Cahill & Cahill

[2003] FamCA 172; (2006) FLC 93-253

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA

AT CANBERRA No. CAF431 of 2002

IN THE MATTER OF:	CAHILL	Ms	Applicant
AND	CAHILL	Mr	Respondent

REASONS FOR JUDGMENT

EX TEMPORE

CORAM:	COLEMAN J
DATE OF HEARING:	6 & 7 March 2003
DATE OF JUDGMENT:	7 March 2003

APPEARANCES:

MS REES	Of Counsel (instructed by Phelps Reid, Solicitors), appeared on behalf of the applicant wife.
MR MATER	Of Counsel (instructed by Anne Marie Proctor & Associates, Solicitors), appeared on behalf of the respondent husband.

The proceedings which the Court has heard and determined relate to settlement of property and either interim spouse maintenance or partial settlement of property. The parties to the dispute are Ms Cahill (“the wife), and Mr Cahill (“the husband”).
The issues for trial were outlined by Counsel at the commencement of the hearing, during the course of which it was made clear by both Counsel that although the case substantially involved consideration of superannuation entitlements, no orders were sought under the recently introduced amendments to the Family Law Act 1975 (Cth) in the nature of “flagging” or “splitting orders” with respect to superannuation entitlements. As such, the case fell to be determined on the basis that by agreement the husband would retain his superannuation entitlements. The Court was asked to note that the husband has those entitlements, and that they are to be and will be taken into account, but that no orders or declarations are sought in respect of them.
Given the novelty of the legislation and the number of uncertainties surrounding the operation of those provisions, the Court indicated during the trial that one order which would be made at the conclusion of this judgment would be that Counsel have liberty to submit variations to the Court's orders for amendments to them in order to best give effect to the mutual intention of the parties that the superannuation remain with the husband and that hereafter there be no adverse consequences of that for either party by virtue of the amendments to the Family Law Act.
Counsel for the wife opened her case on the basis that the wife ought be awarded 55 per cent of the assets of the parties. The assets, as will be seen, are not greatly in contest. It would be realistic to say that the major factual contest with respect to the net assets of the parties relates rather to one liability or alleged liability than to the assets themselves.
The effect of the relief sought on behalf of the wife was that the she would receive in cash approximately $950,000, consequent upon the husband either liquidating existing assets or borrowing against those assets or some combination of those two approaches to generate such sum. The $950,000 was sought to be obtained from existing property valued in excess of that sum. That is to say the husband would retain the superannuation entitlements which are entirely on his side of the ledger.
For his part, Counsel for the husband sought that the wife be paid, in addition to the sum of $30,000 that she has previously received, a further $510,000 in round figures, which his client sought to raise within a period of three months. That period was not opposed by Counsel for the wife. It would be readily apparent that the parties are approximately $440,000 apart with respect to settlement of property.
So far as the $400 per week sought by the wife until she received her settlement of property was concerned, Counsel for the husband opposed the granting of such relief on the basis that the wife did not discharge the onus imposed upon her by s 74 and s 72 of the Act. Counsel for the husband relied significantly on the fact that the wife has previously been paid the sum of $30,000 by way of advance against entitlement, of which, on the evidence, about $24,000 remains. If however, the Court were attracted to awarding the wife such moneys by way of settlement of property then the husband sought that such moneys be taken off the sum payable.

Credit

The issue of credit does not impact on the determination of the dispute. In the brief time in which each party occupied the witness box, each party was revealed as a witness of truth. In the short evidence each party gave there was a refreshing and rare willingness to make concessions in favour of the other party, and in some instances to make concessions against interest. The Court has no doubt that each of the parties was a truthful and candid witness.
As will be seen, the case turns more on the exercise of discretion, on facts which are themselves not greatly in dispute than on the determination of any disputed issue of fact. As will also be seen, particularly by virtue of the two major areas of contention, by which I mean legal rather than factual contention, namely the weight appropriate now to be given to contributions of capital by or on behalf of the husband during cohabitation, and the significance of the husband's superannuation entitlements, the case is one likely to attract varying determinations as a result of the exercise of discretion which its determination entails.
This is very much the type of case to which Brennan J referred in Norbis v Norbis (1986) 161 CLR 513 when saying:-
“The "generous ambit within which reasonable disagreement is possible" is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.” (per Brennan J at 539-540)

