K & K
[2004] FamCA 360
•27 April 2004
[2004] FamCA 360
FAMILY LAW ACT 1975
IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA
AT SYDNEY Appeal No. EA61 of 2003
File No. PA 6764 of 1996
IN THE MATTER OF:
K
Appellant Wife
- and -
K
Respondent Husband
REASONS FOR JUDGMENT
BEFORE: Finn, Holden and Warnick JJ
HEARD: 10 December 2003
JUDGMENT: 27 April 2004
APPEARANCES: Mr Mater of Counsel (instructed by Browns the Family Lawyers, Solicitors) appeared on behalf of the appellant
Mr Broun of Queen’s Counsel (instructed by Goldrick Farrell Mullan, Solicitors) appeared on behalf of the respondent
APPEAL SUMMARY
MATTER:K & K
APPEAL NUMBER: EA61 of 2003 (PA 6764 of 1996)
CORAM:Finn, Holden and Warnick JJ
DATE OF HEARING: 10 December 2003
DATE OF JUDGMENT: 27 April 2004
CATCHWORDS: FAMILY LAW – APPEALS – Property settlement – Determining contributions in relation to a personal injuries damages award received by the husband – Whether trial Judge erred in finding that certain portions of a personal injuries damages award were contributions made exclusively by the husband – Whether the result was manifestly unjust to the wife.
Caselaw cited:
Aleksovski v Aleksovski (1996) FLC 92-705
Griffiths v Kerkemeyer (1977) 139 CLR 161
De Winter and De Winter (1979) FLC 90-605
Williams v Williams (1985) FLC 91-628
Farmer and Bramley (2000) FLC 93-060
Figgins and Figgins (2002) FLC 93-121
Bennett and Bennett (1991) FLC 92-191
Norbis v Norbis (1986) FLC 91-712
Williams and Williams (1984) FLC 91-541
Appeal allowed (Finn J dissenting)
Discretion re-exercised
Costs certificates granted
NOT REPORTABLE
FINN J: This is an appeal by the wife against an order for property settlement made by Coleman J on 27 June 2003 in proceedings between the husband and wife. His Honour’s orders gave effect to his decision that the parties’ property, which he found to have a value of just under $3.2 million, should be divided as to approximately $2.7 million to the husband and approximately $500,000 to the wife.
The greater part of the parties’ property which was available for division by his Honour could be sourced to a common law damages award of $3,900,000 received by the husband in 2001 for injuries sustained in an accident in 1988. (The figure of $3,900,000 was the figure arrived at by way of compromise of an appeal against the original verdict of the Supreme Court of New South Wales).
His Honour divided the property between the parties on the basis of their respective contributions only. That is, he made no adjustment to the contributions-based division on account of any other matter contained in s 79(4) of the Family Law Act 1975 (“the Act”).
After a detailed analysis of Coleman J’s reasons for judgment, Holden and Warnick JJ have concluded that his Honour appears to have regarded certain portions of the husband’s damages award “as being a contribution exclusively by the husband and against which the wife’s contributions were not measured with the result that the wife’s contributions have been devalued.”
Their Honours have also concluded that for his Honour to have quarantined future economic loss was contrary to a concession made by Counsel for the husband.
Ultimately their Honours have concluded that Coleman J erred “in failing to assess the wife’s contribution to the whole of the husband’s damages award” and in assessing the wife’s contribution “on the basis of relating it to what the position might have been had her claim been determined” prior to the husband receiving his damages award, and that these errors have resulted in the wife’s contributions being “seriously devalued”, thus producing a result “manifestly unjust” to the wife. Accordingly their Honours would allow the appeal and substitute their own decision for that of the trial judge. The result of their Honours’ decision is that the wife would receive an additional $200,000.
The treatment of a common law damages award in the assessment of contributions in property settlement proceedings.
In Aleksovski v Aleksovski (1996) FLC 92-705 Baker and Rowlands JJ endorsed the position (apparently taken by the trial judge in that case) that the portions of a personal injuries damages award, which had been received in that case by the wife, and which related to pain and suffering and to economic loss (in the sense of income lost during the cohabitation period), should be regarded as a contribution by the wife. Further their Honours can be read as expressing the opinion that the whole of a damages verdict arising from a personal injury claim is, as a general rule, to be treated in property settlement proceedings as a contribution by the party who suffered the injury.
The relevant passages from the joint judgment of Baker and Rowlands JJ are as follows (at 83, 437):
“In our view, having regard to the facts of this case, his Honour was entirely correct in that the wife's damages award and, in particular, that portion of it which related to pain and suffering, should be regarded as a contribution by her to the marriage and to the family.
Similarly, that portion of a damages award which relates to economic loss, representing income lost during the marriage or period of cohabitation, may also be regarded as a contribution by the party who has suffered the loss.
…
In our opinion, in most cases, a damages verdict arising from a personal injury claim, whenever received, is a contribution by the party who suffered the injury. It should not be considered in isolation, for the reason that each and every contribution, which each of the parties makes to the relationship, must be weighed and considered at the same time.” (per Baker and Rowlands JJ in Aleksovski (1996) FLC 92-705 at 83,437)
The third member of the Full court in Aleksovski, being Kay J, did not disagree with these statements by Baker and Rowlands JJ. There was also no challenge before us, to the correctness of the opinion expressed by Baker and Rowlands JJ. Thus at least as presently advised, I propose to accept their Honour’s opinion as correct. The only question that I would raise is whether their Honour’s intended their statement of opinion to include the Griffths v Kerkemeyer (1977) 139 CLR 161 component (that is, the voluntary domestic services component). But I do not propose to say more about this issue for the reason that it was not agitated before us.
