M & M

[2005] FamCA 554

[2005] FamCA 554

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA
AT SYDNEY  No. SY5608 of 1994

BETWEEN:

M

Husband

and

M

Wife

REASONS FOR JUDGMENT

BEFORE:                 Moore J
HEARD:                   14, 15 & 16 June 2005
JUDGMENT:          30 June 2005

APPEARANCES:    Mr Foster, instructed by Turner Freeman, Solicitors, appeared for the applicant wife. 

Ms Langley, instructed by John Carmody & Co, Solicitors, appeared for the respondent husband.

FAMILY LAW – PROPERTY SETTLEMENT – superannuation – whether resources since Full Court decision of Coghlan – interpretation of majority decision in Coghlan – long separation of 14 ½ years – inheritances by wife pre and post separation.

Ferraro and Ferraro (1992) 16 Fam LR 1
Coghlan & Coghlan (per Bryant CJ, Coleman and Finn JJ) unreported delivered 2 June 2005
Hickey and Hickey (2003) FLC 93-143
Chorn and Hopkins (2004) FLC 93-204
Marker & Marker

[1998] FamCA 42

Proceedings

1. To be determined are the parties’ applications for settlement of property in circumstances where they separated over 14 ½ years ago. 

Principles

1. Consistent with well known authority, the task is to arrive at a just and equitable distribution of their property pursuant to s 79 of the Act.  The approach to that, through s 79(4), in this case involves a number of steps: (i) the identification of their property and its value; (ii) an evaluation of their contributions having regard to s 79(4) (a) - (c); (iii) consideration of any adjustment to that assessment having regard to any relevant matters in s 75(2); and (iv), a review of the outcome against the just and equitable requirement.  (see eg. Ferraro and Ferraro (1992) 16 Fam LR 1).

Property

1. Subject to certain exceptions I shall come to shortly, there is agreement about the parties’ property and its value.  There is also agreement about the allocation of that property into separate lists for the purpose of making the contribution assessment.  There is further agreement that neither party made any contribution to the separate property of the other (B and D below) because, independently of the other, that has been built up or acquired from their own resources over the long period since their separation.  As presented by counsel, their current circumstances are as follows:

A. Joint

H Property  520,000

Less

Mortgage   78,160

H Council Rates       9,000          87,160

432,840

B. Husband

Equitable interest in T property:
Value:  450,000
  Mortgage:                   265,000 (say)             185,000
Greater Building Society (jt with wife $4,278) (say)                2,639
Holden Statesman   22,500
Holden Berlina (50%)   7,250
Household effects    10,000
           TOTAL:  227,389

C. Husband - financial resources
BT Superannuation     (30.06.2004)         2,451
ING Superannuation (30.6.2004)         9,467
AMP Superannuation :(30.06.2004)      11,839
Colonial Super Retirement Fund (31.12.2004)   15,202
ANZ Super Savings (15.10.1998)     7,997
TOTAL:   46,956

D. Wife
ANZ shares       6,227
ANZ Bank           7
Nissan Bluebird   10,000
Honda Prelude     3,000
Household contents   15,000
Jewellery     3,000
IAG shares      7,143
           TOTAL   44,377

E. Wife – financial resources
ANZ Staff Superannuation        20,280

1. No reference was made to the parties’ liabilities in the lists provided other than those set out above, though they do each have other debt.  Part and parcel of their current financial circumstances, those debts should not be ignored.  The husband’s other debts are these:

   Australia Tax Office  136,000
              Credit cards   1,917
              Hire purchase (his wife’s car)   10,983
              Legal fees    34,000
              Total:  182,900

1. The wife’s are these:

   ANZ Bank personal loan  19,470
              Credit card   1,670
              Legal fees  30,000

   Total:  51,140

1. It will be noted these debts include their legal fees related to these proceedings but they are of similar amounts and no distortion arises from their inclusion. 

1. It will also be noted the parties’ respective superannuation entitlements have been designated ‘resources’ and not included as the property of that party, though in both instances, like their other property in B and D above, it has been accumulated over the years since their separation.  Mr Foster explained this step had been taken because of his reading of the majority decision in Coghlan & Coghlan (per Bryant CJ, Coleman and Finn JJ), as yet unreported, delivered on 2 June 2005.  That is this: where no splitting order is sought (as is the case here) superannuation is to be dealt with as it used to be before the legislative changes introducing Part VIIIB; namely, superannuation is to be regarded as a financial resource - and (presumably) taken into account as a s 75(2) factor. 