Material facts

It is appropriate to record some material facts as background to the dispute. The parties married in 1972. They separated in either 1995 or 1997, it matters not which, it being common ground that in terms of contributions, the partnership ceased to exist as at 1995, after which the wife, who was then resident in her native Denmark, did not contribute directly to any asset or activity in Australia. It is appropriate therefore to regard the cohabitation for the purpose of contribution evaluation as having been of 23 years duration.
There are no children under 18 years of age, although there were three children born of the marriage.
The proceedings were commenced by application filed by the wife on 8 March 2002, to which the husband responded on 22 April 2002. The wife amended her claim on 19 November 2002.
The wife was born in 1938, in Denmark, the husband in 1940. The wife is accordingly 65 years of age, the husband 62.
In 1960 the husband joined the Australian Defence Forces. Subsequent to doing so, and at a time which is not entirely clear, but presumably would have been between about 1967/1968 and the very early 1970s the husband served overseas. The wife came to Australia in about 1969.
In 1970 the husband purchased a property which was referred to throughout the evidence as “D Street”. The property was purchased for $14,500. Five thousand dollars of that purchase price was provided by the husband's mother. Whether that was a gift at the time or a loan at the time is immaterial, as it is common ground that the sum was never repaid. The balance of the purchase price, approximately $9,500 was borrowed. That is the first capital contribution which needs to be considered in assessing the contributions of the parties, namely the equity the husband brought to the marriage via the D Street property. The most reliable evidence in that regard is that to which reference has been made, there being no reliable evidence as to the equity in the property in 1972. That ought not be thought of as a criticism, because objectively three decades later with contributions having been made in the intervening period as the evidence reveals, the difference between $5,000 and what the equity might have been two years later would be unlikely to have had a material impact on the contribution entitlements of the parties.
As has been recorded, the parties married in 1972. In December 1973 a second property was purchased. It has been referred to as "O Street". The purchase price was $29,300, of which $10,000 was provided by the husband's mother, that is to say approximately one-third of the cost of the property. The balance was borrowed from the State Bank of Victoria.
The evidence suggests, although it is not clear beyond doubt, that each of the two properties to which reference has been made was rented for the bulk, if not all, of the time it was owned by the parties or the husband. The evidence does not reveal the extent to which retention of those properties was, on balance, a drain on the resources of the parties or a supplement to those resources. The Court is unable to reach any conclusions in that respect.
The first child of the parties, J, was born in 1973. The second child L was born in 1974. It is apparent that before the wife returned to Denmark each of those children had attained 21 years of age, and that the third child of the parties, who was born in 1976, had attained 18 years of age.
The parties purchased the property M Street, in July 1980, and the inference is almost inescapable that it must have been 100 per cent funded by borrowings. Those borrowings included, as it was then called, a war service home loan which was referrable to the husband's overseas service.
In 1980 the husband commenced to study for a degree in law, whilst continuing to be a full-time member of the Defence Forces. He studied part-time. That same year he received either $60,000 or $68,000 from the estate of his mother. The dispute between the two sums is referrable to whether the sale of furniture did or did not swell the funds from $60,000 to $68,000. The evidence in this regard is less than clear. It was a long time ago, and it is unrealistic to expect that there would necessarily now be records available to resolve the issue. The wife asserted a far lesser figure for the sale of furniture than did the husband. The husband bore the onus of proof in relation to that allegation. There is no basis for rejecting his evidence. There is no basis for rejecting the wife's evidence. That being so, the husband cannot discharge the onus of proof on the balance of probabilities. That is to say, either party's account is equally probable on the evidence. He therefore fails to prove his allegation, not that a great deal turns on that in any event given what the Full Court said in Pierce v Pierce (1999) FLC 92-844 and the contributions which continued for another 15 years thereafter. A sum of not less than $60,000 was used to reduce the M Street mortgage and that was a substantial and significant contribution.
In December 1985 the husband retired from the Defence Forces after 26 years of service. He commenced to be employed, I think, by the Department of Defence, but in the Commonwealth Public Service in any event. At that time, he received his DFRDB lump sum entitlement of $82,000 and $32,000 of long-service leave. Those moneys were applied for the benefit of the family. The only argument, as will be seen, is whether, however expressed that contribution should be seen as proportionately more by the husband, as he would contend, or equal, as the wife would contend.
Apart from the significance of the capital lump sum referable to the DFRDB at that time having been received, the practicality is that there is no capacity for the husband to receive another DFRDB lump sum. He has a pension entitlement of substantial magnitude which is ongoing, but no capacity to receive another or further lump sum from the DFRDB fund. More will be said about that later.
In 1985 the O Street property was sold, which generated $65,000 net after discharge of the mortgage and the selling costs. That was applied for the benefit of the family. To the extent that the $65,000 net received at that time is relied upon by the husband as a contribution made by him, the reality is that the parties had by that time been cohabiting for 13 years, and the property clearly had increased substantially in value. To what extent the mortgage had been reduced is less than clear. In any event, the contribution to be considered would properly be considered at the time it was made which was in 1973, rather than later, or even considered twice, which no one seriously suggests should occur.
In about 1984 the parties sold the D Street property for $92,000 net after discharge of the mortgage and selling costs. That figure again is not entirely clear in so far as the then outstanding mortgage balance is concerned, but as with O Street nothing turns on that for the present purposes. The contribution of relevance was that at the time of the acquisition of the property.
In November 1988 the husband was admitted to practice as a solicitor of the Supreme Court of the ACT. The evidence does not suggest that he has ever practised as a solicitor in private practice in the ACT or elsewhere.
In May 1989 the M Street property was transferred into the wife's name. In 1991 the property was renovated and extended at a cost of $216,000.
In about August 1995 the wife returned to Denmark and has lived there substantially since. Subsequent to the wife's return to Denmark, from the period prior to early 1998, the husband provided to her $22,460. Evidence before the Court suggests that for the years 2000, 2001, 2002, the wife was paid in total $71,500 from the Local council. It is appropriate to refrain at this stage from categorising the payments beyond saying that the wife received funds of that magnitude.
In the year 2000 the husband purchased the first of three units which he now holds in Suburb R. He borrowed 100 per cent of the cost of acquisition of that unit. He did the same thing in 2001, and again in 2002. He has three units, all significantly encumbered. They are income producing, negatively geared, and to the extent that he obtains tax benefit by virtue of that, that arises because he pays with real money the shortfall, and without knowing precisely what his tax rate is, it would be incorrect to imagine that the difference between the tax deduction or refund referable to his payments equates with the payments. The probabilities are that the refund is something less than 50 per cent of the amount which he pays out.
The wife commenced these proceedings in 2002. In February of this year the husband advanced the wife $30,000 in partial payment of her anticipated settlement, $6,000 of which in round figures was used for the wife to come to this country and accommodate herself whilst she is here for the purpose of the case. The $30,000 was borrowed on existing financial or loan facilities, and is reflected in the current liabilities of the parties.
The husband has lived in the M Street property, which was the former matrimonial home since separation. He has for some years had students staying in the home, and he gave evidence about the financial arrangements entailed in such presence of students in the home from time-to-time. His evidence as to his motivation in having students in the home is able to be accepted as is his evidence in relation to the financial arrangements. His assertion that there is "not much in it financially" can safely be accepted. The husband has taken advice from an accountant as to his obligation to disclose the gross income thus received, and the expenses which largely offset it for the purposes of the Income Tax Assessment Act. To the extent that he failed in a narrow technical sense to fully comply with O 17 in relation to that, such oversight was innocent and nothing turns on it.
The husband has paid the outgoings on the M Street property in the post-separation period and the mortgage has reduced by $30,000 in the years since separation. There is no suggestion that such reduction was other than referable to the effect of continued payments, although the position is not entirely without uncertainty given that the mortgage seems to have been some $15,000 or thereabouts “in advance” as at early this year. No submission has been made that the reduction of the capital sum owing on the mortgage was other than referable to normal payment expectations of the lender.
The evidence does not suggest that either party has re-partnered, and there is no suggestion that there are any assets which have not been revealed or taken into account. It is necessary to identify the property of the parties and to ascribe valuations to such property.