In the present case Coleman J stated in paragraph 78 of his judgment that in this case “the reality is that the great bulk of what now exists in a contribution sense derives from the husband.” I understand his Honour to be here saying that most of the parties’ existing property could be sourced to the husband’s damages award, and that that award should be regarded as a financial contribution by the husband.
That the husband’s damages award in this case should be treated, as a contribution by the husband is, in my view, in accord with the opinion expressed by Baker and Rowlands JJ in Aleksovski. Thus and subject of course, to the effect of any relevant concession made on behalf of the husband, I do not agree that his Honour was in error either in treating the husband’s damages award as a contribution made solely by him, or in failing to regard the wife as having made some contribution to that award.
The concession made on behalf of the husband
The husband’s case outline document which was before Coleman J contained the following submission in relation to the wife’s entitlement in relation to property settlement (at Appeal Book 57-58):
“6.How the husband would submit an award should be calculated.
6.1On a basis of contribution, it is submitted that a proper award would be:
6.1.1
Half the value of the former matrimonial home
$ 95,000
6.1.2
Half the value of the son’s estate (it could be higher)
$198,500
6.1.3
Generously allowing the whole of the amount awarded by the Supreme Court for the voluntary domestic personal assistance prior to Judgment
$ 45,000
6.1.4
Recognition of the length of the marriage and the contributions the wife had made to the husband’s earning capacity by allowing an amount from the husband’s economic loss as assessed by the Supreme Court, say
$100,000
Total:
$438,500”
Then in his final address to his Honour, Counsel for the husband submitted (at Transcript 228-9):
“… your Honour’s first concern would be what contributions have been made by the wife, including her contribution as home maker and parent to the assets as presently exist. To the former matrimonial home, unquestioned, she has made a contribution which, on the evidence of both parties, we could not really put much one way or the other, other than the 50 per cent division. So she would be entitled to 100,000.
She also has whatever her interest in the estate is. She also has the amount, whatever it is - and we will try to establish to my friend’s satisfaction that I didn’t get that 45,000 out of the air. We would concede that she made a contribution to that asset to the extent that we would say the whole of the verdict that represented voluntary contributions to the care of the husband after his accident and before the judgment should go to her. We believe that to be 45,000, but we will endeavour to find that.
The other category of the judgments, or the award of damages, to which the wife must be seen as having made some contribution, is to the husband’s earning capacity or his earnings, or the compensation he has got for the loss of earnings. That is what would have been shared between them had they continued in their relationship. That is, the future earnings which a Court may have looked to even though not as a capital sum but the fact that he had an expectation of future earnings would certainly be looked at in the assessment overall of section 75(2) factors. So the amount he received in respect of loss of earnings, loss of past earnings and loss of future earnings is something to which some contribution by the wife must be recognised. Now that is very much a matter for your Honour’s judgment. We have put in our written submissions a figure which, we would submit, is on the generous side of recognising that contribution to loss of income or to his earning capacity…” (emphasis added)
Almost at the conclusion of the hearing, Counsel for the husband informed his Honour (at Transcript p.247) that the figure which appeared in paragraph 6.1.3 of the husband’s case outline document should be amended to an agreed figure of $60,882.
In the discussion in his judgment of the parties’ contributions, Coleman J referred to these concessions made on behalf of the husband in the following way:
“82.Past economic loss, $100,000, has been conceded in respect of that component. Future economic loss, $168,004, is no more and no less than money the husband will not receive in the future. It will be taken into account for social security purposes, and it is something to which the wife can have no contribution or other entitlement. Past care of $190,545 was not reduced, nor was the future economic loss, and it picks up the item 6.1.3 for $60,882, which the husband concedes and has been referred to throughout these proceedings as the Griffiths v Kerkemeyer (1977) 139 CLR 161 component.”
Thus it seems clear that his did Honour overlook the fact that at least in the final oral submissions of Counsel for the husband, it was conceded that the wife could be regarded as having made a contribution to the future economic loss component of the husband’s damages award.
However, I am not persuaded that this oversight or mistake on his Honour’s part would justify appellate interference with his decision. I take this view because the concessions made in the husband’s case outline document and in his Counsel’s final submissions were made in the context of informing his Honour as to what the husband proposed that the wife should receive by way of property settlement, and as to how that amount was calculated. The husband proposed that the wife should receive assets to the value of $454,382 (that is $438,500 + ($60,882-$45,000)), calculated in the way explained in the husband’s case outline and his Counsel’s final submissions. Ultimately, his Honour decided to award the wife a greater amount, being a sum in the order of $500,000, which was calculated on an entirely different basis to that proposed by the husband.
I do not consider that his Honour was required to adopt the approach to the calculation of the wife’s award which was proposed by the husband, particularly in circumstances where his Honour was prepared to award the wife a greater amount than that proposed by the husband. Thus the mistake of fact on his Honour’s part in relation to the scope of the concession cannot, in my view, be said to have “affected the final result” (see De Winter and De Winter (1979) FLC 90-605 per Gibbs J at 78 092). Therefore, in my view, this Court would not be justified in interfering with his Honour’s order on the basis of this mistake or oversight.
