Howlett v Neilson

Case

[2005] NSWCA 149

9 May 2005

No judgment structure available for this case.

Reported Decision:

(2005) DFC 95-321

Court of Appeal


CITATION:

Howlett v. Neilson [2005] NSWCA 149

HEARING DATE(S):

16 March 2005

 
JUDGMENT DATE: 


9 May 2005

JUDGMENT OF:

Hodgson JA at 1; Ipp JA at 49; McColl JA at 50

DECISION:

1. Appeal allowed. 2. Orders below set aside. 3. In lieu thereof, order that the appellant pay the respondent $97,000.00 with interest accruing from 11 April 2003, and appellant to pay the respondent's costs of the proceedings. 4. Respondent to pay the appellant's costs of the appeal, not extending to the costs of Senior Counsel, and to have a certificate under the Suitors' Fund Act if otherwise eligible.

CATCHWORDS:

FAMILY LAW - De facto relationships - Statutory power to make orders adjusting property interests of parties - Matters to be considered - Initial contributions of parties - Contributions during relationship - Relevance of both benefit and cost of contributions - Need for findings as to contributions - Sufficiency of reasons

CASES CITED:

Dwyer v. Kaljo (1992) 27 NSWLR 728
Evans v. Marmont (1997) 42 NSWLR 70
Jones v. Grech [2001] NSWCA 208, 27 FamLR 711
Lyman v. Lyman (1989) 13 FamLR 18
Mallett v. Mallett (1984) 156 CLR 605
Marriage of Clauson (1995) 18 FamLR 693
Marriage of Ferraro (1992) 16 FamLR 1
Pierce v. Pierce [1999] FLC 92-844
Powell v. Supresencia (2003) 30 FamLR 473
Wallace v. Stanford (1985) 37 NSWLR 1

PARTIES:

Gary William Howlett - appellant
Gail Maxine Neilson - respondent

FILE NUMBER(S):

CA 40942/03

COUNSEL:

Mr. P. Brereton SC with Mr. J.W. Hammond for appellant
Mr. R.E. Quickenden for respondent

SOLICITORS:

Stephen Marks, Gorokan for appellant
John Ryan, Toukley for respondent

LOWER COURT JURISDICTION:

District Court

LOWER COURT FILE NUMBER(S):

DC 236/01 (Gosford)

LOWER COURT JUDICIAL OFFICER:

English DCJ




                          CA 40942/03
                          DC 236/01

                          HODGSON JA
                          IPP JA
                          McCOLL JA

                          Monday 9 May 2005
HOWLETT V. NEILSON
Headnote


      FACTS
      A de facto relationship between the appellant and the respondent, lasting seventeen years and resulting in one child, ended in January 2000.

      The initial contributions of the appellant and respondent were approximately $110,000 and $2,000, respectively. Included in the appellant’s assets was a house in Lake Munmorah where the parties resided. During the relationship the house was demolished and replaced by a newly constructed residence. The property was then sold in 2001 after the relationship ended, yielding a profit of $146,240.02.

      The appellant was employed until 1987, and from 1988 conducted his own business with the assistance of the respondent. The respondent ceased being employed after the birth of their child, instead taking responsibility for care of the child and the household. She later undertook casual employment.

      The primary judge found that the respondent brought minimal assets to the relationship, but that she had made significant contributions to the appellant’s business, to the building of the new house on the property and in the capacity of homemaker.

      The primary judge valued the assets at $312,516.00, and found it just and equitable under s.20 of the Property (Relationships) Act 1984 to award the respondent 42% of the total assets, being $131,256.72. It was also ordered that the appellant pay the respondent’s cost of the proceedings.

      The two questions raised on appeal were whether the valuation of assets was incorrect and whether the division of assets was just and equitable, it being contended that the primary judge failed to take into account, or give any or any sufficient weight to, the initial contributions made by the appellant, in particular the Lake Munmorah property.

      HELD
      (1) Despite certain oversights in calculating the value of the parties’ assets, appellate intervention could not be justified on this ground alone. However, the figure of $320,000, representing an accurate valuation of assets, would be adopted if necessary.
      (2) It is important to identify and evaluate the contributions of the parties, including initial contributions; and it may be appropriate to consider not merely the benefit of the contributions to the relationship, but also the cost of contributions to the person making it. It may also be appropriate to use mathematical calculations as a guide.
      (3) A fair assessment of the parties’ contributions to the present asset pool would be to deduct the initial contributions (not accounting for interest over time) from the total figure of $320,000 and award half that amount to each party, on the basis that the value of the contributions made during the relationship were roughly equal.
      (4) The primary judge erred in not making findings as to the initial contribution of the appellant, and in not explaining how or to what extent that initial contribution was taken into account in reaching the figure of 42%.