The property of the parties

The M Street property is agreed to be worth $840,000, the Suburb R units are agreed to be worth $465,000. The husband has a motor vehicle and modest contents described in the schedules of assets and liabilities. The wife does not appear to have a motor vehicle. If she does have a motor vehicle it is of extremely modest value, the same as the husband. She too has modest contents. The Court proposes ignoring motor vehicle and contents for a variety of reasons, not the least of which is that in an asset pool of towards $2 million they are de minimus and not so disproportionately shared that they would have any material impact upon the division of the assets of the parties.
So far as what were termed "collectables" are concerned, the collectables are agreed to be worth $94,455. The dispute between the parties is whether $75,805 worth of such items is referable to the period of the parties' cohabitation or the whole of the $94,455, the husband's contention being that assets which he had or which came to him from one source or other prior to marriage have a current value of $18,650. In cross-examination the wife frankly conceded that some items had been in the possession or ownership of the husband before marriage, if not the entirety of the items.
There is no evidence as to the value of the items at the time they were acquired by the husband. That is not said critically. Thirty-plus years later, it would be surprising and perhaps even worrying if people kept that sort of documentation, but the practical effect of that is that the husband cannot prove a value of these assets at the time of marriage even assuming, which one cannot, that the Court prefers his evidence to that of the wife in that regard.
So far as disputed items are concerned, there is no reason to reject the husband's evidence. There is no rational basis for rejecting the wife's evidence. The husband bears the onus of proof. Either party's version in relation to disputed events is as probable as the other. The husband accordingly fails to discharge the onus of proof which he bears, having raised the allegation.
To quarantine in some fashion, the assets which the husband had at the time of marriage, by reference to or in reliance upon their current value, would seem contrary to the decision of the Full Court in Pierce v Pierce (1999) FLC 92-844. I know of no rational basis upon which personalty such as the so-called collectables would be entitled to be treated differently from other assets in the way that Pierce v Pierce (supra) suggests that they can and should. For those reasons, essentially involving the inability of the husband to discharge the onus of proof, the whole of the $94,455 will be taken into account as part of the asset pool without differentiation between pre- and post-marriage acquisitions.
The husband has a prospective entitlement to ComSuper referred to in the documentation as “CSS”. A figure of $447,189.12 is the value, albeit notional, of that CSS entitlement. That figure emerges from a statement from an entity super-splitting, which is apparently competent to value such things. It is an agreed figure and the Court takes it into account as part of the asset pool.
Notwithstanding the artificiality of it, the Court also takes into account as part of the asset pool, $429,805.49 as the value of the husband's entitlement in the future to receive fortnightly pension payments from the DFRDB. To the extent that the CSS figure is somewhat artificial, the DFRDB figure is a complete fiction as the husband, it is common ground, cannot obtain a lump sum of that, or any other magnitude, now or ever. On a rough calculation, at the present rate, if the husband lives to be 80, he will, between now and then, receive in pension payments something of the order the formulaic calculation of the entitlement produces.

