Hodgson v Grebert
[2010] NSWSC 223
•3 March 2010
CITATION: Hodgson v Grebert [2010] NSWSC 223 HEARING DATE(S): 20 August 2009 & 27 November 2009
JUDGMENT DATE :
3 March 2010JURISDICTION: Equity JUDGMENT OF: Slattery J at 1 DECISION: Each party entitled to 50% of divisible pool of property CATCHWORDS: FAMILY LAW - domestic relationships other than marriage - 21 year relationship - just and equitable division of parties' joint property adjustment of interests in property under s 20 Property (Relationships) Act 1984 (NSW) - divisible pool of property agreed - extent of financial and non financial contributions as recognised under s 20 Property (Relationships) Act 1984 (NSW) - substantial initial financial contributions by one party greater financial and non financial contribution by other party during the relationship - treatment of initial contributions - consideration of "erosion principle" - each party entitled to 50% of the parties' divisible pool of property LEGISLATION CITED: Family Law Act 1975 (Cth)
Property (Relationships) Act 1984 (NSW) s 20CATEGORY: Principal judgment CASES CITED: Bilous v Mudaliar (2006) 65 NSWLR 615
Burke v LFOT Pty Limited (2002) ALR 612
Crawford (1979) 5 FamLR 106
Evans v Marmont (1997) 42 NSWLR 70
Jones v Dunkel [1959] HCA 8
Jones v Grech (2001) 27 FamLR 711
Howlett v Neilson (2005) 33 FamLR 402
In the Marriage of Breemer (1994) 18 FamLR 407
In the Marriage of Money (1994) 70 FamLR 814
Kardos v Sarbutt (2006) 34 FamLR 550
Pierce and Pierce (1998) 24 FamLR 377
Sharpless v McKibbin [2007] NSWSC 1498
Way and Way (1996) FLC 92-702
White (1982) 8 FamLR 512PARTIES: Plaintiff: Lynette May Hodgson
Defendant: Barry Louis GrebertFILE NUMBER(S): SC 4004/08 COUNSEL: Plaintiff: Mr D J Lloyd
Defendant: Mr B RichardsSOLICITORS: Plaintiff: McDonell Milne Toltz
Defendant: Robertson Saxton Primrose Dunn Solicitors and Attorneys
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
SLATTERY J
WEDNESDAY 3 MARCH 2010
4004/08 LYNETTE MAY HODGSON v BARRY LOUIS GREBERT
JUDGMENT
1 HIS HONOUR: Lynette May Hodgson and Barry Louis Grebert commenced to live together in Newport in July 1985. They stayed together for 21 years until August 2006. Their child Amelia was born on 29 May 1997. Their relationship has now ended. But they are unable to agree upon the just and equitable division of their joint property. Ms Hodgson seeks orders under s 20 of the Property (Relationships) Act 1984 (NSW) adjusting the interests in the property they each hold. She claims as plaintiff an entitlement to 50% of her and Mr Grebert’s property. Mr Grebert as defendant resists her claim for 50% of their joint property. He cross claims that Ms Hodgson is entitled to no more than 25% of this property. The principal issue for determination is the fixing between them of an appropriate adjusting percentage.
Applicable Principles of Law
2 Both Ms Hodgson’s statement of claim and Mr Grebert’s cross claim invoke jurisdiction conferred on this Court by the Property (Relationships) Act 1984 (NSW) s 20, which allows the Court to adjust the interests in property of parties to a domestic relationship. Section 20(1) relevantly provides:
(1) On an application by a party to a domestic relationship for an order under this Part to adjust interests with respect to the property of the parties to the relationship or either of them, a court may make such order adjusting the interests of the parties in the property as to it seems just and equitable having regard to:“20 Application for adjustment
- (a) the financial and non-financial contributions made directly or indirectly by or on behalf of the parties to the relationship to the acquisition, conservation or improvement of any of the property of the parties or either of them or to the financial resources of the parties or either of them, and
(i) a child of the parties,(b) the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the parties to the relationship to the welfare of the other party to the relationship or to the welfare of the family constituted by the parties and one or more of the following, namely:
- (ii) a child accepted by the parties or either of them into the household of the parties, whether or not the child is a child of either of the parties.
- (2) A court may make an order under subsection (1) in respect of property whether or not it has declared the title or rights of a party to a domestic relationship in respect of the property.”
3 Neither Ms Hodgson nor Mr Grebert contest that there was a domestic relationship between them during the period in question from July 1985 to August 2006. Amelia is the child of the relationship. There is no issue as to the prerequisites to the Court’s jurisdiction. The parties “have lived together in a domestic relationship for a period of not less than 2 years” and “there is a child of the parties to the application”: s 17. Ms Hodgson brought her application on 31 July 2008 within two years after the relationship ceased in August 2006: s 18. Once a domestic relationship is proven, or conceded as it is here, and there is no other impediment to the Court’s exercise of jurisdiction, the decided cases establish three distinct stages in the exercise of jurisdiction under Property (Relationships) Act s 20.
a The first stage is the identification and the valuation of the property of the parties to determine their “divisible pool of property”. The property so identified is “the property of the parties to the relationship or either of them”. Section 20 gives authority to the Court to adjust the parties’ interests in this property.
b The second stage is to identify, evaluate and weigh the parties’ respective contributions of the various types referred to in the Property (Relationships) Act, s 20. Typically this results in the Court apportioning as a percentage the overall s 20 contributions each party made up to the date of hearing.
The courts have repeatedly affirmed this three stage methodology: Evans v Marmont (1997) 42 NSWLR 70, Jones v Grech (2001) 27 FamLR 711; [2001] NSWCA 208; and Kardos v Sarbutt (2006) 34 FamLR 550; [2006] NSWCA 11.c In the third stage the Court determines what order is required sufficiently to recognise and compensate an applicant’s contributions in the context of the contributions as a whole of both partners. This stage typically results in an order leaving the applicant with the percentage identified in the second stage of the divisible property identified in the first stage.
