C and C
[2003] FMCAfam 131
•17 April 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| C & C | [2003] FMCAfam 131 |
| FAMILY LAW – Property – informal property division in 1993 – wife applies for orders under section 79 in 2001 – husband raises estoppel issues – whether such issues can be taken into account under section 79(2) without regard to the matters in section 79(4) or override those matters – whether the husband’s responsibilities to support a child of his second marriage should be taken into account under section 75(2). Schokker v Edwards (1986) FLC 91-737 |
| Applicant: | A C |
| Respondent: | B C |
| File No: | SYM27 of 2001 |
| Delivered on: | 17 April 2003 |
| Delivered at: | Canberra |
| Hearing dates: | 2, 3 & 5 September 2002 |
| Judgment of: | Brewster FM |
REPRESENTATION
| Counsel for the Applicant: | Ms Bridger |
| Solicitors for the Applicant: | Kells the Lawyers |
| Counsel for the Respondent: | Mr David |
| Solicitors for the Respondent: | Hansons |
ORDERS
That the husband within 60 days pay to the wife the sum of $27,000.
That if the husband does not pay this amount within that time the matter may be re-listed for the purpose of making further orders to give effect to Order 1.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT WOLLONGONG |
SYM 27 of 2001
| A C |
Applicant
And
| B C |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter involved issues as to contact and an application by the wife for orders under section 79.
The case has some unusual features. The parties separated in 1993 and divided their property between them. The husband assumed that this was a final distribution and it was not until 2001 that the wife applied for orders under section 79.
Background
The husband is 45 years of age and the wife 43. They were married on 13 August 1977. There is one child of the marriage, D who is aged 13. The parties separated about the middle of 1993. There is some dispute as to the precise date of the separation which it is unnecessary to resolve. The separation was precipitated by the fact that the wife had commenced a relationship with her present partner J P.
It is convenient at this point to address issues of credit. My impression of the husband was that in general he tried to be truthful. However he was not a reliable historian. This is understandable as his evidence often involved events that occurred some nine years or so prior to the hearing. His evidence was also influenced by a natural tendency on his part to portray events in the most favourable light. He was understandably very upset that long after the parties had divided property between them, and he had made a new life for himself in the belief that a financial settlement had been reached with the wife, that the wife should have the temerity to, Oliver Twist like, ask for more.
The wife was a more reliable historian but again her version of past events was affected by her viewing of those events through the dark glasses of litigation and by her poor opinion of her husband.
As a result it was difficult to separate truth from reconstruction and I do not unequivocally accept the evidence of either party. Where it is necessary to make a finding I will do so. In relation to much of the history it is not necessary to make a finding. I will recount this history simply to provide a background to the dispute.
At the time of separation the parties owned a property at Mary Street, Shellharbour. They also owned a block of vacant land at Russell Island in Queensland bought for $3,000 and had a motor vehicle, a boat and a trailer and other chattels. Each had superannuation. The husband's was worth in the order of $17,000 and the wife's in the order of $6,000. Each had insurance policies. Their value is not known.
After they separated the husband sought legal advice. The content of that advice is not in evidence. In any event the solicitor he consulted wrote to the wife with a proposal in relation to property and enclosed consent orders for her to sign. The letter written to the wife suggested that she obtain independent legal advice.
In the event the wife neither signed the orders nor sought legal advice.
Later, at the husband's suggestion, the parties attended upon a Chamber Magistrate. The parties’ versions of what occurred at this meeting differ. The wife maintains that the attendance was in relation to children's issues whereas the husband says that it concerned property issues. Even on the husband's version however no substantive advice was given as to property matters and the Chamber Magistrate only explained the procedure if the parties were unable to agree.
The parties’ evidence differs as to what happened next. The husband said that he advised the wife that, from what he had been told, any property litigation would be a lengthy and costly process to which the wife responded with words to the effect "there must be an easier way." He said that he then suggested a division of chattels on the basis that he take the outside contents and she have the chattels inside the home. He says she agreed to this. He said that they agreed to keep their respective insurance policies, which he said were of comparable value, and the motor vehicles in their respective possession. He says that there was discussion about Russell Island. He said that he said to the wife words to the effect, "We still have that vacant land in Queensland. I am not very interested in it. You are the one who wanted to buy it, you can keep it." He said the wife agreed to this. It should be noted subsequently the Russell Island property was sold by the local council by reason of non payment of rates.
