Bevan & Bevan - [2013] FamCAFC 116

FAMILY COURT OF AUSTRALIA

BEVAN & BEVAN

[2013] FamCAFC 116

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Where the husband and wife had largely lived apart for 18 years and the husband had told the wife she could retain the assets – Where the trial Judge determined it was just and equitable to make an order – Consideration of the High Court’s decision in Stanford – The trial Judge conflated s 79(4) and s 79(2) – The trial Judge purported to undertake a separate consideration of s 79(2) but had already made findings which prevented his Honour from taking account of all relevant factors – Where the trial Judge found there was no need for a s 75(2) adjustment – The trial Judge failed to consider the husband’s occupancy of his partner’s property as a financial resource – Appeal stood over pending receipt of submissions concerning redetermination.

Family Law Act 1975 (Cth)

Amero & Croft [2010] FamCAFC 118
Beneke v Beneke (1996) FLC 92-698
Duff & Duff (1977) FLC 90-217
Ferguson & Ferguson (1978) FLC 90-500
Fisher v Fisher (1986) 161 CLR 438
Hickey & Hickey (2003) FLC 93-143
Jones v Skinner (1836) 5 LJ Ch 85
Mallet v Mallet (1984) 156 CLR 605
Manolis & Manolis (No 2) [2011] FamCAFC 105
Martin & Newton (2011) FLC 93-490
McLay & McLay (1996) FLC 92-667
Mullane v Mullane (1983) 158 CLR 436
Norman & Norman [2010] FamCAFC 66
Pastrikos & Pastrikos (1980) FLC 90-897
Re S by her Case Guardian R and S by his Case Guardian S [2010] FCWAM 26
Rogers & Rogers (1980) FLC 90-874
Stanford v Stanford (2012) 87 ALJR 74; 293 ALR 70
Stanford & Stanford (2012) FLC 93-495
Teal v Teal [2010] FamCAFC 120
Trustee of the property of Lemnos, A Bankrupt & Lemnos (2009) FLC 93-394
Waters & Jurek (1995) FLC 92-635
Wirth v Wirth (1956) 98 CLR 228
Woodcock v Woodcock (1997) FLC 92-739
Woollams & Woollams (2004) FLC 93-195

APPELLANT:

Mrs Bevan

RESPONDENT:

Mr Bevan

FILE NUMBER:

PTW

2469

2010

APPEAL NUMBER:

2013

DATE DELIVERED:

8 August 2013

PLACE DELIVERED:

Perth

PLACE HEARD:

Perth

JUDGMENT OF:

Bryant CJ, Finn and Thackray JJ

HEARING DATE:

10 April 2013 and by way of written submissions

LOWER COURT JURISDICTION:

Family Court of Western Australia

LOWER COURT JUDGMENT DATE:

7 December 2012

LOWER COURT MNC:

[2012] FCWA 125

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Hooper SC

SOLICITOR FOR THE APPELLANT:

DCH Legal

COUNSEL FOR THE RESPONDENT:

Mr Kearney SC

SOLICITOR FOR THE RESPONDENT:

Paltos Briggs Family Lawyers

Orders

Within twenty-eight (28) days the appellant wife file and serve written submissions in relation to:
(a)the redetermination by the Full Court of the respondent husband’s application for property settlement; and
(b)the costs of the appeal.
Within twenty-eight (28) days of service of the appellant’s submissions, the respondent shall file and serve written submissions in response.
Within fourteen (14) days of service of the respondent’s submissions, the appellant shall file and serve written submissions in reply.
The appeal be stood over pending filing of the written submissions.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bevan & Bevan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH

Appeal Number: WA 2 of 2013
File Number: PTW 2469 of 2010

Mrs Bevan

Appellant

And

Mr Bevan

Respondent

REASONS FOR JUDGMENT

Bryant CJ and Thackray J

Introduction

Mrs Bevan (“the wife”) has appealed property orders made by Jordan AJ on 7 December 2012. The appeal is opposed by Mr Bevan (“the husband”).
The primary issue is whether his Honour erred in concluding it was just and equitable to alter existing property interests when the parties had largely lived apart for 18 years and the husband had told the wife she could retain the assets.

Background

The wife was 64 years of age at the time of trial and the husband was 66.
They were married in 1972, and had two sons, born in 1975 and 1976.
The parties had no significant assets at the time of marriage, but over the next 20 years enjoyed considerable financial success, before suffering a serious downturn in the early 1990s.
The downturn had what the trial Judge described as a “stark impact” on their relationship, leading to the husband “[taking] to the sea” in 1994, before eventually settling in England, where he has since worked as a medical professional.
The husband gave the wife power of attorney in 1995 to deal with their property. He told her and others that she could retain all their Australian property for herself and the children, saying he would build a life elsewhere.
Although there was some intermingling of finances after 1994/95, the wife dealt with the Australian assets largely as she saw fit. This included selling real estate and retaining the proceeds.
The wife also managed a protracted legal dispute concerning a trust the parties had established. From time-to-time, the husband contributed “some intellectual and financial input” to the litigation, which was finally settled in 2002. The wife had unfettered access to the $1.4 million net proceeds of the litigation.
The wife used some of the litigation proceeds to purchase a home in her name in M town at a cost of $1.4 million. She borrowed $400,000 to complete the purchase. This was all done without reference to the husband.
Acting on advice, the wife borrowed a further $1 million against the M town property in 2007 and invested the funds in the stock market. The bulk of the investment was lost in the global financial crisis.
After his departure in 1994, the husband continued trading in a portfolio of shares. At one stage, it appeared the value of the portfolio reached about $1 million; however, on sale, in about 2000, the husband recalled receiving only about $400,000, which he deposited into the parties’ accounts in Australia.
Between 1994 and 2004, the husband and wife continued to spend time living together in Australia and on expensive overseas holidays, which were funded largely by the wife from the parties’ Australian resources.
The husband became involved in a new relationship in the UK between 1997 and 1999. This was resumed when the husband commenced living with his current partner in 2006.
The husband’s current partner owns a home in England, which was purchased with her own capital, subject to a £70,000 mortgage. The husband asserted that he has no interest in the property and does not contribute to the mortgage. He did, however, pay £700 per week into a joint account, which he said was a contribution to board, lodging and joint expenses.
The wife still owns her home in M town, which is worth about $2 million, subject to a mortgage of $1,206,000 ($268,000 from the original loan and $938,000 for the investment loan).
The parties were divorced on 22 July 2010. On 20 July 2011, the husband commenced proceedings for property settlement.
The matter proceeded to trial in December 2012. Judgment was delivered on 7 December 2012.

The trial Judge’s reasons

Apart from making the findings we have mentioned above, the trial Judge’s reasons dealt with a variety of issues.
One of these was the date on which the parties “separated”. The husband asserted this occurred in May 2006, whereas the wife said it was in about 2000. His Honour found that not much turned on this, given that on each version:
the relationship had distinct features, with periods of committed combined effort, periods of discrete endeavours merged with some combined efforts, and, in more recent times, largely separate lives and endeavours, but with some ongoing mutual interests through property.
The trial Judge found that the husband’s representations about the wife being able to retain the Australian property were repeated in the years following “the climactic events of 1994”. He further found that the wife had dealt with the parties’ property as if it was her own, which included buying, selling and borrowing without reference to the husband and without accounting to him.
While his Honour found that the wife acted upon the husband’s representations in the belief the property was hers, he also found that, at times:
the husband conducted himself in ways which were not consistent with his stated intentions [of] making some form of clean break between the parties. It is clear that, from time to time after 1994, he continued to volunteer significant contributions to the benefit of the wife entirely inconsistent with the notion that he was leading a separate life and accumulating his own property and securing his own future.
His Honour referred, for example, to the husband’s actions in depositing the proceeds of the share portfolio into the joint account in 2000 and again in 2003. He also found that the husband applied his inheritance from his mother to the wife’s benefit. Furthermore, his Honour found that when the husband worked in Australia in 2001 and 2004, the husband deposited his income into joint accounts and made “not insignificant contributions to the renovations undertaken in the [M town] property in 2004”.
Nevertheless, his Honour went on to say:
46Perhaps the husband’s actions after 1994, whilst they are inconsistent with the notions of separation, might still be viewed as being consistent with an intention to preserve to the wife all that was connected with Australia.
47The inconsistencies in some of the husband’s conduct might indicate that the Court is dealing with a man who struggled in a number of ways to adjust to the consequences of some of the setbacks in his business and personal life. It is clear that he was left suffering depression in 1994 and that thereafter he struggled for some purpose and direction.
48Indeed, each of the parties appear to have shared some uncertainty about their relationship in the years that followed the 1994 events. I suspect these matters contributed to the husband’s presentation from time to time and the representations made by him.
Having made observations about legal principles, to which we will return, his Honour noted that the husband did not press any argument about wastage in relation to the wife’s investment losses.
In dealing with the contention that the husband had a beneficial interest in his current partner’s home, his Honour found that the husband had made some contribution to its maintenance and improvement over the previous six years, but was unable to conclude that extensive renovations had been undertaken. He did find that the husband had made a “meaningful contribution to the mortgage and to the other household outgoings through his contributions”, which had more recently been greater than those of his partner, albeit noting that the mortgage payments were only £770 per annum.
His Honour said it was impossible to quantify what interest the husband might have in his partner’s home, but found it was likely to be only a modest one. He concluded:
66… In the circumstances, I can only deal with that interest in broad terms by noting it and by having regard to the fact that it represents a resource of some value to the husband and that it is likely to continue to meet his accommodation needs in the short and medium term.
The trial Judge went on to find it was “proper to have regard to the history and the representations of the husband in also determining what property pool should be brought to account”. On this basis, he found the only assets against which the husband’s entitlement, if any, ought to be measured were those remaining at the time of trial. He therefore did not take into account the artwork the wife had sold on the understanding she was entitled to do so.
His Honour also excluded from consideration “incidental items” acquired over the 18 years the parties had “lived largely separate lives”, during which time they had been “making separate plans for their respective futures”. Although his Honour identified these items, he did not quantify their value. Ultimately, the only “incidental items” he took into account were those “clearly traceable to the marriage or the property and capital of the parties traceable to their efforts prior to the parties pursuing their individual endeavours”.
His Honour found the “relevant remaining assets and liabilities” were these:

[M town] property              $2,000,000

Husband’s vehicle   $4,000

Wife’s vehicle                   $14,000

Wife’s household furniture and effects                   $20,000

Remaining art collection                   $56,000

Investment shares and banking                 $162,000

Wife’s jewellery                   $19,000

TOTAL              $2,275,000

Less liability secured against the [M town] property              $1,206,000

NET PROPERTY POOL              $1,069,000

The trial Judge did not state which party owned each of the assets in the table above. It would have been useful had he done so, since consideration of an application for property settlement should always begin with identification of the existing property interests of the parties. However, we accept that the case proceeded on the basis that the husband’s only asset was his car.
His Honour decided that, pending sale of the M town home, the “investment shares and banking” should be kept separate from the other assets, and utilised to meet that part of the mortgage payments which related to the wife’s failed investment, and the costs of sale. Any balance would be divided between the parties. On this basis, the assets were worth $907,000 [$1,069,000 - $162,000].
His Honour then turned to assess contributions to the assets. He concluded that the most significant component of this assessment related to the “long and significant effort made by each of the parties from 1972 to 1994”, which he found had “clearly provided the foundation for everything that has followed”.
Whilst recognising the significant contribution made by the wife after 1994, his Honour also noted she had enjoyed the almost exclusive benefit of the assets, whereas the husband had been “left to start from scratch” and had not made any acquisitions of significance.
His Honour found contributions from 1972 to 1994 were equal, but made an “adjustment” of 10% in favour of the wife (bringing about a “differential” of 20%) to take account of “events” after 1994. On this basis, and recalling that the assets were worth $907,000, his Honour assessed the husband’s contribution-based entitlement at $363,000.
His Honour then found there should be no adjustment for the factors in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”). His reasons for so concluding will be discussed when we come to the relevant ground of appeal.
Having determined that an evaluation of contributions and s 75(2) factors would lead to a 60:40 division, his Honour discussed whether orders bringing about such a division would be just and equitable. For reasons we will mention later, his Honour concluded it would be.
His Honour then discussed the mechanics of achieving the proposed outcome, which would involve a sale of the M town home if the wife could not afford to buy out the husband. His Honour acknowledged an order for sale would:
expose the wife to significant disappointment and some hardship in that she would lose her home of the last nine years and indeed she may experience difficulty in acquiring a replacement property given the funds she will have available.
Having observed it was not uncommon for orders to be made that “leave one or each of the parties with insufficient funds to secure their respective futures in ways which they might have reasonably hoped and expected”, his Honour said his proposed orders would “provide to each of the parties outcomes which strike the proper balance between the competing considerations and are in all the circumstances just and equitable”.
Taking account of other assets already held by the wife, his Honour concluded that the husband would need to receive 45.7 per cent of the proceeds of sale of the wife’s M town property to bring about the proposed overall 60:40 division.

Grounds of Appeal

The wife initially relied upon the following four grounds of appeal:
1.Having found that the evidence of the wife and her witnesses is true, namely that husband had repeatedly told her and them that:-
(a)whatever was in Australia was hers with which to do as she wished; and
(b)that the husband would make his life elsewhere and secure his future,
the decision of the learned Trial Judge that it was just and equitable to make an order for property settlement was against the evidence and the weight of the evidence and was wrong in law.
2. Further, or alternatively, the finding of the learned Trial Judge that:
(a) there were no significant section 75(2) factors; and
(b)that the parties were equally capable to [sic] support themselves from their earnings,
was against the evidence and the weight of the evidence and was wrong in law, or alternatively, the reasons for His Honour’s decision are unascertainable and His Honour should have found that the section 75(2) factors substantially favoured the wife.
3.The learned Trial Judge was wrong in law in determining that it was just and equitable to make the order as found by him, or alternatively, His Honour failed to consider or properly consider whether the terms of the order made were just and equitable.
4.Having acknowledged that the effect of the order made by the learned Trial Judge was unfortunate in that it may leave the wife with insufficient funds to secure her future, His Honour should have recognised that the order he was making was not just and equitable.
At the hearing, we gave leave to the wife to add two more grounds and directed the filing of written submissions to deal with them. We will set out these additional grounds later in these reasons.

Grounds 1, 3 and 4 – The just and equitable requirement

Counsel agreed that Grounds 1, 3 and 4 convey one proposition, namely that it was not just and equitable to make the orders pronounced, or any orders at all.
This proposition requires consideration of s 79 of the Act, which relevantly provides:
79Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them — altering the interests of the parties to the marriage in the property; or
(b)…
including:
(c)…
(d)      an order requiring:
(i)       either or both of the parties to the marriage; or
(ii)      …
to make, for the benefit of either or both of the parties to the marriage … such settlement or transfer of property as the court determines.
…
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage … to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage … to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
…