4 In the absence of a contest as to whether there was any domestic relationship between Ms Hodgson and Mr Grebert, the stages identified in these authorities present for judgment the following three main questions. What is Ms Hodgson’s and Mr Grebert’s divisible pool of property? What were their respective contributions that may be recognised under s 20? What order as “seems just and equitable” should the Court make to adjust Ms Hodgson’s and Mr Grebert’s respective interests in their divisible pool of property to reflect and recognise their contributions? Those questions form the structure of this judgment.
5 The Court has a policy of reducing the risk of identity theft through its published judgments. This judgment does not publish the addresses of any of the properties owned by the parties or any other person. Nor are any bank account details published. If required this information is obtainable from the Court’s file.
6 To understand the issues for determination more background is needed. This background is set out in the form of a chronological survey of the course of their relationship and covers the respective s 20(1)(a) financial and non-financial contributions they made to their properties and financial resources. It also covers their respective s 20(1)(b) contributions to one another's welfare and that of Amelia. These matters are the "focal points by reference to which the discretionary judgement as to what seems just and equitable [under s 20] must be made”: Evans v Marmont (1997) 42 NSWLR 70 per Gleeson CJ and McLelland CJ in Eq at 79 G – 80A. The parties were at issue about the extent of their relative contributions in each of these areas. In this background survey the Court makes findings as to their disputed relative contributions. This judgment then deals with the reasoning of the three stages necessary to make a s 20 order.
Background
7 Mr Grebert was born in Sydney on 19 July 1953. Ms Hodgson was born at Mt Isa in Queensland on 8 April 1957. When their relationship began on 1 July 1985 Mr Grebert was 32 and Ms Hodgson was 28. At the time of this judgment he is 56 and she is 52.
8 There is one child of the relationship, Amelia Kay Hodgson-Grebert born on 29 May 1997. She is now 12 years of age and resides with Ms Hodgson. There is no issue between the parties about her custody or maintenance. During their time together the parties did not care for any child of any prior relationship.
Commencement of the Relationship
9 Mr Grebert and Ms Hodgson met in Sydney in about 1984. In early 1985 she moved to live and work in Queensland. Ms Hodgson says and I accept that the relationship commenced with her move to join him in Sydney where he was already established in business. Mr Grebert visited her in Queensland and said to her "I want us to be together forever. Please come back to Sydney so that we could be together." I accept that he said this. Her agreement to this proposal prompted her move to New South Wales and the commencement of the relationship.
10 The respective assets of the parties at the commencement of the relationship are part of the relevant background to be taken into account. The ultimate weight to be given to this feature of the parties’ relationship is one of the issues in contention in this case.
11 When cohabitation commenced Ms Hodgson had significantly fewer assets than Mr Grebert. She had a Holden Gemini motor vehicle, savings of approximately $2000 and furniture and household items, such as kitchenware and linen. Apart from the motor vehicle none of these items had much market value. She was working as a travel consultant for Thomas Cook. The figures are not very clear on the evidence. But she may not have brought assets of more than about $5000 -- $6000 into the relationship.
12 Mr Grebert put a value on the assets that he brought to the relationship. I have no reason to doubt the correctness of his valuation. Ms Hodgson does not seriously dispute it. At the time of their meeting, Mr Grebert was the registered proprietor of a property at Gladstone St Newport. He had acquired this property in February 1984. Mr Grebert explained and I accept that he acquired the property for $75,000 and paid a deposit of $15,000. He had borrowed the balance from the ANZ bank. He thus had equity in the property of $15,000. In July 1985 Mr Grebert also owned a yacht painting business, which he values at $100,000 at that time. He also had superannuation savings of about $6000, two motor vehicles for the total of $32,000 and an E22 yacht worth approximately $20,000. Like Ms Hodgson he also brought household contents and personal effects to the relationship. I find that the total assets he brought to the relationship are to be valued at $175,000.
13 Ms Hodgson’s contention was that the parties’ respective assets at the commencement of the relationship were not of great significance for two main reasons. First she says that she made significant contributions after cohabitation commenced sufficient to negate any asset advantage that Mr Grebert may have had at the commencement of the relationship. This submission acknowledges that Mr Grebert did have a larger asset base than she did at the commencement of the relationship. Second she contends it is more important to look at what contributions were made to the parties’ final asset position from the assets at the commencement of co-habitation. The second argument may really be another way of stating the first.
Financial Arrangements for the Household during the Relationship
14 Ms Hodgson and Mr Grebert did not mix their respective incomes in a joint bank account. Rather, they made an informal arrangement as to how they would share household expenditure. Ms Hodgson deposes to a conversation that explains their financial arrangements.
“Ms Hodgson: ‘We need to work out how we are going to arrange our finances.’
Mr Grebert: ‘Yes. I will pay the mortgage and bills for the home.’
Ms Hodgson: ‘Well I’ll pay for everything else – the groceries, our household needs, a cleaner, our clothes and the other day to day living expenses’.”
15 Mr Grebert disputes that he and Ms Hodgson ever had this discussion. He says that he recalls that throughout the relationship Ms Hodgson would often say to him words to the effect "You're the man. You pay." He says that he understood this to mean that Ms Hodgson expected him to be responsible for the majority of their living expenses. I find that the conversation that she recounts did take place at the beginning of the relationship and that they both acted on it. I also find that she did say what he asserts about household expenses but only towards the end of the relationship when she was spending more of her money on Amelia and a degree of tension had crept into their relationship.
16 They adhered to this financial arrangement. Ms Hodgson says and I accept that from the time they commenced living together this was the arrangement. It was convenient. It worked for both of them. They continued to use it. It is not difficult to see why it was adopted. Neither of them records the arrangement as generating any friction or resentment during their relationship.
17 Something important to the issues in this case may be inferred from the fact that the arrangement was made in the form that it was. It was convenient and it worked because Ms Hodgson expected that she would be more directly involved than Mr Grebert in supplying food and other household needs, cleaning the house, clothing the family and providing for the other incidentals of day-to-day family living.
