Farmer & Bramley
[2000] FamCA 1615
•13 December 2000
[2000] FamCA 1615
FAMILY LAW ACT 1975
IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA Appeal No EA3 of 2000
AT SYDNEY File No NC1679 of 1998
BETWEEN:
WAYNE JOHN FARMER
Appellant Husband
- and -
ROBYN LILLIAN BRAMLEY
Respondent Wife
REASONS FOR JUDGMENT OF THE FULL COURT
CORAM: FINN, KAY & GUEST JJ
DATE OF HEARING: 6 & 7 June 2000
DATE OF JUDGMENT: 13 December 2000
APPEARANCES: Mr Richardson, Senior Counsel, instructed by Newnhams, Solicitors, 71122 Castlereagh Street, Sydney, appeared on behalf of the Appellant Husband
Mr Errington of Counsel, instructed by Hallett & Associates, 46 Main Street, Scone, NSW 2337appeared on behalf of the Respondent Wife.
FARMER and BRAMLEY
EA 3 of 2000
Coram: Finn, Kay & Guest JJ
Date of hearing: 6 June 2000
Date of judgment: 13 December 2000
PROPERTY- alteration of interests - post separation lottery win - modest financial circumstances during relationship- whether contributions must relate to present assets of the relationship
Adequacy of reasons - case focussing on ownership of lottery winnings with little emphasis on the manner they should be divided - whether result reached adequately explained
The parties commenced a defacto relationship in 1983 and married the next year. They both had children from previous relationships. There was one child of the marriage, S, born March 1985. The parties separated in January 1995 and were divorced in April 1997. During the relationship, the financial circumstances of the parties were extremely modest. H had suffered from drug-related problems in the early years of the marriage, and had been supported financially and emotionally by W during this period. After separation, S lived with H for approximately two years from 1996. At all other times S lived with W.
W remarried in 1997.
In September 1996, H won $5m in a lottery. H's assertion that he bought the winning ticket for his mother was rejected by Purdy J who held that the winning lottery ticket was purchased solely for H’s benefit.
Despite the lack of evidence in relation to the remaining amount of the winnings, his Honour adopted the figure of $5m as being available for distribution between the parties.
In determining what share the wife should receive his Honour made reference to 20% received by the wife for contribution in a post separation lottery case of Weber v Bradley (unreported Full Court 3 July 1998). His Honour found that in the 12 years the parties were together the wife made a very considerable contribution as "life cannot have been all roses for Mrs Bramley throughout the marriage". He said however that the principal concern was section 75(2)
"I intend to award the wife $750,000. This takes in the fact that the wife has less ongoing obligation to bring up the parties’ children than in Weber v Bradley but recognises the larger basic property amount available for allocation."
On appeal, H challenged the findings made that he owned the Lotto proceeds. He also contended that the trial Judge failed to provide adequate reasons for reaching his decision to award W $750,000 and that he failed to properly assess the parties’ contributions during the relationship.
Held: in dismissing the appeal (Guest J dissenting)
(per Finn J)
Guest J's reasons for rejecting the appeal against the ownership of the Lotto winnings concurred with.
Whilst the trial Judge’s reasons were not as detailed, nor perhaps as clearly expressed as they might have been, it was clear on the face of his reasons, that his Honour was prepared to award W $750,000 out of a pool of $5m on account of W’s contributions during 12 years and s75(2) factors. His Honour did not give inadequate reasons for making these orders, as he took into account the fact that W’s contributions would have been made more burdensome by H’s heroin addiction; the disparity which now existed in the financial circumstances of the parties and W’s future responsibility of S.
The extent of the reasons needed to be viewed having regard to the limited content of the final submissions of Counsel in support of their respective cases for either a 20% or a 5% award to W.
There is nothing in s 79(4)(c) which would justify a limitation that an entitlement based on contributions made to the welfare of the family can only be satisfied out of property available to the parties at the time the contribution was made. As the Family Law Act currently stands, the jurisdiction conferred by s 79(1) to alter the interests of spouses in property extends without limitation to all the property which either spouse is entitled “whether in possession or reversion” (s 4). The only limitation is that the order must be just and equitable.
(per Kay J)
Guest J's reasons for rejecting the appeal against the ownership of the Lotto winnings concurred with.
Clearly contributions made towards the acquisition of an asset by one party and the lack of contributions made towards its acquisition by the other party may weigh heavily in the exercise of discretion. However it is wrong to say that contributions made under s 79(4)(a), (b) or (c) before an existing asset was acquired could have no bearing on the outcome of the proceedings.
The Court's task is to evaluate all of the contributions from the time of the commencement of the parties' relationship until the time of the hearing and give such weight to such contributions as the Court thinks is appropriate in the circumstances. Further, there is nothing in the legislation that requires s 79(4) (a) (b) and (c) contributions to be measured only in terms of what either party contributed to the assets of which they are presently possessed.
As it is not possible to discern how the trial Judge reached the conclusion that $750,000 was an appropriate award, the Full Court needed to re-exercise the discretion.
The $5,000,000 presently attributed to H should be divided between the parties as to 87.5:12.5 in H’s favour based on an evaluation of contributions. There should be a further adjustment to W of $125,000 under s 75(2). The resulting award to W is the same as that arrived at by the trial Judge albeit by a different route. Accordingly the appeal should be dismissed.
(per Guest J in dissent as to outcome)
It was open for the trial Judge to conclude as that the husband owned the lottery ticket.
Given the structure of his Honour’s judgment, it was not fatal that he did not address himself to the three step exercise in the classic manner of Pastrikos (1980 FLC 90-897).
As his Honour did not provide reasons for his abbreviated approach it is not possible to determine how he arrived at the award of $750,000.
The significant fact in these proceedings is that the efforts of the parties resulted in a situation whereby they had not accumulated any assets as at the date of separation.
The occurrence of the contribution to the welfare of the family and the actuality of property under consideration must partially or substantially co-exist. Save for a few circumstances, one cannot make a contribution pursuant to the provisions of s 79(4)(a), (b) and (c) if the property at the time of that contribution did not exist. To say otherwise would invest the post-separation acquired property with a retrospective identity.
Although there need not be a specific nexus between the property and the contribution, they both must have parallel or fractional contemporaneity. This is particularly germane in situations where a party has acquired an unexpected asset long after the marriage had broken down and the parties had separated.
It is not correct to say that because W contributed as a home maker and parent for the 12 and a half year relationship that she has, as of right, an entitlement to share in the Lotto win of H which arose one and a half years after separation and in circumstances whereby she had re-married. That would be tantamount to an unbounded exercise in distributive justice.
It is appropriate that a proper award pursuant to s 79(4)(c) for W’s ongoing responsibility towards S post separation period to date of hearing is $50,000 (Williams (1984) FLC 91-541; Ferraro (1993) FLC 92-335).
In order for an adjustment in property interests to be made pursuant to s 75(2)(b), any disparity of wealth in the respective financial positions of the parties pursuant to s 75(2)(b) has to have a connection to their cohabitation, their mutual society, the services each rendered to the other and the way in which they adjusted and accommodated their respective lives for the benefit of their marriage (Waters v Jurek (1995) FLC 92-635).
S 75(2)(b) is not designed to “even up” the financial position of the parties.
Considering that S should be afforded all options and advantages available to her by reason of the asset position of her father, an adjustment pursuant to s 75(2) of $90,000 is appropriate in respect of the future demands of child rearing to be borne by W.
The appeal should be allowed and H should pay W $140,000 by way of property settlement.