The husband said that they discussed the expenses in relation to D who was to live with the wife. He said that the wife suggested that an appropriate arrangement would be that each pay D's expenses when they are with that person and that ultimately something would be worked out about the sharing of expenses. He says that later it was agreed that he should pay for D's schooling in the form of school fees, uniforms etc and pay for his private health insurance and medical and dental bills.
The husband says that they agreed that the matrimonial home should be sold and the proceeds divided equally.
The wife maintains that there was no real discussion about these matters at the time. She said that the husband suggested the home be sold and the proceeds divided equally. She said she felt guilty about the way the marriage had ended and she said that her family had taken a very judgmental attitude in relation to her conduct. She said that it was basically for this reason that she agreed to the husband’s proposal. She says that there was no real discussion about chattels but that the parties ended up with their motor vehicles and she took some of the contents of the home. The wife maintains that the husband kept a vehicle of a value much greater than that of the vehicle she retained, albeit that it was subject to a loan of about $5,000 which the husband took over. The husband says that they agreed that as there was money owing on his vehicle a fair division would be him keeping his vehicle and the wife hers. I suspect that the wife may have lost out on this arrangement but as there are no valuations it is not possible to make a finding as to this. I infer that any discrepancy would not have been large as the husband’s vehicle was sold in 2001 for $2,000.
She says there was no discussion about Russell Island. I accept this.
In the event the matrimonial home was sold and after expenses cleared just under $180,000. Each party received just under $90,000 from this settlement.
The parties agreed that D should live with the wife and that the husband should have contact each alternate weekend from Friday afternoon to Monday morning and from each Wednesday after school to the commencement of school on Thursday. This effectively amounted to a 9/5 split in favour of the wife. It was agreed there would be no child support sought but expenses would be shared as indicated by the husband.
In December 1993 the husband purchased a property at Oaks Flat for $127,000. He borrowed $80,000 and the balance of $47,000 came from his share of the proceeds of the former matrimonial home. There would have been stamp duty and other expenses on the purchase which the evidence indicates would have been in the order of $4,000. This would have meant that about $39,000 remained. He purchased a car for $5,000 and purchased furniture. The amount spent on furniture is not known but I infer that a significant balance would have remained after this expenditure. That balance was spent in living expenses.
In 1995 the husband formed a relationship with P S. He sold his Oaks Flat property and brought a property at Albion Park. The sale proceeds of the Oak Flat property went towards the purchase of the Albion Park property or on improvements. The Albion Park property was purchased jointly with Ms S.
In 1996 the relationship with Ms S broke down and the Albion Park property was sold. The proceeds of sale amounted to approximately $120,000 and the husband and Ms S divided this equally.
In 1997 the husband formed a relationship with his present partner,
V J. Ms J had a daughter aged about 10 (her precise age is not in evidence) and the husband and Ms J have a child T who is nearly five.
In January 1998 the husband and Ms J purchased a property at Shoalhaven Heads for $117,000. They borrowed $93,600 and the balance of approximately $23,000 was contributed by the husband. Again there would have been additional expenses, probably in the order of $3,000. The husband applied most of the balance of the $60,000 he had received from the sale of the Albion Park property to renovations of the Shoalhaven Head property.
At the end of 2000 the husband, who had been hitherto employed by Freight Corporation, was made redundant. He received about $79,000 by way of redundancy payments and about $22,000 from long service leave. He spent about $29,000 of these monies to buy a new motor vehicle and placed $30,000 in four separate accounts. One of these was in the joint names of himself and Ms J, one in the name of Ms J’s daughter, one in the name of T and one in the name of D. Each of these were in the sum of $10,000. The balance of about $30,000 was used for living expenses, legal costs, some home improvements and acquiring things like new televisions, videos and buying a trail bike for D.
All that now remains of the four bank accounts is the $10,000 in D's account.
After he was made redundant the husband was unemployed for about seven months. He then had employment for some two months before leaving to set up his own handyman business under the name of “T P"
In May 1994 the wife and Mr P purchased a home at Mt Warrigal for $153,000. The parties borrowed $147,000 by way of mortgage to assist with the purchase of this property and the balance was contributed by the wife from her share of the proceeds of the former matrimonial home. In total the wife contributed some $12,500 towards this property. The balance of the $90,000 from the sale of the former matrimonial home has been spent. All that remains to show of this money is two jet skis now worth a total of about $6,000. She still owns the Mt Warrigal property.
About the middle of 2001 the parties got into a dispute in relation to D's schooling. This led to wife seeking legal advice. This advice is not in evidence but it is reasonable to infer that it included advice as to property. It should be noted at this stage the parties had not been divorced and so there was no impediment to the wife filing an application for property settlement.