18 The detail of this arrangement is also of importance for understanding the financial and non-financial contributions of the parties throughout their relationship. Ms Hodgson says and I accept that she did pay on a weekly basis for the day to day living expenses of the couple including food and groceries, items required for the household, including kitchenware, manchester, linen, household appliances and furnishings. She also purchased clothes for both of them, and also paid for car-running expenses.
19 Both Mr Grebert and Ms Hodgson conducted busy careers until Amelia was born so a cleaner was employed in the various houses that they occupied. This arrangement existed until 1998. I find that Ms Hodgson paid the cleaner and approximately half of the couple’s entertainment expenses until then.
20 On his side Mr Grebert paid all the mortgage instalments for the property in which they lived as they fell due, property and contents insurances, rates, electricity, gas and telephone accounts.
21 These expenditure arrangements altered slightly after Amelia was born. From then on Mr Grebert bore more of the household expenses than he had before. This was because Ms Hodgson took on the payment of costs associated with Amelia’s care and welfare. She had less money left over for general household expenses. Payments on behalf of Amelia included medical and other expenses relating to her birth, private health fund cover for the whole family including Amelia, ongoing medical and dental expenses, Amelia’s clothes, child care fees, school fees and school uniforms. Amelia was encouraged to undertake a full suite of extra curricular activities such as ballet, flute lessons and choir. Ms Hodgson met these expenses and other incidental educational and living expenses such as books and stationery, gifts and expenses for Amelia’s entertainment.
22 Mr Grebert also disputes both the nature and extent of Ms Hodgson’s household expenditure after Amelia's birth. He says that, with the exception of private health insurance premiums and some groceries and personal items, he paid for all Ms Hodgson's, Amelia's and his living expenses, including groceries bills, mortgage payments, dental and medical expenses. I find that Mr Grebert is mistaken as to this. Ms Hodgson seemed to be more familiar with the detail of the expenditure on Amelia, probably because she was closer to it.
23 Within three years of their relationship commencing Mr Grebert and Ms Hodgson jointly decided to sell the Gladstone Street, Newport property. It was sold in March 1988 for a consideration of $142,000. The parties decided to reinvest the proceeds of sale.
24 This decision was one of many joint financial decisions that the parties made in the course of their relationship about properties they owned. This and their subsequent decisions as to which properties to invest in, how to improve those properties and when to sell them were all decisions with financial consequences for them as a couple. I find that Ms Hodgson and Mr Grebert took these decisions together equally. Their joint efforts in discussion and decision-making about these important matters were part of their non-financial contributions to the acquisition, conservation and improvement of the properties in which they lived and invested as a couple.
The Wallumatta Road Property
25 The couple next acquired a property at Wallumatta Road, Newport in late April 1988. Mr Grebert and Ms Hodgson lived there together for nine and a half years until it was sold in December 1997.
26 The Wallumatta Road property was purchased in Mr Grebert’s name for $200,000. Its acquisition was funded by first mortgage borrowings from the ANZ bank of $75,000 and second mortgage borrowings of $15,000. The $110,000 balance of the purchase price was funded from the sale of the Gladstone Street, Newport property.
27 Ms Hodgson claimed that she carried out improvement work to the Wallumatta Road property. Mr Grebert in contrast claimed that she did nothing to assist the improvement of this property. I do not find that Mr Grebert’s evidence can be accepted on this. Couples can have very different perceptions about both the nature and quality of particular contributions to a household. I suspect Mr Grebert has overlooked the contribution that Ms Hodgson made to this property. I accept her evidence that she did improve his property as she says that she did.
28 I also infer that she did make the contribution that she claims in part because it is consistent with the nature of the other contributions, which she made and which I found to be established. There are aspects though of her evidence that I identify below where she fails to acknowledge contributions that Mr Grebert did make.
29 There are important particular disputes about their relative contribution to the maintenance and improvement of the Wallumatta Road property. Ms Hodgson claims that she and Mr Grebert effected renovations and improvements to the Wallumatta Road property including the construction of the carport, the replacement of the roof, the installation of a swimming pool, painting throughout, updating of the bathroom, buying of new carpets throughout and the purchase and installation of window furnishings. She says that the costs of these improvements were undertaken after discussion between the two of them and that she and Mr Grebert were both involved in the painting work and in supervising the work undertaken by tradesmen.
30 Although there was dispute about some of this work, to which I will come, it is not difficult to infer that joint discussion and joint decision making of the kind described by Ms Hodgson must have taken place to authorise the improvement of the Wallumatta Road property. Choosing which of these improvements were to take place, choosing where on the property they were to go, choosing colours and finishes and materials, timing the work and allocating financial priorities among the various items of work are difficult choices to make in a household on a unilateral basis. Ms Hodgson says that they jointly selected carpets, bathroom fittings, and window furnishings and organised their installation. I accept this evidence. She says that the cost of these improvements was met from Mr Grebert’s income. It is likely that this is what happened especially given the commitment of Ms Hodgson’s income to current household expenditure.
31 The picture presented by the evidence of the parties’ life at Wallumatta Road is of energetic joint enterprise to improve the property both as a place to live and to raise its resale value for reinvestment in future family accommodation. The arrival of Amelia in May 1997 coincided with the making of the joint decision to sell the Wallumatta Road property. It probably prompted that decision.
The Mona Vale Property
32 December 1997 saw Mr Grebert and Ms Hodgson move from the Wallumatta Road property to a new home they acquired in Mona Street, Mona Vale (“the Mona Vale property”). The parties also acquired the Mona Vale property in Mr Grebert’s name. It was purchased for $495,000. The purchase was funded through an advance of $120,000 from Perpetual Trustees. The net proceeds of sale of the Wallumatta Road property, $375,000, were applied to fund the balance of the purchase price of the Mona Vale property.
33 There are fewer disputes between the parties about their relative contributions to the improvement of the Mona Vale property. Ms Hodgson says that both she and Mr Grebert effected minor improvements to the Mona Vale property including painting throughout and installation of new kitchen appliances. This time they had acquired a property that more fitted their immediate needs and required less renovation. It was necessary for Mr Grebert and Ms Hodgson jointly to do the painting work and to select and arrange the installation of appliances. The reduction in joint improvement activity on the Mona Vale property is also understandable in light of Amelia’s birth. There are also disputes about the relative proportions of their joint work on this property.
