CPJ and CCJ
[2003] FMCAfam 611
•29 September 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CPJ & CCJ | [2003] FMCAfam 611 |
| FAMILY LAW – Property – application of principle from Jones v Dunkel (1959) 101 CLR 298 – failure of party to make full and frank disclosure of financial position – recognition that duty to disclose is absolute. |
Family Law Act1975
Jones v Dunkel (1959) 101 CLR 298
Pastrikos (1980) FLC 91-987
Lee-Steere (1985) FLC 91-626
Ferraro (1993) FLC 92-335
Clauson (1995) FLC 92-595
Whitely (1996) FLC 92-684
Russell (1999) FLC 92-877
Kannis Full Court of the Family Court of Australia — Judgment dated 24 December 2002
Chang v Su (2002) FamCA 156
Stein (1986) FLC 91-779
Mezzacappa (1987) FLC 91-853
Black v Kellner (1992) FLC 92-287
Weir (1993) FLC 92-338
Waters v Jurek (1995) FLC 92-635
Hickey (2003) FLC 93-143
| Applicant: | CPJ |
| Respondent: | CCJ |
| File No: | MLM 6592 of 2001 |
| Delivered on: | 29 September 2003 |
| Delivered at: | Melbourne |
| Hearing Date: | 24 – 26 September 2003 |
| Judgment of: | Walters FM |
REPRESENTATION
| Counsel for the Applicant: | Mr B.G. Walmsley SC |
| Solicitors for the Applicant: | The Field Group |
| Counsel for the Respondent: | Mr R.N. Hoult |
| Solicitors for the Respondent: | Macpherson and Kelley |
ORDERS
All previous orders in relation to property be discharged.
The wife do pay the husband the sum of $95,713.00 (“the payment”) on or before 29 December 2003 (“the date”).
Contemporaneously with the payment:
(a)The husband do all such acts and things and sign all such documents as may be required to transfer to the wife at the expense of the wife all of his right, title and interest in the real property, being the whole of the land more particularly described in Certificate of Title Volume 9317, Folio 429 (“the real property”).
(b)The wife indemnify the husband against all payments and all apportionable rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind.
In the event that the whole of the payment has not been made by the date then the wife sign all documents and do all things necessary to transfer to the husband the real property to be held on trust for sale and the real property be forthwith sold altogether out of Court (“the sale”).
Upon completion of the sale, the proceeds of the sale be applied:
(a)firstly to pay all costs, commissions and expenses of the sale;
(b)secondly to discharge the mortgage and any other encumbrance affecting the real property;
(c)thirdly so much of the payment as is then outstanding together with interest thereon at the rate of 13 percent per annum adjusted monthly from the date to the husband; and
(d)fourthly, the balance to the wife.
Pending the payment or completion of the sale:
(a)the wife have the sole right to occupy the real property and during such right of occupation the wife pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the real property as they fall due;
(b)the parties hold their respective interests in the real property upon trust pursuant to these orders; and
(c)neither party encumber the real property without the consent in writing of the other party.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses-in-action) owned by or in the possession of such party as at the date of these orders (the furniture, personal possessions, and like chattels in the property being deemed to be in the possession of the wife).
(b)Monies standing to the credit of the parties in any joint bank account are to become the property of the wife.
(c)Insurance policies remain the sole property of the owner/beneficiary named thereon/in.
(d)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
The application of the husband filed 26 June 2002 otherwise be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLM 6592 of 2001
| CPJ |
Applicant
and
| CCJ |
Respondent
REASONS FOR JUDGMENT
(Ex Tempore)
Introduction and Background
Before the court are the parties’ competing applications for property settlement. The documents which were relied upon by each of the parties are set out in their Case Outline documents filed on their behalf. I note that the wife's form 3A response filed on 5 August 2003 sought orders to the effect that the husband transfer the property at
43 Ennismore Crescent, Park Orchards, to her, that he pay to her by way of property settlement and spousal maintenance such further sum or sums as the court deems appropriate (and such further or other orders as the court considers appropriate).
Although the wife's response contains a prayer for spousal maintenance, the trial was conducted on the basis that spousal maintenance was not an issue. Neither counsel addressed me, either in opening or closing addresses, in relation to the issue of spousal maintenance. I can only assume, therefore, that the wife's prayer in that regard was abandoned.
I do not propose to review the previous orders that have been made in this matter. They are summarised in the material filed on behalf of each of the parties. It is important that I record, however, that both parties consented to this court having jurisdiction to deal with the issue of property settlement, notwithstanding that the total value of the assets available for distribution between them, including superannuation, is in excess of $700,000.00. That concession in relation to jurisdiction was made at a very early stage of the proceedings, and it was reiterated at the commencement of the trial before me.