The approach to be taken
I propose to approach this matter firstly using the conventional three stage process. The first stage of this involves making a finding as to the parties’ assets and liabilities. The second stage involves a consideration of contributions of various types made both during and after the parties relationship. The third stage involves a consideration of such paragraphs in section 75(2) of the Family Law Act as are relevant. For reasons that will become apparent I will exclude paragraph (o) from this part of the process. I will then, as best as possible considering the complexity of the case, decide an appropriate division on this basis. I will refer to this approach in this judgment as “the conventional approach.”
I then propose to consider what the likely division would have been had this case been heard in 1993 or thereabouts. I will refer to this in this judgment as “the retrospective approach.” This will be a backdrop to the third stage of my judgment. This third stage involves a consideration of whether or not an order I might propose to make using the conventional approach is just and equitable for the purposes of section 79(2) of the Act.
The property pool
The parties have agreed on the values of their respective items of property. The husband's property at Shoalhaven Heads is valued at $190,000 and is subject to a mortgage of $85,000 leaving an equity of $105,000. It was not part of the wife's case that the husband had other than a 50% legal and beneficial interest in this property. His interest in the property therefore is $52,500.
The husband has a car valued at $19,000 and a boat worth $1,000.
As previously indicated there remains the sum of $10,000 in an account in D's name. The history of the accounts in the names of the other children indicate that the husband did not regard these monies as held in trust for those children but regarded himself as free to use these accounts as he saw fit. I am satisfied therefore that the presumption of advancement has been rebutted and that the husband has the beneficial ownership of this account. I propose to include it in the pool.
The wife's Warrigal home is valued at $210,000 and is subject to a mortgage of $124,000. This leaves an equity of $86,000. Again it was not alleged that her beneficial interest differed from her legal interest and the value of her interest in this property is therefore $43,000.
The wife has a half interest in two motor vehicles. The total value of this interest if $3,250. She has the jet skis previously referred to.
There is no valuation of other chattels and I propose to ignore these.
The husband says that he owes a total of $11,000 to family members being $5,000 to members of his family and $6,000 to members of Ms J’s family.
I propose to disregard these monies for the following reasons:
a)I am not convinced that they will ever be required to be repaid. In the case of the $5,000 advanced by members of his family this advance was made prior to the husband's redundancy but, despite him receiving in the order of $100,000 from this source, the monies were never repaid;
b)The monies advanced by Ms J family came from her parents and this in turn was lent by the parties to another member of her family. The husband was not optimistic of the prospect of obtaining repayment from this person but gave no details as to why this is so. In my opinion if the husband wishes me to draw the conclusion that these monies are irrecoverable it is incumbent on him to adduce evidence to enable that finding to be made;
c)The husband describes a nil value to his business. However it is manifest it must have a value. It owns two mowers one of which is a ride on mower as well as other equipment. The reason he described a nil value for the business was apparently because he maintains that the value of the equipment owned by the business will be cancelled out by the monies which he says the business owes him. He was unable to appreciate the circuity involved in this process of reasoning.
The husband has a bank debt of $900. The wife and Mr P have a personal loan of $10,000 and her half share of this debt is $5,000.
The husband has superannuation which at the date of the trial was valued at $167,662. At the date of separation the withdrawal value of this entitlement was about $17,000.
The wife has superannuation worth $19,000. At the date of separation the value of this policy was about $6,000.
Amendments to the Family Law Act that came into force at the end of 2002 now require that superannuation be treated as property for the purposes of applications under section 79. I will do this but will adopt an asset by asset approach and exclude the parties’ superannuation from the pool to be divided. There are a number of reasons for this. First the bulk of the parties’ superannuation entitlements (in the case of the husband the vast bulk) was acquired after separation. Secondly, no matter what the Act may say, superannuation is not in reality property in the way that real estate, chattels and money are. It cannot be accessed until the party concerned has attained the age of 55 and left the workforce. Thirdly this case was heard prior to the amendments to the Act coming into force. Had this judgment been delivered in a timely fashion the parties’ superannuation entitlements would have been treated as a financial resource and not as property. The husband who has most of the superannuation understandably feels aggrieved that the wife should be able to seek some of his property after such a delay on her part. He would feel even more aggrieved if another delay, this time by me, further prejudiced him.
