GOULD & CHRISTIE
[2011] FMCAfam 1230
•18 November 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GOULD & CHRISTIE | [2011] FMCAfam 1230 |
| FAMILY LAW – Property – date of separation – contributions – asset-by-asset or global approach – section 75(2) factors. |
| Family Law Act 1975, ss.75(2), 79 Evidence Act 1995, s.140 |
| Hurst & Weber [2009] FamCAFC 137 Townsend and Townsend (1995) FLC ¶92-569 Todd and Todd (No.2) (1976) FLC ¶90-008 |
| Applicant: | MR GOULD |
| Respondent: | MS CHRISTIE |
| File number: | MLC 11509 of 2009 |
| Judgment of: | McGuire FM |
| Hearing dates: | 22 & 23 December 2010, 17 & 18 March 2011, 8, 23 & 24 June 2011 and 15 August 2011 |
| Date of last submission: | 15 August 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 18 November 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr G. Thompson |
| Solicitors for the Applicant: | Hayes & Associates |
| Counsel for the Respondent: | Mr D. Staindl |
| Solicitors for the Respondent: | Clancy & Triado |
ORDERS
That within 60 days of the date of these orders the husband pay to the wife a lump sum of $144,257.
That contemporaneously with the payment referred to in paragraph (1) hereof, the husband shall:
(a)Transfer and/or vest all his right, title and interest in the following to the wife absolutely:
(i)the 2003 [omitted] motor vehicle in the possession of the wife;
(ii)the wife’s [omitted] boat;
(iii)the wife’s superannuation policy and entitlement;
(iv)all personalty and chattels in the possession of or under the control of the wife as at the date of these orders;
(v)the balances of any bank accounts or like investments in the name of or to the benefit of the wife as at the date of these orders.
(b)Be solely responsible for and indemnify the wife in respect of the following:
(i)any and all liabilities attaching to any of the assets retained by the husband pursuant to these orders;
(ii)any and all liabilities incurred by the husband since separation in either joint names or in his name alone.
That contemporaneously with the payment referred to in paragraph (1) hereof the wife shall:
(a)Transfer and/or vest all her right, title and interest in the following to the husband absolutely:
(i)the property situate at Property F in the State of Victoria;
(ii)the assets of the husband’s [business];
(iii)the husband’s [omitted] motor vehicle;
(iv)the husband’s berth at [M];
(v)all personalty and chattels in the possession of or under the control of the husband as at the date of these orders;
(vi)the balances of any bank accounts or like investments in the name of or to the benefit of the husband as at the date of these orders.
(b)Be solely responsible for and indemnify the husband in respect of the following liabilities:
(i)any and all liabilities attaching to any of the assets retained by the wife pursuant to these orders;
(ii)any and all liabilities incurred by the wife since separation in either joint names or in her name alone.
THE COURT DECLARES
(A)That these orders are intended to finally determine the financial relationships between the parties with respect to Part VIII of the Family Law Act 1975.
IT IS NOTED that publication of this judgment under the pseudonym Gould & Christie is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 11509 of 2009
| MR GOULD |
Applicant
And
| MS CHRISTIE |
Respondent
REASONS FOR JUDGMENT
Applications and background
This is an application for property settlement commenced by the husband on 23 December 2009. The wife in her amended response filed 8 December 2010 also sought an order for ongoing spousal maintenance in a sum of $1,000 per week.
The husband seeks final orders whereby the wife retains the sum of $130,000 paid to her by him in about November 2005 and that she keep her own motor vehicle, personalty and superannuation entitlements. He says that the Court should take an asset-by-asset approach to the consideration of the parties’ entitlements and in the circumstances of a short marriage and overwhelming financial contributions by the husband. He argues that the Court is not bound
to allocate percentage divisions.[1] He argues that the wife receive
no adjustment for the factors set out in section 75(2) of the Family Law Act 1975 (“the Act”).
[1] Hurst & Weber [2009] FamCAFC 137 at para 11.
In her amended response filed shortly prior to the commencement
of the trial the wife seeks an order “that the parties’ assets be identified, valued and divided equally”. Her application is silent as to her own superannuation and I assume after hearing the evidence that the wife actually seeks an order whereby the net property of the parties inclusive of superannuation be divided on a 50/50 basis. Specifically, she concedes a loading of 10 to 20 per cent to the husband after consideration of contributions but that this be off-set by an adjustment to her of 15 per cent on account of factors favouring her in s.75(2)
of the Act and that therefore there be a distribution of the property
of the parties and each of them on a 50/50 basis.
The husband is 48 years of age. He is a [occupation omitted].
The wife is 44 years of age. She has [omitted] qualifications and has previously [occupation omitted]. Most recently she has been employed as a [omitted]. The wife has obtained a Masters qualification and is currently working towards her doctorate.
There are no children of the marriage.
The parties met in 1998. They married [in] 2000 and did not cohabit prior to the marriage.
The parties lived in [L] until 2003. The wife returned to Australia in mid-2003 to take up a position with [omitted]. The husband arrived some months later.
The husband was granted permanent residency status in Australia
in mid-2006 on an application lodged in about March 2006.
The parties were divorced on 21 July 2010.
The date of separation has assumed real significance in this matter. The husband says that the parties separated in about July 2005
but remained living under the one roof, in fact in two separate residences, until December 2006 when the wife physically vacated the home. The wife says that December 2006 was the date of separation.
The issues
I have identified the following issues for my determination following the completion of the evidence in this matter:
a)the date of separation;
b)whether or not this matter is to be treated as a “short marriage”;
c)whether it is proper for the Court to adopt an asset-by-asset approach or alternatively a global approach to the alteration of the property interests;
d)the quantum of the husband’s initial contribution and the weight to be afforded that contribution;
e)some minor issues as to the nature of and value of the property pool;
f)the valuation of the husband’s [business];
g)assessment of the wife’s health in relation to her capacity for employment;
h)the weight to be given to the relevant factors under s.75(2) of the Act and, in particular, the discrepancy in the current and potential income capacities of the parties; and
i)serious issues of credit as between the parties in respect of their evidence generally and with particular emphasis on matters pertaining to the date of separation.
The evidence
The applicant husband relied on his trial affidavit and sworn financial statement both filed 6 December 2010. He adduced evidence in affidavit form from Mr J (business valuation), Professor M, forensic psychologist (in relation to the wife’s alleged depression) and Ms W. Ms W swore a short affidavit which was the subject of some successful challenge as to its partial admissibility. The husband, Mr J and Professor M were cross-examined.
On the sixth day of trial the husband sought a subpoena to issue to a Ms Y who manages a retail outlet at [E]. Ms Y’s evidence was in rebuttal of the wife’s evidence and dealt with the broad issue of the date of separation.
The respondent wife relied on her trial affidavit filed 8 December 2010 and her financial statement filed 14 December 2010. She also filed a further affidavit on 21 December 2010 in response to the husband’s trial affidavit. The wife’s mother, Ms S, swore an affidavit filed on
21 December 2010 and was cross-examined. Her evidence was essentially relevant to the question of the date of separation. The wife adduced medical evidence from Ms T, therapeutic psychologist, and
Dr M, general practitioner. There was also evidence from Dr H, consultant physician and rheumatologist in respect of the wife’s alleged arthritic condition. Finally the wife also adduced evidence from Mr W in respect of the valuation of the husband’s business.
The trial of this matter proceeded over eight days. The Court was assisted by very competent and detailed cross-examination by counsel as to the major issues including the date of separation and the husband’s initial financial contributions. Credit issues as between the parties were fully explored and the Court was greatly aided by the standard of advocacy and preparation and provision of materials such as court books.
The law
Section 79 of the Act provides for the alteration of property interests between the parties by way of transfer or settlement.
There is a consistent line of authority setting out the preferred approach for the courts in making such a determination. In Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener)[2] the Full Court of the Family Court stated at [78,386]:
That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss. 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss. 79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s. 79(4)(e), the matters referred to in s. 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
[2] (2003) FLC ¶93-143.
Amendments to the Act now provide for superannuation interests and entitlements to be “treated as property” for the exercise under s.79 of the Act.
The second step for the Court is to identify and evaluate the contributions of each of the parties. Contributions can include both financial and non-financial contributions and those made directly and indirectly by or on behalf of the parties to the acquisition, conservation and improvement of their property. Further, contributions by the parties to the welfare of the family including contributions in the capacity of homemaker or parent are to be identified and evaluated.
