G & G
[2000] FamCA 1075
•22 August 2000
[2000] FamCA 1075
FAMILY LAW ACT 1975
IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA
AT SYDNEY
Appeal No. EA26 of 2000
File No. SY3440 of 1998
IN THE MATTER OF:
G
Appellant Husband
AND
G
Respondent Wife
EDITED
REASONS FOR JUDGMENT OF THE FULL COURT
CORAM: NICHOLSON CJ, MURRAY AND KAY JJ
DATE OF HEARING: 22 August 2000
DATE OF JUDGMENT: 22 August 2000
APPEARANCES
Mr Broun QC instructed by
L D Rogers & Associates
Solicitors
DX 25409 MERRYLANDS for the appellant husband
Ms Cohen of Counsel
Tonkin Drysdale Partners
Solicitors
DX 7325 WYONG for the respondent wife
Name of Appeal G and G EA 26 of 2000
Date of Appeal 22 August 2000
Date of Judgment 22 August 2000
Appeal Coram Nicholson CJ, Murray and Kay JJ
Catchwords:
Family Law - Property - Settlement in relation to a marriage - Contributions - "By a party to the marriage to the welfare of the family" - Contributions made prior to marriage or cohabitation - s79(4)(c) Family Law Act - Pre marital agreement - Not put into effect by trial Judge.
This was an appeal against orders made by Boland J on 10 March 2000 by way of settlement of property. Her Honour made findings in relation to the wife's contribution of 15 per cent to which she added 10 per cent in relation to section 75(2) factors thus bringing the wife’s entitlement to a total of 25 per cent of the assets.
The parties were both aged in their 70s at the time of the trial. The wife was previously married. Her previous husband passed away in May 1973. The husband had not previously married and was a friend of the wife and her late husband. The parties commenced what the Court described as a form of relationship in about October 1973 and an engagement announcement was made in early 1975. However, marriage in fact occurred 1986. The parties entered into a pre-marital agreement two days before the date of the marriage. The parties separated 1995 there being no children of the marriage.
The trial Judge found that prior to marriage the parties "had a close and exclusive relationship rather than cohabiting in a defacto relationship as defined in the then definition in the Defacto Relationships Act 1984 (NSW)". Her Honour also found that the wife had made pre-marital contributions to be taken into account under ss 79(4)(a),(b) and (c) of the Family Law Act 1975.
The trial Judge had regard to the pre-marital agreement executed between the parties and found it to be a carefully drawn which set out with clarity the parties’ rights and obligations both on the termination of their marriage and in the event of their deaths. Her Honour found she had "some doubts about the circumstances under which the wife entered into the agreement, and whether her agreement was truly voluntary and the husband's actual understanding of the effect of the agreement."
Referring to s.9 (1) (a) of the Contracts Review Act 1980 (NSW) and having regard to evidence that the husband would not marry the wife unless she entered into the pre marital agreement, she found she was not satisfied that the parties were in an equal bargaining position with respect to the agreement.
In the result, her Honour considered that applying the provisions of the agreement could not be regarded as just and equitable and exercised her own discretion in making the orders which she did.
The husband's appeal contended that:
Her Honour was in error in taking into account contributions by the wife under s79(4)(c) made prior to the marriage because t there was no "family" in existence at that time and that the family only came into existence at a later stage when the marriage took place.
Her Honour approached the matter the wrong way; that she should have first looked at the agreement and its effect and considered whether that agreement produced a result which was within the reasonable range that might be arrived at if an order was made under section 79. It was said that if the trial Judge had adopted such an approach, she would have found that the result under the agreement was within the reasonable range.
Held: per curiam, appeal dismissed with costs
The argument in respect of premarital contributions runs contrary to a line of Full Court authority set out in Kowalski v Kowalski (1993) FLC ¶92-342 and later in W v W (1997) FLC ¶92-723; see also Nemeth and Nemeth (1987) FLC ¶91-844 (special leave to appeal to the High Court refused on 16 October 1987). It was immaterial that unlike W v W, there was no child of the parties. In any event, it was quite obvious that little weight was given in her Honour’s final determination to the matter of pre-marital contribution.
