Erdem & Ozsoy

[2012] FMCAfam 1323

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ERDEM & OZSOY [2012] FMCAfam 1323

FAMILY LAW – Proceedings to alter property interests – where husband and wife separated and lived separately and apart prior to the commencement of proceedings – where wife died after separation and after the commencement of proceedings to alter property interests – where proceedings continued by wife's legal personal representative – consideration of High Court' s decision in Stanford (2012) HCA 52 – consideration of the provisions of section 79(8) of the Family Law Act1975 – whether it would have been just and equitable to make property settlement order had wife remained alive – whether still appropriate despite wife's death to make property settlement order.

Family Law Act 1975 (Cth)
Federal Magistrates Court Rules2001
Federal Magistrates Court Regulations

AJO v GRO (2005) FLC 93-218
B & B (2006) FamCA 883
Black & Kellner (1992) FLC 92-287
Bonacci (2012) FamCAFC 15
Bourke (1998) FamCA 69
Bremner (1995) FLC 92-560
Briese (1986) FLC 91-715
C & C (1998) FamCA 143
Chang v Su (2002) FLC 93-117
Clauson (1995) FLC 92-595
Ferraro (1993) FLC 92-335
Fisher (1986) 161 CLR 438
G & G (2004) FamCA 1179
Giunti (1986) FLC 91-759
Gollings and Scott (2007) FLC 93-319
Hickey (2003) FLC 93-143
K & K (2002) FamCA 1150
Kouper (No.3) (2009) FamCA 1080
Lee-Steere (1985) FLC 91-626
Mayne (2011) FLC 93-479
McMahon (1995) FLC 92-606
Mezzacappa (1987) FLC 91-853
Money (1994) FLC 92-485
Norbis (1986) FLC 91-712
Norman & Norman [2010] FamCAFC 66
Oriolo (1985) FLC 91-653
OSF & OJK (2004) FLC 93-191
Pastrikos (1980) FLC 91-987
Pierce (1998) 24 FamLR 377
Polonius and York (2010) FamCAFC 228
Re Chemaisse; FC of T (Intervener) (1990) FLC 92-133
Reichstein (2006) FamCA 1422
Russell (1999) FLC 92-877
Shimizu and Tanner (2011) FamCA 271
Stanford (2012) FLC 93-495
Stanford (2012) HCA 52
Tasmanian Trustees Ltd and Gleeson (1990) FLC 92-156
Teal & Teal [2010] FamCAFC 120
Waters & Jurek (1995) FLC 92-635
Way (1996) FLC 92-702
Weir (1993) FLC 92-338
Whitely (1996) FLC 92-684
Williams (2007) FamCA 313

Applicant: MR ERDEM

Respondent: MS OZSOY

File Number: MLC 7194 of 2009

Judgment of: Walters FM

Hearing dates: 3 – 7 September 2012

Date of Last Submission: 10 October 2012

Delivered at: Melbourne

Delivered on: 5 December 2012

REPRESENTATION

Counsel for the Applicant: Mr Salamanca

Solicitors for the Applicant: Cahill & Rowe Family Law

Counsel for the Respondent: Ms Smallwood

Solicitors for the Respondent: Lampe Family Lawyers

ORDERS

IT IS ORDERED THAT:

1. Pursuant to section 39 of the Federal Magistrates Act 1999, these proceedings be transferred to the Melbourne Registry of the Family Court of Australia to be listed before Justice Walters when the cost application is filed at the Registry (provided that such listing is to be after 14 December 2012).

2. On or before the 5th day of February 2013 ("the date") the Husband must pay to the legal practitioners for the Estate of Ms Ozsoy ("the Estate") the sum of $68,187 ("the payment").

3. Contemporaneously with the payment the Husband and the Estate respectively must provide a Withdrawal of Caveat in registrable form with respect to any caveat lodged by the Husband or the Estate over any real property to be retained by the other party pursuant to these orders.

4. (a)     At 3.00pm on the 16th day of December 2012 the Estate shall transfer to the Husband the 5 rugs (agreed during trial) at [address omitted] (car park).

   (b)Contemporaneously with the transfer of the rugs, the Husband shall provide a transfer of the Honda UFU 160 to the Estate at the expense of the Estate.

5. In the event that the payment or part thereof has not been made by the due date the Husband shall pay interest on so much of the payment as is then outstanding together with interest thereon at the rate of 10% per annum adjusted monthly from the date to the Estate.

6. In the event the payment is not made by the date then the real estate known as and situate at Property M be sold and the proceeds applied:

   (a)To discharge all costs and commissions of sale;

   (b)To discharge any registered encumbrance;

   (c)To pay any sum outstanding pursuant to orders 1 and 4 herein; and

   (d)The residue to the Applicant Husband.

7. That 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) in the possession of such party as at the date of these orders;

   (b)Monies standing to the credit of the parties in any joint bank account are to become the property of the Husband;

   (c)Insurance policies remain the sole property of the owner;

   (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; and

   (e)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

8. Save for the issue of costs (as provided for in paragraph 1 above), the applications of the Husband and the Estate filed on 13 November 2009 and 18 December 2009 respectively otherwise be dismissed.

AND THE COURT NOTES THAT:

1. The Court has raised with the parties the possibility of setting off the amount of $22,000 owing to the husband in respect of his contribution to the purchase price of one of the apartments in [E], Turkey (plus interest) against the amount of $68,187 otherwise payable by the husband pursuant to the Judgment.  In other words, the Court has suggested that the amount payable by the husband should be $46,187 and that the husband should then release the Estate and the wife's mother from any liability to him for the amount of $22,000 referred to in the Judgment.  The solicitors for the parties indicated they would obtain instructions as to whether their clients were prepared to agree to amending the orders to take account of the Court's suggestion.

IT IS NOTED that publication of this judgment under the pseudonym Erdem & Ozsoy is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLC 7194 of 2009

MR ERDEM

Applicant

And

MS OZSOY

Respondent

Reasons for Judgment

Background and relevant financial and other history

1. In these Reasons, and unless otherwise indicated, all statements of fact comprise findings of fact.

2. The husband was born in 1959, and the wife in 1967. They commenced a relationship in 1995 and married (in Melbourne) on [date omitted] 1996.  They separated (although continuing to live under the one roof) in or about August 2008.  It follows that their relationship lasted approximately 12 or 13 years.  They were divorced in October 2009.

3. There were no children of the marriage.

4. The wife died of cancer [date omitted] 2011.  She had commenced proceedings for property settlement in this Court in November 2009.  After the wife's death, the proceedings were continued by her brother, Mr I (who had been appointed as the executor of her estate).

5. The parties were both born in Turkey.  The husband emigrated to Australia in the first half of 1986; the wife in October 1993.

6. The marriage in August 1996 was the husband's first marriage and the wife's second.  She married her first husband in February 1992 in Turkey.  They divorced after approximately one year (in February 1993).  Some eight months later, the wife emigrated to Australia.

7. It follows from the above that the husband had lived in Australia for approximately 10 years before he met and commenced a relationship with the wife.  The wife had lived in Australia for approximately two years when the relationship commenced.

8. The wife's parents are both alive.  Her father lives in Turkey.  Her mother's living arrangements are less than clear, but she has spent significant time in both Turkey and Australia since approximately September 1995.

9. The wife has two brothers: Mr H and Mr I, who were born in Turkey in 1956 and 1964 respectively.  Mr I emigrated to Australia in February 1989, and Mr H in January 1993.  They are both Australian citizens.  Mr I is the executor of the wife's estate.

10. The husband's father died in 1977.  His mother died in approximately February 1997.  He has siblings living in Turkey.

11. The husband and wife were both educated to tertiary level in Turkey.  The husband obtained qualifications as an [omitted], having graduated in September 1981.  The wife was awarded a [qualification omitted] in 1989.

The wife's will

1. Before dealing with other relevant historical matters, reference should be made to the wife's will.

2. The will was made on 9 December 2010 – well over two years after the parties separated, and approximately 13 months after the husband commenced proceedings for property settlement in this Court.  It was signed on the day before the wife swore her affidavit in the proceedings, when the wife was well aware that she had been diagnosed with cancer and was in the process of undergoing chemotherapy.

3. Leaving aside formal provisions and contingency arrangements, the effect of the will is as follows:

   a)Mr I was appointed to be the executor and trustee of the will;

   b)the wife clearly stated that she was making no provision for the husband (and referred to the ongoing property settlement proceedings in this Court);

   c)specific bequests of $10,000 each were made to two charities;

   d)a trust fund (amounting to $50,000) was established for the education, maintenance and well-being of the wife's nephew, [name omitted] (who is Mr I's son); and

   e)the whole of the residue of the estate was given to the wife's mother, Mrs O.

4. The wife died on 3 July 2011.

5. Probate of the will was granted on 30 November 2011, with Mr I as executor.  On 12 January 2012, orders were made permitting Mr I to conduct the proceedings in the place of the wife.

Husband's employment

1. From 1981 until his relocation to Australia, the husband worked as an [omitted] in both the government and private sector in Turkey.  After arriving in Australia, he obtained employment within approximately two months.  His first job was with [omitted], where he was employed in [omitted] roles for approximately three years.  With the exception of a period of approximately 12 months in 1993/4, the husband has been continuously employed by [omitted] or its corporate predecessors since he left [omitted] in June 1989.  He has worked in a variety of roles associated with [omitted], and is currently a [omitted].

2. From June 1993 to June 1994 the husband took leave without pay to return to Turkey, because his mother was seriously ill at that time.  He obtained employment while he was there, working as a [omitted].

Wife's employment

1. The wife's employment history prior to her arrival in Australia is less than clear.  It appears that she had no significant savings at the time she left Turkey, although she had some jewellery and "a small share of furnishings and appliances".[1]  She sold "the bulk of the jewellery" to pay for costs associated with her emigration to Australia.

   [1] see paragraph 5 of the wife's affidavit

2. The wife's employment history after her arrival in Australia is dealt with in paragraphs 15 to 17 of her affidavit.  Leaving aside the times when she worked for businesses associated with the husband (with which I have dealt below), the reality is that she worked very much on a casual or part-time basis, earning very modest amounts – although she appears to have worked full-time from March 1999 to September 2000 and from June 2002 to September 2004.  According to the table in paragraph 17 of her affidavit, her annual income (which included rent from Property C) never exceeded $30,000 and was often much less than that.

