Hiette and Hiette
[2010] FMCAfam 379
•20 April 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| HIETTE & HIETTE | [2010] FMCAfam 379 |
| FAMILY LAW – Property – long marriage – weight to be given to Husband’s significant initial contribution – no add-back as a result of Wife’s post separation expenditure – consideration of parties’ life expectancy under s.75(2) when Husband 76 and Wife 63 years. |
| Family Law Act 1975 (Cth), ss.75, 79 |
| AJO & GRO (2005) FLC 93-218 Williams & Williams [2007] FamCA 313 |
| Applicant: | MR HIETTE |
| Respondent: | MS HIETTE |
| File Number: | ADC 3568 of 2007 |
| Judgment of: | Sexton FM |
| Hearing dates: | 10 & 11 December 2009; 18 & 19 February 2010 |
| Date of Last Submission: | 19 February 2010 |
| Delivered at: | Sydney |
| Delivered on: | 20 April 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms West |
| Solicitors for the Applicant: | Boylan Lawyers |
| Counsel for the Respondent: | Ms Lewis |
| Solicitors for the Respondent: | Johnston Withers |
ORDERS
Within 30 days of the date of these Orders:
(a)The Husband provide the Wife with a stamped executed Transfer in relation to the property situated at Property C, [W] being the whole of the land in Certificate of Title Register Book Volume [1] and the Wife transfer to the Husband the whole of her interest in the Property C home;
(b)The Husband provide the Wife with a stamped executed Transfer in relation to the property known as Property M being the whole of the land comprised in Certificate of Title Register Book Volume [2] and the Wife transfer to the Husband the whole of her interest in the Property M property; and
(c)The Wife provide the Husband with a stamped executed Transfer in relation to the property known as Block 51, Property H being the whole of the land comprised in Certificate of Title Register Book Volume [3] and the Husband transfer to the Wife unencumbered, the whole of his interest in Block 51.
Pending transfer, the Husband be responsible for all outgoings on the Property C and the Property M properties, and indemnify and keep indemnified the Wife in relation to those outgoings.
The Husband and the Wife shall forthwith do all things necessary to effect a sale of the property known as Property H being the whole of the land comprised in Certificates of Title Register Books Volume [3] using a real estate agent agreed between the parties or failing agreement within 7 days by an agent appointed by the Real Estate Institute of New South Wales at a price agreed between the parties and failing such agreement at a price to be determined by the President of the Australian Property Institute of New South Wales or his nominee, costs to be shared equally between the parties.
Upon the completion of the sale the proceeds to be distributed in the following order and priority:
(a)In payment of all legal costs, commissions, and agent expenses in relation to the sale;
(b)In adjustment of rates and other outgoings in accordance with usual conveyancing practice;
(c)In payment to the Wife of 42% of the balance;
(d)In payment to the Wife of $7,937.00; and
(e)In payment to the Husband of the balance.
The Husband retain absolutely as his property:
(a)The motor vehicles in his possession;
(b)Plant and equipment in his possession;
(c)The livestock held at the Property M property;
(d)The plant and equipment held on Block 52;
(e)The proceeds of any bank account in his name;
(f)Furniture and chattels in his possession; and
(g)The personal property in his possession.
The Wife retain absolutely as her property:
(a)The property at Property W, [W].
(b)The Stallion known as [C];
(c)Collectibles;
(d)Furniture and chattels in her possession;
(e)The red cedar chest of drawers;
(f)The proceeds of any bank account in her name;
(g)The superannuation entitlement in her name; and
(h)The personal property in her possession.
The Court notes
that the Husband agrees the Wife will take possession of the Shetland pony known as “[Z]” presently located at the
Property M property, upon providing the Husband’s solicitor with written confirmation from the owners of the pony that the owners consent to this arrangement.
The Wife provide to the Husband’s solicitor within 7 days all documents held by her relating to the pre-marriage period.
Except as otherwise provided in these orders, the Husband and the Wife remain liable for any debts, howsoever arising, in their own name at the date of these Orders and in this respect shall indemnify, keep indemnified and hold harmless the other from any liability in relation thereto.
In the event the Husband or the Wife refuses or neglects to comply with any of the Orders herein, the Registrar of this Court at its Adelaide Registry be appointed pursuant to section 106A of the Act to execute, in the name of the Husband or the Wife as the case may be, all deeds and instruments necessary to give effect to the orders herein, or any of them, and do all acts and things necessary to give validity and operation to the said deeds and instruments.
Leave to apply be granted in relation to the implementation of these Orders, such leave to expire within 6 months.
All exhibits tendered in these proceedings be returned at the expiration of one calendar month unless an appeal is lodged.
With the exception of any application for costs, all outstanding applications otherwise be dismissed and the matter removed from the list of cases awaiting finalisation.
IT IS NOTED that publication of this judgment under the pseudonym Hiette & Hiette is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
ADC 3568 of 2007
| MR HIETTE |
Applicant
And
| MS HIETTE |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties separated in September 2005 after a 25 year marriage and seek a determination as to their property entitlements. There are no children of the marriage, although [X], the Wife’s son from a previous marriage lived with the parties for 4 years when a teenager.
The Wife seeks approximately 45% of the net asset pool. The Husband seeks 60% of a larger pool which includes an add-back on the Wife’s side because of her post-separation expenditure. In the event the add-back is not included in the pool, the Husband seeks a slightly higher percentage to take account of the Wife’s higher expenditure post-separation, some of which the Husband claims was unreasonable.
The significant issues for determination include how the Husband’s initial contributions should be assessed given the length of marriage and the extent of the Wife’s other contributions, and how the Wife’s post-separation expenditure should be treated.
The Wife is 63 and the Husband 76 years of age. They have both retired. The parties started living together at the date of marriage in September 1980 on a property owned by the Husband. They operated a farming business for the majority of their marriage on that property. The parties separated in September 2005 and divorced in 2007. Each party now lives in [W], the Husband in the former matrimonial home, purchased after the sale of the farm in March 2003, and the Wife in a home she purchased in her own name after separation. Each party relies on a government pension for support.