      ORDERS
      1. Appeal allowed.
      2. Orders below set aside.
      3. In lieu thereof, order that the appellant pay the respondent $97,000.00 with interest accruing from 11 April 2003, and appellant to pay the respondent’s costs of the proceedings.
      4. Respondent to pay the appellant’s costs of the appeal, not extending to the costs of Senior Counsel, and to have a certificate under the Suitors’ Fund Act if otherwise eligible.
      **********

                          CA 40942/03
                          DC 236/01 (Gosford)

                          HODGSON JA
                          IPP JA
                          McCOLL JA

                          Monday 9 May 2005

HOWLETT V. NEILSON

Judgment

1 HODGSON JA: On 11 April 2003, English DCJ made an order under the Property (Relationships) Act 1984 that the appellant pay the respondent $131,256.72, and an order that the appellant pay the respondent’s costs of the proceedings. The appellant appeals from these orders pursuant to an extension of time granted by Beazley JA on 1 March 2004.


      CIRCUMSTANCES

2 The appellant and the respondent were born respectively on 20 August 1953 and 7 February 1957. A de facto relationship between them commenced in about late 1983, and ceased when they separated in January 2000. There was one child of the relationship, a son Nat born 23 October 1984.

3 At the commencement of the relationship, the appellant owned a house at Lake Munmorah valued at $63,500.00, subject to a mortgage of about $12,000.00. He also owned a ski boat, motor and trailer, a Ford station wagon, two catamaran sailing boats, household items, tools and sporting equipment, worth in all around $29,000.00; and he had savings of $12,000.00. He received a redundancy payment from Telstra in 1984 of $18,000.00. At the commencement of the relationship, the respondent owned a few household items, and had savings of about $1,000.00.

4 The parties resided at the Lake Munmorah property. The respondent was in employment from the commencement of the relationship until the birth of Nat, and was then engaged in household duties and caring for Nat. She commenced casual hairdressing work in 1985.

5 The appellant was in employment until 1987. In 1988, he commenced his own business. The respondent assisted him in that business.

6 In 1985, the house at Lake Munmorah was demolished, and subsequently a new house was constructed. Some work was done by the appellant on that new house, and there was some assistance from the respondent.

7 When the parties separated in January 2000, both continued to live in the Lake Munmorah house. On 14 December 2000, the appellant requested the respondent to pay him rent, and she left in February 2001.

8 At the date of the separation, there was a mortgage of just over $130,000.00 on the Lake Munmorah property. It was sold in August 2001 for $290,000.00, and after deduction of the mortgage and expenses, the appellant received $146,240.02.


      DECISION OF THE PRIMARY JUDGE

9 The primary judge found that the respondent brought minimal assets to the relationship, but that she made significant contributions in the capacity of home maker, and that she contributed to the appellant’s business and contributed to the building of the new house at Lake Munmorah.

10 The primary judge found it appropriate to value the assets at the date of hearing, and found the value of those assets to be $312,516.00; and she found it just and equitable that an adjustment be made in favour of the respondent of 42% of the total assets of $312,516.00, giving $131,256.72.

11 Included in the total assets was a motor vehicle valued at $5,450.00, which had been taken by the respondent; but that amount was not deducted from the amount ordered by the primary judge.


      STATUTORY PROVISION

12 The order appealed from was made under s.20 of the Property (Relationships) Act 1984, which is in the following terms:

          20 Application for adjustment
          (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:
          (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
          (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:
              (i) a child of the parties,
              (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.

      GROUNDS OF APPEAL

13 The appellant relied on the following grounds of appeal:

      1. That her Honour was in error in valuing the assets of the parties for division at $312,516.00.
      2. That her Honour was in error in concluding that it was just and equitable that the respondent should receive 42% of the total assets of the parties, in that:
          (a) her Honour failed to take into account, or give any or sufficient weight to, the initial contributions of the appellant, and in particular the circumstance that the visible assets almost exclusively represented the proceeds of sale of the Lake Munmorah property, which the appellant held prior to cohabitation;
          (b) having regard to the initial contributions of the appellant, and in particular the circumstance that the divisible assets almost exclusively represented the proceeds of sale of the Lake Munmorah property, which the appellant had held prior to cohabitation, the result is manifestly unreasonable.