1. The decision of the majority may be the subject of analysis and commentary in due course, but I could not find room anywhere in their decision for this interpretation.  My own reading is this:

   • The majority concluded that superannuation is ‘another species of asset’.  They did so by a process of statutory interpretation after a consideration of the earlier Full Court decision of Hickey and Hickey (2003) FLC 93-143.  They rejected the earlier Full Court’s conclusion there about the effect of s 90MC (ie. a superannuation interest is to be treated as property whether or not a splitting order is sought or proposed to be made), calling it a ‘gloss’ on that section.  In their opinion, s 90MC did no more than confer jurisdiction to make orders with respect to superannuation interests by extending the definition of ‘matrimonial cause’.  This conclusion was supported by their interpretation of the word ‘also’ in s 90MS, from which they drew further support for their conclusion that superannuation is ‘another species of asset’ to be distinguished from ‘property’ as defined in s 4(1) and in relation to which orders can also be made in property proceedings under s 79.  There is nothing, they said, to indicate that superannuation interests are to be treated as property in s 79 proceedings.  Treating superannuation as property is merely to confer jurisdiction.
   • Having found ‘another species of asset’, the majority went on to consider how it is to be treated – that becomes pertinent to the case at hand here – and they suggested there are different considerations depending on whether or not there is an intention to make an order.  They said s 90MS(1) means that where the Court intends to make orders in relation to superannuation interests it must do so ‘under’ s79; that is to say, the Court must apply to superannuation interests the matters to be taken into account under s 79.  As that section deals with ‘property’, it means property as defined in s 4(1) and that will not normally include superannuation interests.  But they said s 79(2) applies to both s 4(1) property and the ‘other species of asset’ and s 79(4) is to be the approach to both.  Importantly, they said, the conclusion that superannuation is to be regarded as ‘another species of asset’ in relation to which orders can be made will mean the Court will be relieved from having to determine the question of whether superannuation as defined in s 90MD may also come within the definition in s 4(1), as was the proposition put in submissions in Hickey, or whether it is only a financial resource. 
   • They went on to discuss the position where no order is sought under Part VIIIB.  They observed that ‘strictly speaking’ the requirement to apply s 79 to superannuation would only arise under s 90MS where an order is sought under Part VIIIB and the legislation appears to be otherwise silent as to the Court’s obligations and powers where no order is sought under Part VIIIB, the latter being a ‘significant omission in the legislation.’  The reasoning in Hickey, they observed, would have overcome that by the requirement to treat superannuation as ‘property’ in all s 79 proceedings, but as s 90MC only serves to confer jurisdiction [on their interpretation], it did not have this effect.  They went on to comment that it may well have been the intention of the legislature, where no order is sought, to have superannuation treated in the same way as it was treated prior to the introduction of Part VIIIB [this is Mr Foster’s interpretation of the judgment].  However, they went on to reject that by pointing out the difficulty with an argument to that effect; namely, the obligation in ‘property settlement proceedings’ to make an order that is just and equitable could only be ascertained with respect to superannuation interests if the criteria reflected in s 79(4) is applied.  Therefore, though not ‘property’ as defined in s 4(1), s 79(4) is to be applied not just to s 4(1) property but also to this ‘other species of asset’.  So, whether or not a splitting order is sought the obligation under s 79(2) for a just and equitable order means s 79(4) is to be applied wherever there is a superannuation interest. 
   • The majority later went on to tackle the practical implication of their analysis, a topic of much interest given their re-interpretation of s 90MC and s 90MS and departure from the earlier Full Court decision.  The upshot is two approaches could be adopted. 
   • The first (it could be called the ‘discretionary approach’) is a matter for the trial judge’s discretion, whether or not a splitting order is sought, to be exercised in certain circumstances.  The court could include the superannuation interest in the list of property (ie as part of the first step) and this could be done where

   (i)the parties agree;

   (ii)the court is satisfied the superannuation interest is property within the meaning of the definition in s.4(1) [so there seems to be some room allowed for the proposition that the interest may be ‘property’ as defined];

   (iii)if not property under s 4(1) but it is of ‘relatively small value’ given the value of other assets or there are ‘other features’ about the superannuation which leads the Court to conclude it would be ‘appropriate’ to do so [there is no elaboration];

   (iv)contributions to everything included would be then assessed, either globally or on an asset by asset basis, bearing in mind it might be necessary to have regard to future superannuation entitlements (avoiding double counting by proper regard to the contribution assessment); and

   (v)then consideration would be given to justice and equity. 

   • The second (called by the majority the ‘preferred approach’) envisages the preparation of a list of s 4(1) ‘property’ and a separate list reflecting the ‘species of asset’, ie any superannuation interests.  If a splitting order is sought, of course the interest is to be valued according to the Regulations.  If no splitting order is sought, the superannuation is to be valued according to Regulations or another method.  Contributions are assessed to both the s 4(1) property and to the ‘other species of asset’.  Other factors in s.79(4)(d) to (g) are then assessed.  Specifically, the s 75(2) factors are to be considered having regard to the assessment made of contributions to s 4(1) property and contributions to superannuation interests and consideration is to be given to any future superannuation prospects.  Finally, the requirement for a just and equitable outcome is to be considered. 
   • In paragraphs 65 the majority purport to summarise the practical implications.  They confirm the existence of a discretion as discussed, but they go on to add that if superannuation is not included in the list of property and is the subject of a separate pool it will be necessary where a splitting order is sought, or ‘extremely prudent’ where no splitting order is sought, to observe the following:

   “(a)value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);

   (b)consider and make findings about the types of contributions referred to in s 79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;

   (c)consider the other factors in s 79(4) being the matters in s 79(4)(d), (e), (f) and (g); and

   (d)ensure that pursuant to s 79(2) the orders in relation to the parties’ property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.”