Credit issues
I found the Wife an honest witness who endeavoured to recall details accurately and who appropriately acknowledged matters which were against interest. The Husband is hard of hearing which may have contributed to his difficulty responding directly to questions. The Husband made derogatory comments about the Wife on several occasions during cross-examination and only reluctantly conceded the Wife made meaningful contributions of any kind during the 25 year marriage. I found his attitude unhelpful and unjustified. I do not however, make a general finding that whenever there is a factual difference between the parties, the Wife’s evidence should be preferred over that of the Husband.
Issues
The approach to the determination of an application under section 79 of the Family Law Act 1975 is well established by authority[1] and in this case, involves consideration of these questions:
a)What were the assets, liabilities and financial resources of the parties and their values at the time of hearing?
b)What were the financial and non-financial contributions made directly or indirectly by or on behalf of each party to the acquisition, conservation or improvement of the property of the parties?
c)What was the contribution made by each party to the welfare of the family including contributions made in the capacity of homemaker or parent?
d)What is the effect, if any, of any proposed order upon the earning capacity of each party?
e)What matters referred to in sub-section 75(2) of the Act are relevant and what adjustment, if any, should be made as a result of these factors?
f)After consideration of these matters, is it just and equitable to make the actual orders?
What were the assets, liabilities and financial resources of the parties at the time of hearing and their values?
[1] In the Marriage of Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595; Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143
The parties agree on the value of the assets held by each of them at the date of hearing and have no liabilities apart from outstanding legal fees. The only superannuation is held in the Wife’s name and is accessible to her. The parties agreed to exclude the modest proceeds of their bank accounts and to add paid legal fees to the pool of assets[2]. At the end of the hearing, the parties agreed to take $2,500 each from the superannuation funds and to also add those funds to the pool.
[2] NHC & RCH [2004] FamCA 633
The add-back. The only contentious issue in relation to the balance sheet is whether $45,000, or some other amount, should be included in the pool available for distribution, as a result of the Wife’s expenditure of joint funds after separation.
It is common ground that the Wife had sole access to the majority of the parties’ liquid funds after separation. The Husband’s counsel contends that the Wife spent most of those funds on herself, well beyond what was reasonable. Counsel submits that an amount of approximately $45,000 has not been explained and therefore that sum should be “added back”. The Wife’s counsel denies the Wife’s expenditure was outside the ambit of “reasonable” and relied on the evidence of her expenditure in the Wife’s affidavits. However, during the course of the hearing the Wife prepared a more detailed schedule of her post-separation expenditure which became Exhibit 4.
It is common ground that the wife had sole access to the majority of the parties’ funds after separation, because after the sale of the Property H property in 2003, the parties had invested approximately $330,000 into a superannuation account in the Wife’s sole name. On the Wife’s case, this arrangement was made to ensure the Husband was eligible for an age pension. At the date of separation, the parties agree they held $328,553 in superannuation in the Wife’s sole name. Until the date of hearing, the Wife had sole access to those funds in addition to an amount of $18,000 accumulated in interest in the fund, $45,000 in a Term Deposit, $464 in a bank account and $5,000 which she withdrew from the Husband’s account shortly before separation. The Wife therefore had exclusive access to approximately $397,000 cash, and also received a widow’s pension. At the time of hearing she had $17,000 remaining from that $397,000. From the date of separation, the Husband had sole access to the balance of his bank account in the sum of approximately $47,000, in addition to the age pension.
Using the funds I have referred to, the Wife bought the property in which she is living at Property W, [W], paid legal fees for herself and for the Husband, undertook minor improvements on her new home and purchased furniture, whitegoods and other items for the home. The Wife paid half the council rates on the former matrimonial home in Property C, and for Property M, until a year before hearing. She otherwise used the funds to meet utilities and to meet usual living expenses. In Exhibit 4 the Wife set out, item by item, how $380,200 of those funds has been applied.
The Wife’s counsel contends that after separation, the Husband sold a semi-trailer, horses, sheep and farm equipment and retained the proceeds without disclosing the sales or the sale proceeds in his affidavit material, and without accounting to the Wife. The Husband conceded he had done so. The Wife’s counsel also drew the Court’s attention to the difference of over $60 a week in each party’s pension entitlement.
As the Full Court said in Essex & Essex[3] the principles relating to when an expense should be “added back” have been comprehensively discussed in a number of Full Court decisions[4].
[3] [2009] FamCAFC 236 at paragraph 31
[4] NHC & RCH [2004] FamCA 633, AJO & GRO (2005) FLC 93-218 and Gollings & Scott (2007) FLC 93-319.
The Full Court in AJO & GRO (2005) FLC 93-218 referred to three categories of cases where it is appropriate to notionally add back to the pool of assets. They are:
(a) Where the parties have expended money on legal fees [DJM and JLM (1998) FLC 92-816];
(b) Where there has been a premature distribution of matrimonial assets [Townsend and Townsend (1995) FLC 92-569]; and
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092.
The Full Court in NHC & RCH [5]cited with approval a passage from the Full Court decision of C & C[6] which stated:
Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. (C & C [1998] FamCA 143, 8 October 1998, per Nicholson CJ, Ellis, Kay JJ.)
[5] [2004] FamCA 633 at paragraph 24
[6] [1998] FamCA 143
In Gollings & Scott[7], the Full Court said:
…it would not normally be appropriate some years after separation to require each of the parties to account for any monies they had spent post-separation so as to determine whether or not that expenditure was reasonably necessary for their own self-support, and to the extent that it was not, to determine whether it would be proper to add it back into the pool of assets available for division between the parties.