APPEAL DISMISSED
H TO PAY W’S COSTS OF THE APPEAL
REPORTABLE
FINN J
This is an appeal by Wayne John Farmer ("the husband") against orders made by Purdy J. in property settlement proceedings between the husband and Robyn Lillian Bramley ("the wife"). His Honour's orders required that the husband pay the wife the sum of $750,000 and that until the payment of that sum, the husband was to be restrained from dealing with certain real property and investments.
THE FACTS OF THIS CASE
The essential facts of this case are as follows.
The husband (who was born in 1959) and the wife (who was born in 1955) commenced a de facto relationship in January 1983. They married in April 1984 and their only child, S, was born on 1 March 1985.
The parties separated on 25 January 1995. It seems common ground that when they separated, they had no property of any value.
However, on 3 September 1996, the husband "held" (to use Purdy J.'s expression) the winning ticket for five million dollars in a lottery. (It would seem from paragraphs 91 - 93 of the wife’s affidavit sworn on 14 April 1999 that the wife became aware of the lottery win shortly after it happened.)
A decree nisi dissolving the parties' marriage became absolute on 20 April 1997.
At about that time (April 1997) the husband met and commenced a relationship with Lorraine Lewis. They now have a child, born in December 1998.
On 28 September 1997, the wife married David John Bramley.
When the parties separated in January 1995, their child, S, remained living with the wife until December of that year (1995), when she went to live with the husband. S remained with the husband through 1996 and 1997, but she returned to live with the wife in December 1997. She was still living with the wife in December 1999 when Purdy J. heard the proceedings which gave rise to this appeal.
On 15 January 1998 (according to the reasons for judgment of Purdy J.) the husband filed an application. There is no copy of that application in the Appeal Book, but it seems that in it the husband sought only a residence order in his favour in relation to S.
The wife filed a response (to be found at Appeal Book 28) to that application on 18 March 1998, seeking a residence order in her favour. However, in her response document the wife also sought an order that by way of property settlement, the husband pay her the sum of $1,000,000.
On 4 April 1998, the husband filed a document entitled "Reply" (to be found at Appeal Book 31) in which he sought that the wife's application for property settlement be dismissed.
On 1 November 1999, the wife filed an amended response (to be found at Appeal Book 332) seeking, in addition to orders (previously sought) for residence of the child and for the payment of the sum of $1,000,000, a declaration that the husband was the sole beneficial owner of certain land in Queensland.
By the time the parties’ applications came before Purdy J. for hearing at Newcastle on 8 December 1999, the residence dispute had been settled, with the parties having agreed that S would live with the wife. This left only the property dispute for determination by his Honour.
The issues at trial in relation to the property settlement dispute
It is fair to say that at the hearing before Purdy J., the most important issue was whether or not the husband was beneficially entitled to the proceeds of the winning lottery ticket. It was the husband’s case that the ticket had been purchased by him for his mother, while it was the wife’s case that the proceeds of the lottery win belonged entirely to the husband.
The transcript of the hearing on 8 December 1999 (as contained in the Appeal Book) does not contain any opening addresses by Counsel for either party. Rather it commences with the evidence of the husband. However, it is important to note that at an early stage in that cross-examination, Counsel for the wife, Mr Errington, asked the husband if he understood that “the big issue” in the case was “who owned the five million dollars?” (Appeal Book 349). The husband replied in the affirmative, and virtually the entire cross-examination thereafter can be seen as being directed to the issue of ownership of the lottery monies, including the use made of them.
The oral evidence of the wife was extremely brief, with nothing of substance said “in chief” and only a few questions asked in cross-examination (being mostly about her assistance to the husband with his studies during their marriage and the living arrangements for S since separation).
The closing addresses of both Counsel were also relatively brief (apparently beginning at about 3:20pm on 8 December and presumably concluding by 4:15pm or shortly after).
Mr Errington for the wife addressed first. He began by submitting that “the significant matter” in the case was what was “the pool of assets” available for division and whether it included the $5 million lottery winnings. The bulk of his submissions (which extended over about eight pages of the transcript) was then devoted to endeavouring to persuade his Honour that “the pool” should include the lottery winnings and be assessed at $5 million.
When he came to the issue of the wife’s entitlement to share in that pool, Mr Errington referred to an unreported decision of the Full Court in the matter of Bradley v Weber [1998] Fam CA 90. He submitted that on the basis of the figures in that case (which was also concerned with a lottery win by a husband after separation), the wife in this case should be entitled to 20 per cent of the lottery win, and that this was the basis of her claim for one million dollars. Mr Errington then referred fairly briefly to various contributions which the wife had made to the welfare of the family, and after referring to the need for restraining orders to protect the property pending payment to the wife, he referred briefly to the so-called “s.75(2) matters”. I will later quote in full what Mr Errington said about the wife’s contributions and the s.75(2) matters.
Mr Dutney QC for the husband also began his submissions by saying that “the first and probably the most important question” was the ownership of the $5 million. Again by far the greater bulk of his submissions were directed to that question, with only brief reference to the issues of the parties’ contribution and the s.75(2) matters. Again, I will later quote exactly what Mr Dutney said about those matters, but it is to be noted that he too referred to Bradley v Weber although seeking to distinguish it, submitting that a 5 per cent award to the wife (rather than 20 per cent) would be appropriate in this case (if the lottery winnings were found to be the husband’s property).
Thus, in my opinion, it can fairly be said that, in the conduct of the trial of this matter before his Honour, it was the issue of the ownership of the lottery winnings rather than the issues of the parties’ contributions and the s.75(2) matters, which was the subject of the principal focus.
The decision of Purdy J.
In his reasons for judgment delivered, it must be emphasised, on the day immediately following the trial, his Honour also focused principally on the issue of the ownership of the winning lottery ticket.
After setting out in five fairly brief paragraphs the relevant factual background, his Honour devoted forty-three paragraphs of his sixty-seven paragraph judgment to the question of the ownership of the winning lottery ticket. At paragraph 49 of his reasons, he made the “formal finding that the lottery win by the husband on 3 September 1996 was as a result of a ticket purchased for his benefit and for his benefit alone”.
For the next nine paragraphs of his reasons, his Honour concerned himself with the present whereabouts of the $5 million.
Then under the heading “Allocation pursuant to s.79” his Honour discussed in some seven paragraphs the wife’s entitlement to share in the $5 million, and relying fairly heavily, it would seem, on the Full Court discussion in Bradley v Weber, he concluded that the wife should receive $750,000. (Again I will later set out in full what his Honour said about those matters).
Finally, his Honour discussed the issues of the time for payment and the need to secure the payment.
The husband's appeal
The husband’s appeal is directed both to his Honour’s conclusion that the husband was the beneficial owner of the lottery ticket, and also to what is termed in the amended grounds of appeal as, his Honour’s “discretionary decision” (or in other words, his exercise of the discretion under s.79 of the Family Law Act 1975).
The decision in relation to the ownership of the lottery ticket
In his reasons for judgment (which I have had the advantage of reading in draft form) Guest J. after recording in detail the findings made by Purdy J. in relation to the issue of the ownership of the lottery ticket, and the submissions made to us by Senior Counsel for the husband challenging those findings, concludes that it was open to the trial Judge to make the findings which he did regarding the ownership of the ticket.
I agree with Guest J. that it was open to the trial Judge to make the findings which he did about this first matter of the ownership of the ticket, and I have nothing to add to what is said by Guest J. about that matter.
The “discretionary decision” under s.79 of the Family Law Act
I do not, however, agree with Guest J., nor with Kay J. (whose reasons I have also had the advantage of reading in draft form) that the trial Judge fell into error when in exercising the discretion under s.79 of the Act, he divided the proceeds of the lottery win between the parties in the proportions of 85% - 15%.
