GALLO & GALLO-SEMMENS

FEDERAL CIRCUIT COURT OF AUSTRALIA

GALLO & GALLO-SEMMENS

[2014] FCCA 398

Catchwords:
FAMILY LAW – Application for final property orders – dispute over property available for distribution – initial contributions favour the husband – wife has greater future needs – orders just and equitable.

Legislation:

Family Law Act 1975 (Cth), ss.79, 79(2),79(4),75(2)

In the Marriage of Kessey (1994) 18 Fam LR 149; (1994) FLC 92-495
In the Marriage of Olliver (1978) 4 Fam LR 360; (1978) FLC 90-499
In the Marriage of Ferraro (1992) 16 Fam LR 1; (1993) FLC 92-335
In the Marriage of Clauson (1995) FLC 92-595
Pierce v Pierce (1999) FLC 92-844
Hickey & Hickey (2003) FLC 93-143
NHC & RCH (2004) FLC 93-204
Beklar & Beklar [2013] FamCA 327
Bevan& Bevan [2013] FamCAFC 116
Stanford & Stanford [2012] 293 ALR 70

Applicant:

MR GALLO

Respondent:

MS GALLO-SEMMENS

File Number:

MLC 5934 of 2012

Judgment of:

Judge O’Sullivan

Hearing dates:

27 & 28 February 2014

Date of Last Submission:

4 April 2014

Delivered at:

Melbourne

Delivered on:

18 June 2014

REPRESENTATION

Counsel for the Applicant:

Mr D. Sweeney

Solicitors for the Applicant:

Pearsons Lawyers Pty Ltd

Counsel for the Respondent:

Mr K. MacFarlane

Solicitors for the Respondent:

Novatsis & Alexander

ORDERS

The husband pay to the wife the sum of $200,000.00 (“the payment”) within 60 days (“the date”).
Contemporaneously with the payment:
(i)the wife sign all documents and do all acts and things as are necessary to relinquish in favour of the husband any and all her right, title and interest she has or may have had in the real properties situate at and known as:
(a) Property T, [T] (“[T] property”); and
(b) Property C, [C] (“[C] property”)
(ii)the husband pay and indemnify the wife in respect to any and all encumbrances on the title to [T] property and [C] property including any rates taxes and charges thereon.
In the event of default in making the payment by the date or complying with the obligations imposed by paragraph (2) hereof [T] property be forthwith offered for sale on terms and conditions and for a reserve price of $430,000 (or other agreed figure) and the proceeds and be applied as follows:
(a)     Firstly, to pay the costs of and incidental to the sale;
(b)     Secondly, to discharge the registered first mortgage;
(c)Thirdly, to make the payment together with interest calculated monthly from the date of default in accordance with the Family Law Rules 2004;
(d)     Finally, the balance be paid to the husband.
That pending the payment:
(a)The husband pay and be solely responsible for the mortgage payments and all other outgoings of [T] and [C] properties;
(b)The husband have the right to occupy [T] and [C] properties;
(c)The husband be and is hereby restrained from drawing on the loan secured by the mortgage.
Unless otherwise specified in these orders and save for the purposes of enforcing monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders and the chattels in [T] and [C] properties shall be the property of the husband;
(b)monies standing to the credit of the parties in any bank account are deemed to be in possession of the person whose name appears on the bank record thereof;
(c)superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements;
(d)insurance policies remain the sole property of the owner named thereon;
(e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA

AT MELBOURNE

MLC 5934 of 2012

MR GALLO

Applicant

And

MS GALLO-SEMMENS

Respondent

REASONS FOR JUDGMENT

Introduction

The applicant in these proceedings is Mr Gallo (“the husband”). The respondent is Ms Gallo-Semmens (“the wife”). The husband is 40 years of age and the wife is 35 years of age. The parties commenced cohabitation (on the wife’s case) in late 2007 or (on the husband’s case) early 2008, married in April 2009 and separated in June 2012. There are two children of the relationship, [X] born [in] 2009 and [Y] born [in] 2011.
The husband is a [omitted] by trade and is currently employed. The wife (who left the former matrimonial home shortly after separation with the children) told the Court she intends returning to work with [Q] part time.

Procedural history

The husband commenced these proceedings by application filed on

3 July 2012. The wife filed a response on 30 July 2012. The husband and wife sought different orders for both parenting and property under the Family Law Act 1975 (Cth) (“the Act”).
The proceedings had a first Court date on 8 August 2012. There were interim parenting orders made and the matter was adjourned to

16 October 2012. On that occasion there were further interim parenting orders made and the parties were directed to attend a conciliation conference on 16 November 2012. The matter was listed for interim hearing on 13 February 2013 (after the preparation of a private family report) and the proceedings were fixed for trial on 6 June 2013.
By the time of the interim hearing the parties had attended the conciliation conference. There had not been compliance with the orders made for that purpose but the parties entered into further interim orders by consent.
At the interim hearing, the report writer was cross examined.