Within the third step of consideration the Court is to take into account the effect of any proposed orders upon the earning capacity of either party to the marriage. The Court must also consider the matters set out in s.75(2) of the Act insofar as they are relevant. Those matters include but are not limited to:
(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 attained the age of 18 years;
(d)commitments of each of the parties that are necessary
to enable the party to support:
(i)himself or herself…
…
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
…
(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;
…
(m)if either party is cohabiting with another person–the financial circumstances relating to the cohabitation;
…
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account…
Arguably, there is a fourth and final step for the Court to take. That is, the Court must be satisfied that the orders are, in all of the circumstances, just and equitable. The Full Court in Russell v Russell[3] stated at [86,439]:
Furthermore, it must be remembered in this regard that under
s 79(2) of the Act, the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties’ assets. Indeed we take the opportunity to emphasise that in what his Honour has termed “the fourth stage”, that is, the consideration of whether the result is just and equitable, it is the justice and equity of the actual orders not the percentage distribution which must be considered.
[3] (1999) FLC ¶92-877.
The property pool
Whilst most of the content and value of the property pool is agreed, there remain some discrete issues as follows:
a)
The wife, properly in my view, concedes that the sum of $130,000 received by her in November 2005 should be added back to the property pool. Whilst there remains dispute as to the initiative for the transfer of these monies from husband to wife, there is no doubt that the wife has had possession, use and benefit of the sum of $130,000. It follows that the amount should
be added back to the property pool in accordance with a number of decisions of the Full Court, prominently including Townsend and Townsend.[4]
[4] (1995) FLC ¶92-569.
b)
There is a dispute as to the proper balance to be given
the husband’s bank accounts. In his financial statement of
6 December 2010, being shortly before the commencement
of the trial, the husband gives a figure of $5,000 of savings. When challenged as to this amount in cross-examination,
he conceded the proper figure to be “about fifty thousand dollars but I factored in legal and professional costs”. He also described his estimate of a bank balance as a “virtual estimate”. Whilst bank balances are often the most fluid of assets, on the evidence before me I am of the view that a figure of $50,000 should
be included in the pool of property as this is the best
evidence of the balance as at the commencement of the trial.
I received no submissions or evidence as to paid legal costs
and I do not consider it appropriate to “add back” any future
or contingent legal costs which is effectively what I would
be doing if I accepted the husband’s “virtual estimate” of his savings.
c)
There is a dispute as to the value of the husband’s [business]. Each party adduced expert valuation evidence. Mr J gave evidence for the husband. Mr W was retained by the wife. Each filed affidavits. Correspondence between the two valuers of
18 March 2011 was before me as exhibits and effectively updated their previous valuations and referred to their conference. Both valuers relied on a separate valuation of plant and equipment.
Mr J attributed a value of $29,654. Mr W’s value was $116,844. Such a seemingly large divergence is however fairly easily explained. Firstly, there was a reduction in trade debtors between Mr J’s December affidavit and his evidence in March 2011. That reduction was slightly in excess of $13,000. Secondly, Mr J did not include a figure for “cash at bank”. Mr W suggested there should be such a figure. Mr J explained that the husband included such cash as a personal asset. Thirdly, there was dispute as to a taxation debt of approximately $35,000. Mr J included this as a liability of the business. Mr W considered it a personal liability and hence did not include it. Both valuers agreed that it was appropriate to use the “net assets” valuation methodology but differed on the inclusions above together with whether or not to include a telephone system valued at $3,000 and artwork at $2,637 as assets.
The major issue between the valuers in terms of quantum is the taxation liability. The husband operates as a sole practitioner under a business entity. His income is effectively the profit retained after payment of all expenses from gross fees.
I prefer the evidence, methodology and conclusions of Mr W in not including the husband’s taxation liability as a liability of the business. Importantly, the valuers agree to use the net asset approach rather than a future maintainable earnings methodology. The taxation liability has a nexus to the husband’s income. A potential purchaser would obviously consider potential income in deciding whether to purchase a business. However, in obtaining a valuation for such a business the purchaser would look at the tangible assets and liabilities separate from the income. Mr W asserted that such a personal tax liability would not normally be included as a liability of a business in a net asset valuation. I accept this evidence.
I accept Mr J’s evidence in respect of there being no “cash
at bank” to be included as an asset. I also accept Mr J’s evidence in relation to the substantial reduction of debtors between December 2010 and March 2011. I have already noted the balance of the husband’s personal bank accounts and the explanation for reduction in the figure for debtors is reasonable and was not subject to substantial or successful challenge.
Mr J does not include the telephone system and paintings in the assets for valuation. Mr W does so on the basis that they are mentioned in the depreciation schedule on the business’ financial documents. To my mind this denotes ownership and they should therefore be included as assets respectively at value of $3,000 for the telephone system and $2,637 for the paintings.
Consequently, I find that the valuation of the husband’s business to be $70,291 being Mr J’s valuation but deleting the taxation liability of $35,000 and adding the telephone system ($3,000) and paintings ($2,637).
d)
There is a minor dispute as to furniture and contents. The parties rely simply on their estimates. There is no valuation evidence. The husband estimates a sum of $10,000 of furniture and contents with the wife and $5,000 with himself. The wife says that in the circumstances of the matter and the state of the evidence, furniture and contents should be disregarded. Given the lack
of probative evidence, I cannot be satisfied on the balance
of probabilities as to the husband’s assertion and I prefer the position of the wife.
e)The wife has possession of a 2003 [omitted] motor vehicle. She says the value is $8,700. The husband says it is $12,000. No expert evidence was adduced. I intend to take the mean of the two values at $10,350. The husband owns a 2010 [motor vehicle omitted]. He says it is valued at $90,000. A concession was made by the wife to this valuation in counsel’s final submissions.
The wife has superannuation entitlements which she says were primarily accrued during the marriage. The value totals $126,174.
The husband has no superannuation.
Consequently, I find the property of the parties to comprise the following:
Assets
Property F (agreed)
$1,012,500
Husband’s [business]
$70,291
Husband’s bank accounts
$50,000 E
Husband’s 2010 [motor vehicle omitted]
$90,000
Berth, [M]
$150,000
Wife’s 2003 [motor vehicle omitted]
$10,350
Wife’s bank accounts
$2,425
Wife’s [omitted] boat
$750
Wife’s superannuation entitlements
$126,174
Monies received by wife November 2005 (added back)
$130,000
Total assets (including superannuation)
$1,642,490
Liabilities
Wife’s [omitted] Bank visa
$4,444
Total liabilities
$4,444
Net property (including superannuation)
$1,638,046
Date of separation
The date on which the parties, in a legal sense, separated has assumed great significance in this matter. The husband argues that the Court should take an asset-by-asset approach on the basis that the parties separated in mid-2005 and that purchases by him of a home valued
at $1,012,500, boat berth ($150,000) and plant and equipment for his business were all made after the date of separation and with
no contributions by the wife.
To the contrary, the wife argues that the parties separated in December 2006 and that the home was purchased prior to separation and that she made direct and indirect contributions to the purchase, maintenance and conservation of that property. She argues from a similar line
in respect of the assets of the [business]. She, not surprisingly, argues that the Court take a global approach to the property settlement.
Husband’s argument – separation in mid-2005
The husband says that the parties had a serious argument, apparently over whether or not to commence a family, in about June or July 2005. The wife agrees that there was an argument. The wife agrees that she vacated their shared rental property for a week or so following the argument. She says that she returned to the home and the marriage continued. The husband agrees that the wife returned to the home
but says that the marriage ended at that time. He says that there were no further sexual relations. The wife disagrees.
In his trial affidavit at paragraphs 8 and 9 the husband says:
In 2005 we were living in a rented property at [M]. We separated under the one roof in about mid 2005. There was a significant argument between the Wife and myself that had been “brewing” intermittently for many years. I wanted to start a family. The Wife was not prepared to commit and kept postponing making a decision. The argument became very heated. The Wife called her parents who came over in the evening. The issues were discussed in their presence. I made it clear that as far as I was concerned there was a major rift between the Wife and me and there were irreconcilable differences. Following that discussion the Wife left the home with her parents taking with her some of her personal possessions.
Some weeks later the Wife returned to the home and moved into the guest bedroom. Thereafter I regarded the marriage as having broken down irretrievably. From that time on there was no sexual intimacy between us. We lived separate lives. We did not socialise together apart from one business dinner in or around early 2006. The Wife did no cooking for me and we did not share meals together. The Wife did not do any washing for me. There was minimum interaction between us. We were living separate lives.
In November 2005 the husband paid to the wife a lump sum
of $130,000. The parties agree that this occurred. The husband says that this sum constituted an agreed but informal property settlement between them. He says that the wife needed funds to re-establish herself in her own accommodation. The wife says that the $130,000 was to be used by the parties to jointly purchase an investment property. She says the funds were transferred to her because she was
to have management of the purchase. There is, therefore, a significant issue of credit as between the parties in respect of this point.
The parties agree that the husband purchased a home at Property F in early 2006. The contract was signed in January 2006. The transaction settled in March. Both parties moved into the Property F property from their previously shared rental home. They both continued to live there until the wife left in December 2006. The husband in cross-examination said that he had some sympathy for the wife’s inability to find alternative accommodation and he reluctantly allowed her to stay.
