JYJ and DAC and Anor - [2004] FMCAfam 363

FEDERAL MAGISTRATES COURT OF AUSTRALIA

JYJ & DAC & Anor

[2004] FMCAfam 363

FAMILY LAW – Property – contributions – where husband gaoled for minimum thirteen years – few assets when husband sentenced – where husband receives three inheritances after incarceration – post separation contributions – trusts – special contributions – where wife solely responsible for children for seven years after husband gaoled – homemaker and parent contributions.

Family Law Act 1975 (Cth), ss.60, 65, 68, 75, 79
Child Support (Assessment) Act 1989, (Cth)

In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626
In the Marriage of Ferraro (1993) FLC 92-335

In the Marriage of Clauson (1995) FLC 92-595
Russell v Russell (1999) FLC 92-877
Rosati (1998) FLC 92-804
Farnell (1996) FLC 92-681
Figgins (2002) FLC 93-122
In the Marriage of Rainbird (1977) FLC 90-256
Gosper (1987) FLC 91-818
Kessey (1994) FLC 92-495
Pellegrino (1997) FLC 92–789
Farmer and Bramley (2000) FLC 93-060
Querasimu (1999) Fam CA 1314
Bonnici (1992) FLC 92-272
Burke (1993) FLC 92-356
Aleksovski (1996) FLC 92-705
Wall (2002) FLC 93-110
McLay (1996) FLC 92-667
Norbis (1986) FLC 91-712
Tomassetti (2002) FLC 93-032

Applicant:

J Y J

First Respondent:

D A C

Second Respondent:

C A M

File No:

Pam4503 of 2003

Delivered on:

23 August 2004

Delivered at:

Parramatta

Hearing dates:

19 & 20 July 2004

Judgment of:

Ryan FM

REPRESENTATION

Solicitor advocate for the Applicant:

Mr N. Ledingham

Solicitors for the Applicant:

Bull Son & Schmidt

Counsel for the First Respondent:

Mr G. Kenny

Solicitors for the Respondent:

Lamrocks

Counsel for the Second Respondent:

Mr G. Kenny

Solicitors for the Second Respondent:

Lamrocks

Counsel for the Children’s Representative:

Ms D. Harris

Solicitors for the Children’s Representative:

Karen Haga & Associates

ORDERS

Within fourteen (14) days of the date of these orders the husband shall pay to the wife the sum of one hundred and ten thousand dollars ($110,000).
Within six (6) months of the date of these orders the husband shall pay to the wife an additional sum of nine thousand seven hundred and fifty seven dollars ($9,757).
In the event the husband fails to comply with orders (1) and/or (2) the parties do all such acts and execute all such documents as may be required to effect a sale of the property situate and known as the Coomba Park Property to be sold by private treaty at a price agreed upon between the parties and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee.
Upon the completion of the sale the proceeds of the sale shall be applied as follows:
(a)To pay all costs, commissions and expenses of the sale and to pay any council and water rates and maintenance levies outstanding in respect of the matrimonial home.
(b)To pay any capital gains tax payable on the sale, which amount shall be held in trust by the husband’s solicitors pending notice of assessment issued by the Australian Taxation Office.
(c)Forty three per cent to the wife.
(d)Balance then remaining to the husband from which he shall pay the wife an adjusting amount in order to give her 43 per cent of the total assets. In the event that the husband has made no payments pursuant to orders (1) and/or (2) of these orders the amount payable pursuant to this order is $42,357 together with interest calculated in accordance with the Federal Magistrates Court Rules 2001 from the date on which the payment was first due.
In the event that the Coomba Park property has not been sold by or before a date nine (9) months from the date of these orders then the husband and the wife shall make all such arrangements and do all such acts and sign all such documents and pay all monies equally necessary to procure a sale by public auction of the matrimonial home upon the following terms:
(a)The auctioneer shall be a real estate agent;
(b)The reserve price shall, unless agreed upon by the parties, be as proposed by the Auctioneer.
(c)That auction will take place within three months of the husband failing to comply with order (1) and/or (2).
Until further order the husband, C A M and their servants and agents are restrained from:
(a)Transferring, encumbering, mortgaging or otherwise dealing with his/her interest in the property known as the Coomba Park property;
(b)Selling, transferring, encumbering, mortgaging or otherwise dealing with the husband’s interest in any household furniture, bank accounts and personal effects; including the assets of the Family Trust;
(c)Other than as is provided for in these orders withdrawing, disposing of or in any way dealing with the money in any bank account in which the husband has an interest.
Pending compliance with orders (1) and (2) the husband shall pay all council and water rates in relation to the Coomba Park property as and when they fall due.
Notwithstanding order (5) the husband and his trustee may withdraw from his or the trusts bank accounts (a) $100 per month for the husband’s expenses, (b) child support in accordance with any operative child support assessment and (c) monies due pursuant to order (6).
All exhibits tendered in these proceedings shall be returned at the expiration of one calender month unless an appeal is lodged.
The solicitor who issued any subpoena shall collect that subpoenaed material and return it to the owner within seven (7) days.
Any application for costs shall be made by filing and serving written submissions within 21 days. The respondent to any costs application shall file and serve written submissions in response within 14 days of service. Any written submissions in reply shall be files and served within a further 7 days.
Any written submissions shall be filed by lodging them with my Associate by letter and or facsimile transmission on 9893-5767.
The children’s representative’s application for costs is dismissed.
All outstanding applications are dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PARRAMATTA

PAM4503 of 2003

J Y J

Applicant

And

D A C

Respondent

REASONS FOR JUDGMENT

The proceedings

These are proceedings for the adjustment of property under s.79 of the Family Law Act 1975 and for parenting orders. The parenting issues concern contact by the husband to the parties’ two children, A C and R C. The contact issue is limited to contribution to a $1000 fund that will provide for the children’s travel expenses for contact. This is necessary because the husband is in gaol and will be until at least 2009.