The answer to submissions concerning the trial Judge's treatment of the pre-marital agreement was to be found in the Full Court's decision of Woodcock v Woodcock (1997) FLC ¶92-739. When regard was had to the principle therein, what her Honour did in the present case could not be objected to. Her Honour clearly paid regard to the agreement. She made a finding of fact that it may have been a just and equitable provision at the time of execution. She properly took into account the events that had occurred afterwards and having done that, she took the view that the parties ought not to be bound by the agreement.
Although her Honour should not have taken into account the Contracts Review Act 1980 (NSW) in relation to the pre-marital agreement, she was entitled to take into account her findings as to the unilateral imposition by the husband of his will on the wife.
It was difficult to see how any injustice has been done to the husband given what would have been the outcome if the agreement been put into effect at the time of separation and had interest been paid in relation to it.
REPORTABLE
NICHOLSON CJ:
This is an appeal against orders made by Boland J by way of settlement of property. The primary contentions of the appellant are: firstly, that the judge erred in taking into account pre-marital contributions made by the wife in the particular circumstances of this case; and secondly, that her Honour failed to give weight or sufficient weight to the existing pre-marital agreement between the parties.
The background to the matter is that the wife was born [in ... ]1921 in the United Kingdom. She migrated to Australia [in ... ]1922 and became an Australian citizen. The husband was born [in ...] 1925 [in ...] Italy and migrated to Australia in 1940.
The wife was previously married. Her previous husband passed away in May 1973. The husband had not previously married and was in fact a friend of the wife and her late husband having met the latter in 1970.
The parties commenced, for want of a better term, what I shall describe as a form of relationship in about October 1973 and it seems that an engagement announcement was made in early 1975. However, nothing came of this for a number of years. The marriage in fact occurred [in...] 1986 and the parties entered into a pre-marital agreement [...] two days before the date of the marriage.
The parties separated [in ... ]1995 there being no children of the marriage.
The nature of the parties’ relationship prior to the marriage was the subject of some submission and dispute. However, the factual disputes in the matter were not great.
The wife was not cross-examined at all on her evidence and the husband was cross-examined in fairly short order. The trial Judge’s findings in relation to this issue as to the nature of the pre-marital cohabitation were as follows.
133The husband came from a traditional Italian family and lived in the same residence of his mother. The wife says that she endeavoured to get on with the husband's family particularly his mother by learning Italian, changing the types of meals she cooked and also assisting the husband with subtle nuances in the English language to assist him with his business activities.
134In this matter I find that the parties had a close friendship for a period of 13 years prior to their marriage. They did not share a common residence. I am unable to find conclusively on the material filed by the wife that there was a sexual relationship between the parties but I accept this probably was the case. I find the parties were not financially dependent on each other although the husband did from time to time assist the wife financially. The parties did not own, use or require property jointly. There were no children of their relationship, nor was there care and support of the wife's children from her former marriage.
135I find that the wife provided some household services for the husband by getting breakfast on the mornings he went to the markets. However, on the wife's evidence the husband contributed to the breakfasts by bringing Italian breads. I find that the wife did from time to time launder the husband's dress shirts and that he stayed overnight in her house from time to time.
136I find that the wife supported the husband by attending at his home and assisting in the [....]business [....] and that she from time to time attended business meetings with him.
137I find the only evidence of the public aspect of the parties relationship was that when they stayed at motels from time to time they registered under the name of Mr and Mrs [G]. On the facts outlined and applying the above tests in paragraphs 84-88 above I find the parties had a close and exclusive relationship rather than cohabiting in a defacto relationship as defined in the then definition in the Defacto Relationships Act 1984 (NSW).