[7] (2007) FLC 93-319 at paragraph 68
In Essex & Essex[8], the Full Court said:
Questions of how a Trial Judge should deal with so called “add backs” and/or premature distribution of assets, regularly arise in cases under s.79 and are often the subject of grounds of appeal. Often the amounts are minor when compared to the overall property in issue and the time taken and costs involved to agitate the claims both at first instance and on appeal, lack proportionality. Trial Judges are correct to deal with such claims robustly in the broad exercise of their discretion under s.79.
[8] [2009] FamCAFC 236 at paragraph 30
It is clear from the authorities that the Court is not required to undertake an audit of the Wife’s expenditure. However, I have examined the contents of Exhibit 4 and find no evidence of waste or extravagance. I also accept that, with the exception of large capital items, the Wife cannot be expected to explain how she has applied every dollar over a 4 year period[9], although I applaud her attempt to do so. In final submissions, the Husband’s counsel was unable to refer to evidence to satisfy me that the Wife had been wasteful or that she had prematurely distributed assets in accordance with the principles in Townsend[10]. The Husband’s counsel was also unable to provide a cogent explanation as to how she came to the figure of $45,000.
[9] Edgehill & Edgehill [2007] FamCA 1102
[10] (1995) FLC 92-569
I therefore reject the Husband’s counsel’s contention that there should be an add-back of $45,000, or any other amount as a result of the Wife’s post separation expenditure.
Red cedar chest of drawers. This item is in the possession of the Wife and has not been valued separately from her other contents. The Wife would like to keep the chest of drawers. The Wife says it was owned by the Husband’s grandmother, the Wife restored it and the Husband gave it to her during the marriage.
Shetland pony known as “[Z]”. The pony has been in the possession of the Husband on the property known as “Property M” for the past 3-4 years. The Husband says the pony is owned by a neighbour whose son comes to visit the pony most evenings. The Husband offers free pony rides from time to time. The Husband does not object to the Wife taking the pony on condition she provides him with written verification that the owners have no objection to the change in arrangements.
Horse known as “[S]”. In her oral evidence in December 2009, the Wife said she would like the Husband to transfer to her the horse called “[S]”. Between that date and the hearing dates in February 2010, the Husband disposed of the horse without reference to the Wife.
I find the assets of the parties available for division between them to be as identified in the following table:
| Assets and liabilities at the date of hearing | $ |
| Property C, [W] (joint) | 350,000.00 |
| Property M (land with stables)(Joint) | 140,000.00 |
| Property W, [W] (W) | 250,000.00 |
| Allotment 51 Hundred of Property H (H) | 77,000.00 |
| Allotment 52 Hundred of Property H (H) | 72,000.00 |
| Nacos account (H) | Negligible |
| Nacos account (W) | Negligible |
| Household contents including Nissan Pulsar (W) | 13,820.00 |
| Items in Wife’s possession (W) | 6,630.00 |
| Farming equipment at Property M property (H) | 11,900.00 |
| Household contents incl Falcon utility, boat, farm equipmt (H) | 24,785.00 |
| Husband’s paid legal fees (add back) | 39,982.00 |
| Wife’s paid legal fees (add back) | 36,276.00 |
| Wife’s superannuation entitlement in [omitted] Super Fund | 12,245.00 |
| Amount distributed to parties from Super Fund at end of hearing | 5,000.00 |
| TOTAL NET ASSET POOL | 1,039,638.00 |
Approach to the question of contributions
The court must consider all the contributions, both financial and non-financial to the acquisition, conservation and improvement of the parties’ assets as well as to the welfare of the family before and after separation. The court must consider the contributions in an overall sense[11]. The Full Court has held that it is not necessary for the Court to justify its decision in property cases by reference to precise mathematical calculations, but rather a broad approach is preferred[12]. The Court is required to undertake an evaluation of each party’s respective contributions[13].
[11] Norman & Norman [2010] FamCAFC 66; Hickey & Hickey & Attorney General for the Commonwealth of Australia (2003) FLC 93-143; Kowalski and Kowalski (1993) FLC 92-342; G & G [2000] FamCA 1075
[12] In the Marriage of Burke (1981) FLC 91-055
[13] JEL & DDF (2001) FLC 93,075
Neither counsel asked me to deal with this matter on an asset by asset basis. Given the long period of the marriage, I have adopted the global approach. In Norbis and Norbis[14], the High Court held that either approach is legitimate but also said:
… there is much to be said for the view that in most cases the global approach is the more convenient.
[14] (1986) 161 CLR 513
Although the parties had been separated for 4 years by the time of hearing, the authorities make it clear there is no requirement on the Court to separately assess matters occurring after separation in arriving at an assessment of contributions[15]. I have chosen to give separate consideration to the parties’ contributions both during cohabitation and during the period after separation and then to assess each party’s contribution entitlement overall.
Contributions during the marriage
[15] Sippel & Sippel [2004] FamCA 201
Initial contributions
At the date of marriage in September 1980, the Wife had assets with a value of approximately $8,000, while the Husband owned substantial assets. These included:
a)An unencumbered leasehold property near [H] (which later became freehold) with a homestead built in 1960, on which he operated a crop and livestock business. That property included Blocks 51 and 52 which are included in the asset pool;
b)Farm plant and equipment including 5 tractors, 2 wide-line seeders, two headers, a 4-wheel drive, 2 other cars, field bins, caravan, cattle trailer and shearer plough. According to the balance sheet for the 1980 financial year, the farming business [excluding land] had net assets of $75,250[16];
c)Bank proceeds;
d)An unencumbered property at [L] which the Husband had purchased 20 years before marriage and later renovated; and
e)A speed boat and two cars stored at [L].
[16] Annexure 1 of husband’s affidavit sworn 29 July 2009
At the date of marriage, the Husband was an experienced farmer. He started working on the Property H property, a cropping and livestock property, when aged 13 years after his father suffered a serious back injury. The property had been owned by the Husband’s grandfather and his own father before him. The husband and his brother purchased the property from their parents in 1956 for 10,000 pounds and ran the business together. They bought additional tractors and built a homestead in 1960. The husband’s brother was killed in a car accident in 1965. The Husband inherited his brother’s share of the farm and continued operating the farming business with an employed farmhand and casual workers. The Husband increased the cropping area to 4,000 acres by clearing 3,000 acres of scrub. The Husband was debt free at the date of marriage.