It will be noted that s 79(4)(e) incorporates by reference the s 75(2) factors “so far as they are relevant”. Many of those factors are of potential importance, but those of direct relevance here (mainly to Ground 2) are the following:
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
…
(m)if either party is cohabiting with another person—the financial circumstances relating to the cohabitation …
The trial Judge discussed the statutory framework in the following terms:
30Section 79(2) … prescribes that a Court should not make an order under Part VIII unless it is satisfied that in, all the circumstances, it is just and equitable to make such an order. That particular provision has been the subject of some submissions in this case, and I will return to those matters shortly.
31Subject to deliberations in relation to that matter, traditionally, the process to be followed by a Court in hearing and determining claims for property settlement is one which embarks upon what is often identified as a four stage process. That requires the Court, firstly, to ascertain what are the assets, liabilities and financial resources of the parties, secondly, to consider the contributions of each of the parties to the property and endeavour to arrive at an entitlement based upon those contributions, thirdly, to consider the current circumstances and future prospects of each of the parties and any other matters relevant under section 75(2) of the Act and make any adjustments necessary to the earlier assessment.
32Finally, there is an obligation upon the Court to review the orders which might flow from such deliberations and determine whether they are, in all the circumstances, just and equitable. If the Court is not so satisfied, it should make such adjustments as may be necessary to provide justice and equity between the parties.
33In addition to the need to properly consider the provisions of section 79(2), the unique facts of this case serve to complicate the deliberations about each of the above matters.
His Honour later returned to consideration of the justice and equity of making an order altering property interests. This part of his discussion is of particular importance and is set out in full:
49The supplementary and perhaps more important consideration relates to what should flow from my findings in relation to the husband’s representations; that is what are the legal consequences, if any, which arise from those statements.
50It is clear that whatever the husband has said and thought in the past, he has now changed his mind. He has brought an application for property settlement, as he was entitled to do. Once there is before the Court proceedings for property settlement, they must be determined according to law. The jurisdiction of the Court can only be extinguished by an order of the Court or by agreement between the parties properly documented upon strict terms and conditions.
51Once proceedings are before the Court they must be determined in accordance with the provisions of Part VII [sic] of the Act. Essentially the entitlement of the parties is to be determined by having regard to the provisions of section 79, including those relating to the contributions of the parties and their current circumstances and future needs and obligations.
52There is no requirement to consider what representations the parties may have made during the marriage or subsequent to separation. The essential inquiry is not what the parties thought or said from time to time, but what is their entitlement at law.
53In my view, what the husband said has no direct bearing upon what he is entitled to. There are, however, some potentially significant considerations to emerge. Of a practical significance is the question of the way the Court should view the wife’s conduct in terms of her dealings with the property of the parties in the face of representations and any related questions of what property should now be brought to account and whether there should be any so-called “add-backs”.
54It appeared on the husband’s material that he was mounting a case of wastage in relation to the wife’s borrowings and losses on investments and in relation to surplus funds from the [litigation] settlement.
55It would be a difficult proposition to argue that having, vested in the wife authority to deal with the Australian property as she saw fit, to then retrospectively ask her to bear any adverse consequences flowing from her decisions to do as she was invited to do. In the end result, the husband pressed no such argument.
56The further possible relevance of the representations brings into focus some submissions made by counsel appearing for the wife, Mr Dowding, Senior Counsel. Mr Dowding argues that the representations made by the husband and what resulted from them, whilst not preventing the husband from bringing his application for property settlement, might justify a determination by the Court that it should not make the orders sought by him.
57In relation to those submissions, Mr Dowding refers in part to a recent decision of the High Court in Stanford v Stanford (2012) HCA 52, a decision handed down on 15 November 2012. He contends that that case is authority for the proposition that section 79(2) considerations stand on their own and require the Court to determine whether it is, in all the circumstances, just and equitable to make such an order for property settlement. He contends that, in appropriate circumstances, it might be considered as something of a threshold question to be considered prior to the Court embarking upon the more traditional deliberations described earlier by me in the so-called four part process.
58A review of that case makes it clear that the Court is obliged to properly consider the provisions of section 79(2) in their own right. In my view, in order to properly consider such matters, it is however necessary to also consider what the husband’s entitlement might otherwise have been in order to determine whether it is just and equitable to contemplate making an order which will alter the wife’s interests in the [M town] property in the context of considering the consequences for each of the parties in making or refusing to make such an order.
59I believe the following extract from the Judgment requires the Court to undertake that exercise …
His Honour then recited these paragraphs from the judgment of the plurality of the High Court in Stanford v Stanford (2012) 87 ALJR 74 (“Stanford”) (original emphasis, footnotes omitted):
35.It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.” Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two subsections are not be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
36.The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of an exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not “to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself which refers to “altering the interests of the parties to the marriage in the property” (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to unguided judicial discretion …
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties’ rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity or ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered.
40.Third, whether making a property settlement order is “just and equitable” is not be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters, including financial and other contributions set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4) without a separate consideration of s 79(2) would be to conflate the statutory requirements and ignore the principles laid down by the Act.”
Having set out these paragraphs from Stanford, his Honour commented:
60In my view, that extract of the Judgment makes it clear that I must take account of the existing interests of the parties, in this case the wife’s existing interests in [M town], and consider whether it is, in all the circumstances, just and equitable to make an order altering those interests.
61In exercising that discretion I must have regard to all relevant circumstances of this case, including the husband’s representations and take proper account of what might be the effect upon each of the parties of making any orders for property settlement or refusing to make any such orders. I will address those matters in a little more detail later.
His Honour went on to make findings in relation to the property to be brought to account. In doing so, his Honour said:
67Subject to my deliberations in relation to the effect of section 79(2) on the facts of this case, I am satisfied that, for other purposes, it is proper to have regard to the history and the representations of the husband in also determining what property pool should be brought to account.
68I am satisfied that for a period of at least 16 years the husband has, by his words and by his conduct, induced the wife to believe that he did not wish to make any claim against the property in Australia and that she was entitled to use that property as she saw fit for her benefit and that of the boys. As I have observed earlier, in those circumstances, it would be entirely unfair and unjust for the husband to retrospectively seek compensation for reasonable outgoings incurred and investments made over that period. The evidence draws me to the conclusion that the wife has utilised the capital and property in Australia for reasonable purposes relating to her needs and for the support of her boys.
69The wife has continued to take proper steps to secure her own support in the form of paid employment and has not unnecessarily or unreasonably diminished the property left behind by the husband. The husband has from time to time derived benefit directly and indirectly from the Australian reserves. The wife’s efforts at investment were undertaken in good faith on professional advice and were designed to provide returns. The losses associated with that investment were for reasons entirely beyond her control.
70I am satisfied that the wife has preserved the remaining assets appropriately once she became aware of the husband’s change of heart. She has continued to work and support herself and continued to make direct and indirect contributions to the maintenance of the property and the service of loans.
71I am satisfied that the only property against which the husband’s entitlement, if any, should be measured is against the property which remains as at the date of trial. That property is largely the equity in the [M town] homestead and the remainder of the investment funds, or that portion which will remain after sale.
72 As to the remainder of the property, I take the view that, in the peculiar circumstances of this case, I should adopt an approach which is consistent with my findings and consistent particularly with my view about the proper consequences of the husband’s representations.
Having explained why he would exclude from consideration certain “incidental items”, the trial Judge found the “net property pool” was worth $1,069,000.
His Honour then discussed, at [77], how he would treat the item “investment shares and banking” “in the event I am persuaded to make an order for property settlement”.
Having outlined what he would do, his Honour said (emphasis added):
81 For the purposes of my deliberations in terms of what might be the husband’s entitlement under the provisions of the Act, I therefore remove the $162,000 from the earlier identified property pool. For the purposes of any evaluation process if undertaken, I proceed on the basis that the net value of the remainder of the property of the parties to be brought to account is some $907,000.
His Honour then made findings about the contributions made by the parties. In doing so, he said, inter alia:
86At the same time, however, it must be observed that the wife enjoyed the almost exclusive benefit of the substantial Australian property and investments which remained. In many ways the husband was indeed left to start from scratch in his endeavours without the benefit of the fruits of what the parties had acquired over the previous 22 years.
87 It is also appropriate to note that, notwithstanding the changed circumstances after 1994 the husband did continue to make periodic financial contributions generally and other contributions in the form of improvement to the [M town] property after that time. It is also clear that he has not preserved to himself any separate acquisitions of significance over the period since 1994.
The precise language his Honour used in setting out his conclusions in this part of his reasons is important and we have therefore emphasised some words he used in the following three paragraphs:
93In my view, an adjustment which finds an appropriate balance based on that overriding foundation, but takes account of the subsequent events, would result in an adjustment to the wife’s advantage of 10 per cent and produce a settlement between the parties of 60 per cent to the wife and 40 per cent to the husband.
94 On the basis of such an estate, the extent of the husband’s entitlement so evaluated would be of the order of $363,000 after the stage one and two evaluation process.
95 The third stage would require me to consider whether there needs to be any adjustment between the parties on account of the so-called section 75(2) factors. In my view, there is no case for an adjustment under this head …
Having determined that assessment of contributions and s 75(2) factors “would result” in a 60:40 division, his Honour concluded this part of the discussion with these paragraphs:
99It is proper to now consider Mr Dowding’s submissions as to any threshold question of whether, having regard to the provisions of section 79(2), it is just and equitable to make any orders for property settlement altering the interests of the parties in property.
100To refuse the husband’s application would be to deny him the opportunity to secure an alteration of the interests and a payment of the type indicated. In relation to any threshold question in this case, I take account of the significant aspect of the history related to the representations made by the husband and to the fact that for many years the wife acted upon them.
101Mr Dowding submits that it is open to the Court to conclude that the wife has acted upon those representations to her detriment. Certainly the parties’ overall financial circumstances have deteriorated somewhat in more recent years and particularly since the investment of 2007. Mr Dowding submits that, in different circumstances, the wife may well have better secured her future had she been aware of the husband’s ability or intention to recant on his earlier agreement. One difficulty with that proposition is that the wife did not make any such positive assertion in the course of the evidence produced by her. In particular, she did not assert that she would not have, for example, made the purchase of the [M town] property or pursued investments had she had an awareness that the husband might change his mind.
102The fact of the matter is that the [M town] acquisition has borne fruit in that the property has increased in value significantly since the date of acquisition whilst I acknowledge that there have been losses occasioned as a result of the investment.
103Further, in terms of considering prejudice to the wife, it must be observed that the wife has enjoyed the considerable benefits that have flowed from the husband’s representation by exclusive access to the property acquired and traceable to the pre 1994 period. In particular, she has had unfettered use of the surplus [Trust] proceeds. Of course, she has also had the largely sole use and benefit of the principal asset of the parties. These benefits have accrued as a consequence of the husband’s willingness to continue to act on the strength of his representations for many years.
104Further, in terms of hardship, it could be said that the principal victim of the husband’s representations has been the husband himself. It is apparent that at many different stages in the potted pathway from 1994, indeed probably at all stages prior to the institution of these proceedings, the husband would have been likely to have had an entitlement to property of far greater value than that which is now being be [sic] assessed.
105To the extent it has been established that the Court may retain a discretion to decline to make any orders for property settlement in accordance with Mr Dowding’s submissions, I am not satisfied that it would be just and equitable to do so in all the circumstances of this case.
106Each of the parties has had the capacity to formalise their informal arrangements at any time over the last 18 years. They each apparently chose not to do so. Whilst I understand that the wife may well have felt secure, given that the husband failed to bring the informal arrangements to an end, it could be said that each of the parties have suffered detriment as a result of the failure of either of them to formalise the informal.
107In my view, it is just and equitable that the parties share in the fruits of their efforts over the period 1972 to 1994 and that they share in the consequences of decisions made in the face of the husband’s representation thereafter.
108I conclude that it is in all the circumstances just and equitable to proceed to make an order for property settlement, albeit an order which will alter the interests of the wife in the [M town] property.

