COPELAND & GROSSMANN
[2015] FCCA 530
•30 March 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| COPELAND & GROSSMANN | [2015] FCCA 530 |
| Catchwords: FAMILY LAW – Property – de facto relationship of 32 years – agreed asset pool – assessment of contributions not capable of precise mathematical calculation – both parties receiving age pensions. |
| Legislation: Family Law Act 1975, ss.75, 79, 90SF, 90SM |
| Ackerman & Ackerman [2013] FMCAfam 109 Bigelow & Reuter [2006] FamCA 1455 Bremner & Bremner (1995) FLC 92-560 Clauson & Clauson (1995) FLC 92-595 Clives & Clives (2008) FLC 93-385 C & C (2005) FLC 93-220 Ferraro & Ferraro (1993) FLC 92-335 Fielding & Nichol [2014] FCWA 77 Garrett & Garrett (1984) FLC 91-539 Hayne & Hayne (1977) FLC 90-265 Hickey & Hickey (2003) FLC 93-143 Kessey & Kessey (1994) FLC 92-495 Lee Steere & Lee Steere (1985) FLC 91-626 Lovine & Connor and Anor (2012) FLC 93-515 OSF & OJK (2004) FLC 93-191 Parshen & Parshen (1996) FLC 92-720 Poulos & Poulos (1984) FLC 91-515 R v Watson; Ex parte Armstrong [1976] HCA 39; (1976) 136 CLR 248 Russell v Russell (1999) FLC 92-877 Stanford v Stanford (2012) FLC 93-518; (2013) 293 ALR 70 |
| Applicant: | MR COPELAND |
| Respondent: | MS GROSSMANN |
| File Number: | LNC 433 of 2013 |
| Judgment of: | Judge Roberts |
| Hearing date: | 19 February 2015 |
| Date of Last Submission: | 19 February 2015 |
| Delivered at: | Burnie |
| Delivered on: | 30 March 2015 |
REPRESENTATION
| Counsel for the Applicant: | Mr L Edwards |
| Solicitors for the Applicant: | Friend & Edwards Lawyers |
| Counsel for the Respondent: | Mr G Williams (on direct brief) |
| Solicitors for the Respondent: | Not applicable |
ORDERS
That within thirty days MS GROSSMANN (“the respondent”) must transfer to MR COPELAND (“the applicant”) all her right title and interest in the property at Property O in Tasmania, more particularly described in Certificate of Title Volume (omitted) Folio (omitted).
That the applicant retain one hundred and two thousand, one hundred and fifteen dollars ($102,115.00) from the proceeds of sale of the parties’ property at Property S in Tasmania currently deposited in an interest bearing account on trust for the parties by Friend & Edwards Lawyers (“the deposited funds”).
That the respondent retain the remaining balance of the deposited funds, together with all interest that has accrued on the total of the deposited funds.
That to give effect to Orders No. 2 and 3 hereof the parties must each do all things necessary to instruct Friend & Edwards Lawyers to distribute the sale proceeds and accrued interest in accordance with Orders No. 2 and 3 hereof.
That the respondent must transfer to the applicant all her right, title and interest (if any) in the Nissan (omitted) motor vehicle, tractor, boat, motor, shipping container and box trailer currently in the applicant’s possession or control.
That the applicant must transfer to the respondent all his right, title and interest (if any) in the Nissan (omitted) motor vehicle and any shares currently in the respondent’s possession or control.
That each party will otherwise be solely entitled to all other property and chattels of whatsoever nature and kind in the possession and control of that party as at the date of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Copeland & Grossmann is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BURNIE |
LNC 433 of 2013
| MR COPELAND |
Applicant
And
| MS GROSSMANN |
Respondent
REASONS FOR JUDGMENT
Terminology
The Applicant MR COPELAND and the Respondent Ms Grossmann cannot agree upon a division of their assets following the end of their 32 year de facto marriage. Although they were never married, for ease of reference I will refer to the parties as “the husband” and “the wife” respectively.
One of their assets is a holiday home in Tasmania. Very often Tasmanians refer to their holiday homes as “shacks” and during the hearing of this matter the parties’ holiday home was frequently referred to as “the shack”, so I will use that term when referring to their holiday home.
Brief background
Where I refer to facts in these Reasons, they should be regarded as findings of fact, unless a contrary intention is clear from the context, particularly when there is a dispute between the parties in relation to those facts.
The parties commenced their relationship in 1981 and separated in 2013. They did not have any children together, but they both had children from previous relationships. The wife’s two sons and two of the husband’s daughters lived with the parties at times during their relationship.
