Faine and Elwood
[2008] FMCAfam 1009
•12 September 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| FAINE & ELWOOD | [2008] FMCAfam 1009 |
| FAMILY LAW – Property settlement – case turns on its own facts. |
| Family Law Act 1975 (Cth) |
| Anast & Anastopolous (1982) FLC 91-201 Re: F – Litigants in Person Guidelines (2001) FLC 93-072 Reichstein (2006) FamCA 1422 |
| Applicant: | MR FAINE |
| Respondent: | MS ELWOOD |
| File Number: | MLC 11234 of 2007 |
| Judgment of: | Walters FM |
| Hearing dates: | 7 & 13 August 2008 |
| Date of Last Submission: | 13 August 2008 |
| Delivered at: | Melbourne |
| Delivered on: | 12 September 2008 |
REPRESENTATION
| Counsel for the Applicant: |
| Solicitors for the Applicant: |
| Counsel for the Respondent: | Ms Smallwood |
| Solicitors for the Respondent: | Pearsons Barristers & Solicitors |
ORDERS
IT IS ORDERED THAT:
That the wife retain for her sole use and benefit all assets of which she is the registered proprietor or that are in her possession, including the following real estate:
(i)Property N, VICTORIA
(ii)Property G Land, VICTORIA
(iii)Property W, QUEENSLAND
(iv)Property P, VICTORIA
That the husband provide a withdrawal of caveat in registrable form for any caveat lodged by him or on his behalf on the real estate listed in paragraph 1(i) to (iv) herein within 14 days.
That the husband retain for his sole use and benefit all assets of which he is the registered proprietor or that are in his possession, including the proceeds of sale of his unit in Cairo, Egypt.
That each party retains for their sole use and benefit any superannuation benefit to which they are or may become entitled.
That each party otherwise be solely liable for and indemnify the other for any debt of whatsoever kind they may or are liable to repay as at this day.
IT IS NOTED that publication of this judgment under the pseudonym Faine & Elwood is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 11234 of 2007
| MR FAINE |
Applicant
And
| MS ELWOOD |
Respondent
REASONS FOR JUDGMENT
Introduction
Before the Court are the parties’ competing applications for property settlement. The husband also sought an order that the wife pay him spousal maintenance, although the precise form and amount of such maintenance was never clearly identified.
Before the commencement of the trial, the parties entered into negotiations and reached an agreement to the effect that the total net value of the property available for distribution between them is approximately $840,000. A schedule reflecting that agreement was handed up to me on 6 August 2008. The schedule is headed “Asset Pool”. It lists the items of property (and liabilities) to be taken into account, and their values.
Although the parties agreed as to the composition and value of the pool, they disagreed as to how it should be divided. The wife argued that each party should retain the property (including, in her case, liabilities) currently in his or her possession (whether notionally or otherwise). The husband argued that the wife should be ordered to pay him something in excess of $150,000.
The trial commenced on 6 August 2008, but could not be completed on that day. Due to the unavailability of an interpreter for the husband on the following day (7 August 2008), the hearing was not resumed until 13 August 2008.
The trial concluded late in the afternoon of 13 August 2008, at which time I indicated to the parties that I had reached a decision. I then made final orders – in an agreed form, although not, of course, by consent. I advised the parties that I would provide detailed reasons at a later stage. These are those reasons.
The husband was self represented. Although he requested and was provided with an interpreter, it was perfectly apparent throughout the trial that his English was very good.
Ms Smallwood appeared for the wife.
The husband was self represented, and utilised the services of an interpreter
Given that the husband was self-represented, I was very conscious of the obligation upon the Court to provide a fair trial – for both parties. I am aware of the guidelines regarding the manner in which a judicial officer should deal with unrepresented litigants, and the associated discussion contained in Re: F – Litigants in Person Guidelines (2001) FLC 93-072.[1] I applied those guidelines during the course of the proceedings, and am comfortable that the trial was indeed fair. In summary:
a)Procedural fairness was afforded to all parties.
b)The “mechanics” of the trial, and the right of the husband to cross-examine witnesses, were explained to him.
c)Other relevant procedures were explained to the husband as they arose.
d)I explained to the husband that he had the right to object to inadmissible evidence, and explained to him – in very broad terms – the types of evidence that might be considered inadmissible.
e)Where appropriate, I attempted to clarify the substance of the husband’s submissions.
f)Where appropriate, I took steps as authorised by the Full Court in Guideline #9 in paragraph 253 of the decision in Re: F – Litigants in Person Guidelines.
[1] See, in particular, paragraphs 209-253 of the decision.
In Saxena (2006) FLC 93-268, Coleman J emphasised that the type of guidelines set out in the previous paragraph “were no more than the name implies” and that they “derive from the broader considerations of natural justice, implicit in which is the recognition that for a litigant in person to be afforded natural justice and procedural fairness, that litigant must have some appreciation of just what is going on”. His Honour added that the Court must be concerned with “the spirit rather than the strict letter of the guidelines”.
In the present case, the husband requested and was provided with an Arabic interpreter. Indeed, a significant delay occurred because of the unavailability of an interpreter on the second day of the hearing. The fact of the matter is, however, that the husband's English was very good, and he often lapsed into near faultless English when answering questions or addressing the court. I have no doubt that he fully understood exactly "what was going on" at all times. I also have no doubt that he fully understood the contents of all documents relied upon during the course of the proceedings.
I would add that, in my opinion, both interpreters were highly competent. Both were clearly alert to the need to accurately convey to the husband, in Arabic, all comments made in English during the course of the proceedings, and to accurately convey to the court and to Ms Smallwood (for the wife) all comments made by the husband in Arabic.
Background
In these Reasons, all statements of fact comprise findings of fact.
The husband was born in Egypt in 1952. He is now 55. The wife was born in Egypt in 1959, and is now 49. Their relationship began in 1996, and they married in Melbourne in 1997.
The wife arrived in Australia in 1972. The husband arrived in 1997. Both are Australian citizens.
The parties were divorced in July 2006.
There was much dispute as to the date upon which the parties separated. I have dealt with this subject in some detail below. Suffice it to say at this stage, however, that the parties had finally separated by October or November 2005 at the latest.
There one child of the marriage ─ [X] (a boy), who was born in 1998. [X] lives with the wife.