There was some dispute as to the value of the Husband’s cash at bank at the date of marriage. While the Husband deposed to having $130,000, the wife claimed the balance was considerably less. While I am unable to make a precise finding as to the balance of each of the Husband’s bank accounts at the date of marriage by examining the bank account statements attached to his affidavit[17], I accept the Husband held substantial funds. His Adelaide Bank account alone held $41,000 in September 1980. As it is common ground that the bank balance for the farming business fluctuated throughout the year, I am not persuaded anything turns on the precise balance of the Husband’s savings at this time.
[17] Annexure to husband’s affidavit sworn 29 July 2009
The parties were unable to reach agreement as to the value of the Property H property as at 13 September 1980, the date of marriage. Each party retained a qualified valuer to prepare a report and the valuers conferred during the course of the hearing, before both were cross-examined.
The authorities require the Court to apply proper principles when arriving at its own value. The Court must consider all relevant evidence in the circumstances of the particular case. The High Court explained the correct approach to be applied to a valuation dispute in The Commonwealth v Milledge (1953) 90 CLR 157[18]:
… by a commonsense endeavour, after consideration of all the material before the court, to fix a sum satisfactory to the mind of the court as representing the value contained in the land…
[18] At 162
In his report, Mr D for the Husband based his valuation of $405,000 on the sales of 8 properties all sold after the date of marriage, between 1981 and 1984. He had regard to the two grades of cropping land and to the improvements which, given the type of operation being undertaken on the property, he accepted were in reasonable condition. He assessed the property to have a value of $160 per hectare arable improved (or $65 per acre) or $96 per hectare ($39 per acre) overall. He said in his report:
Historical sales evidence for the marginal farming districts throughout Eyre Peninsula have been searched over the period 1979 to 1984. In particular, sales in the District Councils of [omitted] have been listed, as these council areas have similar agricultural traits.
At the end of cross-examination, Mr D concluded that the property had a value in September 1980 of between $350,000 and $400,000. By then, he had discussed the valuation reports with Mr N and had considered another two properties likely to have been sold at almost the same time as the parties’ marriage, as well as the comparable sales relied on by Mr N.
In his report, Mr N for the Wife came to a figure of $170,000 based on the sale prices of three properties between May 1979 and February 1980. At the end of cross-examination, having discussed the valuation reports with Mr D, Mr N concluded that the property had a value of $240,000 in September 1980.
I accept Mr D’s evidence as to value because:
a)He has extensive experience valuing properties in the [H] region (situated on Eyre Peninsula). He has worked and lived in the region for 30 years. For 20 years he worked for the Valuer General and was involved in the rating and taxing valuations for the local councils on the Eyre Peninsula. He drives past the subject property every time he drives along the main road from Adelaide to [omitted], as the main road dissects the property. I accepted his evidence when he said “I have a very good understanding of that area in terms of its agricultural ability.”
b)Mr D compared properties sold at almost the same time as the date of the parties’ marriage. In oral evidence, he referred to two properties he became aware of after he had prepared his report, which sold in February 1981. Those properties had sale prices of $82.99 per hectare and $97.56 per hectare. He said it was common for farm sale contracts to be signed between September and November 1980, and not settled for several months, sometimes longer. He therefore believed that the sale prices for these two properties were probably negotiated in or around September 1980, the precise time of the parties’ marriage.
c)Mr D gave careful consideration to the comparable properties relied on by Mr N to arrive at the figure in Mr N’s report of $42.30 an acre for the subject property. Mr D explained that one of them, the [A] property, sold in February 1979, closest in time to the relevant date, at $42.30 per hectare, was new country which would have taken a number of years to reach the standard of the well established subject property. I accept his view that this would result in a lower value. He also said that any property that was purchased prior to 1985 with a significant amount of vegetation would have been purchased with the intention of clearing. In 1985 the laws changed to prevent clearance, but in 1980 scrub land had a market value, a factor not taken into account by Mr N.
d)Mr D demonstrated appropriate caution in giving a $50,000 range in his valuation figures. I accept his evidence that it is extremely difficult to fix on a figure with so few sales to compare. He said there were only a few properties sold in the region in the relevant price range. Mr D considered the data for the whole of Eyre Peninsula because he says the area from [E] to [H] is “four bag” farming country, (amount per acre that can be grown) like the subject property. Around that time $400,000 was a figure paid for land not uncommonly on the Peninsula. He said given its history (owned by 3 generations) the property would have been easy to sell as it was “a good rural holding for that area” at that time. He said $350 to $400,000 is a fair figure because “you could pick any number of figures”. Mr D said in his report:
Value trends for the greater Eyre Peninsula region shows increasing value levels over the period 1980 to around 1985 when the peak was reached, followed by a decline.
Sales of rural land in the periods 1981 to 1984 would give a reasonable indication of the 1980 value levels, taking into account the increasing value trends.
e)Mr N conceded that Mr D has superior experience in relation to valuing properties on Eyre Peninsula at the relevant time. After conferring with Mr D, Mr N accepted the valuation figure in his report of $170,000 should be increased to $240,000 for reasons raised by Mr D. These included his advice about improvement in the market from 1980 to 1985 and about the practice at that time of valuing scrub land.
f)Mr N considered sales of 3 properties sold in May 1979, July 1979 and a property at [A] sold in February 1980, well before the date of the parties’ marriage. He reports that between 1979 and 1980, the value of land was approximately $42 per hectare. He identifies one sale which occurred 5 months after the date of marriage at a sale price of $97 per hectare but nevertheless, assesses value based on the $42 per hectare. I found his logic difficult to follow.
g)I found Mr N to be defensive and rigid in his approach to the figure of $240,000 without adequate explanation. He declined to explain why the Court would not have careful regard to the properties, referred to by Mr D, which sold in February 1981 for a price per acre of between $82 and $97. Without explanation, he was not prepared to apply the general rule, which he accepted, that farming properties frequently have settlement periods of several months after a sale in the spring/summer period and that the sale prices for properties sold in February 1981 are likely to have been negotiated at almost the precise time of the parties’ marriage. Mr N was not prepared to consider at all properties with similar agricultural traits sold across Eyre Peninsula in 1980.