The decision in Stanford and the four step process

The primary focus of Grounds 1, 3 and 4 is on s 79(2) of the Act, which was carefully analysed in Stanford. Before considering the submissions relating to these grounds, it will be instructive to discuss the High Court’s decision, to the extent it has relevance to this appeal.
The facts in Stanford were quite different to those here, and indeed to the factual circumstances in most cases. Nevertheless, as all property settlement applications are considered within the same statutory framework, this rare pronouncement by the ultimate court of appeal warrants careful examination.
Prior to Stanford, property applications were commonly dealt with by reference to what the trial Judge called “a four stage process”. This process was described at [31] and [32] of his Honour’s reasons. The jurisprudential basis for the process was well established – see the line of cases cited in Hickey & Hickey (2003) FLC 93-143 at [39].
The four stage (or step) process involves:
·identification and valuation of the property of the parties;
·identification and evaluation of contributions to the property (including property no longer owned by the parties);
·identification and assessment of the various matters in s 79(4)(d) to (g) including, to the extent they are relevant, the matters in s 75(2);
·consideration of matters of justice and equity.
Although the four step process has been regularly applied, the Full Court has stressed it is no more than a means to an end, since the statutory obligation is to alter existing interests only if it is just and equitable to do so. Thus, in Norman & Norman [2010] FamCAFC 66 at [60], the Full Court (Finn, May and Murphy JJ) said:
It is the mandatory legislative imperative (to reach a conclusion that is just and equitable) that drives the ultimate result. For all its usefulness and merit as a “disciplined approach” or a “structured process of reasoning” (per Fogarty, Lindenmayer, McCall JJ, N and N, unreported, 10 June 1992), the “three-step” or “four-step” approach merely illuminates the path to the ultimate result.
To like effect, in discussing the four step approach in our joint judgment in Martin & Newton (2011) FLC 93-490, we said (original emphasis):
305.… that approach is not legislatively mandated, and as the Full Court [in Hickey] said, is simply the preferred approach. This is because it will be sufficient, in most cases, to have regard to the overall justice and equity of the orders after determination of the asset pool, consideration of contributions and assessment of the relevant s 75(2) matters.
306.But in our view, there is no requirement that the justice and equity of the order, as prescribed by s 79(2), must only be considered at the fourth (and last) stage. In our view, the requirement to make an order that is just and equitable permeates the entire decision making process, and it is not impermissible to consider it at an earlier point if the particular case requires it. We consider this is such a case.
See also Waters & Jurek (1995) FLC 92-635 per Fogarty J at 82,375 and 82,378, Beneke v Beneke (1996) FLC 92-698 per Fogarty and Finn JJ at 83,360 and per Kay J at 83,369; McLay & McLay (1996) FLC 92-667; Trustee of the property of Lemnos, A Bankrupt & Lemnos (2009) FLC 93-394 per Coleman J at [93]; Amero & Croft [2010] FamCAFC 118 per Boland J at [77] and Manolis & Manolis (No 2) [2011] FamCAFC 105 per Coleman, May and Ainslie-Wallace JJ at [65].
The Magistrate who gave the primary judgment in Stanford clearly set out and applied the “four step process”: Re S by her Case Guardian R and S by his Case Guardian S [2010] FCWAM 26 at [45]. The Full Court also accepted there was a “settled approach” in property matters: Stanford & Stanford (2012) FLC 93-495 at [51]. The High Court had before it both judgments, but made no comment about the “four step process” or the “settled approach”.
Although the High Court did not disapprove the four step process, we accept it was not approved either. Given the way the matter was resolved, there was no requirement for a pronouncement either way. However, the High Court’s decision serves to refocus attention on the obligation not to make an order adjusting property interests unless it is just and equitable to do so.
This obligation was previously described in the High Court as the “overriding requirement”: Mallet v Mallet (1984) 156 CLR 605 at 647 per Dawson J. In the same case at 608, Gibbs CJ aptly described s 79 as conferring on a court “a very wide discretion to make such order as it thinks fit when it is satisfied that it is just and equitable that an order should be made …” (emphasis added).
This understanding of the role of s 79(2) resonates with authority developed in the early years of operation of the Act. Thus, in Rogers & Rogers (1980) FLC 90-874 at 75,539 the Full Court cited with approval this view expressed by Strauss J in Ferguson & Ferguson (1978) FLC 90-500 at 77,615:
It seems to me, that the main purpose of sec. 79(2) is to ensure that the Court will not alter the property rights of the parties, unless it is satisfied that cogent considerations of justice require it to do so, and that if the Court decides that it is requisite to make any order under the section, the Court must be satisfied that the alterations so ordered, will go no further than the justice of the matter demands.
Notwithstanding this clear exposition of the law, again approved in Beneke and Beneke (supra), perusal of the law reports reveals that it has only rarely been argued that a court is precluded by considerations of justice from exercising the discretion conferred by s 79(1). It appears to have been routinely assumed by litigants, certainly in more recent times, that justice requires the court to assess their claims by reference to s 79(4), even if one contends that the outcome of that assessment will be an order leaving existing property interests intact.
The reason for this is likely to be found in this passage from Stanford (original emphasis):
42.In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order …
In our experience, the circumstances described in the paragraph above encapsulate the vast majority of cases. Hence, the reminder in Stanford of the pivotal role of s 79(2) is unlikely to have any impact in most cases, although it will serve as a reminder to trial judges that the precondition to making any order is a finding that it is just and equitable to do so.
Stanford will also serve as a reminder that the four step process “merely illuminates the path to the ultimate result”. Any future restatement of that process should incorporate acceptance of the fact that the power to make any order adjusting property interests is conditioned upon the court finding that it is just and equitable to make an order.
It follows that judges would be well advised to avoid what we consider to be arid discussion of the “stage in the process” at which “adjustments” are permissible. Such discussion tends to elevate the four step process to the status of a statutory edict, when in fact it is no more than a shorthand distillation of the words of a statute which has but one ultimate requirement, namely not to make an order unless it is just and equitable to do so.
The High Court in Stanford has laid down three “fundamental propositions” which will provide useful guidance to trial judges in approaching the task under s 79. These were recited above, and could be summarised thus:
1.Determination of a just and equitable outcome of an application for property settlement begins with the identification of existing property interests (as determined by common law and equity);
2.The discretion conferred by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity;
3.A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4), and without separate consideration of s 79(2), would erroneously conflate what are distinct statutory requirements.
The first “fundamental proposition”, which requires identification of existing legal and equitable interests in property, is nothing new, since “property” has always been understood as incorporating equitable, as well as legal, interests.
Thus, in Duff & Duff (1977) FLC 90-217 at 76,133, the Full Court agreed with Langdale MR in Jones v Skinner (1836) 5 LJ Ch 85 that:
Property is the most comprehensive of all terms which can be used inasmuch as it is indicative and descriptive of every possible interest which the party can have.
In Mullane v Mullane (1983) 158 CLR 436 at 445, Mason A.C.J., Wilson, Brennan, Deane and Dawson JJ said (emphasis added, references omitted):
In our opinion, therefore, s. 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right … It does not exclude every interest which is not assignable or transferable …
Once it is recognised a court has power to alter both legal and equitable interests, it follows that it is necessary first to identify all property in which the parties have either a legal or equitable interest. Since the issue does not arise here, we will not express a concluded view about the post-Stanford controversy concerning the extent to which it is necessary to decide whether – as between the parties – the legal title accurately reflects their respective interests. However, where it is accepted that justice and equity require the making of an order, it would seem unnecessary to complicate proceedings by deciding whether one party has an equitable interest in property held by the other, since the ultimate outcome will not be determined by application of equitable principles but rather by reference to ss 79(4) and 75(2).
Nevertheless, there will be cases, of which Stanford may have been one, where the assertion (or lack thereof) of an existing equitable interest in property held by the other party may be of critical importance in deciding whether it would be just and equitable to interfere with the existing legal ownership. And of course it will always be important to determine whether one party has an equitable interest in property owned by a third party.
We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.
The second “fundamental proposition” laid down in Stanford is also not novel since, as the plurality noted, it is well accepted that “title to property and proprietary rights in the case of married persons … rests upon the law …”: Wirth v Wirth (1956) 98 CLR 228 at 232. Thus, spouses do not have rights to property by operation of s 79 unless and until an order is made altering the rights they have, as determined by principles of common law and equity: Fisher v Fisher (1986) 161 CLR 438 per Mason and Deane JJ at 452 to 454.
The third “fundamental proposition” demands separate consideration of the preliminary question of whether it is just and equitable to make any order altering property interests before the need arises to consider the extent to which existing interests are to be altered and the manner in which that is to be done.
As we have noted, in many cases the preliminary question is effectively answered in the affirmative by the way the parties present their cases. Nevertheless, it is still necessary for it to be shown that the trial judge has expressly, or by clear implication, answered that question in the affirmative before making an order altering existing interests in property.
Answering this preliminary question clearly involves the exercise of judicial discretion since, as was said in Stanford at [36]:
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.
Just as the expression “just and equitable” does not admit of exhaustive definition, it is not possible to catalogue the “range of potentially competing considerations” that may be taken into account in determining whether it is just and equitable to make an order altering property interests. However, in our view, it would be a fundamental misunderstanding to read Stanford as suggesting that the matters referred to in s 79(4) should be ignored in coming to that decision. Indeed, such a reading would ignore the plain words of s 79(4), which make clear that in considering “what order (if any)” to make, the court must take into account the matters referred to in that subsection (emphasis added).
This requirement to consider the s 79(4) matters in determining whether it is just and equitable to make any order provides fertile ground for potential conflation of the two different issues, which the High Court has warned against. However, this potential will not be realised in many cases because of what the plurality said at [42] about the “just and equitable” requirement being “readily satisfied”. But there will be a range of cases, of which arguably the present is a good example, where determining whether it is just and equitable to make any order altering property interests will not be so clear cut and will therefore require not only separate but very careful deliberation.
We do not consider it helpful, and indeed it is misleading, to describe this separate enquiry as a “threshold” issue. We say this for two reasons. First, as was emphasised in Stanford, the initial enquiry is to determine the existing legal and equitable interests of the parties. Secondly, although s 79(2) is cast in the negative and amounts to a prohibition against making any order unless it is just and equitable to do so, the corollary is that if the court does make an order, such order itself must be just and equitable: Woollams & Woollams (2004) FLC 93-195 per Thackray J at [53] and Teal v Teal [2010] FamCAFC 120 per Finn, Boland and Dawe JJ at [70]. The just and equitable requirement is therefore not a threshold issue, but rather one permeating the entire process.
It will be seen from this discussion that while the s 79(2) and s 79(4) issues must not be conflated, they are intertwined because the text of the Act links them. This was recognised in Ferguson & Ferguson where Strauss J said that s 79(2) “is directed to both the questions whether an order should be made at all, and what the order should be, if one is made” (supra at 77,615).
This understanding of the interplay between ss 79(2) and 79(4) accords with the analysis of Martin Bartfeld QC in his paper entitled “Stanford and Stanford – Lots of Questions – Very Few Answers”. In that paper, which we drew to the attention of counsel, Mr Bartfeld opined that:
49… there is scope for taking into account the factors under s 79(4) in the exercise of the [s 79(2)] discretion. This can be accomplished, it is submitted, by treating the contribution factors and the factors under s 75(2) as having two simultaneous characteristics;
a.A discretionary characteristic, which is used to identify those matters which are relevant to enliven the exercise of the discretion. Thus the fact that a party has made substantial contributions, over a long period of time, which are not reflected in their asset holdings but which are reflected in the other party’s assets may found a basis for finding that it is just and equitable for an order to be made; and
b.An evaluative characteristic, which is used to measure the weight or to quantify the effect of a particular contribution.
50.The problem of conflation can easily be overcome by clearly identifying the use to which a factor is being put.
In our view, it will be less likely that the separate issues arising under s 79(2) and s 79(4) will be conflated if judges refrain from evaluating contributions and other relevant factors in percentage or monetary terms until they have first determined that it would be just and equitable to make an order. Ultimately, however, appellate error will not be demonstrated if it is possible to ascertain, either by reference to an express finding or by necessary inference, that the trial judge has given separate consideration to the two issues.