   • They follow this in paragraph 66 by saying the following matters may well be relevant in the context of steps 2 and 3:

   1.the relationship between years of fund membership and cohabitation;

   2.actual contributions made by the fund member at commencement of cohabitation at separation and at the date of hearing;

   3.preserved and non-preserved entitlements at those times;

   4.any other factor peculiar to the fund or to the spouse’s present and future entitlement under the fund.

   • They round up this area of discussion by the observation that if this approach is adopted – by which I apprehend them to mean superannuation interests are dealt with separately from s 4(1) property but s 79(4) is applied to those interests as well - then it will be more likely contributions to those interests will be given proper recognition.  Not only that, but the ‘real nature’ of the interests can be taken into account both in the consideration of s 75(2) factors and the overall assessment of whether the outcome proposed is just and equitable.  As for what is meant by ‘real nature’ [particularly given their observation in paragraph 56, in effect, that since the introduction of Part VIIIB a valuation provides an indication of the ‘true worth’ of a superannuation interest], they explain in paragraph 68 that this means the fact that ‘notwithstanding its value according to the Regulations may well be calculated to be a very significant amount, that superannuation interest may be no more than a present or future periodic sum, or perhaps a future lump sum, the value of which at date of receipt is unknown.’  In other words, despite the fact that a present day value as been calculated for the receipt of money in the future – a not unusual process as the minority pointed out – this seems to contemplate at steps 3 and/or 4 [any (s75(2) adjustment and just and equitable outcome), a ‘loading up’ of the considerations already factored into that valuation - [ie. assuming the valuation has already taken account of the fact that the interest is a ‘present or future periodic sum or..a future lump sum’ as would normally be the case] – by considering its ‘real nature’. 

1. Perspectives may differ about it, but as I read the majority decision, I cannot see any support for Mr Foster’s reading.  In a nutshell, absent any splitting order being sought, as is the case here, a superannuation interest is not a ‘financial resource’ but ‘another species of asset’.  There is a discretion to include the value of the interest in one list (if certain criteria exists) along with the s 4(1) property; it might be the subject of a second list and set apart from the s 4(1) property (to be preferred); and irrespective of the one list or two list approach, the usual approach to s 79 is to be applied to all of it. 

1. Here, counsel by agreement arranged property and superannuation into several separate lists and that suggests the appropriate course in this case would be to maintain those separate categories.  Coghlan merely requires counsels’ categorisation of superannuation as ‘resources’ to be disregarded and ‘another species of asset’ substituted.  Contributions to each category can be assessed in the usual way and then any s 75(2) adjustment considered in the light of the whole of their property and superannuation interests before reviewing the outcome against the just and equitable requirement. 

1. Before proceeding to discuss other matters, however, there are a couple of issues relevant to their assets that need to be addressed.  The first is the equity in the T home registered in the name of Mr M’s wife and the joint bank account the husband has with her.  As is apparent, I have notionally attributed him with one half of each.  Quite sensibly, this proposition drew no real argument from Mr Foster.  The other issue relates to the submission by Mr Foster that the following items and amounts, being monies retained by the husband in the early years of their separation, should be included as his current assets:

   ·Balance eligible termination payment retained - $7,678

   ·Funds from investment account - $6,500

1. I shall come shortly to the surrounding circumstances in recounting the financial history of the parties’ relationship, but in my view his retention of these funds is more appropriately considered in assessing post-separation contributions overall rather than being brought to account as a notional asset in his hands.  The Full Court, before going on to discuss in some detail the adding back of paid legal costs to an asset list, observed in Chorn and Hopkins (2004) FLC 93-204)

   ‘42.      In Marker [[1998] FamCA 42] Baker, Kay and Chisholm JJ said:

   2.10  It is well settled that save in exceptional circumstances a trial Judge should deal with the property as at the date of the hearing and make adjustments taking into account the various matters set out under s.79. (Wells v Wells (1977) FLC 90-285; Wardman v Hudson (1978) FLC 90-466; In the Marriage of Geyl 7 Fam LR 219)   However, the particular justice of the case may make it appropriate to notionally add back assets which have been demonstrated to have been dissipated either during the marriage or post-separation.  Normally it is necessary to demonstrate an appropriate basis for doing so, for example by wastage such as gambling or extravagant living.  (Kowaliw v Kowaliw (1981) FLC 91-092; Fane-Thompson v Fane-Thompson (1981) FLC 91-053; Winnel v Winnel (1984) FLC 91-580; Townsend v Townsend (1995) FLC 92-569; Doherty v Doherty (1996) FLC 92-652)   Additionally, because of the requirement for each party to bear their own costs, it is generally appropriate to add back to the pool of assets notionally any legal costs that have been spent on the litigation and to deal with the costs as a separate issue at the end of the litigation.  (see Farnell(1996) FLC 92-681).