Two other superannuation entitlements of the husband are brought into account at their actual present value. That is by consent. The figures are not those which the formula used for that purpose provides. The first is in a superannuation fund ASGARD. The current worth of that is $35,098.39. The second is in AGEST which is $2,518.00.
The remaining matters for consideration are firstly the husband's legal fees which he has paid, of $15,378. To the extent that there is any dispute in relation to writing back that sum, that dispute can be swiftly resolved, and resolved in favour of the wife. Quite simply, had the husband still had in his bank account or not had in the form of another liability, the $15,378 which he has paid to his lawyers, there would be not the slightest doubt that such sum would be reflected in the asset pool. To allow the $15,378 to be left out, is to oblige the wife to subsidise the husband's legal costs of this case. That is not going to happen. The sum should be written back, there is ample authority for that as Counsel for the husband fairly conceded and $15,378 is written back.
So far as the $30,000 pre-payment to the wife is concerned, the Court writes back $24,000 of that sum. That is the difference between the $30,000 which has been paid and the $24,000 approximately which remains. The reasons for that are essentially that the wife is and has been for a long time, a resident of Denmark. It is her country of origin and it would be quite unfair to in effect punish her for having returned to her homeland in circumstances where the Court is here in Canberra where the husband lives, and she has those expenses which he does not.

The effect of those findings is that the asset pool is worth approximately $2,353,443.
On the liability side, there is little which is contentious. The Suburb R units are encumbered to X Home Loans, $370,000. The mortgage to the bank over M Street is $65,000. There is a Visa debt of $15,000.
Controversy surrounds the wife's alleged indebtedness or probable future indebtedness, to a Danish authority by reason of her having received $71,500 from that authority in the three years to which reference has been made. The evidence in relation to that topic is provided by Ms W who is the Vice-Consul of the Danish Consulate in Sydney. Ms W annexed to her affidavit as annexure A, which was struck out after objection was successfully taken, a letter from an entity which is described in para 3 of her affidavit, as "the equivalent of a local council in Denmark". That entity, as the evidence of the wife makes clear, paid $71,500 to the wife over three years. The wife's case is that consequent upon receipt of her settlement of property, she will or as was more accurately suggested by her Counsel in concluding submissions, may have to, repay that money to the authority.
The question is whether that alleged liability or probable future debt has been proved. Through no fault of hers, the wife is not able to give any admissible evidence on that topic. She undoubtedly believes that she may have to pay the money back. The issue however is one for the Court to determine on such admissible evidence as there is available in that regard.
Ms W refers to the Danish law which, she says in her affidavit, reveals the following:
"The local council can make decision on reimbursement of paid social welfare payment."
On balance, the Court would find that what the wife received was a paid social welfare payment. Whether that was means-tested or not, is less than clear. Ms W further deposes that the Danish law provides:
"When at the time of application for payment it is stated that the application is on the grounds of economic hardship and that there exists a condition that shows the person in question within a short time will be able to reimburse the payment received."
To the extent that one can reach any conclusions in relation to that paragraph, because it does not really seem to stand alone, it is not clear on what basis the wife made her application to the local council, although it is clear that voluntary support from the husband had by that time ceased. In 2000, when the relief was first apparently granted, there were no property settlement proceedings on foot in this Court and no evidence of proceedings elsewhere. What is a “short time” for reimbursement is not clear and ultimately the Court cannot meaningfully say more about para 93.6 of the relevant Danish law.
Ms W finally deposed that the Danish law provides that:
"The local council can make decision on reimbursement when a person who has received help later will receive payment for compensation, alimony et cetera covering the same period and the same purpose as the paid social welfare."
Counsel for the husband submitted correctly in the Court's view, that the evidence did not enliven that provision. The Court agrees with that submission, accepting that the wife is a person who has received help, she will not be receiving “compensation” from this Court and for reasons which will emerge in the context of the spouse maintenance application, will not be receiving what may be referred to as “alimony” in other parts of the world. What else there might be is not stated.
Moreover, the evidence does not reveal that whatever the wife receives from this Court, it would be:
"Covering the same period and the same purpose as the paid social welfare."
As will be seen, when dealing with what could be perhaps crudely described as the global assets to be considered, the Court will have regard to events in the post-separation period and will have regard to the disparity of earnings of the parties, and use and enjoyment of assets for that period. It will not however, in effect, be awarding compensation, alimony or otherwise for the period in which the wife was receiving help from the local council.
The wife asserts the debt. She bears the onus of proving on the balance of probabilities that the liability exists or will exist. However, her belief that she will have this liability which the Court has no difficulty accepting, is not proof of the liability itself. The wife fails to make out her case in relation to this alleged liability on the balance of probabilities, and accordingly for the purpose of determining the net assets of the parties, it is not to be taken into account. As will be seen, that is not the end of the matter, however, for reasons for which the Court will later give.
The liabilities then relevant to be taken into account thus total $450,000. The net assets are thus worth $1,903,443.