The parties then entered into interim parenting orders by consent and agreed (on the basis of the report writers evidence) to vacate the original trial date (of 6 June 2013). The proceedings were re-listed to

7 October 2013 for trial with an order for an updated report and otherwise the detailed trial directions made in August 2012 remained in full force and effect.
The proceedings returned to Court on 6 June 2013 for mention by which time there was an updated report. There were further interim parenting orders made by consent and the matter remained listed for trial on 7 October 2013.
Unfortunately the parties did not comply with the detailed orders and directions for trial. On 7 October 2013 the Court was told the wife believed the trial could not proceed as there needed to be a retrospective valuation of the former matrimonial home. The Court was also told, the parties were agreed on the value of the pool save for two items, the value of which hadn’t been determined by a single expert in accordance with the process in the orders and directions for trial.
Given this, and the non-compliance referred to above and so this could be remedied, the proceedings were adjourned to a trial fixed for

27 February 2014. The parties entered into further interim parenting orders by consent.

Trial on 27 & 28 February 2014

By the time of the adjourned trial date and to the credit of the parties, with the assistance of their Counsel, they were able to resolve the parenting issues. The Court made final parenting orders by consent at the beginning of the second day of the trial.

Material relied on

At trial Counsel for the husband said his client relied on the following documents:
a)amended application filed on 9 September 2013;
b)affidavit of the husband filed on 9 September 2013;
c)financial statement field on 9 September 2013;
d)affidavit of Mr B filed on 30 September 2013; and
e)affidavit of the husband filed on 3 October 2013.
At trial Counsel for the wife said his client relied on the following documents:
a)amended response filed on 18 September 2013;
b)affidavit of the wife filed on 30 July 2012;
c)affidavit of the wife filed on 18 September 2013;
d)affidavit of the wife filed on 24 September 2013; and
e)financial statement filed on 18 September 2013.
At the trial in February 2014 despite some initial uncertainty, ultimately only the husband and the wife were required for cross examination. Neither witness made concessions willingly and issues to do with credit were of no assistance in resolving the matters before the Court. During the course of the evidence Counsel for each of the parties tendered a number of exhibits upon which their respective clients relied. At the conclusion of the evidence the Court made directions for the parties to file written submissions and the matter was adjourned sine die.
As requested both parties filed written submissions. However rather than crystallising the issues arising from the evidence heard at the trial those submissions appeared to open up other lines of dispute between the parties. No leave was sought or granted to attempt to lead further evidence or re-open the hearing. To the extent those submissions did so (and the matters raised therein weren’t canvassed at the trial and/or with the parties in their evidence) they were unhelpful.
Before turning to the property settlement exercise it is important to set out the orders sought by each party.

Orders sought by the husband

The husband sought the Court to make the following final orders:[1]
[1] see exhibit A4
“1.The husband pay to the wife the sum of $136,562 (“the payment”) on or before 27^th May 2014 (“the date”).
2.Contemporaneously with the payment:
(i)the wife sign all documents and do all acts and things as are necessary to relinquish in favour of the husband any and all right title and interest she has or may have had in the real property situate at and known as:
(a) Property T, [T] (“[T]”); and
(b) Property C, [C] (“[C]”)
(ii)the husband pay and indemnify the wife in respect to any and all encumbrances on the title to [T] and [C] including any rates taxes and charges thereon.
3.In the event of default in making the payment by the date or complying with the obligations imposed by paragraph 2 hereof [T] be forthwith offered for sale on terms and conditions and for a reserve price of $430,000 (or other agreed figure) and the proceeds and be applied as follows:
(a)First to pay the costs of and incidental to the sale;
(b)Secondly, to discharge the registered first mortgage;
(c)Thirdly to make the payment together with interest calculated monthly from the date of default in accordance with the Family Law Rules;
(d)Finally, the balance be paid to the husband.
4.That pending the payment:
(a)The husband pay and be solely responsible for the mortgage payments and all other outgoings of the properties;
(b)The husband have the right to occupy the [T] and [C];
(c)The husband be and is hereby restrained from drawing on the loan security by the mortgage.
5.The husband indemnify the wife in respect to any debt owed or owing to his mother Ms P.
6.Unless otherwise specified in these orders and save for the purposes of enforcing monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders and the chattels in [T] and [C] shall be the property of the husband;
(b)monies standing to the credit of the parties in any bank account are deemed to be in possession of the person whose name appears on the bank record thereof;
(c)superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements;
(d)insurance policies remain the sole property of the owner named thereon;
(e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.”