14 I will consider these two grounds in turn.


      VALUATION OF ASSETS AT $312,516.00

15 The primary judge did not set out the calculation of this figure. The appellant has provided a calculation of assets at $259,995.00, but this calculation omits the appellant’s superannuation of $25,688.00 and the respondent’s superannuation of $3,329.00. Also, it shows values for the appellant’s interest in a farm property, his Jeep, and his interest in cattle and farm implements which are respectively $9,810.00, $13,450.00 and $3,500.00 less than values said by the respondent’s Counsel to have been agreed at the trial.

16 The respondent has provided what her Counsel says to have been the list used by the primary judge, showing values totalling $312,516.00, including values mentioned above said to have been agreed at the trial. The total includes the appellant’s superannuation to the extent of $23,000.00; and it also includes $9,000.00 identified as stamp duty, which the parties accept to represent stamp duty paid by the appellant towards the acquisition of a property in Newcastle after separation. However, the list omits some of the appellant’s superannuation and also omits the respondent’s superannuation, and it omits an additional amount paid by the appellant towards acquisition of the Newcastle property, in an amount of either $1,500.00 or $2,500.00.

17 In these circumstances, I am not satisfied that the primary judge made an error which could justify appellate intervention. However, should this Court need to find the total assets available for distribution, I would include the total amount of superannuation of the parties of about $29,000.00, and also an additional amount paid towards the Newcastle property; and I would adopt a total figure of $320,000.00.


      DETERMINATION THAT THE RESPONDENT RECEIVE 42% OF TOTAL ASSETS

18 The primary judge referred to the appellant’s estimate of value of his property at the commencement of the relationship (Red 21H), and noted a concession by the respondent that the appellant had made a substantial capital contribution towards the acquisition of assets during the relationship (Red 26O). She noted that the respondent sought a division of assets of 50% (Red 26M); and that the appellant submitted that the respondent was entitled to 40% of the net asset growth of the assets of the parties (Red 26S), and urged the Court to take into account his initial capital contribution and his financial contributions post-separation (Red 27W). At Red 28F, the primary judge rejected the appellant’s contention that the respondent should have 40% of the net asset growth, and gave the following reasons:

          The defendant asks the court to makes orders entitling the plaintiff to a 40% share of a net asset pool. I find such an award would not reflect the significant contribution made by the plaintiff to the relationship to the limited financial extent that she did but also I find it fails to reflect the significant contribution which I have found she made in her role as homemaker and silent business partner. Such an award would not result in a just and equitable distribution of the assets between the parties as required by Section 20 of the Property (Relationships) Act 1984.

19 However, the primary judge made no finding as to the amount of the initial financial contributions of the appellant, and made no statement as to how, if at all, that contribution was taken into account in reaching her conclusion that there should be an adjustment made in favour of the plaintiff of 42% of the total assets of $312,516.00.


      Submissions

20 Mr. Brereton SC for the appellant submitted that error was disclosed in two ways: an error of principle, in that the primary judge failed to take into account or give sufficient weight to the initial contributions by the appellant; and error of principle demonstrated by a manifestly unreasonable result.

21 Mr. Brereton submitted that in this case, as in Pierce v. Pierce [1999] FLC 92-844, the primary judge had adopted a percentage figure which did not properly reflect the disproportion of the initial contributions, without any explanation of how the initial contributions were taken into account when arriving at that figure. He also referred to Wallace v. Stanford (1985) 37 NSWLR 1 at 15, and Powell v. Supresencia (2003) 30 FamLR 473 at [55] to [56]. He pointed out that the primary judge’s calculation meant that the respondent would receive $131,000.00 and the appellant would receive $181,000.00 of the $312,000.00 identified for distribution, so that if one assessed the contributions of the parties during the relationship as being roughly equal, the appellant was given the benefit of only $50,000.00 for having contributed $110,000.00 at the commencement of the relationship, as compared with about $1,000.00 by the respondent.