The application

J Y J (“the wife”) started these proceedings when she filed an application for final orders in the Local Court Family Matters on 1 August 2003. Those proceedings were transferred to the Family Court of Australia on 5 September 2003. On 14 October 2003 the proceedings were transferred from the Family Court to the Federal Magistrates Court.
At the start of the hearing the wife’s solicitor outlined the orders sought by his client. They are as follows:
1.Within twenty-eight (28) days of the date of order the second respondent deliver to the applicant a transfer in registrable form of her interest in the Coomba Park Property, being the land comprised in Certificate of Title Folio Identifier X, together with a document of title in respect of that property.
2.Within twenty-eight (28) days the husband remove or cause to be removed from the garage at the Central Mangrove property as per annexure “A” hereto.
3.Within twenty-eight (28) days of the date of order the husband remove or cause to be removed all contents and belongings of his stored in the garage at the Coomba Park property.
4.Each party otherwise be declared to be the sole owner of all property of whatsoever nature currently in their possession, control or ownership.
5.The children of the marriage, A C born in 1987 and R C in June 1989 live with the wife.
6.That the said children have reasonable contact with the husband.
7.The wife have the sole responsibility for the care, welfare and development of the said children.
8.Each of the parties do such things as may be reasonably required of them so as to facilitate contact between the children and the husband.
During closing addresses, the wife’s solicitor submitted that the court would divide the assets equally between the parties and that the wife agreed that the husband should keep Coomba Park provided he paid her out her s.79 entitlement from the remaining assets
D A C (“the husband”) filed a response on 4 September 2003 which he later amended. In relation to property, the husband contends that the wife should have 15 per cent of the assets and that he should have the balance. At trial, he moved on his amended response filed 22 March 2004. Insofar as the formulation of the property orders is concerned, he contends that the wife’s entitlement should be by cash adjustment in her favour paid from his savings.
When the wife initiated these proceedings, she joined C A M as a party. By Deed of Trust dated 21 November 2002[1] the husband appointed C A M trustee of the Family Trust. The trust is a discretionary trust naming the husband primary beneficiary and the children specified beneficiaries. The husband provided all of the trust assets. Pursuant to s.106B the wife applied to set aside a series of transactions whereby the husband transferred his interest in land and other assets to the Family Trust. At the start of this hearing, the husband’s counsel indicated that his client agreed that the trust assets would be included as matrimonial assets and that the trust transfers should be set aside to the extent needed to provide the wife’s s.79 entitlement. As trustee, C A M indicated that she would abide the court’s orders and did not seek to be heard.
[1] Exhibit G

The evidence

The applicant wife relied upon the following evidence:
·Her affidavit sworn 23 July 2003, her financial statement sworn the same day, her affidavit sworn 24 May 2004 and her oral testimony.
The respondent husband relied upon the following evidence:
·His affidavit sworn 12 July 2004, his financial statement sworn 27 August 2003 and his oral testimony.
·Affidavit of CA M sworn 7 July 2004 and her oral testimony
The husband and wife both tendered documents.

The issues

At the start of the hearing, counsel for the children’s representative advised that the parents and children’s representative agreed on all parenting matters, subject only to the costs of contact. By consent, the court made final parenting orders and took short submissions from counsel for the children’s representative concerning payment of the children’s representative’s costs and the necessity for a travel fund. The children’s representative and her counsel were then excused.
Thus the principal remaining issues concerned the adjustment of property. They are:
·Whether the parties separated when the husband was gaoled or in August 2002;
·Whether the husband’s interest in his later grandfather’s estate is property or a financial resource;
·The parties’ s.75(2) factors;
·Whether the wife is living in a defacto relationship with A M;
·The comparative contributions made after the husband’s incarceration.