The wife has long service leave and recreation leave entitlements valued at $17,178. I would normally discount the significance of this financial resource. The purpose of long service leave and recreation leave is to enable a party to take paid leave from his or her employment. It is not intended to be accessed in a lump sum on retirement although this can be done. There is no evidence that the wife is proposing to do other than take paid leave. However in this case the husband has no long service leave or recreation leave. He took some long service leave in 2000 and worked on the Shoalhaven Heads property, probably increasing its value. He received monies in relation to the remainder of his leave in the lump sum when he ceased his employment with Freight Corporation. Whilst I do not propose to "add back” all the monies that he received on termination of his employment to the pool, part of the pool in the form of the husband’s car and the $10,000 in D’s name is referable to those monies. In fairness therefore I propose to treat the wife's long service and recreation leave entitlements as a financial resource.
The husband maintains an amount of about $77,500 should be included in the pool as notional property in the possession of or notionally in the possession of the wife. The basis of this contention is that of the $90,000 received by the wife from the proceeds of the sale of the former matrimonial home she applied only $12,500 to the purchase of the Mt Warrigal property and the rest was spent by her and, in the main, it is not referable to any existing property.
Such an approach was taken by the Full Court of the Family Court in the case of Townsend (1995) FLC 92-569. However that was a different type of case. In that the husband unilaterally appropriated to himself some $128,000 by selling a taxi plate owned at the date of separation and spending the proceeds. No equivalent amount was taken by the wife in that case. Moreover that case was heard when the other assets of the parties which existed at the date of separation were still in place.
In this case I believe that simply adding back some $77,500 as notional property would be overly simplistic. A problem would arise as to what should be done with that part of the husband's share of the proceeds of sale of the former matrimonial home that he did not apply to the purchase of real estate. A problem would also arise as to how to take account of the fact that the $51,000 that he applied from his share of the proceeds of the sale of the former matrimonial home is now represented by an equity in the Shoalhaven Heads home of $52,500 whereas the $12,500 invested by the wife in real estate is now represented by an equity of $43,000 in the Mt Warrigal home. The question would also arise as how to treat the husband's redundancy payment. The case of Burke (1993) FLC 92-356 would indicate that part of this payment is referable to the period when the parties lived together and to be consistent a part of that payment would also have to be added to the pool as notional property. The husband joined the Freightcorp superannuation scheme in 1975 and left in 2000. The parties lived together for sixteen years during this period and so about 64% of the payment is referable to the period of cohabitation.
In the circumstances I believe it is inappropriate to add back the $77,500 as sought by the husband. It is appropriate to have regard to the whole history of this matter including the fact that the husband has an interest in real estated valued at $52,500 derived essentially from the monies he received from the sale of the former matrimonial home whilst the wife has an interest of some $43,000 in real estate and $6,000 in chattels derived from the same source.
The pool therefore comprises the following
(a) The husband’s interest in the Shoalhaven Heads property $52,500
(b) The wife’s interest in the Warrigal property 43,000
(c) The husband’s car and boat 20,000
(d) The wife’s cars and jet skis 9,250
(d) The husband’s savings 10,000
Total 134,750
Less the parties’ debts 5,900
Net total 128,850
Contributions
Apart from one matter, I can see no reason to regard the contributions by one party during their relationship as of greater significance than that of the other. This one matter concerns work performed by the husband in renovating the former matrimonial home. In a situation where there are children of the relationship I would not normally give any added weight to renovation work carried out by a husband. The approach I usually take is that whilst he was occupying himself renovating the home the wife was engaged in caring for the children. In those circumstances there is no basis for giving one contribution more weight than the other. In this case however the work was carried out in about 1982 prior to D's birth. In these circumstances I do not equate the homemaking role performed by the wife at this stage with the role played by the husband in renovating the home and I do propose to have regard to this contribution. There is a dispute as to the extent of that contribution and in this respect I prefer the evidence of the husband to the wife. I do not propose to outline the work done by the husband. It is contained in paragraph 16 of his affidavit.
Notwithstanding the fact that I propose to have regard to the work done by the husband I recognise that it is more than twenty years since this work was carried out and the significance to be attributed to it has been eroded to a substantial degree.
Between the date of separation and the completion of the sale of the home the husband paid the mortgage and the wife occupied the property. He also worked on the property preparing it for sale.
Since separation the wife has been the primary parent. Until she unilaterally altered contact arrangements in early 2002 she cared for D nine nights a fortnight and the husband five. Since 2002 the arrangement has been a more conventional two nights a fortnight plus holiday contact.