3. The wife deposed to working for two businesses associated with the husband – [B] Pty Ltd and [A].  In relation to the former, the wife asserted that she did certain (unpaid) administrative work for a period of approximately 5 to 8 hours a week from 1995 to 2001.  The husband asserted that the wife did not work for [B] Pty Ltd "because there was no work to do"; there was "no office work or office management".[2]  I accept the husband's evidence in that regard and find that any work that the wife may have done for [B] Pty Ltd was minimal.  In relation to the latter ([A]), the wife asserted that she "established a [omitted] business known as [A]", that she purchased a van for the business and that her brother assisted her in the business as a [omitted].  She said the business was conducted for a period of approximately 3 years between 1997 and 2000.  It ceased in 2000 because "it was not very successful".  The wife deposed to having purchased a van for $24,500, of which approximately one half was provided by her mother and the other half was borrowed from the bank.  The wife also deposed to fully repaying the bank loan prior to the cessation of the business.  She said that the van was sold in 2001 for $8000 and that her mother had never been repaid.  The husband's version was that he set up [A] in order to assist the wife's brother, Mr H, who wanted to establish a [omitted] business.  The husband asserted that approximately one half of the purchase price of the van was provided by Mr H, but agreed that the other half was borrowed from the bank.  According to the husband, the business was registered in the wife's name because Mr H was receiving Social Security entitlements at the same time as he was driving the van for the business.  The husband said that Mr H was unsuccessful as a [omitted] and eventually could not continue in the role because "he had an accident when he was drunk and was caught by Police and lost his licence for more than a year".[3]  The husband said that the wife did the book keeping for the business because Mr H was incapable of doing it himself.  The husband agreed that the wife repaid the bank loan and that the van was later sold.  I accept that approximately one half of the purchase price of the van was provided by either Mr H or the wife's mother, and otherwise accept the husband's evidence in relation to [A].  The business generated enough moneys to repay the bank loan and provide Mr H (and the wife) with some very modest income, but it was ultimately unsuccessful and the moneys invested by either Mr H or the wife's mother were effectively lost.  It seems clear that the wife retain the proceeds of sale of the van (which she said amounted to $8000).

   [2] see paragraph 149 of the husband's affidavit

   [3] see paragraph 151of the husband affidavit

Parties' property at the commencement of the relationship

1. At the date of marriage, therefore, the wife had "minimal savings, jewellery and personal items".[4]  The husband had the following:

   a)A small unit in [U] (which the husband had purchased in 1989 for approximately $57,000).  The unit was sold shortly after marriage for $67,300.

   b)A half interest in a unit in Property B.  The unit was purchased by the husband and the other half owner in 1990 as an investment.  The purchase price was approximately $120,000.  The husband's net half interest Property B unit is now worth $221,000.

   c)Savings in Australia amounting to approximately $27,000.

   d)Savings in Turkey amounting to approximately $109,000, which the husband transferred to Australia progressively between March 1997 and September 2005.

   e)A motor vehicle, and furniture, chattels and personal belongings.

   f)Superannuation entitlements amounting to approximately $51,700.

   [4] see paragraph 28 of the wife's affidavit

2. As a result of the death of the husband's mother in Turkey in early 1997 (approximately 6 months after the parties' marriage), the husband inherited or ultimately became entitled to an interest in five properties in Turkey.  The husband's interest in these properties is currently valued at $165,100.

Contributions – preliminary observations

1. There can be no doubt that the husband's financial contributions at or around the commencement of the parties' relationship were overwhelmingly greater than those of the wife.  Similarly, there can be no doubt that the husband's income from employment during the course of the relationship was overwhelmingly greater than the wife's income from employment.  Indeed, his income from all sources (including investments) during the course of the relationship was overwhelmingly greater than the wife's income from all sources (including investments).

The course of the marriage

1. In paragraph 11 of his affidavit, the husband said:

   In summary, I say that essentially the breakdown of our relationship was related to (the wife's) view on seeking meaningful employment, the issues in relation to attempting to have a child and financial issues.

2. The relationship between the parties appears to have been under considerable strain almost from the outset.  The husband is an emotionally withdrawn and somewhat self-centred and unsympathetic man.  His focus was on the accumulation of assets – initially for the benefit of what he hoped would be a family comprising the wife and himself and their children, but later for his own benefit.  He resented the wife's failure or refusal to obtain and maintain paid employment, and was unmoved by such explanations as she was able to give for that failure or refusal.[5]  Although the wife had initially wanted the former matrimonial home to be registered in the parties' joint names, her reaction to the fact that the home was eventually registered in the husband's sole name (irrespective of the validity of the reasons for the change from joint to sole ownership) was to seek to acquire property in her own name and to resolve to keep her financial affairs separate from those of the husband.  The husband was more than comfortable with the wife's approach in this regard: he had no desire to intermingle his financial affairs with those of the wife.

   [5] see, for example, paragraphs 28 (ii) and 30 of the husband affidavit

3. The inability of the parties to have children together drove a further wedge between them.  The husband seemed unable to understand the wife's profound desire to have children, and had little sympathy for her as she underwent the physical and emotional strains associated with repeated IVF treatment.  He saw himself as detached from the process, in a way that is almost incomprehensible to this judicial officer.  Indeed, in my opinion he regarded the wife's involvement in the IVF program as a further form of excuse for her failing to obtain full-time employment.

4. The husband returned to his theme of the wife being unwilling to obtain employment on numerous occasions in his affidavit and during the course of his evidence.  For example, in paragraph 32 of his affidavit he said:

   I believe it important for the Court to understand the basis for (the wife) not seeking employment as I truly believe she was deliberately constructing a situation regarding her opportunity to gain employment so as to better her chances of obtaining more by way of division of assets.

5. The insensitivity and lack of empathy of some of the husband's comments (such as that quoted above) are striking.  The wife emigrated to Australia after a short and very unhappy marriage in Turkey.  She had almost no assets upon her arrival in this country.  At the time the parties married, the wife had been in Australia for less than three years.  In an attempt to have children, the wife underwent IVF treatment on four occasions during the marriage – even as it became progressively clear that the marriage was failing.  All were unsuccessful.  The wife's brothers were already living in Australia when she arrived.  Her mother joined them later.  For much of the parties' marriage, the wife had to take responsibility for managing the affairs of her mother and at least one of her brothers.  For most of the time, the wife's mother and both of her brothers were in receipt of Social Security.  The wife's health deteriorated during the marriage, and in late 2005 she was diagnosed as suffering from endometriosis.  She underwent laparoscopies in 2006, 2007 and 2008.  Not long before separation, her mother had a stroke and was hospitalised.  After separation, the wife was diagnosed with cancer (including lung and bone cancers).  She underwent a series of chemotherapy treatments, which were unsuccessful.  When she swore her affidavit in December 2010, her quality of life was poor.  She was taking painkillers and anti nausea tablets and receiving care from the local council.  She died on 3 July 2011.

1. The parties' affidavits paint broadly similar pictures of the manner in which they conducted their financial affairs – although each party tends to be somewhat critical of the other and seeks to justify his/her own behaviour.  The wife confirmed that the parties disagreed about financial matters and said that the husband "took the view that he was the husband and he had to control the finances and pay the bills".[6] She also said that the husband was "secretive about his own money",[7] and that he would say to her: "You manage your money and I'll manage mine".[8]  For his part, the husband said:[9]

   I do not fully understand where (the wife's) money has been applied.  During the course of the whole of our relationship, I was responsible for payment of everything …  (The wife) did not contribute any moneys for herself but instead kept her moneys separate.

   [6] see paragraph 21 of the wife's affidavit

   [7] see paragraph 20 of the wife's affidavit

   [8] see paragraph 21 of the wife's affidavit

   [9] see paragraph 66 of the husband affidavit

2. During the course of his evidence, and in relation to the purchase of the first holiday apartment in [E], Turkey, the husband said that the wife told him that she had been "borrowing funds" from her mother.  He conceded that he did not know the wife's "banking habits" during the marriage.

3. I am satisfied that the parties kept their finances separate throughout the relationship, and that neither was prepared to make more than a superficial disclosure of his/her financial position to the other.  At the end of the day, it does not really matter which of the parties may have been initially responsible for this approach.  The fact of the matter is that they were both sufficiently comfortable with the approach to order their affairs in accordance with it.  For whatever reason, each wished to be left alone to conduct his/her financial affairs free from the interference of the other.

4. In paragraphs 21 and 22 of her affidavit, the wife spoke of asking the husband for money and the husband responded that she should not need funds because "he paid the groceries and the bills".  She also spoke of the husband becoming "furious" when he learned that she was paying some utility bills the former matrimonial home.  Notwithstanding her description of the husband's attitude, she asserted in the same paragraph of that – for a limited period at least – that she "regularly gave (the husband) cash for expenses" (amounting to $600 per month).  She also asserted that she spent "between $50 and $100 per week for groceries".  The wife also said that she "often contributed towards the cost of the joint (overseas trips undertaken by the parties to Turkey, Bali and Fiji)".

5. The wife's assertions in this regard are denied by the husband in paragraphs 152 and 153 of his affidavit.  He said:

   … During the years of our marriage and when (the wife) was not working I regularly gave her cash money for her personal expenses … I deny that (the wife) ever gave me any cash money, even when she was working full-time…

   … In relation to holidays I paid all expenses.  (The wife) never paid or contributed to our holiday expenses.

6. I do not accept the wife's assertions to the effect that she regularly gave the husband cash for expenses and paid regular amounts for groceries and the like.  Nor do I accept her assertions to the effect that she financially contributed towards the cost of the parties' joint trips or holidays.  The wife's assertions are largely inconsistent with her own description of the husband's attitude to financial matters.  They are also inconsistent with the husband's evidence which, although stated somewhat emphatically, is much more reflective of the true nature of the parties' financial relationship.  I accept the husband's evidence to the effect that he regularly provided her with amounts of cash and that he did not receive funds from her.  I also accept the husband's evidence to the effect that he paid for the parties' joint trips and holidays.  That is not to say that the wife never gave the husband cash, bought groceries or paid for purchases or minor expenses relating to joint trips and holidays; but I find that any amounts the wife may have paid in this regard were minimal.