Short history

The wife was born in 1961 and is 43 years old.
The husband was born in 1963 and is 40 years old.
The parties commenced cohabitation in 1983 and lived together until they separated for the first time in 1984.
After living separately for about twelve months the parties resumed cohabitation in late 1985.
Their daughter A C was born in 1987.
In April 1989 the wife was seriously injured in a motor vehicle accident.
The parties’ son R C was born in 1989.
The parties separated on a second occasion in late 1985/early 1986. They resumed cohabitation in early 1987.
In 1994 the wife received $50,000 compensation for her injuries suffered in the April 1989 motor vehicle accident. The compensation was entirely for her pain and suffering. After payment of $15,000 legal expenses, the wife received $35,000.
The parties separated in 1995 for about five months. During this separation the children remained with the wife. She supported them without financial help from the husband.
In 1996 the wife inherited approximately $33,000 from her late mother’s estate.
In February 1996 the husband was charged with murder and arson. He was released on bail and commenced treatment for an anxiety disorder. Since then he has not worked in the paid workforce.
The parties married on 14 September 1996.
On 16 May 1997 the husband was convicted of manslaughter and arson. He was sentenced to eighteen years imprisonment. He is eligible for release from 2009.
On 27 March 1999 the husband’s mother died. She bequeathed her estate to the husband and his brother in equal shares. In September 1989 the husband received $103,198.56 from his late mother’s estate.
On 13 September 2001 the husband’s father died. His estate was bequeathed to the husband and his brother in equal shares. On 24 January 2002 the husband received a one-half share of his late father’s property at Coomba Park and its contents. The husband’s brother purchased his share of a motor vehicle as a result of which the husband received cash from the estate of $40,548.27.
On 18 April 2002 the husband purchased his brother’s one-half share in the Coomba Park property for $45,339 (including stamp duty).
A considerable focus of the proceedings concerned the date of final separation. This was potentially significant because all of the husband’s inheritances were received after he was incarcerated which is when he says the parties separated. The length of the husband’s sentence shocked both parties. Upon sentence the husband told the wife that, in effect, their marriage was over. During cross-examination he explained that he realised that few marriages could survive a minimum of twelve years forced separation. He wanted to convey to the wife that he did not expect her to put her life on hold whilst he was in gaol. The husband wanted the wife to feel free of him and that he understood that she might decide that their marriage was over. Not withstanding the husband’s imprimatur to end their marriage, the wife continued it. She visited the husband weekly usually taking the children to see their father. She actively campaigned for his release and worked tirelessly with his lawyers throughout his many appeals. After his incarceration the husband treated the marriage as continuing. He wrote many loving letters to the wife, a selection of which is in evidence[2]. These letters reveal his continuing attachment to her and his angst at separation. The communication is intimate, affectionate and clearly based on his belief that although physically separated, the marital relationship continued.
[2] Exhibit E
By 18 August 2001 the husband was expressing concern in his letters that he feared that the wife’s commitment to their marriage was faltering. In this letter he writes, “Please explain where I stand! Is it over? Is there someone else?” ..” I totally understand that twelve years is a bloody long time and I don’t blame you for one second for moving on with your life. Please put it to me straight and lay it down and without pulling any punches”. “I know I’m doing another eights years and I ask you to decide what you want out of life and if I’m part of it, if not! I’m fine with whatever decision you make as for me I find it hard and cannot go on like this”. By the time this letter was written, the wife’s visits to the gaol had reduced significantly and increasingly only the husband initiated contact: through his letters and regular telephone calls. While this is an indication that their relationship was failing the decision to end the marriage came later.
On 26 August 2002 the wife wrote to the husband and said that their marriage was over. This letter galvanised the husband to establish the Family Trust. Apparently, he received advice from another prisoner that he should do so. The timing between receiving his wife’s separation letter and establishing the trust is only a few months. At that time the purpose of the trust appears to have been to enable the husband to divest himself of assets in case the wife made a family law application claiming a share. From that point the husband withdrew direct financial support to her. The husband wrote to the wife informing her that he did not believe he could cope with seeing her and asked that she not visit him in the future. The wife complied with the husband’s request.
I am satisfied that the husband’s discussions concerning separation prior to August 2002 were aimed solely at allowing the wife to make her own decision whether to continue or end the marriage. The husband had not himself decided that the parties were separated and from his point of view he regarded the marriage as continuing until the wife informed him differently. The wife regarded the marriage as continuing until about mid 2002. Her decision to end the marriage crystallised when she wrote to the husband in August 2002 which was the first time that the wife said that she regarded the marriage as over. Until the husband received the wife’s letter, although he sensed that the marriage was in trouble, he did not interpret her conduct as a clear indication that she regarded the marriage as over. All of these circumstances persuade me that the parties’ separation occurred in late August 2002.
On 21 November 2002 the husband established the Family Trust. That same day the husband transferred his interest in the Coomba Park property to C A M.
In January 2004 the husband’s grandfather passed away. The solicitor administering his later grandfather’s estate, C N Manning, advises that he will receive $45,000. These monies are held in the solicitors trust account and are likely to be distributed shortly. The husband has instructed C A M that the proceeds are to be held by the trust and deposited into a new Term Deposit Account.

General section 79 principles

The approach to the determination of an application under s. 79 is well established by authority In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-595. The process ordinarily involves firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in s.79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. I must then evaluate the matters contained in s.75(2) insofar as they are relevant, any other order made under the Act affecting a party or child and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide, or might be liable to provide in the future, for a child to the marriage.
In determining what order the court should make under s.79, the court must be satisfied in all the circumstances that it is just and equitable to do so [s.79(2)]. It is the justice and equity of the actual orders that the court must consider. Russell v Russell (1999) FLC 92-877.

Assets and liabilities as at the date of hearing

The parties reach agreement as to some assets and the quantum of liabilities.
I find the assets, liabilities and financial resources as at the date of hearing are as identified in the table below:

Assets as at the date of hearing	$
The Coomba Park Property (H) (Agreed)	180,000[3]
Police Credit Union account (H) (Agreed)	8,440[4]
Term deposit (H) (Agreed)	63,585.45[5]
Nissan motor vehicle (W) (Agreed)	10,000
Horses (W) (Agreed)	500
Household effects (W)	5,000
Paid legal fees (H)	2,027
Husband’s interest in late grandfather’s estate	45,000
TOTAL ASSETS	314,552.45
Liabilities as at the date of hearing	$
NIL
NETT ASSETS	314,552.45
Financial resources	$
NIL

[3] Exhibit B

[4] Exhibit B

[5] Annexure 18 husband’s affidavit

The Coomba Park, Police Credit Union and term deposit are treated as the husband’s assets. The Family Trust holds these assets and all have been contributed by the husband. They are the trusts entire assets. Both the Coomba Park property and term deposit are income producing. Since April 2003 the property has been leased and when tenanted earns $130 per week. The term deposit earns approximately 5.25 per cent interest. The trustee understands that the trust is not liable to pay tax because its income is below the tax-free threshold. If there is any taxation due the parties agree that the amount would be small and should not be taken into account.
If the Coomba Park property is sold it will attract capital gains tax. The parties agree that the capital gains tax payable is $17,250. In Rosati (1998) FLC 92-804 the Full Court held “If the court orders the sale of an asset or is satisfied that a sale of it is inevitable or will probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit then generally allowance should be made for any capital gains tax payable on such a sale in determining the value of the asset for the purposes of the proceedings.” During his closing address the husband’s counsel indicated that the husband sought the opportunity to pay out the wife before resorting to the sale of Coomba Park. Although it will be tight, the evidence suggests that the husband may be able to pay out the wife without resorting to its sale. Presently the husband plans to live in the property upon his release. Thus, it is unlikely that capital gains tax will be payable for many years. Because it is unlikely to be payable for many years the potential liability will not be included as a relevant liability. However in the event that the property is sold so that the wife receives her s.79 entitlement capital gains tax is payable immediately. In those circumstances the asset pool is smaller by at least $17,250. The orders will need to make provision for payment of capital gains tax.
There is no valuation evidence concerning the wife’s household effects or the husband’s personalty (including his late mother’s furniture) which he presently stores in the wife’s garage. The husband concedes the wife’s value of her household effects as an admission against interest. This is a reasonable approach given the parties’ modest financial circumstance. There is no evidence that suggests that the husband’s late mother’s furniture and household goods have any sale value.
Applying Farnell (1996) FLC 92-681 the husband’s paid legal fees, drawn from the Police Credit Union F1 account are added back into the asset pool.
The classification of the husband’s inheritance from his late grandfather’s estate was controversial. The wife contends that it is an asset to be included in the total asset pool, upon which the parties entitlements would be calculated. This is one of two ways the Full Court identified in Burke as an appropriate methodology. The husband contends that it is a financial resource. If the court concludes that it is an asset, he submits that the asset would be treated as belonging to him and should only be brought into account during the s.75(2) phase. This approach is consistent with the Full Court’s decision in Bonnici. The husband knows precisely how much he will receive from his grandfather’s estate. The estate has been finalised and the delay in distributing the beneficiaries’ entitlement is not explained. The logical inference is that the executor has delayed final distribution pending the outcome of these proceeding. As the amount payable is known, the husband can demand payment by the executor and there is no impediment to the husband receiving his entitlement forthwith, I am satisfied that the inheritance in an asset. The issue of contributions will be dealt with later.