The history of the parties' relationship is set out in the chronologies which form part of the case outline documents filed on behalf of the parties. The husband was born in June 1941. The wife was born in June 1948. The husband was born in Poland. The wife was born in Australia. The husband arrived in Australia, no doubt with his family, in 1950. Prior to the marriage, and in or about November 1971, the husband's parents gave him a block of land in East Doncaster. The parties were married in January 1972. At that time the wife was employed by the Commonwealth Public Service. She was a clerk. The husband was employed as a quantity surveyor.
Not long after the marriage, in 1973 or 1974, the parties purchased a property in East Bentleigh. It would appear that the purchase price of the property was some $17,500.00. A deposit was provided by the parties from their joint assets, and the balance was borrowed from a financial institution. The parties later sold the East Bentleigh property for some $35,000.00. In the meantime, perhaps, but certainly early in the relationship, a home had been constructed on the East Doncaster property (which had been given to the husband by his parents). The parties moved from the East Bentleigh property into the East Doncaster property for a period of time.
In or about 1979, the parties purchased the vacant block of land in Ennismore Crescent, Park Orchards. It would appear that the purchase was funded from the proceeds of sale of the East Bentleigh property and from savings of the parties. The parties’ first child, A, was born in February 1980. The wife had ceased her paid employment with the public service not long before A was born. In or about 1981 the East Doncaster property was sold and the net proceeds of sale were applied to the construction of a house on the Park Orchards property. The evidence before me (and it would appear to be unchallenged evidence) is that the husband's father ¾ who was an architect ¾ undertook the design of the Park Orchards property and assisted in the drafting of plans and the supervision of construction of the home on that property. That was due to the fact that the parties were living in New Guinea as a result of the husband's employment at that time.
The parties’ second child, C, was born in May 1983. The parties separated shortly before C's birth. According to the husband, the parties reconciled in 1985. According to the wife, they reconciled in 1986. It matters not in the context of these proceedings which of the parties' versions is more accurate. It is important, however, to recognise that at this crucial time of the parties’ relationship — being the time of the birth of their second child — the wife was unable to count on the support of the husband, and the various duties and tasks associated with homemaking and caregiving were left to her to perform. I take that fact into account in these proceedings — along with all the other facts that I have mentioned or will mention during the course of these Reasons.
In or about 1990, it became clear that there were once again difficulties within the marriage. It is difficult to follow from the material before the court exactly what occurred leading up to the parties' final separation. The chronology filed on behalf of the husband records that in 1990 he left White Industries, his then employer, with a superannuation entitlement of about $87,000.00, and that he invested those funds in certain financial institutions.
The chronology records that, in the same year, the parties moved to Brisbane, and the husband was employed as construction manager by a firm called Turner Corporation. He was required to work in New South Wales. The chronology also records that in 1990 the husband's parents gave him certain BHP shares (which he later sold on 14 June 2001 for a net amount of some $83,000.00).
The husband's chronology also records that in September 1991 the husband resigned from Turner Corporation (after having worked with that employer for 12 months) and that in September 1991 the parties separated after the husband commenced work overseas. The chronology records that the wife and children continued to live in Sydney and receive the rental income from the Park Orchards property.
The wife's chronology records that in 1990 the husband was employed as construction manager by the Turner Corporation. That was in relation to the construction of the Australia Post headquarters in New South Wales. It records that the wife and children moved to Brisbane, Queensland, with the husband's employment for 11 months — but the husband did not move. The parties then separated. The chronology records, as well, that the parties reconciled in Sydney in 1991. Later that year the husband was employed by a firm called Gammon Constructions in Hong Kong, and he then moved to Hong Kong. According to the wife, she thought that the marriage was on foot from 1991 through to 1993 — when the husband telephoned her to tell her that the marriage was over.
The husband's version of events is that the marriage ended in 1991, although he continued to have some dealings and a form of relationship with the wife.
On the basis of the evidence now before me, it is very difficult to determine precisely when it was that the marriage finally ended. At the end of the day it is probably the case that little turns on the precise date of separation. It is clear that the parties did not live as man and wife for any significant period after the husband relocated overseas in 1991. It is also clear that the husband commenced a relationship with his present partner, Ms L, not long after he commenced living in Malaysia — which itself was not all that long after he commenced his employment in Hong Kong.
I reserve the right, should it be necessary for me to do so, to review the evidence regarding the movements of the husband from Australia to Hong Kong to Malaysia.
Following the breakdown of the marriage, the wife and the children continued to reside in rented accommodation in Sydney. The Park Orchards property in Melbourne had been leased. The wife retained (by agreement) the rental receipts from the Park Orchards property. The time arrived, however, when the wife considered that it was no longer appropriate to continue to pay high rent for rented accommodation in New South Wales, and — at that time — she and the children left Sydney and returned to Park Orchards. That occurred in or about 1996.