Wife’s submissions in support of Grounds 1, 3 & 4

Senior counsel for the wife accepted that ss 79(2) and 79(4) “stand and work together to some extent, and march together to a conclusion”, since consideration of whether there should be any order adjusting interests cannot take place “in a vacuum”. However, consistent with Stanford, he argued that:
the two … can’t be conflated in the sense that … just because … a 79 (4) exercise will produce a certain distribution or a certain order, doesn’t mean that is, ergo just and equitable.
Senior counsel for the wife submitted that the trial Judge had conflated the two subsections because he had:
turned his attention to 79 (4), came to a conclusion that a 60:40 split was appropriate and proceeded to do that without looking at the justice and equity of, for example, having a wife on the one hand who he acknowledged by his order would be without her home, and would be unlikely to be able to obtain another in circumstances where the husband had accommodation that appeared assured from the relationship that he then had, and where the husband had, from 1994 onwards, set off in different parts of the world to make his own way and accumulate or not accumulate assets as he chose, and live in the manner to which he chose, and applying his income as he chose.
Noting that the trial Judge had expressly said that the husband’s representations had no direct bearing upon what he was entitled to receive, senior counsel for the wife argued, in effect, that the only way his Honour took the husband’s representations into account was “as a shield” against an “add back argument that was mooted but not run” relating to the failed investment. It was therefore submitted that “his Honour simply did not go beyond the 79(4) adjustment”.

Developing this argument, senior counsel for the wife submitted that the trial Judge’s conclusions were essentially to be found in those paragraphs of his judgment ([92] and [93]) where he determined, by reference to contributions both before and after 1994, that the appropriate division was 60:40, and that “having looked at the just and equitable issue, or ruminated on that, he makes no further finding or adjustment”.
He further submitted that his Honour did not have to treat the wife’s arguments about the husband’s representations as a “cliff edge” issue, and argued that the finding about the representations should have been taken into account to “ameliorate the level of contributions found by applying 79 (4) solely”.
While eschewing reliance upon estoppel, senior counsel for the wife argued that the trial Judge had failed to give sufficient weight to the fact that the husband had represented to the wife that all the property in Australia was hers and had allowed her to deal with the property in the way she had. It was further submitted that greater weight should have been placed on the fact that, relying on the husband’s representations, the wife had made arrangements for the children, including using her funds to support their endeavours and funding their education, without making a claim on the husband to assist.
In reply to submissions made by senior counsel for the husband in his oral argument about the absence of proven detriment to the wife as a result of relying on the husband’s representations, senior counsel for the wife argued that:
there’s no evidence that had [the wife] been aware that the husband would resile from his promise that she wouldn’t have asked him to contribute [to the payments made for the benefit of the children] because when one’s labouring under a belief, you proceed under that belief. How can you ever say that you wouldn’t have done something absent of belief because it’s speculation.
It’s not as though someone is saying, for example, it’s not like a contractual arrangement where someone says “if that promise of me getting the lease of the adjoining property hadn’t been made, I wouldn’t have bought the property next door”. That can never be the case in a marriage type situation. She’s labouring under a belief that no claim would be made ...
Finally, we should record that senior counsel for the wife agreed with an observation made from the bench during argument that a noteworthy feature of this case is that none of the assets held at the time of trial (save for some of the artwork and jewellery), was owned by either party in 1994, albeit the current assets could arguably be traced to assets held at that time. We accept, however, that the legislation requires account to be taken not only of contributions made to assets held at the date of trial, but also to those previously owned.