Contributions

It is then necessary to consider and evaluate the contributions of the parties prior to a consideration of relevant s 75(2) factors. Two cases of significance need to be referred to in this context. First there is the decision of the High Court in Norbis v Norbis (1986) 161 CLR 513 in which the Court made clear that in discharging its function in property settlement proceedings, the Court may adopt either what is described as a global approach to the assets of the parties, or adopt an asset by asset approach, or some combination of the two. As the High Court has stressed in Norbis v Norbis (supra), the approach does not produce a different result in terms of a just and equitable outcome. It is not a case of selecting one method and having the prospect of being correct, but incorrect if the other is selected. It is a convenient and helpful way in many cases, to achieve a just and equitable resolution, where one approach is likely to more readily facilitate that outcome.
This is a case where an asset by asset approach is appropriate in relation to certain assets, whilst others, they being the remaining assets, ought be considered globally.
The second authority relevant to the present case and its determination, is Pierce v Pierce (1999) FLC 92-844 and the passage in particular set out at para 28 of the authorised reports at page 85-881. The Full Court there said:-
“In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contribution of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home.”
If one looks at the M Street property and the collectibles contained in it, as a group, and evaluates the contributions referable to that, that is the most convenient and appropriate way, for reasons which will emerge, to consider and evaluate the parties' contributions . It was the matrimonial home of the parties and the collectibles were, to the extent they were furniture, the furniture of the parties and otherwise the adornments or whatever of their place of residence during the great bulk of their cohabitation.
If those reasons are themselves not sufficient to justify grouping those two assets together in dealing with them, the inappropriateness in the Court's view of grouping anything else in with them, renders that approach preferable. Whether the approach itself be strictly speaking a global or an asset by asset approach, nothing really turns on the label that is given to it, it is the substance of the evaluation which is of importance.
In referring to the material facts, the Court has referred to the contributions of capital by or on behalf of the husband. They are referred to in his Counsel's outline of written submissions at page 4, para (b), principally as matters stand, by which the Court means after submissions were made, in para 1, 2, 3 and 4.
There is very little evidence in relation to what might be termed the periodic contributions of the parties prior to 1995. Counsel for the husband conceded properly in the Court's view, at an early stage in the trial, that it would be hard to resist a conclusion that contributions other than those upon which the husband sought specifically to rely, could be seen as “near enough to 50 per cent”. The Court concludes that save in the respects to which reference will shortly be made, it would be naive and quite unrealistic to treat the contributions of the parties in respect of these assets to 1995 as other than approximately equal.
At trial, there was not, and sensibly so, any forensic exploration of the nature and quality of the parties' contributions in terms of homemaking and parenting, contribution of income and the provision of physical effort or exertion. It is apparent that the contributions made by or on behalf of the husband, were significant at the time when they were made. There is no evidence to establish, for argument's sake, that but for those capital contributions, the parties could not have done certain things, but that is not the test. The Court regards the contributions, looks at their impact, and as Pierce v Pierce (1999) FLC 92-844 makes clear, weighs them with other contributions revealed by the evidence.
The parties cohabited for 23 years prior to the contribution nexus ceasing in 1995. Each party made very substantial contributions during that time. By 1995, the effect of those contributions was that the capital contributions of the husband including DFRDB benefits upon leaving the Defence Forces in 1985, upon which reliance has been placed, were greatly less than the capital sums themselves. At separation, in the Court's view, there remained however a disparity of contribution entitlement favouring the husband. That disparity however could not be seen as vast, in relation to the two assets which have a net value of $869,455. By way of indication, a single figure adjustment from equality which would be appropriate, and certainly not exceeding in the order of five per cent.
However regard must be had to the post-separation period in order to determine whether in justice and equity, anything there occurring, causes that to change. In the post-separation period, the husband has had the use and occupation of the M Street property. He has maintained the property and has paid the outgoings. There is no precise evidence of the rental value of the property. It is improbable however that it could have been rented by the husband, or that he could have rented comparable accommodation elsewhere, for less than he was paying by way of outgoings on that property.
The Court has earlier recorded that it does not accept that the husband has benefited in any significant way from having students in residence during the post-separation period. The husband has had, in the post-separation period, a substantial income from employment, and has received the benefits of a pension from the DFRDB which has become a very substantial emolument on a fortnightly basis.
There is not the slightest doubt that the husband’s income position in the post-separation period greatly exceeds that of the wife. The Court is mindful of the fact that in the post-separation period, the wife has not had the use of enjoyment of any of the assets built up over the preceding 23 years of cohabitation and contribution. It is also mindful of the fact that the husband provided by way of voluntary support for the wife, a sum of $22,460 to which reference was earlier made.
In the Court's view, an adjustment for the post-separation period in favour of the wife is warranted. That adjustment, though imprecise, would, in order to produce a fair and just result, be best regarded as equating with the disparity of contribution entitlement, to the date of separation. The effect of that is that the parties are entitled equally to the two assets to which reference has been made, namely M Street equity and the collectibles, $434,000 approximately, so far as those two assets are concerned.
Passing then to a consideration of the Commonwealth Superannuation, which is brought in at the figure which the formula reveals. There is a measure of artificiality about that, particularly having regard to the terms of Exhibit R3. However, it is a fund which falls within the operation of the legislation. Depending upon what happens in the next few years, the husband's prima facie intention being to retire three years from now, the benefits receivable in lump sum or periodic form, are not so vastly disparate from the figure revealed by the formula as to render an evaluation of contributions by reference to the figure provided by the formula, other than appropriate.
In relation to the ComSuper, the Court determines the entitlements of the parties by reference to the figure revealed by the formula. The husband joined the ComSuper fund in 1985. He has been a member of the fund since. That is a little less than 18 years, more than 17. Contributions were made during some 10 of those years, that is whilst the parties were cohabiting. Since 1995, only the husband has contributed to the fund. The wife has not made any contribution, direct or indirect, to the fund. On the other hand, the husband has had the greater capacity to make those contributions from his significantly greater earnings.
The Court was urged to adopt a formulaic apportionment of the entitlement. That approach is not entirely acceptable. The appropriateness of formulaic approaches in general remains to be conclusively considered by the Full Court. Apart from anything else, a formulaic approach has no real regard to the value of money at any given time, nor does it have any regard to the impact upon the family of the contributor to a superannuation fund at any given time in the life of the family, nor does it, or can it, have regard to the family’s circumstances at that time.
On the other hand it would be quite unrealistic, notwithstanding the disparity of income in the post-separation period, to have no regard to the reality that the wife has not made a contribution, direct or indirect, in the present circumstances. There is a material difference between looking at post-separation contribution to the superannuation where parties have been separated for a year or two and looking at it where as here the parties have been separated for in excess of seven years.
The Court does not pretend that there is precision in its approach to the contribution entitlements of the parties to the Comsuper Fund. That is the nature discretion. The sections of the Act which govern the proceedings contemplate that, as the High Court has confirmed.
In the Court's view to reflect the entitlements of the parties to the Comsuper Fund in percentages of 60 per cent to the husband and 40 per cent to the wife would, in the circumstances, be just and equitable. The disparity, approximately $178,000 to the wife, $268,000 to the husband, is in the circumstances a proper or reasonable reflection of the reality of contributions in the post-separation period.
It will be discerned that the Court at first instance, dealing with this case, is suggesting a distinction between taking into account, for the purpose of determining the assets of parties to proceedings, assets which have a theoretical value such as the husband’s DFRDB entitlements, and having regard to the realities of life surrounding such entitlements and reflecting them in the evaluation of contributions. The terms of s 90MC do not appear to raise an obstacle in the path of so doing. It is one thing to “treat” superannuation as “property” to enliven the jurisdiction of the Court to make an order in respect of superannuation, another altogether to suggest that superannuation must thereby be treated the same way as existing or tangible assets when entitlements of parties are determined pursuant to s 79 of the Act.
The Court thus moves to consider the DFRDB pension. As has been said, the formula provides a figure of $429,805 for that fund. The superannuation amendments to the Act do not detract from the Court's duty to do justice and equity to litigants appearing before it, as directed by s 79 of the Act.
The $429,805 is a conversion of what is clearly income to capital. The husband’s DFRDB pension is not, and can never be, capital. It is as simple as that. To apportion $429,805 as if it were an asset would be an exercise in artificiality no matter how it was approached. If one had regard to it and if one concluded that the wife's entitlement was any significant percentage that would be, in the Court's view, grossly unjust so far as the husband was concerned.
On the other hand, to avoid that kind of injustice and reflect the reality that this is no more and no less than a notional calculation of the capital value of an income stream and reflect the wife's entitlement in contribution terms as zero per cent would be grossly unjust to the wife.
As a reading of the transcript would reveal a number of possible approaches to this issue were canvassed yesterday and it would be accurate to say that none appeared at that time to be without fictional, artificial or undesirable features. The approach for which the Court has ultimately opted could be criticised in precisely that way, but the Court is persuaded that it is the least unjust approach to this difficult problem.
The DFRDB pension, which is currently just short of $1,000 a fortnight, comes about by virtue of the husband's contributions from the time he joined the Defence Forces in 1960 through to his retirement from the Defence Forces in 1985. He was in the Defence Forces for almost 26 years. Of those 26 years about half were years he spent living with the wife. If one were looking at the retirement benefit, which one cannot, as it was received and applied in 1985 for the benefit of the parties, one would have to provide significantly for the wife having regard to her contributions from 1972 to 1985.
The Court is not persuaded that it is obliged to make a contribution entitlement finding in respect of the DFRDB figure thrown up by the formula. The Court is constrained under s 79(2) from doing things which are not just and equitable. In the Court's view any contribution finding in relation to this notional value of the superannuation would be unjust to both parties, the only question being which party would be more unjustly treated.