From the time of separation, the husband made certain payments for or on behalf of the wife and/or the children. It would appear that the husband contributed what he describes as maintenance payments for the wife and children at the rate of $40,000.00 per annum from the date of separation until the time when A attained the age of 18 years.
The husband's case is that when A attained the age of 18 years — or, alternatively, from the time she completed her full‑time education — the maintenance payments, as he characterised them, were reduced from $40,000.00 per annum to $30,000.00 per annum.
After separation the wife received dividend cheques of about $1000.00 per annum from certain shares then owned by the husband. In addition, in 1992 or 1993 the husband sold certain shares in White Constructions. The sale of those shares generated something in the order of $10,000.00 — which sum was retained by the wife for her benefit, and for the benefit of the children of the marriage.
As each child attained the age of 18 years (A in February 1998 and C in May 2001) the husband purchased the child a motor vehicle. According to the husband, the cost of the motor vehicle for each of the children was approximately $10,000.00. According to the wife, it was approximately $9,000.00.
In or about 1994 or 1995 the husband's partner, Ms L, purchased a property in Healesville. The evidence before me is that Ms L utilised her own funds for the purchase of that property. I accept her evidence in that regard.
In or about July 1995, the husband returned to Australia. His evidence is that he was then unemployed for a period of about 12 months. He also deposed to the fact that he was unemployed for a further period of some six months in the following year. In other words, the husband's evidence is that he was unemployed after he returned to Australia for a total period of approximately 18 months. He asserted that he was financially supported by Ms L during that period. At a later stage the husband paid Ms L an amount of approximately $75,000.00 which, according to the husband, was to repay to her moneys lent to him during the period of his unemployment. The $75,000.00 paid to Ms L was, according to the husband, sourced in the sale of BHP shares which had been given to him by his father in 1990. The sale price of the BHP shares was something in the order of $84,000.00.
During the course of cross‑examination of the husband, it became clear that the husband had significant funds at the time that he returned to Australia in 1995 or 1996. Reference had been made in the husband's Answers to Questions to an account with the Hong Kong and Shanghai Banking Corporation, but it became apparent during the trial that the husband also had significant funds in two other overseas bank accounts immediately prior to his return to Australia in 1995 or 1996.
The evidence before me is such that I can conclude (and I so find) that the husband had available to him at the time of his return to Australia something in the order of $63,000.00 — which moneys were contained in the accounts then available to him.
The evidence of Ms L and the husband is that during the period of the husband's unemployment he drew down on funds available to him (and which he brought with him from overseas) until the point where no funds were available. He then requested financial support from Ms L ¾ which support was forthcoming. If that is the case, and if the husband indeed received financial support from Ms L to the extent of $75,000.00, then it is apparent that he spent something in the order of $130,000.00 or $140,000.00 during the period of his unemployment.
The husband’s evidence is to the effect that he continued to make the payments for the benefit of the wife and the children that he had made in the preceding years. During the trial I did a rough calculation to the effect that some $60,000.00 might be accounted for in this way. But there is still a significant amount of money which has passed through the husband's hands and which has not been adequately accounted for.
The husband's evidence was that he has not retained bank statements (or various other financial documents relating to assets in his name) since separation. The evidence that he gave was to the effect that he would receive bank statements, that he would check to see that the transactions reflected in them were accurate and that he would then destroy the bank statements. But I do not believe the husband.
In my view, the husband has failed to adequately account for the funds that were or have been in his possession from the date of separation and through to the present date. I will say more about this subject later in these Reasons.
That is not to say that the husband was other than generous in relation to his financial dealings with the wife and the children in the period leading up to these proceedings. Nor is it to say that I should find that Ms L necessarily holds assets on behalf of the husband above and beyond the assets which have been accepted as being held by her. What I am able to say, however, is that, in my view, the husband has assets which have not been adequately accounted for. I do not know what they are, where they are, or what they are worth.
Insofar as the husband's dealings with his family are concerned, there was a dispute as to whether the BHP shares, which the husband asserts were given to him by his father in 1990, were in fact given to him at that time, or whether he purchased those shares (presumably from his earnings). The wife's evidence in this regard was that she saw a document which related to the acquisition of shares, being a purchase note of some form.
The husband's father is very elderly. He is over 90 years old. The husband's evidence, however, is that his father, although hard of hearing, has “all his faculties”. I take into account the rule in Jones v Dunkel (1959) 101 CLR 298, to which I made reference during the course of the proceedings (and upon which I shall expand if it should become necessary for me to do so), and observe that the husband could have, and arguably should have, called his father to give evidence for the purpose of clarifying the financial arrangement between them. It would have been a very simple step for the husband's father to swear a short affidavit setting out the nature of the gifts that he had provided for his son. He did not do so.