The parties agree that the title to the Property F property was registered solely in the name of the husband. They agree that a mortgage of about $350,000 was taken out by the husband in his name alone to assist with the purchase. The wife agrees that she had no dealings with the agent in respect of the purchase. She agrees that the husband engaged conveyancers. They agree that the $130,000 previously paid to the wife, which on the wife’s account was for the intended joint purchase of an investment property, was not utilised in whole or in part to assist with the husband’s purchase even though a mortgage loan was obtained to assist with funding. The husband relies to a great extent on the facts and context of this transaction to support his argument that separation occurred in mid-2005 and that the wife had accepted the $130,000 as an acknowledgment of separation.
In September 2005, being after the date on which the husband says separation took place, the wife travelled alone to Europe for
a conference. The husband put into evidence an email he received from the wife on 25 September 2005. That email says:
Good morning [nickname omitted], how is it going down under? I am now in the hotel in [omitted] and it is terrific. I have a room with a balcony overlooking the little square with a balcony. While it is still late afternoon, I do wonder what the noise factor will be like later. It is good to have some quiet time. The conference was great but I am really enjoying doing absolutely nothing. I decided to call [names omitted] and will have lunch with them tomorrow. I am not going to say anything about us, but decided that I really want to see them and little [omitted]. [My emphasis] So that is good. My hotel number is [omitted] and room number is [omitted] if you want to call directly.
Hugs[nickname omitted]
The husband says that the highlighted reference is in respect of the wife not telling mutual friends about their separation.
The wife was cross-examined as to why she would put such a phrase
in the email. Her response was simply “I can’t recall why that’s there”.
The husband relies on another email received from the wife’s mother, Ms S, in about July 2005. That email says:
Dear [Mr Gould],
[Name omitted] and I are grieving for two lost souls, both of whom are dearly loved. To one we have been able to offer a degree of comfort, but are at a loss to show the other how much we care, hence this note.
You are a special person in our life, [Mr Gould], and at the risk of mentioning that word, you have become an integral part of our whole family. You are a good person who has contributed much to our happiness and so it is doubly sad that we, in turn, are unable to help you now.
The evidence seems to be that after moving to another country, the first two years are the hardest to bear. Please see that there
is a light at the end of this depressing tunnel you have entered and endured for the last twenty months and know that you will
soon emerge a stronger for the experience and will succeed
in whatever you choose to do.
I guess what I am trying to say, in my usual long-winded way,
is that we sympathise deeply with what you have been through since coming to Australia and that we will always be there for you at any time you need a friend – someone to talk to or just have
a hug.
Take care of yourself, something you have been doing very capably for many years, but do remember there are others ready and willing to support and comfort you at any time, should you feel the need.
Hoping to see you soon; lots of love and hugs, [Ms S].
The husband says that this is an acknowledgment by Ms S of his separation from her daughter.
Ms S was cross-examined. She was presented with a copy of the email. She agreed with the suggestion of “that word” being a reference to a divorce. She agreed that there had been an argument between the husband and the wife in mid-2005 and that the wife had come to stay with the parents for a number of days. However, generally, Ms S stated that the marriage had continued after this aberration. Not surprisingly, Ms S appeared to be a witness sympathetic, if not partisan, to her daughter’s argument. Whilst some of her evidence was later discredited, my reading of her letter to the husband does not lead me to conclude that she was necessarily speaking of a final separation as distinct from difficulties in July 2005, a fact not in dispute. The letter is contemporaneous with the argument. Ms S was unmoved in her evidence that the marriage subsisted until December 2006 and gave evidence of empirical events in support of her contention.
In support of his argument for the earlier date of separation, the husband relies on evidence adduced by the wife in support of her own position but which has been discredited. Specifically, the wife caused her bank statements for June 2006 to be received into evidence. She asserted that on 2 June 2006 she made a purchase with her credit card from a clothes store known as [E] in [E] being an expensive pullover for the husband as a birthday present. The implication from the wife is that she would not have made such a purchase if the parties had been separated for almost a year as claimed by the husband. The wife was cross-examined at length as to this seemingly innocuous piece of evidence. It is important to emphasise that she made the assertion. She repeated on a number of occasions in cross-examination, with forceful certainty of her recollection, that she relied upon this piece of evidence to support her argument as to the date of separation and by implication to discredit the husband. It was put to her in cross-examination that [E] did not sell men’s clothing. The wife continued with her assertion and again with apparent certainty and did not retreat from her position save and except to then declare that the retailer had two separate venues, one of which sold men’s clothes. To put it bluntly, the wife was given every opportunity to retreat from her position or to even question her own recollection. She did not do so. The husband then adduced evidence in rebuttal from Ms Y, the manager at [E] at all relevant times including 2006. She gave evidence that there was indeed a second venue. However, Ms Y also gave clear evidence that neither venue sold men’s clothing and had never done so. In his final submissions, counsel for the wife could do little more than simply concede that his client’s recollection had been mistaken. The husband, however, with some force and merit, makes the point that it was the wife who made the assertion, and continued to do so in detail and with vigour, as to the purchase and her own recollection throughout her cross-examination. The husband argues that the Court should therefore find against the wife’s credit on this particular point and generally.
In support of his argument as to the date of separation, the husband states that there was no sexual relationship between the parties after mid-June 2005. The wife gives a more detailed version of events.
At paragraphs 64 and 65 of her trial affidavit she says:
By the middle of 2006 my health had deteriorated. Earlier in 2006 I was diagnosed with a form of arthritis and I subsequently ended up in hospital having an operation on my left hip which had become chronically inflamed. This was in approximately mid to late 2006. After returning from hospital, I was on crutches for several weeks and found it difficult to get up and down the staircase in our home to the bedroom. The Husband refused to move a bed downstairs for me, despite having more than enough room and a bathroom. Consequently I stayed with my parents for the first week. During this time I experienced great trouble sleeping, partly because of the pain and also because things were clearly deteriorating between us. At this time I started sleeping in the spare room.
During the last two years of our marriage we rarely had sex.
The husband’s evidence was that the parties did not socialise together, except for one specific occasion, between mid-2005 and December 2006. He says that they did not take their meals together.
Wife’s argument – separation in December 2006
The wife points to statutory declarations made by both she and the husband in March 2006 as her strongest evidence that the marriage
was existing at that time, being some nine months or so after the husband says separation occurred. The statutory declarations were made in support of the husband’s application for residency in Australia.
Further, she says that each of her parents similarly made supportive statutory declarations. The wife says that she is an [occupations omitted] and thus understands the significance of making a statutory declaration and asks the Court to infer the inherent unlikelihood of her making a false declaration. The declarations are in standard form and on their face quite clearly provide a warning that a false statement may be punishable by a term of imprisonment of up to four years. Each party made a separate declaration and each added great detail to the formal parts of the document. The husband admits that he adopted and relied on the wife’s statutory declaration in his own declaration and application.
In his declaration the husband answers that he has “a genuine and continuing interdependent relationship with Ms Christie”. He confirms that they are living together. The document was signed by him on 28 March 2006 and the husband admitted in cross-examination that he attended for the interview separately from the wife thereby negating any suggestion of direct influence. The attached typed statement from the husband refers specifically to the joint social activities of the parties as follows:
Our social life is very active. We enjoy meeting up with my parents-in-law who live just 25 km away from us. We have regularly had informal gatherings with them and spent all Christmas or family birthday dinners with them and some friends. In addition to the Australian friends that we both had prior
to permanently moving to Australia, [Ms Christie] and I have made new friends, who we meet on a regular basis, either at their place, our place or at a restaurant. We have also regular contact with my sister-in-law, who lives in Sydney and regularly comes back to Melbourne for a few days. As often as we could [Ms Christie] and I have been to Sydney to visit her and her partner. We also have a couple of good friends, [names omitted], who we first met while still in [L]. They moved back to Australia in 2003 when they both retired. We are always delighted to meet up with them when we go to Sydney. The last opportunity was
in November 2005 on the occasion of a conference in [omitted] that I attended to. [Ms Christie] came with me and we all gathered at their place with my sister-in-law and her partner for lunch. Some colleagues of mine, [occupations omitted], have become friends and we have had the pleasure to meet for dinner on several occasions. [Ms Christie] and I were recently invited to the private party organised by [name and occupation omitted], on the occasion of his 50th birthday. This is a glimpse of the active social activity that both [Ms Christie] and I share. Apart from that, we both enjoy hiking, jogging, bike riding together. We went camping together at [omitted], where we met up with longstanding friends of [Ms Christie]’s parents, Mr & Ms C…
[Ms Christie] and I have lived together since our marriage in January 2000 and share all domestic matters.