Husband’s submissions in response to Grounds 1, 3 & 4

Save for the “cliff edge” argument, senior counsel for the husband did not take real issue with the approach to s 79 advocated by his opponent. In particular, he agreed that the court could not approach the just and equitable requirement in a vacuum, and accepted that the court could not reach a decision on that issue without first having regard to the “mandatory considerations” in s 79(4).
However, senior counsel for the husband submitted that the trial Judge’s consideration of s 79(2) occurred independently of the s 79(4) determination, which he argued could be seen particularly at [99] to [108]. He drew attention in particular to [100] where the trial Judge said he had taken account of the representations made by the husband and the fact that the wife had for many years acted upon them. Senior counsel accepted these were matters his Honour could take into account, consistent with ordinary principles of law; however, he stressed that, at [101], the trial Judge had recorded that the wife had made no assertion of “detriment” as a result of having acted on the representations.
Whilst recognising that the wife had eschewed reliance on estoppel, senior counsel for the husband submitted that a finding of detriment would be necessary to provide a basis, within established principle, for finding that the husband should be held to his representations. Senior counsel for the husband accepted that a mere assertion by the wife that she had acted to her detriment would not have been admissible, but said the wife had provided no evidence which would have permitted a submission to that effect in order to “complete the estoppel circle”.
Senior counsel for the husband submitted that the trial Judge had considered questions of prejudice and hardship to the wife (for example at [103]), but had also taken account of benefits she received, while recognising that the husband had also suffered hardship, given he did not pursue a claim of waste arising from the wife’s loss of the investment money.
Senior counsel for the husband submitted that it could not be said that the trial Judge had been plainly wrong in taking into account the matters he did, and was entitled to conclude it would not be just and equitable to decline to make any order. In submitting that the “just and equitable” issue had not been conflated with any other issue, senior counsel for the husband drew attention to the paragraphs where his Honour gave separate consideration to the justice and equity of the form of orders he proposed to make, in which he recognised the impact of those orders on both parties, but in particular on the wife.
Senior counsel for the husband also argued that the contentions now advanced by the wife were inconsistent with the way she presented her case at trial. In advancing that argument, senior counsel for the husband referred to [56] of the reasons, where his Honour said that the wife had acknowledged at trial that the husband was not prevented from bringing his application merely because of the representations made. We do not propose to discuss this argument, since the wife did not contend before us that the husband was precluded from bringing an application. Her contention all along was that the application should be dismissed since it was not just and equitable to make an order.

Discussion of Grounds 1, 3 and 4

The primary thrust of the appeal is that the trial Judge impermissibly conflated the issues arising under s 79(2) and s 79(4). In dealing with that submission, it is important to observe at the outset that his Honour was keenly aware of the requirement not to conflate the issues and attempted to keep them separate.
This appears from the following paragraphs of the reasons (emphasis added):
·at [58] where his Honour said that Stanford “makes it clear that the Court is obliged to properly consider the provisions of section 79(2) in their own right”;
·at [77] where his Honour discussed how he would treat an item of property “in the event I am persuaded to make an order for property settlement”;
·at [81] where his Honour found what the value of the assets would be “for the purposes of any evaluation process if undertaken”;
·from [93] to [95] where his Honour was at pains to make clear that in assessing the parties’ entitlements by reference to s 79(4), he was doing so only with a view to determining what the result “would be” if the matter was determined by reference to that provision; and
·at [108] where his Honour concluded it was “in all the circumstances just and equitable to proceed to make an order for property settlement …”
Nevertheless, there are parts of the reasons which could be seen as suggesting his Honour did proceed on the basis that some order altering property interests was inevitable, and that the entitlements of the parties were to be calculated solely by reference to s 79(4).
This includes his remarks at [50] and [51], which for convenience we repeat:
50.It is clear that whatever the husband has said and thought in the past, he has now changed his mind. He has brought an application for property settlement, as he was entitled to do. Once there is before the Court proceedings for property settlement, they must be determined according to law. The jurisdiction of the Court can only be extinguished by an order of the Court or by agreement between the parties properly documented upon strict terms and conditions.
51Once proceedings are before the Court they must be determined in accordance with the provisions of Part VII [sic] of the Act. Essentially the entitlement of the parties is to be determined by having regard to the provisions of section 79, including those relating to the contributions of the parties and their current circumstances and future needs and obligations.
Although we accept that the court’s jurisdiction can be extinguished only when its power is exhausted by the making of final orders or by a binding financial agreement, the proper exercise of the jurisdiction can include the dismissal of an application because it is not just and equitable to make any order. Furthermore, a decision to dismiss can be made for reasons not referable to s 79(4) since, as the High Court said in Stanford at [40] (original emphasis):
To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
Nevertheless, read alone, [50] and [51] of the reasons do not reveal error, since it is correct to say that the parties’ entitlements are “to be determined by having regard to the provisions of section 79”, because that would include s 79(2).
However, it will be remembered his Honour went on to say:
52There is no requirement to consider what representations the parties may have made during the marriage or subsequent to separation. The essential inquiry is not what the parties thought or said from time to time, but what is their entitlement at law.
53In my view, what the husband said has no direct bearing upon what he is entitled to …
It is true the trial Judge later accepted that the husband’s representations should have an indirect bearing upon his entitlement – because he considered them when deciding what assets should be taken into account. Nevertheless, we consider his Honour erred in saying there was “no requirement to consider what representations the parties may have made during the marriage or subsequent to separation”. In our view, such representations clearly could be relevant in determining whether it was just and equitable to make an order adjusting existing interests.
Furthermore, in saying that “the essential inquiry is not what the parties thought or said from time to time, but what is their entitlement at law”, it seems to us that his Honour considered the parties’ “entitlement at law” was their entitlement measured only by reference to s 79(4).
Further evidence of conflation of the two distinct enquiries can also be seen at [58], where his Honour commenced by accurately stating that s 79(2) had to be considered separately, but then went on to explain how he proposed to do that in the present matter. For ease of reference we set out that paragraph again:
58A review of [Stanford] makes it clear that the Court is obliged to properly consider the provisions of section 79(2) in their own right. In my view, in order to properly consider such matters, it is however necessary to also consider what the husband’s entitlement might otherwise have been in order to determine whether it is just and equitable to contemplate making an order which will alter the wife’s interests in the [M town] property in the context of considering the consequences for each of the parties in making or refusing to make such an order.
The fact the trial Judge placed weight on “what the husband’s entitlement might otherwise have been” and the consequences of refusing to make an order conferring that entitlement can be seen at [100] where his Honour said:
To refuse the husband’s application would be to deny him the opportunity to secure an alteration of the interests and a payment of the type indicated …
This is clearly a matter his Honour took into account when, at [105], he gave what might be seen as grudging acceptance of the proposition in Stanford that the court does have a discretion to decline to make any order.
In our view, while his Honour purported to undertake a separate consideration of s 79(2), he did so having already made findings which prevented him from taking account of all relevant factors. In particular, his Honour had found that he was not obliged to consider “representations the parties may have made during the marriage or subsequent to separation”. It is true that, at [100], the trial Judge said that in deciding “any threshold question” he had taken account of the husband’s representations, but that proposition is inconsistent with his earlier unambiguous finding. This inconsistency, at the very least, leads to an inference that insufficient weight was placed on this factor.
We also consider his Honour erred when, at [106], he took into account, against the interests of the wife, the fact that the “informal arrangements” between the parties were not formalised at any time during the 18 years in which they lived largely separate lives. In our view, that was not a material factor in this matter where the wife had disposed of all the substantial assets in which the parties had any joint interest and thereafter acquired property in her name, in relation to which the husband never asserted any equitable interest. At the very least, his Honour gave the absence of formality more weight than it deserved.
The trial Judge’s approach also seems to us incompatible with the following remarks made in Stanford concerning the three “fundamental propositions” (footnote omitted, original emphasis):
41… if the parties to a marriage have expressly considered, but not put in writing in a way that complies with Pt VIIIA, how their property interests should be arranged between them during the continuance of their marriage, the application of these principles accommodates that fact … These principles do so by recognising the force of the stated and unstated assumptions between the parties to a marriage that the arrangement of property interests, whatever they are, is sufficient for the purposes of that husband and wife during the continuance of their marriage. The fundamental propositions that have been identified require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage.
In our view, if the three “fundamental propositions” can truly accommodate any consideration the parties gave to how their property interests should be arranged during the continuance of their marriage, they must also accommodate express consideration given to how those interests should be arranged after separation. Indeed, the argument for doing so is stronger, given that any mutual understanding is less likely to have been affected by extraneous influences that would be at work whilst their relationship was intact.
This is not to suggest that any understanding between spouses would be conclusive of any later dispute, since an agreement can only be conclusive when the s 90G(1) formalities are satisfied or when a s 90G(1B) declaration is made. Long experience in this jurisdiction teaches that there will be cases in which other factors will be present that would make it just and equitable to make an order inconsistent with a previous understanding, even one reached after separation. But the reasoning in Stanford makes clear that such an understanding would have to be a factor to be taken into account in deciding whether it would be just and equitable to make orders altering existing interests. This reasoning is entirely consistent with what was said by the Full Court in Woodcock v Woodcock (1997) FLC 92-739 at 83,968 to 83,969.
Once it is accepted that a prior agreement or representation is relevant to the justice and equity of the outcome, we consider that the period of time a party has allowed to elapse before making a claim inconsistent with that agreement or representation must also be a material factor. The trial Judge did, at one point, take this into account when he said he was:
satisfied that for a period of at least 16 years the husband has, by his words and by his conduct, induced the wife to believe that he did not wish to make any claim against the property in Australia and that she was entitled to use that property as she saw fit for her benefit and that of the boys.
However, we accept the wife’s submission that his Honour appears to have placed weight on the passage of those 16 years only as a shield against an argument the husband ultimately did not run.
Limitation periods are imposed in all civil disputes to ensure the resolution of claims within a reasonable time. The reasons for such limits are manifold. It is true the Act has its own limitation period and that the husband’s application was made (just) within it. Although he was therefore at liberty to pursue his claim, the husband’s long delay in bringing it, in the face of repeated prior representations, was highly relevant in the exercise of the s 79 discretion. In this context, we note it appears not to be in dispute that the first notice of the claim was given to the wife on 1 January 2011: Appeal Book 159.
The trial Judge properly described this case as “unique”. In our view, the unusual facts demanded consideration of the justice and equity of making any order, quite independent of consideration of what the husband would have received had he pursued his claim earlier and not led the wife to believe he would not pursue a claim at all. With great respect to his Honour, we are not satisfied these matters received the independent consideration they required.
For the reasons given, we find there is merit in these grounds.