I infer — in accordance with the test in Jones v Dunkel — not necessarily that the evidence of the husband's father would have contradicted the evidence of the husband, but that his evidence may not have assisted his son's case.
I find the wife to be a witness of truth, and I accept that she did indeed see a document in the nature of a purchase note and as otherwise described by her. I find, therefore, that the shares that the husband asserts were given to him by his father in 1990 were in fact purchased by the husband from the parties’ joint assets.
Insofar as other transactions are concerned, I accept (because it does not appear to be in issue) that the amount of approximately $101,000.00 provided to the husband in July 2001 and the amount of approximately $32,000.00 provided to the husband in November 2001 were sourced in the husband's parents. But, for the same reason as I have indicated (which reason has its genesis in the rule in Jones v Dunkel) I am not prepared to accept that the arrangement between the husband and his parents can or should properly be characterised as a loan. I find that the husband has no obligation to repay to his parents any of the total amount of approximately $132,000.00 that was provided to him in 2001.
The fact of the matter is, however, that that very significant amount of money was provided to the husband by his parents well after the date of separation, and it is not possible to clearly conclude — on the basis of the evidence before me — that the wife has made any real contribution to it.
In 1996 the wife was diagnosed with oesophageal cancer. The evidence would appear to be that after treatment that cancer is now in remission. Quite what the wife’s future earning capacity will be is uncertain. All that I can determine at this point in time is that the wife has employment (as she has deposed to in her affidavit material) and that that employment is continuing.
From the husband's point of view, the evidence is that he left his employment with Grocon Pty Ltd, (which was his last employer) in 2001, and that he retired at that time. It does not appear to be in issue that the husband has indeed retired, and that his present earning capacity is that which reflects his dealings with whatever assets may now be available to him.
The Park Orchards property was destroyed by fire in 2000 or 2001. The wife received an insurance payout of some $44,000.00 relating to the fittings, fixtures and chattels contained in that property. To the extent that it may still be relevant in these proceedings, I find that she has indeed expended all of those funds on the refurnishing of the reconstructed home. The home itself was rebuilt following the fire, utilising an insurance payout. I accept the wife's evidence (again, to the extent that it be relevant in these proceedings) that there were additional costs over and above the bare construction cost of the home, and find that she almost certainly outlaid well in excess of the $44,000 that was provided to her from the insurance payout in the reconstruction and refurnishing of the home in which she presently resides.
The evidence reveals that the husband provided Ms L with sums of money totalling close to $130,000.00 — sourced in the moneys provided to him by his parents (to which moneys I have made reference). The evidence before me is such that I can confidently conclude that these funds were simply to be held by her on his behalf — for tax or other purposes which remain unclear.
Approximately six months ago, Ms L repaid the husband some $48,000.00 of the moneys that the husband had asked her to keep for him. Quite what that sum was used for, I do not know — but it was not an issue in these proceedings. Accordingly, I find that — insofar as item 11 of the schedule of assets and liabilities to which I am about to make reference is concerned — the $80,609.00 now held by Ms L is indeed an asset of the husband, and that the item described as “personal loan from parents” (being $133,153.00) is not a liability to which I need have regard.
The Law
The general approach that should be adopted by the court in relation to a property settlement application has been described in many cases. See, for example, Pastrikos (1980) FLC 91-987, Lee-Steere (1985) FLC 91-626, Ferraro (1993) FLC 92-335, Clauson (1995) FLC 92-595 and Whitely (1996) FLC 92-684.
The court must first identify the assets of the parties. It must then attribute a value to each of those assets — usually as at the date of the hearing. Thereafter it must assess the extent of each parties' contributions under the various subheadings described in section 79(4) of the Family Law Act. Finally, the court must consider the financial resources, means and needs of the parties, and the other matters set out in section 75(2) so far as they are relevant. An adjustment of the amount due to each party by way of contribution is then made by reference to the section 75(2) factors. It is not essential, however, that such an adjustment take place. Generally speaking, an adjustment is made because one party has greater needs and the other has stronger means.
In relation to the contributions of the parties under section 79(4) generally, it has been held that a global approach will usually be more convenient than an asset by asset approach, although the application of an asset by asset approach does not of itself amount to an error of law (see Norbis (1986) FLC 91-712).
Section 75(2) is concerned with the process of arriving at a just and equitable result. It follows that there may be circumstances in which the justice and equity of the case and the specific provisions of section 75(2) support an adjustment in a party's favour for matters which cannot comfortably be described as being a financial or economic significance (see McMahon (1995) FLC 92-606 at page 82,043).