The adequacy of the trial judge’s reasons and the justice of the award made.
I understood the wife’s complaints on this appeal to be essentially that having regard to her contributions, particularly those made after the husband’s accident, his Honour did not adequately explain his reasons for the division of property which he made, and that the division which he made was outside a reasonable exercise of the discretion.
It has to be said that the reasoning in his Honour’s judgment where he endeavours to evaluate the parties’ contributions (paragraph 68 to 89) is somewhat complex. His Honour began his assessment of the parties’ contributions by considering the position up until 1988 when the husband suffered the accident which led to the damages award. He concluded (at paragraph 68) that for that period the wife’s “contribution entitlements” exceeded those of the husband “by a modest percentage” in the order of five percent (“55/45”).
His Honour then considered the period between the husband’s accident in 1988 and the parties’ separation in 1992 and concluded (in paragraph 69) that the contribution of the wife to the welfare of the family in that period “entitled her to have her 1988 entitlement increased”, commenting a little later (at paragraph 71) that in 1988 to 1992 the wife’s contributions were “further heightened by the difficult circumstances under which she laboured in making those contributions” and that her contributions in that period “when evaluated, call for recognition in (her) favour” (paragraph 72).
In the course of his consideration of the period between the husband’s accident and the parties’ separation (1988 to 1992), his Honour also referred (in paragraph 70) to the post-separation until 1998 period, saying that in that period the wife’s “contributions as homemaker and parent” greatly exceeded those of the husband.
Then in a discussion extending over a number of paragraphs (paragraph 72-77), his Honour rejected the use of a percentage approach for a determination of the parties’ entitlement in this case, preferring instead a determination “by reference to the assets, and to money and to reality.” It is important to note that he had earlier expressed the view (in paragraph 70) that contribution entitlements are best evaluated having regard to the asset pool existing at the date of hearing.
His Honour went on (paragraph 78) to make the statement which I have earlier discussed, that “the reality” in this case “is that the great bulk of what now exists in a contribution sense derives from the husband.”
Then having commented (paragraph 79) that “ the great bulk of the monies received by the husband… relate either to the horrendous pain and suffering which he suffered… or the enormous future needs which he will have…”, his Honour embarked upon an exercise where, he considered the amount of each of the components of the husband’s damages award both in the original Supreme Court verdict and as compromised on appeal (paragraph 80-84).
In the course of this exercise his Honour:
·concluded (paragraph 81) that the figure (which was not reduced) of $284,00 for pain and suffering was “personal to the husband,” and that it was “inconceivable… that the wife could or should receive any part of (it)…”;
·made reference to the concessions made on behalf of the husband in the terms which I set out in paragraph 15 above; and
·set out all other components of the husband’s award, all of which he appears to have regarded as being directed to the husband’s future needs.
Exactly why his Honour undertook this exercise, particularly in the context of his assessment or evaluation of the parties’ contributions, is not entirely clear to me. Ultimately, however, that exercise seems to have done no more than confirm his Honour’s earlier conclusion that the bulk of the parties’ property should be seen as a contribution by the husband.
It is true that, at first glance, his Honour’s statement to the effect that it was inconceivable that the wife could share in the pain and suffering component might seem to be in conflict with the High Court decision in Williams v Williams (1985) FLC 91- 628 where it was said (at p 80-093) that “ there is no general presumption that (the portion of a damages award representing pain and suffering) should be left out of account in determining what order should be made under sec.79 of the Family Law Act 1975 (Cth).” It seems to me, however, that by including all the presently available property of the parties in the pool of property available for distribution between them, his Honour could not be said to have fallen into error in this regard.
It is also true that one might have expected that his Honour’s discussion (in paragraph 83 and 84) of those components of the damages award which are directed to the husband’s future needs in the context of the “s.75(2) factors”. But given that no adjustment was ultimately made on account of those factors, no error seems to arise. There can be no question of any “double count.”
Having carried out the exercise which I have just discussed, his Honour turned to the question of how he should evaluate the wife’s contributions. He answered this question in the following way:
“86.How then, does one evaluate the wife's contributions? The reality is that tragically there is far more there now than there would have been had her claim been determined prior to the husband's case being resolved. The wife has an entitlement to not less than $100,000 in respect of the matrimonial home as at 1988. The home itself is worth $200,000.
87.In the Court's view the wife's additional contributions, howsoever categorised, particularly to the welfare of the family, subsequent to the husband's 1988 accident, entitled her to receive an additional $200,000. That entitlement is not determined by simply, as was urged on behalf of the husband, adopting the figures appearing in 6.13 and 6.14. Those were figures determined by another court for another purpose, albeit no doubt properly determined within the context of the proceedings with which that court was concerned.
88.This Court has a statutory obligation to evaluate contributions, having regard to their nature and quality, for itself. That has been made clear by the High Court in Mallet's case. It can be said that $200,000 or any other figure is somewhat arbitrary, and that would be correctly so stated. Objectively, the $200,000 represents $100,000 more than the husband's equity, that is, the husband's legal entitlement, to the matrimonial home.
89.It does, however, in the Court's view provide a realistic reflection of the contribution imbalance post-1988. The wife should, by way of contribution entitlement, therefore, receive $300,000 from the husband in consideration of the transfer to him of her interest in the matrimonial home.”