Applicable law concerning inheritances and gifts

Both parties claim contributions based upon gifts and inheritances. Situations where a parent advances property as a gift are analogous to those where a party receives an inheritance. Figgins (2002) FLC 93-122. In theMarriage of Rainbird (1977) FLC 90-256 at 76,376 the Full Court of the Family Court made it clear that the “contributor” of a gift is usually determined by the original intention of the donor. Later in Gosper (1987) FLC 91-818 the Full Court held that the donor’s intention is not necessarily the determining factor. The essence of Fogarty J’s judgment is that the court is able to treat a gift as a financial contribution made on a spouse’s behalf by the spouse’s relative. This can be displaced by evidence that the donor intended to benefit both parties to the marriage. In Kessey (1994) FLC 92-495 the Full Court applied Gosper saying that as a general approach a parental gift is to be treated as a financial contribution made on behalf of the child of the donor parent. Where the intention of the donor is not clear the court can look to any special relationship between the donor and one of the spouses and regard the gift as having been contributed by that party.
The issue of gifts and advances is further discussed in Pellegrino (1997) FLC 92–789. In that case Chisholm J sagely acknowledged that parents do not usually have an intention as to who they intend to benefit when making gifts to their married children. If the motivating circumstance leading to the gift was the parent/child relationship, the gift may be regarded as the contribution of the son or daughter: and not also of his or her spouse. These principles apply to all intra familial advances.
The issue of inheritances has been specifically discussed in a number of cases including Bonnici (1992) FLC 92-272, Burke (1993) FLC 92-356, Aleksovski (1996) FLC 92-705, Wall (2002) FLC 93-110 and Figgins. The applicable principles were explained by the Full Court in Bonnici as follows:
“The more difficult issue in this case is as to whether the same should be treated differently from other types of property in which the parties clearly have an interest. The answer, we consider, must depend upon the circumstances of individual cases. If, for example, in the present case, there had been no other assets than the husband's inheritance, but the wife had, as his Honour found, clearly carried the main financial burden in the support of a family and also performed a more substantial role as a home maker and parent than the husband, then it would clearly be open and indeed incumbent upon a Court to make a property settlement in her favour from such an inheritance. A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question.”
Nothing in the subsequent cases has undermined the veracity of this statement of principle. There are many factual variables that have resulted in courts treating inheritances differently. Careful reading of the later cases shows that the courts have been concerned to ensure they deliver individual justice. This is the essence of a discretionary jurisdiction. Thus in some cases the inheritance is not brought into account whereas in others it is. Common themes running through the cases are summarised below.
·Careful consideration of what stage of the relationship was the inheritance received?
·Where an inheritance is received very late in the relationship or after separation, absent very unusual circumstances, it represents a contribution by the spouse relative.
·The size of the total asset pool.
·Property does not fall into a protected category merely because it is an inheritance.
·An inheritance is not a “special” contribution in the sense discussed in McLay (1996) FLC 92-667.