34 Mr Grebert does dispute some aspects of Ms Hodgson’s account of contributions to the improvement of the Mona Vale property. He denies that she had any involvement in painting the Mona Vale property or the installation of new kitchen appliances there. He says that he personally undertook all of the painting work at the property.
35 I doubt that this dispute between the parties is particularly significant. I find that Ms Hodgson was involved in some of the painting of the Mona Vale property but Mr Grebert physically did more of the painting than she did. The reason for this was that Amelia was recently born. There is no dispute between the parties that particularly in her earliest years Ms Hodgson was predominantly involved in her day-to-day care. At this time the parties were balancing their joint contributions to the household by Mr Grebert doing more of the painting and physical work directly on the Mona Vale property while Ms Hodgson was caring for Amelia. As might be expected too, she was closely involved in the choice and purchase of kitchen appliances that she and Mr Grebert would be using for themselves and for Amelia.
The East Gosford Investment Unit
36 When Ms Hodgson was pregnant with Amelia the parties had sufficient financial foresight to decide upon the acquisition of an investment unit in Caroline Street, East Gosford (“the East Gosford unit”). The property was acquired in July 1997 in the name of Mr Grebert’s company, Barry L Grebert Marine Pty Limited as Trustee for the Barry L Grebert Unit Trust. The East Gosford unit was acquired for $148,000, which was entirely financed through an advance through Perpetual Trustees. It is not disputed between the parties that the Barry L Grebert Unit Trust was established for the acquisition of this unit. The Barry L Grebert Marine Superannuation Fund holds all units in the unit trust. This is a self-managed superannuation fund of which Barry L Grebert Marine Pty Limited is the trustee and Mr Grebert is the sole member. The unit trust appears to have been established to conform to superannuation rules, which prohibited superannuation funds from borrowing to acquire property. The borrowings to fund the acquisition of the East Gosford unit were incurred outside the superannuation fund.
37 The disputes between the parties concerning the East Gosford unit relate to issues about its physical improvement and the extent to which the personal exertions of the parties freed up time and energy for the acquisition and conversion of this asset.
38 Ms Hodgson’s case was that she helped Mr Grebert to paint the East Gosford unit before it was put on the rental market. Mr Grebert contests this evidence. He denies that she assisted him with the painting of the East Gosford property. He says that at all times when he was at that property carrying out the painting he was there alone. I find that Mr Grebert is mostly right about what he says in relation to the East Gosford property. He undoubtedly did more of the painting work and any other improvement that needed to be done to this unit. But there was a reason for this. The unit was acquired and improved shortly after Amelia's birth. I doubt that Ms Hodgson was physically available to do much to improve the East Gosford property because of the demands of her time from her new infant child. At this time Ms Hodgson was making her non-financial contributions to the household and contributing to the welfare of Mr Grebert and Amelia by her close care of their child.
Issues about Other Contributions in the Course of the Relationship
Motor Vehicles
39 There is a minor dispute between the parties as to what motor vehicle Ms Hodgson brought to the relationship. Mr Grebert thought that Ms Hodgson had a Ford Meteor at the time the relationship commenced. Ms Hodgson has made clear in more detailed evidence that at that time she had a Holden Gemini but it was involved in an accident and written off shortly after the relationship commenced.
40 The application of the proceeds of this write off is one useful example of the use of Ms Hodgson’s financial resources for the acquisition of property used by the parties. Mr Grebert’s financial resources were undoubtedly used for this purpose but not exclusively so. I accept that from the proceeds of the insurance claim Ms Hodgson purchased the Ford Meteor. In December 1989 she traded the Ford Meteor motor vehicle in for the purchase of a Ford Laser for the sum of $16,975. The acquisition of this vehicle was funded by a trade in of $8,500 on the Meteor, and cash savings of $3,000. The balance of $5,475 was provided by a loan from the QANTAS Staff Credit Union. The Laser motor vehicle was sold in about 1992 or 1993 and Grebert Marine purchased the then family car. Throughout the rest of the relationship both the family car used by Ms Hodgson and the car used by Mr Grebert were acquired through Grebert Marine.
41 Both Mr Grebert’s business, Grebert Marine, and Ms Hodgson’s employer QANTAS provided resources that assisted the couple in the course of their relationship. The example of the funding of the motor vehicles through Grebert Marine is set out above. The couple also enjoyed financial benefits because of Ms Hodgson’s employment relationship with QANTAS.
QANTAS Travel
42 Ms Hodgson’s employment with QANTAS entitled members of her immediate family, Mr Grebert and Amelia, to discounted airfares and travel benefits. Ms Hodgson says that the family travelled up to four times each year to domestic and overseas destinations including Melbourne, Brisbane, Singapore, Hong Kong, Canada and the United States.
43 Mr Grebert denies that he travelled with Ms Hodgson and Amelia up to four times a year using Ms Hodgson’s travel benefits. He says he can recall only four or five occasions throughout the entire relationship with Ms Hodgson that he accompanied her on such holidays. He claims that his business commitments meant that it was difficult for him to be away from his business and his employees for long periods, although he accepts that Ms Hodgson and Amelia did themselves travel up to four times each year. His evidence was that whenever Amelia and Ms Hodgson were on such trips he paid for the accommodation, meals and entertainment for them at Ms Hodgson’s request.
44 Ms Hodgson agreed that following the birth of Amelia that Mr Grebert only travelled overseas with her twice. After her birth I find that Mr Grebert did not travel with her four times a year. But before the birth of Amelia joint travel appears to have been quite extensive. Before the birth of Amelia Ms Hodgson financed the overseas trips from credit cards.