It is clear to me that what his Honour has done in these paragraphs is to recognise that prior to the accident, the wife had an entitlement in the order of $100,000 measured against the assets which the parties then had, and that that entitlement should now be satisfied out of the parties’ presently existing assets. In addition, his Honour determined that the wife’s significant contributions to the welfare of the family following the husband’s accident should be recognised by the wife’s receiving from the husband a sum equivalent to the current value of the matrimonial home ($200,000). It should be borne in mind that the wife will retain other assets totalling in value about $200,000 (being her car and superannuation and her interest in her deceased son’s estate).
This was obviously an unusual and difficult case. No two minds are likely to agree on the exact figure that the wife should receive on account of her contributions or indeed on the exact way in which her entitlement should be calculated. As Coleman J recognised, any figure awarded to the wife has to be “somewhat arbitrary”. However, in my view, it cannot be said that his Honour did not, particularly in paragraphs 86 to 89 of his judgment, attempt to explain how he arrived at the figure of $300,000. (In this context I draw attention to my observations in Farmer and Bramley (2000) FLC 93-060 paragraph 49, and to the qualified endorsement those observations received from Nicholson CJ and Buckley J in Figgins and Figgins (2002) FLC 93-122 at paragraph 74).
I consider that it was a reasonable approach, on his Honour’s part, to assess the wife’s contributions on the basis of what would have been her entitlement prior to the husband’s accident and to recognise her contribution to the welfare of the family following that event by awarding her the full value of the matrimonial home. I certainly do not agree that his Honour placed undue weight on, or was otherwise in error in emphasising, the entitlements which the parties would have had prior to the husband’s accident. Again, in my view, it provided his Honour with some form of benchmark in the difficult task of evaluating the wife’s contribution in this case.
For my part, I am able “to ascertain the reasoning upon which (his Honour’s) decision (was) based” (see Bennett and Bennett (1991) FLC 92-191 at 78 266) and I am satisfied that his decision was within “the generous ambit within which reasonable disagreement is possible” (per Brennan J in Norbis v Norbis (1986) FLC 91-712 at 75 178). Accordingly I would dismiss the appeal.
HOLDEN and WARNICK JJ: This is an appeal against an order made by Coleman J on 27 June 2003. The effect of the order was to divide the property of the parties such that, in round figures, the wife would receive $500,000 and the husband would receive $2,700,000.
Background
The husband was born in 1945 and was 58 years of age at the date of trial. The wife who was born on in 1951 was 51 years of age. The parties married and commenced cohabitation in 1974. There were two children of the marriage, G who was born in 1976 and who tragically died in a motor vehicle accident in August 2002 and GA born 1980 (aged 23 at trial).
In 1977 the parties purchased the former matrimonial home in which the husband still lived at the time of the trial. During the marriage the husband worked as an owner/driver of a prime mover. Apart from the five years after G’s birth, the wife worked as a fabric cutter and a merchandising representative.
In 1986 the wife was injured in a fall and received compensation of $17,500 which was contributed to the marriage in various ways. In 1988 the husband was involved in an accident while driving his prime mover. He was “catastrophically” injured on that date, in that he became a paraplegic.
In 1989 the husband received $123,450 in respect of the accident. The money was applied towards the purchase of a modified VW motor vehicle, a caravan at S and the balance of the funds were invested and later utilised by the family.
The husband commenced proceedings in the Supreme Court. Dowd J delivered judgment on 17 April 2001. In broad terms the effect of his Honour’s judgment was that the husband received a total of $4,345,711.95. The defendant appealed the decision and that appeal was compromised for a sum of $3,900,000.
The parties separated in December 1992 when the wife moved with the children, then aged 16 and 12 to rented accommodation. The parties were divorced by decree nisi of dissolution of marriage in December 1997 which became absolute in January 1997.
By application filed on 30 May 2000, subsequently amended, the wife sought leave to institute proceedings some two years and three months out of time and if leave were granted, seeking certain orders for settlement of property.
In August 2002, the child G died in a motor vehicle accident. He died intestate with the result that pursuant to the provisions of the Family Provision Act 1982 (NSW), his estate passed to his parents as tenants in common in equal shares. The estate had a value of $393,000 net of costs.
Judgment of the trial Judge
After setting out the above background, albeit in considerably more detail, his Honour turned to consider whether leave ought to be granted for the wife to institute proceedings for settlement of property. His Honour granted leave. There is no appeal against the order granting leave and therefore no further reference need be made to this aspect of his Honour’s judgment.
His Honour then turned to consider the proceedings brought pursuant to Part VIII of the Family Law Act 1975 with particular reference to the terms of s79(4) and s75(2).
He commenced by considering the judgment of Dowd J in the proceedings in the common law division of the Supreme Court. We shall return to this aspect of his Honour’s judgment to the extent necessary when we consider the various grounds of appeal. His Honour then made findings with respect to the assets and liabilities. As no ground of appeal is directed towards his Honour’s finding with respect to assets and liabilities it is only necessary for us to observe that his Honour found the net value of the assets available for distribution between the parties to be $3,182,501.
His Honour then turned to evaluate the contributions of the parties. His Honour said:
“68.… Until 1988, the contributions of the parties to the assets then existing were almost equal. The contribution entitlements of the wife exceeded those of the husband by a modest percentage. If one were to speculate, for that is what it must be, there being no reliable evidence of values at that time, something like 55/45 would be an indication of the difference.