It is common ground that the husband has never paid child support. He paid school fees while D was in primary school and maintained private medical insurance. He bought clothes and other items used by D when he was at the husband's home. He says he also purchased school uniforms and provided uniforms for D's cubs and scouts and paid cub and scout expenses. The wife disagrees with these latter assertions to a degree. She says that whilst her husband provided some uniforms and paid some expenses that she provided most of the uniforms required by D and paid most of his cub and scout expenses. I accept the evidence of the wife as to the cub and scout expenses but I think her evidence in relation to uniforms was exaggerated. Nevertheless I do not accept that the husband provided all of the uniforms required but did provide most of them.
Overall, notwithstanding the significant time that D spent with the husband, and the amounts paid by him towards D’s support I accept that the greater part of the cost of maintaining D had fallen on the wife. I have regard also to the fact that the greater share of the work involved in caring for D would have fallen on the wife.
Assessing contributions to the acquisition, conservation or improvement of the property in the pool is made difficult by the fact that it was all acquired post separation. However most of it is essentially derived from property acquired during cohabitation and in my opinion, whilst I have set out the financial history post separation it is nor appropriate to attempt a detailed accounting analysis based on this history. The bottom line is that a part of the pool of $52,500 on the husband’s side is derived from the $90,000 he took from the relationship and an amount of $49,250 is in the same category on the wife’s side. In this respect post separation contributions slightly favour the husband.
Part of the pool in the form of the savings and the husband’s car comes from the redundancy monies paid post separation. However as I have mentioned a significant part of those monies would have been referable to the time when the parties lived together. I therefore do not ascribe any particular significance to this.
I have regard to the fact that the wife’s debt of $5,000 was incurred after separation and that the effect of including this when fixing the pool is to reduce the assets on her side of the ledger which in turn has the effect of increasing the monies to be paid to her. The husband’s debt is in the same category but it is much less.
Overall I regard the wife’s post separation contributions as slightly outweighing the pre separation and post separation contributions of the husband. I make a contribution based division of 52.5%/47.5% in favour of the wife.
Section 75(2) factors
The husband is self employed and continuing to run his handyman business. He disclosed in his financial statement an income of $300 a week from this source. Whilst I suspect that if he tried the husband might well be able to obtain more remunerative employment in the end I am not prepared to make a finding to this effect. I accept, albeit with serious reservations, that this represents the limit of his earning capacity.
As previously indicated the husband has re-partnered. His partner Ms J earns $250 a week. She has a daughter of her own but the husband has no responsibility for the support of this child. The relevance of Ms J is that her modest income gets injected into the family finances and there are economies of scale involved in living with a partner. However it is likely that her income is barely sufficient to support herself so it becomes a neutral factor in the case.
The husband and Ms J have a child of their own. The question arises as to whether or not I should have regard to the husband’s responsibility to support this child.
A recent decision of the Full Court of the Family Court of Zelandonii v White (unreported 5 March 2003) would indicate that normally such responsibility should be ignored. In that case the Court said as follows:
In property proceedings the relative financial circumstances of the parties are frequently relevant considerations. The fact that one of the parties will carry the burden of the care of the children of the marriage to that party's economic detriment will frequently be a most significant factor to be taken into account.
As factors extraneous to the marriage begin to impact upon earning capacity, or begin to make other demands on available income in capital, it is difficult to see how it can be said to be either appropriate or just and equitable in most cases to increase the entitlement of one party to the marriage to share in the assets which otherwise belong to the other by reason of these factors. It is difficult to see how it could be said to be just and equitable that Mr White's share of the pool of assets jointly acquired by the parties should be reduced by reason of the fact that after the relationship ended Ms Zelandonii took on extra commitments by bearing the two children born into her next marriage.
I do not propose to follow this guideline in the present case. It is one thing for Ms Zelandonii to decide to have two children after separation and prior to any property settlement and then claim an additional share of property based on that decision. It is another thing for the husband in this case, having made a new life for himself in the belief that the financial aspects of his first marriage had been resolved, to point to the reality of the position he is now in. I have regard to the husband’s responsibility to support his child.
The wife has a financial resource in the form of her long service and recreational leave entitlements.
The wife is employed as a practice manager/receptionist with a local medical practitioner. Her financial statement discloses an income of some $800 a week from this source. Her partner Mr P earns $600 a week. To some extent he is a financial resource for the wife but in the context of this case his impact in this respect is minimal.
The wife has the continued support of D. As has been indicated the husband pays no child support. The wife could if she chose seek an assessment from the Child Support Agency but, based on the figures for income contained in their respective financial statements the child support the husband would be assessed to pay would be minimal. It is likely that the financial burden of continuing to care for D will fall almost entirely on the shoulders of the wife.