Ground 2 – The s 75(2) factors

Ground 2 comprises four complaints relating to the trial Judge’s refusal to make an “adjustment” on account of s 75(2) factors. It is asserted that he:
·erred in finding there were no significant s 75(2) factors;
·erred in concluding that the parties were equally capable of supporting themselves from their earnings;
·failed to give reasons sufficient to ascertain why he decided as he did;
·should have found the s 75(2) factors substantially favoured the wife.
His Honour’s reasons for concluding there should be no s 75(2) “adjustment” appeared in the following passage, where his Honour discussed what the entitlements would be if he decided it was just and equitable to make any order:
95 The third stage would require me to consider whether there needs to be any adjustment between the parties on account of the so-called section 75(2) factors. In my view, there is no case for an adjustment under this head. The parties are capable of supporting themselves and of earning incomes of similar value. Whilst the husband currently earns a little more than the wife, the wife has a long history of successful endeavours and of earnings the equal of or greater than those currently enjoyed by the husband.
96 The wife is currently 64 years of age. The husband is currently 66. They each have some emerging health problems and some reduced capacity to meet the demands of their jobs. They are clearly each reaching the end of their working lives. If I proceed to make the orders sought, it is likely that they will each leave the relationship with limited capital and modest savings.
97 In my view, those factors largely negate on [sic] another and no further adjustment under this head would be required …

In advancing this ground, senior counsel for the wife did not suggest that the trial Judge overlooked any relevant s 75(2) factor, save for one relating to the husband’s occupancy of his partner’s home in England. Senior counsel did seek to persuade us that his Honour should have come to a different conclusion concerning the earning capacities of the parties and their state of health; however, nothing to which we were taken persuaded us that the findings his Honour reached on these topics were not open to him.
Turning then to the complaint about the trial Judge’s failure to place any weight on the husband’s occupancy of the home in England, it will be recalled that, having concluded it was impossible to quantify what interest the husband might have in that property, his Honour went on to say at [66] (emphasis added):
In the circumstances, I can only deal with that interest in broad terms by noting it and by having regard to the fact that it represents a resource of some value to the husband and that it is likely to continue to meet his accommodation needs in the short and medium term.
Senior counsel for the wife argued that admissions made in cross-examination by the husband and his partner should have led to a finding that the husband had an equitable interest in the partner’s property. However, in our view, this was an impermissible attempt to mount a backdoor challenge to otherwise unchallenged findings concerning existing property interests.
Nevertheless, we do find merit in the submission of senior counsel for the wife that, having found that the home in England was “a resource of some value to the husband”, the trial Judge failed to make any further reference to it in his reasons. As senior counsel for the wife argued, it is therefore “unascertainable as to whether His Honour gave further consideration to it in relation to a section 75(2) adjustment to the wife”.
We do not accept the submission of senior counsel for the husband that it is clear his Honour had regard to the resource constituted by the English property. The only reference his Honour made to that property was when he was making findings of fact. At no point in his discussion about s 75(2) factors did he return to this resource, which was an error because:
·s 75(2)(b) requires the court to take account of “financial resources”;
·when one party is cohabiting with another person, s 75(2)(m) requires account to be taken of financial circumstances relating to the cohabitation; and
·the wife’s Papers for the Judge raised this as an issue under s 75(2).
Given his Honour’s findings about the contributions made by the husband during his relationship with his current partner, we consider the fact the husband had accommodation available to him was a matter that should have been considered under s 75(2). To that extent, we find merit in this ground.

Ground 5 – The artwork and jewellery

This ground was expressed in the following terms:
That in determining the appropriate asset pool “to be brought to account” His Honour erred when he included:
(a) the remaining art collection at $56,000 or any sum; and
(b) the wife’s jewellery at $19,000 or any sum.
While the submissions of senior counsel for the wife appear to take issue with the values placed on the art and jewellery, they are the figures given in his client’s Papers for the Judge. The only issue therefore is whether his Honour erred in taking these assets into account.
Senior counsel for the husband raised a preliminary point about this ground, contending that the wife had not agitated this issue at trial. We do not accept this contention, since the wife’s Papers for the Judge proposed that the artwork and “some items of jewellery” should not be taken into account. Although we accept that senior counsel for the wife did not mention the topic in his closing submissions, we observe that each counsel had only 20 minutes in which to make submissions (Transcript 5 December 2012, p 85). Counsel for the husband must have apprehended the issue was still live, since he found time to address it during his closing address (Transcript 5 December 2012, p 93).
Save for his argument that the issue is de minimis, we accept the thrust of the written submissions made by senior counsel for the husband dealing with this ground. In particular, we accept it was not in dispute at trial that the wife had retained “valuable paintings and jewellery” acquired when the parties were still cohabiting. Nor was it in dispute that the wife had disposed of some paintings and had failed to produce for valuation some jewellery still in her possession.
We conclude that the trial Judge was entitled to bring to account the remaining artwork and the jewellery that had been valued.

Ground 6 – Contributions made by husband

By this ground it was asserted that:
If His Honour found that the husband:
(a)Contributed $400,000 to accounts in Australia from the sale of shares in about 2000 and that the said contribution was a contribution of the husband;
(b)That the husband contributed monies from share trading after the year 2000;
(c)That the husband contributed any more than $58,005.57 from his mother’s estate after 2000
then such findings were against the weight of the evidence and wrong in law.
The wife submitted that it was not clear what weight had been accorded to the contributions mentioned in this ground. She submitted that the source of the capital for the share trading could only have been from shares or money accumulated before 1994, which was as much a contribution by her as by the husband. It was further submitted that the evidence did not support the husband’s contentions about the extent of funds received from share trading and from his mother’s estate. In this context, it was submitted that the husband’s evidence “in other respects, was found to be unreliable”.
In reply, senior counsel for the husband submitted that his Honour had made no general credit finding against the husband, having rejected his evidence only in relation to the issue of the various representations made to the wife about her keeping all of the property. Senior counsel further submitted, in effect, that the husband had provided sufficient evidence to support all the findings made and it could not be said that the findings were against the weight of evidence.
While we accept much of the detail advanced in the husband’s argument, we consider there is merit in the wife’s complaint about the uncertainty of the trial Judge’s findings and how they impacted on his assessment of contributions. The only express mention his Honour made of the share portfolio and the inheritance was in the following two paragraphs of his reasons:
20The husband had been share trading in Australia prior to and subsequent to 1994. At one stage it appears that the value of the share port folio reached approximately $1 million. After a crash in the share market in or about the year 2000, the husband sold the shares, as he recalls, for approximately $400,000. Significantly, he deposited those funds into the parties’ accounts in Australia.
…
44What I am less certain about is what is behind the husband’s present denials. It is equally clear that, after 1994, at times the husband conducted himself in ways which were not consistent with his stated intentions or making some form of clean break between the parties. It is clear that, from time to time after 1994, he continued to volunteer significant contributions to the benefit of the wife entirely inconsistent with the notion that he was leading a separate life and accumulating his own property and securing his own future. For example, I accept that, when he wound up his share portfolio in 2000 he chose to deposit the proceeds in the parties’ account. He also did so in relation to the final winding up of his share port folio in 2003. I accept the husband also applied the proceeds of his inheritance from his mother to the benefit of the wife.
It is noteworthy that in neither of these paragraphs was his Honour addressing the issue of contributions. Paragraph 22 was simply part of his Honour’s statement of the “background” and paragraph 44 was directed to the issue relating to the husband’s representations.
When the trial Judge came to discuss contributions, he made no direct mention of the share portfolio or the inheritance (and at no point did he quantify the size of the inheritance). If his Honour did take these matters into account in the contribution assessment, it must have been in the following paragraphs:
87 It is also appropriate to note that, notwithstanding the changed circumstances after 1994 the husband did continue to make periodic financial contributions generally and other contributions in the form of improvement to the [M town] property after that time. It is also clear that he has not preserved to himself any separate acquisitions of significance over the period since 1994.
…
89 Between 1994 and the year 2000, there was continuing to be some merging of finances and some merging of efforts …
90 After the year 2000 the husband’s contributions became more isolated and less significant …
With respect to his Honour, and recognising that his reasons were given almost ex tempore, the absence of clear findings about the shares and the inheritance, and the absence of mention of them in the contribution discussion, leaves us in doubt about the path of reasoning followed in assessing contributions.
We therefore find merit in this ground.