At the time of the marriage, the wife had the following property:
a)A unit in Property N ("the N flat"). The wife purchased the N flat in 1996 for $68,000. At the time of the marriage, it was encumbered by a mortgage in respect of which approximately $36,000 was owing.
b)Vacant land in Property G ("Property G"). The wife had purchased Property G in or about 1992 for approximately $11,000. It has always been unencumbered.
c)A motor vehicle, and furniture.
At the time of marriage, the husband owned a unit in Egypt. It appears that the unit was sold in or about 1999 for approximately $130,000. The husband did not satisfactorily explain what had happened to the proceeds of sale of the Egyptian unit, and he certainly produced no credible evidence to support his assertion that some (at least) of the proceeds were brought into Australia in dribs and drabs in the form of travellers cheques. Shortly before the start of the trial, the parties agreed that the whole of the $130,000 should be included in the pool of assets available for distribution between them.
The husband asserted that he also had savings of $25,000 at the time of the marriage. I do not accept this assertion, and no credible evidence was produced to corroborate it.
The parties lived and worked in Egypt (as accountants) for approximately 6 months from late 1999 to early 2000.
In March 2000, the wife became the registered proprietor of a unit in Property B, ("the Property B flat"). According to the husband, he contributed $20,000 to the purchase of the Property B flat from the sale of his Egyptian unit. There was no credible evidence to support the husband's assertion in this regard, and I do not accept it. As I have said, I do not know what the husband did with the proceeds of sale of the Egyptian unit, but I have no doubt that none of it was used to acquire assets in the wife's name. In any event, the parties agreed that the entire proceeds of the sale of the Egyptian unit should be included in the pool of assets available for distribution between the parties (and necessarily allocated to the husband).
In approximately June 2001, the parties moved to Property H in western Victoria. Both parties obtained employment in the area ─ the wife as an accountant or financial officer, and the husband as a clerk/administrator. The husband has qualifications as an accountant in Egypt.
Unfortunately, the husband's employment in H ceased after approximately 3 months. He then returned to live in Melbourne (in circumstances described elsewhere in these Reasons). The wife continued to live and work in the H area until approximately March 2004, when she too moved back to Melbourne. [X] lived with her throughout her time in the H area.
The husband commenced employment with [omitted] in Melbourne in late November 2001. He worked as a [omitted] at Tullamarine on a full-time basis. He continued to work for [omitted] until January 2006.[2]
[2] See Annexure SF5 to the husband's affidavit sworn 1 April 2008
In 2002 ─ when the husband was living in Melbourne and the wife and [X] were living in the H area ─ the wife purchased a unit in W, Queensland ("Property W"). The wife paid $79,000 for Property W. There is no credible evidence to the effect that the husband played any role whatsoever in the purchase of Property W. The wife managed Property W and collected all rent from it.
During the marriage, Mr A, a family friend, gave the wife a total of approximately $79,000. The wife used the funds to assist with the purchase of the Property B flat, to make various mortgage payments in relation to the Property N flat, and to pay household and other bills.
On leaving his employment with [omitted] in January 2006, the husband became entitled to superannuation benefits totalling approximately $14,500. Later that year, and again in 2007, he applied for and received a total of $6,400 from his superannuation entitlements. According to the husband, he received these payments "on hardship grounds", but no credible evidence was presented to corroborate the grounds upon which the payments were made.
The husband applied for a Newstart allowance in February 2006. It appears that he did not work in paid employment until 11 March 2008, when he began working part time (two days per week) as a [omitted] at [M] Company in [U].
In 2006 (and clearly after the date of separation) the wife purchased a house in P ("Property P"). Property P was purchased for $370,000 as a house and land package. At the date of trial, it was subject to a mortgage in respect of which approximately $138,000 was owing.
In approximately April 2007, the wife purchased a one-way ticket for the husband to travel to Egypt. I accept the wife's evidence to the effect that she believed, at that time, that the husband wished to return to Egypt permanently.
The husband did not remain in Egypt. He returned to Australia in June 2007 and later (on 17 October 2007) commenced proceedings in this Court. In his application, he sought "that there be a fair and equitable distribution of property and financial resources between the parties". He also sought lump sum spousal maintenance in an unspecified amount.
The wife's response was filed on 10 December 2007. In it, she sought that each party retain the assets currently under his or her control.
Date of separation
The wife asserted that the parties separated in or about September 2001. The husband asserted that they did not separate until approximately October 2005.
At the end of the day, the actual date of separation was only of marginal relevance. Still, it is appropriate that I deal with the subject ─ to some extent ─ in these reasons.
The wife filed an application for divorce on 15 June 2006. In it, she stated that the parties separated on 1 December 2001, that she regarded the marriage as being over on that date and that she and the husband had not lived under one roof, or together as husband and wife, since that time.
The application for divorce was served on the husband on 14 June 2006. He did not oppose the application, and did not attend on the hearing date (being 27 July 2006). As a result, the divorce was granted (the wife appearing in person).
As recorded above, the husband's initiating application in the current proceedings was filed on 17 October 2007. No supporting affidavit was filed at that time (although the husband did file a financial statement). In the initiating application itself, the husband recorded the date of final separation as 1 December 2001.
In paragraph 7 of her affidavit sworn 7 December 2007 (in support of her response filed 10 December 2007), the wife deposed as follows:
The husband and I were married for a very short time from the 25th October 1997 until September 2001 when we separated.
In the subsequent paragraphs of her affidavit, the wife described the contributions made by the parties prior to and after the date of separation. She also recorded her version of the assets that were in existence at the time of separation, together with the assets in existence at the time that the affidavit was sworn.
The wife also deposed as follows:
9. Since separation the child has lived with me on a permanent basis. The husband was seeing the child on a regular basis one day per week at times to be agreed between us.
…
11. The arrangement has been suitable since separation for over six years.
12. Since separation the husband has not provided me with any financial support whatsoever.
…
17. I have continued to support myself and the child post separation and the husband has not made any contributions whatsoever.