Orders sought by the wife

The wife sought the Court to make the following final orders:[2]
[2] see exhibit R1
“1.That within 60 days (“the date”) the husband pay to the wife the sum of $314,000 (“the payment”).
2.Contemporaneously with the payment the wife do all acts and things and sign all such documents as may be required to transfer to the husband at the expense of the husband all of her right title and interest in the real property situate at and known as Property C, [C], Victoria (“the [C] property”).
4.That in the event the whole of the payment has not been made by the date then the real property be forthwith sold altogether out of Court (“the sale”) and upon completion of the sale, the proceeds of the sale be applied:
4.1.first to pay all costs, commissions and expenses of the sale;
4.2.secondly, to discharge the mortgage and any other encumbrance affecting the real property;
4.3.thirdly, so much of the payment as is then outstanding together with interest thereon at the rate prescribed by the Family Law Rules adjusted monthly from the date to the wife.
4.4.fourthly, the balance to the husband.
5.That pending the transfer of the real property and the [C] property to the husband:
5.1.the husband have the sole right to occupy the real property and [C] property;
5.2.the husband pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the real property and the [C] property as they fall due;
5.3.the parties hold their respective interests in the real property and the [C] property upon trust pursuant to these orders; and
5.4.save for the sole purpose of complying with these orders neither party shall encumber the real property without the consent of the other party.
6.That unless otherwise specifically ordered herein and save for the purposes of enforcing any monies due under these order any subsequent orders:
6.1.each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders (the furniture, personal possessions and like chattels in the real property being deemed to be in the possession of the husband;
6.2.each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
6.3.each party shall retrain the sole and exclusive right to their irrespective superannuation entitlements/long service leave entitlement and other employment based entitlements;
6.4.any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
7.The Amended Application of the husband filed 9 September 2013 and the Amended Response of the wife filed

18 September 2013 be otherwise dismissed.”

Approach to property settlement

The approach to property settlement was considered in the decision in Stanford & Stanford[3] which noted that the approach requires first of all that:
“The Court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.”
[3] [2012] 293 ALR 70
The Court is required to consider whether it is just and equitable to make an order under s.79 at all before embarking on the four step process set out by the Full Court of the Family Court in Hickey & Hickey.[4] The High Court said in relation to the approach to property settlement under the Act:
“37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law principles, the existing legal and equitable interests of the parties in the property…
38.Second, although s.79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion… (but) “in accordance with legal principles, including the principles which the Act itself lays down”.
[4] (2003) FLC 93-143
…
40.Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s.79(4).[5]”
[5] Stanford v Stanford (supra) at [37]-[38] & [40] per French CJ, Hayne , Kiefel and Bell JJ
Given this once the Court has decided that it would be just and equitable to make an order under s.79, the Court should then undertake the four inter-related steps set out in Hickey:[6]
“Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of hearing. Secondly, the Court should identify and assess the contributions of the parties…and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters…including…the matters referred to in s.75(2) so far as they are relevant…Fourthly, the Court should…resolve what order is just and equitable in all the circumstances of the case.[7]”
[6] supra
[7] Hickey & Hickey (2003) FLC 93-143 (supra) at [39] per Nicholson CJ, Ellis and O’Ryan JJ
In the Full Court of the Family Court decision in Bevan & Bevan [2013] FamCAFC 116 the Full Court considered the decision in Stanford and the implication of that decision when looking at the property settlement approach. Bryant CJ and Thackray J said:
“59.Prior to Stanford, property applications were commonly dealt with by reference to what the trial Judge called “a four stage process”. This process was described at [31] and [32] of his Honour’s reasons. The jurisprudential basis for the process was well established – see the line of cases cited in Hickey & Hickey (2003) FLC 93-143 at [39].
60. The four stage (or step) process involves:
•identification and valuation of the property of the parties;
•identification and evaluation of contributions to the property (including property no longer owned by the parties);
•identification and assessment of the various matters in s.79(4)(d) to (g) including, to the extent they are relevant, the matters in s.75(2);
•consideration of matters of justice and equity.

61.Although the four step process has been regularly applied, the Full Court has stressed it is no more than a means to an end, since the statutory obligation is to alter existing interests only if it is just and equitable to do so. Thus, in Norman & Norman [2010] FamCAFC 66 at [60], the Full Court (Finn, May and Murphy JJ) said:
It is the mandatory legislative imperative (to reach a conclusion that is just and equitable) that drives the ultimate result. For all its usefulness and merit as a “disciplined approach” or a “structured process of reasoning” (per Fogarty, Lindenmayer, McCall JJ, N and N, unreported,
10 June 1992), the “three-step” or “four-step” approach merely illuminates the path to the ultimate result.

Given the above and the decision in Stanford the following matters should be determined in applications brought under s.79 of the Act:
·whether the parties have separated;
·the assets and liabilities of each party;
·the contributions of each party;
·the future needs of each party;
·bearing in mind all the foregoing matters, whether it is just and equitable to make any orders altering the interests of the parties in their property; and
·what orders, if any are just and equitable in all the circumstances of the case.

Property settlement

The majority in Stanford noted that, in many cases, the just and equitable requirement will be easily satisfied because, as a result of the breakdown in the marital relationship, the parties no longer enjoy the common use of their property.[8]
[8] At paragraph 42
In this case Counsel agreed as both the husband and the wife asked the Court to make orders altering those interests that it is just and equitable to do so. I am satisfied that is the case.