Her Honour then went on to make the following findings in respect of pre-cohabitation contributions:
138In this case I find the wife's pre-cohabitation non financial contributions to the improvements and conservation of the husband's property to be as follows:-
(a) between 1976 and 1983 when the husband conducted [a ... business], attending the husband's premises approximately three days per week [... and working] for three hours;
(b) attending some business meetings with the husband with solicitors and accountants at or about the time of the sale of the [...] business.
139I find that the wife did receive some financial assistance from the husband. There is no other evidence before me which indicates that the wife's activities contributed to the acquisition, conservation or improvement of the husband's [...]business. I find such contribution was substantially offset by the financial payments the husband made to the wife from time to time.
140In respect of the wife's contributions as homemaker prior to cohabitation I find:-
(a)the wife made coffee for the husband for breakfast from 1976 to 1983 when the husband's [...]business was sold;
(b)that the wife provided accommodation for the husband at least one night per week when he stayed at her home at [W] until it was sold;
(c) that the parties probably had a sexual relationship;
(d)that the wife provided laundry services for the husband in respect of his formal clothing;
(e)that the wife assisted the husband with preparation of food for [...] functions; and
(f)that the wife entertained and attended social functions with the husband.
141I also find that during this period the wife participated at family dinners at the husband's home from time to time, had the benefit of outings with him and that he provided accommodation for her when they travelled to [...] functions.
142I find that there was a contribution by the wife during the period 1976 until the date of the marriage to the parties welfare during this close and lengthy relationship but it was not equivalent to the role of homemaker on a day to day basis and was offset partially by contributions made by the husband during this period including his financial assistance to the wife from time to time, entertaining the wife at his home and taking the wife out on social functions.
The principal argument advanced by Mr Broun QC for the appellant husband in this regard was as follows. In respect of s79(4) of the Family Law Act 1975, he conceded that the contributions identified by her Honour fell within ss 79(4)(a) and (b), that is, financial and non-financial contributions, and that such contributions could be made prior to a marriage and taken into account. However, he sought to draw a contrast with s79(4)(c) which requires the Court to take into account "the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent".
10. In effect, the central point of Mr Broun’s submission as I understand it was that for the period as set out by her Honour, the matters to which she referred were not contributions to the welfare of a family because he said that there was, in fact, no family in existence at that time and that the family only came into existence at a later stage when the marriage took place. He submitted it was therefore inappropriate to have regard to those contributions and thus the trial Judge erred.
11. In my view that submission must fail. I consider it runs contrary to a line of authority in this Court set out authoritatively in Kowalski v Kowalski (1993) FLC ¶92-342 and later in W v W (1997) FLC ¶92-723; see also Nemeth and Nemeth (1987) FLC ¶91-844 (special leave to appeal to the High Court refused on 16 October 1987).
12. W v W (supra) was a case involving a child born in circumstances where the parties had not cohabited. Some seven years later they married and a second child was then born. The marriage lasted for thirteen years. In proceedings for property settlement between the parties, the trial Judge excluded the wife’s contribution to the care of the elder child from her birth until the date of the marriage. On appeal, the Full Court held that the fact that the parents of the child had subsequently married was sufficient to make contributions before the marriage relevant, and the wife’s award was accordingly increased.
13. Mr Broun sought to distinguish W v W (supra) because there was no child in the present case. Without getting into the definitions of what constitutes a family I think it is sufficient for present purposes to refer to a passage from her Honour’s judgment where, after discussing W v W (supra) she said:
113The Full Court did not expressly decide whether a contribution made "to the welfare of the family constituted by the parties to the marriage" absent the circumstances of a child of the marriage could include pre-cohabitation contributions. However, the Full Court has not limited the phase the "welfare of the family" to when the family is an intact family. By analogy therefore, it follows that contributions made by one party to the welfare of the other party including contributions in the capacity of homemaker should not be limited to cohabitation or an "intact” family situation. However the rendering of such contributions, the circumstances of the parties, and the weight to be accorded to those contributions must be a factual matter to be determined in each case.