In paragraph 6 of his affidavit sworn on 13 February 2008, the husband raised the issue of the date of separation for the first time. He deposed as follows:
I say we separated in October 2005. In or around May 2001, the wife obtained a job as an accountant with the H Hospital. At the time we were renting a flat in [O]. We then relocated together to Property H. Upon arriving in Property H, I was able to obtain a job. However, the job ceased after three months. I was told by the firm of accountants that there was no further work for me. As a result, I decided to move back to Melbourne and reside in our property at Property B, where my job opportunities would be greater. ([X]) and (the wife) remained living in Property H. Each weekend they would reside with me in Property B. I believe this is the time of the wife alleges that we separated. I deny this and say the relationship continued until final separation in or around October 2005. It is true that the wife filed an application for divorce and in that application she had the separation date as 2001. I did not read that document and neither did I object or file any objection to the inaccurate information in the application regarding the separation date. I did not attend court. I say the separation date was October 2005. The wife said to me in October 2005 that she wanted some space and would like me to move out. She paid for the first month's rent on a unit in [T] and the bond. Even at this point in time, I did not feel that the relationship was over but later this became the case. I say that up until approximately 1 month before I vacated the former matrimonial home, the wife and I still had a sexual relationship. Up until October 2005, we did everything together. We socialised together, we visited friends together, we went to the casino together. In my opinion, to the outside world, we would have appeared to be a married couple. It is true that when I returned to live in Melbourne and the wife insisted that I enter into a lease agreement with respect to the Property B property. We purchased a property together but it was registered solely in her name. I believe this may have had some accounting or tax benefit for the wife. I can confirm that, although the lease was prepared by an agent and I signed the lease, I never made one payment of rent pursuant to that lease nor was I ever chased for any rent. The wife worked for approximately 12 months at the H Hospital and then returned to reside with me and our son in the Property B property. We resided there full-time until October 2005.
On 29 July 2008, the wife filed a short affidavit attaching a large volume of material in support of her assertion that the parties had separated in 2001 (and not in 2005). Relevantly, the wife annexed a copy of the certificate of divorce, copies of her income-tax returns for the financial years from 2001 to 2004 (inclusive), a copy of the lease agreement signed by the husband relating to his occupancy of the Property B flat, various bills relating to the time that the wife was living in Property H and copies of [X]'s school reports from the time that he was attending school in Property H.
In relation to the documents attached to the wife's affidavit filed on
29 July 2008, I note as follows:
a)The wife's 2001 income-tax return recorded (on page 3 of 17) that she had a spouse for the full year 1 July 2000 to 30 June 2001, and that her spouse was the husband (see pages 9 and 10 of 17).
b)The wife's 2002 income-tax return recorded that the wife was living and working in the Property H area, that the husband was her spouse and that the husband was living in [O]. It also recorded (on page 16 of 18) that the Property B flat was rented for "zero" weeks during the year and that the wife received no income from it (although her expenses relating to the Property B flat totalled $7,445).
c)The wife's 2003 income-tax return recorded that the wife was living and working in the Property H area. Details of her spouse's name were left blank. Similarly, other spouse details (including the question of whether she had a spouse for the full year 1 July 2002 to 30 June 2003) were left blank. The 2003 income-tax return also recorded that the Property B flat was rented for "zero" weeks during the year and that the wife received no income from it (although her expenses relating to the Property B flat totalled $6,890).
d)The wife's 2004 income-tax return recorded that the wife was living and working in the Property H area until November 2003. Other documents attached to the income-tax return (such as the wife's Centrelink 2004 PAYG payment summary and her TAC statement of earnings for 2003/2004) recorded her address as the Property B flat. Details of her spouse's name were left blank, as were other spouse details (including the question of whether she had a spouse for the full year 1 July 2003 to 30 June 2004). The 2004 income-tax return referred to the Property B flat, but left blank the box relating to the number of weeks during which the property was rented in the 2004 financial year. The wife's expenses relating to the Property B flat totalled $11,637. She received no income from it.
e)Annexure C to the wife's affidavit comprises a bundle of documents revealing that the Property B flat was leased to the husband for six months from 3 November 2001. The documents show that the lease was arranged through the N office of Ray White, on what was clearly an "arms length" basis. The husband was vetted as any new tenant would have been, and a condition report relating to the property was prepared and signed by the agent and the husband as tenant. The rent was expressed to be $520 per calendar month.
f)The documents in Annexures D and E to the wife's affidavit appear to corroborate that the wife was living in the Property H area until approximately March 2004 (at the latest).
On 1 April 2008, the husband swore a further affidavit, in which he again dealt with the date of separation. The husband deposed as follows:
12. In early November 2001 (the wife says it was October 2001) I returned to live in (the Property B flat) as the tenant had vacated and I could not find work in H so I came to Melbourne and attended a [omitted] course with [omitted] to assist my job prospects. …
14. While the wife was living in [Property H] I lived in (the Property B flat). We were in regular contact each week and the wife would travel to Melbourne by car with [X] approximately twice a month and would stay for the weekend at (the Property B flat). I would travel by train on Saturday morning and stayed with the wife at the flat she was then renting in H and return on Sunday afternoons approximately twice a month. We shared the same bed when these visits occurred. …
16. The wife and ([X]) returned to live in Melbourne about the end of 2003. [X] was then aged 5½ … and the family all resided together at (the Property B flat). …
17. [X] was enrolled at S School, B from 2 March 2004 until 16 July 2004 …
18. [X] was transferred to N School, N and … he attended the school from 19 July 2004 to 30 March 2007.
19. While [X] was attending S School and N School until 5 November 2005, I regularly took [X] to school or collected him from school or from the after-school carer. …
Attached to the husband's affidavit sworn 1 April 2008 are statements signed by friends or acquaintances of the husband and wife. In broad terms, the statements record that the parties appeared ─ to outside observers ─ to be husband and wife until approximately October 2005 (when the husband left the Property B flat and moved to a flat in [T]). Similar statements are attached to the husband's affidavit sworn
5 August 2008, as is a copy of [X]'s enrolment form at S School primary school (which form is dated 1 March 2004 and records both parties’ address as the Property B flat).
Two of the people who had provided statements regarding the parties’ apparent cohabitation in the Property B flat during the period from late 2001 to approximately October 2005 were called as witnesses and gave oral evidence. Both witnesses (Mr T and Mr M) confirmed the contents of their statements. I have no reason to disbelieve either witness.
During the course of his oral evidence, the husband confirmed that the parties did not separate until he left the Property B flat in October 2005. His evidence in relation to his lack of response to the wife’s divorce application (and the date of separation appearing in his initiating application commencing these proceedings), however, was wholly unsatisfactory. For example, he said that he told his solicitor that the date in the divorce application was incorrect, but that his solicitor told him that:
You need to sign (the initiating application) and we can object to the date later.
The husband also said that his solicitor was "well aware of the date of separation" at the time that he prepared the initiating application in October 2007.