At the start of their relationship the husband owned a home in Tasmania and had a motor vehicle. The wife had the proceeds of a former matrimonial property settlement and a motor vehicle. Essentially, the values of their assets were reasonably similar.
During their relationship the parties jointly purchased three homes together in Tasmania, in addition to the shack. A number of motor vehicles were bought and sold, and the parties had a number of relatively lengthy holidays in Australia, and at least one in (country omitted).
The parties are both currently in receipt of age pensions.
Applications
Since filing his application in August 2013, the husband’s position has been fairly consistent, in that he has sought an equal division of the parties’ assets. At the hearing he still sought an equal division of the assets, however, he conceded that the wife should also receive the interest earned on funds deposited in an account on trust for them pending the outcome of these proceedings (“the interest”). Those funds held on trust were deposited following the sale of their last home. The interest was agreed to be approximately $11,000.
It is clear from the table at the end of the wife’s affidavit sworn on 5 June 2014 that she was then seeking a division of the assets on the basis of 55% to her and 45% to the husband. However, that was when she attributed a value of $200,000 to the shack, but two registered valuers put the market value of the shack on 4 June and 14 October 2015 at $105,000 and $125,000 respectively.
At the start of the hearing, the wife was seeking a division of the parties’ assets (inclusive of the interest) on the basis of 60% to herself and 40% to the husband. The parties agreed that the court should attribute a value of $120,000 to the shack.
The wife was also seeking orders for the sale of the shack and for the proceeds of such sale to be taken into account in relation to that 60:40 division. However, after some discussion outside the courtroom, the wife conceded through her counsel that a sale of the shack was not necessary in order to give effect to a 60:40 division.
Based upon the agreed asset pool that is referred to below, I calculate that the parties are less than $50,000 apart in relation to what they are seeking. On the husband’s proposal, the wife’s total entitlement (inclusive of all the interest) would be $281,140, and on the wife’s proposal, she would be entitled to assets worth $330,767.
Relevant law
The law with respect to financial matters relating to de facto relationships is found in Part VIIIAB of the Family Law Act 1975 (“the Act”). Subsection 90SM(4) sets out the matters that the court must take into account when considering what orders should be made for the alteration of the property interests of parties. They include:
a)the financial and non-financial contributions made directly or indirectly by or on behalf of each party or by a child of the de facto relationship to the acquisition, conservation or improvement of any property of the parties;
b)the contribution made by a party to the welfare of the family including any contribution made in the capacity of homemaker or parent;
c)the effect of any proposed order upon the earning capacity of either party; and
d)the matters referred to in subsection 90SF(3) “so far as they are relevant”.
Because subsections 90SM(4) and 90SF(3) of the Act mirror subsections 79(4) and 75(2) of the Act, it is clear that the approach that courts should take to the determination of de facto relationship property settlements is essentially the same as that which would have applied if the parties had been legally married. Consequently, the court can have regard to relevant cases decided over the years pursuant to Part VIII of the Act, notwithstanding that Part VIIIAB of the Act only became law in 2009.
Prior to the recent High Court case of Stanford v Stanford,[1] the general approach to the determination of a property settlement application appeared to have been well established by authority as a multi-step process.[2] The steps were said to involve:
a)Firstly, an identification and valuation of the property, liabilities and financial resources of the parties;
b)Secondly, an evaluation of the contributions made by the parties as defined in subsections 79(4) or 90SM(4)of the Act;
c)Thirdly, a consideration of any relevant matters under subsections 75(2) or 90SF(3) of the Act; and
d)Fourthly, before making an order adjusting property interests, being satisfied in all the circumstances that it is just and equitable to do so under subsections 79(2) or 90SM(3).[3]
[1] Stanford v Stanford (2012) FLC 93-518; (2013) 293 ALR 70
[2] See Lee Steere (1985) FLC 91-626; Ferraro (1993) FLC 92-335; Clauson (1995) FLC 92-595, Hickey (2003) FLC 93-143 and Coghlan (2005) FLC 93-220
[3] Also see Russell v Russell (1999) FLC 92-877
In Stanford, at paragraph 37, their Honours French CJ, Hayne, Kiefel and Bell JJ said:
37. First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
In paragraph 40 of Stanford, their Honours went on to say:
40. Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”.[4] To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
[4] R v Watson; Ex parte Armstrong [1976] HCA 39; (1976) 136 CLR 248 at 257