The exact terms of the grounds of appeal which attack his Honour’s exercise of the discretion in this regard, are set out by Guest J. and I do not need to repeat them. It is sufficient to say that essentially they assert error constituted by an inadequacy of reasons, and/or a miscarriage of the discretion on account of the trial Judge’s apparent reliance by analogy on the decision in Bradley v Weber, of his alleged failure to have sufficient regard to the relevant contributions and s.75(2) matters in this case, and of a “manifestly unjust” award.
I have so far in these reasons endeavoured to emphasise that the legal representatives of the parties before the trial Judge (being in the husband’s case a Queen’s Counsel, and in the wife’s a junior Counsel with long experience in the family law jurisdiction) and the trial Judge himself apparently saw the primary issue in this case as being the ownership of the lottery ticket, and hence of its winning proceeds. Matters arising under s.79(4) of the Act, being the parties’ contributions and the s.75(2) matters, received only minimal attention in cross-examination, final addresses and ultimately the reasons for judgment.
To the extent that there was any real focus at trial on the matters specified in s.79(4), Counsel for the wife clearly relied on the decision in Bradley v Weber as providing some form of benchmark or guideline for the determination of this case (involving as it did a significant lottery win by the husband after separation).
Moreover, it must be remembered that his Honour delivered what was effectively an ex-tempore judgment (albeit overnight) following the submissions of experienced Counsel. In these circumstances before it can be concluded that his Honour was “clearly wrong” (per Kitto J. in Australian Coal and Shale Employees Federation v The Commonwealth (1953) 94 CLR 621 at 627) in the various ways alleged in the amended grounds of appeal, it is necessary, in my view, to have regard to the content of the final submissions of Counsel for both parties as well as to his Honour’s reasons which followed those submissions.
Mr Errington for the wife commenced his final submissions as follows (at Transcript 416):
“Yes, in effect I am the applicant but I do not mind who goes first. Your Honour, the first step in any exercise under section 79 is to ask what the pool of assets are and that really is the significant matter in this case. The wife, for practical purposes, has nothing of significance. … If the husband is to be believed, he owns nothing and that is what the case is all about.”
Then after making his submissions on the issues of the ownership of the lottery ticket and the present whereabouts of its proceeds, (which as I said earlier, constituted the bulk of his submissions) Mr Errington turned to the issue of the appropriate division between the parties of those proceeds. It is important to note (in view particularly of the approach ultimately adopted by his Honour in his reasons for judgment) that Mr Errington began his discussion of the appropriate division of the proceeds with a reference to the Full Court decision in Bradley v Weber, and then later explained how the wife’s claim was framed against the background of that decision (at Appeal Book 420-421):
“So what is the wife’s entitlement at this stage to the pool is something over $2 million. But notionally $5 million because he has not counted (sic) for what he has done with the money at all, just simply has not told us. This is consistent with the approach of the Full Court of the Family Court of Australia in Bradley v Weber.
…
This was a case in which the relationship was shorter. It was a relationship of six years, just under six years. There were two children who were very young; one of them was born after the separation, and the lotto win in that case was $1.27 million. Also after separation, to which ---
…
…The lotto win was $1.27 million. What is instructed (sic) is their Honours’ approach at the flagged page, where their Honours was (sic) critical of the trial Judge, her Honour, Renaud J, who awarded the wife $100,000 in addition to money she had already got after separation, the husband had given her a car and some other items of property, and she kept some property on separation. She had about $80,000 and she awarded her another $100,000, and the Full Court held that as a proper exercise of discretion, that was just manifestly inadequate, and awarded her 20 per cent of the win, and taking into account matters she ended up in round terms $230,000 cash, because she already had some money.
Now, that is not binding on your Honour, but it is a good indication of what is appropriate in this case, and of course, that is how the wife’s claim is framed, $1 million, 20 per cent of the win. What we have here is a relationship of much longer duration. This was a relationship where the parties commenced to reside together in January 1983, and did not separate until January 1995, so it is a 12 year relationship. There was one child of the relationship, the child S, who now is 14.”
Mr Errington then submitted as follows in relation to the contributions of the parties (Appeal Book 421-422):
“Now, my client made, as the husband concedes, the bulk of the home making and parenting contributions. He said he did a bit, and it is not worth the toss. He freely concedes that. Since separation, apart from the period that S was residing with him, when she went up to live with him, she has had the sole care of S, and it looks like she is going to have the future care of S. So, she has continued to make a contribution to the welfare of the family since separation, and she has done that without any support from the husband, or any likelihood of support from the husband. He had a child support assessment at the very time he was losing tens of thousands of dollars at Jupiters Casino, he made an application to vary the assessment to nil, and that is precisely what he has paid since, nil.
So, it is all the more a contribution that my client has had to make and she has had to make it this year without any physical assistance from the husband, who hardly sees S. He last saw her at a wedding. Secondly, my client made a very significant contribution to the husband during the relationship. He was a man, who, on his own admission, was addicted to heroin. That is something he admitted in his Griffith affidavit, which I will come back to, and it is something he admitted in these proceedings. There is a dispute about when he stopped being addicted to heroin, but it can’t have been an easy marriage, and my client describes at length she (sic) assistance that she gave to the husband, the difficulties that occasioned to her.
So, the contributions of home maker and parent was all the greater and that is really a variety of the arguments in Kennan v Kennan (sic), some contributions are made under the burden of domestic violence, others under the burden of a man who is addicted to heroin.
In relation to the s.75(2) matters Mr Errington made only the following brief submissions (Appeal Book 423-424):
“…So, that is why a million dollars is the appropriate order, and it should be secured as well as it may be. Is there anything else I can assist the court? Of course, the 75(2) factor is primarily in favour, I should say, because we have got the care of the child, the husband left with the balance of the lotto win, and clearly the money he has not accounted for.”
In his submissions on behalf of the husband, Mr Dutney having made submissions extending over five pages on what he had earlier (at Appeal Book 424) termed “the first and probably the most important question” of “who owned…the $5 million”, made the following relatively brief submissions concerning the exercise of the discretion under s.79 (at Appeal Book 429-431):
“…On the 79 and other discretionary factors, can I say this quickly, because I am conscious of the time. This is a different case from Bradley v Weber for a number of reasons. First of all, in Bradley v Weber, as my learned friend has already indicated, there were very young children and a very long period ---
…
It is different from Bradley v Weber. There, there were very young children requiring a long period of effectively full time or largely full time care by the mother in circumstances where she was ill equipped to provide it without a substantial contribution from the father. In this case, you have got one child who is presently 15, who has effectively split her time since separation between the two parents so that the mother has not in fact been caring for the child since separation, but only for about half the period, a little more than half the period since separation in two blocks.
There seems to be a real prospect of the child returning to the father to complete the last two years of high school on the material, so it is not likely to be for that reason, or indeed because of the age of the child, the same sort of care or other burden that a parent normally bears in the case of children. So, that discretionary factor weighs much less heavily in this sort of case than when you have got infant children.
Then again, there are other factors that are pointed to, that the husband had a period of heroin addiction during the relationship, and as far as that is concerned, it is not disputed, but I would say that at the commencement of the relationship it seemed to have been in relationship terms of relatively short duration. The principal period of addiction seemed to have terminated in about 1985 I think, on the affidavit evidence, and there were a couple of bust outs subsequently, but it seems to have disappeared, certainly on the affidavit material, by 1987, a relationship which started in 1983. So, for most of the relationship it simply wasn’t a factor.