14. I respectfully agree with her Honour’s view. It seems to me to be quite clear that the trigger to the Court’s jurisdiction is the fact of the marriage and the Court is then not confined to the actual period of the marriage in taking account of contributions. It can look to the situation both before and after the marriage. In my view that is what her Honour did in this case.
15. A further matter is that when one looks at her Honour’s judgment overall and the findings to which I have referred, it is quite obvious that little weight was given in her Honour’s final determination to the matter of pre-marital contribution. She took them into account correctly but in terms of the amount involved, although she did not spell it out, I would consider having regard to her comments that it must have been minimal. Indeed Mr Broun conceded that had that been the only matter in dispute we would not have been here today.
16. The next issue and indeed principal issue raised by Mr Broun related to the status of the pre-nuptial agreement. The agreement was made on 10 October 1986, two days before the marriage. The wife’s evidence as to how the agreement came to be made was in substance that the husband refused to proceed with the marriage in the absence of a pre-marital agreement. She was opposed to the concept of the pre-marital agreement and had consistently, she said, been opposed to it. However, eventually it became apparent to her that if she did not enter the agreement then there would be no marriage. Her evidence as set out in her affidavit was as follows:
After his mother’s death we spoke on a number of occasions regarding marriage. I would say to him words to the effect "Why don’t we get married?" He would say words to the effect "In time". Later he would say words to the effect "I will marry you if you sign a Pre-Marital Agreement". I felt that he either wanted to marry me or not and that such an Agreement was not necessary. On such occasions I said to him words to the effect "I do not want to sign a Pre-Marital Agreement". The husband would say words to the effect "I am not going to marry you unless you sign it."
After a considerable period of time I relented and that Agreement was signed.
17. Another matter relied upon by Mr Broun was that some six months after the marriage, with the consent of the wife, the agreement was approved by the Master in Equity of the Supreme Court of New South Wales under the Family Provision Act 1982 (NSW). He said that this is a matter of considerable significance in considering the agreement.
18. When one turns to look at the agreement it recites the fact that the parties have agreed to marry. It recites that the agreement sets out the agreement that they have reached in contemplation of the marriage. It recites that the parties have known each other for many years but have never lived together in any de facto marital relationship. It then recites that they are entering into the marriage confident in their relationship, in the hope and expectation of remaining together for the rest of their lives but that each desires to be reassured that the separate assets that each has and their respective intentions as to those assets should not be jeopardised as a result of this marriage, and that accordingly, they have agreed as set out to the maintaining of their assets separately and as to what is to happen to their respective assets after their life time or in the event of a separation or break down of their marriage.
19. Clause 7 provides that in the event of separation the parties agree that the [… beach home in which they were living is to be valued, that the husband is to pay the wife one half of the value of that home, and that she will make no other claim to the [... beach] property and no other financial claim arising out of the marriage.
20. There is a reference to the contents of the home and issues as to how that would be divided in the event of a breakdown and then there are provisions as to the making of wills. Finally the agreement provides in clause 11:
Except as aforesaid [the wife] will make no other claim against [the husband] and the effect of a separation or in the event of his death or against his estate in the event of his death during cohabitation.
21. The agreement then sets out a schedule of assets and various other matters.
22. It is an agreement that was entered into on legal advice and it is apparent that the two respective solicitors for each party discussed with them the terms of and the advisability of entering into the agreement, and the fairness of the provisions made in it. The wife's solicitor certified that she appeared to understand the agreement fully and that she entered the agreement apparently voluntarily and without any pressure or influence placed upon her. A similar certification was given by the solicitor advising the husband.