7. In 2006, an amount of approximately $32,500 that the husband had "saved for (the wife)"[10] was transferred into the wife's bank account.  The reasons for the transfer are not important.  At a later stage, and as part of a failed business venture, the husband gained access to these funds.  The funds were used to purchase a piece of equipment.  The husband's explanation of the transaction is difficult to understand.  Nevertheless, the reality is that the transaction is of no importance in the context of the current proceedings.  That is because the funds were accumulated by the husband, and because he dealt with them as he saw fit.  For her part, the wife did not suggest that she had contributed to the funds in any way.[11]

   [10] see paragraph 161 of the husband affidavit

   [11] see paragraph 27 of the wife's affidavit will with

8. The wife contended that she made various non-financial contributions to the Property B unit (which the husband owned jointly with another person).  She said that she and the husband's co-owner repainted the bathroom in the unit, and that she supervised the replacement of a water heater.  She also said that she had attended the property with the husband "for the purposes of inspection and assisting (husband) with minor repairs".[12]  Even if full weight is given to these contributions, they are of minimal significance.

   [12] see paragraph 29 to of the wife's affidavit

Acquisition of and other contributions to property during the marriage

1. During the trial, much emphasis was directed to three (or, more accurately, four) properties acquired or allegedly acquired by the parties during the marriage.  They comprise:

   a)the former matrimonial home in Property M;

   b)a property in Property C; and

   c)two holiday apartments in [E], Turkey.

The former matrimonial home (Property M)

1. The former matrimonial home was purchased in the first half of 1997 in the sole name of the husband.  The purchase price was $170,500.  In order to meet the purchase price, the husband utilised the net proceeds of sale of the [U] unit together with funds sourced in his inheritance from his mother.  The balance of the purchase price (totalling approximately $105,300) was borrowed from the Commonwealth Bank.[13]

   [13] see exhibit W1

2. It seems that the wife was willing to contribute $10,000 of her own moneys (or, perhaps, her mother's moneys) towards the purchase price or, alternatively, towards reducing the mortgage.  The parties disagree as the circumstances in which the $10,000 was requested, offered or paid, but nothing turns on the disagreement.  It is not in dispute that the $10,000 was not utilised for any purpose associated with the purchase of the former matrimonial home.  If it was actually paid to the husband, then it was repaid shortly thereafter.

3. Similarly, nothing turns on the circumstances in which the former matrimonial home came to be registered in the husband's sole name.  Whatever the parties' initial intentions may have been, and irrespective of the reasons why the wife's name did not appear on the title, the Court's primary focus is on the contributions made by each of the parties.

4. Ms Smallwood (for the wife’s estate) ultimately conceded that significant amounts of money were transferred to the husband's accounts in Australia after the marriage.  According to the husband, whose evidence I accept, these funds, or a substantial proportion of them, were derived from the husband's earnings in Turkey.  The amounts are referred to in paragraph 37(iv) of the husband affidavit.  Of particular relevance is the amount of just over $47,000 received by the husband in April 1998 – which moneys were used to reduce the mortgage encumbering former matrimonial home.  Indeed, using his own resources the husband was able to reduce the amount owing on the mortgage very substantially within a short period of time.

5. The wife conceded that the husband paid the mortgage payments to the Commonwealth Bank.[14] She asserted that she paid approximately $14,000 to $15,000 towards the cost of renovations or improvements to the property carried out in or about 2001.  She said that the husband paid the remainder of the cost of the renovations or improvements.  The husband said that the total cost of the renovations or improvements was approximately $100,000.  It follows that, even if the wife is correct, her financial contributions to the acquisition, conservation or improvement of the property were very modest indeed when compared with those of the husband.  But I do not accept that the wife contributed any moneys towards the cost of the renovations or improvements.  For her to have done so would have been inconsistent with the parties' approach to the intermingling of their finances as I have described it above.  I find that the wife made no such financial contribution.  I find that, even if the wife had the moneys available and wished to contribute them towards the cost of the renovations or improvements, the husband would not have accepted the contribution.

   [14] see paragraph 33 of the wife's affidavit

6. I accept that the wife may have done a very small amount of work associated with the maintenance or improvement of the former matrimonial home.  For example, she said that she and her brother "removed the carpets and underlay" in one or more rooms.  The cross-examination of Mr I, however, revealed that the work involved was not onerous, and that it occupied approximately two hours.  I accept the husband's evidence to the effect that the wife did very little physical work associated with the renovations or improvements.  On the other hand, I accept that she liaised with tradespeople from time to time and was occasionally present in a supervisory role.  I also accept that it would have been comparatively uncomfortable for the wife to live in the house while the renovations or improvements were taking place.

7. The husband said that he "worked extensively" on the property himself, using up two months of his accumulated annual leave entitlements.  He said that the wife did not assist him and that she was "away on holiday in Turkey" during much of that period, although he conceded that she was at home when the works began.  I accept the husband's evidence in this regard and find that his non-financial contributions to the conservation and improvement of the former matrimonial home vastly exceeded those of the wife – both during the period of the renovations and improvements and at other times.  Such was the nature of the parties' relationship that it is difficult to imagine that the wife would willingly devote her labours (or contribute her finances) to a property that she knew the husband regarded as his own and which, almost certainly, she also regarded as his sole property.

8. According to Mr I, he "personally observed (the wife) to undertake the management of the renovations (to the former matrimonial home), undertake a lot of the painting and doing most of the garden landscape and maintenance."[15]  I reject Mr I's evidence in this regard.  While I accept that the wife might have done some small amount of supervision or gardening, the contributions in this regard were minimal.  As I wrote above, it is difficult to imagine that the wife would willingly devote her labours to a property that she knew the husband regarded as his own and which, almost certainly, she also regarded as his sole property.

   [15] see paragraph 22 of Irfan's affidavit

9. In April 2008 (according to the wife) or August 2008 (according to the husband), the parties separated under the one roof.  They continued to live in the former matrimonial home until the wife obtained an Interim Intervention Order against the husband in April 2010.  The effect of the order was that the husband was compelled to vacate the property.  Although the Interim Intervention Order was eventually discharged (and although the wife's appeal from the decision to discharge the Interim Intervention Order was unsuccessful), the husband did not return to live in the former matrimonial home.  His reasons for doing so are unimportant.  The fact of the matter is that the wife remained in exclusive occupation of the former matrimonial home from April 2010 until her death in July 2011 – although, according to the husband, she also spent time living with her mother or elsewhere.[16]

   [16] see paragraph 15 of the husband's affidavit

10. The husband continued to meet the instalments in respect of the mortgage encumbering the former matrimonial home during the period of the wife's exclusive occupation.  There was no evidence that the wife made any, or any significant, contribution to the conservation or improvement of the former matrimonial home during that time.

11. During the period (or the vast majority of the period) of the wife's exclusive occupation of the former matrimonial home, the husband lived in the Property B unit.  The practical effect of him doing so was that he was required to pay approximately $600 per month to the co-owner of the Property B unit (given that both the husband and his co-owner were deprived of the normal rental income from the Property B unit).

Property C

1. Property C was purchased in January 1998, with settlement to occur on 13 March 1998.[17]  It was purchased in the wife's sole name.  The purchase price was $112,000.

   [17] see exhibit W2

2. According to the wife, the Property C property was purchased as a home for her parents to live in "after (her father) came to live in Australia", but effectively became an investment property after "(her) father's health had deteriorated to the extent that he was no longer willing to travel to Australia".[18]  Both Mr I and Mrs O supported the wife's evidence in relation to this subject, but I reject the evidence of all three as it relates to this matter.  Relevantly, the weight of the evidence (which strongly contradicts the evidence of the wife, Mr I and Mrs O) persuades me that the wife's father never intended to leave Turkey and live in Australia, and there was never any prospect of the wife's mother living in the Property C property. Further, the application form signed by the wife in support of her application for an investment home loan to enable her to complete the purchase of the Property C property reveals that it was always intended to be an investment property.  The prospect of rental income was even referred to by the bank officer recommending the loan in his comments and recommendations.

   [18] see paragraph 35 of the wife's affidavit

3. I accept that the wife used approximately $10,000 or $11,000 of her own savings to pay the deposit for the Property C property.  I also accept that she contributed a further amount of approximately $18,000 which she received from her father (or perhaps her parents jointly) in Turkey via international transfers in September, October and December 1997.  The amount borrowed by way of investment home loan in order to complete the purchase was $78,000, which amount was secured by a mortgage.

4. The investment home loan was obtained through the husband's bankers, after the husband had introduced the wife to them.  The husband assisted the wife with the conveyancing associated with the purchase.  Beyond that, the husband had little involvement in the acquisition of the Property C property.

5. The husband said, and I accept, that the wife was keen to purchase a property in her own name after it became apparent to her that the former matrimonial home was registered in the husband's name only, and after it became clear that her proposed contribution of $10,000 to the purchase price of the former matrimonial home (or in reduction of the amount owing under the mortgage) was not welcome from the husband's point of view.  To that extent, the purchase of the Property C property took place on the rebound (as it were), following the inability of the wife to formally contribute funds towards the acquisition or conservation of the former matrimonial home.

6. In June 1998, Mr I left his employment as [occupation omitted].  He received approximately $26,500 by way of retrenchment benefit, which was to be rolled over into a superannuation fund (but not necessarily preserved).  He also received a further amount of approximately $7250 which was also required to be rolled over into a superannuation fund, but this amount was to be preserved until Mr I's permanent retirement from the workforce after age 55.[19]  The evidence of the wife and Mr I is in conflict as it relates to Mr I's financial contribution to the Property C property.  I am prepared to accept, however, that Mr I contributed something between $19,000 and $34,000 towards the reduction of the mortgage encumbering the Property C property.  The moneys were paid in the second half of 1998.

   [19] see exhibit W7

7. Mr I lived in the Property C property for a period of approximately 15 months in 2001/02.  While living there he did some work associated with the conservation or improvement of the property, including painting, repair work and general maintenance.

8. Little turns on whether lump sums used to reduce the mortgage over the Property C property were provided by the wife, by her parents (or either of them) or by Mr I.  The reality is that the husband made no (or no discernable) direct financial contribution to the acquisition, conservation or improvement of the Property C property, and he met none of the relevant mortgage payments.  He regarded the Property C property as being the wife's property.  The vast majority of the direct and indirect contributions (both financial and otherwise) to the Property C property were made by the wife or by members of her family.

9. Leaving aside the period during which it was occupied by Mr I, the Property C property was leased at all or almost all times after its purchase.  The rental payments were paid into an account in the wife's name, and the income was treated as hers.  Although it is possible that some form of internal accounting took place among the wife's family members, the evidence is not sufficiently clear to enable me to identify how that accounting may have been effected.  From 1998 to 2010, the gross rental income from the Property C property varied from approximately $7000 or $8000 per annum to approximately $11,400 per annum.  For the majority of that time, the rental income exceeded the mortgage payments.  As a result of the lump sum payments made in respect of the mortgage and the excess of the rental income over the required mortgage payments, the amount currently owing in respect of the mortgage over the Property C property is just over $22,500.