Under section 79(2) the court is required to be satisfied that the order to be made is just and equitable, and not simply the underlying percentage division of the net value of the parties’ assets. In other words, in the consideration of whether the overall result of property settlement proceedings is just and equitable, it is the justice and equity of the actual orders and not of the percentage distribution which must be considered (see Russell (1999) FLC 92-877).
Assets and Liabilities
During the course of the trial the identity and value of the assets of the parties were essentially agreed. A document was handed up to me by counsel for the husband at the conclusion of the hearing. It records the assets available to these parties. I have already found that item 11 in the schedule is incorrect, in that it records an obligation on the part of the husband to repay moneys to his parents. I have found that the husband has no such obligation. It follows that the liability described in the schedule (recorded as $133,153.00) should be ignored at this stage of the property settlement exercise.
I find that the assets that the parties now have available for distribution between them are as follows. Firstly, the assets in the name of the wife:
Park Orchards property
$565,000.00
1988 Nissan Skyline motor vehicle
$ 4,000.00
Westpac or Bank of Melbourne account
$ 5,000.00
Shares in the wife's name
$ 58,698.00
The wife’s superannuation
$ 10,299.00
Total:
$642,997.00
Insofar as the assets owned or controlled by the husband are concerned, they comprise:
Ford Futura motor vehicle
$ 8,000.00
Ford Transit motor vehicle
$ 1,500.00
Other motor vehicle
$ 15,000.00
Bank of Melbourne account
$ 24,948.00
Tools
$ 5,000.00
Managed investments (comprising his superannuation entitlements)
$214,694.00
Total:
$269,142.00
I pause at this stage in these reasons to state that it was agreed between the parties that their superannuation entitlements should be treated as an asset for the purpose of these proceedings. Accordingly, I have treated them in that way, and not dealt with them as a financial resource[1].
[1] In any event, I note the approach approved by the Full Court in Hickey (2003) FLC 93-143 at pp 78,392-3 (paragraph 75).
The total of the assets available to the wife is $642,997.00, and the total of the assets to which I have referred, and which are available to the husband, is $269,142.00. The total net pool, therefore, is $912,139.00.
I have not made reference to the item in the schedule recorded as the loan to Ms L of $80,609. Due to the fact that those moneys were sourced in funds provided to the husband by his parents well after the date of separation, I have decided that the most appropriate way to deal with them is to treat them as a financial resource available to the husband. I have not treated other assets in the same way. I am conscious that the shares in the name of the wife, for example, were or may have been acquired by the wife from funds available to her since the date of separation. Nevertheless, I find that those are assets to which it can fairly be said that the husband has made a form of contribution.
The wife's evidence is that she received moneys from the husband after separation, that she invested those moneys and at the same time acquired additional shares when she was able to do so. As well, the wife was able to acquire shares at some stage prior to the date of separation. In my view, the shares in the name of the wife should be regarded as an asset, but I do take into account the differing contributions of the parties in a broad sense to that asset (and to all the assets to which I have referred) and I shall say more about such contributions later in these Reasons.
The same applies in many ways to the investments in the name of the husband, forming his superannuation entitlements. The evidence is that at the time of separation the husband had superannuation entitlements worth something in the order of $100,000.00. The husband continued to work and to contribute to his superannuation after the date of separation. No doubt, his entitlements also accumulated internally during the post-separation period. Nevertheless, a significant proportion of those entitlements were acquired prior to the date of separation.
To the extent that the wife's contributions to the welfare of the family continued after the parties separated, it is fair to say that her contributions to the husband’s superannuation entitlements also continued.
I have concluded, therefore, that all of those assets should be included in the asset pool. I have only “removed” the $80,609.00 because that asset is clearly and without dispute a result of funds provided to the husband by his parents well after the date of separation. It is not possible for me to conclude that the wife has made any significant contribution to those funds.
There is one last item to which I would make reference under the general heading of Financial Resources. I have found that the husband did not make full and frank disclosure of the assets that he brought into Australia in 1995 or 1996. I find, as well, that the husband's statement to the effect that he destroyed his bank statements is not to be believed. If I am wrong in that regard, then I conclude that the destruction was related to these proceedings, and to the possibility of property settlement orders being made in the wife's favour.
The Husband has not made Full and Frank Disclosure
The duty to make full and frank disclosure of one's financial position has been set out in a number of cases determined by the Full Court over the years. They are helpfully summarised in a recent decision of the Full Court of the Family Court of Australia in Kannis. The date of the Judgment is 24 December 2002. The decision in Kannis is reported in (2002) 30 Fam LR at page 83 — but it is not reported in relation to the non-disclosure issue.