45 Ms Hodgson has handed in evidence a document summarising the trips undertaken both before and after Amelia’s birth on 29 May 1997 [Exhibit 2]. The asterisks on the document indicate according to Mr Grebert the times that he went overseas with her. These are reproduced in the next paragraph below in the form of the exhibit. However, Ms Hodgson said, and I accept, that there are probably other dates that Mr Grebert travelled overseas with her that are not asterisked. She is not able to record those dates as she explained “because I don’t see corresponding dates or I can’t remember the date over that period” [T43 Line 25]. She says that she could not remember the dates but she can remember the other destinations to which she and Mr Grebert travelled. She was invited to write these destinations on the document. She wrote the destinations “Fiji, Singapore, Honolulu and Bali”. The form of Exhibit 2 shows quite a number of trips to these destinations before the birth of Amelia. It is open on the evidence to infer that there were other trips to these destinations not recorded in Exhibit 2. I do infer that based upon her oral evidence.
46 The form of Exhibit 2 is instructive in showing the extent of the overseas travel and the benefit that it conferred on the family. As Ms Hodgson explained she took Amelia with her generally after her birth. This would have assisted in relieving Mr Grebert of his care obligations in respect of Amelia during the period of these trips. Reproduced in chronological order (from Exhibit 2) those trips were as follows.
Fiji
Singapore
Honolulu BaliISSUED 20 MAY 1986 * MAY - 1987 - CANADA – USA - APR - 1987 - INDIA JUN - 1987 - HONG KONG JUN 1987 - CANADA - - SEP - 1989 - SINGAPORE NOV - 1989 - NEW ZEALAND - - JUN - 1990 - FIJI * JUN - 1990 - HONG KONG - - - - ISSUE 14 FEB1991 - JUN - 1991 - SINGAPORE AUG - 1991 - ARGENTINA NOV - 1991 - USA 3 DAYS NOV - 1991 - CANADA NOV - 1991 - BAHAMAS 1 DAY - - [ MARCH - 1992 - POLYNESIA ] [ JUN - 1992 - HONG KONG ] OCT - 1992 - THAILAND [ NOV - 1992 - INDONESIA ] - - APRIL - 1993 THAILAND 3 JUN - 1993 - SINGAPORE JUN - 1993 - MALDIVES [ AUG - 1993 - SINGAPORE ] [ OCT - 1993 - THAILAND ] [ NOV - 1993 - FRANCE ] - - SEP - 1994 - SINGAPORE MAY - 1994 - SINGAPORE JUN - 1994 - MALAYSIA JUL - 1994 - HONG KONG - - ISSUE 29 JULY 1994 AUG - 1994 - USA 28 DAYS AUG - 1994 - JAPAN 1 MONTH NOV - 1994 - MILAN NOV - 1994 - FRANCE 5 DAYS NOV - 1994 - UK - - FEB - 1995 - TAHITI AUG - 1995 - SINGAPORE - - JUN - 1996 - USA 4 DAYS * OCT - 1996 - HONG KONG 14 DAYS NOV - 1996 - USA - JAN - 1999 - THAILAND 3 DAYS JAN - 1999 - SINGAPORE JAN - 1999 - LONDON MAY-JUN - 1999 - JAPAN 2 DAYS * JUL - 1999 - USA 90 DAYS SEPT-OCT - 1999 - JAPAN 7 DAYS JAN - 2000 - JAPAN OCT - 2000 - USA 3 DAYS - JUN - 2001 - HONG KONG 2 DAYS JUL - 2001 - INDONESIA -
47 On the available evidence I find that there is some truth in what they both say about the issue of international travel. The nature of Mr Grebert’s business, Grebert Marine, would have undoubtedly precluded him from travelling overseas for extensive periods four times a year and being away from the business. I accept also that he funded the overseas expenses for these trips even when he did not accompany Amelia and Ms Hodgson. I do not accept that it was only four or five occasions throughout the entire relationship that he accompanied Ms Hodgson on such holidays. That may be all that he can now recall but it is likely that he accompanied Ms Hodgson, and after she was born, Ms Hodgson and Amelia on these trips at least once a year. One annual trip was unlikely to interfere with his business. The financial incentive provided by QANTAS was so attractive that he would have been motivated to take advantage of this opportunity. The limited documentary and oral evidence available about this issue supports this conclusion.
Sale of Grebert Marine
48 Mr Grebert’s business was a yacht painting business. He sold it in 2004 for $190,000. His use of these sale proceeds completed his contribution to the financing of the Mona Vale property. From the business sale proceeds Mr Grebert almost fully repaid a loan of $115,000 he had taken out from Grebert Marine. He had originally borrowed these funds to pay off part of the mortgage on the Mona Vale property. The balance of the business sale proceeds, of $75,000 was placed on term deposit. This represented a substantial contribution by Mr Grebert to funding the ultimate acquisition of the Mona Vale property. It also had the effect of lowering the balance outstanding to Perpetual Trustees so that the Mr Grebert’s mortgage obligations were only in the order of $25 per month. As at 31 December 2008 the balance outstanding on the Perpetual Trustees mortgage was the minor amount of $2,788.69.
49 It is appropriate now to analyse the contributions the parties made during the course of the relationship into financial and non financial contributions to their property and financial resources: s 20(1)(a). It is then appropriate to discuss the parties’ contributions including in the capacity of homemaker or parent to the welfare of one another and to the welfare of the family including Amelia: s 20(1)(b). Once that is done we can return to the three stages of assessment required for making an order under s 20.
The Parties Financial Contributions in the Course of the Relationship
50 There is a marked contrast in the evidence advanced by each party about their respective financial contributions to their property and their financial resources. An important measure of their financial contributions to the household is their identifiable income from personal exertion. An approach to analysing this income is to divide the period of their relationship into the time before Amelia’s birth and the time after her birth.
51 It is Mr Grebert’s contention that until the birth of Amelia Ms Hodgson out-earned Mr Grebert in both gross and net terms. He supports this submission covering the period 1985-1997 by reference to a schedule advanced in final submissions that puts Ms Hodgson’s net earnings for the period at $318,107.07 and Mr Grebert’s net earnings for the same period at $369,000. Mr Grebert’s counsel seeks to use this difference as the basis to argue that Mr Grebert’s financial contributions to the relationship were greater prior to Amelia’s birth.