The property available for distribution

To the parties’ credit, with the assistance of their Counsel, they did agree on the value of many of the items available for distribution. However the value of some of those items was still in dispute at the start of the trial on 27 February 2014.
Counsel for the parties provided the Court with an agreed list of those items which was marked as Exhibit “A1”. It identified the items and their respective values for which the parties contended as follows:
“Assets  Wife               Husband
Property T, [T]  $430,000      $430,000
Property C, [C]   $248,750      $248,750
Husband’s Holden Monaro  $12,500             $12,500
[R]  $18,000     $6,000
Husband’s Holden /Landcruiser $17,000$10,000
Wife’s Mazda Tribute  $7,925           $7,925
Husband’s Harley Davidson  $12,750             $12,750
Husband’s Boat and Trailer  $8,000 $4,500
Wife’s [Q] shares                   $1,200           $1,200
~~Husband’s savings at Separation            $15,000             $15,000[9]~~
[9]     See paragraph 27
~~Wife’s Savings at Separation                    $15,000             $15,000[10]~~
Husband’s Redundancy payment                  $34,660     $Nil
Total                   $790,785      $733,625
Liabilities
Home mortgage to ING Bank               $248,000           $248,000
~~Husband’s Mother’s Loan  $Nil                    $55,000[11]~~
Total              $248,000           $248,000
[10]    Ibid
[11] See paragraph 29
Net Assets  $542,785           $485,625
Superannuation
Husband’s Superannuation (value as at 30 June 2013)    $73,524
Wife’s Superannuation (value as at 28 July 2013)            $88,651”
Several matters from the above table require explanation. Before the commencement of the evidence and in relation to the issue of the parties’ savings at separation, it was agreed by Counsel that the amounts cancelled each other out, they no longer existed and that those monies weren’t to be brought into account at trial. Accordingly they were excised from the list.
Counsel for both parties also indicated that the parties were agreed on the values of the superannuation which were roughly equivalent and no orders were sought by either party in relation to superannuation. It was common ground that the husband and the wife would retain their own superannuation and seek no adjustment to those interests. On that basis it was agreed the Court should approach this matter on the basis that the parties’ superannuation should be disregarded and not be included in the list of property for division. As it was agreed, the matters will be treated on that basis.[12]
[12] See fn 8 at para.9 of husband’s final submissions and page 13 of wife’s final submissions
There had been a dispute concerning the husband’s claim his parents advanced the parties $55,000. However Counsel for the husband noted it was open to the Court to (and asked that the Court) consider treating that money as a contribution on his client’s part. Counsel for the wife expressed no opposition to this approach. As this was the agreed approach, the issue will be dealt with on that basis.
In simple terms a gift is treated as a contribution on behalf of the person who is the relative of the donor unless there is evidence of the donor’s intention otherwise. There is also support for this approach in the case of In the Marriage of Kessey (1994) 18 Fam LR 149; (1994) FLC 92-495, where the Full Court of the Family Court stated at paragraph 161:
“…a contribution by a parent of a party to a marriage to the property of the marriage will be taken to be a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child.”
In light of the concessions and agreements detailed above and as is clear from the above table, Counsel for the parties told the Court there were then four issues before the Court with respect to determining the property of the parties available for division.
These were identified in an Aide Memoire handed to the Court by Counsel for the husband and were said to be the following:
“1.    Value of business [R]
Wife says$18000 based on Statement made by Husband in 2012
Husband says             $6000 as the value of his tools ($18000 included garage which is valued as part of the house)
2.    Value of Holden/Landcruiser
Wife says                $17000
Husband says             $10,000 which was the value of the vehicle on Trade-in
3.Value of Boat & Trailer
Wife says                $8000 – its insurance value
Husband says        sold for $4,500
4         Relevance of Redundancy payment
Wife says                $34,660
Husband says             “Nil” Amount was received but expended during period of unemployment on Child Support, living etc It was largely long service leave
~~5.    Effect of Parents advancement to Husband~~
~~Wife saysAmount of $55,000 may have been advanced but it is not a “loan” that requires payment~~
~~Husband says             $55,000 was advanced and has to be repaid as it was a loan”[13]~~”
[13]    See paragraph 29
At the conclusion of the evidence at trial, Counsel for the wife conceded that the Court should find that the evidence accorded with the values placed by the husband (on all of the items that had been in dispute) save for the value of the [R].