I am satisfied that the approximate value of the Husband’s Property H property in September 1980 was $350,000- $400,000. However, as each party’s counsel conceded, the precise value of the property at that time is not critical to the outcome of this case.
In the recent decision of Cabbell & Cabbell[19] the Full Court affirmed [20] that given the wide discretion exercised under s.79, there is “no formula…which prescribes how a court should deal with initial contributions in cases of property adjustment.” The Full Court then referred to the comprehensive discussion in Pierce[21] as to the weight to be afforded to initial contributions, in particular at [28], where the Full Court said:
In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the Husband and the Wife. In considering the weight to be attached to the initial contribution, in this case of the Husband, regard must be had to the use made by the parties of that contribution.
[19] [2009] FamCAFC 205
[20] At paragraph 42
[21] (1999) FLC 92-844 at 85,881
The Full Court in Cabbell then highlighted the need to identify all the relevant contributions and assess them, and reaffirmed the principles set out in Williams & Williams[22],where the Full Court said[23]:
We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties.
[22] [2007] FamCA 313
[23] At paragraph 26
It is common ground in this case that the parties lived on the
Property H property for 23 of their 25 years of marriage and (with the exception of government entitlements at one stage) the farming business was their sole source of income during the marriage. The parties sold the farm in 2003 for $715,000, but retained Blocks 51 and 52 which have an agreed present total value of $149,000. In addition, the parties received substantial funds from a legal claim, from the sale of wheat and barley shares and from the sale of horses, plant and machinery. These funds were realised as a result of the farming enterprise. As well, I find it significant that the parties purchased only one significant item of farm machinery during the marriage, a second hand header in 1984, undertook limited maintenance on the homestead, and therefore the farm retained its character from the date of marriage until the date of its sale.The Husband’s counsel contends that the Property H property was the springboard upon which the parties accumulated almost all of the assets existing at trial. In addition, the Husband sold the property at [L] in 1990 for $42,500 and the proceeds of the sale were invested in the farming business. Counsel submits the Husband should receive a 10% adjustment as a result of his initial contributions. However, the Wife’s counsel submits that when the Court weighs, as it must, all the other contributions made by the parties during the 25 year marriage, the Court should come to the view that the Husband’s initial contribution has been largely eroded by the Wife’s contributions over 25 years. Counsel submits as a result of his initial contributions, the Husband should receive a maximum adjustment of 5%.
Other contributions
From 1980 until the Property H property was sold in 2003, the Husband undertook the majority of the manual work involved in running a crop and livestock farming business and a [omitted] enterprise. The parties had a mutual interest in harness racing and kept horses on the property.
The Wife acknowledges that the Husband worked physically hard from dawn until dusk each day but says she did the same. She says “it was not an easy lifestyle”. The Wife says she used to feed the horses morning and night for most of the year and worked the horses with the Husband. She cleaned harnesses and helped prepare the horses for race days and harnessing. She says she helped the Husband repair machinery, build a shed, a large horse and sheep yard, to load and unload grain bins, and to put in fence posts. The Wife looked after the poultry including up to 150 turkeys. In addition, she looked after the house, did all the washing (by hand with an electric ringer), did all the cooking and maintained the homestead without assistance from the Husband.
The Husband had difficulty acknowledging the Wife’s contributions though conceded under cross-examination that the Wife helped feed the horses morning and night, was involved in raising the poultry and assisted with maintenance work on the farm. He asked the Court to accept that the Wife spent a great deal of her time working on her paintings. The Wife said she enjoyed painting and spent about 30 hours a year completing 2-3 paintings, usually when the Husband was watching football on television or attending an auction sale. I accept the Wife’s evidence as to her contributions to day to day life on the property.
When the Wife moved to the Property H property at the time of marriage, she brought her son [X], then aged 12 years, to live with the parties. It is common ground that [X] lived with the parties and went to school for 4 years, and that, without assistance from [X]’s father, the parties financially supported him. The Husband says, and the Wife agrees, that they paid [X]’s orthodontic fees, books, school expenses and sporting expenses. However, the Wife deposes to [X] working up to 40 hours a week on the farm outside school hours, doing maintenance, chopping wood, and sometimes driving a tractor until 11 p.m. at night without pay. The Husband denied the Wife’s son did more than minimal work on the farm and says he received wages for the work done. However, in cross-examination, the Husband did not seriously challenge the Wife’s claim that there were only four book entries in the farm accounts showing payments to [X], a total of $320.
From June 1981, the Wife says she undertook the book-keeping responsibilities for the farm. She said she knew little about book-keeping when she started, and at first used to enter the cheque numbers and payment details only. She said her expertise improved over time until she was managing the accounts, negotiating with banks in relation to refinancing, undertaking horse registrations, foaling notifications and share farming agreements. The Husband deposed to the Wife doing the farm books from 1984, though acknowledged in cross-examination that she started doing the book entries earlier. It is clear from Annexure 6 to the Husband’s Affidavit of 29 July 2009 that the writing in the farm accounting books changed from June 1981. As time went on, the Wife said she did almost all the administrative work for the farm, as well as the parties’ personal administration. I am satisfied the Wife took over the data entry for the farm accounts in June 1981, and from that time, took responsibility for the book-keeping and general administration.