22 Mr. Brereton submitted that, accepting that the correct pool of assets was $320,000.00, the appellant’s original contribution should be recognised as contributing about $200,000.00 to that pool, and the balance should then be divided equally, giving $60,000.00 for the respondent, from which her superannuation and Nissan motor vehicle (a total of $8,779.00) should be deducted. The figure of $200,000.00 could be justified either by considering in detail the contribution to the pool of assets provided by the Lake Munmorah property, or alternatively by applying simple interest at the rate of about 4% or 5% to the $110,000.00 initially provided by the appellant.

23 Mr. Quickenden for the respondent submitted that cases such as Wallace and Powell, dealing with money such as inheritances received late in the relationship, involved very different considerations from those concerning initial contributions. In a long relationship, the contributions made during the relationship reduce the significance of initial contributions, and that was appropriately recognised by the primary judge.

24 Mr. Quickenden submitted that Pierce was a different case from the present, because the relationship was ten years rather than seventeen years, and the husband took major responsibility for the care of children who were aged 8 and 9 after the separation. Furthermore, in that case, the Court reached its determination of a 70%/30% split without any explanation of how the initial contributions were taken into account. In the present case, the primary judge’s reasons indicate that she did take into account the appellant’s initial contributions, and the result does not indicate any error of principle in the way she did this.


      Decision

25 It is accepted that the exercise of jurisdiction under s.20 of the Act involves three steps:

      (1) identification and valuation of the property of the parties;
      (2) identification and valuation of the respective contributions of the parties, of the types referred to in s.20;
      (3) determination of what if any order is just and equitable having regard to these contributions.

      See Lyman v. Lyman (1989) 13 FamLR at 18, Jones v. Grech [2001] NSWCA 208, 27 FamLR 711 at [29].

26 The first of those steps has been dealt with above, and needs no further discussion.

27 As regards the second and third steps, it is established that, whereas in determining an appropriate order for property settlement under s.79 of the Family Law Act 1975 (Cwth) the Family Court can take into account a wide range of circumstances relevant to the justice of the case, a court in making an order under s.20 of the Act is limited to considering what is just and equitable having regard to the contributions of the parties, in all the circumstances: Evans v. Marmont (1997) 42 NSWLR 70. In the leading judgment in that case, Gleeson CJ and McLelland CJ in Eq. noted that there were at least two major reasons for such difference, and they continued (at 78-79):

          The first relates to the limited purpose of the New South Wales Act, which will be explained below. The second relates to the essential legal nature of marriage, which is referred to in the Family Law Act (s.43) as an institution, and which is given by that Act its common law meaning as being “the union of a man and woman to the exclusion of all others voluntarily entered into for life". Marriage involves matters of legal status and public commitment. Included in the formal commitment undertaken by people who marry, and reflected in s.72 of the Family Law Act, is a mutual undertaking by each party to maintain the other to the extent of their respective abilities and needs. No such commitment need be involved in a de facto relationship; hence the substantial differences between the way in which the two Acts address the subject of maintenance.

28 Accordingly, since the contributions are so central to the decision, it is particularly important in the reasons for making or refusing an order to identify and evaluate these contributions.

29 This is not a narrow or purely mathematical process. In many cases, it may be appropriate simply to treat the contributions of the parties during the relationship as equal, even though the nature of the contributions are different, although of course there is no presumption of law to that effect, and this assessment depends on a judgment being made that the quality of the contribution of each, in his or her own sphere, deserves to be considered as equal: Mallett v. Mallett (1984) 156 CLR 605. However, that judgment is one that often may be readily reached: Marriage of Ferraro (1992) 16 FamLR 1, Marriage of Clauson (1995) 18 FamLR 693, Jones v. Grech.

30 In addition to the contributions of the parties during a relationship, regard needs also to be had to initial contributions. In cases decided under the Family Law Act, there has developed what is sometimes referred to as “the erosion principle”. That principle was considered and explained in Pierce. That case concerned a marriage of eight years, preceded by two years’ cohabitation. The assets of the parties were found to be $319,190.00. At the time of marriage, the husband had assets to the value of $226,000.00, while the wife had assets with an estimated value of $11,500.00. The trial judge considered the parties’ contributions during cohabitation to be equal. He gave some additional weight to the greater initial contribution of the husband, but said that the relevance of this was diminished due to the length of cohabitation, a little over ten years, and the substantial other contributions. He took into account the husband’s contribution in caring for the children since separation, and assessed the contributions of the parties to be 55:45 in favour of the husband. The Full Court allowed an appeal, holding that the trial judge erred in his assessment of the contributions of the parties in that he failed to attach sufficient weight to the greater initial contribution of the husband and his post-separation contribution in caring for the children. The Full Court held that, having regard to the facts as found by the trial judge, the result embodied in his reasons was unreasonable; and that in re-exercising the discretion, the contribution to the parties should be assessed at 70% to the husband and 30% to the wife, with a further 5% adjustment in favour of the husband for factors under s.75(2) of the Family Law Act.