In relation to the so called “Redundancy” payment, Counsel for the wife, in light of the evidence at trial, correctly conceded not only that that payment to the husband had been expended, but that it was a termination payment (made up of accrued entitlements) from the husband’s employment with [E] and not a “Redundancy” payment. In any event, I am satisfied that given the make up of and modest size of the sum; and the time that elapsed between its receipt and the trial that the sum should be regarded as funds used by the husband in the ordinary support of himself. The husband’s evidence accounted for its expenditure.[14]
[14] See paragraph 6 of husband’s submissions filed 6 March 2014 and paragraph 15 of the husband’s submissions in reply filed 27 March 2014
In relation to the other matters that had been in dispute, Counsel for the wife also correctly conceded in light of the husband’s evidence (and the material that had been tendered on his behalf) that the Court should find the value of the cars and boat were as contended for by the husband. Accordingly, in light of those concessions in the husband’s submissions before the Court, it was contended that the position of the parties on the property in light of the evidence was:
“Assets  Wife               Husband
Property T, [T]  $430,000      $430,000
Property C, [C]   $248,750      $248,750
Husband’s Holden Monaro  $12,500             $12,500
[R]  $18,000             $6,000
Husband’s Holden /Landcruiser              $10,000             $10,000
Wife’s Mazda Tribute  $7,925           $8,000
Husband’s Harley Davidson  $12,750             $12,750
Husband’s Boat and Trailer  $4,500           $4,500
Wife’s [Q] shares                     $1,200           $1,200
~~Husband’s savings at Separation            $15,000             $15,000[15]~~
~~Wife’s Savings at Separation                    $15,000             $15,000[16]~~
Husband’s Redundancy payment                  $Nil               $Nil
Total                   $745.625      $733,625
[15] See paragraph 27
[16] Ibid
Liabilities
Home mortgage to ING Bank                    $248,000      $248,000
~~Husband’s Mother’s Loan   $Nil                $55,000[17]~~
[17] See paragraph 29
Total                   $248,000      $248,000
Net Assets (excluding super)[18]               $497,625      $485,625”
[18] See paragraph 28
In relation to the remaining dispute on the value of [R], the husband’s position in written submissions was:
“10.As stated, it is contended that the only area of dispute at the conclusion of the evidence is the value of [R]. That is an amount the husband asserts is $6,000. The wife asserts that it is worth $18,000.
It is submitted that the wife’s explanation that she did not, despite orders of this Court in October 2013, seek to value the company because the husband had made an assessment that in 2012 the business was worth $18,000 is not logical. The wife knew well before the return to Court in October 2013 when the Court raised the issue of valuation that there was still a dispute about this value. The husband was indeed contending at that time that the value of the business was “nil”. He has now invited the Court to accept a concession that two years on it is now worth $6,000. That is the latest and most accurate information that the Court can rely upon if it is to place any value on it at all. The wife must have known that in failing to value that interest she was running a real risk that there could be no value found to be in the business at all. The husband does not attempt to take advantage of the wife’s inaction however and asks the court to accept the value at $6000.
It is submitted that the wife cannot rely upon her failure to call evidence in light of the invitation from the Court to value that interest if she sought to challenge the evidence in paragraph 50 of the trial affidavit of the husband which was already known to her and before the Court at that time.” (footnote omitted)
In response to those submissions the wife’s position in written submissions was:
“It is submitted the husband’s testimony in relation to this issue was conflicting and was framed to suit his particular purpose at the time it was provided. In his first affidavit filed 3 July 2012 at paragraph 71 he states – “I have run a part time business involved in [omitted] for the past five years. I run it from [omitted] at the rear of Property T. My business is known as [R]. The matrimonial home is its registered business address. I do work associated with my business some evenings and on weekends. It generates about $20-30,000 per annum.”
At paragraph 72 of the same affidavit he states – “Very importantly, I have customers [items omitted] in the [omitted] at the back of Property T premises.”
At paragraph 73 of the same affidavit he states – “If I were not living there I would not readily be able to continue my business. I am trying to build this up for the benefit of all family members”
At paragraph 82 of the same affidavit he states – “I have always worked full time throughout the marriage and in addition have a second income from my private [omitted] business. My gross annual income is approximately $60-100,000.”
In reply the husband submitted that:
“9.The submissions of the wife again attempt to rely on paragraphs of an Affidavit filed on 3 July 2012 which was not relied on in the proceedings, and which was not the subject of cross examination (save for paragraph 89).