From 1983 to 1984, the Wife’s father lived on the farm for a period of many months. The Husband says he occasionally did some maintenance around the farm, or chopped wood, but was well paid for his limited efforts at $60 a fortnight and lived with them free of charge. The Wife said her father was a big help around the property.
I formed the view that the Husband understated any contributions made by the Wife or members of her family, when, in cross-examination, in response to specific questions about their contributions, the Husband reluctantly made concessions. I therefore prefer the Wife’s evidence on these issues to that of the Husband.
In 1984, the parties bought land known as Property T for $140,000, of which 2,900 acres were arable. It also had a homestead in which a sharefarmer could live. The parties had decided to enter into share farming agreements which typically involved the Husband supplying seed, superphosphate and land to the sharefarmer for them to farm. The proceeds of the harvest were then shared equally between the sharefarmer and the parties. The Husband said it was usual for the sharefarmer to crop 2,000 acres while he cropped the same. The cropping areas were rotated and sheep were put on the uncropped land.
It is common ground that the farming business had good and bad financial years during the parties’ marriage. However, it is the Wife’s case that the farming business was on the point of financial collapse at different times, particularly between 1999 and 2001 and at times a forced sale of the property seemed inevitable. The Wife contends that had it not been for her ability to negotiate the parties’ financial arrangements with the banks and other creditors, and had she not obtained loans from her sister and son, the farming business would not have survived and the property would have been sold, well before its date of sale in 2003.
The Husband says the Wife has exaggerated the financial difficulties the parties faced as the parties always held assets well in excess of their debt level and obtaining finance was never a serious problem.
Exhibit 6 is an agreed schedule of the parties’ liabilities from the date of marriage until June 2002 and Exhibits 1 and 3 contain correspondence between financial lenders and the parties about loan arrangements. I am not satisfied this evidence confirms either party’s position although I find the Wife’s position more accurate than the Husband’s. It is clear the parties were under significant financial pressure at different times, particularly in the 1999 – 2002 period, but I am not persuaded the position was so dire that the banks were about to foreclose. Certainly, pressure from the lenders led to the parties’ decision to sell Property T in October 2001. However, there is no evidence of a Notice of Demand being issued. The most threatening letter from the Bank came in February 2000 when the ANZ Bank said:
…the bank is in a position to commence legal proceedings and reserves all rights… The Bank is not prepared to wait indefinitely for a property sale to clear debts..
In my view, this does not diminish the importance of the Wife’s contribution in using her skills to keep the lenders on side and to negotiate extensions of time for payment when that was necessary. I also accept that the Wife’s sister’s loan of $5,500 to the parties in 1999 and the Wife’s son’s investment in the share-farming crop in July 2001 of $9,000 were significant contributions on the Wife’s side when the funds were much needed by the parties.
I do not accept the Husband’s position that the parties had a number of options for borrowing money. When the parties’ debt level reached over $200,000 after 1999, and the crop failed, I am satisfied the Wife would have been very concerned about how they were going to manage. The Wife says, and I accept, that in or about 2000/2001 the parties approached all other banks and two credit unions to obtain finance, unsuccessfully. The Wife then opened a Narcos account so the bank could not take every dollar of their income. I find that the Husband was relying heavily on the Wife at that time to keep the lenders off his back. The Wife says, and I accept, that the Husband would turn up the radio or leave the house in his truck, to avoid talking about their financial difficulties and options for resolution. I accept the Wife’s evidence that the Husband had his head in the sand, and would say “I’m not here” and refuse to speak to the bank manager.
It is the Wife’s case that her dealing with the banks, obtaining deferments on loans and arranging finance saved the farm and that her contribution in this way should largely offset the value of the Husband’s initial contributions. While I accept the significance of the Wife’s contributions, I am not satisfied they diminish the value of the Husband’s initial contributions to the extent sought by the Wife.
In March 2003, the parties sold the main property for $715,000. They retained Block 51, and as a result of an arrangement with the new owners, the parties were able to retain a subdivided Block 52. At the time of its sale, the financial records of the business show the farm recorded a net operating profit of $110,753 and had net assets (excluding land) of $159,551[24]. The parties made additional money from the property when they sold approximately 60 horses for a sale price of over $15,000 and farming equipment for over $14,000, received a final payment from the Australian Wheat Board of $6,730 and in September 2003 and early 2004 received over $100,000 from legal proceedings concerning the failure of a crop. A year or so later, the parties sold ABB shares for $49,940.
[24] Annexure 2 to husband’s affidavit sworn 6 August 2009
In April 2003, the parties were in a position to give the Wife’s son $10,000 and to buy a utility for nearly $30,000.
In April 2003, the parties purchased the property at Property C, [W] for $110,000. The property has markedly increased in value. In 2004, the parties bought two vacant blocks at Property M for $25,000. The Husband’s counsel submits that the Husband alone selected these properties and should receive credit for their marked increase in value, particularly as the property in Property W selected by the Wife, has had a very small increase in value since its purchase.
I do not accept the Husband’s counsel’s submission. While the Husband may have initiated the inspections, I accept the Wife’s evidence that she was involved, that she was also keen to find a property for the horses and that both properties were purchased in joint names.
The Wife complains that the Husband was verbally abusive and at times threatening. She complains the Husband drank alcohol to excess on a daily basis. However, the Wife does not adduce evidence to link the Husband’s conduct with her contributions in such a way that I can take these issues into account in a financial sense[25].
[25] Kennon v Kennon (1997) FLC 92-757
Contributions after separation
The parties separated in September 2005. The Wife says she took “what was important to me” at the time of separation which included collectibles, ornaments, a few items of furniture and painting supplies. After separation, the Husband remained living in the former matrimonial home at Property C, [W]. The Wife relocated to rental accommodation until she purchased the property at Property W in November 2006. The Husband had exclusive use of the Property M stables by locking the Wife out, and later had exclusive use of the two blocks of land known as Blocks 51 and 52.
The parties had retired. The Husband was already on the aged pension. Shortly after separation, the Wife received a widow’s pension from the Government. The Wife has a lower rate of pension than the Husband.