Again, I shall expand upon this subject if I am required to do so. Suffice it to say (in these oral and ex tempore Reasons) that the Full Court referred to the very recent decision in Chang v Su (2002) FamCA 156, and to the line of authorities comprising Stein (1986) FLC 91-779, Mezzacappa (1987) FLC 91-853, Black v Kellner (1992) FLC 92-287 and Weir (1993) FLC 92-338 — and cited with approval the various approaches taken by the court in those cases. It recognised that when a party has not made full and frank disclosure, it is very difficult for a court to make decisions as to what the extent of that non-disclosure may be.
In paragraph 52 of the Kannis decision, there appears the following comment:
Whether the non-disclosure is wilful or accidental, or is a result of misfeasance or malfeasance or non-feasance is beside the point. The duty to disclose is absolute. Where the court is satisfied that the whole truth has not come out, it might readily conclude that the asset pool is greater than demonstrated. In those circumstances, it may be appropriate to err on the side of generosity to the party who might be otherwise seen to be disadvantaged by the lack of complete candour.
In Kannis, that was the course that the trial Judge adopted, and the Full Court concluded that it was a course clearly open to the trial Judge, and that it did not merit appellate interference. I adopt the discussion by the Full Court of the law in relation to this subject contained in paragraphs 48 through to 51 of the decision in Kannis.
What then do I do with such a finding? On the basis of the evidence before me, and taking into account the nature of the husband's financial relationship with Ms L and the earnings that he received after separation (and, most importantly, after his return to Australia), I conclude that the fairest and most sensible way of proceeding is to find that the husband has available to him, or should have had available to him — if he had acted in a prudent manner — assets to the value of $75,000.00. I treat that amount as a resource available to the husband. I treat it as a resource because, although I cannot be certain that it exists, I am persuaded on the balance of probabilities, and on the basis of the authorities to which I have referred, that it is likely to exist. Further, I find that the husband should be entitled to at least this sum, over and above the $80,000.00 that Ms L currently owes him.
I do not wish these comments to be interpreted, however, as a finding that the $75,000.00 to which I referred is actually held by Ms L. It may not be. I do not know where the funds are. But the husband has failed to make full disclosure, and the law is to the effect that I should not be unduly cautious about making a finding in favour of the wife (who is to be seen in that regard as the innocent party).
If I add $75,000.00 to the resources available to the husband, then it is apparent that they total $155,609.00 — being the $80,609.00 to which I referred earlier, together with the $75,000.00.
What the court must deal with, therefore, is an asset pool of $912,139.00 and a resource pool of $155,609.00 To the extent that it may be relevant, the total of assets and resources is $1,067,748.00.
Contribution
I turn now to consider the question of contribution — which is variously described as the second or third step in the property settlement exercise. I do not wish to spend an undue amount of time on this subject, and reserve the right to expand on it should it become necessary for me to do so.
I find that the husband brought into the marriage the block in East Doncaster given to him by his parents. That is an important consideration in these proceedings. True it is that many years have passed since that asset was provided to the husband and that it has long since been sold and absorbed into other assets. I am conscious of the decisions in Money (1994) FLC 92-485, Bremner (1995) FLC 92-560 and most recently Pierce (1999) FLC 92-560. It is for this court to determine, in the overall context of these proceedings, what weight should be given to a contribution of that nature.
It is clear that the simple passage of time does not in itself dilute or erode the significance of that contribution. It is the offsetting contribution of the other party to the marriage that may diminish its overall relevance. There are many other factors that may serve to diminish its overall relevance as well.
There can be no doubt that the husband was the principal breadwinner in this family. He worked long and hard for the benefit of his family, and to assist in the acquisition of assets. I have already found, however, that at the time of C's birth the husband was not available to assist the wife for a period of two or three years. Quite what the financial relationship between the parties was at that time I do not know. I shall return to that form of contribution under the separate heading of Contribution to the Welfare of the Family.
The husband provided for the family financially until the date of separation. Thereafter, the husband continued to provide financial assistance to the wife and the children. I have referred to the evidence which reveals that the husband paid $40,000 per annum to the wife for her benefit, and for the benefit of the children. The evidence reveals that those moneys were reduced and ultimately stopped as the children attained the age of 18 or completed their secondary education.
The husband also permitted the wife to obtain and retain the dividends from the shares to which I have referred and the sale proceeds from the other shares to which I have referred. I have already found that the BHP shares acquired in the year 1990 or thereabouts were not given to the husband by his parents, but were purchased from moneys earned by the husband during the course of the parties' relationship.