52 The flaw in Mr Grebert’s argument is the poor quality of the evidence that he advances to establish his earnings in the period 1985-1997. Whereas Ms Hodgson has gathered and tendered into evidence her tax returns for the period establishing a figure of $318,107.07 with precision, Mr Grebert has estimated his gross income for each of those 13 years as $39,000 with tax payable of either $10,000 or $11,000 depending upon changes in tax rates from 1992 with an annual net income of $28,000 in the early years and $29,000 in the later years. The total gross income of $507,000, the total tax of $90,000 and the total net income of $369,000 are largely artificial constructs. The Court has no firm basis from which it should infer that Mr Grebert out earned Ms Hodgson during this period.
53 Counsel for Ms Hodgson cross-examined Mr Grebert about this issue. Mr Grebert deposed that he earned approximately $750 per week or $39,000 per annum during the period 1985 to 2005. In that cross-examination (T69/35) Mr Grebert seemed to limit that estimate of $750 per week to the latter part of the period 1985 to 2005. That makes his evidence about the early part of the period even more uncertain.
54 Notices to produce were issued to Mr Grebert for his tax returns for this earlier period. Nothing has been produced and no explanation has been given by him in evidence that after appropriate search and inquiry for the tax returns for this earlier period that they could not be obtained. In the absence of any compelling explanation as to why these documents are missing I am not prepared to accept Mr Grebert’s general estimate of his earnings during this period.
55 Counsel for Ms Hodgson directly confronted Mr Grebert about the lack of documentary evidence to support his evidence that he earned $750 per week throughout this period (T69/36-46). When it was suggested to him that Ms Hodgson out earned him throughout their relationship he said "I can't answer that, sir, because I never seen her finances." When it was put to him that he had not produced anything prior to 1999 to justify his income estimates for that earlier period he simply said, "Well, unfortunately no. No". Nor did Mr Grebert assert any basis on which he could say that Ms Hodgson’s expenditure during the relationship was either reckless or not for their common good (T70/1).
56 The question then arises as to what inferences are available on the evidence about Mr Grebert’s earnings during this early period. The authorities suggest that I am able to infer that the actual documentary evidence of those earnings would not have assisted Mr Grebert’s case: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298. This principle applies as much to the production and tender documents as it does to the calling of witnesses: Burke v LFOT Pty Limited (2002) ALR 612; [2002] HCA 17 per Callinan J. I am not prepared to infer that Mr Grebert’s earnings were greater than Ms Hodgson’s during the period before Amelia's birth.
57 For the reasons that I explained below, however, I am prepared to infer that her earnings in fact were greater than his during this period. This is evident from analysis of the parties’ earnings in the later period 1999-2006.
58 Ms Hodgson’s income established from her tax returns, between 1999-2006, was $507,584.00. Mr Grebert’s income during the same period established on the same basis was $330,371.00. During a substantial part of this period from 1999-2006 Mr Grebert was operating Grebert Marine, the yacht painting business in the same way that he had been through the earlier period 1985-1997. There is a strong continuity between the later period and the earlier period. During the period 1999-2006 which is comparable to the earlier period in terms of the nature of the work done by the parties, Ms Hodgson derived greater gross and net earnings from personal exertion than did Mr Grebert. I am not persuaded that Ms Hodgson expended substantial amounts of money on herself during the relationship that was not contributed to household expenses. It can be inferred that it is probable that she made a greater financial contribution to the expenses of the household than did Mr Grebert throughout their relationship. When the picture is seen as a whole the continuous nature of this greater financial contribution over the course of the relationship offsets the asset advantage that Mr Grebert started with at its commencement.
Contributions to the Welfare of the Family
Domestic Tasks
59 The parties showed a large measure of agreement about their relative contributions to the health and welfare of the family. Although their perspectives on the amount of contribution of the other markedly contrasted, the actual contributions appeared to be roughly equal.
60 Ms Hodgson acknowledged that Mr Grebert had prepared most of the evening meals as he claimed. He says that he made the lunches for the family also for the next day, something that I accept that he mostly did. Ms Hodgson says that she attended to the daily tidying of the home, the making of the beds, cleaning up after dinner, preparing breakfast and lunches, grocery shopping on a weekly basis, shopping for other necessities for the family and the home, washing and ironing, caring for the family pet and cleaning and maintaining the courtyard at the Mona Vale property. In her evidence she allocates Mr Grebert’s areas of responsibility as maintaining the grounds in the various homes in which they lived and associated routine maintenance and repairs.
61 I do not accept though that the respective domestic functions of the parties were as tightly divided as Ms Hodgson claims. It is probable that a man who prepares the evening meal is sufficiently domestically focused that some preparation of lunches for the following day and some interest in the acquisition of groceries and foodstuffs for the family on his part would also be probable. One who cooks is likely to want to choose what is cooked and therefore to participate at least at times with the shopping.
62 Mr Grebert says that he made a contribution “at least equal to that of the plaintiff” with respect to that of such tasks. In my assessment he made a contribution slightly less than that of Ms Hodgson but not very much less. However when the evidence is analysed in relation to the care of Amelia Ms Hodgson’s role is one of much greater prominence.
Amelia
63 The parties have quite different views about the amount of time and care they gave Amelia during the relationship. Some of the differences between the parties can be resolved by drawing inferences as to what is likely to have happened given the parties’ work arrangements.
64 After Amelia’s birth and until 2004 Mr Grebert owned and operated his yacht painting business in the Mona Vale – Bayview district. For a short period of time between the sale of this business in 2004 and the end of the relationship in 2006 Mr Grebert was without this commitment.
65 In contrast after Amelia’s birth Ms Hodgson continued to work well away from the Mona Vale – Bayview area in her employment at QANTAS. Throughout her primary schooling Amelia attended the Loquat Valley Primary School which is on Pittwater Rd, Bayview NSW 2104. This school is only a few kilometres from the Mona Vale property.