The application being made by the husband was for spouse-sponsored residency in Australia. The wife argues that the husband’s statutory declaration unambiguously implies an ongoing marriage. The wife further says the contents of this sworn document clearly contradict his reference in his affidavit in these proceedings to only one social interaction after mid-2005.[5]
[5] See paragraph 29 herein.
The wife also prepared a statutory declaration made two days later
on 30 March 2006. She says inter alia:
Since moving to Australia, we have continued to have
a supportive, caring, loving and genuine relationship. In addition to providing full financial support, we continue to provide each other with essential emotional and physical support in all of our endeavours… Through constant love and support, we have worked together to ensure that these obstacles have been overcome…
…We undertake most activities together as a couple and clearly present ourselves as a married couple. The genuine and enduring nature of our relationship is clear to all of our friends and family.
When we initially arrived in Australia, we lived in my family’s home situated at [omitted], Melbourne. In January 2004 we moved into our own home at [omitted], which was located on the southern outskirts of Melbourne. When our landlord sold this property in late 2004, we then moved further south along the coast into another rental situated at [M]. In mid March, 2006, we moved into our own house, situated at Property F. We had seen the property for sale in the middle of 2005 and were fortunate to be able to purchase it. The sale was finalised in early March and we moved in the following weekend.
…
As noted above, [Mr Gould] just recently purchased a family home. We had not done this earlier because we had been unsure, until recently, about [Mr Gould]’s working arrangements and were [sic] he could be located permanently. In addition to purchasing a new car each, we have made many other financial commitments, in particular, purchasing a number of expensive pieces of equipment for [Mr Gould’s [business]. These include a [omitted] (approx $100,000) and [omitted] (approx $27,000). We have also purchased a number of expensive household goods including a new fridge, a BBQ and outdoor furniture setting, a new laptop computer for each of us, a plasma television and surround sound system and most recently, a house. That being said, we are currently not indebted in any way, other than the mortgage on the house. Although we have continued to have separate bank accounts, we share bills and expenses on a regular basis. We also make investment decisions together. For instance, we paid for [Mr Gould’s business] equipment out of our savings and more recently, when I expressed an interest in purchasing an investment property and/or creating a share portfolio, we transferred a significant amount of our savings into an account in my name so that I could do this as and when I am able to do so.
The wife says that it is inherently improbable that she would be supportive of the husband’s application for residency if they were separated. She says that she would not lie on a statutory declaration. She says that the comments as to the transfer of funds, presumably the $130,000, corroborate her evidence to this court in relation to the transfer of those funds.
The husband was cross-examined in detail as to these statements.
He was asked whether he was aware knew that it was not necessary for him to be still married in order to bring a residency application.
He answered that he knew this to be so. The husband stated simply that the content of the statutory declarations “was a lie”. He then attempted to blame the wife saying that she was at least complicit, and perhaps the instigator, in the documents and that she drew them.
He concedes that part of the standard form documents are in his handwriting and the statutory declaration contains his signature.
He concedes that he went for interview separate from the wife
and hence had every opportunity to remove himself from her statement. He offers no motive for the wife, on his case, perjuring herself,
other than a vague suggestion of a convoluted and long term plan
to advantage herself in these proceedings.
The husband concedes that the picture painted in the statutory declarations of the parties’ social lives is very much at odds with what he says in his affidavit which is that they socialised together only
on one occasion following what he says was separation in 2005.
The wife also argues that the husband’s own evidence as to separation is equivocal. In his trial affidavit at paragraph 8 the husband says:
In 2005 we were living in a rented property at [M]. We separated under the one roof in about mid 2005. There was a significant argument between the Wife and myself that had been “brewing” intermittently for many years. I wanted to start a family. The Wife was not prepared to commit and kept postponing making a decision… I made it clear that as far as I was concerned there was a major rift between the Wife and me and there were irreconcilable differences… [My emphasis]
However, the contents of the husband’s first affidavit in these proceedings filed 23 December 2009 were put to him in cross-examination and in particular paragraph 2 of that document, which states:
The Wife (“[Ms Christie]”) and I commenced a romantic relationship in or about 1998. We started living together on the day we were married, [date omitted] 2000. Separation occurred intermittently in between 2005 and December 2006. We first separated under the one roof in mid-2005. [Ms Christie] moved out of a home I purchased (after separation) on 20 December 2006… [My emphasis]
The wife urges the Court towards the interpretation that the phrases “occurred intermittently in between 2005 and December 2006” and “first separated under the one roof” literally mean that final separation did not occur until December 2006 and that there was more than one act of separation. The husband says that this is not an open interpretation and that the paragraph is to be read as a whole and the context shows separation occurring in mid-2005. He describes his second affidavit as a correction of his first.
The wife also points to other indicators of a subsisting marriage until December 2006. She and her mother give consistent evidence of the husband and wife together attending a funeral and showing some signs of intimacy, such as holding hands, at that event which occurred well after mid-2005. The wife and her mother both recall detail of the husband and wife travelling together. The husband admits his attendance at the funeral but disputes the particulars recalled by the wife and her mother.
Similarly the wife and her mother recall viewing homes for prospective purchase by the parties in late 2005. The husband disagrees.
The wife gave evidence, including photographic evidence, of a joint camping trip post July 2005 in support of her version of events.
In cross-examination she was forced to concede this event to have taken place in Easter 2005 and the husband then relies on this error
as a point of credit in his favour. The wife’s mother gave similar evidence but was forced to make similar concessions.
Conclusion – date of separation
On the face of it there are forceful arguments by each of the parties
in respect of their claimed date of separation. However, the evidence of each of them is also unsatisfactory in many areas and particularly after challenge in cross-examination. As a wit once pondered:[6]
[6] O Wilde, The Importance of Being Earnest: A Trivial Comedy for Serious People (1895) (public domain), Act I.
The truth is rarely pure and never simple.
In such a discrete but important issue of disputed fact and credit between the parties, the standard of proof that I must apply to my determination is one of “on the balance of probabilities”.[7]
[7] See Evidence Act 1995, s.140.
Courts exercising this jurisdiction have long been called upon to make determinations as to the question of separation under the one roof
and most commonly in divorce applications. A long line of authorities makes it clear that there are three elements of separation in a legal sense. They are:
a)The development of an intention to separate. That intention need not be mutual.
b)The communication of that intention to the other party.
c)Some form of action upon the determination to separate.
In Todd and Todd (No.2)[8] at [75,079] Watson J stated:
[8] (1976) FLC ¶90-008.
Separation can only occur in the sense used by the Act where one or both of the spouses form the intention to sever or not to resume the marital relationship and act upon that intention,
or alternatively act as if the marital relationship has been severed.
The communication of intention is an absolute requirement.
That communication may be either spoken or unspoken but it should
be unequivocal, unconditional and unambiguous.[9]
[9] Falk and Falk (1977) FLC ¶90-247.
The above listed elements are guiding principles only. Each separate case must be determined upon its own facts. Their Honours in the Full Court of the Family Court said in Pavey and Pavey[10] noted at [75,214]:
…it is not possible to apply some mathematical formula to these activities and determine whether a “separation” has occurred. Rather the evidence should examine and contrast the state of the marital relationship before and after the alleged separation.
[10] (1976) FLC ¶90-051.
For obvious reasons, the Court often looks for some form
of corroboration of a claimed separation under the one roof. In Fenech and Fenech[11] the evidence was that the parties lived in a continuing strained relationship and there was no intimate relationship between them. Nevertheless, Evatt CJ did not consider such evidence
to be sufficient to ground the claimed separation. Her Honour said
at [75,133]:
[11] (1976) FLC ¶90-035.
I am satisfied that the breakdown has been continuing for at least a year, but that is not enough…
Marriage comes in many shapes and sizes and many families are living in a strained relationship like this. To the outside observer, matters go on much as usual, and only within the family itself —between the husband and wife — is there any acknowledgment of the breach. To comply with the Act there must be some overt separation, some evidence that there are two households, not one…
These early decisions appear to presume a continuance of marriage emanating from the ceremony and legal certificate until there
is sufficient evidence of separation. It follows that there is an onus on the party to a marriage asserting separation under the one roof to prove that separation on the balance of probabilities. Interestingly, the courts
in more recent times have had cause to consider whether or not parties are cohabiting pursuant to the recent amendments to the Act in respect of de facto relationships. There the discretion for the Court is a wide one but with the Act giving some assistance with indicators. The onus of proof here however seems to be on the party asserting a continuing relationship.