As earlier noted, at the date of separation, the wife had sole access to the majority of the parties’ cash assets because after the sale of the Property H property in 2003, they had invested $330,000 into superannuation in the Wife’s sole name. At the date of separation, the parties agree the Wife had exclusive access to approximately $397,000. At the time of hearing she had a balance of $17,000 from that $397,000. At separation, the Husband had sole access to the balance of his bank account in the sum of approximately $47,000.
As already noted, considerable time was spent at hearing on how the Wife applied the Funds exclusively available to her. It is common ground that the Wife used the funds to buy the property at Property W, to pay legal fees for herself and the Husband, to purchase furniture and whitegoods and to undertake improvements on her home at a cost of $20,555. The Wife also paid half the council rates for the Property C property and for a number of years for Property M. She bought a car and used the remainder on living expenses, including seeing a psychologist.
The Husband had $47,000 in his account at separation which he used for living expenses he was unable to meet on his pension. In addition, the Husband acknowledged selling the parties’ semi-trailer, horses, sheep and other farm equipment without accounting to the Wife. The Husband also bought a tractor for $6,000, a trailer and a television set. The Wife’s counsel highlighted a number of cash transactions from the Husband’s account which the Husband had difficulty explaining.
The Wife set out in detail during the hearing every item of expenditure she could verify from documents since the date of separation. She shows expenditure of $380,000 as at October 2009. As already noted, I do not find the Wife’s expenditure excessive.
Assessment of contributions
The Court has a discretion as to its assessment of each party’s contributions including the weight to be given to the Husband’s initial contributions.
The Husband’s counsel submits that the Court should make an adjustment in the Husband’s favour of at least 10% for his initial contributions. Counsel does not otherwise suggest that the parties’ contributions should not otherwise be assessed as equal. As already noted, the Wife’s counsel submits that any adjustment the Husband might have received should be substantially offset by the Wife’s contributions during the marriage, particularly given her responsibility for dealing with the parties’ financial lenders during periods when cash flow from the farming business was so poor. In final submissions, the Wife’s counsel submits that the Husband should receive, at most, a 5% adjustment in his favour for initial contributions, and that otherwise each party’s contributions should be assessed as equal.
As already noted, I accept the Husband’s counsel’s submission that the Husband’s initial contributions provided the springboard for the creation of the vast majority of the parties’ current assets. While, as I have detailed, I am satisfied the Wife has made significant contributions during the marriage, on a weighing of the factors I have referred to, I am satisfied the Husband should receive an adjustment on contributions of 9%.
What is the effect, if any, of any proposed order upon the earning capacity of each party?
This factor does not apply.
Section 75(2) factors
The Wife is 63 years and the Husband 76 years. Neither party has any dependents. Each relies on a government pension for support though the Wife’s pension at $500 a fortnight is currently lower than the Husband’s at $672 a fortnight, a difference of $4,472 a year. The evidence does not disclose on what basis her pension would increase. I accept the Husband’s evidence as to his weekly expenditure and find he is very frugal. I accept the Wife spends more than the Husband week to week but nevertheless I am satisfied her expenses are modest. I make no adjustment as a result of these factors.
The Husband deposes to enjoying excellent health. The Wife says she suffers from depression and requires ongoing psychological treatment which is costly. She says, except for a foot injury, she is otherwise well. The Wife does not adduce any medical evidence or independent evidence as to her need for treatment. I make no adjustment for this factor.
According to the life expectancy tables[26], the Wife is likely to live another 23 years, and the Husband another 10 years. The Wife’s counsel submits the Wife should therefore receive an adjustment on the principle in Lawrie and Lawrie[27]. The Husband says there should be no adjustment given neither party intends to pursue future employment. In Lawrie’s case, the Full Court said[28]:
It is appropriate, and in my view, necessary to consider the relative future needs of the parties in determining what is a just and equitable order under s.79. Where there is a significant disparity, that would ordinarily be reflected in the orders. This is frequently a result in cases of a more unusual type. Further, where in any case it is clearly established that the future financial needs of a party will terminate (or perhaps significantly diminish) upon the happening of a definite future event, it is proper to take that into account… A number of examples of that readily spring to mind. The weight to be given to that will obviously vary from case to case.
[26] Tables 7 and 8 of Australian Life Tables 2005-2007 – CCH Australian Family Law Handbook
[27] (1981) FLC 91-102
[28] At 76,750
In Lawrie, the asset pool was small, the Husband had terminal cancer and he had a life expectancy of approximately 6 months. In S v P [29], the Full Court affirmed the principle in Lawrie:
We consider that the approach adopted by the majority of the Full Court in Lawrie’s case is correct in principle. However, each case must ultimately be decided on its own particular facts and the conclusion is ultimately an exercise of discretion within s.75(2) and overall within s.79.
[29] Unreported decision of Fogarty, Lindenmayer and Finn JJ delivered 29 April 1997
In each of the Full Court cases one of the parties had a terminal illness. In this case, neither party presents with a terminal illness and the life expectancy tables can only serve as a broad guide. It may be that the Husband, who is in good health, and who has lived his whole life on the land, will outlive the Wife. However, given the 13 year age difference and the statistical likelihood of women living longer than men, I am satisfied that it is more likely that the Wife will live longer than the Husband and have greater future needs. I make a small adjustment in favour of the Wife as a result of this factor.
On the basis of each party’s financial statement, I find both parties are in the habit of spending frugally. However, it is common ground that the Wife has spent substantially more than the Husband since separation, excluding the funds she has spent on purchasing a home and paying legal fees. I accept that because the Wife was required to rent after separation, and later find accommodation for her stallion, she has at times, needed additional funds. However, given the length of time it has taken for this matter to be finalised, the Husband has been deprived of equal access to the parties’ joint funds for over 4 years. Therefore, to date, the Husband, in his retirement, has not had the same opportunity as the Wife to enjoy the fruits of long years of hard labour. For a just result, I have decided there should be a small adjustment in favour of the Husband as a result of this factor.