Accordingly, the Court does not propose to make a contribution finding in relation to this notional asset. It ought not however, be thought that so doing means that the DFRDB pension entitlement ceases to be relevant, nothing could be further from the truth. What it does mean is that, a guaranteed income stream, of a substantial order, will be treated within the context of s 75(2). It is income, it will always be income and it is a powerful s 75(2) factor.
The Court then proceeds to consider what could be described as the “post-separation assets”, which comprise the ASGARD superannuation, none of which was contributed prior to separation; the AGEST superannuation of which approximately 20 per cent of contribution time coincided with cohabitation; the Suburb R units, which after deducting for convenience the mortgage and the Visa debt, have an equity of $80,000; and the $15,400, in round figures, of “pre-paid legals”.
Some of those assets are entitlements. Taking into account the AGEST and other small superannuation entitlement as assets, as the Court has been invited, approximately $133,000, that being $15,400, $37,500 (they are the super funds combined), and $80,000 (the equity in the units).
There has to be in dealing with these items due regard to the reality that in the context of dealing with the first group of assets, the home at M Street and the collectables, the Court has had regard to the post-separation period and done so in a way advantageous to the wife. Care has to be taken not to evaluate or reflect the same contribution twice. The difficulty in entirely avoiding overlapping is considerable in a case such as this.
Objectively, the wife has made no direct contribution to these assets, save to the minimal extent referred to with the AGEST superannuation in the post-separation period. On the other hand, it is clearly apparent that the ability to buy the negatively geared Suburb R apartments on 100 per cent finance must have been assisted by the ability to utilise the equity, substantial as it clearly would have then been, in the M Street property. To use the colloquial, the wife would thereby “get her foot in the door”.
The assessment of contributions in this period is necessarily somewhat arbitrary, but in the Court's view an apportionment of 90 per cent to the husband and 10 per cent to the wife provides a realistic measure of their comparative contributions. That translates in round figures as $13,000 on the part of the wife.
There are no other assets to be considered from the contribution perspective. It would be apparent from the figures referred to thus far that the wife's entitlement by way of contributions approximates $593,550, after allowing for the $24,000 which has already been paid by the husband. In the Court's view that is a proper reflection of the contribution entitlements of the wife.
An observer would not fail to notice that the Court has not thus far translated any of this to percentage terms. If one did and had regard to the assets which have been considered for this purposes, that is the totality of the assets less the DFRDB notional asset, the figure becomes $593,550 approximately over $1,450,000, which approximates 40 per cent of the assets.