   2.11 There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.’

1. Here, these two amounts are referable to events many years ago after the parties’ separation, there is no proper basis for including them as assets now as discussed by Chorn, there is no inclusion of monies from the same source retained by the wife in her current assets, and to do as suggested when these funds are no longer available would distort the current situation in an unwarranted way.  They are better left to an assessment of post separation contributions along with many other developments over those years. 

Evidence:

1. Witnesses who gave affidavits for the wife were not required for cross-examination.  Apart from their unchallenged evidence, the evidence consists of that given by the parties, supplemented by a number of documents tendered. 

1. The wife indisputably retained the bulk of documents relating to transactions relevant to their financial history and so she had the advantage of their contents in giving her evidence.  The husband had largely relied on recollection of transactions many years ago and he readily conceded the correctness of details she had provided relying on the documents in her possession.  However, differences remain, they are not supported by documents or corroborated by other evidence, and so some issues of fact have to be resolved by assessing the reliability of their evidence generally. 

1. Ms Langley, counsel for the husband, submitted on a number of fronts that the wife’s evidence should attract the finding that she was variously argumentative, evasive, unresponsive, and made every attempt to claim a contribution.  I tend to agree.  There were several areas of her affidavit evidence where it was demonstrated she was incorrect and it was always in circumstances where her sworn evidence inflated her own contribution.  She thereby demonstrated a tendency to exaggerate to her own benefit.  When challenged about any demonstrable error, she also tended to minimise the importance of her evidence being accurate and to dismiss as trivial anything contrary to the picture she had painted. 

1. Of course there is no expectation of complete accuracy, particularly when many transactions and events occurred many years ago, and a degree subjectivity is to be expected.  But when it becomes necessary to assess reliability to resolve a disputed fact, the least that can be expected is for a party to take due care in presenting their evidence and to do the best they can to present the facts accurately.  Probably convinced of the merits of her own cause, the wife’s attitude was all too cavalier and not enough care was taken with accuracy.  In the result, while the husband’s evidence was vague about detail in some respects, where there is a conflict or dispute about facts, I prefer his version of events unless the contrary is corroborated or supported by other evidence. 

1. There follows a record of the more central features of their financial history where statements of fact are to be read as findings of fact, taking into account the finding on credit just discussed. 

History

1. The parties (both aged 49) began living together in August 1976.  They shared rented premises and their expenses equally.  Both were working full time for the ANZ Bank. 

1. The husband had a Holden panel van, some equipment and minimal savings.  The wife had savings of between $5,000 and $8,000 (the former is the husband’s assessment and the latter is the figure she gave in an earlier affidavit before nominating $10,000 in a more recent affidavit).  She had been involved in a motor vehicle accident in 1976 and her savings included the insurance payout.  She subsequently purchased another vehicle using this money.  She also had an interest in her late father’s Estate along with some furniture and personal effects. 

1. They married in 1978.  They have three children: F (24) born in 1981, C (almost 22) born in 1982, and S (20) born in 1984. 

1. The husband remained working with the ANZ Bank throughout the years they were together and beyond their separation in November 1990.  They moved a number of times over the years in the course of his employment with the Bank – in 1983 to Town V, in 1984 to Town W, and in 1986 overseas for three years until the end of 1988 when they returned to Australia.  Throughout, when they were required to rent a home the bank subsidized their rent and the bank met their moving or relocation costs.  His income, I am satisfied, was used for family purposes throughout.  I shall return later to developments in his employment post separation. 

1. The wife continued to work with the Bank until 1981 when she went on maternity leave, but she did not return and later resigned.  She returned to full time work while living overseas for almost 2 years for a foreign government authority.  A few months after their return to Australia, in March 1989, she began part time employment, again with the ANZ Bank.  She has remained in the employ of the Bank since and recently her employment was increased to full time.  While she worked overseas her income did not go into the joint account (they separated for a time while overseas) but there is nothing to indicate her income at this time was used for anything other than family purposes of one kind or another, directly or indirectly, and I am satisfied her income throughout was used for family purposes.

1. Not only did the wife come to the relationship with an entitlement to a share of her father’s Estate but after her mother’s death in 1981 she also had an entitlement to a share of her Estate and she became entitled to a distribution under her maternal grandfather’s Estate.  More will be said about her inheritances shortly.  But considering her income for the moment, it is her case that between 1986 and 1989 she received rental income from properties she had inherited totaling $3,800 and from May 1989 to September 1997 (ie mostly post-separation) further rental income totaling $4,700.  These amounts were not included in her tax returns but the explanation, as I apprehend it, is that her brother attended to the Estate arrangements and she considered there to be no need to include the amounts given to her as her income in her tax returns.  I proceed here on the basis she did receive the additional monies she identified, some of it pre-separation and some post-separation. 

1. About four years after they started living together, in 1980, they purchased land at Town B on the far north coast of New South Wales for $10,500.  The wife’s motor vehicle was sold and the proceeds put towards the purchase of the land along with either joint savings accumulated over the previous years of living together or small loans from their parents. 