Assessment of s.75(2) factors
The Husband’s counsel submits there should be no adjustment on the basis of s.75(2) factors. The Wife’s counsel submits that if the Court finds the Husband is entitled to 57% on contributions, then the Wife should be entitled to an adjustment of 2-3% on life expectancy and disparity in assets and should therefore receive no less than 45% of the overall pool.
On a weighing of the factors to which I have referred under s.75(2) I have decided the Wife will receive an adjustment of 1%. This means the net assets of the parties will be divided as to 58% to the Husband and 42% to the Wife.
Is the result just and equitable?
Section 79(2) provides that:
The Court shall not make an Order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the Order.
The Court must be satisfied that the actual orders provide for a just and equitable distribution of the property of the parties.
Each party has had a long time interest in trotting horses. At the commencement of hearing, each party sought to retain the Property M property, a two and a quarter acre block of land with stables. It was agreed the Wife had not had access to the property since 2007 due to the high level of conflict between the parties. The Husband said the Property M property is very significant to him because he keeps his horses there and “the horses are my only interest. That’s all I spend my life at now.” He says that on 7 evenings a week, he works the horses, and then washes them down, feeds them and brushes them. Having sold [S], he now has two horses at Property M. The Wife had sought to have [S] transferred to her, but presently has one horse, a stallion.
The Wife seeks orders providing for her to have Property M, but at the end of hearing, said she would agree to the Husband retaining that property, if she could have both Block 51 and Block 52. She says if she were to receive both those properties, she would sell Block 52 to meet her legal fees and living expenses but would retain Block 51 as long as she could afford to. She says Lot 51 is full of wild flowers and she is attached to it. She might keep her horse there. The Husband said he would like to retain both blocks, particularly Block 52 which has water and where he keeps 23 sheep. However, if faced with the choice, the Husband would rather retain the Property M property.
In these circumstances, I have decided the Husband will receive his first choice of Property M, and the Wife will receive her first choice, (having agreed Property M can remain with the Husband) which is Block 51.
The Wife asks for the Husband to make “[Z]” the Shetland pony available to her and as already noted, the Husband agrees to her taking the pony on condition the owners approve her doing so. She asks for the red cedar chest of drawers in the Husband’s possession. I accept her evidence that although it was an item inherited from the Husband’s family, she restored it and the Husband gave it to her during the marriage. In any event, as the Husband sold the horse known as “[S]” after hearing the Wife’s evidence that she wanted that horse transferred to her, I am satisfied justice and equity is served by the Wife receiving the red cedar chest of drawers.
The Wife raises an issue in her affidavit about the Husband owing her half the cost of Mr V’s valuation fees. This issue was not the subject of cross-examination or submissions but is an order sought by the Wife. If the Husband has not yet repaid the Wife for his share of the valuation fees, I will order him to do so.
The net asset pool has a value of $1,039,638.00. On the basis of my assessment of contributions, the Wife will receive 42% of the assets with a value of $436,648.00. The Husband will receive 58% of the assets with a value of $602,990.00.
The Husband will have assets of $569,167 if he receives Property C, Property M, and other items in his possession. He will therefore need another $33,823.00 to receive his entitlement. The Wife will have $398,471 if she retains her home in [W], Block 51 and other items in her possession. She therefore needs another $38,177 to receive her entitlement. As neither party has the means to pay out the other to enable either to retain Block 52 without selling other property each wishes to retain, Block 52 will have to be sold to enable each party to receive their respective entitlements.
Until it is sold, it is not possible to speculate as to its sale price. I have made an adjustment in relation to the assets, excluding Block 52, to ensure, whatever the sale price of Block 52, each party will receive their respective entitlement. The Husband must receive 58% and the Wife 42% of the asset pool calculated by excluding Block 52. The Husband must also receive 58% and the Wife 42% of the net proceeds of sale of Block 52.
The asset pool excluding Block 52 is $967,638 [$1,039,638.00-72,000]. 58% of that pool is $561,230. The Husband already has $569,167. 42% of that pool is $406,407. The Wife already has $398,471. Therefore, the Wife must receive $7,936.96 as well as 42% of the net proceeds of sale to receive her 42% overall. I have ordered accordingly.
The Husband will have assets and liabilities set out in the following table:
| Assets to be retained by Husband | $ |
| Property at Property C, [W] | 350,000.00 |
| Property at Property M, [W] | 140,000.00 |
| Nacos account | Nominal |
| Farm equipment | 11,900.00 |
| Home contents | 24,785.00 |
| Paid legal fees (add back) | 39,982.00 |
| Cash from superannuation fund by order of 19 February 2010 | 2,500.00 |
| Payment to the Wife before Husband receives his share of sale proceeds | (7,937.00) |
| 58% of the sale proceeds of Block 52 (as adjusted after sale) | E 41,760.00 |
| TOTAL | 602,990.00 |
The Wife will have the assets and liabilities set out in the following table:
| Assets to be retained by Wife | $ |
| Property at Property W, [W] | 250,000.00 |
| Nacos account | Nominal |
| Home contents | 13,820.00 |
| Wife’s personal items | 6,630.00 |
| Wife’s legal fees (add back) | 36,276.00 |
| Lot 51 | 77,000.00 |
| Red cedar chest of drawers | Not valued |
| Remaining funds in superannuation account | 12,245.00 |
| Cash from superannuation fund by order of 19 February 2010 | 2,500.00 |
| Payment to Wife before division of sale proceeds of Block 52 | 7,937.00 |
| 42 % of the sale proceeds of Block 52 (as adjusted after sale) | 30,240.00 |
| TOTAL | 436,648.00 |
I am satisfied that the orders set out at the beginning of these Reasons are just and equitable.
I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of Sexton FM
Associate: Skye Owen
Date: 20 April 2010
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