69.In the post-1988, post-accident period, until separation, the contributions of the wife to the welfare of the family entitled her to have her 1988 entitlement increased. The difficulty is, increased by what or by reference to what, given that between 1988 and 1992 there was, as the evidence clearly reveals, only the matrimonial home and some items of personalty, the value of which has not been reliably established.
70.Ultimately, contribution entitlements are best evaluated at the date of hearing and having regard to the asset pool then existing. Post-separation, until 1998, the wife's contributions by virtue of her contributions as homemaker and parent, greatly exceed those of the husband, albeit without being critical of the husband in that regard.
71.In the 1988 to 1992 period, the wife's contributions were, on balance, having regard to Dowd J.'s findings and to the contents of exhibit A2, the occupational therapy assessment report on the husband, further heightened by the difficult circumstances under which she laboured in making those contributions. It is not necessary to refer to the decision of the Full Court in Kennon v Kennon (1997) FLC 91-757 to reach that conclusion, nor is it necessary to make findings of fact about particular alleged incidents or events.
72.Evaluating the nature and quality of the contributions, as the High Court said in Mallet was necessary, the evidence leaves little room for doubt that between 1988 and 1992 the combination of the husband's tragic medical condition and his realisation of it meant not only that he was physically greatly impaired in terms of his ability to contribute to the welfare of the family, but that he was understandably, no doubt by virtue of the realisation of his condition and the inability to do anything about it, difficult to get on with, at times argumentative, abusive, and physically excessive in his conduct to the wife. These things are not said critically of the husband, and it is certainly not established on the evidence that these were conscious or deliberate acts on his part. But they do, when evaluated, call for recognition in the wife's favour.”
For reasons set out in his judgment his Honour declined to evaluate the parties’ contributions in percentage terms. He said:
“Senior Counsel for the husband points out, correctly in this Court's view, that in the circumstances of this case, and each case turns on its own facts and circumstances, to simply apply percentages to a fund of $3,182,501, is to totally ignore the realities of life, and in particular the reality that the great bulk of such sum is referable to a tragic accident which has forever left the husband affected, and to ignore the reality that, to use Counsel's expression, there is a negative, a huge negative, in the form of provision for the husband's future needs, and that the $3,182,000 figure has no regard to that.”
His Honour then turned to consider the break up of the compromise on appeal. He found the break up of the more important items to be as follows:
Pain and suffering
$284,000
Past economic loss
$323,442
Future economic loss
$168,004
Past care
$190,545
Future accommodation needs
$387,570
House maintenance
$182,454
Motor vehicles
$122,770
Diversional therapy
$69,990
Special equipment
$297,640
Recreational/household/aviary
$58,756
Washing
$12,464
Boating and campervan
$193,785
Phone
$6,800
Out of pocket
$391,063
Future medicals
$150,280
HIC
$3,792
Future physio
$65,382
Fox v Wood adjustment
$40,118
Superannuation
$41,979
Insofar as the $284,000 awarded for pain and suffering was concerned his Honour said as follows:
“81.…The $284,000 first referred to is personal to the husband. It is inconceivable that in any system claiming to be just that the wife could or should receive any part of that, one only has to read the horrendous injuries the husband sustained, and his Honour's conclusion that this was a most extreme case for that to become utterly unarguable.”
With respect to the future economic loss his Honour said:
“82.…Future economic loss, $168,004, is no more and no less than money the husband will not receive in the future. It will be taken into account for social security purposes, and it is something to which the wife can have no contribution or other entitlement.”
With respect to the various heads of damage generally his Honour said:
“84.…With the possible exception of superannuation - and the wife does have a modest superannuation entitlement - all of these items were referable to a future need and/or payback for expenses perilously met of (sic) the husband.”
His Honour then reached a conclusion with respect to contributions. His conclusion was stated as follows:
“86.How then, does one evaluate the wife's contributions? The reality is that tragically there is far more there now than there would have been had her claim been determined prior to the husband's case being resolved. The wife has an entitlement to not less than $100,000 in respect of the matrimonial home as at 1988. The home itself is worth $200,000.
87.In the Court's view the wife's additional contributions, howsoever categorised, particularly to the welfare of the family, subsequent to the husband's 1988 accident, entitled her to receive an additional $200,000. That entitlement is not determined by simply, as was urged on behalf of the husband, adopting the figures appearing in 6.13 and 6.14. Those were figures determined by another court for another purpose, albeit no doubt properly determined within the context of the proceedings with which that court was concerned.
88.This Court has a statutory obligation to evaluate contributions, having regard to their nature and quality, for itself. That has been made clear by the High Court in Mallet's case. It can be said that $200,000 or any other figure is somewhat arbitrary, and that would be correctly so stated. Objectively, the $200,000 represents $100,000 more than the husband's equity, that is, the husband's legal entitlement, to the matrimonial home.
89.It does, however, in the Court's view provide a realistic reflection of the contribution imbalance post-1988. The wife should, by way of contribution entitlement, therefore, receive $300,000 from the husband in consideration of the transfer to him of her interest in the matrimonial home.”
His Honour then turned to a consideration of the s75(2) factors. In summary his findings were as follows:
·The wife is seven years younger than the husband and has a capacity to go on earning a modest income, in round figures $376 per week
·The husband has no realistic capacity to earn income from personal exertion in the future.