In the matter before me, and whilst there are forceful indicators
in respect of each argument, I prefer the wife’s position that the parties separated in 2006. The fact of the statutory declarations made by both the husband and the wife in March 2006, some nine months after
the husband’s claimed date of separation, is significant and persuasive. The husband’s explanation for these declarations, in the face of his claim of a prior separation, is simply unsatisfactory. A spouse sponsored residency application was not necessary on his own admission. His claims of influence by his supposedly separated spouse are both unconvincing and illogical. The declarations are detailed and both support the wife’s particulars in her affidavits and discredit and contradict the husband’s affidavit evidence. A prime example is the parties’ differing versions of their social lives after mid-2005.
The declarations are remarkable for their detail and similarity to the wife’s affidavit in this respect.
The statutory declarations raise an issue under the so-called “Elias principle”.[12] Whilst later authorities retreat from the position taken
[12] Elias and Elias (1977) FLC ¶90-267.
by Goldstein J in that case achieving the status of “principle”, the common sense and logic of his Honour’s decision remains valid.
His Honour took the view that if a party relied on a statement at some time and to their advantage then they would be estopped from denying that same statement of fact later in a Family Court if it was not to their advantage to do so. The fact is that the husband signed and relied upon a statutory declaration for himself and adopted one in similar terms
by the wife in order to achieve a benefit for himself, namely residency in Australia. Now, and in a completely different context, he resiles from those statutory declarations given that they now potentially
cause him a detriment rather than a benefit. The husband says that
his statutory declaration was simply a “lie”. Such a statement
is frankly disingenuous without further reasonable explanation.
I do not accept the husband’s evidence of some form of coercion
by the wife.
Whilst the purchase of the property at Property F in early 2006 in the husband’s name alone some nine months prior to the wife’s stated date of separation is unusual and unexpected on her case, so is the fact that the wife moved into that property with the husband in March 2006, equally unusual and unexpected on his case. That is, having had the benefit of seeing the wife in the witness box, it might not be expected that she would allow the joint purchase of real property to be registered without reference to her. Nevertheless, the joint move of the parties from a rental home to one owned by the husband some nine months after separation is puzzling. The husband agreed that they shared the removalist and did not indicate anything other than a joint and amicable move.
The wife’s evidence and claims in respect of receiving a $130,000
in order to allow the parties to purchase an investment property and/or a share portfolio in November 2005 also seems unusual and unnecessary, particularly within the context of the husband obtaining
a mortgage loan to assist with the Property F purchase and the $130,000 being available but not contributed to the purchase. Nevertheless, there is some consistency in this explanation and in that it was given in the wife’s statutory declaration in support of the husband’s residency application and adopted by the husband.
I am also troubled by the wife’s argument in respect of the alleged purchase of the birthday present for the husband in June 2006. She asserted her recollection time and time again. She is clearly incorrect. As to whether or not her credit generally is destroyed by this argument is another matter altogether. Having seen and heard the parties give their evidence and be cross-examined, I prefer that the wife’s evidence in this regard is a symptom of her brash and uncompromising manner which at times borders upon arrogance in refusing to retreat from such assertions and particularly in the face of vigorous cross-examination. The wife’s demeanour in the witness box varied greatly. She was also at times theatrical, overly emotional, and pedantic to the point of evasive. All of which did not lend credit to her evidence generally and was surprising in someone who had apparently herself [occupation omitted].
Similarly, I find the discrepancies in the husband’s evidence in respect of him claiming virtually no joint social life to be more of a tendency to embellish, exaggerate and be selective. In this sense both parties set out to present their respective cases at their highest with some real disregard for the whole truth. The wife’s errors in respect of the camping trip are another example. Obvious errors in the husband’s sworn financial statement shows his lackadaisical attitude to the truth.
I find the material in the husband’s own earlier affidavit, referred
to by the wife’s counsel, and put to the husband in cross-examination, as persuasive in respect of the issue of when final separation actually occurred. At that time the husband swore:
…Separation occurred intermittently in between 2005 and December 2006. We first separated under the one roof in mid-2005. [Ms Christie] moved out of a home I purchased (after separation) on 20 December 2006…
A close examination of this paragraph of the husband’s own affidavit perhaps shows his own confusion as to the fact, legal reality, and time of separation. There is little doubt in my mind and on the evidence that the relationship between the husband and the wife was troubled and may have been in a process of breaking down following the events
of mid-2005. In cross-examination the husband said:
I made a distinction in my mind between the end of the marriage in 2005 and final physical separation in 2006. [My emphasis]
He also speaks in his affidavit of “first separating” in 2005 which might imply more than one separation. I gained the impression from hearing Mr Gould give his evidence that he placed some real store
in the cessation of sexual relations as a defining characteristic
of separation. Nevertheless, this in itself is not definitive of separation and is a completely different proposition than asserting and communicating that the relationship had unambiguously and unconditionally broken down in mid-2005. This scenario is consistent with the making of the statutory declarations. There is further support for this proposition in a document tendered into evidence by the husband himself being an email from the wife to him of 23 August 2005 which says:
Thanks for that. Apropos last night, can we agree that the children discussion is off the agenda? It is a very raw nerve with me and something that I find very difficult to come to terms with… amongst everything else. Hope you have a good day. :)
My reading of such communication more than a month after
a supposed final and unequivocal separation does not indicate the wife sharing the husband’s understanding of a separation having occurred. Further, there is no email from the husband in response
or contemporaneously which communicates his apparent view of the unambiguous demise of the marriage. Rather, this email suggests
a continuing albeit troubled marriage. What is lacking is evidence
of any communication by the husband during this period of what
was in his mind, namely that there had been a final separation. Regardless of what he may have said at the time of the argument
in mid-2005, the wife resumed residence. There is no evidence
of sufficient certainty then that the husband communicated his mindset.
There is a distinct lack of any independent corroboration of the husband’s position. The wife’s mother, Ms S, does give some corroboration of the wife’s version of events. She and her husband also provided statutory declarations in support of the husband’s residency application which is an unlikely assistance if he had separated from their daughter. Ms S also speaks of attending open homes and supports the wife’s recollection of the parties attending a funeral together. There are however obvious errors in her recollection of some events. She is clearly supportive of her daughter and overall the independence of her recall is not always convincing.
Taking all of these matters into account I am not of the view that the husband has proven his assertion of a separation under the one roof
on the balance of probabilities.
Contributions
Global or asset-by-asset approach
The husband argues that the Court should take an asset-by-asset approach when considering the contributions. He, of course, bases this on his argument that separation occurred in mid-2005 and hence their relationship was only of some five and a half years’ duration and significantly, on that premise, that the home, berth, and much of the plant and equipment of the [business] was purchased after separation. However, on my findings above I prefer the version of the wife as to the date of separation being December 2006. This gives a period of almost seven years of cohabitation and, whilst still perhaps relatively short, would include the purchase of the most substantial and valuable asset of the home taking place during the course of cohabitation. Similarly, the evidence of the parties in the statutory declarations made in support of the husband’s residency application indicate the purchase of plant and equipment for the [business] taking place during the course of the relationship. Both parties were employed and contributing income, albeit in significantly different quantum, at least from 2003. The wife claims non-financial contributions to the home. The parties agree that they maintained separate bank accounts but, on the wife’s case, both contributed to the ongoing household expenses. The implication in the statutory declarations is that this was the case.
Historically the courts have most often adopted the “global” approach whereby the parties’ contributions are considered and assessed
in respect of the overall property pool. This is so because commonly marriages involve a variety of contributions of direct and indirect nature over a relatively long period of time. There is no obligation, however, on the Court to take this approach and it is equally open
to undertake the alternative of an “asset-by-asset” approach.
Their Honours Mason and Deane JJ in the High Court in Norbis
v Norbis[13] at [75,168] stated:…Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient. It follows that the Full Court
is quite entitled to prescribe that approach as a guideline in order to promote uniformity of approach within the Court. In saying this we are not to be understood as denying the legitimacy of the trial Judge's ascertainment in the first instance of the financial contributions of the parties by reference to particular assets. It is difficult to conceive how the trial Judge in many cases could otherwise take account of such contributions as he is requiredto by sec. 79(4)(a) of the Act.[13] (1986) FLC ¶91-712.
The Full Court of the Family Court in McMahon and McMahon[14] said on this point at [82,043]:
In our view, the particular circumstances of this case made an asset-by-asset approach preferable to a global approach.
The short duration of and the unhappy nature of the marriage, coupled with the parties’ strict division of assets and their method of dealing with them lent itself to an asset-by-asset approach, particularly where they had separately identified another group of assets as joint.
[14] (1995) FLC ¶92-606.
In the matter now before me I prefer the global approach. Given the superior significant direct contributions by the husband, it is tempting to take the alternate but over a relationship of seven years’ duration
I am of the view that the Court must be careful to give proper weight
to all of the contributions of the parties, both direct and indirect and financial and non-financial. Both parties were contributing from their incomes. The home was purchased some nine months before separation. There are non-financial contributions such as that of the husband towards the wife’s qualifications to consider. After consideration, I am of the view that the global approach is appropriate.