1. They then went about having a home constructed on the land and, for that purpose, they borrowed $33,000 from the Bank.  The wife’s mother gave them a gift of a further $7,500 to assist in meeting costs.  The wife was not in paid work by this time and was able to attend to the progress of the building work that took place over a 12 month period.  The husband contributed $1,000 given to him as a birthday present from his aunt to carpet the home. 

1. In 1983 the home was sold for $78,000 and they moved to Town V where they rented premises before later moving to Town W. 

1. In December 1983 they purchased a home at Town W for $81,000.  The money received from the sale of the Town B home was put towards the cost, they borrowed $53,000 from the Bank, and any shortfall came from their savings. 

1. In July 1984 the wife received $10,000 related to her late mother’s Estate.  She produced a copy of the letter from the solicitor enclosing the cheque and a dividend advice from the St George Bank, issued in the parties’ joint names and dated 31 May 1985, for a sum of $10,322.  Some work was undertaken on the Town W property and she used this money towards that work.  That is not disputed by the husband. 

1. In October 1984 they purchased land at Town O for $21,000.  The necessary money was borrowed from Esanda Finance. 

1. In 1986 on the transfer overseas they rented the Town W home, applied the rent to outgoings, and they later sold it for $105,000.  From the sale proceeds a document (K to the wife’s affidavit) suggests the housing loan of $53,095 was paid out, the Esanda loan of $22,351 was paid out, and $23,345 plus the balance of deposit was credited to an account in the husband’s name – styled as a business account to reflect some computer work he was doing.  About $13,000 of that was put towards the purchase of motor vehicles while they were overseas and that left them with around $16,000.  Nothing supports any notion that this money was wasted or spent unwisely and everything points in the direction of it being applied for one purpose or another associated with the family’s needs. 

1. On their return to Australia at the end of December 1988 they lived in rented premises for about 12 months and bought a motor vehicle. 

1. In December 1989 they acquired the H home for $215,000.  The property was subject to a Crown land debt of around $8,000 and the offset of that meant the price was reduced to just under $207,000.  Given the relocation from overseas, the Bank paid the charges such as stamp duty and fees such as legal costs associated with the purchase. 

1. Just prior to that, in November 1989, the wife received two payments from her parents’ separate Estates: $15,000 and $19,000.  The first is evidenced by a letter enclosing the cheque and the latter by a document from the ANZ Bank dated 8 December 1989 withdrawing in the vicinity of $19,000.  It is accepted these are two separate amounts.  On 14 December a deposit of $20,600 was paid towards the purchase of the home.  It is the wife’s evidence that this came from her inheritance monies.  However, a copy letter from her brother annexed to her affidavit, dated earlier that month, indicates he had lent them $1,700 to assist with payment of the deposit with another $11,300 to be paid on settlement and the whole $13,000 to be repaid with interest at the rate of $120 per month on the sale of the Town O land.  I therefore conclude she contributed around $18,900 towards the deposit.  In all probability she used the other funds she received to acquire a motor vehicle.  Apart from the $13,000 loan from her brother (repayable with interest) there was another $3,000 borrowed from the husband’s parents.  Almost $170,000 also came from three separate loans from the ANZ Bank for reasons explained by the husband at the hearing:

   (i)joint loan $42,280 (home loan A)

   (ii)wife’s staff loan of $31,930 (home loan B)

   (iii)husband’s staff loan of $95,750 (home loan C).

1. After acquiring the home they purchased furniture and white goods.  Over the following months some renovations were carried out and the husband did this work himself: it was reclad inside, repainted, new decking put on both verandahs, new paving areas and gardens established, and recarpeted.  The funds necessary came from savings and the wife’s inheritance monies. 

1. They separated in November 1990.  At that time they had their equity in the home (it is not disputed that the home was then worth $230,000) and their interest in the Town O land along with furniture and a motor vehicle.  The husband had his entitlements to superannuation and leave from his years of employment with the Bank since 1974.  The children were aged nine, eight and six. The wife was working part time. 

1. It was not challenged that between 1981 and 1986 the wife cared for the children full time before returning to part time employment while overseas and she continued her role with the children while working part time.  Nor was there any challenge to any of her evidence about her performance of the household duties associated with the running and organization of the home while the family was together.  I accept she did undertake those roles after the children were born, along with her employment as discussed, up until separation at the end of 1990. 

Post-separation

1. Turning to the developments since then, the husband’s personal circumstances have undergone considerable change.  He initially moved out of the family home and established himself elsewhere in shared rented accommodation.  They agreed the children would remain living with their mother at the H home and have contact with their father every second weekend from Friday night until Sunday night.  This continued until 1994 when it was extended to a Monday morning return and that continued until the husband moved to Newcastle in January 1999.  They also agreed at separation that the husband would continue to pay the mortgage of $1200 per month, which he did as well as his rent initially, and he also paid the house and contents insurance of $88 per month (he is not sure how long this continued; the wife said he paid until 2001 and she took over payments from then) and private health cover for the family of $112 per month (he maintains this fund and the children were eligible dependents during their minority). 