The quotations above from Stanford clearly suggest that being satisfied that it is just and equitable to make an order cannot be the last in a series of four steps. In my view, the assessment must begin with an identification of the parties’ legal and equitable interests in the asset pool and deciding whether it is just and equitable to make orders to adjust those interests. Indeed, with the benefit of hindsight, it may have been wise for judicial officers over the years to have heeded the words of former Federal Magistrate Walters[5] when he said that “the testing of any proposed orders by reference to section 79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and there is no fourth step in that sense.” [6]
[5] Now Justice Walters of the Family Court of Western Australia
[6] OSF and OJK (2004) FLC 93-191 at paragraph 16
The asset pool
At the start of the hearing the parties had a disagreement about the value of the shack. However, they resolved that disagreement after some discussion outside the courtroom, and they agreed the asset pool as set out below. [7]
[7] The agreed list of assets is Exhibit “A1”
Item Asset $ Value 1 Home sale proceeds 256,988 2 Shack 120,000 3 Nissan (omitted) 7,500 4 Tractor/Boat/Motor 5,125 5 Husband’s term deposit 30,000 6 Husband’s savings account 3,000 7 Shipping container 2,000 8 Box trailer 400 9 Nissan (omitted)-trail 6,000 10 Wife’s savings account 17,983 11 Wife’s term deposit 70,000 12 Shares 21,283 Total $540,279
As mentioned above, there is also the interest of approximately $11,000 to be taken into account in any division of the asset pool.
There are no liabilities of any significance and the parties agree that:
a)the husband will retain Items 2 to 8 in the table above;
b)the wife will retain Items 9 to 12; and
c)any adjustment to do justice and equity between the parties is to come from the proceeds at Item 1 and the interest of approximately $11,000.
Should there be an alteration of property interests?
It is clear to me that it is just and equitable to make orders altering the parties’ property interests. In Stanford the High Court said:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife.[8]
[8] See paragraph 42 of Stanford v Stanford (2012) FLC 93-518; (2013) 293 ALR 70
Clearly, that is just as applicable in the case of de facto marriage relationships.
At the very least, the parties agree that the wife’s legal interest in the shack must be transferred to the husband, because they hold that property as tenants in common in equal shares and there will not be any common use of that property in the future.
In that respect, the situation in this case is very different from that in the decision in Fielding & Nichol. In that case, Thackray CJ found that “the assets were … kept entirely separate and the great bulk of them now exist in precisely the same form in which they were held at the commencement of the relationship …”[9]
[9] See Fielding & Nichol [2014] FCWA 77 at paragraph 52
Further, an order will also be necessary to divide the home sale proceeds, notwithstanding that the parties are clearly unable to agree about the terms of that division.
Comment about the evidence
I found the parties to be generally honest in giving their evidence, but the wife was not really inclined to give the husband credit for his contributions. Indeed, she was at times quite begrudging in any concessions that she made. For example, she made statements like “After his arthroscopy [the husband] could have returned to work between 1993 and 1999 but he did not. He did not have a knee replacement until 2009”[10] or “He went to work when it suited him”.[11]
[10] At paragraph 31 of her affidavit
[11] Said when she was being cross-examined.
It is not unusual in proceedings such as these for the parties to see things from different perspectives. However, that does not necessarily mean that either party is intentionally giving false evidence. A party’s perspective can be clouded by emotional overlay and Judge Brown explained that very well in Ackerman & Ackerman.[12]
Inevitably, proceedings between former marital partners evoke strong emotional responses. These emotions are likely to inform how parties recollect past events and, when those events need to be reconstructed, for the sake of adversarial proceedings such as these, it is only to be expected that such a subsequent reconstruction should favour the party making it.
[12] Ackerman & Ackerman [2013] FMCAfam 109, at paragraph 137
The husband was a little more magnanimous in his evidence. For example, when he was cross-examined, he described the wife as “a good housekeeper and a very good woman”.
It was also suggested to the husband during cross-examination (presumably on instructions) that he had secretly kept some money for himself. His response was that he had never kept anything secret from the wife, and I accept that assertion. The fact that the wife was able to quote the husband’s taxable income for each of 20 years at paragraph 28 of her affidavit would appear to corroborate his assertion that there were no financial secrets between them. Further, paragraph 38 of the wife’s affidavit shows that she was aware of the husband’s inheritance to the cent.
Contributions
I have referred above to the assets that each party brought into the relationship at the start.