The submission is therefore ill founded and irrelevant.”

Findings on remaining matter in dispute and the property for distribution

At the close of evidence and in final submissions before the Court, Counsel for the husband provided another Aide Memoire which it was contended, represented the findings the Court should make as to the property in light of the evidence and given the concessions made by the wife. It will be necessary to return to this.
Before doing so it is necessary to deal with the remaining dispute and matters arising from the parties written submissions. Firstly, at the close of the evidence on the second day of the trial, Counsel for the husband in submissions before the Court correctly identified that the only issue in relation to the value of the property of the parties remaining was the value of [R].
The husband’s written submissions correctly identify, given the orders and directions made for trial and the failure of the parties, individually or collectively, to invoke the independent valuation provisions therein that the wife can not now complain about the husband’s evidence at trial on the value of the business. The husband’s evidence before the Court was the most up to date information on the value of [R]. In his evidence before the Court the husband’s clear evidence was the only value that business now had was the value of the tools at $6,000. The husband was cross examined and this included Counsel for the wife producing items of [R] clothing in open Court, all (apparently) in an effort to (try with great theatrical flourish) shake the credibility and veracity of the husband’s evidence on the value of that business.
Counsel for the wife was critical of the husband’s evidence. It was submitted the husband had been inconsistent and shaped his evidence to suit his case. Counsel for the wife pointed to earlier affidavit evidence of the husband in this regard. Objection was taken by the husband to the wife referring to affidavit material not in evidence when making that criticism.[19]
[19] See paragraph 1 of husband’s submissions in reply filed 27 March 2014
However, even putting that issue to one side, the criticism made on behalf of the wife about the husband’s evidence failed to take into account the difference between what may have at one time been the aspiration of the husband (about the business that had been a hobby) and the reality (by the time of the trial) that the business was only worth the value of the tools that had been accumulated.[20] The best evidence at the time of the trial of its value was given by the husband, and despite the criticisms by the wife of that evidence, I see no reason to reject it.
[20] See husband’s submissions filed 6 March 2014 at paragraphs 10-11 and submissions in reply filed 27 March 2014 at paragraphs 9-12
Secondly, the parties’ written submissions did not clarify but rather complicated the issues. Both parties were represented by experienced Counsel who made oral submissions at the closing of evidence. When written submissions were received, both parties in my view sought to impermissibly raise new issues or attempt to recast the evidence.
By way of an example of the former issue, the husband’s written submissions sought to add to the list of property “the sum of $55,000”. The final Aide Memoire handed to the Court by Counsel on behalf of the husband before the Court did not refer to this. I reject the husband’s written submissions that such an amount (which no longer exists anyway) be included. Notwithstanding the husband’s submissions there is no reason not to accept the wife’s evidence her parent’s paid for her legal bills and I am satisfied her evidence otherwise accounted for her expenditure. In any event, given the authority relied on by the husband to bring to account the “the sum of $55,000” I am not satisfied that justice and equity demands it be brought to account or that its proper to do so, in the way contended for in the husband’s written submissions.[21] In relation to the other issues raised in the husband’s written submissions about claimed unexplained withdrawals and interest in property I reject the claims made in those submissions for the reasons set out in the wife’s written submissions.[22] The wife had denied the claims made on behalf of the husband in written submissions in her evidence before the Court about an asserted interest in property owned by her family and alleged unexplained withdrawals. Notwithstanding the husband’s written submissions I am not satisfied I should reject those denials or her evidence about those matters.
[21] The husband relied on the decision in NHC & RCH (2004) FLC 93-204. However see approach for e.g. in Beklar & Beklar [2013] FamCA 327 and Bateman & Bowe [2013] FamCA 253 on treatment of ‘add backs’ after decision in Stanford (supra)
[22] See for e.g. pages 8-9 and 10-11 of wife’s submissions filed 24 March 2014
An example of the latter issue that arose from the parties written submissions, the wife’s written submissions sought to trawl through affidavit material which wasn’t in evidence in any event. The parties had identified the material they relied on at the start of the trial. The husband had denied the allegations put to him in cross examination about inter alia the value of [R]. Notwithstanding the written submissions of the wife, I am not satisfied I should reject that evidence.
In light of the above and the evidence at the trial the Court makes the following findings as to the assets and liabilities of the parties:
“PROPERTY AT THE CONCLUSION OF THE EVIDENCE
1.    Property T  $430,000
2.Property C, [C]   $248,750
3.Holden Monaro (Husband)  $ 12,500
4.[R]  $ 6,000
5.Holden Crewman/Landcruiser  $ 10,000
6.Mazda Tribute (Wife)  $ 7,925
7.Harley Davidson (Husband)  $ 12,750
8.Boat and Trailer proceeds  $ 4,500
9.[Q] Shares     $ 1,200
10.Savings at separation  N/R
Gross                  $733,625
Liabilities
1.    ING Mortgage  ($248,000)
Net Total (excl Super)            $485,625[23]”
[23]    The parties agreed the super was not to be included in the property to be divided and an adjustment was not sought by either party to or by reason of this. They agreed the parties would each keep their own super. See fn 8 at para.9 of husband’s written submissions and page 13 of wife’s submissions.