·Taking into account her contribution based entitlement and her share of her son’s estate she will have in round figures $500,000. The husband will have $2.7m.
·Neither party has an obligation to support any other person.
·The husband has superannuation of $41,979 that will not increase. The wife has the capacity to make further contributions to superannuation thereby enhancing her position.
·The wife, with $500,000, will have sufficient money to buy a home of comparable standard to the former matrimonial home, retain a capital fund of $300,000, and continue earning an income of $376 per week, which would provide a reasonable standard of living.
·The "vast bulk" of the $2.7m to be retained by the husband ought to be regarded as necessary to provide him with a reasonable standard of living.
With respect to the s 75(2) factors his Honour concluded:
“101.Should there be a s.75(2) adjustment at all? The Court concludes that there should not. The effect of the s.75(2) factors is that objectively, notwithstanding that the husband has and will continue to have, in capital terms, vastly more than the wife, some five times, more than five times, his needs as quantified and accepted, as clearly they have been by the absence of challenge through cross-examination of the husband of any of the items appearing in the compromise on appeal, the break up of the husband's settlement monies, are well and truly accounted for in terms of his future reasonable needs.”
His Honour then considered the so-called fourth step, saying:
“102.If one stands back and takes what is sometimes described as the fourth step, what flows from it is that the husband, with $2.7 million, will have to expend in order to have what is not suggested to be other than a reasonable residence within which to reside, in round figures $400,000. That is to say, he will have $2.3 million and be in a new house. If the wife were to purchase a home for, say, $300,000, she would have a home and a capital fund of $200,000. She would have her future employment. The husband does not have that benefit.
103.It is when one looks, though, at where the balance of the husband's $2.3 million will go, that one gains a greater insight into the realities of the proposed division, and it is the Court's belief that the justice and equity of that proposed division becomes more apparent. $284,000 of that $2.3 million is referable to the horrific injuries, pain and suffering which the husband has undergone. No amount of money can compensate him in the true sense for that, but the law recognising compensation in monetary terms, that is the measure of it, $284,000. Of that $2.3 million, future care, that is, somebody to do for him the things he cannot do for himself which, thankfully, the wife can do for herself, will cost $713,887.92. There is no magic about that. That is the figure, it has not been challenged. It is a substantial figure, and every cent of it has been determined by the Supreme Court of New South Wales as the husband's reasonable future needs in terms of care.
104.House maintenance, $182,453.67 is necessary to enable somebody to come and do things like cutting the grass, cleaning, all the sorts of things which thankfully the wife is able to do for herself. Diversional therapy, $69,950. Special equipment, $297,640. Washing, 12,464. Future medicals, $150,280. Future physiotherapy, $65,382. Wherever one looks, one sees expense which the husband will have to meet. No apparent adjustment for probable future costs of providing these things, no allowance for inflation. He gets one settlement, and one only, and out of that $2.3 million, after he houses himself, the husband will have to provide for all of these things for the rest of his life.
105.Objectively, for the wife to depart this case with $500,000 and the husband to retain $2.7 million is, in the Court's view, just and equitable. When one looks at the realities of life and what that $2.7 million is referable to, and what it must pay for over the next two decades or more.”
Grounds of Appeal
Upon the hearing of the appeal, counsel for the appellant wife sought, and was granted leave, to add a further ground to those contained in the Amended Notice of Appeal, filed on 8 September 2003. The grounds of appeal therefore became:
“1.That His Honour erred in failing to give appropriate and sufficient weight on the contributions of the Appellant.
2.That His Honour erred in attaching too much weight to the financial contributions of the Respondent.
3.That His Honour erred in failing to make any adjustment pursuant to section 75(2) in favour of the Appellant.
4.That His Honour erred in the exercise of his discretion in that the Orders made achieved a result outside the reasonable bounds of the exercise of the Court's discretion.
5.His Honour the trial Judge did not adequately explain his reasoning in determining the respective entitlements of the parties.”
Consideration of Grounds of Appeal
Counsel for the wife, both in his written and oral submissions, argued his grounds of appeal “en bloc”. To the extent necessary we propose to deal with them in a similar fashion.
Counsel for the wife submitted that his Honour erred by effectively "quarantining" the pain and suffering ($284,000) and future economic loss ($168,004) components of the husband's damages award.
In Williams and Williams (1984) FLC 91-541, the husband in 1979 received $125,000 in settlement of a damages claim arising from an accident in 1971. The parties had separated in 1975.
Approximately $76,000 of the amount was paid into a fund in the Supreme Court on the husband's behalf, he having become a permanent hospital in-patient since 1976. It was not possible to particularise the various components of the damages award.
It was argued on the husband's behalf that it was a matter of law that this fund ought to be excluded from consideration. In his judgment Fogarty J (with whom Baker and Joske JJ agreed) said as follows, at 79,385 - 386:
“… However, as counsel for the wife correctly pointed out, the assets of the parties constituted now by the home and the fund in the Supreme Court are clearly ''property'' within the meaning of sec. 4 of the Family Law Act. They therefore fall within the operation of sec. 79, and it is really a question of the exercise of discretion. That is, it is clear that the Court has power to make an order in respect of assets constituted in that way. It is a question whether it should or should not do so in the particular circumstances of the case, taking into account in the individual case the components of that damages figure.”