Generally speaking, the husband's evidence regarding his acceptance of the date in the divorce application and its repetition in the initiating application was vague and unconvincing. I do not accept it, and find that it is likely that the husband was quite prepared to accept the earlier date of separation until he formed the view that it might not be to his advantage (in property settlement proceedings) to do so. As I have recorded elsewhere in these proceedings, the husband was a most unimpressive witness, and I do not accept that he was candid with the court.
Having recorded that the husband's evidence in relation to the date of separation was less than satisfactory, it needs to be added that the wife's evidence was equally unsatisfactory. In spite of the clear statements in the divorce application, and in her affidavit sworn 7 December 2007, the wife readily admitted ─ during the course of her examination in chief ─ that the parties did, in fact, live under the one roof from March 2004 to November 2005. She said that her failure to refer to the fact that the parties were separated under the one roof in her divorce application was due to "an error" on her behalf. She then said that ─
I acted as if we were together (during the period leading up to November 2005) because I wanted to protect [X]. Everyone thought our relationship was normal, but we were really separated. I behaved in this way because I wanted a normal situation for [X]'s sake, but it came back and bit me.
Having regard to all the evidence before me, I conclude that the parties did not physically separate on a final basis until October or November 2005, when the husband left the Property B flat. Nevertheless, I find that the wife fully intended to separate from the husband at the time that he left Property H and commenced living in the Property B flat, and that the husband knew of and accepted the wife’s intention in that regard. I accept that the wife was prepared to behave in the manner described by the husband’s witnesses in order to protect [X] from the knowledge that his parents’ marriage had broken down and that, in doing so, the friends and acquaintances of the parties would have been unaware of the true circumstances in the household. Although the parties undoubtedly spent time together and socialised together on many occasions after the husband commenced living in the Property B flat (and particularly after the wife returned to live in the flat in or about March 2004), and although they may have occasionally had sexual relations during that time, the evidence clearly shows that the parties kept their finances separate.
I find that the husband was well aware of the wife's intention to sever the marital relationship at the time that he left Property H to live in the Property B flat. The wife clearly acted on that intention, as did the husband (given that the husband moved to Melbourne and entered into a formal lease relating to the occupation of the Property B flat). Although the parties lived under the one roof after the wife returned to Melbourne in March 2004, I find that "mutual society and protection" were absent from their relationship and, that although the parties recognised the existence of the marriage in their public relationships, they did not do so in their private relationship.[3] Further, I have little doubt that there was little mutual affection between the parties and that they did not care for each other. And there is no credible evidence that would lead me to conclude that they shared material resources at any time after the husband left Property H and commenced living in Melbourne.
[3] See, for example, Dickey, Family Law (5th edition, 2007) at pp 187 to 198
Overall, I conclude that the parties did not share "a common life" in the usual sense after the husband left Property H. I accept the wife's evidence to the effect that, in essence, the parties continued to live together as individuals for [X]'s sake ─ even if it appeared to friends and acquaintances that the marriage was intact. That is not to say that the parties maintained two strictly separate households; nor is it to say that they did not have sexual relations from time to time. In the unusual circumstances of the present case, however, it is likely that the marriage was essentially a matter of form and not substance, and that neither party was genuinely committed to a true marital relationship.
In partial corroboration of the view that I have formed regarding the date of separation, I note that the mortgage taken out by the wife over the Property B flat in February 2002 (a copy of which comprises part of annexure SF3 to the husband's affidavit sworn 1 April 2008) records that the mortgage was full name is "Ms Elwood (formerly Faine)”.
At the end of the day, it is not my role to determine whether or not the divorce should have been granted (irrespective of the accuracy of the statements made by the wife in the divorce application). The husband made no attempt to formally challenge the validity of the divorce. The real issue in the proceedings before me was not the date of separation itself, but the nature of the contributions made by the parties at all times from the commencement of cohabitation to the date of trial (and, of course, the other factors forming steps in the property settlement exercise). In that regard, the most striking feature of the evidence is the complete absence of any documentary material which could cause the court to conclude that the parties had anything approaching a joint or mutual financial relationship at any time after the husband left Property H in late 2001.
Documents relied upon
The husband relied upon the following documents:
a)his affidavits sworn 13 February 2008, 1 April 2008 and 5 August 2008; and
b)his financial statement sworn 13 February 2008.
The wife relied upon the following documents:
a)her affidavits sworn 7 December 2007 and 28 July 2008; and
b)her financial statements filed 10 December 2007;
The husband filed a case outline document (and an "Opening") on 2 April 2008.
The wife supplied a case summary document shortly before the commencement of the trial.
A schedule headed “Asset Pool” was handed up at the commencement of the trial. It identifies the property available for distribution between the parties (including relevant liabilities). All items contained in the schedule were agreed.
A small number of exhibits were tendered during the course of trial.
Orders Sought
In his application, the husband sought "that there be a fair and equitable distribution of property and financial resources between the parties". He also sought lump sum spousal maintenance in an unspecified amount.
In his outline of case document, the husband proposed that the wife sell certain properties and that she pay him the sum of $260,000 "for all his property settlement entitlements and by way of lump sum maintenance and/or property settlement". He also proposed that the wife pay him "one half of the increase in value of her superannuation from the date of the marriage to the date of hearing".
The wife's response was filed on 10 December 2007. In it, she sought that each party retain the assets currently under his or her control. The wife's proposals did not alter.
Property Settlement – The Law[4]
[4] This generic summary of the law is extracted from my decision in the matter of Kernahan (2007) FMCAfam 952
The general approach that should be adopted by the court in relation to a property settlement application has been described in many cases[5]. 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. 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.
[5] 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
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[6].
[6] See Norbis (1986) FLC 91-712
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[7].
[7] See McMahon (1995) FLC 92-606 at 82,043
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[8].
[8] See Russell (1999) FLC 92-877
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:[9]
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 s.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…
[9] At paragraph 39
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.[10] 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.
[10] See Waters & Jurek (1995) FLC 92-635, Dickson (1999) FLC 92-843 and my discussion of the subject in OSF & OJK (2004) FLC 93-191
In B & B (2006) FamCA 883, Faulks DCJ said[11];
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. From my part, it seems to me that even that sort of adjustment is more appropriately incorporated into the first two discretionary phases.
[11] In paragraphs 105 & 106
In Brice (2007) FamCA 170, however, Kay J suggested – in a passage that is clearly obiter – that section 79(2) is itself a source of substantive power. His Honour continued[12];
If the sum of the parts created by section 79(4)(a), (b) and (c) contributions and section 79(4)(e) considerations adds up to too much or too little, then further adjustments may be made in order to meet the over-riding dictate that an order must not be made unless it is just and equitable.