66 Ms Hodgson says that after Amelia’s birth she took eight months maternity leave in which she was engaged in Amelia’s full time care and responsible for feeding her, changing nappies, bathing, dressing her and settling her to sleep and getting up to her during the night. This evidence is undoubtedly correct and I accept it. During Amelia’s preschool years and after Ms Hodgson returned to work I accept her evidence that she arranged child care for Amelia close to her place of work and delivered her and collected her from that care each week day continuing until Amelia commenced at Loquat Valley Primary School in 2002.
67 Ms Hodgson says that Mr Grebert only drove Amelia to school during the first year at Loquat Valley Primary School and that he did so three days a week. She said that otherwise she would drive Amelia to school each morning impacting upon her working hours. To avoid this she organised Amelia to be placed in after school care and Mr Grebert collected Amelia from after school care each day at about 5pm until the separation in mid 2006.
68 The parties seem to have sensibly allocated their time to accommodate Amelia’s primary school needs by releasing Mr Grebert in the mornings to go to work early but allowing Ms Hodgson to complete an ordinary day at QANTAS once she got to work, which was a long distance from Mona Vale. The consequence of this was that Mr Grebert was not just required to collect her from after school care each day at about 5pm. I accept that he also took her to much if not most of her after school activities including ballet classes, choir rehearsals and music lessons when they occurred on weekday afternoons as they commonly would.
69 Ms Hodgson took Amelia to these activities when they were at other times, including in the evenings and on weekends. I also accept that Amelia came to work with Mr Grebert during school holidays on a number of occasions, so that he could look after her when the competing work commitments of the couple impacted on her care during the school holiday period.
70 Amelia is a member of the Australian Girls Choir and has been since 2006. It is probable that Ms Hodgson attended more of her performances in the choir and the ballet concerts than Mr Grebert as she claims. But he undoubtedly was involved in supporting her for many of the rehearsals. Looking at the picture overall in relation to Amelia after she started going to school, I find that Mr Grebert contributed very significant amounts of his time to her care and welfare but that Ms Hodgson’s time commitment was still greater.
The Post Separation Period
71 It is now necessary to consider the period post separation. The contentions of the parties in respect of the period post separation are the following.
72 Mr Grebert says that Ms Hodgson has had the benefit of exclusive occupation of the Mona Vale property whilst Mr Grebert has had to accommodate himself elsewhere. He claims that the rental value associated with the occupation of the Mona Vale property is in the order of $700-$750. This figure is supported by the real estate rental appraisal (Exhibit 6). The calculation (for 155 weeks) since separation is $109,000-$116,250. Mr Grebert says that although he has not claimed from Ms Hodgson occupation rent to which he would be entitled, that the Court should give significant weight to that contribution.
73 Mr Grebert also points out in final submissions that during the post separation period he continued to collect Amelia after school and take her to her activities until May 2007 and that until April 2009 Ms Hodgson had the use of the Toyota Avalon motor vehicle which was funded by Grebert Marine. Further Mr Grebert paid $750 per month towards the household expenses of Ms Hodgson and Amelia, being $9,000 per annum on $27,000 in total since separation.
74 Ms Hodgson’s response to this is that the advantage of having Ms Hodgson remaining at the Mona Vale property gave Amelia the security and continuity of remaining in the Mona Vale property during the post separation period and pending resolution of the parties’ disputes.
75 It is now necessary to consider the several stages of the s 20 assessment.
Applying Section 20
The Divisible Pool of Property
76 There was little disagreement between the parties about their divisible pool of property. In summary form the parties total net property was $2,139,651.00. Of these assets Ms Hodgson had $526,616 and Mr Grebert had $1,613,035. They differed in their assessment of liabilities in that Mr Grebert does not accept Ms Hodgson’s credit card debt of $100,000 as a joint liability. Later I find that it was not unreasonably incurred and is a joint liability.
77 The approach I propose to take as a result of my conclusions in this judgment is to ask the parties to undertake the necessary calculations that I have reached to apply the percentages to their divisible pool of property. This should be able to be determined now by agreement.
The Parties’ Respective Contributions
78 I have already made extensive findings for the purposes of s 20(1)(a) and (b) in the course of my chronological survey of the parties’ relationship. A number of legal issues should be mentioned though before I reach a final view about the assessment of the parties’ relative contributions under the Statute.
79 The Court is not required in proceedings under s 20 to undertake a reductionist process, examining every alleged contribution with a view to putting a money value on each in order to reach an accounting balance, which balance is then to be eliminated by the requisite financial adjustment in the s 20 order. Rather the Court is required to make a holistic value judgment in the exercise of a discretion of a very general kind. Mathematical calculations, however, are of some use in guiding and testing conclusions about what is just and equitable, and also in promoting transparency and consistency in decision making: Kardos v Sarbutt (2006) 34 FamLR 550; [2006] NSWCA 11 at [36] and [49] and Howlett v Neilson (2005) 33 FamLR 402; [2005] NSWCA 149.
80 In the course of final submissions, counsel for Mr Grebert referred me to the so-called “erosion principle”. Indeed, it is not a principle of law at all but really a short hand description of the approach to the evaluation of contributions which recognises that initial contributions do not carry forward full weight but diminish in significance by reason of the other subsequent contributions made by both parties during the relationship: Sharpless v McKibbin [2007] NSWSC 1498 at [78] per Brereton J. It is not really a question of erosion but of what weight is to be attached in all the circumstances to the initial contributions, in the context of all the contributions. This does not involve casting any particular onus on a party to prove that an initial contribution “eroded” – save for the extent that any party contending that it has made a contribution bears the onus of proving that contribution: Sharpless v McKibbin [2007] NSWSC 1498; Kardos v Sarbutt (2006) 34 FamLR 550; [2006] NSWCA 11 at [66]-[67]. Counsel for Mr Grebert is quite correct that such considerations are of particular importance in this case because of the imbalance of assets between the parties at the beginning of the relationship.