31 In dealing with the so-called “erosion principle”, the Full Court (Ellis, Baker and O’Ryan JJ) said this (at [25]-[28]):

          25. In addition to referring to a short passage from the judgment of Fogarty J in Money and Money (1994) FLC 92-485, the trial judge noted that the passage was cited with approval by the Full Court (Nicholson CJ, Baker and Tolcon JJ) in Bremner and Bremner (1995) FLC 92-560.

          26. In Way and Way (1996) FLC 92-702, the Full Court (Barblett DCJ, Finn and Butler JJ), said at 83,404:-
              "In the subsequent Full Court decision in Bremner all three Judges expressly preferred the approach taken by Fogarty J in Money over that taken by Lindenmayer J in the same case. Thus, and notwithstanding the attempts by Counsel for the husband in this case to demonstrate that there was some inconsistency between what Fogarty J said in Money and what was actually said in the joint judgment of the Full Court in Lee Steere , we regard the law in this area as now settled by the statement by Fogarty J in Money (and subsequently accepted by all members of the Full Court in Bremner ) 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’."
          27. However, it is important to put that quotation in its correct context. Fogarty J in Money and Money (supra) said at page 81,054:-

              "I am unable to agree with the criticism by his Honour in the passage in his judgment immediately after that quotation or of his analysis of the issues involved. In an appropriate case, in my view, an initial substantial 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. I feel, if I may say so with respect, that his Honour's formulation to the contrary is unrealistic and does not correspond with common experience in the Court in many of these cases.

              I think it is legitimate for me to say, as I was a member of the Full Court in Le Steere and Le Steer e (1985) FLC 91-626 that His Honour has read too much into the passage to which he refers and that the term "off-setting contribution" does not necessarily mean ‘greater contribution’. It simply reflects the circumstance that the respective contributions of the parties over a long period of marriage ‘offset’ the significance which might otherwise be attached to a greater initial contribution by one party. This is, in my view, made clear by the Full Court in White and White (1982) FLC 91-246 where that court pointed out that the principal (sic) in Crawford and Crawford (1979) FLC 90-647 is that the original contribution should not be carried forward as a mathematical proportion; ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be later factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution".
          28. 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. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: See also Campo and Campo (unreported, Full Court (Ellis, Lindenmayer and Finn JJ), Sydney, delivered 19 May 1995 at pages 21 and 22 of the joint judgment) and Zahra and Zahra (unreported, Full Court Sydney, delivered 3 October 1996, per Ellis J. at page 10).

32 In applying these principles to the fact of that case, the Full Court said this ([36]-[40]):

          36. The duration of cohabitation was about ten years. The husband had significant assets at about the date of the marriage. He made a significant financial contribution to the purchase of the matrimonial home in 1990, using funds that he had at about the time of the marriage, to the acquisition of which the wife had made little, if any, contribution.

          37. During the period of cohabitation, the husband was continuously engaged in paid employment and utilised his earnings for the benefit of the family. In addition he made a non-financial contribution to the maintenance of the matrimonial home and a minor contribution as a parent.

          38. The wife made a financial contribution to the purchase of the matrimonial home from savings which she had at the commencement of cohabitation. However this contribution was minimal compared to that of the husband. The wife was engaged in paid employment during the cohabitation but for a lesser period than the husband. She was primarily engaged in attending to domestic tasks and the care of the children. We are satisfied that this contribution was greater than that of the husband and we take it into account in a real and substantial way.

          39. The supervening contributions, after the commencement of cohabitation, were the contributions which we have identified. These contributions were found by Chisholm J to be equal and we agree with that assessment. However there remains what the trial judge described as the husband's greater initial financial contribution and the husband's contribution in caring and supporting the children since the date of separation. But for the husband's greater initial financial contribution the parties would not have been able to acquire the matrimonial home in 1990.