[12] At paragraph 19
For the reasons that I set out in OSF & OJK (2004) FLC 93-191 (and, in particular, in paragraphs 26 to 28 thereof), I prefer the analysis of Faulks DCJ in B & B to that of Kay J in Brice.
At the end of the day, though, the precise nature of the final step or stage in the property settlement exercise is of no 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.
Credibility
The husband’s evidence relating to:
a)his response (or lack thereof) to the wife's divorce application;
b)his gambling;
c)his failure to pay child support, and his alleged "agreement" with the wife (to the effect that the wife was to care for [X] ─ with some assistance from the husband if required ─ in return for which the husband was not obliged to pay child support);
d)the various cash payments that he allegedly made on behalf of the parties;
e)the proceeds of sale of the Egyptian unit, and the bringing of the relevant funds into Australia by way of travellers cheques;
f)his alleged contribution (of approximately $20,000) to the purchase of the Property B flat;
g)his expenditure during the period that the parties lived in Egypt in 1999/2000;
h)the manner in which he dealt with his income from his employment with [omitted]; and
i)the one way ticket to Egypt,
was less than satisfactory. Many of his answers were vague and difficult to follow. Others were non-responsive. I find that he has not been open and frank with the Court in relation to the subjects referred to above (among other things).
The wife's evidence was also unimpressive in parts. For example, her evidence relating to:
a)the date of separation (including the evidence contained in her divorce application); and
b)her current defacto relationship (including her failure to mention the existence of the relationship, and her financial relationship with her domestic partner, in her affidavit material, and in her financial statement),
was as unsatisfactory as much of the husband’s evidence.
Both parties are clearly intelligent and capable people. Neither seemed remotely overawed or intimidated by the trial process. That being so, the lapses described above cannot, in my opinion, be satisfactorily explained by factors such as the understandable nervousness that witnesses feel during the course of giving evidence.
Having recorded the above, I nevertheless conclude that I have no hesitation in preferring the wife’s evidence to that of the husband in relation to broad financial matters, including the parties’ contributions in all their guises. It was simply impossible to understand the husband’s attempted explanations regarding the way in which he had spent the moneys available to him during the relationship. Put simply, he had virtually nothing to show for his claimed expenditure.
I shall refer to other aspects of the parties’ evidence later in these Reasons.
Property and liabilities as at the date of trial
The first step in the property settlement exercise relates to the identification and valuation of the property of the parties at trial (which I shall describe as "the asset pool").
In the present case, the asset pool was agreed at the commencement of the trial. As a result, I find that the parties’ property and liabilities are as follows:
Assets Amount Sub Total 1. The Property N flat $250,000 2. Property G (land) $50,000 3. The Property B flat $250,000 4. Property W, Queensland $200,000 5. Property P $450,000 6. Wife's superannuation $60,000 7. Husband's superannuation $14,500 8. Proceeds of husband's unit in Egypt $130,000 $1,404,500 Liabilities 9. Home loan #[3] ($138,493) 10. Home loan #[8] ($388,742) 11. Viridian credit line ($27,075) 12. Wife's credit card ($10,205) ($564,515) TOTAL $839,985
It can be seen from the above that the total net value of the parties' property is $839,985 – of which $14,500 comprises the husband's superannuation entitlements (some of which he has already received), and $60,000 comprises the wife's superannuation entitlements.
It was not in dispute that the parties' respective superannuation entitlements should be included in the overall "pool" of property available for distribution between the parties. In other words, neither party suggested that superannuation should be included in a separate list[13], to be treated differently from the remaining items of property. Further, there was no suggestion that the parties' contributions to their superannuation interests should be treated or assessed any differently to their contributions to other items of property. In other words, and in that sense, a "global" approach was adopted.
[13] see C v C (2005) FLC 93-220, at para.63
Contributions
I now turn to consider the second "step" of the property settlement exercise – namely, the identification and assessment of the parties' contributions in all their various guises.
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.
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.
The relevance of initial contributions has been discussed very recently in Williams (2007) FamCA 313. Before referring to dicta from Money and Pierce, the Full Court said[14]:
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.
[14] at paragraph 26
I have already recorded the parties' initial financial contributions.[15] The wife owned the Property N flat (which was encumbered) and Property G (which was not). She also had furniture, and her motor vehicle. The husband had the Egyptian unit. I am not persuaded that he had any other property of significance.
[15] See paragraphs 18 to 20 above
It is clear beyond argument that the parties kept their finances separate throughout their relationship, and particularly after the husband returned to Melbourne from Property H in late 2001. The husband did not engage in paid employment until June 2001. The job that he obtained at that time (in Property H) lasted for three months. He then returned to Melbourne, and in November 2001 commenced working for [omitted] as a [omitted]. He left that employment in January 2006.
There is simply no credible evidence before me to enable me to conclude that the husband made any, or any significant, financial contribution to the acquisition, conservation or improvement of any of the properties now registered in the wife’s name. Although the husband was able to produce a miscellaneous assortment of documents to support (principally) his assertion that separation did not occur until late 2005, he did not produce a single bank statement or other financial document to support his assertion that he had indeed made some financial contributions. Nor did he satisfactorily explain the absence of such documentation – given that he is a qualified accountant and that, in my opinion, he is anything but commercially naïve.
I accept the wife’s evidence that the husband gambled heavily, and I have no doubt that a significant portion of his income was used for that purpose. I do not doubt that the wife also gambled, but I find that her gambling was on a much smaller scale than the husband’s gambling. After all, the wife was solely (or almost solely) responsible for [X]’s care while she lived in Property H (and the husband was in Melbourne), and she remained very largely responsible for his care after the parties ceased living under the one roof in late 2005. In other words, the husband had much more time available to him than did the wife. In addition, the fact of the matter is that the wife has been able to accumulate substantial assets over the years. Her income was used to meet mortgage instalments and other outgoings that were not covered by the income from the rental properties. I note, as well, that the husband did not pay rent during the period that he lived alone in the Property B flat (being the period from late 2001 to approximately March 2004). Although he was working and earning income during that period, no credible explanation was provided as to the manner in which his income was spent.