10. In her financial statement sworn 17 December 2009, the wife recorded that she was the sole owner of the Property C property.[20]  She also recorded that she was solely responsible for the mortgage encumbering the Property C property.  Similarly, she recorded that she was receiving rent of $250 per week from the tenants in the Property C property.  There was no suggestion in the financial statement that the Property C property was owned by anyone other than the wife, and no suggestion that anyone other than the wife had a beneficial interest in it.

    [20] She also recorded that she was entitled to 50% of the former matrimonial home.

11. I do not accept that the wife held the Property C property on trust for her mother.  I find, instead, that the wife purchased the Property C property as an investment for herself and the members of her family generally.  Her own moneys, her parents' moneys and Mr I's moneys were used to acquire the property and to help reduce the mortgage.  When a member of the family required funds, moneys were withdrawn from the mortgage.[21]  I find that the wife was the driving force behind the investment, and that she was the primary manager of it.  She regarded it as her sole property, but recognised her obligations to her family in an informal (and probably vague) manner.  I find that the other members of the wife's family were content to leave the Property C property in her name and under her control.  As indicated above, the evidence does not permit me to make clear finding as to the precise arrangements (if any) that had been made among the family members.  I am satisfied, however, that – irrespective of the evidence given by

    
    

    Mr I and Mrs O (and irrespective of the wife's affidavit evidence) – all family members regarded the wife as being the legal and beneficial owner of the Property C property.  They had no more than an expectation that the wife would provide them with funds (or repay funds contributed) when and if a relevant need arose.  My view in this regard is corroborated by the fact that the wife recorded the rental income (and, no doubt, the expenses associated with earning that income) in her income tax returns for the whole of the period after the purchase of the Property C property.  As the wife deposed in paragraph 38 of her affidavit:

    The net rental income was included in my tax returns but any tax I was required to pay as a result of this was done so by withdrawing from the home loan account.  There were also occasions when I withdrew from the home loan account for my own personal expenses.  For example, courses and general living expenses due to my minimal income.

    [21] see, for example, exhibit H10

1. The paragraph quoted above also serves to confirm that the wife's income during the relationship was "minimal" and that she was in effective control of the investment.

2. As for the rental payments themselves, it is clear that the wife (and subsequently Mr I) failed to make full and frank disclosure of the actual amounts received and the account or accounts into which they were paid.  On page 22 of his affidavit, the husband deposed:

   To date, and despite various requests for details regarding rentals received from the Property C property, I have not received any documentation from (the wife) in relation to the same.  I understand she used rental moneys to pay the mortgage which is relatively small, and the rest was used as living expenses for her.

3. The husband's understanding in the paragraph quoted above is logical.  It is also consistent with the findings I have made in relation to the Property C property.  The evidence reveals that the mortgage payments[22] were made regularly.  Given the wife's financial position, and in the absence of any relevant interest to the contrary (which evidence should have been supplied by Mr I on behalf of the wife's estate), I find that the wife did indeed use rental moneys to pay the mortgage and that she used the balance of the rental moneys (or the vast majority of them) for her own purposes.

   [22] There were, in fact, two home loan accounts – a fixed interest investment home loan and a variable interest investment home loan.

4. During the trial, considerable attention was directed to the investment home loan application form relating to the Property C property.  The form comprises exhibit W2.  The wife was the sole applicant for the investment home loan.  It is clear beyond argument that a number of false representations were made to the bank in the form (for example, in relation to the wife's income).  I am satisfied that both the husband and wife were well aware of the representations made in the form and that both were content to allow the bank to rely upon them.  Both the husband and the wife were desirous of the wife being able to purchase of the property in her own name (for reasons that I have discussed above).

5. In cross examination, Mr I conceded that he did not discuss the contents of the investment home loan application form with the wife, and that he first saw the form in these proceedings. Quite extraordinarily, he then asserted that the husband directed the wife to insert false and misleading information regarding her income.  There was clearly no evidence to support Mr I’s assertion in this regard, and I reject it. If he knew nothing about the form prior to the commencement of the proceedings, and had not discussed it with the wife prior to her death, then he cannot possibly know how the inaccurate information came to be included in it.

Holiday apartments in [E], Turkey

1. The two holiday apartments are adjacent to each other in the same block of units.  They were purchased in 2003 and 2004 respectively.  Both were purchased in Mrs O's name.  The husband asserts that the wife is the beneficial owner of the holiday apartments.

2. Mrs O migrated to Australia in 1995.  After living here for over two years, she became an Australian citizen in early 1998.  Mr O remained in Turkey during this time, and (as indicated above) I am satisfied that he never intended to emigrate to Australia and always intended to remain living in Turkey.

3. Mrs O returned to Turkey for approximately 12 months in 1999/2000.  She then returned to Australia for approximately 2 years before travelling to Turkey again in 2003.  On this occasion, she remained in Turkey for approximately four or five years.  She then lived in Australia for approximately two or three years, returning to Turkey in February 2010.  She lived in Turkey for approximately 15 months, and returned to Australia in May 2011 – shortly before the wife's death in July 2011.

4. Mrs O was in receipt of Australian social security benefits for the whole of the period from early 1998, including during the periods that she lived in Turkey.  For all or almost all of the period that Mrs O was in receipt of Australian social security benefits, the wife was authorised to access and operate upon the bank account into which the benefits were paid.

5. The amount received by Mrs O by way of Australian social security benefits gradually increased from approximately $350 per fortnight in 1998 to approximately $500 per fortnight in September/October 2006.  From that time, it gradually increased to approximately $680 per fortnight (although paid monthly) in April 2011.[23]  It follows that

   
   

   Mrs O received a total amount of (very approximately) $165,000 by way of Australian social security benefits between 1998 and mid 2011.  During that period, she was living in Turkey for approximately six or seven years.

   [23] see exhibit W5

6. According to the wife, she withdrew approximately $78,000 from her mother's account between 1999 and December 2010.  She said that she withdrew the money "for (her) own personal use", but that she had an arrangement with her mother to the effect that the money "was to be repaid when and if (Mrs O) required it".[24]

   [24] see paragraph 25 of the wife's affidavit

7. The estate's case is that Mrs O (or Mr and Mrs O) decided to purchase the first of the two holiday apartments in 2003.  The purchase price was approximately A$32,000.  Mrs O asked the wife to "repay" some of the moneys that the wife had used for own purposes from Mrs O’s Australian account (being the account into which her social security entitlements were paid).  The wife then sent Mrs O A$20,000.  The sum was withdrawn from the wife's personal bank account.  The balance of the purchase price (amounting to approximately A$12,000) was "funded" by Mr and Mrs O.

8. In relation to the second holiday apartment, the estate's case is that in 2004 an apartment adjacent to the first holiday apartment became available for sale.  Mrs O (or Mr and Mrs O) felt that it would be a good investment to buy the second apartment.  The purchase price of the second apartment was also approximately A$32,000.  Once again, Mrs O asked the wife to "repay" some of the moneys that the wife had used for own purposes from Mrs O’s Australian account (being the account into which her social security entitlements were paid).  The wife then sent Mrs Ozsoy A$32,000.  On this occasion, A$18,000 was sourced from the wife's personal bank account and the balance, being A$14,000, was provided by the husband.  According to the wife, the $14,000 from the husband was "a loan … to be repaid in the future when he asked for it".[25]  The wife also said:

   It was never the intention of my mother nor I that I or (the husband) would have an interest in the apartments my mother purchased.  This was simply regarded by all of us as family members helping each other out.

   [25] see paragraph 25 of the wife's affidavit

9. Mrs O said in her affidavit that she was initially unaware that the husband had provided $14,000 of the $32,000 sent to her by the wife.  She confirmed that it was never intended that the wife would have any interest in the holiday apartments.

10. Mrs O also said that one of the holiday apartments was sold when she was in Turkey between February 2010 and May 2011 – because Mr O had been hospitalised and funds were needed to pay for his hospital and medical expenses.  She said that the apartment sold for the equivalent of A$32,000 and that the proceeds of sale were used for Mr O's medical expenses and "our general living expenses".[26]

    [26] see paragraph 11 of Mrs O's affidavit

11. The husband's case is that the wife is the beneficial owner of the holiday apartments, or, alternatively, that the husband and the wife are the beneficial owners of the apartments.  He said that:

    a)the wife borrowed against the Property C property in order to send the sum of approximately $20,000 to Mrs O in Turkey for the purpose of purchasing the first holiday apartment;

    b)the full purchase price for the first holiday apartment was A$20,000;

    c)a short time later, the wife wanted to purchase the second holiday apartment;

    d)the purchase price for the second holiday apartment was A$32,000;

    e)in order to purchase the second holiday apartment, the wife used $16,000 from her personal account and $16,000 given to her by the husband (being $14,000 by way of bank transfer and approximately $2000 in cash); and

    f)both holiday apartments were purchased in the name of Mrs O for the sake of convenience.

12. The husband said that, at the time of the purchase of the first holiday apartment, he did not know that the wife had contributed $20,000 to the purchase price.  He "thought it was purchased by her family".[27]  Shortly before the purchase of the second holiday apartment, the wife advised the husband that she wished to purchase a holiday apartment in Turkey.  She told the husband that the builder of the apartments needed money urgently and that the relevant apartment was a good buy.  Although the husband was initially sceptical about the wisdom of the investment, he eventually agreed to contribute towards the cost of the apartment.[28] 

    [27] see paragraph 110 of the husband's Affidavit

    [28] see paragraph 159 of the husband affidavit

13. Documents annexed to the husband affidavit reveal that a total of $20,056 was withdrawn from the wife's personal account on 16 and 18 June 2003.  The husband asserts that the wife sent these moneys to her parents in order to purchase the first holiday apartment.  The documents also reveal that $14,000 was deposited into the wife's personal account on 27 January 2004, bringing the balance in the account to approximately $37,850.  The husband said that the $14,000 came from his account.  On the following day (28 January 2004), $32,028 was withdrawn from the account (leaving a balance in the account of approximately $6000).  The husband said that the wife sent these moneys to her parents in order to purchase the second holiday apartment.[29]

    [29] see annexure AE17 to the husband affidavit

14. Having regard to the husband's evidence to the effect that:

    a)the two holiday apartments have the same value;[30]

    b)the wife told him that the builder of the apartments needed money urgently and that the second apartment was a good buy (at A$32,000);

    c)he was not directly involved in the purchase of the first apartment; and

    d)the two holiday apartments were purchased approximately six or seven months apart,

    it is most unlikely that the purchase price of the first holiday apartment was less than A$32,000. In the absence of any other relevant evidence, I accept the estate's assertion the purchase price of the first holiday apartment was A$32,000.  It follows that the likelihood is that Mr and Mrs O did indeed fund the difference between the amount that the wife sent from Australia (being approximately A$20,000) and the purchase price.