Contributions

The Court now turns to the second step in the exercise under s.79, namely an assessment of the parties contributions within the context of s.79(4)(a) to (c).
The Court is required to consider the parties’ contributions made on and from the commencement of their relationship,[24] during their relationship and following separation.[25] In general, the assessment of contributions is not an exercise of mathematical precision. I need to take into account the initial contributions of both parties. It appears to be conceded by the wife, that the husband brought more valuable assets into the relationship than she did.
[24] In the marriage of Olliver (1978) 4 Fam LR 360; (1978) FLC 90-499
[25] In the Marriage of Ferraro (1992) 16 Fam LR 1; (1993) FLC 92-335
In Pierce v Pierce[26] the Full Court said:
“It is necessary to weigh the initial contributions by a party with all the other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution … regard must be had to the use made by the parties of that contribution.…”
[26] Pierce v Pierce (1999) FLC92-844 at paragraph 28
There had been a dispute about when the parties commenced cohabitation. No doubt the parties at one time thought the resolution of this issue one way or the other was important for their respective arguments over contributions. At trial this issue was pursued in cross examination down to details as to who was sleeping where when renovations were done to the former matrimonial home. In terms of the husband’s contributions, Counsel for the husband submitted the evidence was that his client brought the largest asset into the relationship being the former matrimonial home, along with the sale of the vehicles during the early part of cohabitation he had within a short space of time payed down the mortgage over that property by $100,000.
Counsel for the wife acknowledged in final submissions before the Court that initial contributions weighed heavily in favour of the husband. However, it was submitted the husband’s case effectively ignored the contributions made by the wife.
In this case, it is reasonable to infer that the husband’s ownership of the former matrimonial home gave the parties an asset base upon which they could build. However, as the evidence made clear the wife came into the relationship with around $40,000 and a number of other items which I am satisfied were applied to the former matrimonial home or for the benefit of both parties. The wife also contributed to the renovations after the parties commenced cohabitation at the beginning of 2008.

In relation to the husband’s claim for credit by way of contributions for the money from his parents, I accept the wife’s submissions that the evidence (including that from the husband) was that those monies were expended on improvements to the former matrimonial home and those improvements to which that money was referable, were done before cohabitation. I accept the submissions made on behalf of the wife that to count that as a separate contribution on behalf of the husband would be double counting.
Missing from the husband’s case was a recognition of the value of the wife’s initial contributions and that after cohabitation I am satisfied that the parties were engaged in joint endeavours to maintain and maximise the benefits to the family. This is important as the husband’s case depended at least in part, on the Court being satisfied he should get the credit for selling cars (after cohabitation) which led to the mortgage on the former matrimonial home being reduced by almost $100,000. Whilst the husband’s contribution in that regard should be recognised, it didn’t occur in isolation (no matter how convenient it is after the event to think so). After the parties commenced cohabitation the mortgage over the former matrimonial home was able to be discharged. However this didn’t happen just as a result of the husband’s contributions. The wife’s contributions to this need to be recognised. The wife’s support and assistance during this time allowed the husband time to work on these projects and this must be taken into account.[27]
[27] As was noted in the wife’s submissions the husband did not deny he was able to purchase and work on cars during cohabitation
What also seems to be missing from the husband’s case is a recognition that contributions also include contributions to the welfare of the family including any contribution made in the capacity of homemaker or parent. This type of contribution is not a token matter and should not be treated as less valuable or important than a financial contribution to property. This type of contribution by the wife should be recognised.
It is clear from the evidence that, throughout much of their relationship, the parties contributed in their respective roles of significant “breadwinner” and “homemaker and parent” respectively. The husband worked during the marriage including on the [R] (though this was very much a hobby type business).[28] The husband used his skills during the relationship to sell cars and to pay down debt. There was also the on-going work of the husband compared with the work of the wife outside the home (before the children were born) and the contributions they both made to the family.
[28] See paragraph 48 of husband’s affidavit filed 9 September 2013
After the children were born, the wife was the primary carer for the children during the relationship. I am satisfied that both parents worked very hard to build up the assets that they had together, though it seems clear to the Court that after the children were born, the wife did the majority of the parenting and home-making, whilst the husband was the primary income earner. It’s not until late in the relationship that the [C] property was purchased. Its value is no more than the debt attached to it.
In the circumstances, I do not intend to analyse the minutiae of the parties’ individual contributions during their cohabitation. It is sufficient that I consider them to have been equal after the initial contributions that I have referred to above.
As against the husband’s greater direct financial contribution, the wife clearly bore the responsibility of caring for the children and contributed further as a homemaker. Her role in this regard allowed the husband to pursue his work and his ‘hobby’. The wife’s role also was at the expense of her own career potential, leaving her a part-time employee.
The contributions made by the wife in the period since separation are in my view significantly greater than those of the husband. The children have lived with the wife and she has borne virtually all of their financial costs. The husband has had use of the former matrimonial home for almost 2 years whilst the wife and the children have had to find alternative accommodation.
Accordingly on the basis of contributions I would recognise the husband’s very great initial contributions but overall adjust the matter 78 percent in his favour.