I simply have no idea what the husband did with the income that he earned during the relationship, or with the proceeds of sale of the Egyptian unit. He did not pay child support at any relevant time, he did not pay rent (to anyone) during the period prior to November 2005, and he does not appear to have paid any of the mortgage instalments or other outgoings in relation to the properties in the wife’s name. Although he said that he “paid things for (the Property B flat)”, and that he paid for gifts and meals and entertainment when he was living with the wife, I do not believe that he paid any more than minimal amounts for these things.
It is apparent from Exhibit W2 that the husband’s taxable income was approximately $29,000 for the 2002 tax year, approximately $42,000 for the 2003 tax year, approximately $35,000 for the 2004 tax year and approximately $37,000 for the 2005 tax year. The tax on his taxable income varied from approximately $5,000 to approximately $7,000 during that period. Clearly, the husband’s net income was not insignificant over those years. As I have indicated above, however, there is simply no credible evidence that would allow me to conclude – or even to infer or assume – that that net income (or a reasonably significant part of it) was used, whether directly or indirectly, to –
a)acquire, conserve or improve property of any sort; or
b)benefit or otherwise contribute to the welfare of the family.
Details of the wife’s income over a similar period are contained in the attachments to her affidavit sworn 28 July 2008. The wife’s taxable income was clearly affected by the expenses that she incurred in relation to the rental properties, and the associated tax losses. Her gross income from paid employment, however, was approximately $38,500 for the 2002 tax year, approximately $53,500 for the 2003 tax year and approximately $43,000 for the 2004 tax year. The gross rent that she received from the rental properties in those years was approximately $9,300 for the 2002 tax year, approximately $15,800 for the 2003 tax year and approximately $15,000 for the 2004 tax year. The wife’s tax returns reveal that she spent significant amounts during those years on interest payments, rates, letting fees, repairs and maintenance and the like.
I accept that there can be a danger when comparing like with unlike, but the fact of the matter is that the husband’s gross income was not likely to have been substantially higher than his taxable income in any of the years referred to above, because he did not appear to have any significant deductions available to him. The wife was in a very different position, of course. But the figures to which I have referred exemplify the disparity in the parties’ income for the years to which they refer. They also corroborate the wife’s case to the effect that parties’ kept their finances strictly separate (which fact the husband does not effectively dispute) and that the husband made no meaningful financial contributions in any relevant guise. To be added to that are the following:
a)The husband was not employed from the date of the marriage until June 2001.
b)The parties lived some 350 kilometres apart from late 2001 until approximately March 2004.
c)On any view of the evidence, the parties were living separately and apart from approximately November 2005.
d)The husband was unemployed from January 2006 until March 2008.
The husband’s case seemed to be that I should infer or assume that his earnings (and the net proceeds from the sale of the Egyptian unit) were used – in some way – to acquire, conserve or improve the parties’ property, or otherwise for the benefit of the family. But I am not prepared to draw that inference or make that assumption without some form of credible evidence to support it. Given the parties’ concession that the proceeds of sale of the Egyptian unit are to be included in the pool of property available (or notionally available) for distribution, however, there is scope for me to give some recognition to the husband’s financial contributions.
I accept that the husband made a contribution to the welfare of the family in the role of homemaker and parent. [X] was born in 1998, and the wife only took some three weeks leave from her employment following the birth. I am sure that the husband supervised and cared for [X] at times when the wife was not available prior to the parties relocating to Property H in mid 2001. Similarly, I am sure that the parties shared [X]’s care during the period that they were both living in Property H. Between late 2001 and approximately March 2004, however, the wife was almost solely responsible for [X]’s care and supervision.
I find that the husband assisted with the care and supervision of [X] while the parties lived under the one roof from approximately March 2004 to late 2005. From that time onwards, the wife was responsible for [X]’s care and supervision to a far greater extent than was the husband. Indeed, for approximately 9 months in 2006 the wife paid the husband $40 per week to care for [X] on two nights each week. The wife was studying at the time (as well as working).
That is not to say that the husband cared for [X] on a full time basis for significant periods of time. Generally speaking, the wife arranged (and paid for) day care for [X] when he was very young.
Ms Smallwood submitted, and I accept, that the wife frequently did a “double shift”, in the sense of working to support the family, and then caring for [X] after her return from her workplace.
Having regard to the whole of the period from the commencement of the parties’ relationship to the date of trial (and bearing in mind that the husband has never paid any or any significant child support, and that he could not credibly account for the vast bulk of the funds that became available to him during the relationship), I find that the wife’s contributions ─ both non-financial and financial ─ to the welfare of the family far outweighed those of the husband.
The extremely modest contributions (of all types) made by the husband did not serve to offset, dilute or erode the significance of the wife's initial contribution. I find, however, that the wife’s very substantial contributions (in all their various guises) during the relationship and leading up to trial have served to offset, dilute or erode the significance of the husband’s initial contribution. Both parties’ initial contributions are still more or less intact (as it were), and there have been other contributions made by the parties during the course of their relationship. The wife made very significant financial and non-financial contributions (including in the role of homemaker and parent). The husband made very much less significant contributions (the vast majority of the identifiable contributions being in the role of parent).
In my opinion, and in all the circumstances (including the length of the period of cohabitation and the fact that the current net value of the property available for distribution between the parties is approximately $840,000), I find that the wife's overall contributions (in all their various guises) were of far greater significance or weight than those of the husband, and conclude that 85% of the overall property pool should be awarded to the wife on the basis of her contributions from the commencement of cohabitation to the date of trial. Conversely, 15% should be awarded to the husband.
Section 75(2) factors
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, amongst 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”[16] In essence, s.75(2) is concerned with the process of arriving at a just and equitable result.[17]
[16] See Clauson (1995) FLC 92-595.
[17] See, in that regard, Waters & Jurek (1995) FLC 92-635.
I have already recorded the age of each of the parties.
The wife is in good health, and in gainful employment. She is employed by [omitted] and earns something in the order of $80,000 per annum (gross), plus superannuation.
The evidence regarding the husband’s health and capacity for appropriate gainful employment was less than satisfactory. In his affidavit sworn 1 April 2008, he said that he commenced working part time (2 days per week) as a [omitted] at [M] Company in [U] on
11 March 2008– earning $315 per week before tax. At trial, the husband said that he was not working, and that he had angina and other health problems.
In his “Outline of Case” filed 2 April 2008, the husband listed four “maters in dispute”. In essence, those matters were –
a)whether the wife had made a full and frank disclosure of her financial position;
b)the extent of the husband’s direct and indirect financial and other contributions to the parties’ property;
c)the extent of the husband’s contributions to the welfare of the family; and
d)the date of separation.