81 Under s 20, the sole consideration of the Court in adjusting the interest of the parties in their property is the justice and equity of the case, having regard to the contributions that fall into the category of those described in ss 20 (1)(a) & (b). The problem with the “erosion principle” is that the enquiry commences as with any determination as to whether an initial contribution by one party has been made and this is followed by consideration as to whether that contribution was eroded by later contributions of the other party. This approach appears to throw up an onus on the other party to prove that the initial contribution should be eroded. This approach is contrary to s 20: Bilous v Mudaliar (2006) 65 NSWLR 615; [2006] NSWCA 38 at [55] per Ipp JA.
82 The debate about the so called “erosion principle” is an interesting illustration of how the use by judges of a colourful image to describe one aspect of the exercise of the statutory discretion carries with it the risk of legal error unless judges closely bear in mind the words of the discretion being exercised. In a series of cases under the Family Law Act 1975 (Cth) judges in the Family Court have said in adjusting property interests that “an initial contribution by one party may be ‘eroded’ to a greater or lesser extent by the later contributions of the other party, even though those later contributions do not necessarily at any particular point outstrip those of the other party”: see In the Marriage of Money (1994) 70 FamLR 814 per Fogarty J, In the Marriage of Breemer (1994) 18 FamLR 407 and Way and Way (1996) FLC 92-702 especially at 83,404 and finally in Pierce and Pierce (1998) 24 FamLR 377. Stated simply, the idea is that the original contributions should not be carried forward as a mathematical proportion but ultimately when it comes to the trial such initial contributions, are one of the number of factors to be considered. The longer the marriage or relationship, the more likely it is there will be later factors of significance and in the ultimate, the exercise is to weigh the original contributions with all other later factors. And those later factors whether equal or not may in the circumstances in the individual case reduce the significance of the original contribution: White (1982) 8 FamLR 512 and Crawford (1979) 5 FamLR 106. Interestingly, these early cases do not use the image of erosion, and state the idea with a degree of simplicity with which it is difficult to argue and which was reaffirmed by Ipp JA in Bilous v Mudaliar (2006) 65 NSWLR 615; [2006] NSWCA 38 at [55].
83 I conclude on the basis of my consideration of all the evidence that the s 20(1)(a) and (b) contributions of Ms Hodgson and Mr Grebert throughout their relationship were equal. I accept the submission put on behalf of Ms Hodgson that the appropriate assessment of the contributions is 50% each. Although Mr Grebert brought significantly more assets to the relationship, there are many factors discussed in my earlier chronological survey, which compel me to the view that ultimately their s 20 contributions were equal. I mention the principal ones now.
84 Ms Hodgson's earnings exceeded those of Mr Grebert throughout the relationship. She did commit this earnings advantage to the building up of the parties’ joint assets and financial resources. Ms Hodgson’s employment at QANTAS brought significant financial benefits to both Mr Grebert and Ms Hodgson throughout their relationship and to Amelia’s welfare after 1997. Apart from her earnings at QANTAS, Ms Hodgson's contribution came both through her membership of the staff credit union and her travel entitlements.
85 Whilst the physical non-financial contribution of Mr Grebert to the improvement of the various properties in which they lived and the Gosford investment property was overall greater than that of Ms Hodgson, her physical contribution to the day-to-day provisioning and running of the household was greater than his. This was on top of her greater financial contribution to household income.
86 In relation to the parties’ contributions to the welfare of the other party to the relationship and to the welfare of the family unit including Amelia overall I find that Ms Hodgson’s contribution was also greater in this area. As I have said, by way of example in relation to Mr Grebert's after-school care, his contribution in this area was very significant and I take it into account. But it was a contribution that was exceeded by hers.
87 Overall therefore both Ms Hodgson's s 20(1)(a) contributions and her s 20(1)(b) contributions each exceeded those of Mr Grebert.
What order is required?
88 A number of observations about the proper legal approach are required before dealing with the third stage under s 20.
89 I am conscious of the difference between an assessment under s 20 of the Property (Relationships) Act and the Family Law Act 1975 (Cth). As explained by Gleeson CJ and McLelland CJ in Eq in Evans v Marmont (1997) 42 NSW LR 70 at 74B it cannot now be suggested that one should approach an application for adjustment of property interests under the Property (Relationships) Act by beginning with an assumption that an equal division of property is appropriate and then asking whether the circumstances of the case requires some departure from that position. That is the course I have taken.
90 Also it can no longer be contended the contributions of a de facto partner as homemaker and parent should be regarded as in some way inferior to the corresponding contributions of a spouse: Evans v Marmont, at 74C. My findings about Ms Hodgson’s relevant contribution in this area are of importance to my overall conclusion.
91 Before the final assessment in stage three is made, it is necessary to consider a number of arguments advanced on behalf of Mr Grebert.
Notional Rent
92 Mr Grebert asks for an adjustment in his favour in respect of notional rent for Ms Hodgson’s occupation of the Mona Vale property during the period between the parties’ separation and the date of trial. The authorities suggest that caution should be exercised in acceding to such a submission. Undertaking an adjustment for “notional rent” for post separation occupation can result in the giving of undue weight and significance to a single contribution. Notional rent is obviously to be taken into account but the proper way to do so is in the overall evaluation of the contribution during the relationship and not as a final additional adjustment: Kardos v Sarbutt (2006) 34 FamLR 550; [2006] NSWCA 11 at [78]. That is the course I propose to take. I have taken the submission into account in my overall assessment.
93 Counsel on behalf of Mr Grebert submits that about $30,000 of a substantial credit card debt incurred by Mrs Hodgson since separation remains unexplained. One cannot readily infer from her credit card statements that she has frittered money away on luxuries. Indeed that conclusion would be contrary to my earlier findings about her responsible behaviour in this area in the course of a 21 year relationship. I take into account in my overall assessment the fact that some of her credit card debt is unexplained. I do not think it makes much difference to the final result.
Conclusions and orders
94 Accordingly in my assessment the just and equitable order adjusting the interests of the parties in their divisible pool of property is an order that they are each entitled to 50% of such property.
95 I direct the parties to bring in short minutes of order within seven days to give effect to these reasons. This will include an agreed calculation of the party's entitlements in accordance with these orders. There may be other consequential orders and calculations that are required. Any of those matters can be dealt with at that time.
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