Insofar as indirect contributions are concerned, the evidence is that, for so long as the wife and the children resided in Sydney, the husband provided or enabled them to receive the benefit of the rental proceeds from the Park Orchards property. The wife and children were able to reside in the Park Orchards property after they returned to Melbourne. It was pressed upon me that that was not a contribution in any recognisable form on the part of the husband. I do not agree. In my view, the husband could have pressed for a property settlement at a much earlier stage than he did (and so, indeed, could the wife). The fact of the matter is that the wife had the security of the Park Orchards accommodation, which she enjoyed for a lengthy period of time, during which it fell to the husband to make other arrangements.
If the Park Orchards property is treated as an asset of the parties, then it is fair to say that the wife had the exclusive use of that asset for a lengthy period of time. I regard that as being an indirect financial contribution on the part of the husband, or alternatively, a contribution to the welfare of the family.
I take into account, as well, the fact that some of the husband’s assets were acquired (in large part) after the date of separation — from his earnings or entitlements. In that regard, I refer to the husband’s Bank of Melbourne account, in which there is close to $25,000.00 available, and to the investments sourced in his superannuation.
The wife has also made financial contributions. It is clear that she has worked in paid employment ¾ initially on a part‑time basis (indeed, I think still on close to a part‑time basis, being some four days per week). She has made a financial contribution to the assets now in her name.
But it is also the case that certain of the assets now available to her are sourced, in large part, from funds made available to her by the husband, and which were surplus to her needs. Alternatively, and if that is not the case, then those assets were acquired as a result of social security entitlements which the wife received and which she was able to preserve in this form due to the other contributions made by the husband.
I take into account, as well, the contributions made by the husband to the construction of the home. These contributions were made, it would appear, indirectly by his father. But there were other contributions made by the husband in the very early stages of the marriage in relation to the construction of the parties’ first residence, and I take them into account. I shall review this matter and expand upon it should it become necessary for me to do so. I take into account, insofar as indirect contributions to assets are concerned, the contributions made by the wife to the reconstruction of the home following the fire some three years ago.
Overall, I conclude that ¾ insofar as financial contributions to the asset pool are concerned ¾ the husband has made a significantly greater contribution than has the wife. In relation to non-financial contributions to assets, I find that the husband has made a greater contribution (but not a significantly greater contribution) than has the wife.
I turn now to the third aspect of the contribution exercise ¾ being contribution to the welfare of the family. I take into account the fact that the wife was ¾ unarguably ¾ the principal homemaker and caregiver for these children whilst the parties resided together. But her contributions in this regard do not stop with that statement. The parties separated at or around the time of C's birth, and the wife's contributions in the absence of the husband during that period of separation, be it two or three years, were very significant indeed. The wife's contributions in this area, at that stage, were extraordinary, and were unmatched by those of the husband.
Similarly, from the time that the husband moved to Hong Kong it fell to the wife to run the household comprising herself and the children. She was obliged to care for and supervise the children throughout the years following separation, and until they reached adulthood. In my view, her contributions in that regard were also extraordinary and were not matched by the husband’s contributions to the welfare of the family. I do not ignore, however, the financial contributions made by the husband to the welfare of the family. During the period of separation he paid school fees for the children, and when they attained the age of 18 years he bought them each a motor car. I do not ignore those forms of contribution. The husband said in his affidavit, as well, that he paid for holidays for the children, and I accept his evidence in that regard.
Overall, however, the wife's contributions to the welfare of the family were far in excess of those of the husband. Again, if I am required to do so I shall expand upon this subject at a later stage.
It is a very difficult exercise to weigh up the various forms of contribution made by the parties. It is like comparing apples and oranges. But that is what I must do. Taking into account the various aspects of the parties’ contributions to which I have referred in these reasons, I conclude that an appropriate division of the parties’ assets available for distribution between them at the present time — on the basis of contribution alone — is 55 per cent to the wife and 45 per cent to the husband.
I am satisfied that that is an appropriate preliminary division, notwithstanding the submissions of counsel for each of the parties.
Section 75(2) Factors
So far in discussing the question of property settlement, I have addressed the question of contribution only. Clearly, the court is entitled to make an adjustment to a party's property settlement entitlement on the basis, amongst other things, of both parties' respective means and needs. The Family Court has been critical of shorthand terms being used to describe the last step in the property settlement exercise, preferring to refer to it simply as the section 75(2) factors (see Clauson (1995) FLC 92-565). In essence, section 75(2) is concerned with the process of arriving at a just and equitable result (see Waters v Jurek (1995) FLC 92-635).
I have already recorded the age and state of health of each of the parties. I have dealt with their respective income, property and financial resources, and the physical and mental capacity of each of them for appropriate gainful employment. I find that the wife is presently utilising her earning capacity to the full and that she has no physical or mental capacity for employment over and above the employment that she currently undertakes. I find that the husband has no capacity for gainful employment at the present time.
Insofar as the subject of resources is concerned, I refer to the findings which I made earlier — to the effect that the husband has available to him resources worth something in the order of $155,609.00.