I note from the above that the husband did not include his health or his earning capacity as a matter in issue in the proceedings. I recognise, of course, that the husband was self represented, but it was abundantly clear during the trial that the husband’s English is very good indeed, and the quality of the documents upon which he relied (including his Outline of Case and his affidavit sworn 1 April 2008) reveals that the husband (or those advising him) had a good working knowledge of the relevant areas of Family Law and the matters that the court might have to consider. I note, in passing, that there is no indication that the documents were ever interpreted for the husband before he signed and filed them – which fact does not surprise me, because it was obvious in the courtroom that the husband had absolutely no difficulty reading and understanding the documents that were presented to him in the witness box or to which he referred while he was at the bar table. Indeed, there were times when the husband became frustrated with the slowness of the interpretation process and proceeded to answer questions or explain matters himself. When he did speak in English – which was often – he spoke clearly and with confidence.
In the above circumstances, I am not prepared to find that the husband lacks the physical and/or mental capacity for appropriate gainful employment. There is certainly no credible evidence to that effect.
I find that the husband is perfectly capable of obtaining and maintaining suitable employment as a [omitted], or in some other clerical capacity. And, at the end of the day, the husband did not seriously assert that he was not capable of doing so.
I do not doubt, however, that the wife’s earning capacity is significantly greater than that of the husband.
I have already dealt with the property available for distribution between the parties.
The wife has the full-time care and control of [X], who spends time with the husband on each alternate weekend. The husband has never paid any (or any significant) child support, and I find that he is not likely to provide realistic financial support for [X] in the future. The father’s oral evidence regarding his alleged “agreement” with the wife in relation to [X]’s care was simply not credible; indeed, it was one of the least satisfactory aspects of the husband’s oral evidence. To extract details of the alleged agreement was, to use a colloquialism, like drawing teeth. The husband’s final description of the agreement was that it involved the wife saying that she would take care of [X] (with the husband’s help, if required), in return for which the husband would not have to pay child support. That evidence is to be contrasted with the fact that the wife paid the husband $40 per week to care for [X] for on two nights each week for a period of approximately 9 months in 2006, while she studied.
The burden of caring for [X] and dealing with his day-to-day concerns, issues and problems falls very substantially upon the wife. In that regard, it should not be forgotten that – as the Full Court said in Clauson[18]:
(the) payment of child support in no way compensates the custodial parent for the loss of career opportunity, lack of employment mobility and the restriction on an independent lifestyle which the obligation to care for children usually entails.
[18] (1995) FLC 92-595, at page 81,911
There can be no doubt that both parties have a clear obligation to make a full and frank disclosure of their financial circumstances in a timely manner.[19].
[19] See Reichstein (2006) FamCA 1422 at paragraph 80.
The duty to make full and frank disclosure of one’s financial position has been set out in a number of cases determined by the Full Court over the years. Those cases were summarised in of Chang v Su (2002) FLC 93-117. Full and frank disclosure is required as a matter of principle in proceedings between spouses or former spouses under the Family Law Act (see, for example, Oriolo (1985) FLC 91-653, Briese (1986) FLC 91-715 and Giunti (1986) FLC 91-759). Where, for example, the court cannot be satisfied as to the extent of a party’s property, it can be less cautious than might otherwise be the case when making relevant orders (see Mezzacappa (1987) FLC 91-853, Black & Kellner (1992) FLC 92-287 and Weir (1993) FLC 92-338).
The authorities referred to above reveal that a judge (or federal magistrate) is entitled to take a “robust view” in relation to findings regarding a party’s financial position (including a party’s capacity to meet any proposed order) where that party has failed to make full and frank disclosure of his/her financial position.[20]
[20] See Chang v Su at paragraphs 71 an 72
In November 2002, the High Court dismissed an application by the husband in Chang v Su seeking special leave to appeal from the Full Court’s decision. In the course of argument, Callinan J observed:
It does not matter what the principle might be seen to be, a Court has to do the best it can. It does the best it can, having regard to the evidence that is adduced, and if the parties are not frank then naturally there is going to be a measure of imprecision about any findings that the Court can make.
I am not satisfied that the husband has been open and frank in relation to his financial position, including his expenditure on gambling and the manner in which his earned income over the years has been dealt with. Nor am I satisfied that he has been open and frank in relation to the manner in which he dealt with the proceeds of sale of the Egyptian unit (although this subject is of less concern, given the concession to the effect that $130,000 is to be included in the asset pool).
I am satisfied that the wife has been open and frank in relation to her financial position, but her initial failure to provide information regarding her financial relationship with her partner was regrettable. Although she was a less than perfect witness, I am satisfied that, at the end of the day, her evidence regarding her financial dealings during the relationship with the husband, and with the husband himself, should be accepted. I have already referred to the unsatisfactory nature of certain other aspects of her evidence.
The wife has adequate income available to her to meet her commitments to support herself. In all the circumstances, and given my expressed views regarding the husband’s credibility, I am not prepared to make a different finding as it relates to the husband.
Neither party is responsible for the support of any other person (apart from [X]). Certainly, the wife has no obligation to support her partner. I would add that the wife’s partner has no obligation to support the wife or [X].
I have already dealt with the issue of the parties' contributions to their property.
The duration of the marriage has not (itself) adversely affected either party’s earning capacity. The wife has obtained further qualifications since the marriage. The husband appears to have had a similar opportunity.
Both parties wish to continue their roles as parents. The orders that I propose to make in relation to property settlement will have no impact upon those wishes, or upon their parenting roles.
The husband is not cohabiting with any other person. The wife is cohabiting with her partner, but she was less than forthcoming as to the financial circumstances relating to the cohabitation. She eventually said, and I accept, that her partner is a project manager earning something in the vicinity of $100,000 per annum. I do not know how (or if) they share their living expenses. At the end of the day, though, the financial circumstances relating to the wife’s cohabitation with her partner are not obviously relevant to the property settlement orders that I propose to make.
Neither party suggested that there are any other facts or circumstances (beyond those referred to above) which the justice of this case requires to be taken into account.
Conclusion in relation to section 75(2) factors
Having regard to all the evidence before me, and subject to my comments below, I am not persuaded that it is appropriate to make an adjustment on the basis of the s.75(2) factors. In my opinion, and given that the purpose of the s.75(2) adjustment is to assist the Court in the process of arriving at a just and equitable result, to make such an adjustment in the present proceedings would be to run the risk of making orders which are neither just nor equitable.