The parties each put in $10,000 to purchase their first home. They borrowed the balance jointly. In 1985 they sold that first home and used the proceeds to buy their second home.
In 1988 the parties purchased a leasehold interest in the shack for $8000, by contributing equally towards the purchase. In 2005 they bought the freehold interest in that property.
In 2000 the parties sold their second home and bought their third home together. They lived there until their separation, and that third home was subsequently sold. The funds from that sale are referred to in Item 1 in the table of assets set out above.
At the start of their relationship, both parties were employed and they both continued in employment until the husband ceased work at the end of 1993 because of problems that he had with his knee. It was necessary for the husband to have surgery on his knee and he was paid his superannuation. The wife says that he purchased a Toyota (omitted) and an outboard motor with his superannuation payout for a total of $50,000.[13] It was the husband’s oral evidence that his total payout was “around $156,000”, but the wife’s evidence was that he had only received a cheque for $48,000 because they “got [her] son to look at the mail while [they] were away”.
[13] Paragraph 27 of her affidavit
I am unable to make a definite finding about how much the husband received in 1993, but I conclude that the husband is probably overstating the amount, while the wife is just as likely to be understating it. I put that down to the passage of time since 1993 and the matters mentioned at paragraph 28 above. However, I am satisfied that whatever the amount was, it was a significant financial contribution made by the husband. In this regard, I am mindful that in Parshen & Parshen,[14] their Honours Ellis, Finn and Purdy JJ said the following:
In our view, in the absence of evidence to the contrary, it should be inferred in proceedings … that moneys howsoever received by a party during the course of the parties’ cohabitation, are used by that party for the benefit of the family unit. Such moneys, in those circumstances, thus constitute a financial contribution by the party who received the moneys. [15]
[14] Parshen & Parshen (1996) FLC 92-720
[15] At page 83,665
However, I am also satisfied that the husband invested some of those funds in an investment that “went belly-up” as he claimed.
The wife claims in paragraph 28 of her affidavit that she “was the primary breadwinner from 1993”. In that paragraph, she sets out a table of the parties’ taxable incomes in the 20 years from 1993 to 2012 inclusive. That table shows that she estimates that her total taxable income was $412,869 during those 20 years, whereas husband’s was $210,958. However, I find that table to be somewhat self-serving because it does not include:
·any earnings by either of them during the 12 years that they were together prior to 1993;
·the disability support pension that the husband received; or
·the disputed payout received by the husband as referred to in paragraphs 35 to 37 above.
The table also shows that after the husband returned to work, his taxable income exceeded that of the wife in 2003, 2006, 2007 and 2011.
The wife received “a payout” when a company employing her was taken over by another company in 1993.[16] She used that payout of $15,000 to purchase an investment property (“the investment property”) with the assistance of a mortgage loan, which the husband guaranteed. The purchase price was $65,500.
[16] At paragraph 29
The wife states that she paid the mortgage payments in relation to the investment property when the rent receipts were insufficient to cover them. She also claims to have paid the insurance and a gardener. [17] Although the investment property did not “go belly-up”, it does not appear to have been a particularly profitable investment, because it was sold for only $2,000 more than it cost to buy. It is reasonable to infer that the costs of purchase and sale would have exceeded that $2,000.
[17] At paragraph 30
Notwithstanding that it was not a particularly profitable investment, I accept that the husband contributed his labour to the maintenance of that property and that he contributed by guaranteeing the mortgage loan.
In 2010 the wife received an inheritance from her mother’s estate in the sum of $31,826.42. The husband received an inheritance in 2012 in the sum of $12,044.85
I am satisfied that both parties made non-financial contributions to their relationship according to their respective abilities. For example, the wife was primarily responsible for domestic chores inside the home (cooking, cleaning, etc.), whereas the husband was primarily responsible for chores outside the home such as maintaining the lawns and gardens and servicing the parties’ vehicles. Further, I am satisfied that both parties contributed to the substantial renovation and improvement of the shack.
Although the wife may have earned more than the husband from time to time, that is not a reason to suggest that the husband was not “pulling his weight”. In my view, there is a parallel to be found in the decision in Bigelow & Reuter,[18] in which Kay J (sitting as the Full Court of the Family Court of Australia) said this of a wife’s contributions: [19]
What was the relevant finding is that the wife, whatever she was doing in the course of the relationship, was not able to earn money at the same rate that the husband was able to earn, but there is nothing to indicate that she was not pulling her weight in terms of effort and endeavour.