Then there is the assistance with obtaining the diploma of social work. Again, that is not a factor that really carries the weight that my learned friend would like it to carry for this reason, that the purpose of the exercise was for him to acquire a skill which would enable him to support the family, which, until that time, he had been ill equipped to do. He acquired the skill and used the skill as the principal support for the family right through the remainder of the relationship. So that, the contribution that the wife made to that, was in effect a contribution to enabling him to support her and the children, and not just their children, but of course the children she had by the earlier relationship, which---”
At this point his Honour intervened and the following exchange occurred:
“HIS HONOUR: It was 79(4)(c) – I don’t seem to have a copy. I am grateful, thank you, Mr Maher. 79(4)(c) refers to the contribution to the family rather than to any individual assets, doesn’t it? I mean, that sort of thing, assistance in that fashion, I would have thought if it is necessary to go beyond 75(2), I would have thought one could say that. Do you think that is wrong, 79(4)(c):
The contribution made by a party to the marriage for the welfare of the family -
You don’t have to look at any individual asset, because – I know it is a bit artificial when the asset comes in long after separation, but I am not sure that I can’t look at – it is basic that the court adds up the property at the time of the hearing, not at the time of separation, and then you usually say, well, you know, there has been something like this that came in completely extraneously, you are not going to go 50/50 like you would with earnings during the marriage, and so on. But I suspect that I can look at 79(4)(c) in addition to 75(2) to some limited extent.
MR DUTNEY: Look, I am not submitting to your Honour that if your Honour is against me on the primary aspects of the case, that Mrs Bra[m]ley is not entitled to something.
HIS HONOUR: Well, it is certainly open to me to be. I am going to look at it overnight obviously, but it is certainly open to me to go either way.
MR DUTNEY: Yes, but it is really a question of degree. I mean, you start from the proposition that there has been no direct contribution to the pool ---
HIS HONOUR: Yes, I think that is right. It is a question of degree.
MR DUTNEY: --- and I am really comparing it with Bradley, because in that circumstance they decided that the discretionary factors and the indirect contribution entitled the wife in that case to 20 per cent of the end pool, taking into account the gratuitous win post separation. But what I am really saying to your Honour is that in this case, those factors don’t weigh as heavily in favour of the wife as they did in the other case, because of circumstances such as the age of the children and so on. She tries to make her case stronger by saying, well, look, I helped him in the course of the relationship with his studies and so forth. But, there is quid pro quo for all that. The reason she was doing that was so that he would be able to support her and her children by the other relationship and so forth. So, it is not a case of disproportionate contribution in those discretionary roles, simply by virtue of the fact that she says that she made a significant contribution to his getting through the study.
But, that is really the reason I make the submission. So that, it would not be appropriate, and of course, in determining the quantum of the percentage, I mean, it is just not simply a mathematical thing in many ways. One looks at the size of the pool, of course. If the pool is smaller then in order to have any meaningful outcome, perhaps one goes for a higher percentage, because one looks at the end result. But where the pool is $5 million, one does not sort of automatically say, well, look, because Bradley v Weber got 20 per cent, you get 20 per cent, it is just not the – which is the approach my learned friend seems to be taking.
But, in our submission, if she is entitled to part of the $5 million, if your Honour finds that it in fact belongs to the husband and not to the mother, then we would submit that something much lower and even 10 per cent of the pool comes to $500,000, which is a vast sum of money really, in the context of these people who have struggled all their lives. So, we would submit that bearing in account or the discretionary factors, that a proper figure in that circumstance would be something more in the order of 5 per cent rather than 20 in Webber (sic), which was a much stronger case for a much stronger and bigger contribution. Those are our submissions.”
In his reasons for judgment delivered orally on the day following the hearing his Honour having devoted the bulk of his reasons to the matter on which Counsel had primarily focused, being the ownership of the lottery ticket, went on to determine what he described as the “Allocation pursuant to s.79” in the following way:
“59. The question is now what to do. The subject of a lottery win after separation is - has occurred in this registry comparatively recently. In the matter Weber v Bradley (sic) [incorrectly cited as (1979) FLC 90-716], Mr Weber received a much smaller sum but still very significant, of $1,270,000 as a result of a Lotto win. Her Honour, Renaud J, considered the question of a Lotto win after separation. In Weber v Bradley (sic) it was only some six months after separation but it probably doesn't make a great deal of difference, it was prior to the property hearing - and awarded the wife $125,000 on the facts before her. The Full Court considered the matter on appeal and increased the amount by appropriately $100,000.
60. All of this increase was related to the Lotto winnings and seemed to be an indication that 20 per cent of the value of the Lotto wins would be a reasonable treatment of the situation. In that case there were two very young children. In the present case there is one child nearly 15 and thus this factor is much less significant to S75(2).
61. On the other hand, their Honours indicated in Weber v Bradley (sic) that one factor that had to be borne very much in mind is that the husband with the bulk of the winnings still in his possessions would be economically secure and wouldn't have to work again, whereas the wife with some figure, whether it be 20 per cent or not, certainly would not have enough to provide the private income which would, itself obviate her need to work.
62. As to the latter point, the large winnings in this case militate against the wife claiming 20 per cent because we are dealing with section 75(2) rather than contribution because, as their Honours pointed out, the contribution in the case of a lottery win is almost all in the buying of a ticket. There does remain however section 79(4)(c) which refers to “contributions to the marriage” rather than to individual assets. There is no doubt that the wife in the 12 years these parties were together, made a very considerable contribution. It is common ground the husband was for a period a heroin addict. At some point in the marriage he succeeded in beating his addiction but later relapsed into addiction. Ultimately, he threw off the habit but life cannot have been all roses for Mrs Bramley throughout the marriage and thus, she must be seen as having made a contribution generally to the marriage even though no direct contribution to the Lotto win. Nevertheless the principal concern is section 75(2). As to this the superior financial position of the husband following these orders is manifest. Somewhere there must be deemed to be the best part of $5 million. The husband must thus be seen as being in a far better position economically and far more able by normal generation of interest, dividends and the like, from such a large sum to be able to live as a man of independent means from the time of the win onward. He is much more able to do so having won $5 million and have the bulk of that still available to him following these proceedings than was Mr Weber in Weber v Bradley (sic) where his initial winnings were $1,270,000.
63. In fact, it is a feature of Weber v Bradley (sic) apparently that the husband was guilty of spending on the grand scale and there seemed to be very little of it left at the time of the litigation. Thus the fact that there is such a large sum available to the husband or should have been, seems to me to be grounds, if anything, for a high percentage of the $5 million to be made available to the wife under section 75(2) even though the demands of child rearing are very much less in the present case than they were in Weber v Bradley (sic).
64. In the event I do not intend to grant the 20 per cent of the $5 million sought by the wife. I do find that I should treat the sum available for allocation between the parties as being $5 million. There is no real reason for reducing that sum. There was every opportunity by simple investment in risk free securities to provide a large income to the husband for the rest of his life and he, to use the phrase used by Counsel in cross-examination, he spent “as though there were no tomorrow”. I do not know where the money is but I am convinced there is a very significant sum there and, as I say, I intend in the circumstances to adopt the figure of $5 million as the cash available.
65. In the event I intend to award the wife $750,000. This takes in the fact that the wife has less ongoing obligation to bring up the parties’ children than in Weber v Bradley (sic) but recognises the larger basic property amount available for allocation.. There will therefore be an order that the husband pay the wife the sum of $750,000. …”
Conclusion in relation to the adequacy of reasons
A close reading of the paragraphs just quoted from his Honour’s reasons reveals that their form and content follow fairly closely the form and content of the submissions made by Mr Errington on behalf of the applicant wife. As did Mr Errington, his Honour began with a reference to the facts of Bradley v Weber and to the ultimate apportionment of the funds in that case.