It follows that the overall distribution of the property between the parties should be on the basis of 85% to the wife and
15% to the husband ─ but, given that the wife proposes that the husband should retain his superannuation and the proceeds of sale of the Egyptian unit (which total $144,500, or approximately 17.2% of the total property pool), I am prepared to err on the side of caution and accept that the s.75(2) factors can be interpreted so as to justify an adjustment in the husband’s favour to the extent that he receives a total of 17.2% of the property pool. In percentage terms, such an adjustment amounts to 2.2% in the husband’s favour (or a differential of 4.4% in respect of the s.75(2) factors alone).
Just and equitable?
Under section 79(2), the court is required to be satisfied that the order to be made is 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[21].
[21] see Russell (1999) FLC 92-877
Although I am of the view that the testing of any proposed orders by reference to s.79(2) is not a fourth substantive step (properly so called) in the property settlement exercise, and although I have considered the justice and equity of the overall “split” under the general heading of Conclusion as to s.75(2) factors, I propose to (metaphorically) step back and consider whether the outcome achieved by my consideration of the parties’ contributions and the s.75(2) factors has brought about a just and equitable result.
The Full Court has cautioned against assessing the s.75(2) factors in percentage terms, without considering the real impact of any proposed adjustment. In other words, the real impact in money terms is "the critical issue".[22]
[22] see Clauson (1995) FLC 92-596
In the present case, the wife's overall entitlement (being 82.8 per cent of $839,985) amounts to approximately $695,485, and the husband's overall entitlement (being 17.2 per cent of $839,985) amounts to approximately $144,500. The differential between these two sums equates to 65.6 per cent of the property pool (or approximately $550,985).
I am very conscious that justice and equity must be done to both parties, and I am satisfied that the split that I have proposed achieves that result.
I turn now to consider the husband’s application for spousal maintenance.
Spousal Maintenance – The Law[23]
[23] This generic summary of the law is extracted from my decision in the matter of Kernahan (2007) FMCAfam 952
The distinction between property settlement and spousal maintenance orders was drawn in Anast & Anastopolous (1982) FLC 91-201. Relevantly, the Full Court distinguished a party’s entitlement to a property settlement based on contributions and the general factors arising under section 75(2) on the one hand, and a party’s entitlement to be maintained within the meaning of section 72 on the other. It held that an entitlement to an order under section 79 (including the section 75(2) factors) should be assessed before the question of entitlement to maintenance within the meaning of section 72 is considered. In some cases, a party’s property settlement entitlement (under section 79) will “exhaust” that party’s claim for spousal maintenance. In other cases, a maintenance entitlement under section 72 will remain, even after property entitlements under section 79 have been determined.
In Clauson (1995) FLC 92-959, the Full Court was at pains to clarify the distinction between a claim for spousal maintenance (properly so called) and that component of a s.79 property settlement order which attracts the terms of section 75(2). After describing the general approach which should be adopted in property settlement applications, the Full Court said[24]:
The result of the s.79 order may be such that the applicant for maintenance can no longer be described as being “unable to support himself or herself adequately” because he or she may have sufficient assets which, with or without income arising from the investment or use of those assets, will provide an adequate level of support. It also defines the other party’s capacity to meet any order.
[24] at page 81, 907
The Court has broad powers in considering what may be a proper or appropriate order for spousal maintenance. Although periodic maintenance is the most common form of spousal maintenance, section 80 makes it clear that, in exercising the powers under Part VIII of the Family Law Act, an order may take a variety of different forms. It follows that the Court may make an order for periodic spousal maintenance, lump sum spousal maintenance, or a combination of both. In making such an order, it is to be borne in mind that maintenance is not confined to a subsistence level of support, but is intended to provide such assistance as is reasonable in the circumstances of the particular case[25].
[25] See Mitchell (1995) FLC 92-601.
In Vautin (1998) FLC 92-827, the Full Court said:
…in the exercise of the power to order lump sum maintenance caution is usually appropriate because of the apparent finality of lump sum orders and the difficulties in making predictions into the future. However, it is a power, the exercise of which may be appropriate in particular cases. It may be ordered, amongst other reasons, to meet non-periodic expenditure for the maintenance of that person where there is an established need and a capacity to pay. It is not confined to cases of the capitalisation of periodic maintenance and/or where periodic maintenance is unlikely to be paid because of concerns about the capacity or willingness of the liable parent to pay…
In Bevan (1995) FLC 92-600, the Full Court stated that an award of spousal maintenance requires:
a)a threshold finding under section 72;
b)a consideration of sections 74 and 75(2);
c)no fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit; and
d)discretion exercised in accordance with the provisions of s.74, with “reasonableness in the circumstances” as the guiding principle.
Spousal Maintenance – Preamble
In broad terms, the result of the property settlement proceedings is that the wife will be receiving property worth approximately $695,485, and the husband will be receiving property worth approximately $144,500. If the husband retains his superannuation and the proceeds from the sale of the Egyptian unit (amounting to $144,500), then it is clear that he will receive no additional payment from the wife
Spousal Maintenance – Discussion
The wife is only liable to maintain the wife to the extent that she is reasonably able to do so. Further, she is only obliged to maintain him if he is unable to support herself adequately for one of the reasons set out in section 72, and having regard to the matters referred to in section 75(2).
As a result of the property settlement orders that I propose to make, the husband will be retaining property worth approximately $144,500. I have also found that the husband has an earning capacity (the details of which are unclear). Although he may have some health problems there is no credible evidence before me to suggest that they are likely to adversely affect his earning capacity to any significant extent. I find that the husband is able to exercise his earning capacity for the foreseeable future. There is no credible, persuasive evidence which could lead me to conclude otherwise.
In all the circumstances, I find that the husband is able to support himself adequately, and that he therefore has no “need” for spousal maintenance. Alternatively, I find that he has not demonstrated that he is unable to support himself adequately. In other words, I am unable to make the threshold finding under section 72 of the Family Law Act required as the first step before awarding spousal maintenance. It follows that there is no need for me to consider the other steps required before an award of spousal maintenance can be made (including the wife’s capacity to pay).
The husband’s claim for spousal maintenance will be dismissed.
Orders
I have already made the orders set out in the preamble to these Reasons.
I certify that the preceding one hundred and forty-seven (147) paragraphs are a true copy of the reasons for judgment of Walters FM
Associate: Suzette De La Motte
Date: 15 September 2008
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