Section 79(4) evaluation of contributions and other factors

Section 79(4) requires that the court look at the entirety of the contributions, both financial and non-financial, to the welfare of the family, as well as the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation or improvement of a particular asset and are to be taken into account generally as contributions in a total sense. Farmer and Bramley (2000) FLC 93-060, Querasimu (1999) Fam CA1314. In relation to the parties contributions under s.79(4) a global approach is generally adopted rather than an asset by asset approach. This is particularly so where the parties have been married for a considerable period. Neither party submitted that the court should depart from the usual global approach which approach is clearly the appropriate methodology for this matter. Norbis (1986) FLC 91-712.
When the parties commenced cohabitation neither had any valuable assets, liabilities or financial resources. Both parties had a quantity of personal possessions and the husband owned a car. The husband was employed full time as an apprentice motor mechanic, earning approximately $20,000 per annum. The wife was initially unemployed. Not long afterwards she obtained paid employment working in Sydney and then in Long Jetty.
When the parties separated in 1984 neither party had any valuable assets, financial resources or liabilities.
When the parties resumed cohabitation in 1985 the husband had completed his apprenticeship. He left his employer and began working for himself as a fencing and irrigation contractor. Upon the resumption of cohabitation the parties lived in a loft at the husband’s parents’ home. The accommodation was rudimentary and the parties did not pay rent. At that time both parties were working at Kulnura. They resided together for only two or three months before once again separating. The contribution made on the husband’s behalf by his parents through rent free accommodation was very small. At this separation neither party had any assets, liabilities or financial resources of value.
When the parties resumed cohabitation in 1987 they rented a small shack at Kulnura. Because the wife was pregnant she gave up paid employment. During cohabitation, in total the wife worked for about two years in paid employment. When they resumed cohabitation the husband was working as a mechanic for Repco Auto Parts at Gosford, earning approximately $40,000 per annum. From this point on his income was the family’s only income from paid employment.
During 1987 the husband started boxing training with the Waters family, who lived not far from them at Kulnura. The husband’s drug use increased, from what had been a manageable, recreational pastime to a more severe habit. He started using amphetamines, increased his cannabis use and drank alcohol to excess. Although the wife had also occasionally used cannabis, after she became pregnant with Amanda she stopped using any illegal drugs. As the husband’s drug use increased he spent ever-increasing sums on drugs. Thus money that was needed by the family was wasted.
Notwithstanding his drug use, the husband kept up full time employment. In 1989 he changed employers and for a time the husband was earning as much as $80,000 per annum whilst with Coya Constructions. He had an accident at work in 1991 and went on to workers compensation. While on workers compensation Coya Constructions ceased its Kulnura operation and the husband was then unemployed, receiving unemployment benefits for approximately the next eight months. The husband’s work history as summarised in his affidavit in the period following is somewhat inconsistent with his group certificates for 1992 and 1993 tax years[6]. It appears that the husband began working for Costains in 1991[7] and Mangrove Mountain Fruits in February 1992. Although he claims that he was earning approximately $80,000 per annum at Costains, exhibit C reveals that it was closer to approximately $60,000 per annum. Whilst the husband worked at Costains he was transferred to Springwood in the Blue Mountains. During the week the husband lived at Springwood while the wife remained at home at Kulnura with the children. The husband gave up employment at the end of 1993 and in 1995 commenced eight months work for a pre-cast concrete company at Somersby. The husband last worked in February 1996. This coincides with his arrest for murder and arson.
[6] Exhibits C & D
[7] Exhibit C
The wife agrees that during cohabitation the husband was primarily responsible for maintaining the exterior of the parties’ homes and financial support for the family. As well as his wages, the husband claimed that in September 1994 he received two gifts of $15,000 each from his parents. He says the money came from the sale of a property when his parents separated. The wife understood that the husband’s parents each gave him $5,000, from which the husband bought a bedroom suite, paid some household expenses, the costs of a holiday to Foster and that he spent the balance, probably most of it, on drugs. In his oral testimony, the husband said that he received the $30,000, or thereabouts, in smallish sums. If the money came from the sale of his parents’ property, I would have expected that the amounts were paid as lump sums over a fairly short period and that there would have been some documentation, for example bank deposit records available. I am not satisfied that the husband received gifts totalling $30,000 and it is likely that the assistance he received was closer to the $10,000 that the wife recalls.
When the husband was incarcerated the parties owned a Commodore motor vehicle and Harley Davidson motorcycle, household furniture and 500 Tabcorp shares. The wife paid $14,000 for the Harley Davidson twelve months earlier and it is likely that it had maintained its value. The Commodore was purchased in about 1996 for $10,000 and it is probable that it had also maintained its value. Not long after the husband was incarcerated the wife sold the Tabcorp shares for about $4,000. Thus, when the husband was incarcerated the parties had assets worth approximately $28,000, as well as household furniture.
Such money as the wife earned from paid employment she contributed to joint matrimonial purposes, in particular day to day living expenses. At Easter 1989 the wife received $35,000 net as damages from a motor vehicle accident which money was spent entirely on joint family expenses, including day to day living expenses, vehicles and furniture. In 1996 the wife inherited $33,000 from her late mother’s estate. This money was spent on the parties’ wedding and honeymoon, household and living expenses, TAB shares and a Harley Davidson motorcycle and accessories. Both the inheritance and compensation monies were funds solely contributed by the wife. In most cases the court will find that the parties contributed all of their income to joint matrimonial purposes. Because the husband supported his drug habit from his wages I am not satisfied that he did so. Money that sorely needed by the family was wasted on his addiction, the extent of which is not in evidence. Nonetheless as at the date of the husband’s incarceration he had made a greater financial contribution than the wife had.
Prior to the husband’s incarceration he maintained the parties’ motor vehicles and his bike and the parties lived with his parents rent free for a few months. The wife maintained their modest furniture and personalty. As at the date of the husband’s incarceration their s.79(4)(b) non financial contributions were equal.
The wife’s contribution as a homemaker and parent is one of the pivotal features of this case. Prior to the husband’s incarceration she was overwhelmingly responsible for the home and children. She agrees that the husband worked hard when employed, and that at different times he either lived and worked away from the home during the week or worked long hours. The effect of this is that during these periods she was virtually exclusively responsible for the home and the children. To a considerable extent her efforts freed the husband from substantial responsibility for the home and children, enabling him to pursue his career. Whilst the husband was undoubtedly a loving father his work limited his time and hence ability to play a meaningful role as a homemaker. When he as at home he spent time with the children in play and did some work around the house, predominantly maintaining the grounds on the parties’ rented properties. Although the wife did not emphasise this point, the husband acknowledged that his drug use became a significant point of disagreement between the parties. As his addiction grew, it is likely that his capacity to contribute as a homemaker and parent was impaired. Not only was it necessary for the wife to take even greater responsibility for the home and children, her contribution as home maker and parent was made even more onerous. During the approximately twelve months between the husband’s criminal charges and his conviction he was unable to work and diagnosed by Dr Blicharski as suffering from an anxiety state. He was unable to concentrate and needed prescription medication, probably mood stabilisers or anti depressants. Thus the wife’s responsibility for the welfare of the family, including the husband’s welfare, became virtually all encompassing. As at the date of his incarceration the wife’s contribution as a homemaker and parent vastly exceeded the husband’s.
Overall at the time the husband was incarcerated the wife’s total contributions exceeded the husband’s.
After the husband’s incarceration the wife supported the children using social security benefits. Because of the children’s young ages, her need to support the husband and work with his lawyers on his appeals, she could not work in the paid workforce. For about eighteen months she visited him weekly. When she visited the husband she gave him small sums, usually about twenty dollars per week, to assist with his expenses. The husband was then rehoused in gaols away from Sydney, making it extremely difficult for the wife to visit and the frequency of her visits reduced significantly. In February 2002 the wife traded in the Commodore on a 1989 Nissan Patrol. The Nissan Patrol cost $15,990 (including the Commodore trade in). The husband paid the shortfall of $11,900 from his inheritance directly to the motor dealer. In April 2003 the wife sold the Harley Davidson for $6,000 which she spent on day to day living expenses.
Since the husband’s incarceration both of his parents and his grandfather have passed away. He was a beneficiary of each estate. Until he established the trust the husband had complete control of the estate proceeds. During gaol visits he gave the wife signed withdrawal slips which authorised her to withdraw funds the husband needed or agreed that she should have. On 30 September 1999 the husband received $103,198.56 from his mother’s estate. In January 2002 the husband inherited a one-half share of his father’s estate, which resulted in him acquiring a half interest in the property at Coomba Park and $40,548.27. In April 2002 the husband purchased his brother’s half share in the Coomba Park property, using monies inherited to acquire the half interest for $45,339. Until the husband purchased his brother’s share of Coomba Park, he and his brother shared its maintenance costs. After the husband became the sole registered proprietor, he alone has been responsible for its rates, taxes and maintenance. In late 2002 the husband paid approximately $6,500 for repairs and maintenance at Coomba Park. He made further payments for repairs of $738 in September 2002. Since the trust was established, the trustee has made all payments for the property’s outgoings. Between 6 December 1999 and 17 December 2002 the husband has paid the applicant $28,033. This includes the monies used to buy the 1989 Nissan Patrol, $3000 used to establish children’s trust accounts and other money paid directly to the children.