The husband has a substantial entitlement to superannuation. The wife’s superannuation entitlements are quite modest. However she is comparatively young and with employer contributions should be able to increase her entitlements. Nevertheless those entitlements are unlikely to ever come close to those of the husband.
Making an adjustment under section 75(2) in this case essentially involves on the one hand taking account of the wife’s future responsibilities in relation to D and the husband’s superior superannuation entitlements and offsetting against these the husband’s inferior income earning capacity and responsibilities to support his second child.
In the circumstances I propose to make an adjustment of 10% by reason of section 75(2) factors.
Tentative conclusion
The overall result of the above is a division 62.5% to the wife and 37.5% to the husband. 62.5% of $128,850 is $80,531. She has assets to a value of $47,250 which would result in a payment to her of $33,281 which I would round off to $33,000.
The appropriate 1993 division
This is made difficult by the fact that there is no valuation of chattels or the parties’ insurance policies. Insofar as the latter is concerned I infer that they had little value. They no longer exist and no issue was made as to them. Whether or not adding chattels to the pool would have made any significant difference is a matter of speculation. Given the absence of evidence I cannot factor these into the equation.
The relevant facts as at 1993 were:
(a)There was a pool of $180,000.
(b)Each party was working although in the case of the wife this was for only three days a week.
(c)While the care of D was to be shared the greater portion fell on and would continue to fall on the wife. Eogham was only aged 4 at the time.
(d)There was an imbalance in relation to superannuation although the amounts involved were not large.
(e)The husband’s contributions as per paragraph 49 would not have been as much lost in the mists of time as they now are.
I think it likely that a division in the order of 65%/35% to 70%/30% in favour of the wife would have been likely. This means that the wife would have received an additional amount over and above the 50% she received of between $27,000 and $36,000.
Discussion
It can be seen that the result of applying the conventional approach produces a result within the range derived from the retrospective approach, albeit more towards the top of that range than the bottom. Is this result one that is just and equitable having regard to all the factors in this case?
The wife might argue that it is too low. She might complain that she is getting an amount in dollars with a present day purchasing power about equivalent to what she should have received in 1993 with 1993 purchasing power. In other words she has not been compensated for inflation, let alone some component in the way of interest to compensate for the delay.
I do not propose to increase the $33,000 on this basis. One reason is that the wife cannot complain of the delay which she has caused. In addition the husband has not profited from the use of his additional monies. Other reasons will become apparent.
The husband might complain that his share of the monies received in 1993 has reduced. He started with $90,000 from the relationship but now only $52,500 remains. He might point out that the wife cannot complain of poor stewardship on his part as she has done no better. He might complain that she now, in effect, gets a second bite of the cherry and retrieves in full the additional money she should have got with her first bite.
The husband might also raise what might conveniently, if not altogether accurately, be called an estoppel issue. In 1993 the wife acquiesced in an equal division of the proceeds of the sale of the matrimonial home. The husband did not invest the whole of his share in real estate. He simply spent some of the money. He would not, it might be assumed, have spent so much had he not thought that all financial issues between him and the wife were finalised. He would not have had most of the spare money to spend had the wife demanded and received an appropriate share of the sale proceeds. In 1993 there were liquid funds to satisfy her claim. She could have been given an extra amount of between $27,000 and $36,000 without causing undue hardship to the husband. Now there are no such funds. The husband will either have to go into debt or perhaps be forced to sell his house if he has to pay the wife any money. In making the reasonable assumption that he had money to spend and then spending he has acted to his detriment. In making this assumption he was relying on the actions of the wife.
There is authority for applying estoppel principles in section 79 cases. In Schokker v Edwards (1986) FLC 91-723 the wife had on two occasions, once in an affidavit in maintenance proceedings and again in a letter written by her solicitors to the husband’s bank stated that she would not seek any settlement beyond that contained in an informal agreement between the parties. The husband acted on this basis in deciding to leave the Public Service, take a lump sum by way of superannuation rather than a pension and establish a business. The Full Court by majority (Gun and Elliot JJ) held that in these circumstances the wife should not be permitted to resile from her assurances. The majority stated that the court had a wide discretion to make orders “as it sees fit” under section 79(1) beyond the criteria set out in section 79(4) provided it was “just and equitable” to do so under section 79(2). They further indicated that a consideration of what is just and equitable is not confined to a consideration of the matters contained in sections 79(4) and 75(2).