Contributions
At the date of marriage the wife had savings of approximately $14,000. She had a small equity in her motor vehicle and a modest superannuation entitlement. The wife’s major asset was the equity
in her unit at [omitted] which when sold netted her $66,243.
The evidence is that at around the time of the marriage the wife
was employed and in the year 2000 had a taxable income of $42,400.The husband was in a far superior financial position at the date of the marriage. He owned two luxury motor vehicles, [omitted] which he estimates to have had a joint value of approximately $160,000. Although there was some cross-examination on the values of those vehicles, the husband was not moved and I accept his evidence. He also had a tax liability then of €53,430. However, the majority of his wealth was in the form of liquid assets being either cash or shareholdings. There was lengthy cross-examination as to the actual values of these holdings and, in particular, as to whether the husband was “double-dipping” between shareholdings and cash reserves. The husband caused numerous documents to be tendered into evidence in support of his position. The extent of his wealth as of 2000 was subject to that challenge and various exchange rates between the Euro, Franc and Australian dollar. At paragraph 17 of his trial affidavit the husband states that he “had savings of approximately $690,000 (€446,970)”. In evidence in chief he corrected that paragraph and stated that the amount should read $890,000 with an exchange rate of 60 cents to the Euro at that time. His evidence continued that the breakdown of this sum was approximately $300,000 in savings and hence $590,000 in shareholdings. A quantity of shares was sold around or soon after the marriage with the proceeds going into his savings account in [L]. A vigorous cross-examination followed on the value of the shareholdings and whether or not the husband double-counted in respect of savings. Generally the husband was unmoved in his evidence as to the sale of shares being converted into cash. I am not satisfied that there was any double-dipping. The husband’s evidence was consistent and detailed both in his recollection and by documents in support. Nevertheless, that cross-examination was successful in giving some precise mathematical calculation to the husband’s position at the date of the marriage. His evidence at this stage was:
Shares sold
€223,656
Other shares held
€113,497
€2,790
Total shareholdings
€339,943
Cash at bank
€174,046
Total cash and shareholdings
€513,989
The relevant exchange rate of €0.64 per A$1.00 at the relevant time
Translates to approximately A$800,000
The husband transferred about $750,000 from [L] to assist with the purchase of the Property F house in 2006, and to buy the wife’s car. I did not have the advantage of continuity of bank statements for the duration of the marriage. However, it is clear on the evidence that by the time of that transfer the parties had financed their move to Australia and the husband had been unemployed for about three months and then established a new [business]. Further the evidence is of the parties having enjoyed a pleasant lifestyle in Europe including a number of holidays as well as the husband financing the wife’s education expenses. Taking all of these matters into account I am satisfied that the husband entered this marriage in a very financially secure position and I accept his evidence as to his financial status at that time.
The husband was employed or self-employed during the duration of the marriage and except for the period October 2003 to February 2004 when the parties moved back to Australia and the husband established his own [business]. His income in both [L] and Australia has been substantial with the best evidence, from the valuers of the business, showing his most recent income being in the region of $450,000 to $500,000 per annum. That income has allowed the husband to make a number of expensive capital purchases including a berth at $150,000 and plant and equipment at purchase cost of $120,000. He has also been able to satisfy the mortgage taken out in 2006 in a sum of approximately $350,000 to assist with the purchase of the home at Property F.
The parties lived in [L] between 2000 and 2003. The wife’s income during that time was minimal. Between September 2000 and September 2001 she undertook post-graduate studies at a university some distance from their home and for these purposes an apartment was rented for the wife’s accommodation. I accept the husband’s evidence that the wife’s living, study and accommodation expenses were met primarily from his income with some assistance from the wife’s cash reserves. At paragraph 77 of his trial affidavit filed
6 December 2010 the husband cites a statement made by the wife
in May 2003 in support of his application for an Australian visa.
That evidence was unchallenged and states:10. In terms of current income and financial resources, [Mr Gould’s business] has been the primary source of income to our relationship. We have always considered this income to be our joint income and have used it freely in respect of our individual and joint financial needs. We both have a bank account and credit card account in our own name, but all of our accounts are all furnished with moneys from our joint income, which is derived from [Mr Gould’s business].
11.I have not been financially contributing to our relationship because I have been a full time post-graduate student for most of the last 3 & ½ years. [Mr Gould] has given me complete and full financial and emotional support in respect of these studies. We have paid for all of the associated expenses from our income earned here in [L]. For example, the course fees for the [omitted] programme ([omitted])
I completed in 2000/2001 at [omitted] University in the Netherlands amounted to 20,000 Dutch Gilders (approx. A$14,000) at that time). This amount was paid in full entirely out of our savings here in [L].12.I am currently enrolled as a full-time student with the Faculty of [omitted] at the [university omitted] in [omitted]. Again, all of the costs of my post-graduate doctoral studies are met by our financial resources here in [L]. These costs have included travelling expenses, accommodation when necessary, food, books, photocopying, stationary and so on. In November last year we decided to purchase a new Toshiba laptop computer to help with my doctorate studies. All such expenses are covered by us from our joint income here in [L].
13.In addition to covering all the costs of my post-graduate studies, we have bought an additional car for my own use, namely a [motor vehicle omitted]. This was purchased in May 2001 and we paid for it in full at this time.
The wife has been substantially employed save and except for the period in [L]. Her taxable income for the year 2000 was $42,400. Her income has since at times exceeded $70,000 per annum but most recently she has been working less than full time. There is no evidence to suggest that the wife has not contributed her income towards the marriage and the general benefit of the parties.
Having taken the in globo approach to this matter it is proper that
I consider the post separation contributions. Whilst I have not been provided with any evidence of mathematical detail and precision,
it is apparent on the evidence that is available that the husband
has contributed significantly to the asset pool post separation. He has purchased a nautical berth for $150,000. The wife concedes
no direction contribution to this asset. That asset is included in the pool of property for my consideration. It is open for me to find that
he has also contributed substantially to the equity in the former matrimonial home. An initial mortgage of approximately $350,000 was taken out by him to assist with the purchase. That mortgage liability is now extinguished. Whilst it is the case that the wife lived
in that home for approximately nine months prior to final separation, she candidly admitted in cross-examination that she made no direct financial contributions to the purchase or payment for that home and mortgage. The wife in cross-examination stated that her contribution to the Property F property came only in a non-financial sense to the maintenance and conservation of that property by way of “cleaning, gardening”. She did however indicate the use of her wages for living expenses thereby allowing the husband’s available funds to be put to the mortgage. This situation did not occur of course after December 2006 although the mortgage was finalised in March 2007.The weight to be attributed to the abovementioned contributions must be seen within the context of the marriage itself and specifically as to its duration, the date of separation which is now close to five years ago, the purchases made since separation, the fact that there are no children of the marriage, and the fact of the parties’ maintaining separate bank accounts. The relationship is of seven years’ duration and cannot
be categorised as a long marriage. The husband’s financial contributions both initially and during the course of the relationship are far superior. The fact of considerable post-separation contribution
by him should be afforded appropriate weight. The husband’s non-financial contribution in respect of supporting the wife pursuing post graduate qualifications should also be given weight and particularly given that the wife is now able to utilise those qualifications for her own financial benefit and support.However, I disagree with the submissions of counsel for the husband that the wife “has made no financial contribution of any consequence”. I am able to find on the evidence that she has contributed her own income to the benefit of the marriage. She contributed her savings
and equity in her apartment.The wife volunteered in response to questions in cross-examination that she performed cleaning and gardening duties at the home. This evidence was not challenged.
The dates of some financial transactions assumed some relevance in the final submissions, particularly of the wife. For instance, the evidence is that the husband transferred approximately $721,000 from [L] to Australia in January 2005 with the suggestion being that a part of these monies had accrued during the marriage. Nevertheless, I have made findings as to the husband’s asset position as of the date of cohabitation. The husband had substantial earnings from his [business] prior to leaving [L] and that the parties enjoyed a good lifestyle. Secondly, the evidence is that the mortgage liability on the Property F home was finally satisfied in May 2007. That is, in a period of approximately 14 months a mortgage of $350,000 was paid out. The wife says that it follows that a majority of this mortgage was paid during the course of their cohabitation given that I find that separation did not occur until December 2006. However, it is clear that the parties retained separate bank accounts and in this sense were responsible for the direction of their own incomes. The wife concedes no direct financial contribution to the home but responded in cross-examination that the parties used her salary for general living expenses to allow the husband to pay his income into the mortgage reduction. The husband himself admitted that a sum of about $241,000 was paid in the nine months from purchase to the wife’s departure in December 2006. It follows from the wife’s own evidence that she did not contribute financially directly to the mortgage, that the husband’s income was put towards satisfying this mortgage, although she made indirect financial contributions for about nine months.