    [30] see, for example, annexure AE18 to the husband affidavit

15. In similar fashion to my findings in relation to the Property C property, I do not accept that Mrs O holds or held the two holiday apartments (or either of them) on trust for the wife or for the husband and wife jointly.  I find that:

    a)the wife was the driving force behind the decision to buy the two holiday apartments;

    b)the apartments were purchased in Mrs O's name for the sake of convenience;

    c)the first apartment was purchased as an investment, and perhaps to be used as a holiday destination as well, for the benefit of the wife, her parents and her brothers;

    d)the second apartment was purchased as an investment, and perhaps to be used as a holiday destination as well, for the benefit of the wife, her parents, her brothers and the husband. 

16. It is not easy to identify the genesis of the funds used to purchase the first apartment.  I am satisfied, however, that the funds were provided by the wife and her mother (or, perhaps, her parents jointly).  Put another way, I am satisfied that the husband made no financial contribution to the purchase of the first holiday apartment.

17. In relation to the second holiday apartment, I am satisfied that approximately half of the funds were provided by the wife and her mother (or, perhaps, her parents jointly).  The other half of the funds were provided by the husband.  It follows that I am satisfied that the husband contributed approximately $16,000 to the purchase of the second holiday apartment.

18. The evidence does not permit me to make clear findings as to the precise arrangements (if any) that were made among the family members as to any distribution of funds between them in the event of the holiday apartments or either of them being sold.  I find, however, that the wife and her father (and the husband – until the commencement of these proceedings) were content to leave the holiday apartments in Mrs O's name. 

19. Given that the purchase price of the second holiday apartment was A$32,000, and having regard to my previous findings regarding the parties' attitude to financial matters, I am satisfied that the total amount contributed by the husband towards the purchase was A$16,000 and not $14,000.  I have no doubt that both parties would have insisted that they make equal contributions to the purchase price.

20. Mrs O was a most unimpressive witness.  I find that she did not provide the instructions pursuant to which her affidavit was prepared and that she had no real knowledge of many of the matters to which she deposed in her affidavit.  She was thoroughly confused as to the purchase price of the holiday apartments and her evidence regarding the sale of one of them was not credible; indeed, it was preposterous.  She produced no documents to confirm the alleged sale.  I find that she is still the legal owner of the two holiday apartments.  Having regard to the informal financial arrangements that she had with the wife regarding the wife having access to her bank account in Australia (into which Mrs O’s Australian social security entitlements were paid), however, I am satisfied that a significant proportion of the moneys paid by the wife towards the purchase price of the holiday apartments was sourced in Mrs O’s Australian social security entitlements.  The wife also contributed moneys towards the purchase price by drawing down on the mortgage over the Property C property. 

21. It is clear that Mrs O had no entitlement to the moneys paid by the husband towards the purchase price of the second holiday apartment.  Doing the best that I can with the limited and unsatisfactory evidence available to me, I conclude that the wife's estate has no clearly identifiable or enforceable interest in the two holiday apartments, but that Mrs O is obliged to account to the husband for the $16,000 that he contributed to the purchase of the second holiday apartment.  Bearing in mind that the husband contributed the $16,000 in 2004, I conclude that Mrs O currently owes the husband something in the order of $22,000 (to take account of a relatively modest allowance for interest).

22. These findings are broadly consistent with the wife's description of the overall structure of the arrangements.  For example, she asserted that the husband "offered a loan of $14,000 to be repaid in the future when he asked for it"[31] – although I have concluded that the correct amount was $16,000 and not $14,000).  She also asserted:[32]

    It was never the intention of my mother nor I that I or (the husband) would have any interest in (the two holiday apartments).  This was simply regarded by all of us as family members helping each other out.

    [31] see paragraph 25 of the wife's affidavit

    [32] see paragraph 26 of the wife's affidavit

23. I accept that the wife's evidence as quoted above begs the question as to whether it was ever the husband's intention that he would have an interest in the holiday apartments (as opposed to the intention of the wife and her mother).  Still, and for the reasons set out below, little turns on the question of whether the husband did or did not acquire an interest in the holiday apartments.

24. The wife's description of her and her mother's intentions[33] in paragraph 26 of her affidavit is important. She said that the financial contributions made by the husband and herself to the purchase of the apartments were "simply regarded by all of us as family members helping each other out".  This description is entirely consistent with the findings I have made regarding the ownership of the Property C property.  The pieces of the jigsaw (as it were) fit comfortably together when it is understood that – from the wife's point of view – her family members were prepared to help her to acquire the Property C property, just as she was prepared to help her mother (or perhaps her parents) to acquire the two holiday apartments.

    [33] as they related to the acquisition of the two holiday apartments

25. In all the circumstances, I propose to exclude the two holiday apartments from the pool of assets available for distribution between the parties.  On the other hand, I propose to treat the amount of approximately $22,000 currently owing by Mrs O to the husband (in respect of the husband's contribution to the purchase of the second apartment) as an asset.

26. I should add that my conclusion to the effect that the wife's estate has no clearly identifiable or enforceable interest in the two holiday apartments adheres more strongly to the first holiday apartment than it does to the second.  Further, it was at least arguable that Mrs O holds a 50% interest in the second holiday apartment on trust for the husband – but one of the difficulties that would have arisen if the evidence had allowed me to find that the husband was beneficially entitled to a 50% interest in the second holiday apartment comprises the unsatisfactory nature of the evidence relating to the value of that apartment.  At the end of the day, however, and for reasons that will become apparent, the overall result of the proceedings is similar – even if a conclusion to the effect that the husband has a beneficial half interest in the second holiday apartment could be demonstrated as being more appropriate than my conclusion to the effect that Mrs O owes the husband approximately $22,000 in respect of his investment in the apartment.

Documents relied upon

1. The husband relied on the following documents:

   a)outline of case filed 31 August 2012;

   b)summary of argument (handed up by Mr Salamanca on 3 September 2012);

   c)amended initiating application filed 25 August 2010;

   d)his affidavit sworn 22 August 2012; and

   e)his financial statement sworn 22 August 2012.

2. The estate relied on the following documents:

   a)case outline filed 23 August 2012;

   b)response to initiating application filed 18 December 2009;

   c)the wife's financial statement sworn 17 December 2009;

   d)the wife's affidavit sworn 10 December 2010;

   e)affidavit of Mr I sworn 15 August 2012; and

   f)affidavit of Mrs O sworn 20 August 2012.

3. Ms Smallwood and Mr Salamanca (for the husband) handed up a "joint", agreed schedule of assets and liabilities as at the commencement of the trial.  The schedule was referred to throughout the trial, and in closing addresses.

4. The trial commenced on 3 September 2012 and continued to 7 September 2012.  Was then adjourned to 10 October 2012 for the completion of closing addresses.  I then reserved my judgment.

5. Following the publication of the High Court's decision in Stanford (2012) HCA 52 on 15 November 2012, I gave both parties leave to file further submissions dealing with matters raised in the decision. The husband filed further submissions on 23 November 2012. The estate elected not to file further submissions.

Orders sought

1. By the conclusion of the trial, it was apparent that the estate was seeking orders to the effect that the property available for distribution between the parties be divided on the basis of 50% to the husband and 50% to the estate.  Ms Smallwood argued that the worst case scenario for the estate (as it were) is that the property available for distribution should be divided on the basis of 55% to the husband and 45% to the estate.  In other words, the estate's case was that it should receive no less than 45% of the available property.  In money terms, Ms Smallwood argued that the husband should be obliged to pay something between approximately $320,000 and $370,000 to the estate.

1. The husband's case was that orders should be made to the effect that each party should retain the assets and liabilities in that party's possession.  In very broad terms, Mr Salamanca argued that such a result would reflect a split of approximately 62.5%/37.5% in the husband's favour.  Mr Salamanca also argued, however, that such a division significantly undervalues the husband's true entitlement pursuant to section 79 – which Mr Salamanca suggested should be approximately 75% to the husband and 25% to the estate.

2. Because of the differences in the parties' approaches to the identification of the property pool, it is difficult to set out their competing proposals in more detail.  Put simply, however, the estate's case was that the husband should have to pay it something between $320,000 and $370,000 (approximately) and the husband's case was that he should not have to pay the estate anything.

Property Settlement – The Law

1. Subject to what I have written below regarding the effect of the very recent decision of the High Court in Stanford (2012) HCA 52, it is fair to say that the Full Court of the Family Court has consistently ruled that the general approach that should be adopted in relation to a property settlement application is settled.[34] The court must first identify the property of the parties. It must then attribute a value to each item of property – usually as at the date of the hearing. Thereafter, it must assess the extent of each party’s contributions under the various sub-headings described in section 79(4) of the Family Law Act 1975.  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.

   [34] 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

2. 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.[35]

   [35] See Norbis (1986) FLC 91-712

3. The section 75(2) factors are related to 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 of financial or economic significance.[36]

   [36] See McMahon (1995) FLC 92-606 at 82,043

4. Under section 79(2), the court is required to be satisfied that the property settlement orders that it proposes to make are just and equitable – and not simply that the underlying percentage division of the net value of the parties’ property is appropriate.  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.[37]

   [37] See Russell (1999) FLC 92-877

5. The overall process to be applied in property settlement cases is summarised by the Full Court in Hickey (2003) FLC 93-143, where their Honours said:[38]

   The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79.  That approach involves four inter-related steps.  Firstly, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing.  Secondly, the court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties.  Thirdly, the court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), including, because of s.79(4)(e), the matters referred to in section 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case…

   [38] At paragraph 39

6. My view is 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.[39]  In applying s.79(2), the court has power to adjust the form, structure or balance (for want of a better description) of the orders that it is minded to make in order to give effect to its conclusion as to the parties’ respective entitlements after the application of the first three steps mentioned in Hickey.  In other words, the determination of the proportional or other distribution or division of the parties’ property between them must necessarily be concluded before the court considers the justice and equity of the actual orders that are to be utilised to give effect to that distribution or division.