Again similarly to Mr Errington’s approach, his Honour then canvassed the wife’s “contributions to the marriage” – although before doing so he referred to the importance of the s.75(2) matters in a case where the property is constituted by a post-separation lottery win. In relation to the wife’s contributions to the marriage, his Honour emphasised, as had Mr Errington in his submissions, the added burden which the husband’s heroin addiction would have imposed on the wife in the performance of her home-maker and parent contributions.
Then coming to the s.75(2) matters, his Honour referred to the husband’s superior financial position which existed by virtue of his lottery win and later (and in a somewhat indirect way) to the wife’s on-going obligation to the child of the marriage. These matters, it must be noted, were the only s.75(2) matters on which Mr Errington had relied.
As to the alleged failure on the part of his Honour to follow the traditional or orthodox three stage approach (or to provide an explanation for not doing so), it cannot be asserted that he failed to make a finding of the property available for distribution or of its value - indeed this first step in the three stage process was the central focus of the case.
It is true, however, that his Honour did not make discrete apportionments of the parties’ property first on the basis of their respective contributions and then on the basis of the s.75(2) matters. But it must be borne in mind that Mr Errington did not present his case in accordance with the strict traditional structure of an amount (or percentage) on account of contributions, and then an amount (or percentage) on account of the s.75(2) matters. Nor indeed did Mr Dutney, who, it is also important to note, expressly stated that he was not submitting that if he failed on “the primary aspects of the case” (ie the ownership of the lottery proceeds) that the wife was “not entitled to something”.
Mr Errington simply claimed 20% of the lottery win essentially by analogy with the Full Court decision in Bradley v Weber, and Mr Dutney argued for “something more in the order of 5 per cent” having regard to the factual differences between this case and Bradley v Weber. Faced with such presentations from experienced Counsel, it is hardly surprising that his Honour adopted the composite figure approach which he did, and that he did not apparently consider it necessary to explain why he had adopted the approach which both Counsel had chosen to adopt.
As to the specific complaint that his Honour’s reasons do not reveal how he arrived at the figure of $750,000, it has to be said, that it is not generally possible in the exercise of the discretion under s.79 to say or to ascertain why a particular award is ultimately arrived at. Given that awards under s.79 are virtually never calculated with mathematical precision, no amount of enumeration of, or indeed of evaluation of, contributions, or of the s.75(2) matters, or indeed of any of the matters listed in s.79(4), can ever explain exactly why a particular figure, or more usually a percentage, is eventually arrived at (other than that it is within the recognised “range”). Absent a strict mathematical approach, the reasons for judgment requirement ultimately becomes impossible of total fulfilment in the jurisdiction under s.79.
It must of course be acknowledged that his Honour’s reasons are not as detailed, nor perhaps as clearly expressed as they might have been. Nevertheless, it is clear to me on the face of his reasons, that out of “a pool” of $5 million, he was prepared to award the wife $750,000 (or 15%) on account of her contributions as a home-maker and parent over 12 years – contributions which his Honour considered had been made more burdensome by the husband’s heroin addiction – and also on account of the disparity which now existed in the financial circumstances of the parties and the wife’s future responsibility for the then 14 year old child of the parties’ marriage. I would not therefore be prepared to uphold this appeal on the ground of inadequacy of reasons.
Conclusion in relation to the alleged miscarriage of the discretion
Again having regard to the limited content of the final submissions of Counsel in support of their respective cases for either a 20% or a 5% award to the wife, I would not be prepared to uphold this appeal on the basis that his Honour did not take into account, or accord proper weight to, certain contributions, or to the present circumstances, of either party. It is particularly note-worthy in this regard that Mr Dutney for the husband in his final submissions did not draw to his Honour’s attention the specific matters now the subject of complaint in certain grounds of appeal.
I would also not be prepared to uphold this appeal on the basis that his Honour seems to have placed considerable reliance in reaching his decision on the decision of the Full Court in Bradley v Weber. Again as I have endeavoured to demonstrate, that case was used certainly by Counsel for the wife, and to some extent by Senior Counsel for the husband as some form of benchmark or guideline for the determination of this case. I am not convinced that this was not an approach open to his Honour and to Counsel in their attempts to delineate the ambit or range of the discretion in this difficult and unusual case.
This brings me then to the question of whether the award made by his Honour was “manifestly unjust” to the husband. There can be little doubt, in my view, that opinions would vary widely as to what would be a just and equitable award in the circumstances of this case. In other words, “the generous ambit within which reasonable disagreement is possible” must be very wide in this case, as indeed therefore must be “the area of immunity from appellate interference”. For my own part, I may not have awarded the wife the amount which Purdy J. awarded her. But that of course is not the test, and I am not satisfied that his Honour exceeded “the generous ambit” within which “reasonable disagreement” is possible.
Overall therefore, I consider that there is also no substance in the grounds of appeal which assert a miscarriage of his Honour’s discretion. Accordingly I would dismiss the appeal.
Before finally concluding in relation to the issues raised by the appeal, I make two brief observations.
First an issue has arisen in this appeal as to whether an entitlement based on contributions made to the welfare of the family can only be satisfied out of property available to the parties at the time the contribution was made. In my view, there is nothing in s.79(4)(c) or indeed else in the Act, or in the authorities to date, which would justify such a limitation. Again in my view, if such a limitation were to be applied in any particular case, its justification would have to be found in the generally worded limitation in s.79(2) that a court shall not make an order under s.79 “unless it is satisfied that in all the circumstances it is just and equitable to make the order”.
Secondly, if it was to be determined that a majority of the community considered that one spouse should, as a general rule, have no entitlement to share in property either by good fortune or good management acquired after separation by the other spouse, then the Act would need to be amended to make this clear. As the Act currently stands, the jurisdiction conferred by s.79(1) to alter the interests of spouses in property extends without limitation to all the property which either spouse is entitled “whether in possession or reversion” (s.4).
Costs of this appeal
Having regard to the oral submissions of Counsel which we received at the conclusion of the hearing of the appeal, in relation to the costs of the appeal, and in circumstances where I would dismiss the appeal, I would order that the unsuccessful appellant husband pay the costs of the respondent wife. Again having regard to the submissions made to us, I would assess those costs at $3,000.
The appeal against the costs order made by Purdy J.
We were informed by Counsel for the husband that there was also pending an appeal by the husband against a costs order made by Purdy J. on 14 April 2000, and we were asked to make the usual directions for written submissions in relation to that appeal. This we will do.
Orders
Having regard to the reasons for judgment of each of the members of this Full Court, the orders of the Full Court will be:
That the appeal be dismissed.
That the husband pay the wife’s costs of and incidental to the appeal assessed at $3,000.
(a) That the appellant husband file and serve any written submissions in relation to the costs appeal within 21 days of the date hereof.
(b) That the respondent wife file and serve any written submissions in answer thereto within 14 days thereafter.
(c) That the appellant husband file and serve any written submissions in reply thereto within a further seven (7) days thereafter.
(d) That each submission have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.
KAY J
In this matter I have had the opportunity of reading the draft reasons for judgment of Guest J. I am unable to agree with several of the conclusions reached by my learned brother and propose now to discuss the areas in which I agree and those where I reach a different conclusion.
I agree with and adopt Guest J's reasons in respect to the failure of the appeal insofar as it attacks the finding by the learned trial Judge that the husband owned the proceeds of the lottery ticket. I also agree that the learned trial Judge fell into error in that
(a) he failed to properly assess the contributions of the parties prior to the acquisition of the lottery winning;
(b) he failed to adequately explain how he reached the final conclusion that the wife should receive $750,000.