In summary, the husband’s direct financial contributions are overwhelming in this marriage. The relationship was not a long one. The direct financial contributions of the parties are the major contributions given that there are no contingencies such as the caring
of children. The husband’s contributions are far superior at the initial stage of the relationship, during the relationship, and post separation. However, the wife’s contributions, directly and indirectly, should
be given consideration. In this respect the husband again showed
a tendency to overplay his own efforts and diminish those of the wife. A perfect example is his initial claim that he “paid for the wedding”. However, this position quickly collapsed after some short cross-examination obliged him to admit the wife’s contributions to this event. Generally the husband was reluctant to acknowledge the contributions of the wife. A further example is in opening his counsel suggested that the wife retained the proceeds of sale of her apartment ($66,243)
for her own use and benefit. However, she was not vigorously
or successfully cross-examined as to her claim that these funds went
to the joint benefit of the parties during the marriage and I prefer the wife’s evidence that she contributed this asset to the marriage.
Taking all of these matters into account on the basis of contributions
I am of the view that there should be a loading to the husband of 32.5 per cent or 82.5 per cent of the net pool of property to the husband and
17.5 per cent to the wife.
Section 75(2) factors
A major consideration at this point is the relative incomes, asset
and resources positions and earning capacities of the parties. Specifically, there is an issue as to the future earning capacity of the wife. At its highest, the husband argues that she should be able to use her professional qualifications and experience to the maximum
so as to achieve an income as a [omitted] up to an annual salary of approximately $120,000. The wife counters that she is limited by her health difficulties to working part time and in accordance with her current regime which brings her an income of something less than $50,000 per annum. In any event, and even at its maximum, the wife could not expect to achieve an income level even approaching that of the husband who on his own evidence currently has an income of approximately $450,000 to $500,000 per annum.It should be noted that the wife’s continuity of employment has been punctuated not just because of her health but also by her work on her PhD.
The wife claims that her work capacity is impacted by her suffering from clinical depression and an arthritic condition. She says the symptoms of her arthritis have been getting progressively worse over the past six months. The effect is prominent in her hands. She is changing from a manual to an automatic car and has difficulty typing. A deal of court time was occupied by evidence from experts. The husband’s counsel argued that the Court could not be satisfied that there was even a diagnosis of depression in the sense that the evidence adduced by the wife referred only to her therapy but that she provided no evidence of a forensic diagnosis. The difficulty with this argument is that the husband’s own witness, Professor M, also appeared to presume a diagnosis of depression. Given that I must consider all of the evidence before me in respect to such an assertion and that the standard of proof is one of “on the balance of probabilities” I am satisfied that the wife suffers from a condition generically known as depression or anxiety. The real issue for the Court is whether or not she is precluded from pursuing her employment and qualifications to their maximum remuneration by reason of this condition and/or her arthritis.
The wife relied on evidence from her general practitioner, Dr M, and a psychologist, Ms T, both in respect of the depression. There was evidence from Dr H, rheumatologist, in relation to that condition in the wife. Ms Christie herself gave evidence and was cross-examined at length as to her health. She says that she has been treated for arthritis since 2006 and for depression since 2007. She candidly indicated that, in her view, her depression was in part related to the breakdown of her marriage but had not yet resolved. It was put to her that the finalising of these property proceedings might assist in resolving that condition. She was reluctant to agree. The wife agreed that she was in full time employment in 2005. She was on sick leave for part of 2006 due to a hip operation but worked full time in 2007 even though she had by then on her account been diagnosed with depression. She agreed that she worked full time in 2008 but went on to part time work in 2009. The husband emphasised that also in 2009 the wife pursued her PhD studies and for these reasons reduced her employment hours. The wife agreed that in the three years of 2007 to 2009 she was overseas for a total of 17 months out of a 36 month period. The wife returned from overseas at the beginning of 2010 and went back to full time work but reduced again to part time in mid-2010, she says due to her medical conditions. The wife confirmed that she was prescribed and taking medication for her depression. She says that Dr M, her general practitioner, coordinates the treatment of her medical conditions generally. The wife says that her conditions and/or her medication cause her to suffer from side effects including severe fatigue, mental clouding, loss of coordination and blood in her urine. She now sees a different rheumatologist, a Dr Shackner. The wife gave evidence that she was now seeing yet another psychologist. That person did not give evidence.
Dr M gave evidence and was cross-examined. She impressed as an experienced and supportive general practitioner. She agreed that she had not made any diagnosis in respect of the wife and considered her task to be as a coordinator of an overall treatment plan. I did not get the impression of any forensic investigations having been undertaken by Dr M. Dr M candidly admitted that she did not have the skills to challenge Professor M’s view that Ms Christie’s condition would benefit by her returning to work. Overall, I was not assisted greatly in my task by the evidence of Dr M although quite clearly she provides counsel and support to the wife but unfortunately her evidence thus lacked some objectivity. After hearing Dr M’s evidence it appears that no actual diagnosis of “clinical depression” for Ms Christie has ever been made although unfortunately the therapists may have acted as if one had.
Ms T has in the main been the wife’s psychologist. She is in this sense a therapist. She concedes that she has not carried out any forensic diagnostic exercise as distinct from the forensic exercise conducted by the husband’s expert, Professor M. This does not, however, diminish the relevance of Ms T’s evidence as the success of Ms Christie’s therapy has assumed some importance in this matter. Rather, I simply see her evidence as being of a different type and different focus to that of Professor M. However, when Ms T uses phrases such as “suffering from major depression” she does so without any personal investigation or diagnosis. Indeed, Ms T agreed that such a diagnosis is properly the role of a medical practitioner. Ms T noted that in her opinion the stress of these current proceedings was a factor in Ms Christie’s condition and prognosis. She was of the opinion that an increase in the wife’s symptoms would result if she was required immediately to return to full time employment. She was unable to put any definitive time limit on her client’s return to full time work. In any event, Ms T confirmed that her evidence was essentially in the form of a “treatment report” and I gained the impression that she did not wish to commit to either a firm diagnosis or prognosis. In the witness box she presented as somewhat personally and professionally defensive when challenged as to her evidence and in particular when aspects of the evidence of the husband’s expert were put to her. In September 2010 Ms T reported to Dr M that Ms Christie’s symptoms were still in the severe range but that she was managing those symptoms better and starting to report some “symptom reduction”. Ms T described Ms Christie as “a perfectionist, a high achieving individual”. She agreed that some of the stressors for her client would be removed with the completion of these proceedings.
The husband adduced evidence from Professor M who swore an affidavit annexing his report on 21 December 2010. Professor M had consulted with the wife and, contrary to the role of Ms T, did so in order to provide a forensic report. There were some questions of Professor M as to his expertise. I am, however, satisfied that he has practised in his profession for many years and is well qualified to provide the forensic evidence he purported to give. His evidence was consistent, confident and at times even assertive. He did not attempt to give expert opinions outside of his field of expertise and generally his evidence was impressive and enlightening in respect of Ms Christie’s conditions.
Specifically he questioned the treatment plan provided for Ms Christie. For instance, he expressed his concern that she should be diagnosed with depression and treated for three years, including with medication, but with little discernable improvement. From this premise,
Professor M advanced his own preferred alternative treatment plan which interestingly involved Ms Christie re-entering the workforce on a full time basis. In this respect he found that Ms Christie was not a malingerer and that she presented as a well-motivated person. The inference that he draws, and asks the Court to follow, is that her treatment thus far has been unsuccessful and alternative options should have been considered. When challenged as to his expertise and opinion in this regard, Professor M proffered that he also has a PhD in psycho-pharmacology.Professor M was of the view that Ms Christie’s arthritic condition could also be assisted by her psychologist. He suggested that the best practice for a rheumatologist in such circumstances would be to work together with a psychologist. Professor M rightly noted that
Ms Christie’s rheumatologist, Dr H, was neutral in neither supporting nor discouraging a reduction in Ms Christie’s workload.Professor M had considered the reports from Dr H, Dr M and Ms T which were eventually put into evidence. The professor’s suggestion that Ms Christie return to full time work within a three month period was made with full knowledge of her attempts to return to the full time workforce in 2010 and her suggestion that she could not cope with this workload. The clear theme of Professor M’s treatment plan involving the wife returning to the workforce also relied upon the cooperative and coordinated involvement of all her treating professionals in devising a single health plan. When challenged as to his apparent criticism of Dr H’s treatment plan for Ms Christie’s arthritis,
Professor M was quick to respond that he was not saying that the treatment was “inappropriate” but rather that it was “inadequate” in that Ms Christie would benefit from a “full professional team”. Professor M would not concede that Ms Christie suffered from “recurrent major depression” or clinical depression. He preferred that she suffers from a generalised anxiety disorder. In summary,
Professor M advocated an early return to full time employment as a part of the wife’s treatment. He urged a psycho-social component to her pain management and a coordinated treatment plan in respect of both her conditions.