[18] Bigelow & Reuter [2006] FamCA 1455
[19] At paragraph 25
Clearly, that reasoning must also apply in a non-sexist way to husbands if the circumstances prevail.
In my view, the wife appears to have attributed too much emphasis to a mathematical calculation of the dollars that each of them may have contributed during the relationship (i.e. the direct financial contributions), whereas is quite clear that the assessment of contributions, especially in long relationships, cannot be a precise mathematical calculation. As long ago as 1977, that was recognised by Pawley J in Hayne & Hayne, when he said: [20]
In matters such as this one cannot approach the problem with an eye for meticulous detail. It should rather be dealt with broadly so that the end result can be said to be just and equitable.
[20] Hayne & Hayne (1977) FLC 90-265 at p. 76,415
In Garrett & Garrett [21] the Full Court of the Family Court of Australia held that in long marriages, where the parties have devoted their resources and incomes for the benefit of the family, it is not possible to have a precise accounting of their contributions.[22] That also applies in relation to long de facto marriage relationships.
[21] Garrett & Garrett (1984) FLC 91-539
[22] See also Poulos & Poulos (1984) FLC 91-515 at page 79,184.
Similar things have been said in many cases, including Bremner& Bremner, [23] Clives & Clives [24] and Kessey & Kessey. [25]Indeed, I would say that an evaluation of the weight to be attributed to different types of contributions - such as direct financial contributions and indirect non-financial contributions - cannot be a science involving precise measurement.
[23] Bremner & Bremner (1995) FLC 92-560
[24] Clives & Clives (2008) FLC 93-385 at paragraph 44
[25] Kessey & Kessey (1994) FLC 92-495 at page 81,150
In Lovine & Connor and Anor, the Full Court said: [26]
40. Contribution, either direct or indirect and financial or non-financial, to any of acquisition and/or conservation and/or improvement to property (whether or not such property has ceased to be held) or to the welfare of the family or children, falls for consideration. No order of priority is attached to individual elements. The evaluation occurs often, as in this case, with respect to such disparate kinds of contribution made over a substantial period. Such evaluation, having regard to its subject matter, inevitably involves value judgments and matters of impression.
41. It follows that the assessment involves matters of estimation and is not, and cannot be, a mathematical exercise. No amount of devotion to mathematics is capable of transforming a discretionary exercise involving many component parts, each mostly unamenable to precise computation, into one of aggregating separately finely calculated components to reach an overall outcome.
[26] Lovine & Connor and Anor (2012) FLC 93-515 per Coleman, Ainslie-Wallace and Kent JJ
I note that the wife conceded that when it came to funding “the big ticket items”, such as purchases of homes and paying the costs of their extensive holidays, they both attributed equally.
When I weigh up the parties various financial and non-financial contributions over their relationship of 32 years, I conclude that they should receive equal weighting. Consequently, if this matter was to be decided on the basis of contributions alone, there would be a 50-50 division by value of the asset pool. However, these matters are not determined only by contributions.
Subsection 90SF(3) factors
The wife is 69 years old and the husband is aged 71 years, so it is unlikely that either party has any real capacity for gainful employment. They are both in receipt of age pensions.
The wife claims to have some “health issues” in paragraph 40 of her affidavit, but she did not provide any medical evidence in relation to those health issues.
Neither party has any responsibility to support any other person.
As both parties receive an age pension, I infer that they have reasonably similar standards of living apart from the fact that, since the sale of their third home, the husband has been able to live rent-free in the shack, whereas the wife has been paying rent.
I note also that paragraph (r) of subsection 90SF(3) enables me give consideration to “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account” so an adjustment can be made in favour of the wife in relation to that. However, I also note that the husband is prepared to allow the wife to retain all the interest of approximately $11,000 that has been earned by the funds held in trust following the sale of their third home. In my view, that is an appropriate adjustment to make in the wife’s favour.
Conclusions
I conclude that a just and equitable resolution of this matter is:
·that the agreed asset pool (set out in the table at paragraph 19 above) be divided equally by value between the parties; and
·that the wife receive all the interest in the of approximate sum of $11,000.
Fifty percent of the agreed value of the asset pool is $270,140, so if the husband retains Items 2 to 8 with a total value of $168,025, he should receive $102,115 from the sale proceeds at Item 1 in the table.
The wife would then retain the balance of Item 1, being a sum of $154,873, in addition to the interest of approximately $11,000. She will also retain Items 9 to 12 worth $115,266.
I will make orders to provide for what is set out above.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Judge Roberts
Associate:
Date: 30 March 2015
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