Once those errors have been identified, it is necessary for the matter either to be remitted for retrial or for this Court to exercise the discretion which is normally reposed in the trial Judge and, in accordance with s 94(2) of the Family Law Act 1975, to make the order that ought to have been made in the first instance.
Notwithstanding the absence of extensive findings by the trial Judge in respect of matters of contribution, given the scope of the material in the appeal books and the urging of both counsel, in my view it is appropriate that we re-exercise the discretion and make the order that ought to have been made at first instance.
Guest J, having analysed several relevant cases, reaches a conclusion that there should be no consideration of s 79(4)(a), (b) and (c) issues other than those that post-date the acquisition of the lottery winnings. In my view the passages cited by Guest J from Shaw (valuation of assets)(1989) FLC 92-010, Jones (1990) FLC 92-143 and Branicki (unreported Full Court 18 May 1990), place beyond doubt the proposition that an assessment of contributions made under s 79(4)(a), (b) and (c) does not have to bear a direct relationship to the assets as they presently exist. The court is asked to determine what is an appropriate and just and equitable order, bearing in mind not only the contributions made directly to the existing assets, but contributions made generally during the course of the relationship between the parties both to the acquisition, conservation and improvement of assets (which may or may not still exist) and to the welfare of the family in the role of homemaker and parent.
This is not to say that the Court should be blind to the circumstances in which any assets were acquired post separation. Clearly contributions made towards the acquisition of such an asset by one party and the lack of contributions made towards its acquisition by the other party may weigh heavily in the exercise of discretion. However it is quite wrong to say that contributions made under s 79(4)(a), (b) or (c) before an existing asset was acquired could have no bearing on the outcome of the proceedings.
In Bradley v Weber [1998] FamCA 90, coram Baker, Lindenmayer and O'Ryan JJ ) the Full Court did not consider Shaw (supra) but commented upon the question of contribution to the Lotto winnings of the husband in that case. The wife’s counsel submitted that the fact that the winnings came into the pool after separation made little difference. As to that, the Full Court had this to say:
“5.9As to the first of those submissions, we think that it is significant that the lotto winnings came into the pool after separation because, as her Honour found, the effect of that (the ticket having also been bought by the husband from his funds after separation) is that those winnings, applied by him towards the acquisition of property brought into account in the proceedings, constituted a direct financial contribution by him to that property. That direct financial contribution was unmatched by any like contribution on the part of the wife. That does not mean, of course, that the wife made no contribution to the property acquired with the lotto winnings, but her contribution was an indirect one, principally through her continuation in the role of homemaker and parent – a contribution under paragraph (c) of s.79(4).”
There is nothing said in that passage which detracts from the principles discussed above, namely the Court's task is to evaluate all of the contributions from the time of the commencement of the parties' relationship until the time of the hearing and give such weight to such contributions as the Court thinks is appropriate in the circumstances. All that passage concerned itself with was the contribution that could be measured directly against the lottery winning in a temporal sense. It did not purport to confine the Court from considering the like contribution to the welfare of the family which may have been made over many previous years.
No doubt there are a myriad of examples that can be used to illustrate the principle that all of the contribution history needs to be examined to reach a conclusion as to what distribution should now be allowed when dealing with the "second step" identified in Pastrikos (1980 FLC 90-897) et al. Suppose a wife enters into a marriage with savings of $1,000,000 whilst the husband has nothing. Suppose the marriage lasts 10 years during which the wife is not only the major income earner but also the sole contributor as homemaker and parent. Suppose the husband's contribution is that he manages to gamble away the wife's assets. At separation the parties have nothing. Suppose the husband then wins the lottery, or inherits a fortune or somehow becomes rich. Subject to time limits imposed by s 44(3) clearly the wife could bring a property claim and have brought into account in the determination of what is appropriate, or just and equitable, the contributions she made, not to the current pool of assets but to the marriage and to the pool of assets squandered away by the husband at some time prior to separation. There is nothing in the legislation that requires s 79(4) (a) (b) and (c) contributions to be measured only in terms of "what did either party contribute to the assets of which they are presently possessed?"
Section 75(2)
As to Guest J's analysis of the s 75(2) considerations and the manner in which Waters and Jurek (1995) FLC 92-635 dealt with the question of a disparity of earning power, in my view their Honours in Waters and Jurek were not intending to be decisive of the manner in which a disparity of the parties' economic situation following separation could be brought into account but were simply being illustrative of circumstances in which it was appropriate to perhaps give more weight to those circumstances than others. Plus, a disparity of economic situation which could be clearly seen to be related to the roles of the parties during the period of cohabitation might attract a more generous adjustment than one that was simply based upon the situation in which the parties now find themselves, namely that one party is very rich whilst the other party is not.
The manner in which s 75(2)(b) can be utilised to bring about an adjustment of property interests was discussed fully in Collins (1990) FLC 92-149 by Ellis, Fogarty and Gun JJ. There their Honour's upheld Nygh J's judgment making an adjustment of $1,000,000 in favour of a wife, who already owned assets worth more than that sum. Nygh J had specifically identified a disparity in capital as a basis for making that adjustment. My apologies for setting out such an extensive passage but it seems to me to put to rest any suggestion that there can only be an adjustment under s 75(2)(b) if there is some causal nexus between the disparity and the marriage itself.
At 78,043-4 to 78,043-8:
"Senior counsel [ for the husband] submitted that when the task under sec. 79(4) reaches para. (e) the trial Judge is required to pause and consider separately whether any and which of the paragraphs of sec. 75(2) has application in the case. He submitted that, read literally, the diverse matters in sec. 75(2) could be applied to almost every case but that it was necessary to show that it was ‘just and equitable’ in the circumstances of that case that the applicant should obtain an interest in property because of those factors. He submitted that this means ‘just and equitable’ to both parties and that this was in the nature of a threshold question before the trial Judge went on to analyse the applicability of the various matters in sec. 75(2) in that case. He submitted that this provision should not be used as a back door method of providing maintenance or of avoiding the stricter regime for spousal maintenance in sec. 72 - 75.
He submitted that the trial Judge needed to ask whether there was a ‘financial need’ in the applicant and whether that should be satisfied by an interest in property under sec. 79. He submitted that unless such an approach was adopted, then there would be ‘complete uncertainty’ in these matters and the order arrived at would be incapable of being objectively tested. He submitted that after the trial Judge had determined the issue of ‘contributions’, if there was no further ‘financial need’ then it was unnecessary to go on to deal with the aspects referred to in sec. 79(4)(e) and 75(2). Specifically in this case he raised the question whether the conclusion by the trial judge as to contribution eliminated any ‘needs factor’ and consequently rendered sec. 75(2) inapplicable. Senior counsel went so far as to submit that sec. 75(2) was confined to cases involving a ‘roof over the head’ of the applicant or to cases where there was a need arising from the custody of children, and he submitted that the applicability of sec. 75(2) ‘came back to a question of need’.
He further submitted that ultimately the question of what was ‘just and equitable’ under the various sec. 75(2) factors, if they were to be taken into account, must be capable of calculation and the trial Judge was required to state what amount was awarded under each of the paragraphs of that subsection.
We will deal separately with arguments relating to the relevance and assessment of the particular paragraphs relied on by the trial Judge in this case. As to the more general matters of approach, we do not consider that senior counsel’s submissions are correct. In this regard we refer to the following passage from the judgment of the Full Court in Branicki already referred to:
‘We are unable to agree that this is the approach required under sec 79. Section 79(1) provides, so far as relevant, that the court “may make such order as it considers appropriate altering the interests of the parties” in their property, and by subsec. (2) it is provided that the court “shall not make any order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”.'