1. In December 1993 he began living with his current wife whom he married in 1995.  They have twins, now aged eight years.  They live in a property at Town T registered in his wife’s name though there is not in any contest here that the husband has an equitable interest in the home, as he does in their joint savings.  They have increased their borrowings against the home over time and its value and the mortgage debt were set out earlier. 

1. In early 1993 the husband left the Bank and, though he has not been in continuous employment, he has since worked in sales.  He is the main income earner in their family.  His wife is self employed.  In the mid-1990s he invested in a tea-tree plantation scheme, subsequently disallowed by the Australian Tax Office.  The upshot is the debt to the ATO of an estimated $136,000, referred to earlier.  He is still in negotiation with that Office about details related to quantum and repayment. 

1. The parties’ daughter S came to live with him for two years until the end of last year.  She returned to her mother’s for a short time before moving to live and work on the Central Coast where she shares premises with her brother C who also works there. 

1. The wife, on the other hand, has remained living in the H home and working with the Bank part time until recently when she moved to full time work.  She sets out her taxable income, at least for the years 1990 – 2003 inclusive, in her affidavit.  Apart from her earnings income, she has received considerable monies over these years since their separation, including by way of workers compensation and inheritances which I shall come to shortly. 

1. The children turned 18 years of age in 1999, 2000 and 2002 respectively.  F moved out for a year in 1998 when she was 17 to live with her boyfriend’s family, though she presently lives with her mother and pays board.  S’s situation and C’s current circumstances have been referred to already. 

1. Not long after their separation, in March 1991, they sold the O land for $40,000 or thereabouts.  By letter dated 28 March 1991 (S to the wife’s affidavit) solicitors accounted to the parties for payment of $36,344 and the deposit of $3,900 was to come directly from the agents.  From these funds the wife’s brother was repaid his loan plus interest to settle the purchase of the H home - by then around $14,500 – and the husband’s parents were repaid their loan of $3,000.  The balance was initially invested, including deposits totaling $12,000 into accounts in the children’s names (see exhibits 2, 3 and 4).  There were later dealings with these funds. 

1. In December 1992 the wife was entitled to receive $10,591 from her grandfather’s estate.  But she directed these funds be distributed in equal amounts between herself and the three children and cheques were written accordingly (T to her affidavit).  She received $2,647, as did each of the children.  Ultimately, she used this money including the money put in the children’s accounts for household purposes of one kind or another. 

1. In 1993, on his departure from the ANZ Bank after 20 years service, the husband received the entirety of his superannuation entitlement as well as long service and annual leave entitlements: eligible termination payment of $13,294 and superannuation of $56,283, totaling $69,577.  He used part of that money to pay off credit card debt he had incurred of $8,400, the wife’s credit card debt of $1,000, and he retained some funds.  He otherwise paid some money towards the installation of a new kitchen at the H home: a deposit of $1,420, a further $480 for the installation and $265 for timber for the floor which he installed with some assistance, and he deposited another $2,500 to an account towards the kitchen costs.  He paid the balance into the mortgages: $39,717 towards home loan A (joint) which discharged it, $5,000 towards home loan B to bring it back to $26,530, and $5,282 towards home loan C to bring it back to $84,900 odd. 

1. At the time he had to relinquish his car to the Bank and he leased a vehicle.  It seems that part of the money from the O land sale invested in the children’s names was used for this purpose and he received $6,500 which he subsequently retained.  The wife retained what was left of the funds invested in the children’s accounts and apparently used it for general purposes. 

1. Leaving the Bank not only meant the husband’s superannuation entitlement was paid out along with other work related entitlements and he would no longer have the benefit of a motor vehicle, it also meant he would no longer be eligible for the staff rate on borrowings.  Statements of account annexed to the wife’s affidavit indicate that the interest on home loan B increased from 3.8 per cent to 8.3 per cent and went from 4.3 per cent to 8.5 per cent on home loan C. 

1. On the husband’s evidence his repayments had put the mortgage in advance by more than 12 months at one point and this allowed him to reduce the mortgage repayment to $800 per month after 1999.  He ceased to pay the mortgage when the wife applied for child support assessment in July 2001 obliging him to pay $1,287 per month.  At the time, C was aged 18 and S aged 16 was still at school.  This remained his child support obligation until February 2002 when he was unemployed for several months and the assessment was reduced to $21.67 per month.  The Agency was not notified of his resumption of employment, and he did not receive any amended assessment.  S turned 18 in September of that year. 

1. When the husband ceased to pay the mortgage after she sought a child support assessment, the wife began to pay both loans and she has continued to do so.  It is her unchallenged evidence that she has paid a total of $40,026.  She has also paid house and contents insurance since 2001, mentioned earlier, and she paid the Crown land debt of $8,483.  However, she has not paid the council rates and debt has accrued there since 1992 for the amount recorded earlier. 