   [39] See OSF & OJK (2004) FLC 93-191

7. In B & B (2006) FamCA 883, Faulks DCJ said:[40]

   If the judge has properly carried out his or her functions in determining the factors under section 79(4) (including those applicable factors under section 75(2)), the result overall should be just and equitable within the terms of the Family Law Act 1975. Accordingly, if a judge on reviewing his or her deliberations in relation to the first three stages concludes that the result does not appear to accord with justice and equity, then it is likely that the earlier adjustments were wrong. This fourth stage is really a description of a judicial thought process rather than a third discretionary phase. I do not accept the proposition that there is a third discretionary phase un-associated with contributions and/or the financial circumstances of the parties (or the other matters under section 79(4)) which somehow permits a judge in accordance with his or her conception of justice and equity to vary determinations otherwise properly made in accordance with the first two discretionary assessments.

   I accept that in some cases there may be a minor adjustment required, for example to enable a cash-poor litigant to retain some real estate when he or she has no capacity to make any payment to the other party.  For my part, it seems to me that even that sort of adjustment is more appropriately incorporated into the first two discretionary phases.

   [40] In paragraphs 105 & 106

8. For the reasons that I set out in OSF & OJK (2004) FLC 93-191 (and, in particular, in paragraphs 26 to 28 thereof), I agree with the analysis of Faulks DCJ in B & B.

9. In more recent times, the Deputy Chief Justice's approach to the implementation of the so-called "fourth step" has been endorsed by the Family Court in its appellate jurisdiction.  For example, in Bonacci (2012) FamCAFC 15, the Full Court said:[41]

   …(The) Full Court has said on a number of occasions (that) the so-called fourth step is not an opportunity to make a further adjustment; it is an opportunity for the judicial officer to determine finally how, in reality, a just and equitable order might be achieved based on the circumstances of the case before him or her (see in this regard Norman & Norman [2010] FamCAFC 66 and Teal & Teal [2010] FamCAFC 120).[42]

   [41] at paragraph 61

   [42] See also the comments made by Faulks DCJ in Mayne (2011) FLC 93-479, at paragraphs 65 and 66

10. At the end of the day, though, the precise nature of the final step or stage in the property settlement exercise may not be of any real significance in the present case.  It is enough to record that the process involves the Court metaphorically “stepping back” to consider whether the proposed orders (arrived at after the application of the first three steps described in Hickey) are just and equitable.

11. That the above analysis represents the approach that should be adopted by the Family Law Courts has been recognised by the Full Court of the Family Court for many years.  In the very recent decision of Stanford (2012) HCA 52 (delivered 15 November 2012), however, the High Court commented upon the operation of section 79(2) – among other things.

12. The High Court emphasised that the provisions of section 79 empower the Court to make orders "altering the interests of the parties to the marriage" (although the proceedings are described as relating to "property settlement"). As a result, it is essential 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 available for distribution between them)".[43]

    [43] see paragraph 37 of Stanford

13. Of particular importance are paragraphs 35 to 46 of the majority judgment in Stanford (under the heading "The operation of section 79").  The majority emphasised that:

    ... the requirements of (section 79(2) and section 79(4)) are not to be conflated.  In every case in which a property settlement under section 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.

14. The majority then spoke of "three fundamental propositions" that adhere to the power to make property orders under section 79:

    a)The first step (as is currently the case) is to identify "... according to ordinary common law and equitable principles, the existing legal and equitable interests of the party in the property."  The interest of parties in property cannot be altered unless their existing legal and equitable interests in the property can be identified.

    b)Although the Court has a very broad power to make orders in relation to property, "it is not a power that is to be exercised according to an unguided judicial discretion". The judicial discretion must be exercised in accordance with legal principles – including the principles which appear within the Family Law Act itself.  Further, "because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is 'just and equitable' to make the order is not to be answered by assuming that the parties' rights to all interests in marital property are or should be different from those that then exist".  Put another way:[44]

    The question presented by section 79 is whether those rights and interests should be altered.  (Emphasis added.).

    c)The consideration of the various factors in section 79(4) (including the parties' contributions in all their various guises) does not automatically give rise to a right on the part of one or other of the parties to have the property divided between them by reference to those factors. The just and equitable requirement in section 79(2) must also be considered and applied. Thus: "to conclude that making an order is 'just and equitable' only because of and by reference to various matters in section 79(4), without a separate consideration of section 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act".

    [44] see paragraph 39 of Stanford

15. I note that the third of the above propositions endorses pre-existing dicta to the effect that a party to a marriage does not effectively build up an interest in the patrimony of the parties over the duration of the marriage, such that the party may be regarded as having "a presently vested interest of an 'inchoate' kind which exists prior to the institution of proceedings under section 79 or the making of an order under that section".  The law in Australia is to the effect that rights arising under section 79 "come into existence when an order is made under that section" and that neither section 79 nor the other provisions of the Family Law Act "establish rights, however described, in a party to a marriage over the property of the other spouse either arising from the existence of the marriage or the activities of the parties during that marriage or the institution of proceedings under section 79, where those rights do not otherwise exist under the laws in Australia".[45]

    [45] see Re Chemaisse; FC of T (Intervener) (1990) FLC 92-133 at page 77,915

16. After referring to the above three propositions, the majority explained that – in the vast majority of cases – the requirements of section 79(2) are fairly easily satisfied:[46]

    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 the choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship.  It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife.  No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship.  That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship.  And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end.  Hence it will be just and equitable that the court make a property settlement order.  What order, if any, should then be made is determined by applying section 79(4).

    [46] see paragraph 42 of Stanford

17. It is arguable that the effect of the High Court's decision in Stanford is that the first step in the property settlement exercise is to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in their property.  The second step involves ascertaining whether it is just and equitable to make an order altering the interests of the parties in their property.  In most cases – relevantly, where the parties have separated and are no longer living in a marital relationship – the underlying assumptions that the parties had to the effect that the existing property ownership arrangements were functional (or perhaps irrelevant) and could be varied by agreement between them, no longer apply.  That fact alone should ordinarily persuade the Court that it is just and equitable to make orders altering the parties' interests in their property.  It is only after the Court has concluded that it is just and equitable to make such orders that it should proceed to take what might be regarded as the third and fourth steps – namely:

    a)assess the extent of each party’s contributions under the various sub-headings described in section 79(4); and

    b)thereafter, 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,

    and in the process adjust the amount due to each party by way of contribution by reference to the relevant section 75(2) factors.

Continuation of property settlement proceedings after the death of a party

1. It is not in dispute that property proceedings may be continued by or against the legal personal representative of the deceased party.[47]

   [47] see section 79(8) of the Family Law Act

2. The continuation of extant property proceedings after the death of a party does not mean, however, that the Court will necessarily make orders altering the interests of the parties in the property then in existence. Section 79(8)(b) provides as follows:

   if the court is of the opinion:

   (i)     that it would have made an order with respect to property if the deceased party had not died; and

   (ii)    that it is still appropriate to make an order with respect to property;

   the court may make such order as it considers appropriate with respect to:

   (iii)   any of the property of the parties to the marriage or either of them …

3. The High Court explained the effect of section 79(8)(b) in Stanford:[48]

   Section 79(8)(b) … requires a court considering an application for a property settlement order which is continued by or against the legal personal representative of a deceased party to determine first, whether it would have made an order with respect to property if the deceased party had not died and second, whether, despite the death, it is still appropriate to make an order.  Both of those inquiries require consideration of s 79(2) and its direction that the court not make an order unless "satisfied that, in all the circumstances, it is just and equitable" to do so.  It follows that, in cases where s 79(8) applies, a court must consider whether, had the party not died, it would have been just and equitable to make an order and whether, the party having died, it is still just and equitable to make an order.

   [48] see paragraph 24 of Stanford

4. After confirming that the property settlement claim continued by a legal personal representative after the death of a party to property settlement proceedings is the same claim that had been instituted by the deceased party, and not some new or different claim, the High Court emphasised that the continuing claim remained a matrimonial cause and did not metamorphose into a claim by the beneficiaries of the estate of the deceased party – in other words, proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings arising out of the marital relationship. Section 79(8) operates to continue proceedings that would otherwise have abated upon the death of a party.[49]

   [49] see paragraphs 29 and 30 of Stanford

5. In the present case, unlike the factual scenario in Stanford, it is not in dispute that the parties separated prior to the commencement of property settlement proceedings. It follows that the underlying assumptions that the parties had to the effect that the existing property ownership arrangements were functional (or perhaps irrelevant) and could be varied by agreement between them, no longer applied at the time the proceedings were commenced.  It also follows that the Court can readily conclude that, had the wife not died, it would have been just and equitable to make orders altering the parties' interests in their property.  The question remains, however, whether, the wife having died, it is still just and equitable to make such orders.

6. In the decision under appeal in Stanford,[50] the Full Court had referred to the following passages from Fisher (1986) 161 CLR 438:[51]

   … The death of a spouse will not always extinguish or satisfy the moral claims of the surviving spouse and children to which effect would have been given if the proceedings had been complete.  Section 79(8) empowers the Family Court to give effect to the moral claims made in respect of the property of the spouses which was made available to answer those claims by the commencement of the proceedings, provided ‘it is still appropriate to make an order with respect to property’: s.79(8)(b)(ii).  That qualification on the power, coupled with par. (ca)(i) of the definition of ‘matrimonial cause’, ensure that the jurisdiction is exercised only in cases where the moral obligations arising out of the marriage remains unsatisfied.

   Section 79(8) provides machinery for the discharge of those moral obligations in priority to any rights in the property of a party to a marriage which arise by testamentary disposition to that party’s property or by any other devolution of that property on that party’s death.  That is a law which governs an incident of marriage in that it provides the machinery for enforcing the moral obligation with respect to property arising from a spouse’s marital relationship.  It is a law with respect to marriage.

   [50] Stanford (2012) FLC 93-495

   [51] per Brennan J at 457-458

1. After citing the above passage from AGO v GRO, the Full Court in Gollings and Scott (2007) FLC 93-319 said that, as a general rule, once parties have separated, they are entitled to get on with their respective lives independent of each other. That general rule is, however, subject to obligations of maintenance and support. It is also subject "to the type of considerations described in Kowaliw relating to waste".[63]  The Full Court in Gollings and Scott also recognised[64] that "the concept of adding moneys reasonably disposed of back into the pool ought to be the exception rather than the rule".