Section 75(2) factors

Having determined the contribution elements the Court is required to have regard to the provisions of s.75(2).
The matters to be so taken into account are:
a)The age and state of health of each of the parties;
b)The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
c)Whether either party has the care or control of a child of the marriage who has not obtained the age of 18 years;
d)Commitments of each of the parties that are necessary to enable the parties to support:
i)himself or herself; and
ii)a child or another person that the party has a duty to maintain;
e)The responsibilities of either party to support any other person;
f)Subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under:
i)any law of the Commonwealth, of a State or Territory or of any other country;
ii)or any superannuation fund or scheme, whether the fund or scheme was established or operates within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party;
g)Where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
h)The extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
ha)The effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
j)The extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
k)The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
l)The need to protect a party who wishes to continue that party’s role as a parent;
m)If either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
n)the terms of any order made or proposed to be made under section 79 in relation to:
i)the property of the parties; or
ii)vested bankruptcy property in relation to a bankrupt party;
na)Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
o)Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
p)the terms of any financial agreement that is binding on the parties.
The s.75(2) factors loom large in this case, particularly with respect to the care of children under the age of 18, the disparity in income earning capacity[29], and the need to protect a party who wishes to continue that party’s role as a parent.
[29] Counsel for the wife submitted the husband would be earning 4 times what the wife earned per annum
The parties are in their early forties and mid thirties respectively and their children are still very young. Although the husband will now spend time with the children pursuant to the final parenting orders, the wife will remain their primary carer. She has done so since separation with only the minimum child support from the husband.
The wife wants to return to work with [Q] on a part time basis.

The wife is in good health and I see no reason why she would not be able to do so. The wife is fortunate to continue to have the support of her family as she has since separation.
The husband worked during the marriage but has had a period of unemployment since separation. However the husband has since obtained, when compared to the wife, well paid employment on a full time basis and is in good health. I see no reason why the husband would not be able to continue working in the future.
The Full Court in In the Marriage of Clauson (1995) FLC 92-595 said:
“It has long been recognised that in most cases the most valuable “asset” a party can take out of the marriage is a substantial, reliable income earning capacity.”
The wife submitted that she had been unable to cover her expenses and that her parents were helping her financially. The wife stated that the children were still young and she could not possibly work full-time.
I am satisfied that I should give weight to the wife’s responsibilities as the primary carer for the two children of the marriage.
The income, property and financial resources of the husband are substantially greater than that of the wife. The husband has a significantly greater income earning potential than the wife and the prospect of secure future employment. The disparity in the future income of the parties is manifest.
The husband will pay child support as assessed by the Child Support Agency but this is never likely to be at a high level, even if he is employed full-time.
Save where mentioned above, there are no other facts or circumstances which, in the opinion of the Court, the justice of the case requires to be taken into account.
Counsel for the wife submitted that the factors in s.75(2) weighed heavily in the wife’s favour and warranted an adjustment of between 20-25 percent. It was submitted, having regard to the small pool, the wife’s future needs requirement to support the children, her own limited earning capacity, the differential in earning capacities between the husband and the wife, an adjustment of that amount is appropriate.
In my view, the adjustment for the s.75(2) factors of the property taking into account the size of the pool, the care of the children and most significantly, the disparity in the income earning capacity of the parties, should be 21.25 percent.

The justice and equity considerations

The fourth stage of the process is to step back and assess whether in all of the circumstances it is just and equitable to make the orders as proposed.
Counsel for the husband submitted that when consideration was given the effect of the husband’s initial contribution, the parties’ contributions during and after separation and even allowing a substantial adjustment in favour of the wife for s.75(2) factors, overall the wife should receive no more than 30 percent. In my view, not only is such an outcome not just and equitable given the matters set out above, it doesn’t accord with a result reached after consideration of the evidence in the matter.
Counsel for the wife criticised the husband’s position on what would be a suitable adjustment as downplaying the wife’s contribution both at the start and throughout the relationship, as well as post separation which, when added to an adjustment of between 20 and 25 percent for s.75(2) factors warranted the wife receiving around 65 percent. In my view, this outcome would not be just and equitable nor accord with a result reached after consideration of the evidence in the matter.
Given the similarity in the form of orders sought by the parties a result, on the basis of the adjustments set out above and the orders sought by the parties, where the husband retains the former matrimonial home, the [C] property and the other property in his possession (including superannuation) and where the wife retains her [Q] shares, her car, other property in her possession (including superannuation) and receives a payment from the husband of $200,000 would effect a just and equitable distribution.

Conclusion

This case concerns a reasonably short marriage where the property available for distribution is relatively modest. Having regard to the assets and liabilities of the parties, having considered each party’s contributions pursuant to s.79(4), what adjustment should be made when considering those factors at s.75(2) and making adjustments to the orders after considering whether the effect of the orders are just and equitable in accordance with s.79(2), the Court makes the orders set out in the beginning of these reasons for judgment.
There is one matter that warrants further comment. During cross examination the wife was questioned about a piece of paper she signed saying she would make no claim against the husband in relation to the [T] property. The wife was obviously distressed by the line of questioning. The wife made plain she was suffering post natal depression at the time she signed the document. The wife said she signed under duress and having been told by the husband she would be a single mother on her birthday with a seven week old baby. Given the emotionally charged nature of the proceedings and that parties cannot enter into binding agreements to surrender their rights as to property and other entitlements under the Act other than in accordance with the Act, and it hadn’t been contended that was the case, the purpose of the question eluded me.

I certify that the preceding eighty-two (82) paragraphs are a true copy of the reasons for judgment of O’Sullivan

Associate:

Date: 18 June 2014

[2014] FCCA 398

18 June 2014

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