The outcome

The appeal proceeded on the basis that we could redetermine the matter if the appeal was allowed. Having found merit in some of the grounds, there is a basis for allowing the appeal, but we will not make orders to that effect at this point as it is conceivable we could arrive at the same result as the trial Judge.
For the purposes of the redetermination, neither party seeks to adduce further evidence, however both wish to make further submissions about the outcome. We therefore propose to stand the appeal over, pending receipt of submissions.
Our orders contain a timetable for the filing of those submissions.

Finn J

Introduction

I have had the advantage of reading the draft reasons for judgment of the Chief Justice and Thackray J in relation to this appeal. I agree with their Honours that there is merit in Grounds 1, 3 and 4, and 2 and 6. I also agree with the course which their Honours propose for the future conduct of this appeal.
In determining that there is merit in Grounds 1, 3 and 4, the Chief Justice and Thackray J have relied on the decision of the High Court in Stanford v Stanford (2012) 87 ALJR 74; 293 ALR 70 (“Stanford”), and they have taken the opportunity of providing some guidance as to the implications of that decision for the exercise of the property settlement jurisdiction under s 79 of the Family Law Act 1975 (Cth) (“the Act”).
I am largely in agreement with what the Chief Justice and Thackray J have said in relation to the High Court’s decision in Stanford. However, there are some matters arising from that decision, and also from what the Chief Justice and Thackray J have said about that decision, on which I want to comment.
To the extent that the High Court decision in Stanford has wider application beyond its own somewhat unusual (although perhaps increasingly possible) facts, it is principally in relation to the operation of s 79(2). That section provides the court “shall not make an order … unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.”
Before discussing the operation of s 79(2) in light of Stanford, there is another matter which arises out of that decision which should first be addressed.

Identification of the titles that might be altered

It is clear from the reasons of French CJ, Hayne, Kiefel and Bell JJ in Stanford (at [37]), and this is recognised by the Chief Justice and Thackray J in their reasons, that the starting point in any exercise of the jurisdiction under

s 79 to alter the property interests of parties to a marriage, is the identification of the existing legal and equitable interests of each of the parties in their property.
The need to identify (and value) the parties’ property has long been recognised (see for example Pastrikos & Pastrikos (1980) FLC 90-897). But what now must be emphasised is the need for trial judges to identify clearly, and at an early stage of their reasons for judgment, which party has the legal or equitable title to a particular item of property.
This process of identification of title in s 79 proceedings is important because, as the High Court has now emphasised, that section is directed to the alteration of such title.
In this context it is also important to note the reminder given by the High Court in Stanford (at [39]) that there is no “community of property” in our law.
Given this reminder, there may well be validity in the question raised by Martin Bartfeld QC in his paper entitled ‘Stanford and Stanford – Lots of Questions – Very few Answers” (at [41]) as to whether the common approach of identifying a pool of all the property (which is owned by both parties) and dividing that pool according to a percentage assessed by reference to the matters in s 79(4) remains an appropriate approach (at least in all cases).
These reminders that the jurisdiction under s 79 is a jurisdiction to alter individual interests in title to property and that there is no community of property in this country, might also call into some question the current practices in relation to the treatment of property which is no longer in existence but which one party has had the use of (the so called “addbacks”), and perhaps also of the unsecured liabilities of one or both parties. It may well be that these matters should more strictly be considered in making findings under s 79(4)(e) (i.e. s 75(2)), or in an extreme case, when considering the question under s 79(2) as to whether it is just and equitable to make any order under s 79. But these questions do not arise in the present case, and are thus for another day.

The operation of s 79(2)

I turn then to issues relating s 79(2).
It is fair to say that prior to the decision in Stanford, and particularly since the decision in Hickey & Hickey (2003) FLC 93-143, the approach in exercising the jurisdiction under s 79 has generally been to consider whether the order proposed to be made, after consideration of the seven groups of matters specified in s 79(4), is just and equitable.
However, now the High Court has emphasised (particularly at [35]) that the question is whether it is just and equitable to make any order at all under s 79. Furthermore, it has said at [34] and repeated at [40] that the matters to be considered in answering the question under s 79(2) are not to be “conflated” with the matters contained in s 79(4). The matters which can be taken into account in determining whether it is just and equitable to make an order do not admit of “exhaustive definition” (Stanford at [36]). But there must be a “principled reason for interfering with the existing legal and equitable interests of the parties to the marriage” (Stanford at [41]).
However, it is also clear from Stanford (at [42]) that in many cases the just and equitable requirement will be readily satisfied because once the parties are no longer living together, there will no longer be the common use of the property, and the express or implied assumptions previously underpinning the parties’ property arrangements will have been brought to an end. This will be the situation, as the Chief Justice and Thackray J have observed, in the vast majority of cases, and thus, again as their Honours have observed, the pivotal role of s 79(2) as identified in Stanford is unlikely to have any impact in most cases.
Nevertheless, having regard to the decision in Stanford the court must be seen to address at some point in a decision under s 79, the question of whether it is just and equitable to alter the existing property interests in that particular case. That question will be easily answered where both parties are seeking orders which alter their respective property interests. It will be more difficult to answer in cases such as the present, where one party seeks that no order be made.

When should the s 79(2) question be asked and how can it be answered?

The point in the decision making process at which the question of whether it is just and equitable to alter property interests of either party is to be addressed must depend on the circumstances of each particular case. There can be no hard and fast rule.
However, as a general rule, it will, in my view, be useful to identify at a very early point in a judgment what are the existing property interests of the parties and what are the orders that each party is seeking in relation to those interests.
As already suggested, where both parties are seeking alterations of interests in one or other’s property, the question as to whether or not it is just and equitable to make any order, will be more easily answered.
Findings of fact concerning the parties’ financial history (i.e. their contributions) and their present circumstances and future prospects made in the context of s 79(4) will also assist, but such findings cannot (according to Stanford) be conclusive in determining whether or not it is just and equitable to make an order altering any particular property interest.
After having determined that it is just and equitable to make an order altering interests, the manner or extent of any such alteration of interests will then be determined, as the Chief Justice and Thackray J have indicated, by a consideration of the matters in s 79(4).
For my part, and with respect to those who may take a contrary view, I do not consider that much assistance will be provided to the ordinary person, who has to understand the operation of s 79, by the introduction of concepts such as “discretionary characteristics” and/or “evaluative characteristics” in relation to the factors in s 79(4).
I am concerned that the use of the expression “discretionary” may be misleading or confusing because the entire exercise of the jurisdiction under s 79 is discretionary, save, of course, when initially identifying the existing legal and equitable interests of the parties. So far as the term “evaluative” or “evaluation” is concerned, it can mean no more, in my view, than the calculation of what alteration is required to one party’s property interest or interests, to take account of matters such as the contributions or the present or future position of the other party.

I certify that the preceding one hundred and seventy-two (172) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 8 August 2013.

Associate:

Date: 8 August 2013

[M town] property	$2,000,000
Husband’s vehicle	$4,000
Wife’s vehicle	$14,000
Wife’s household furniture and effects	$20,000
Remaining art collection	$56,000
Investment shares and banking	$162,000
Wife’s jewellery	$19,000
TOTAL	$2,275,000
Less liability secured against the [M town] property	$1,206,000
NET PROPERTY POOL	$1,069,000