          40. In our opinion the two additional matters of contribution, which we have identified, favour the husband. Weighing the initial contributions of the husband and his post separation contributions with all other relevant contributions by both the husband and the wife we would attach significant weight to the initial contribution and would assess the respective contributions of the parties within the meaning of paragraphs (a), (b) and (c) of s.79 (4), from the date of the to the date of the hearing, expressed as a percentage of the net value of their assets, as at the date of the hearing, as being 70% by the husband and 30% by the wife.

33 Although this case was relied on by the appellant, it is not a case in which the original contribution was by any means fully reflected in the ultimate order. If one rounds off the value of the assets available for distribution to $320,000.00, one finds that 70% of that figure is $224,000.00 and 30% is $96,000.00, a difference of $128,000.00, whereas the difference between the initial contributions was around $215,000.00. That overall result is not strikingly different from the overall result in this case, where the difference in the initial contributions is of the order of $108,000.00 and the difference in the shares of the ultimate division is around $50,000.00.

34 I have found no clear statement concerning the “erosion principle” in cases under the Property (Relationships) Act. In my opinion, it is by no means clear that it would apply to the same extent as under the Family Law Act, where matters other than contributions can be taken into account, and where the relationship itself involves a public commitment to mutual support for life (as noted in Evans at 78-79).

35 However, it is plainly not the case that the contributions of the parties should be considered as making it just and equitable that there be an order only concerning increases in the value of assets over and above initial contributions.

36 For example, suppose that one has a ten year relationship to which the man brought assets of $5 million and the woman brought no assets, and both make very substantial contributions during the relationship, both financial and non-financial; but that at the end of the relationship, for various reasons, the total assets of the parties are still around $5 million; and that the court assesses the value of the contributions during the relationship as being approximately equal. In those circumstances, the contributions of the woman may make it just and equitable that she receive an order for a substantial sum of money. This is for at least two reasons. This may be a case in which the value of the initial contributions plus the value of the contributions made during the relationship substantially exceed the value of the assets available for distribution; in which case the person making the original contribution cannot expect to receive it back undiminished. Secondly, in my opinion, while s.20 does not authorise the making of orders by reason of perceived needs of a party to a de facto relationship, or by reason of opportunities lost to that party because of the relationship, it does permit the evaluation of contributions having regard not merely to the benefit of the contributions to the relationship and to the property of the parties, but also having regard to the cost of each contribution to the person making it. If, in a relationship involving the financial parameters indicated above, the woman spends the ten years as a homemaker rather than in developing skills and advancing a career, this may indicate that her contribution, although equal to that of the man in terms of benefit to the relationship and to the property of the relationship, is such as to make a substantial order just and equitable because of what it has cost the woman in terms of loss of opportunity for development of skills and advancement of a career. It is for reasons such as those that I believe that the result reached by the Court of Appeal in Dwyer v. Kaljo (1992) 27 NSWLR 728 (substantially increasing the amount awarded by me at first instance) was correct, even though the principle on which the Court then acted was rejected in Evans v. Marmont.

37 However, even if parties are not necessarily entitled to a return of their initial contributions, these contributions should be identified and evaluated. The primary judge did not do that in this case: she noted some evidence and contentions about initial contributions, but apart from finding that the respondent brought minimal assets to the relationship, she made no finding as to the initial contributions of the parties, in particular as to the appellant’s initial contribution. In addition, she gave no explanation of how she reached her figure of 42% of the total assets, in particular giving no explanation of how, or to what extent, her assessment of the initial contributions of the parties was taken into account in reaching that figure. I find it a difficult question whether this amounts to an inadequacy of reasons; and also a difficult question as to whether the result, in effect giving the appellant a return of $50,000.00 for his initial contribution of $110,000.00, is so unreasonable as to indicate some error of principle.

38 Before further considering that question, I note that there is one plain error by the primary judge, namely a failure to deduct the value of the Nissan motor vehicle from the figure of about $131,000.00. This error is conceded by the respondent. In my opinion, if the only result of the appeal were to make that adjustment to the figure awarded, the appeal would have to be considered as substantially unsuccessful.

39 In order to reach a conclusion on whether the primary judge has made a more significant error, I find it helpful to set out the way I would resolve this matter, having regard to the principles I have discussed. Doing so involves some mathematical calculations; and while I do not think that these matters can be determined on such mathematical calculations, I think mathematical calculations 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.