Neither party has the care or control of a child of the marriage who has not attained the age of 18 years.
I am required to consider the commitments of each of the parties that are necessary to enable that party to support himself or herself and a child or another person that the party has a duty to maintain. Notwithstanding the efforts of counsel for the wife, on the basis of the evidence now before me, I can only conclude that the wife has no duty in law to maintain her two adult children (who would appear, in any event, to be self-supporting). Parents may have a moral obligation to maintain their adult children, but the law does not impose a formal obligation in that regard.
I have referred to the resources available to each of the parties and the assets available for distribution between them. Their commitments, to the extent that they may be relevant, are dealt with in the financial statements that they have filed.
Section 75(2)(e) requires the court to consider the responsibilities of the parties to support any other person. In that regard, I refer to the comments that I have already made regarding the adult children of the parties. The husband and Ms L have not married, and he has no legal obligation to support her. I would add that he has no moral obligation to support her either.
The eligibility of either party for an appropriate pension, allowance or benefit would not appear to be a relevant consideration in this case.
The court is required to consider a standard of living that in all the circumstances is reasonable. I take into account the fact that the wife and the children have resided in the Park Orchards property for a lengthy period of time. That does not mean, however, that she must continue to reside in that property. It is reasonable that she should continue to reside there if the resources of the parties permit, and if justice and equity allow that to occur.
The husband resides in a property owned by Ms L. On the basis of the evidence now before me, I cannot and do not conclude that he has any legal interest in that property. He may have some form of equitable interest in it, but it might be difficult, having regard to the evidence that each of Ms L and the husband have given during the course of these proceedings, to identify or enforce that should their relationship end. I am conscious that there is no guarantee that the husband's relationship with Ms L will continue for an extended period into the future — although, when I look at the history of their relationship, it is fair to conclude that it is a stable relationship, and that it is likely to continue.
I take into account the duration of the marriage and the extent to which it affected the earning capacity of (in this case) both parties. There is little, however, that I can say in relation to that subject that I have not already said.
I am required to consider the financial circumstances relating to the cohabitation between the husband and Ms L. That is so because section 75(2)(m) requires me to take them into account. I find that there occurs some considerable mixing of funds between the husband and Ms L. I find, however, that Ms L is not holding funds for the husband above and beyond the funds which she has admitted to holding on his behalf. As to whether there is some other arrangement between them, I do not know. I have dealt with this subject already — in relation to my conclusion regarding the sum of $75,000.00 (which I have treated as a resource available to the husband).
In the broadest sense, however, I accept the evidence of Ms L and the husband that they endeavour to keep their financial affairs separate, and that moneys passing between them have fairly been characterised as loans or the equivalent.
None of the other factors set out in section 75(2) would appear to be of significance in the context of these proceedings.
I find, in all the circumstances, that the two most significant s.75(2) factors are the financial resources which are available to the husband (and which are not available to the wife), and the standard of living that can be considered reasonable for each of the parties. I find that the husband has secure accommodation with Ms L for as long as his relationship with her continues, and I have no reason to suspect that the relationship will not continue well beyond the foreseeable future.
Conclusion
Taking all those factors into account, on the evidence before me and having regard to the fact that the purpose of the section 75(2) adjustment is to assist the court with the process of arriving at a just and equitable result, I conclude that an adjustment should be made to the wife's entitlement on the basis of contribution alone by increasing that entitlement from 55 per cent to 60 per cent. On the basis of the material presented to me, this means that, if the wife is to retain the items of property which I have referred to as being “her” assets (and which include the Ennismore Crescent property), then she must pay to the husband an amount of $95,713.60.
If the asset pool comprises $912,139.00, then 60 per cent of that figure is $547,283.40. The wife will retain assets to the total value of $642,997.00. It follows that if she is to retain all those assets, then she must pay to the husband the sum of $95,713.60.
As I indicated earlier, the Full Court has cautioned against assessing section 75(2) factors in percentage terms without considering the real impact of any proposed adjustment; in other words, the real impact in money terms is what was described in Clauson as “the critical issue”. In the present case, the section 75(2) adjustment amounts, in money terms, to $45,606.95. I am satisfied that that adjustment is proper, even taking into account, as I do, the differential between the value of the assets to be retained by the wife and the assets to be retained by the husband. I am satisfied that the division is just and equitable (within the meaning and contemplation of s.79(2)) to both parties in all the circumstances of this case.
I now invite counsel to prepare a minute of orders to give effect to the reasons which I have just delivered.
I, Paul O'Halloran, certify that the preceding one hundred (100) paragraphs are a true copy of the Reasons for Judgment of Walters FM
Associate:
Date: 4 March 2004
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