Section 75(2)

It is necessary to then consider the s 75(2) factors, the most significant of which is the disparity of earning ability. The husband has the capacity to earn for some years, albeit for how many is not clear and clearly must be somewhat limited, in his current employment. He there earns a substantial income of about $82,000 a year.
He receives by way of DFRDB pension a further, in round figures, $500 a week and will go on doing so no matter what happens in the future. He receives a DVA pension of $118.40 per fortnight. That could be taken into account, but in justice and equity should not. It is a DVA pension referable to the husband's war service and to the fact that he has war related injuries and is assessed by the DVA doctors as having 40 per cent disability. It is in the nature of the personal injury context analogous to a pain and suffering award, if one has to draw analogies, rather than income in that sense. He receives it because he has a disability.
The wife's earning capacity must be limited. There is paucity of evidence in that regard, but her affidavit evidence, which is not challenged on this point, reveals, with due respect to her, nothing like the capacity for professional employment of the husband and also reveals an absence of any recent work experience or qualifications. The Court refers in this context to paragraph 9 of her affidavit of evidence-in-chief.
There must be a significant adjustment by virtue of s 75(2) having regard to this very considerable disparity of earning ability and / or financial resources, based upon the factors to which the Court has referred. No part of the s 75(2) adjustment can, in the circumstances of this case, properly be referable to the husband's Comsuper. In fairness, Counsel for the wife conceded that very early in the trial and properly so. It would seem that despite the absence of legislative amendment to s 75(2) it could not possibly in justice and equity be the case that something brought in as an asset which has not yet materialised and will not materialise necessarily for the sum at which it is brought in can then again be considered under s 75(2). That would clearly be double counting and impermissible.
The parties will each have substantial entitlements by virtue of the Court’s conclusions in relation to contributions. The different nature of those entitlements, as discussed earlier in these reasons, militates against an adjustment in favour of the wife pursuant to subsection n of s 75(2).
The matters to which regard is had under s 75(2) in relation to income are thus the husband's capacity to derive income from employment and his future DFRDB pension. Even then matters are not as simple as they might seem with the current legislative regime because when the husband receives his Comsuper, which has been brought in at the calculated figure of almost half a million, that is the end of his capacity to earn.
Having brought in the husband’s Comsuper as a notional lump sum what one must look at under s 75(2) is his capacity to earn for a few years to come, and his future DFRDB indexed pension for life. One could not properly have regard in the circumstances of this case to any component of his Comsuper which will in the future come to him as a pension. To do that would be, at least in part, to double count.
The disparity on the limited basis indicated is substantial. No other s 75(2) factor assumes significance in the circumstances of this case. What then is the appropriate adjustment? In the Court's view to increase the wife's entitlement to a settlement of property from the figure reached on evaluation of contributions, namely $593,550, by $100,000 by virtue of s 75(2) would in the circumstances be just and equitable and the Court so determines.
The effect of that is that the wife should receive by way of settlement of property $693,550. That sum should be paid within three months, failing which it should accrue interest under the rules until it is paid, provided that if at the end of six months it has not been paid with interest then the wife shall be entitled to require the husband to sell M Street in order to pay to her her entitlement.
It will be necessary to convert that, consistent with authority, to a percentage, that is the default provision to a percentage, and the minutes when issued will provide a percentage. Prima facie that percentage, however, should be $693,550 over $840,000 and calculated that way.
It then remains to consider what is sometimes described in the Full Court these days as “the fourth step”. That is to determine whether in all the circumstances the determination reached via s 79(4) and 75(2) is just and equitable. If one stands back from it and looks at the assets of the parties and the outcome of this case it will be seen that the wife receives close to $700,000 in cash plus $24,000 which she retains. For his part the husband will retain a much lesser sum in terms of real assets. If one aggregates what remains the husband will be receiving, bringing in as the formula reveals his Comsuper, $750,000 approximately in round figures, of which only about $300,000 is represented by tangible assets.
The wife will be receiving a very substantial sum, in cash, to deal with as she pleases. The evidence is unclear as to what she proposes for her future or what her future holds, but it seems clear, to the extent that they are not already expressly or impliedly revealed, that she will have to support herself out of that in some measure. It is not clear what the outcome of the receipt will be on her position in terms of the local council "help" in the future.
The Court has endeavoured by the approach it has taken to the husband's DFRDB to preclude an unjust and inequitable determination of this dispute. It is always difficult where one party is receiving “real money”, if it may be described, and the other is receiving a mixture of real money and notional money, to be completely satisfied that an outcome is just and equitable. In the circumstances of this case, however, the Court is persuaded that the order proposed is just and equitable and should stand.