He went on to say:
“Dealing with that first submission of counsel for the husband, it seems clear to me that the fund is “property”. It falls within sec. 79, and it is a question of the exercise of discretion as to how one would deal with that fund, and in the exercise of that discretion no doubt a significant factor, but not the only factor, to take into account is the history and origin of the fund with which the Court is concerned.”
His Honour did acknowledge, however, that different considerations might apply where there were detailed particulars of the components of a damages award.
The husband was granted special leave to appeal to the High Court. Special leave was rescinded on 22 August 1985 (see Williams v Williams (1985) FLC 91-628). In its reasons for judgment the High Court said, at 80,093:
“…[T]he appellant submits that there are matters of principle involved.
… The first arises from a submission that the Family Court erred in taking into account, when assessing the property of the parties capable of division, (a) moneys still held in the Supreme Court of the Australia Capital Territory representing part of the proceeds of the settlement of an action brought by the appellant for damages for personal injuries, and (b) the home which had been acquired with moneys earlier withdrawn from the fund in Court. It is submitted that in doing so the Family Court necessarily had regard to portions of the settlement that represented damages for pain and suffering and loss of amenity of life. The short answer to this submission is that when the property available for division between the parties represents an award of damages for pain, suffering and loss of amenity, it may be relevant, in some situations, to have regard to the circumstances relating to that award, but there is no general presumption that the award should be left out of account in determining what order should be made under sec. 79 of the Family Law Act 1975 (Cth).”
We were referred to Aleksovski v Aleksovski (1996) FLC 92-705. In that case the parties married in 1975 and separated in 1993. In 1988 the wife was injured in a motor vehicle accident and in 1992 she received $143,000 by way of compensation for injuries sustained by her. $89,000 was used to purchase a unit. The trial Judge found that the wife contributed “exclusively” to that unit.
The full Court said at 83,437:
“In our view, having regard to the facts of this case, his Honour was entirely correct in that the wife’s damages award and, in particular, that portion of it which related to pain and suffering, should be regarded as a contribution by her to the marriage and to the family.
Similarly, that portion of a damages award which relates to economic loss, representing income lost during the marriage or period of cohabitation, may also be regarded as a contribution by the party who has suffered the loss.”
The Court went on to say:
“It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.
It really comes down to questions of weight. Whilst weight would and must be given to a contribution which a party makes shortly before the separation, less weight may be given to a contribution made by one of the parties to a marriage early in the cohabitation period of a long marriage, particularly in circumstances where the contribution has gone into the parties’ assets or been used up in the payment of family expenses.
In our opinion, in most cases, a damages verdict arising from a personal injury claim, whenever received, is a contribution by the party who suffered the injury. It should not be considered in isolation, for the reason that each and every contribution, which each of the parties makes to the relationship, must be weighed and considered at the same time.
In our opinion, the manner in which the trial Judge, in effect, quarantined the Thomastown unit as a contribution made solely by the wife because of her compensation award, has resulted in the wife receiving substantial credit for all her contributions, with the husband receiving minimal credit for his.”
It is not suggested that his Honour quarantined any part of the husband's damages award from the asset pool available for distribution. What he does appear to have done, however, is regard certain portions of the damages award as being a contribution exclusively by the husband, and against which the wife’s contributions were not measured, with the result that the wife's contributions have been devalued.
Furthermore, to quarantine future economic loss was contrary to a concession made by counsel for the husband who, during his closing address, said:
“The other category of the judgments, or the award of damages, to which the wife must be seen as having made some contribution, is to the husband's earning capacity or his earnings, or the compensation he has got for the loss of earnings. That is what would have been shared between them had they continued in their relationship. That is, the future earnings which a Court may have looked to even though not as a capital sum but the fact that he had an expectation of future earnings would certainly be looked at in the assessment overall of section 75(2) factors. So the amount he received in respect of loss of earnings, loss of past earnings and loss of future earnings is something to which some contribution by the wife must be recognised.”
At para 35 of his judgment, his Honour said:
“35.There is much in the submissions of learned Senior Counsel for the husband, further in this context, namely that had the wife applied within time, had she been 100 percent successful, as clearly she then would not have been on the evidence as it then stood, she would not and could not have obtained anything like the relief which she now seeks. The difficulty with that proposition is ultimately that with respect, although superficially attractive, it is somewhat of an approach from the wrong end. The question is not how much short of what she seeks can she obtain or could she have obtained, but rather how much in excess of what she could have obtained can the wife at this time realistically hope to achieve if leave is granted.”
Then, in para 70, his Honour said:
“Ultimately, contribution entitlements are best evaluated at the date of hearing and having regard to the asset pool then existing.”
We regard that as a correct statement by his Honour. Notwithstanding that he has correctly stated the principle, the question of what the wife would have received had her claim been finalised prior to the husband's damages award seems to weigh heavily on his Honour's mind. There are references to this question throughout his Honour's judgment. At para 69, he said:
“In the post-1988, post-accident period, until separation, the contributions of the wife to the welfare of the family entitled her to have her 1988 entitlement increased. The difficulty is, increased by what or by reference to what, given that between 1988 and 1992 there was, as the evidence clearly reveals, only the matrimonial home and some items of personalty, the value of which has not been reliably established.”