Professor M’s evidence and expertise were impressive and the probity of that evidence was of more assistance to the Court relative to the witnesses called by the wife. Further, Professor M gave evidence that he had suggested his treatment plan, involving the wife returning to the workforce within three months, directly to Ms Christie who had seemed enthused by the prospect, leaving the Court to ponder why it had not been put into place, given the wife’s work record, the fact that she is not a malingerer according to Professor M, and is also a highly motivated individual. The wife has impressive qualifications and impressed me in the witness box as a person confident in her own expertise and skills. I have little doubt that she will soon complete her PhD and that opportunities will open for her within academia. Overall I find some merit in Professor M’s suggestions and prognosis
and his evidence gives some confidence that Ms Christie may, properly assisted, be able to follow her career more productively.Nevertheless, even if she was to achieve the top range of the salary available to her as a [occupation omitted], she will not approach the earning capacity of Mr Gould.
I need also to consider the duration of the marriage and the effect that
it has had on the parties’ earning capacities. This was not a long relationship. It was not one that brought responsibilities for child care. Indeed, the fact and circumstances of the marriage assisted the wife
in bettering her qualifications so as to obtain her Masters degree which in turn has allowed her to achieve some renown in her particular field of [omitted] and potentially to increase her income.Whilst the husband’s qualifications will inevitably give him a greater earning ability than the wife, counsel for the husband argues that, in the circumstances of this relatively short relationship, there should be no adjustment for s.75(2) factors because the wife’s qualifications and experience will allow her to achieve an income which will permit her to support herself adequately. She also has the benefit of some accrued superannuation whilst the husband has none. In essence he argues that she can attend to her own needs.
The question for my consideration therefore is whether the obvious and substantial disparity in income-earning capacity per se should result
in a further adjustment in favour of the wife in a situation where I have found that the wife has real capacity for employment and that her potential income is likely to be sufficient to meet her reasonable needs. The more fundamental question is whether there must necessarily,
in all circumstances, be an adjustment under s.75(2) of the Act where there exists a disparity of income or income-earning capacity where the party seeking a positive adjustment is able to meet his or her own needs without such an adjustment. The wife argues that an adjustment should properly follow. The husband argues that such an adjustment is not necessary and should not be made in the circumstances of this case.
The relevant facts are:
a)
The wife has qualifications and capacity for employment which could give her an income potential up to $120,000 per annum
but realistically less than this figure. That is, whilst I have evidence of the top tier of income for an [occupation omitted], but there is no evidence that any position is readily available to
Ms Christie although successful completion of her PhD will qualify her for higher income level positions.
b)
The husband has an income capacity of at least $450,000
to $500,000 gross per annum.
c)The wife has some superannuation entitlements with a current value of $126,174 but with the prospect of that to increase from employer contributions. The husband has no superannuation.
d)
Pursuant to my determination on contributions, the wife will receive an award in dollar terms of $286,580. In real terms, however, her entitlement includes her superannuation entitlement ($126,174), the monies added back ($130,000) much of which has already been expended, her motor vehicle ($10,350),
the [omitted] boat ($750) and her bank account ($2,425) but also
her liabilities of $4,444. The husband would retain the unencumbered home. The wife currently owns no real property.
e)
The ability of each of the parties to pursue their careers and hence their earning capacity is not hindered by responsibilities
for caring for children.
f)
The wife has entered into a new relationship. However, there
is not evidence sufficient for me to find that that is a financially dependent relationship at this stage.
Whereas the factors under s.75(2) of the Act are positioned in the maintenance section of that legislation, it is no longer proper terminology or intent to use the terms “maintenance” or “needs” when considering the factors under s.75(2) in relation to adjustment and alteration of property interests. The Full Court in Collins and Collins[15] at [78,043] said:
[15] (1990) FLC ¶92-149.
Senior counsel 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”.
I understand the argument put before their Honours in Collins (supra) to be similar to that put by the husband’s counsel in the matter now before me. In his written final submissions counsel says:[16]
[16] At pages 19 and 20 of the aide memoir entitled Summary of Submissions.
Husband has greater earning capacity than the Wife yet the Wife’s current income is comparable to what she earned at the time of the marriage. There has been no financial detriment suffered by the Wife as a result of the marriage. On the other hand the move from Europe to Australia has had adverse financial consequences for the Husband.
…
It is submitted there are no s 75(2) factors requiring a financial adjustment in favour of the Wife. Alternately, the orders proposed by the Husband at paragraph 1 hereof sufficiently provide for the Wife by way of s 79(4) and s 75(2) considerations and the Court should make no further financial adjustment in favour of the Wife.
However, the Court in Collins (supra) rejected the argument before them at [78,043-5] and following:
In particular, we reject the submission of senior counsel for the husband that sec. 75(2) is referable only to a question of “financial need”. That confuses the exercise under sec. 79 (which includes sec. 75(2)) with proceedings for spousal maintenance under sec. 72-75. No doubt, as the Full Court in Branicki's case pointed out, there is a risk of overlap and trial Judges need to be cautious to avoid that. The sec. 75(2) factors within sec. 79 have an independent existence which is quite different from and separate from proceedings for spousal maintenance.
Therefore, s.79(4)(e) of the Act references specifically a consideration of adjustment or alteration of property in consideration of matters referred to in s.75(2) insofar as they are relevant. There are considerable and diverse matters for consideration and of varied relevance dependent upon the facts. The Court’s discretion is not conditional upon or limited by a party having to establish “need”.
As the Full Court stated categorically in Waters and Jurek[17]
at [82,388]:
… Shortly stated, if a trial Judge comes to a conclusion that where there is an imbalance in the income and or respective earning capacity of each of the parties, adjustment can be made in favour of one of the parties. This must be so if for no other reason than that any order which the Court makes under the provisions of s 79 must, in all the circumstances, be just and equitable.
[17] (1995) FLC ¶92-635.
Importantly, however, is that s.79(4)(e) enlivens discretion in the Court and one that must be exercised judicially. It follows that each matter will be considered on its own facts and it does not necessarily follow that there will be an adjustment to a party simply because of a lower asset holding or income capacity. Similarly, it is well established that the exercise of consideration under s.75(2) of the Act is not one
of social engineering so as to “even up” the positions of the parties after the considerations in respect of contribution.[18] As the High Court said in Mallet v Mallet[19] at [79,127]:
The objective of the section is not to equalise the financial strengths of the parties. It is to empower the Court, following
a dissolution of a marriage, to effect a redistribution of the property of the parties if it be just and equitable to do so…
[18] Waters and Jurek (supra) at [82,376] and Clauson and Clauson (1995) FLC ¶92-595 at [81,912].
[19] (1984) FLC ¶91-507.
Conclusion – section 75(2) factors
Whereas the husband argues for no adjustment on account of s.75(2) factors, the wife seeks an adjustment in her favour of 15 per cent of the net property pool. I am of the view that there should be an adjustment in favour of the wife, after consideration of the disparity in current and future income capacity.
In this matter, I take into account that the marriage endured over almost seven years. The wife made various contributions from her assets
at the commencement of the marriage and from her income during the marriage. However, after consideration of contributions alone, she
is not left in a strong asset position relative to the husband. His far superior income allows him to further develop his assets. The wife’s income and its potential do not give her the same prospects. In my opinion, disparity of income can assume greater relevance where
an alteration of contribution considerations alone does not result
in each of the parties leaving the marriage with a secure assets base. With emphasis on this consideration I consider an adjustment to the wife of 7.5 per cent of the net pool to be appropriate.
This will therefore result in an overall distribution of the net pool as to 75 per cent to the husband and 25 per cent to the wife. In dollar terms this gives the wife an entitlement of $409,512. She will retain the following:
Monies received (added back)
$130,000
Superannuation entitlements
$126,174
2003 [motor vehicle omitted]
$10,350
Bank accounts
$2,425
[omitted] boat
$750
[omitted] Bank visa card debt
($4,444)ooo
Total to be retained by the wife
$265,255
It follows that the husband must make a cash payment to the wife
of $144,257. Such an order will acknowledge the nature and length
of the marriage together with the various contributions of the parties and the relative financial positions of the parties moving forward from separation. The husband retains the home which is at this point unencumbered whilst the wife receives a cash adjustment. I am satisfied that such orders are just and equitable as required by s.79(2) of the Act.
The wife’s counsel in his final address properly conceded that she
no longer pursued her spousal maintenance claim and indeed the evidence during the trial did not address that issue in particular.
I certify that the preceding one hundred and fifteen (115) paragraphs are a true copy of the reasons for judgment of McGuire FM
Date: 18 November 2011
0