1. In August 1995 the wife brought property proceedings to avoid the expiration of the limitation period after their divorce in 1994.  Yet the matter did not proceed at the time, it was agreed she would remain living in the home with the children who were still dependent, and they recorded their arrangement in terms of settlement lodged with the Court in February 1996 granting each liberty to restore to the list on the giving of 14 days notice and noting ‘they both acknowledge a resolution to their financial and property arrangements, including maintenance and mortgage protection insurance in the sum of $15 per months paid by the husband.’  They were in fact restored by the wife in May 2003. 

1. Between September 1995 and June 1999 the wife received lump sum payments from three sources, totaling more than $82,000:

   ·In September 1995 her AMP policy matured and she received $4,812 which she used for family purposes. 

   ·In March 1997 she received $50,000 as workers compensation payment for a work injury sustained in 1992.  From that she paid out credit card and other debt she had accumulated of about $10,000 or so and she purchased a motor vehicle for almost $28,500. 

   ·In June 1999 she received further inheritance monies of $27,550 and she put that money – she does not say how much – towards maintenance and replacement of the deck on the home. 

1. In 2002 the wife received nearly $72,500 in further distributions from inheritances:

   ·It is her evidence she received $1,876 in March 2002 and while that is not established by any documents it is a relatively small amount and for present purposes it can be taken she did receive it. 

   ·In July 2002 she received further distribution from her mother’s estate of $41,556.  After paying credit card debt of $4,000 she lent to F $10,250 to purchase a motor vehicle (there is no reference to this as an asset she has in the list settled by counsel) and she paid $3,000 towards legal fees C had incurred.  She retained the balance.  She gave no evidence in her affidavit about what she did with it but in her oral evidence she referred to various things such as the house and paying other expenses she incurred. 

   ·In November 2002 she received $29,000.  She used $7,000 of that to repay money she had borrowed to do paving work at the home and retained the balance. 

2. The wife gave particulars of repairs and maintenance and improvements to the home between 1990 and 2004, some of which she is able to substantiate by receipts and other documents.  However, she conceded the items related to the installation of the kitchen in 1993 were duplicated in the particulars she gave and there are other items where it was demonstrated she had rounded up the figure on receipts to the figure in her affidavit.  It could hardly be said to represent an accurate summary of the receipts she holds for money contributed and I accept it has been established the amount she has contributed is more in the order of $56,000. 

1. In the years since their separation, she has remained the children’s primary carer during their dependent years (subject to F going to live elsewhere for a year).  Over that time she attended to their various needs when they were in her care and she saw to their activities and upbringing generally when they were not with their father.  The particulars are to be found set out in some detail in her affidavit.  She had some homecare assistance from her employer after her back injury in 1992 until 2001. 

Evaluation of contributions

1. The approach to be taken to assessing the parties' entitlements has already been discussed, at least partly, by the manner in which the assets and superannuation interests have been organised into lists.  As the High Court in Norbis and Norbis (1986) FLC 91-712 made clear, it is legitimate and within the proper confines of the proper exercise of discretion conferred by the legislation to assess contributions either against individual assets or group of assets or by taking a global approach. Considerations relate to convenience and consistency, but in most cases the global approach will produce the best result. Here the presentation of the lists by counsel into these categories, the common approach they took in their submissions was based on those categories, and the agreement that neither party is to be considered as having made a contribution to the other’s assets or superannuation interests accumulated post-separation all indicate it would be appropriate here, as agreed, to evaluate contribution entitlements by reference to the equity in the H home. Of course that means all of their contributions are to be assessed, not just those to the home, but the fund to which that assessment will apply is the equity in the home.

1. Their contributions for the 14 years or so they were together can be reviewed and assessed first.  The wife gains credit for the contribution she made in the early years of their marriage to the acquisition of the land on which they built their first home.  The source was the sale of the motor vehicle she introduced to the relationship and it constituted almost half of the purchase price.  She also receives the credit for the gift of $7,500 from her mother towards construction of the home.  Again this constitutes a sizeable gift when compared with the money they also borrowed for that purpose.  She worked full time until the birth of their first child and such savings as they accumulated during that time is partly attributable to her efforts.  After the birth of their first child she was primarily responsible for the children’s day to day arrangements and the running of the household until early 1987, just under three years before their separation, when she re-entered the paid workforce and contributed her earnings from part time employment.  At the same time, during those last few years she continued in her role with the children and the household.  In addition to her income from employment she contributed monies received from inheritances: a small amount of rental income in the last few years, $10,000 was put towards the renovations to the W home, and she paid the vast bulk of the deposit on the H home just under a year prior to their separation.  As for the last of these contributions, no doubt the availability of her funds played a crucial part in going ahead with the purchase of the home.  By the same token, it is also apparent their borrowing capacity through the husband’s work was crucial, as were the additional funds they borrowed from family.  In other words, there appears to have been an interconnection of reliance on all of these sources of funds to buy that home.  On the topic of contribution from family to that purchase, the wife’s brother charged interest and the loan plus interest was paid in due course.  This put the arrangement virtually on a commercial footing but, nonetheless, the loan meant they did not have to go to the market for the necessary funds to meet their settlement obligations.  The wife’s contributions are also boosted by her eligibility for staff discount of interest rates on one of the loans taken out to purchase the home.  Also to be taken into account in her favour is the fact that she used part of her inheritance funds prior to separation to acquire a motor vehicle and while she retained this on separation along with other chattels such as the furniture and contents of the home, it no doubt served a beneficial purpose during the remainder of the time they were together. 