Since the husband’s incarceration the wife has had exclusive use of the parties’ modest assets owned at separation. She and the children have lived in parlous circumstances, reliant primarily upon social security payments. She has contributed all of her money towards the children’s support and joint matrimonial purposes.
In Ferraro the Full Court highlighted the difficulty involved in evaluating and balancing fundamentally different activities. It also reinforced that the court’s task includes evaluating the significance of the various contributions, the weighting of which is ultimately a matter for the court. The Full Court summarised the situation thus:
“The task of evaluating and comparing the parties' respective contributions where one party has exclusively been the breadwinner and the other exclusively the home maker, is a most difficult one to perform because the evaluation and comparison cannot be conducted on a "level playing field". Firstly, it involves making a crucial comparison between fundamentally different activities, and a comparison between contributions to property and contributions to the welfare of the family. Secondly, whilst a breadwinner contribution can be objectively assessed by reference to such things as that party's employment record, income and the value of the assets acquired, an assessment of the quality of a home maker contribution to the family is vulnerable to subjective value judgments as to what constitutes a competent home maker and parent and can not be readily equated to the value of assets acquired. This leads to a tendency to undervalue the home maker role. However, there are cases where the performance of those roles has what may be described as "special" features about it either adding to or detracting from what may be described as the norm. For example, in relation to the home maker role the evidence may demonstrate the carrying out of responsibilities well beyond the norm as, for example, where the home maker has the responsibility for the home and children entirely or almost entirely without assistance from the other party for long periods or cases such as the care of a handicapped or special needs child. On the other hand, in the breadwinner role the facts may demonstrate an outstanding application of time and energy to producing income and the application of what some of the cases have referred to as "special skills". Within either role there may be cases where the evidence demonstrates a neglect of those responsibilities or a wasting of income or assets.”
The husband’s inheritances are contributions made entirely on his behalf. The total asset pool is made up almost entirely of money and assets inherited after he was gaoled. The husband’s inheritances from each of his parents were received late in the marriage and his grandfather’s estate after the parties’ separated. The later an inheritance is received, particularly if the inheritances comprise virtually all of the available assets, the greater the significance of the inheritance and financial contribution by the spouse beneficiary ordinarily has. In this matter not only is the husband’s financial contribution vastly greater than the wife’s, it must also carry considerable weight because the inheritances have been preserved, enhanced through capital gains to Coomba Park as well as interest payments which comprise virtually all of the available assets.
Since the husband’s incarceration the wife has been exclusively responsible for the children. For seven years she alone has provided their day to day care, in clearly onerous circumstances. She also contributed to the husband’s welfare by making her regular trek to see him in gaol, doing her best to keep his spirits up and the children’s relationship with their father alive. She shared her limited financial resources with him, giving him the maximum amount he was permitted to receive. Although it came to nought, her tireless work on his behalf trying to redress a perceived sentencing injustice is a contribution to the families’ welfare. Although it could alternatively be treated as an indirect financial contribution to the conservation of the inheritances, I will include as a homemaker contribution the wife’s modest use of those funds. Although she and the children greatly needed any financial help they could get, including a proper use of the inheritances, she took only a relatively small sum from the assets so received. By doing so not only have the assets been preserved, they have increased in value. The wife’s contribution is well beyond the norm and has the special features and quality to which the Full Court in Ferraro drew attention. This is a highly significant contribution, which must be given real weight.
The orders I propose will not affect the earning capacity of either party.
On 25 November 2002 the Child Support Agency issued an assessment requiring the husband to pay $216.67 monthly to the wife. The husband applied to change the assessment and on 10 January 2003 his monthly child support obligation was reduced to $21.67. The assessment has not changed since then. C A M pays $25.00 each month to the child support agency from the trusts working account. After the trust was established, unbeknown to the wife, the husband instructed the trustee to transfer $100 per quarter into each child’s Wyong Council Credit Union account. In June 2003 this increased to $100 per month per child, paid out of the Coomba Park rental account. The children can withdraw the money without the wife’s consent and she has no say how it is spent. The children use the money as pocket money and it does not make its way their regular living costs that continue to be overwhelmingly provided by the wife. The husband pays child support to which I have made reference and is unlikely to ever pay more than the minimum rate.
As I have already indicated I must take into account and balance all of the parties contributions. This means that the wife is not required to prove a nexus between her role as a homemaker and parent to the inheritances. It is immediately apparent that this involves quantifying and balancing fundamentally different activities, something that does not lend itself to mathematical precision or a formulaic scheme. Nor is there an artificial divide whereby contributions made prior to separation are inherently more valuable than those made later. Here the husband has contributed the overwhelming majority of the financial assets, few of which existed when he was incarcerated. Although the focus of inheritance cases often centres upon separation, here the more important date is when the husband was gaoled, as from that time the dichotomy in the nature of the parties contributions is even more acute. Although non financial in nature the wife’s homemaker and parent contributions have been highly valuable to the families welfare. Although a totally different style of activity the case law makes it plain that such contributions carry real weight. Particularly in cases like this. Taking into account all of the matters referred to, I find therefore that the parties’ total contributions and other s.79(4) factors should be assessed as being 33 per cent by the wife and 67 per cent by the husband.