40 As indicated above, the assets of the parties are around $320,000.00. I take the initial contributions to be respectively about $110,000.00 and about $2,000.00. I take the contributions during the relationship, at least in terms of benefit to the relationship and to the property of the relationship, to be equal in value.

41 If, as suggested by Mr. Brereton, one regards the appellant’s initial contribution, or perhaps the differential between the contributions, as increased to $200,000.00 by virtue of some allowance for a low rate of interest, the result would be of the order of $51,000.00 to the respondent, as indicated by par.[22] above. In my opinion, an order for that amount would fall well short of what is just and equitable, having regard to the 17-year contribution of the respondent to the relationship and the property of the relationship.

42 If one takes the appellant’s initial contribution as $110,00.00, and the respondent’s as $2,000.00, and deducts those figures from $320,000.00, this gives $208,000.00. Half that amount would be $104,000.00. If one then adds the respondent’s initial contribution of about $2,000.00, and deducts the assets retained by the respondent of $8,779.00, one arrives at a figure to be paid to the respondent which can be rounded off to $97,000.00. This approach would return the initial contributions, without any adjustment to increase them either by CPI indexing or an interest allowance. It would be on the basis that the contributions made during the relationship are roughly equal, which seems an appropriate assumption. It would value the contributions of each party during the 17-year relationship at $104,000.00, and value the contributions to the present asset pool of the original asset contributions at $110,000.00 and $2,000.00 respectively. It would make no allowance for any possible greater cost to the respondent of her contribution; but that was not a matter about which there was significant evidence, and not a matter relied on in submissions.

43 In cases such as this, mathematical precision is not attainable; but in my opinion, this result would be a fair assessment of how the various contributions make up the present asset pool, and of how it would be just and equitable, having regard to the contributions of the parties, to divide that asset pool.

44 Returning to the decision of the primary judge, the result of about $125,000.00 (the awarded figure less an amount for the Nissan motor vehicle) is not so different from the figure I arrived at as itself to justify a conclusion that the judge applied a wrong principle. However, when one has regard to the circumstance that, assuming substantially equal contributions otherwise, the result arrived at in effect gives the appellant only about $50,000.00 as reflecting an initial contribution difference of around $108,000.00 (see par.[21] above), and the circumstance that the primary judge made no finding as to the value of the appellant’s contribution, and the circumstance that she gave no explanation of how she arrived at the figure of 42% and, in particular, no explanation of how or to what extent her assessment of the initial contributions was taken into account in reaching that figure, I think there is a deficiency of reasons that warrants appellate intervention. Accordingly, I think it is appropriate for the Court of Appeal to make its own assessment, and my assessment is that indicated above.

45 For those reasons, in my opinion the judgment appealed from should be set aside, the order that should be made is for payment by the appellant to the respondent of $97,000.00, with interest at Supreme Court rates from 11 April 2003. Apparently, something like $65,000.00 has been paid on account, so there will need to be some calculation of interest.


      CONCLUSIONS

46 In my opinion, the result achieved is enough to carry the costs of the appeal, subject to one matter; but not enough to make any difference as to the costs at first instance, at least unless there was some relevant offer of compromise or Calderbank letter. The appellant was represented by Senior Counsel on appeal, and the Court was very much assisted by his submissions. However, in this particular case, the disproportion of the amount involved and the result achieved to the costs of retaining Senior Counsel leads me to the view that those costs should not be borne by the respondent.

47 Accordingly, I propose the following orders:

      1. Appeal allowed.
      2. Orders below set aside.
      3. In lieu thereof, order that the appellant pay the respondent $97,000.00 with interest accruing from 11 April 2003, and appellant to pay the respondent’s costs of the proceedings.
      4. Respondent to pay the appellant’s costs of the appeal, not extending to the costs of Senior Counsel, and to have a certificate under the Suitors’ Fund Act if otherwise eligible.

48 If either party sees any difficulty with the form of the orders, or if there are any additional submissions to be made on costs, written submissions on those matters can be made within 7 days, with the other side replying by written submissions within a further 7 days.

49 IPP JA: I agree with Hodgson JA.

50 McCOLL JA: I agree with Hodgson JA.

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Most Recent Citation

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51

Davis v Davis [2024] NSWCA 222
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Separovich v Ferrao [2011] NSWCA 180
Cases Cited

3

Statutory Material Cited

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Jones v Grech [2001] NSWCA 208
Jones v Grech [2001] NSWCA 208
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