   [63] see Gollings and Scott at paragraph 68

   [64] citing C & C (1998) FamCA 143

2. In Shimizu and Tanner (2011) FamCA 271, Bryant CJ (sitting at first instance) applied a series of questions posed by Murphy J in Kouper (No.3) (2009) FamCA 1080. Her Honour clearly approved the questions and found them useful. The questions are as follows:

   a.     Is it contended that property (including money), that would otherwise be available for distribution between the parties if a s 79 order is made, has been dissipated with a consequential loss to the property otherwise potentially divisible between the parties at the date of trial?

   b.     If so, is it alleged that the dissipation of property was in respect of things other than what, in the particular circumstances of this particular marriage, can be classified as “reasonable living expenses”?

   c.      If it is asserted that any loss to the divisible property results from dissipation of property other than in respect of such expenses, why is it asserted that the result should be a sharing of that loss by the parties other than equally?

   d.     If it is contended that this be the result, why should there be an add back (which brings to account, dollar for dollar, such past expenditure in current dollars) as distinct, for example, from there being an adjustment being made pursuant to s 75(2)(o)?

   e.      How should either any “add back”, or adjustment pursuant to s 75(2)(o), be quantified?

3. In Mayne (2011) FLC 93-479, Faulks DCJ expressed the view that her Honour the Chief Justice's summary of the relevant law in Shimizu and Tanner, including the endorsement of the approach of Murphy J in Kouper, is "definitive of the issues".[65]  Strickland J disagreed.  His Honour said that "there is nothing new (or definitive) in those decisions".[66]  The third member of the Full Court (May J) did not discuss this subject.

   [65] see Mayne at paragraph 91

   [66] see Mayne at paragraph 183

4. For what it is worth, and with respect, I am inclined to agree with Strickland J. I also agree with the following passages from his Honour's judgment:[67]

   175.      (There) is no warrant in any authority, in logic or otherwise to find that funds that have been expended by one party prior to separation cannot be notionally added back simply because the actions occurred prior to separation, and that is the case whether the basis for adding back is a finding of waste or non-disclosure.  It is not the case that the only basis for notionally adding back assets is that one party should not benefit from a premature distribution.  As has often been said it is also appropriate to notionally add back assets where there is financial misbehaviour or financial misconduct which has the effect of reducing the assets available for distribution. ...  Of course, individual circumstances may not justify the notional adding back, but that does not say anything about the ability to do that where warranted. ...

   184.      It is beyond doubt that notionally adding back assets is the exception rather than the rule. ... However, it is also beyond doubt that (there are circumstances in which) the exception applies, for instance where there is conduct of the nature identified by Baker J in Kowaliw.  Thus, in those circumstances it is open to a trial judge ... to notionally add back assets or take the conduct into account under s 75(2)(o).

   [67] see Mayne at paragraphs 175 and 184

5. In support of the second of the two passages quoted above, Strickland cited the Full Court in Polonius and York (2010) FamCAFC 228:[68]

   (In) certain circumstances financial misconduct or financial misbehaviour may be taken into account in a number of ways.  It may be taken into account by the notional inclusion of an amount at step one of the preferred approach to determination of an application pursuant to s 79 of the Act which was explained in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 or when assessing the contributions at step two of the preferred approach or perhaps when considering the other factors at step three of the preferred approach ...

   [68] see Polonius and York at paragraph 89

6. To the extent that Strickland J may have suggested that financial misconduct or misbehaviour may be taken into account in the fourth step identified in Hickey, I will simply record that, with respect, I am not persuaded that that is necessarily the case.  I have already recorded my view as to the purpose and effect of the so called fourth step under the heading "Property Settlement – The Law" above.  I refer, as well, to the following passage from the judgment of Faulks DCJ in Mayne:[69]

   65.    As the Full Court has said on multiple occasions, the “fourth step” is not an opportunity to make a further adjustment; it is an opportunity for the judicial officer to determine finally how, in reality, a just and equitable order might be achieved based on the circumstances of the case before her or him (see in this regard Norman[70] and Teal[71]). 

   66.    In Teal, the Full Court ... stated:

   (The “fourth step”) requires consideration of the actual assets to be retained by each party, and may include consideration of the effect when one party is to retain the greater proportion of his or her entitlement in superannuation of the nature, form and characteristics of the superannuation.  It is also relevant when assets included for division are “notional” assets or “add backs”, including paid legal fees, or when a business which requires retention of business premises or re-financing is to be retained as part of one party’s entitlement. ...

   [69] See Mayne at paragraphs 65 and 66

   [70] (2010) FamCAFC 66.

   [71] (2010) FamCAFC 120, at paragraph 70.

7. Having regard to the principles set out above, and treating the questions posed by Murphy J in Kouper as being of assistance, I record the following:

   a)It is difficult to conclude that the husband's contention is to the effect that the proceeds of sale of the shares have been dissipated with a consequential loss to the total property pool.  The wife says nothing about who sold the shares or what was done with the net proceeds of sale.  The husband does not seem to know what happened to the funds and appears to argue that they should be added back in to the property pool for no other reason than the fact that the shares were sold around the date of separation.

   b)There is no direct allegation to the effect that the funds were used for something other than the wife's reasonable living expenses .  The husband asserts that he simply does not know what happened to the funds.

   c)It seems to me that an add back of the relevant funds would not be just or equitable in the current circumstances, given that it is impossible to conclude that all of the funds were dissipated in what might be regarded as an inappropriate manner.  As Murphy J in Kouper and Strickland J in Mayne both pointed out, an add back requires a degree of precision as the amount of money involved. The evidence falls far short of enabling me to determine precisely how much of the alleged expenditure should be deemed inappropriate and how much should be accepted as being reasonable in the circumstances.

   d)Further, the evidence does not permit me to conclude (for example) that the funds are still in existence – or, indeed, to exclude the possibility that the funds now form part of other property already included in the property schedule

8. I am not satisfied that the wife embarked upon a course of conduct designed to reduce or minimise the asset pool; nor am I satisfied that she acted recklessly, negligently or wantonly in any relevant sense (at least in relation to the amount of $8119 sought to be included in the pool).  Given that the wife was entitled to get on with her life independently of the husband to, and given that add backs or the ignoring of liabilities should be the exception rather than the rule, there does not appear to be any justification for the approach that the husband has urged upon the Court.

9. For all the above reasons, and put shortly, I am not satisfied that it is appropriate to include the proceeds of sale of the ANZ shares in the property schedule.

Excluded item: Shares disposed of by husband ($27,000)

1. Ms Smallwood argued that the amount of $27,000 in respect of shares sold by the husband should be added back into the property schedule.  The sale of the shares is referred to in paragraph 68 of the husband's affidavit and Part M of his financial statement.

2. For much the same reasons as those that led me to conclude that I should not add back the amount of $8119 (being the proceeds of shares allegedly sold by the wife around the time of separation), I am not satisfied that it is appropriate to include the amount of $27,000 (being the proceeds of shares sold by the husband) in the property schedule.

3. The husband's evidence, which I accept, is that he did not sell the shares "in one hit".  They were sold between May and July 2008 approximately.  He said that some of the moneys were used to pay for renovations or improvements to the former matrimonial home.  During the course of his oral evidence, he added that he paid approximately $12,000 from the sale of the shares towards the "home loan".  I accept his evidence in this regard.

4. It seems to me, as well, that an add back of the relevant funds would not be appropriate in the current circumstances, given that it is impossible to conclude that all of the funds were dissipated in what might be regarded as an inappropriate manner.  The evidence falls far short of enabling me to determine precisely how much of the alleged expenditure should be deemed inappropriate and how much should be accepted as being reasonable in the circumstances.

5. Further, the evidence does not permit me to conclude (for example) that the funds are still in existence – or, indeed, to exclude the possibility that the funds now form part of other property already included in the property schedule.

6. I am not satisfied that the husband embarked upon a course of conduct designed to reduce or minimise the asset pool; nor am I satisfied that he acted recklessly, negligently or wantonly in any relevant sense .

Items 14 to 17: Wife's superannuation and death benefits

1. It was not in dispute  that the wife's superannuation and death benefits should be included in the property schedule.

Contributions

1. Having identified the pool of property available for distribution between the parties, I now turn to consider the next "step" of the property settlement exercise – namely, the identification and assessment of the parties' contributions in all their various guises. 

2. Both parties urged the court to approach the issue of contributions on an "asset by asset" basis.  Having regard to the findings that I have made in relation to the manner in which the parties conducted their financial affairs, I am satisfied that an "asset by asset" basis is reasonable and appropriate.  I find that the express and implicit assumptions of the parties that underpinned their property arrangements were to the effect that, wherever possible and to the extent that it might be regarded as practicable, the parties would keep their finances separate – and each would be wholly responsible for his/her own investments.

3. Regrettably, both the husband and the estate saw fit to conduct their cases on what might be described as a "microcosmic" basis.  Far too much time and effort was spent analysing and debating the effect of individual transactions or groups of transactions.  In other words, both sides lost sight of the wood for the trees.

4. This was a relationship of some 12 or 13 years.  In spite of their best efforts, the husband and the wife did not have children.  Throughout the relationship they kept their financial affairs separate.  The husband had vastly more assets than the wife at the commencement of the relationship, and vastly greater income than her throughout the relationship.  He also received funds from other sources, unrelated to the wife.  The wife's parents were of modest means, and her mother was in receipt of Australian social security entitlements throughout the parties' relationship.  One of the wife's brothers appears to have never been gainfully employed during the parties' relationship (or if he was, he earned very little indeed).  The wife's other brother, Mr I, ceased full-time employment in the late 1990s and worked irregularly thereafter.  His income from employment after his retirement from full-time employment was modest.

5. In the above circumstances, the wife utilised all the financial resources available to her (such as her income from her employment from time to time, moneys deposited into her mother's bank account in respect of Mrs Ozsoy’s Australian social security entitlements, some moneys provided to her by Mr I [no doubt for his own purposes] and the like) to acquire property independently of the husband and to enable her to enjoy a lifestyle that she may not otherwise have enjoyed – given the husband's reluctance (or perceived reluctance) to spend money on entertainment and luxuries (or perceived luxuries).

6. In my opinion, the evidence leads to the inevitable conclusion that –as discussed elsewhere in these Reasons – neither party made any significant non-financial contribution to the acquisition, conservation or improvement of assets in the name of (or under the control of ) the other party.  That is not to say that each party did not make some non-financial contributions in the relevant sense; seen in context, however, those contributions ranged from minimal to trivial.