The wife’s alleged debt in Denmark

It then remains to examine two issues, there is no particular significance attaching to the order in which they are considered. The first relates to the wife's possible obligation to pay money to the authorities in Denmark. Objectively, the Court cannot be satisfied that the wife will have that liability. She genuinely believes she will. She has evidence from the Vice Consul which suggests that the possibility may exist. The Court for reasons given has not been satisfied that on the balance of probabilities the liability is made out.
Whilst the Court has some sympathy for the wife in relation to that possible position and accepts that it may happen that she has to pay the money, the proceedings must be determined according to law. The proceedings are adversarial, the party who avers must prove. That has not occurred. Without being critical, the evidence if it was to be, as clearly it was at trial, a significant part of the wife's case could have been presented in ways that may have changed the Court's determination. The Court is not persuaded that any order of the kind initially proposed by Counsel for the wife, that is quarantining the fund in case it materialises, should be ordered, nor is it persuaded that any contingent order should be made.
Section 81 is in the nature of a philosophical provision of the Act, but where parties have married more than three decades ago and been separated for more than seven years to put them in a position of further possible litigation is, in the Court's view, unthinkable and any order of the kind proposed by Counsel for the wife in her closing submissions yesterday would, in the Court's view, be highly likely to produce further litigation because only by making an order that the wife do things which may even be illegal in Denmark could the Court protect the husband against unfair risks of having to pay the money and even then there would be the potential for litigation in relation to why the money was payable if it was, what efforts the wife had made in that regard and so forth.
For the sake of half that sum, which is after all what the wife through her Counsel has sought to be protected in respect of the cost to each of the parties, the uncertainty and the unfairness occasioned to the husband, who has quite properly relied upon the onus of proof and standard of proof, would be out of all proportion to the sum involved.

The maintenance application

So far as maintenance is concerned the wife cannot on any basis succeed with a maintenance application. She has $24,000 available to her for potentially three months. She has her rights in respect of maintenance thereafter and nothing the Court does circumvents those rights. Once the wife has her capital sum pursuant to the orders for settlement of property then on no basis which has been revealed to the Court could she meet the threshold requirement of s 72 and, to be fair, she has not attempted to present any evidence which would begin to suggest even prima facie that such was the case.
Whilst there might be a convenience in paying $400 a week from the husband's or wife's perspective that is not something the Court considers to be necessary, just or equitable. If the husband wants to pay $400 a week between now and when the capital sum is receivable that is a matter for him and would come off the capital sum payable.
The interest to apply on the capital sum after three months if it is not paid by then is interest in accordance with the rules, which I understand is somewhat in excess of commercial borrowing rates. In other words, the wife will not be the husband's banker or, if she is to be his banker, she will be in effect obtaining lender of last resort rates for doing so and even then for only a limited period.

ORDERS

For those reasons the orders of the Court are accordingly:-
That within 3 months of this date, the husband pay to the wife the sum of $693,550, whereupon the wife is to do all acts and things and execute all documents necessary to cause to be transferred to the husband the whole of her right title and interest in the property known as and situated at M Street, Suburb R, hereinafter referred to as “Suburb R”.
That in the event of the said sum not being paid within 3 months of this date interest shall accrue upon it unless and until the sum with interest has been paid by the husband to the wife or the property is sold and the wife paid, in accordance with the provisions of these orders, her percentage entitlement to the proceeds of sale.
That in the event of the wife not having been paid the sum of $693,550 together with interest accrued as and from 7 June 2003 by 7 September 2003 the wife shall be entitled to require the husband to sell Suburb R at and for a price agreed between the parties, or failing agreement in that regard, a price determined by a nominee of the Australian Institute of Valuers to be the value of the property and the wife shall be paid 693,550/840,000 or 82.6 per cent of the gross selling price of the property, the balance of the proceeds of sale of the property being payable to the husband.
That save in relation to costs the Court otherwise dismisses all outstanding applications and cross-applications.
That documents tendered in evidence and/or produced on subpoena be returned to the party/entity producing same.
That the Court reserves liberty to Counsel for the parties to submit Minutes of Consent Order amending or varying the orders made this day.
Costs reserved.
That in the event of there being an application for costs, the party seeking same is to file and serve written submissions within 21 days of this date, the party responding and or cross-applying is to file written submissions in that regard within 21 days thereafter, any responding submissions to be filed within 7 days of the expiration of that period.

IT IS NOTED:

That the husband has superannuation entitlements in respect of Comsuper (CSS), DFRDB, ASGARD and AGEST which the parties agree that he will retain.

10. That such entitlements have been taken into account.

I certify that these 25 pages are a true copy of the Reasons for Judgment herein of
I.R. Coleman J.

Associate.
Date:20/03/2003

[2003] FamCA 172

7 March 2003

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