Section 79(4) provides as follows:
“In considering what order (if any) should be made under this section… the court shall take into account… “
the seven paragraphs of that subsection.
The matters set out in sec. 79(4) are relevant both to the question whether any order should be made and the nature or quantum of the order. Secondly, sec. 79(4) does not draw any distinction as to degrees of importance or relevance in the various paragraphs (a) to (g). In particular, it does not suggest that any of those paragraphs have any more relevance or importance than any other as a generality, although in individual cases they obviously can and do have.
The trial Judge is required to consider each of the paragraphs set out in sec. 79(4). No doubt in an individual case it may appear that one or more of those paragraphs has no relevance or little relevance compared with the other paragraphs. The trial Judge in applying sec. 79(4) would, in the course of considering what order, if any, to make, disregard any paragraph which had no relevance and consider and give appropriate weight to those paragraphs which did have relevance to the particular circumstances of the case at trial.
…
Section 79(4)(e) incorporates in the consideration of a property order under sec. 79 “matters referred to in sub-section 75(2) so far as they are relevant.” Section 75(2) sets out in 15 paragraphs various matters which are required to be taken into account. They are of considerable diversity; some are likely to have little to do with the general run of property applications; some are likely to have more significance in one case than they would in another. Section 75(2) is part of sec. 75 which is a section related to “matters to be taken into consideration in relation to spousal maintenance.”
Consequently, some of the matters set out in sec. 75(2) may be more appropriate to spousal maintenance than they may be to a property order, and the use of a common subsection in the disparate responsibilities under sec. 74 and 79 can produce confusion and the risk of overlapping. However, these circumstances are well known to trial Judges in the course of their experience in the daily application of sec. 79 to the facts of a particular case.
It is the wife who is now solely responsible for those unrewarded domestic duties associated with the nurture of S, such as washing, ironing, cooking and transport. They are all matters to be taken into account. It is clear that on the evidence before his Honour, the wife did not suffer lost income opportunities by reason of her responsibility towards S and nor was it argued that such was the fact.
Whilst it is open for the wife to seek an order for departure from the administrative assessment in special circumstances so as to have S’s proper needs met from the husband’s property as now determined by this Court, it is nonetheless appropriate for us to adjust the property interests of the parties having regard, specifically on this issue, to the provisions of s 75(2)(c). The husband would be protected, should the wife following our judgment seek an order for departure, by the provisions of s 117(2)(c)(ii) of the Child Support (Assessment) Act 1989.
Having regard to all those matters to which I have referred, and considering that S should be afforded every opportunity to participate in contemporary Australian society with all options and advantages available to her by reason of the asset position of her father, I am satisfied, in the exercise of my discretion that an adjustment of $90,000 is appropriate to be made in respect of the future demands of child rearing to be borne by the wife. In coming to that award, I use as a rough guideline the methodology earlier referred to under s 79(4)(c).
For all of these reasons, the appeal must be allowed and in lieu of paragraph 5 of the orders made on 9 December 1999, the husband do pay to the wife the sum of $140,000 by way of property settlement and that such payment be made on or before 25 October 2000. In my view, such an order is “… just and equitable” as regards the property for consideration within the particular discrete facts and circumstances of this marriage. That is the overriding requirement of s 79.
Finally, there is a further matter I wish to raise in passing, for it was not considered by counsel in the proceedings before us. The question appears open to argument on the facts of the case before his Honour that s 79 may be read down to limit the property alteration power to circumstances which arise out of the marital relationship. It is provided by s 4(1)(ca) that a “… matrimonial cause means”:
(ca)proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings –
(i)arising out of the marital relationship;”
In Attorney-General (Vic) v The Commonwealth & Ors (1945) 71 CLR 237, Dixon J (as he then was) said at 267:
“… In discharging our duty of passing upon the validity of an enactment, we should make every reasonable intendment in its favour. We should give the powers conferred upon the Parliament as ample an application as the expressed intention and the recognised implications of the constitution will allow. We should interpret the enactment, so far as its language permits, so as to bring it within the application of those powers and we should not, unless the intention is clear, read it as exceeding them.” (emphasis added)
The language of s 79 (and s 75(2)) is broad. In Dougherty (1987) 163 CLR 278 Mason CJ, Wilson and Dawson JJ said that the section may be read down, and that (at 285-6):
“… It purports to confer a wide discretionary power to vary the legal interests in any property of the parties to a marriage or either of them, but with no reference at all to the criteria by which a permissible claim to the exercise of the power may be identified. The validity of s.79 did not fall to be determined by this Court in Russell v. Russell (1976) 134 C.L.R. 495, but the reasoning in that case indicates that the section can only have a valid application with respect to a claim based on circumstances arising out of the marriage relationship [(1976) 134 CLR; at pp. 525, 528, 542-543, 552-553]. See also Fisher v Fisher ((1986) 161 CLR; 438, at pp. 445-446, 452, 456, 461). Since Russell v. Russell, parliament has given attention on more than one occasion to the definition of ‘matrimonial cause’ in this regard.”
(Reference was then made to the relevant definition of “… matrimonial cause” and the Court went on to say)
“This requires that proceedings between the parties to a marriage with respect to property should arise out of the marital relationship. By this means a limit is imposed on the jurisdiction of the Family Court to make an order under s.79 where the parties are parties to the marriage.”
The meaning of the term “… arising out of the marital relationship” has often been the subject of consideration. As long ago as 1976, Demack J said in Mills (1976) FLC 98-080 (at 75,381):
“… in my view the words “marital relationship” refer to that body of law which defines the nature and extent of that relationship. They do not define an area of fact which may be explored to determine the jurisdiction of the court. In other words the mere fact that something happens between a husband and a wife does not mean that it involves ‘circumstances arising out of the marital relationship’. The event must be one which raises issues of law that are within the body of law defining marital relationships. In Australia, this body of law must be within the legislative competence of the parliament of the Commonwealth of Australia. Thus, events which raise issues of criminal law, industrial law or fiscal law cannot be brought within the “marital relationship” simply because the circumstances involve a husband and wife and their children.”
[Considered by Gibbs J (as he then was) with the concurrence of Barwick, CJ and Mason J in Re Dovey; Ex parte Ross (1979) 141 CLR 526 at 533. Also by Mason CJ, Wilson and Dawson JJ in Dougherty (supra at 285-6).]