23. Her Honour’s findings in relation to the agreement were that the agreement is a carefully drawn document which sets out with clarity the parties’ rights and obligations both on the termination of their marriage and in the event of their deaths. However, as to the wife, her Honour said:
147I have some doubts about the circumstances under which the wife entered into the agreement, and whether her agreement was truly voluntary and the husband's actual understanding of the effect of the agreement.
24. That finding was clearly open to her Honour. There was the evidence by the wife to which I have referred in relation to the circumstances in which she made the agreement and her Honour was entitled to have some concerns about the husband’s actual understanding of the effect of the agreement having regard to the nature of the cross-examination of the husband. Her Honour then went on to say:
148I accept that the wife clearly wished to formalise her relationship with the husband which had been of uncertain legal status for many years. The husband for his part made it clear that he would only formalise the parties' relationship if an agreement was in place. Considering the matter as a contract between the parties I have regard to s.9 (1) (a) of the Contracts Review Act 1980 (NSW). I am not satisfied the parties were in an equal bargaining position. I find the wife relented to sign the agreement because after a 13 year relationship she wished to have the parties' relationship formalised. She was no doubt in a position of vulnerability because of the uncertainty of her status, and I find there was inequality in her bargaining position with the husband who unilaterally imposed his condition precedent on the wife prior to the marriage.
25. Apart from the reference to the Contracts Review Act 1980 (NSW) I would find nothing with which to differ about the factual findings of her Honour concerning the circumstances of the making of the agreement. However, it is quite clear that her Honour was incorrect in seeking to apply the Contracts Review Act 1980 (NSW) and insofar as she did so then that part of her judgment was wrong. However, as will appear I do not regard that finding as of sufficient significance to vitiate her Honour’s judgment in the matter.
26. Her Honour continued in discussing the agreement and said:
149The agreement may have been considered to make a just and equitable provision for the wife at the time of its execution. It may have seemed in fact generous to the wife if the marriage had only lasted a short time or it may have in fact reflected the past contributions made by the wife over the parties preceding 13 year relationship. However, it contained no provision to increase the wife's entitlements to recognise long term contributions she may make to the marriage, for example, if the husband suffered illness and she provided substantial nursing services to him or the marriage endured for many years.
150The agreement did not contemplate the circumstances as have occurred in this case that the wife's assets may diminish, that she may suffer ill health requiring domestic assistance and that she could be dependant on the aged pension to meet her daily living expenses. In these circumstances the provisions and particularly having regard to her contributions during the marriage cannot now be regarded as just and equitable.
27. Later in her reasons for judgment, her Honour said:
163The parties entered into a pre-marital agreement as a precondition to the marriage imposed by the husband. I find in the nine years of the parties marriage they paid no regard to the agreement and substantially treated the agreement as one which governed their rights viz-a-vis (sic) each other's estates in the event of their respective deaths. Given the wife's contributions over the period of the parties' close relationship of 13 years premarriage and during their marriage I find it would not be just and equitable if the wife was to receive by way of property settlement in addition to the assets presently held by her the sum of $175,000, namely that the wife would retain approximately 20% of the parties' net assets.
28. Her Honour then went on to make contribution findings in relation to the wife of 15 per cent to which she added 10 per cent in relation to section 75(2) factors thus bringing the wife’s entitlement to a total of 25 per cent of the assets.
29. Mr Broun has argued that her Honour approached the matter the wrong way. As I understand him he says that she should have first looked at the agreement and its effect and considered whether that agreement produced a result which was within the reasonable range that might be arrived at if an order was made under section 79. He said that if she had approached it in that way, which he submits is correct, she would have found that the result under the agreement was within the reasonable range.