Schokker v Edwards however has not been favourably received by subsequent Full Courts. In McIntyre and Malezer (1987) FLC 91-816 a Full Court comprising Evatt CJ, Lindenmeyer and Nygh JJ cast doubt on the correctness of that decision. While declining to explicitly disapprove of the reasoning of the majority the court said that the dissenting view of Strauss J to the effect that the only bar or estoppel to an application under section 79 is an approved section 87 agreement “commends itself as a statement of principle.” The court went on to say that “while the considerations which influenced Gun and Elliot JJ would have been a relevant consideration under sec. 75(2)(o), in our view it would be dangerous to extend the majority view in Schokker v Edwards beyond the very special circumstances of that case.” In Neale and Neale (1991) FLC 92-242 a Full Court comprising Nicholson CJ, Strauss and Nygh JJ went further and explicitly stated that the reasoning of the majority in Schokkerv Edwards as set out in the last two sentences of paragraph 76 above was wrong. At pages 78,646 to 76,647 the Court said as follows:
The proposition that the Court has a general discretion to make or not to make orders under section 79(1) as a preliminary question to the considerations set out in sections 79(4) and 75(2) was rejected by the Full Court as early as Ferguson and Ferguson (1978) FLC 90-500…………… It should not, at this late stage, be revived. ……….This leaves open the question to what extent, if any, the considerations set out in sections 79(4) and 75(2) can be supplemented or varied by general considerations of what is just and is just and equitable under section 79(2), insofar as they are not covered by section 75(2)(o), but the Court must first take account of the specific factors before it can proceed to any wider question.
It would appear that at by this stage the question of whether or not an earlier agreement, coupled with circumstances which under the general law might raise an estoppel, could prevent a party from making a successful application under section 79 was settled. Notwithstanding this in 1996 in a case of Woodcock v Woodcock Frederico J stated a case to the Full Court asking that question. It appears that an argument may have been raised before His Honour to the effect that previous decisions may have been decided per incuriam in that no consideration appeared to have been given to the seminal High Court authority in the area of equitable estoppel of Waltons Stores (Interstate) Ltd v Maher (1987-1988) 164 CLR 387. The Full Court in its decision reported at (1997) FLC 92-739 reaffirmed that the doctrine of estoppel as such had no role in Section 79 applications. However the Court stated that circumstances which in other areas of the law might raise an estoppel may be relevant to determine, inter alia,
(a)Whether it is appropriate to make an order for the alteration of property interests pursuant to section 79(1), or
(b)Whether it is just and equitable to make an order for alteration of property interests within the meaning of section 79(2).
At first glance the Court might be thought to have departed from Neale insofar as its comments on section 79(1) are concerned and to have answered in the affirmative the question left open in Neale of whether the considerations set out in sections 79(4) and 75(2) can be supplemented or varied by general considerations of what is just and equitable under section 79(2). However, despite the exhaustive recounting of a great many decided cases, Neale was not referred to by the Court and to this extent I regard its dicta as being per incuriam.
I regard myself as bound by Neale insofar as its comments on section 79(1) are concerned. I regard the question of whether section 79(2) can operate outside of the considerations set out in sections 79(4) and 75(2) as unanswered. From my perspective it is regrettable that the Full Court in Woodcock was not asked to answer the question left open in Neale.
If the answer is in the affirmative I might refuse the wife’s application. If I were to have regard to matters outside sections 79(4) and 75(2) and were I to treat such matters as being capable of overriding sections 79(4) and 75(2) considerations I might not regard an order that the husband pay any further money to the wife as being just and equitable. I need not dilate on my reasons for this. They are based on the matters referred to in paragraph 77. The most cogent factors in this case which would suggest that the wife should now receive an additional share of the parties’ property are the fact that the superannuation entitlements of the parties are so disparate and the fact that the wife will in future have the financial burden of providing for D. But if I look at these two factors independently of the matters in sections 79(4) and 75(2) and the jurisprudence that has developed as to the way such matters should be applied they are of no particular moment. The extent of the discrepancy in superannuation entitlements is a result of post separation factors. True it is that the wife will have to provide for D without child support. But this is because the husband has only a modest income and the legislature in the Child Support (Assessment) Act has indicated that normally it is the income of the parents that should determine what level of support each should provide
If however the decision as to whether or not an order is just and equitable is to be made
(a)Having regard only to the matters set out in sections 79(4) and 75(2), or
(b)On the basis that even if one can take account of extraneous factors such factors cannot be treated as having a significance that can override sections 79(4) and 75(2) factors
Then the result, in my opinion, is different. The facts referred to in paragraph 75 can be taken into account under paragraph (o) of section 75. This paragraph allows the court to take into account any fact or circumstance that the justice of the case requires. However this paragraph is but one of many that must be considered and there is no basis for giving it any primacy. There are other reasons for regarding an order that the wife receive an additional share of the parties’ property as just and equitable. As I have said the most cogent of these are the matters referred to in the previous paragraph. Take but one of them, the issue of child support. This is referred to twice in those sections. It is, and has always been regarded as, an important factor in dividing property of the parties.