Decisions such as Mills (supra) and Dougherty (supra) are concerned with one aspect of defining whether a matter arises out of a marital relationship. That is, whether the fact of the parties’ marriage to one another is incidental to the legal claim. That is not an issue in these proceedings. Nonetheless, members of the High Court have said a number of things which suggest to me that s 79 should be read down to have application only to ensuring that the division of property is “… just and equitable” in the light of the circumstances of the “… marriage relationship”. In Dougherty (supra) Mason CJ, Wilson and Dawson JJ had this to say:
“… In any event, whether the exercise is undertaken for the purpose of applying par. (ca) or reading down s.79, it should be comparatively easy to ascertain whether or not a claim by a party to a marriage for an alteration of property interests is based upon circumstances arising out of the marital relationship. Claims grounded solely in contract or tort or equity or where the marriage relationship is purely coincidental are not likely to attract the power. But leaving aside matters such as those there will be wanting occasions where the Family Court may find it just and equitable to alter the respective property interests of the parties inter se for reasons associated with and finding their source in the marriage relationship.” (at 286) (emphasis added)
(Their Honours then continued as follows)
“… If s.79 is to be a law with respect to marriage, and for that reason to be within power, it must be because of the connection between the jurisdiction which it confers and the relationship of marriage: see Reg. v Lambert; Ex parte Plummer (1980) 146 CLR; at pp. 456-457. The jurisdiction which it confers is a jurisdiction to alter property interests. Thus, the rights and duties which the Family Court may validly create or define under the section are confined to those which have their basis in the marital relationship”. (at 288) (emphasis added)
In Fisher (1986) 161 CLR 438 Gibbs CJ said that it is a question of degree whether a law is one with respect to marriage and that the answer to it “… depends on whether the connection between the law and the marital relationship is sufficiently close to enable it to be said that the law is in truth one with respect to the relationship”. (at 447) See also Gazzo v Comptroller of Stamps (Vict) (1981) 149 CLR; at pp. 234-235, 248. The learned Chief Justice then went on to say at 447:
“I would be unduly cynical to regard matrimonial property as central to the concept of marriage and it is certainly not true to say that all the proprietary rights which a party to a marriage possesses arose out of the marital relationship … Consistently with the principles stated above, a law which has some application to the property of a party to a marriage will not for that reason alone be a law with respect to marriage. Whether a law which in some way affects the property of the parties to a marriage or one of them is a law with respect to marriage will depend on the strength of the connexion between the law and the marital relationship.”
In Fisher (supra), Mason and Deane JJ said at 452-453:
“It is well settled that the constitutional concept of marriage, considered as a head of legislative power, embraces marriage as a relationship. In the exercise of that legislative power, parliament may regulate the relationship and, subject to the requirement that the law remain one ‘with respect to’ marriage, attach to it such consequences as parliament considers appropriate. It follows that parliament may make provision for the alteration of the interests of the parties to a marriage in their property or the property of either of them by reference to considerations arising out of the relationship. And it may make such provision by conferring jurisdiction on a court to make orders altering such interests.” (emphasis added)
[Later, Brennan J has this to say at 456]
“… A jurisdiction to entertain any proceeding between the parties to a marriage with respect to their property whether or not the proceeding arises out of the marital relationship cannot be created in reliance on the marriage power: Russell v. Russell (1976) 134 C.L.R. 495, at pp. 510-511, 527-528, 542, 552-553. On the other hand, if the jurisdiction is limited so that its exercise is governed by considerations arising out of the marital relationship, the creation of the jurisdiction is supported by s.51(xxi), at least where the parties to the proceedings are the parties to the marriage.” (emphasis added)
In these passages, their Honours refer to the “… relationship” of marriage. This could be understood as meaning that the power to alter property interests arises not merely from the formal status of being married from the wedding day until the date of the decree absolute, but from the circumstances of the marital relationship that the parties had during the course of their marriage. The Family Court jurisdiction arises out of the “marital relationship” and is not confined to the period of formal marriage. It can take account of pre-marriage contributions, and in exceptional cases, post divorce contributions. (See for example Kowalski (1993) FLC 92-342; W v W (1997) FLC 92-723; Nemeth (No 2)(1987) FLC 91-844).
In Dougherty v Dougherty (supra) Mason CJ, Wilson and Dawson JJ considered that it would only be in exceptional cases that a claim by an adult son or daughter could arise out of the marital relationship. In the same way, it is arguable in my view that a claim against a property which was not in existence during the course of the marriage and which has no nexus or connection with the circumstances of the marriage cannot be a claim which arises out of the marital relationship. For a claim to arise out of the marital relationship, there must be some nexus between the property and the circumstances of the marriage. Such a circumstance for example, might well be satisfied where a post separation windfall had its evolution, at least to some extent, in a business which was built up during the course of the marriage as seen in Collins (supra).
A further basis for alteration of property interests of the parties from property acquired post-separation is the requirement (if appropriate to do so) to satisfy a claim by one party to financial support based on circumstances that arose during the marriage. For example, the ongoing requirement to support children. In those circumstances, the residence parent may look to assets acquired post-separation to assist in meeting, for example, child costs under s 75(2)(c) in much the same way as claims are met from post-divorce income when a court makes a spousal maintenance award. Another example is seen in James (supra). In that case, the wife helped out in various ways on a rural property that was owned by her father-in-law. In those circumstances, and in the light of an expectation, her contribution was taken into account as a contribution to that property when it was inherited by the husband following their separation.
In my view however s 75(2) should be read down in this context. If a party has no claim to a post separation asset on the basis of contribution as the asset was not in existence at the time of that contribution, and there is no nexus between the marriage “partnership” of the parties and the “acquisition”, “conservation” or “improvement” of that property, the claimant, in my view, can only assert an interest in that asset in order to satisfy a “moral claim” which arises directly out of the marital relationship, and which cannot be met by recourse to other assets. For example, if there is a disparity in the earning power of the parties as a consequence of the role division each played in the course of the marriage (the wife for example surrendering her income earning prospects to nurture children of the marriage) and this cannot be met adequately by an unequal distribution of the assets acquired or otherwise enjoyed during the marriage, then it would be appropriate to meet that obligation out of a post separation acquired asset.
In my view, this falls seamlessly into the language of s 79(2). The legislation does not say that the court should do “… whatever is just and equitable”. The legislation provides that the court should not make an order altering the property interests of the parties unless it is “… just and equitable” to do so. Section 79(2) is a clear limitation on the power of the court to alter interests in property. It is not an open ended jurisdiction to do so based upon subjective notions of a fair result or, “… unbounded distributive justice”. The constitutional context of this provision, in my view, suggests that the term “… just and equitable”, is to be understood as being in relation to the “… circumstances of the marriage relationship”. The power to alter the property interests of parties is conferred upon the court to address the inequities which might otherwise result as a consequence of the breakdown of the marriage.
If the disparity of wealth, for example, does not arise from the breakdown of the marriage but from circumstances which occur after the separation between the parties, then the circumstances do not arise out of “… the marital relationship” or its breakdown, and is beyond the constitutional reach of s 79 to address those disparities. There is an exception however where the property acquired by one party after separation constitutes a fund which can be drawn upon to meet needs arising “… from the marital relationship”, which could not be met from assets acquired during the marriage.
COSTS
At the conclusion of the hearing of the appeal, we heard argument from counsel in regard to what order for costs would be appropriate if the appeal was either successful or unsuccessful. It was the submission of both Mr Richardson and Mr Errington that if the appeal was allowed, then a certificate pursuant to the Federal Proceedings (Costs) Act 1981 be ordered.
As the appeal has succeeded on a question of law for reasons which I have already given, in my opinion it is appropriate that each party be granted the relevant certificate pursuant to the provisions of the Act and that orders be made accordingly.
I WOULD ORDER
That the appeal be allowed.
That orders numbered 5 and 7 of the Orders made by the Honourable Justice Purdy on 9 December 1999 be set aside and in lieu thereof the following orders be substituted:
“5.That the husband pay to the wife the sum of $140,000 by way of property settlement on or before 25 September 2000.
7.That the husband be and is hereby restrained until payment of the said sum of $140,000 from dealing with –
(a)the said property at [Wongawallan]; and
(b)the proceeds of investments by the husband or on the husband’s behalf in the project known as Oasis Village Unit Trust;
otherwise than to meet his obligations pursuant to Order 5 above.”
That the Court grant to the appellant/husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant/husband in respect of the costs incurred by the appellant/husband in relation to the appeal.
That the Court grant to the respondent/wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent/wife in respect of the costs incurred by the respondent/wife in relation to the appeal.
I certify that the 249 preceding
paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.
Associate
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