Section 75(2) factors

Subsection (a). The husband is 40 years old and the wife is 43 years old. The wife is in basically good health. Presently the husband takes Surmontil, an antidepressant. He expects that he will take antidepressant medication indefinitely and upon his release from prison will attend a psychologist. He had a health scare related to his heart and stomach in late 2003, however has not required treatment for it. The husband’s health difficulties appear well managed by medication and although continuing the evidence does not suggest that with treatment they are debilitating. I make no adjustment pursuant to this subsection.
Subsection (b). I have already made findings concerning the parties’ assets. The wife receives approximately $204 per week pension, $173 per week family allowance and $6 child support. The children receive $84 per week youth allowance and the wife has an education allowance of $31 each week. Presently, the wife works eight hours each week at an equestrian centre where he works the maximum hours available. Although it is many years since the wife has worked in an office, she has tried to keep pace with changing technology and through a combination of study and volunteer work has a working knowledge of computer programs such as Microsoft Office, Word and Excel. The Department of Social Security is encouraging her to obtain employment and she recently applied unsuccessfully for full time work as a secretary. It is far from certain that the wife will succeed in her ambition to work as a secretary. If the wife does secure permanent part time or full time work her skills and experience suggest that she will only earn a modest income. When the husband is released from gaol, probably in 2009, it will be thirteen years since he last worked in the paid workforce. Although he has completed a number of counselling type courses in gaol, he has not been able to keep up his trade. Upon release, he may be able to complete further trade qualifications that will bring his knowledge up to date. The husband’s prospects, upon release, for future employment are also speculative. Whilst on parole, it is probable that he will receive support settling back into the community, including with finding either part or full time employment. However, it is far from certain that he will be able to secure employment. If he does so his income is also likely to be modest. The husband earns $20 per week for his work in gaol. Because he has divested himself of assets, the trust earns income to which the husband would otherwise be entitled. Since April 2003 the Coomba Park property has been leased for $130 per week, which income is received by the trust. In addition, the term deposit earns interest at 5.25 per cent per annum. Overall, I am not satisfied that there should be any adjustment in either parties’ favour pursuant to s.72(2)(b).
Subsection (c). The children are 17 and 15 years old. Within three years both children will be adults. In Clauson the Full Court said, “In addition it should not be forgotten that the payment of child support in no way compensates the custodial parent for the loss of career opportunity, lack of employment opportunity and the restriction upon an independent lifestyle which the obligation to care for the children usually entails”. These principles are applicable to the circumstances of this case. Responsibility for the children’s care falls exclusively upon the wife. Although the children will shortly achieve their majority, I am satisfied that there should be an adjustment in the wife’s favour pursuant to the subsection.
Subsection (d). This subsection focuses on the financial needs of the parties, including their financial commitments supporting their children. The wife lives frugally and her income is fully expended on day to day necessary expenses. There is no evidence that suggests she is wasteful or extravagant. By virtue of his imprisonment, the husband’s necessary commitments, at least until 2009 are modest indeed. The trustee makes regular payments to him of about $100 per month, which are sufficient for his necessary day to day expenses. By comparison to the husband, the wife’s necessary commitments for herself and the children are vastly greater. In those circumstances it is appropriate to make an adjustment pursuant to the subsection in her favour.
Subsection (e). Neither party has a responsibility to support any other person.
Subsection (f). The wife receives social security payments that have already been taken into account pursuant to s.75(2)(b). Other than these payments, neither party currently receives a pension, allowance nor benefit from any superannuation fund or scheme. As I have already taken the wife’s social security entitlement into account I make no further adjustment pursuant to the subsection.
Subsection (g). Both parties have suffered a reduction in their standard of living. The wife lives in modest rental accommodation and because of the families’ reduced income since at least the husband’s incarceration her circumstances are parlous. The husband’s imprisonment imposed a reduction in his standard of living. There is no proper basis upon which the court would make an adjustment pursuant to the subsection.
Subsection (h) – (k). These subsections do not arise.
Subsection (l). I have already taken into account the wife’s uncertain future employment prospects. Because of the children’s ages, the wife believes that she is in a position to obtain full time employment. The wife does not contend that there should be an adjustment pursuant to s.75(2)(l) and I agree that no adjustment pursuant to the subsection is appropriate.
Subsection (m). The wife has established a relationship with A M.

A M is a building service engineer. He owns his own house, which is where he lives. The wife denied that she cohabits with A M. I accept her denial and was not persuaded that she and A M are in a defacto relationship. There is no evidence that they have ever lived together or that they plan to do so. The husband’s counsel properly criticised the presentation of the wife’s case insofar as it concerned disclosure of her relationship with A M. It is no answer that the husband was aware of the relationship, the wife had a separate obligation to the court to make full and frank disclosure. A M accompanied the wife to court both hearing days and was available to give evidence concerning his relationship with the wife. The husband’s counsel submitted that the court would draw an inference that A M’s evidence would not have assisted the wife. I was concerned about the general adequacy of the presentation of the wife’s affidavit material. Her affidavits were brief and barely adequate for the task that faced her and the court. My observation does not necessarily reflect criticism upon the wife. When the wife gave evidence she impressed me as making a genuine attempt to give an honest and complete account. She readily conceded the husband’s strengths, including his contributions as a home maker and parent. Whilst in other cases, where I have had less confidence in the integrity of the evidence given by a party I may well have drawn a Jones v Dunkel inference, I am not satisfied that I should do so in this case. Thus, I am not satisfied that either party is cohabiting with any other person and make no adjustment pursuant to the subsection.
Subsection (n). Section 75(2)(n) achieves a cross-referencing between s.75(2) and s.79(4). The outcome of the assessment of contributions and other factors has resulted in the wife having 33 per cent of the assets compared to the husband’s 67 per cent. These factors do not warrant an adjustment pursuant to the subsection.
Subsection (na). The husband pays $25 per month child support. He will continue to do so for the next three years. This does not warrant an adjustment pursuant to the subsection.
Subsection (o). There are no factors pursuant to this subsection that warrant adjustment.
Subsection (p). This issue does not arise.
Having regard to all of the s.75(2) factors I find that it is appropriate that there should be an adjustment in the wife’s favour of 10 per cent. This outcome reflects the cumulative outcome of the findings I have made pursuant to s.75(2). See Tomassetti (2002) FLC 93-032. Any lesser adjustment given the size of the asset pool would be notional.