He makes further reference to this question in para 78 of his judgment where he said:
“In this case, the reality is that the great bulk of what now exists in a contribution sense derives from the husband. The smashing of his body and the ruining of his life, albeit no doubt a contribution he would dearly like not to have ever had to make, has given rise to the great bulk of the money. One doesn't know what might have been, but one does know that until 1988, despite a history of each contributing to the best of their respective abilities, the parties' assets were extremely modest. There is no rational basis in the evidence for suggesting that absent the verdict the husband received, that would have materially changed.”
Then, at para 86 he said:
“How then, does one evaluate the wife's contributions? The reality is that tragically there is far more there now than there would have been had her claim been determined prior to the husband's case being resolved. The wife has an entitlement to not less than $100,000 in respect of the matrimonial home as at 1988. The home itself is worth $200,000.”
We think there is considerable merit in the submission of counsel for the wife that his Honour was unduly influenced by a consideration of the amount the wife would have received if her application for property settlement had been determined prior to the husband's damages claim being resolved.
His Honour's findings as to contributions may be summarised as follows:
·The wife's contributions from the date of the marriage until the accident in 1988 exceeded those of the husband by a modest percentage.
·In the post-1988 period until separation the contribution to the welfare of the family “entitled her to have her 1988 entitlement increased”.
·From the time of the husband's injuries until the parties separated, the wife contributed to the “fullest extent of her ability as a carer for the children, a homemaker and carer for the husband”.
·Subsequent to separation the children, then aged about 16 and 12 lived with the wife and were her sole responsibility in terms of care.
·Between 1988 and 1992 she made the contributions that she did in difficult circumstances as the husband was difficult to get on with and was at times argumentative, abusive and physically excessive in his conduct to the wife.
·The great bulk of what now exists in a contribution sense derives from the husband.
In our view, his Honour erred in failing to assess the wife's contribution to the whole of the husband's damages award and in assessing that contribution on the basis of relating it to what the position might have been had her claim been determined prior to the husband received his damages award.
These errors have resulted in the wife's contribution being seriously devalued, thus producing a result which is manifestly unjust to the wife. We would therefore allow the appeal.
Re-exercise of discretion
We understood it to be common ground that in the event that we upheld the appeal we should re-exercise the discretion in order to save the parties the ordeal of a new trial. Both counsel indicated that we should re-exercise the discretion on the basis of his Honour's findings of fact as neither sought to adduce any further evidence.
Earlier in these reasons we summarised his Honour's findings with respect to contributions. His Honour found in the pre-accident period of the marriage, a period of approximately 14 years that the wife's contributions were greater than the husband's by approximately 5%.
It is true that except for some items of personalty, the former matrimonial home, and the son's estate, the existence of all of the assets available for distribution between the parties, are derived from the husband's damages award and thus he made an overwhelmingly greater financial contribution overall.
At the time of the accident, however, the two children were not yet 12 and just 8 respectively. From 1988 onwards the wife was effectively the sole contributor to the welfare of the family in the non-financial sense and she cared for the husband “to the fullest extent of her ability” for the four years between the date of the accident and separation. She made this contribution in an environment where the husband was difficult to get on with and at times “argumentative, abusive and physically excessive in his conduct to the wife”. Although not making specific findings about particular incidents or events, his Honour found that the behaviour of the husband “when evaluated, called for a recognition in the wife's favour”.
In our opinion, these contributions of the wife go some way to reducing the significance of the husband's overwhelmingly greater financial contribution and would be adequately recognised by a contributions based entitlement of $700,000.
Section 75(2) factors
We now turn to consider the s 75(2) factors. Ground 3 asserts that his Honour erred in failing to make any adjustment pursuant to s 75(2) in favour of the appellant. We had reservations that the order as it stood would have provided a standard of living for the wife that was reasonable in all the circumstances, given that she had legal fees to pay, her extremely modest income and lack of superannuation.
These reservations disappear, however, when the wife's contribution entitlement is increased by a further $200,000. We reviewed his Honour's findings with respect to the s 75(2) factors in the context of those additional funds and adopting his Honour's reasoning we conclude that there ought to be no adjustment on account of the s 75(2) factors.
Costs
In the event that the appeal were successful, each party sought an order pursuant to the provisions of the Federal Proceedings (Costs) Act 1981 (Cth). In Tyson and Tyson (No. 2) (1993) FLC 92-401, the Full Court said as follows, at 80,111:
“The grant or refusal of a costs certificate under the Act is purely discretionary, and the Act itself lays down no guidelines for the exercise of that discretion. Without intending to be exhaustive, matters such as the overall reasonableness or otherwise of the attitude adopted throughout the proceedings by the party applying for the certificate to the relief sought by the other, the financial resources of the applicant, and the likely quantum of that party’s total costs of the appeal, as compared with the “prescribed maximum amount” payable upon a costs certificate (in this case $4,000), all appear relevant for consideration by the Court in the exercise of that discretion, as too is the fact that the funds to honour such a certificate must come from the public purse.”
We are of the opinion that when we consider the above it is appropriate to grant certificates to each of the parties to the appeal.
Orders of the Court
1. That the appeal be allowed.
2.That paragraph 2 of the order made by the Honourable Justice Coleman on 27 June 2003 be varied by deleting the figure "$300,000" and inserting in its place the figure "$500,000".
3.That the Court grants to the respondent a costs certificate pursuant to the provisions of s6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.
4.That the Court grants to the appellant a costs certificate pursuant to the provisions of s9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
I certify that the preceding 87 paragraphs are a true copy of the reasons for judgment delivered by this Honourable Court
Associate
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