30. I consider that the answer to this submission is to be found in the decision of Woodcock v Woodcock (1997) FLC ¶92-739 per Murray, Baker and Kay JJ. At 83,968 their Honours said:
In our view the cases referred to above clearly indicate that the Court’s jurisdiction to grant relief under s 74 or 79 can only be ousted by court order or by an agreement approved pursuant to the provisions of s 87. It may be that the ability of a court to take into account the terms of an unapproved agreement creates in the words of Hoffman LJ 'the worst of both worlds' as it will be impossible to predict from case to case, exactly what weight ought to be given to the agreement (Schoker v Edwards: agreement followed; c/f Klesnik: agreement given little weight). However, it is the dominant and unwavering thread of all of the cases that the parties cannot by their conduct or agreement oust the jurisdiction of the Court.
The Court’s reluctance to preclude a party from seeking property or maintenance orders simply because an agreement intended to regulate financial matters between that party and his or her spouse has previously been entered into has not been swayed by the circumstance that the agreement is in writing; has been drafted with the intent that it be registered under s 86 (or in some cases, has been registered); is intended to be approved under s 87; is wholly executory; is partly executed; or has been wholly carried out. Given the ability to commence or continue proceedings in the face of a formal document, it is difficult to perceive why more significant consequences should flow from agreements made without the intention of any such formal imprimatur. Indeed it is untenable that an agreement whether oral or in writing executory or executed, should have a more binding effect than a written agreement which is registered or remains unapproved pursuant to the provisions of the Family Law Act.
31. It seems to me that when one has regard to that statement of principle, what her Honour did in the present case cannot be objected to. Her Honour clearly paid regard to the agreement. She made a finding of fact that it may have been a just and equitable provision at the time of execution. She properly took into account the events that had occurred afterwards and having done that, she took the view that the parties ought not to be bound by the agreement.
32. It may be that had her Honour adopted the approach of saying that the agreement was one that not only could be taken into account but could be put into effect to produce what she thought would be a just and equitable result, such a conclusion could not have been challenged on appeal. However her Honour would have had to first determine what she thought was a just and equitable result.
33. In my view her Honour was entitled to decide as she did. She exercised her discretion to arrive at a just and equitable result taking into account the various factors and I can see no reason why this Court should interfere with her judgment.
34. As I have said, although her Honour should not have taken into account the Contracts Review Act 1980 (NSW) in relation to the agreement, I believe that she was entitled to take into account her findings as to the unilateral imposition by the husband of his will on the wife and that again may well be a relevant factor in considering agreements of this sort.
35. In all the circumstances therefore I do not consider that the grounds of appeal have been made out.
36. I might again mention that it is difficult to see how any injustice has been done to the husband for as pointed out in the written submissions of counsel for the wife, had the agreement been put into effect at the time of separation and had interest been paid in relation to it, the husband would have in fact been paying perhaps a little less but not very much less than he is required to pay pursuant to Boland J's order.
37. In all the circumstances therefore I would dismiss the appeal.
MURRAY J:
38. I agree with the reasons given by the learned Chief Justice and further agree that the appeal must be dismissed. I would only add that I thought that her Honour’s reference to the New South Wales legislation, the Contracts Review Act 1980 (NSW), was a needless one but in my view this reference had no effect on the result that her Honour reached.
39. I too took note of the calculations that she made as regards the payment of interest. I worked out that, in fact, the amount payable would only be about $500 less if the more punitive rates as Mr Broun put it under the Family Law Rules had been applied. Mr Broun I think put that the wife would have been entitled to receive only commercial rates which he put at 5 to 7 per cent. Even so, at 7 per cent the interest amount would still be considerable and I see no injustice being done to the husband by her Honour’s decision. I have nothing further to add.
KAY J:
40. I agree and have nothing to add.
RECORDED: NOT TRANSCRIBED
NICHOLSON CJ:
41. The orders of the Court will be:
1. That the appeal be dismissed.
2.That the Appellant Husband pay to the Respondent Wife the costs of the appeal fixed in the sum of three thousand dollars ($3,000)
I certify that the previous 41 numbered paragraphs are a true copy of
the edited reasons for judgment delivered by this Honourable Full Court.
Danny Sandor
Senior Legal Associate to the Chief Justice
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