Section 79(2) is this outcome just and equitable?

Because the court must consider the actual orders, not just the percentage distribution under s.79(2) justice and equity in cases like this requires that the court stands back and looks carefully at the outcome of the s.79(4) and s.75(2) process.
I will not repeat the findings made thus far. There are key findings that lead to my comfortable satisfaction that an outcome favourable to the husband 57 per cent compared to the wife’s 43 per cent is just and equitable. Simply put, these include that the husband has made a vastly greater financial contribution and that in particular he contributed all of his inheritances late in the marriage or after separation. His inheritances comprise almost all of the matrimonial assets. While the wife also made a real financial contribution, specifically her inheritance, pension and compensation monies it is her contribution as a home maker and parent made in difficult circumstances both prior to and since separation that carries most weight. For seven years she has been exclusively responsible for the children’s care and provided for them when the husband could not. Although the husband’s imprisonment deprived him of the opportunity to contribute as a home maker and parent after 1997, the relevant matter is that the wife did it all. In the early years of the husband’s incarceration the wife took the children to visit the father and worked hard to maintain the family unit, notwithstanding the parties’ physical separation. Both parties face an uncertain financial future. The wife by virtue of her absence from the paid workforce for many years cannot be confident that she will secure well paid full time employment. Upon his release from prison the husband faces real challenges that limit his opportunity for future well paid employment. Although the husband gives the children pocket money and pays assessed child support, the wife has financial responsibility for the children, the youngest of whom will be dependent upon her for another three years. She and the children live in difficult circumstances, dependent upon social security income. When I stand back and examine the parties’ circumstances I am satisfied that an outcome 43 per cent to the wife and 57 per cent to the husband is just and equitable.

Structure of the orders

The parties agree that the husband should have the opportunity to pay out the wife’s s.79 entitlement from cash assets and that the Coomba Park property should be preserved unless its sale is necessary. Rounded out forty three per cent of $314,522 (nett assets) is $135,257. The wife has assets comprising her car, which is worth $10,000, her horses worth $500 and furniture worth $5,000, giving her total assets worth $15,500. Thus, the husband must pay her $135,257 less $15,500, which is $119,757. By way of crosscheck, the husband will have Coomba Park, his and the trust’s savings, paid legal fees and his inheritance from his grandfather’s estate, nett assets worth $299,052. Fifty-seven per cent of $314,552 is $179,294 and $299,052 less $179,294 is $119,758. The one dollar difference occurs because the cents have been rounded down.
Presently, the husband has total cash assets worth $117,025. Depleting his cash assets will reduce his income because he will no longer have a cash investment earning interest. Presently the husband does not have the capacity to earn an income, other than through renting Coomba Park. Until his release from prison, the husband requires a small fund that will provide him with those basic necessities that the state does not offer. Unless he sells Coomba Park, the husband does not have the capacity to pay the wife her entire s.79 entitlements immediately. Justice requires that he be given a reasonable amount of time within which to organise his affairs so that the wife has her full entitlement. This must be tempered by the wife’s parlous circumstances and her need to have her entitlement paid in a timely way. The husband will be ordered to pay the wife $110,000 within fourteen days. He will have six months from the date of the orders within which to pay the wife the remaining $9,757. If he does not do so then, regrettably Coomba Park must be sold. I contemplated reducing the amount that the husband must pay the wife so that he is left with at least a small amount in the bank and the risk that Coomba Park may be sold was avoided. In effect adopting a similar approach to that applied by the Full Court in Phillips (2002) FLC 93-104. However the wife is in a very difficult financial situation and justice requires that she have her full s.79 entitlement.

Although Coomba Park has an agreed value, the nett proceeds cannot be known. Upon its sale the husband will incur selling costs and capital gains tax of at least $17,250 must be paid. The total assets, excluding Coomba Park, are $134,552. Fifty-seven per cent of this amount is $76,695. Excluding Coomba Park, the husband has total assets worth $119,052. Therefore, on the sale of Coomba Park when the husband receives his 57 per cent nett share, there will have to be an adjustment in the wife’s favour of $42,357 paid from it. The wife has assets of $15,500 and is entitled to 43 per cent of $134,552, which is $57,857. $57,857 minus $15,500 is $42,357. This is the adjusting figure needed to ensure that the wife receives 43 per cent of the nett assets.
Pending compliance with these orders, the husband and trustee will be restrained from disposing of or encumbering Coomba Park, his and the trusts cash resources and the husband’s interest in his late grandfather’s estate. This order is not intended to interfere with the trustee continuing to meet the husband’s modest periodic expenses at the same rate presently paid. Until the husband has fully complied with these orders, he must pay all rates and taxes upon Coomba Park as and when they fall due. If he defaults, the default must be paid out of his proceeds.
In the event of default, interest runs on the balance outstanding in accordance with the Federal Magistrate Court Rules 2001.

The costs of contact

The parties agree that the children will have contact with the husband. It is also agreed that the mother should not be involved in contact. They agree that a $1000 fund should be established so that the costs of contact can be met and thus the husband certain that he will see the children with the frequency intended. The issue is whether both should contribute to the fund or only the husband. Because he pays minimal child support and the wife needs all of her income in order to meet her and the children’s day to day expenses, the husband will establish the fund from his share of the matrimonial assets.

Costs

The children’s representative makes an application that the parties pay her costs in equal shares. Costs are a discretionary matter. I have already made findings concerning the parties financial circumstances and do not repeat them. There are no disciplinary matters that justify a costs order. Because of the parties modest means, notwithstanding the valuable role performed by the children’s representative, in this case her costs application will fail.
For these reasons I make the orders identified at the start of this judgment.

I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of Ryan FM

Associate: S Mashman

Date: 23 August 2004