7. The evidence does not permit me to conclude that one party's contribution to the welfare of the family should be given greater weight than the other party's contribution in that regard.  It is likely that homemaking and housekeeping duties were shared.

8. In Bremner (1995) FLC 92-560 and Way (1996) FLC 92-702, the Full Court cited with approval a passage from the judgment of Fogarty J in Money (1994) FLC 92-485, as follows:

   … an initial contribution by one party may be “eroded” to a greater or lesser extent by the later contributions of the other party, even though those later contributions do not necessarily at any particular point outstrip those of the other party.

9. In Pierce (1998) 24 FamLR 377 (at 385), the Full Court sought to put Fogarty J’s quotation “in its correct context”. After referring to an expanded passage from Fogarty J’s judgment in Money – in which his Honour said that: “… the respective contributions of the parties over a long period of marriage ‘offset’ the significance which might otherwise be attached to a greater initial contribution by one party” – the Full Court 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 the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution … regard must be had to the use made by the parties of that contribution.

10. The relevance of initial contributions was also discussed in Williams (2007) FamCA 313, where, before referring to dicta from Money and Pierce, the Full Court said[72]:

    We think that there is force in the proposition that a reference to the value of an item as at the date of commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties.  Thus, where the pool of assets available for distribution between the parties consists of, say, an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation.  But, in so doing, it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship. 

    [72] at paragraph 26

11. In the very unusual circumstances of this case, it is difficult to see how either party's contributions would have served to offset, dilute or erode -- the words may denote a distinction without a significant difference ─ the significance of the other party's initial and subsequent contributions (whether, in the case of the wife, those contributions were sourced in the wife's own funds or in funds more properly regarded as being property family members).

12. Doing the best that I can with the evidence available to me, I find that an appropriate division of the property contained in the property schedule – on the basis of contribution alone – is as follows:

    a)Property B: 97.5% to the husband and 2.5% to the wife;

    b)Property S: 97.5% to the husband and 2.5% to the wife;

    c)Property M: 85% to the husband and 15% to the wife;

    d)Property C: 5% to the husband and 95% to the wife;

    e)husband's property in Turkey: 100% to the husband and 0% to the wife (as per Ms Smallwood's concession);

    f)moneys owing to the husband in respect of his contribution to the purchase price of one of the apartments in [E], Turkey (plus interest): 100% to the husband and 0% to the wife;

    g)Honda Civic: 50% to the husband and 50% to the wife;

    h)Mercedes-Benz: 80% to the husband and 20% to the wife;

    i)wife's shares: 50% to the husband and 50% to the wife;

    j)husband's shares: 90% to the husband and 10% to the wife;

    k)wife's Westpac term deposit: 10% to the husband and 90% to the wife;

    l)wife's superannuation and death benefits: 2.5% to the husband and 97.5% to the wife;

    m)husband superannuation entitlements: 90% to the husband and 10% to the wife; and

    n)Viridian line of credit: 100% to the husband and 0% to the wife

13. In relation to the wife's superannuation and death benefits, Mr Salamanca endeavoured to argue that the parties' contribution should be treated as being equal.  He argued that the death benefits were something similar to a windfall or an insurance payout with the parties had contributed equally, or something close to equally, to the acquisition which gave rise to the windfall or to the policy which generated the insurance payout.  I reject that submission.  While I accept that the husband may have made a contribution (directly or indirectly) to the policies or arrangements which gave rise to the wife's superannuation entitlements and, ultimately, her death benefits, there can be no doubt that it was the wife's death that generated the substantial lump sum payments.  I do not know whether death can be regarded as the quintessential contribution in such circumstances, but it is difficult to conceive of a more "direct" contribution.  But for the wife's death, the lump sums would not have been paid.

14. I would add that, in making the above assessments I have had regard to the fact that the wife have exclusive occupation of the former matrimonial home after separation and until her death, and the other post separation contributions made by the husband.

1. Applying the percentages referred to above to the value of the property set out in the property schedule results in an overall split of the total property pool on the basis of approximately 61.4% to the husband and 38.6% to the wife.

Section 75(2) factors

1. So far, in considering the question of property settlement I have dealt with the identification of the parties' property and the question of their respective contributions.  The Court has power to make an adjustment to a party's property settlement entitlement based on such contributions in order to take account of, among other things, both parties' respective means and needs.  The Family Court has been critical of shorthand terms being used to describe this step in the property settlement exercise, preferring to refer to it simply as “the section 75(2) factors”.[73]  In essence, section 75(2) is concerned with the process of arriving at a just and equitable result.[74]

   [73] See Clauson (1995) FLC 92-595.

   [74] See, in that regard, Waters & Jurek (1995) FLC 92-635.

2. Ms Smallwood conceded that the section 75(2) factors have no part to play from the point of view of the estate's case.  She argued that the property pool should be divided between the parties on the basis of their respective contributions (in all their various guises).

3. Mr Salamanca submitted that the section 75(2) factors are relevant to the extent that they justify a very modest adjustment (to the preliminary decision on the basis of contribution alone) in the husband's favour.

4. The husband's Summary of Argument makes reference to the husband's age and state of health, and the fact that the wife died in July 2011.  It records that the husband is currently employed as an [occupation omitted] and that he has the capacity to continue in that role for the foreseeable future.  The husband's financial position is otherwise as described in these Reasons.  The husband seeks to maintain a standard of living which is commensurate with the parties' standard of living prior to separation.  No other section 75(2) factors are relied upon, save section 75(2)(o) – which directs the court's attention to "any factor or circumstances which, in the opinion of the court, the justice of the case requires to be taken into account".  The husband submits that the wife's death, in itself, should trigger an adjustment in the husband's favour.

5. Bearing in mind that the proceedings are properly seen as a continuation of the property settlement proceedings between the husband and the wife (and not as fresh proceedings, as it were, between  the estate and the husband), I am persuaded that it is appropriate to make a modest adjustment in the husband's favour on the basis of the section 75(2) factors.  Subject to comments that I shall make below, I am so persuaded because the purpose of the section 75(2) adjustment is to assist the Court in the process of arriving at a just and equitable result.  To refuse to make an adjustment in the present proceedings would be to run the risk of making orders which are neither just nor equitable.

6. I conclude that an appropriate adjustment of the parties' entitlements on the basis of contribution alone is to increase the husband's entitlement by 2.5%.

7. It follows (subject what is set out below) that the overall distribution of the property between the parties should be on the basis of 63.9% (being 61.4% for contribution factors plus 2.5% to take account of the section 75(2) factors) to the husband, and 36.1% to the estate. 

8. In G & G (2004) FamCA 1179, the Full Court said (in relation to an exercise of judicial discretion such as that which I have performed in the previous paragraph):

   73.    …(Words) will often (perhaps always) fall frustratingly short of an incontestable explanation for any particular exercise of discretion – or, for that matter, for a finding by an appellate court that a particular exercise was wrong.  All the relevant factors can be described, with modifiers in abundance, but still the analysis will beg the question, “Yes, but why that figure and not another?” or “Why was that the range rather than some other parameters?”

   74.    The deficiency is unavoidable.  When there are a number of “right” results available, the explanation for the choice of one over others can never be incontestable.  Nor can the reasons for saying that a result is outside a range be beyond challenge.  The very nature of a discretionary exercise that ascribes mathematical consequences to a batch of actions and events amenable only to descriptive evaluation, means that it is impossible to place beyond argument the explanation for all the steps to the ultimate selection of result. ...

   81.    …(In) respect of virtually every exercise of discretion, by definition, it will not be possible to deliver a judgment which excludes reasoned argument that another result was available.

9. For what it is worth, I concur with the Full Court’s view as expressed in the passage from G & G quoted above.  The “balancing exercise” that the court must perform is rarely an easy or non-contentious one.

Just and equitable?

1. As indicated above , the High Court in Stanford explained that the consideration of the various factors in section 79(4) – which includes reference to section 75(2) factors – does not automatically give rise to a right on the part of one or other of the parties to have the property divided between them by reference to those factors. The requirement contained in section 79(2) must be considered and applied.

2. In this case, the husband and the wife had separated well before the commencement of property settlement proceedings.  It is arguable, therefore, that the express and implicit assumptions that underpinned the property arrangements that they had made during their cohabitation had been "brought to an end by the voluntary severance of the mutuality of the marital relationship".  It follows that it can be considered just and equitable that the court make a property settlement order (which order is to be determined by applying section 79(4))

Application of section 79(8)

1. It is apparent from the analysis of the parties' respective contributions (in all their various guises) set out above, and from the fact that the "the mutuality of the marital relationship" ended well before the commencement of property settlement proceedings, that the court would have made an order with respect to property if the wife had not died.  What that order may have been is difficult to determine, but the analysis of the parties' contributions set out above establishes signposts as to the direction that the court's discretion may have taken.

2. The second requirement of section 79(8) requires the court to form the opinion that it is still appropriate to make an order with respect to property.  Section 79(2) applies to this requirement as well.

3. The somewhat dispassionate consideration of the contribution factors and section 75(2) factors embarked upon above leads to a conclusion that the division of the property should be on the basis of 63.9% to the husband and 36.1% to the wife and that, accordingly, the husband should pay to the estate a sum of $68,187 (being the amount required to bring the estate's share of the total pool to 36.1% – after taking into account that the estate will be retaining property to the value of $939,665 ).  In my opinion, it is indeed just and equitable to make in order to the effect that the husband pay this amount.  Put another way, I am of the opinion that it is still appropriate to make an order with respect to property.  The husband has more than enough assets to meet the proposed payment, and his financial security is assured.  The parties having separated well before the commencement of the property settlement proceedings, it is just and equitable that her fair entitlement (after taking into account the section 75(2) factors) be left to her, or to her estate, to do with as she or it sees fit.

4. Further, the intermingling of the wife's financial arrangements with those of her family members dictates that it would be neither just nor equitable to ignore moneys to which the wife (or her estate) would ordinarily be entitled.

5. It follows that the wife's estate should receive property to the value of the $1,007,852 (being 36.1% of $2,791,835 ) and the husband should receive the balance.  The estate already has property to the value of $939,665 (comprising the Property C property, the Honda motor vehicle, the wife's shares, the wife's term deposit and the wife's superannuation and death benefits).  The husband must pay to the estate a sum of $68,187 in order to enable it to receive its overall entitlement. 

Structure of the orders

1. I shall now hear Counsel as to the precise orders necessary to give effect to these Reasons.

I certify that the preceding two hundred (200) paragraphs are a true copy of the reasons for judgment of Walters FM

Date:  5 December 2012