What then is the answer to the question left open in Neale. I have concluded that it is that the issue of whether or not an order under section 79 is just and equitable must be determined by the criteria set out in sections 79(4) and 75(2) and that there is no independent operation for section 79(2). There are two reasons for that conclusion. These are
(a)If the issue were at large then decisions as to whether or not an order was just and equitable would to a large extent be made with no guidelines. Such a result would suffer from the “Chancellor’s foot” type of uncertainty and subjectivity.
(b)It seems to me that a reading of section 79 itself in the light of the Full Court’s comments in Neale as to the operation of section 79(1) lends itself to this conclusion. Section 79(1) states that the court may make such order as it considers appropriate altering the interests of the parties in property. Section 79(2) states that 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 do so. Section 79(4) states that “in considering what order (if any) should be made under this section in proceedings with respect to any property of the parties …….. the court shall take into account (the matters contained in the six paragraphs of the subsection and the twenty one paragraphs of section 75(2)). Neale establishes that the decision under subsection (1) as to whether an order is appropriate is governed by a consideration of the matters set out in subsection (4). I can see no sufficient basis for applying a different approach to subsection (2). True it is that subsection (2) refers to “all the circumstances” and subsection (1) does not include this phrase but “all the circumstances” can easily be read as “all the circumstances that emerge from a consideration of the matters in subsection (4).”
There is another aspect to be noted. It is true that Neale leaves open the possibility of subsection (2) having an operation which is independent of subsection (4). This would give a greater power to a court to apply estoppel type considerations to the question of whether or not the making of an order is just and equitable than if only the matters in sections 79(4) and 75(2) were to be taken into account. But in no case of which I am aware apart from Schokker v Edwards has a court refused to make an order by reason of such considerations and in doing so in that case the majority proceeded on an erroneous basis.
I deduce that if subsection (2) is to have any independent operation it must be a limited operation. In no case of which I am aware has any independent operation been treated as overriding the matters in sections 79(4)and 75(2). Indeed the statement of the Full Court in Neale that “the Court must first take account of the specific factors (ie the sections 79(4) and 75(2) factors) before it can proceed to any wider question” appears to confirm this. To refuse to make an order in this case by reason of any independent operation of section 79(2) would be to elevate general considerations of what is just and equitable above the considerations emerging from the application of sections 79(4) and 75(2). In no case of which I am aware has this ever occurred.
Conclusion
I therefore will not decline to make an order by reason of any estoppel type considerations.
When I compare the result of the application of the conventional analysis with the range of results from the retrospective analysis it can be seen that the first result is within the range produced by that analysis. Absent the application of paragraph (o) of section 75(2)
I would make an order that the husband pay this amount.
However in my opinion the justice of the case justifies having regard to the matters set out in paragraphs 76 and 77. I propose to apply section 75(2)(o) to produce a result that (absent any general and overriding considerations of justice and equity) is, in my opinion, just and equitable in all the circumstances having regard to the matters set out in section 79(4) and the balance of section 75(2).
An award to the wife of $33,000 is to give to her an amount towards the top of the range derived from the retrospective analysis. In my opinion the application of section 75(2)(o) to the case would justify reducing the award to one at the bottom of that range, namely $27,000. To do so would result in an order that is, I believe, in all the circumstances, just and equitable.
I emphasise that in making such an order I am not applying the retrospective approach. What I am doing is applying the conventional approach but tempering the result by applying section 75(2)(o) to reflect the considerations referred to in paragraphs 74 and 75. To this end the retrospective approach provides a backdrop against which a just and equitable result can be assessed.
I will order that the husband pay this amount to the wife. If he is unable or unwilling to do this then I will need to give consideration to what ancillary orders should be made to enforce this order. I will not do so at this stage. One would normally provide for a sale of his Shoalhaven Heads property and a percentage division of the proceeds if he does not pay out the wife. However in the special circumstances of this case a different order might be appropriate. In particular it might be appropriate to give the husband the option of a percentage division or a cash payment from the proceeds. I will therefore give liberty to either party to re-list the matter to seek ancillary orders. Any hearing as a result could be done by way of a telephone hookup.
I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of Brewster FM
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