1. For his part, the husband worked full time throughout the time they were together and he was the family breadwinner between 1981 and 1987 before the wife took up part time work.  His income was the primary source of support for the family overall throughout and his income was the primary source of repayment of loans they obtained to acquire property and meet other obligations they undertook over the years.  Also to his credit is the gift from his family he introduced of $1,000 towards other costs associated with establishing their first home.  He gains the credit also for the benefit they derived from staff discount on interest rates related to borrowings over the years they were together.  This was no small advantage, as the later rise in rates demonstrates.  His employment also relieved them from the obligation to pay costs related to the acquisition of the H home, including the payment of stamp duty.  He gains credit for the interest free advance from his family, albeit a relatively small amount but nonetheless necessary, to enable them to complete the purchase of their last home.  Over the years they were together he obviously fulfilled his role as a parent of their three children in addition to his role as main breadwinner and he contributed in other way by work undertaken around the family homes as indicated in his evidence. 

1. It is not possible to make any finding about the value of their assets at the time of separation in November 1990.  It is agreed the home was worth $230,000 but there was no evidence about the value of other property they had accumulated.  Apart from their assets, the husband had his superannuation and work related entitlements which had been built up for the most part, though not entirely, during the years they were together.  While they were his entitlements, the wife could be seen to have contributed indirectly to them by the role she undertook throughout their relationship.  The inability to quantify their assets and resources makes it impossible, or difficult at the very least, to make a finding about their contributions up to the point of separation in specific proportions.  Even so, while their respective contributions were many and varied in nature and effect, what can be said is that overall the weight favours the wife if for no other reason than the cumulative effect of her initial contribution to the acquisition of their first property and the direct financial contribution she made from her inheritance to the acquisition of their last home less than a year before they went their separate ways. 

1. In the 14 ½ years since their separation the history demonstrates significant developments and contributions from both.  They both contributed some of the funds from the sale of the Town O land soon after separation by paying out the family debt related to the acquisition of the H home.  They also each retained some of the balance of those funds: the husband received money in due course towards the purchase of a motor vehicle and the wife used the balance of funds deposited in accounts in the children’s names.  They also both contributed, directly and indirectly, by the husband paying some $50,000 off mortgage debt when he received his superannuation and work related entitlements in early 1993.  The wife received the benefit of a further $1,000 in discharge of her credit card debt and he contributed other funds towards the renovation of the kitchen.  That he retained some other funds does not weigh against him here.  For one thing, he paid credit card debt he had accumulated at the time and that is reasonable having regard to the fact that he left the home intact on his departure and he was required to re-settle himself elsewhere after their separation.  For another, those entitlements had been accumulating from 1974, some two years or so prior to the time they began living together.  They both contributed by attracting staff discounts for borrowings, at least up until 1993 when the husband left the employ of the Bank. 

1. Over these many years the wife has continued her role as primary carer for the three children who were aged nine, eight and six years at separation.  She met the costs of their support, apart from the costs paid by their father, from her income and other money she received during those years, ie. from rent received from inherited property, inherited funds, surrender of a life policy, and workers compensation payment.  The money she received over time, quite apart from her earnings, was substantial and totalled around $160,000.  Apart from supplementing the cost of her living and the children’s expenditure over the years of their dependency, she used part of that money to pay around $56,000 in repairs and improvements to the home, to pay out the Crown land debt of more than $8,000, she has paid more than $40,000 since mid-2001 towards mortgage instalments, and she has also paid house insurance (at staff discount rates) since mid-2001.  She otherwise used her money to acquire property that she now owns (as per category D) and she lent some money to F.  As the history demonstrates, the capital the husband paid in reduction of debt when lump sums came into his hands found no match in debt reduction when the wife received lump sum payments; that is to say, she did not use any of what she received between 1995 and 2002 – workers compensation or inheritances - to make a lump sum payment to reduce the mortgage debt or to pay outstanding council rates.  Nonetheless, the contributions she made of varying kinds under s 79(4)(a)-(c) are substantial. 

1. Weighing against that, she had exclusive occupation of the home since their separation.  The husband could have, at any time, sought to bring the property proceedings to a conclusion but he did not and the result has been her undisturbed occupancy now for 14 ½ years.  That period included all of the years of the children’s dependency up until the youngest attained the age of 18 years in 2002 as well as near enough to another three years.  Added to the various other contributions made by the husband, he thereby provided a substantial benefit.  In addition, the husband paid the mortgage for 10 ½ years and it only ceased when the wife had a child support assessment issue for around about the same amount which he paid until February 2002 when it was substantially reduced during a time of unemployment. 

1. There was a submission from Mr Foster to the effect that there has been a significant shortfall in the husband’s child support obligations since separation.  He supported that submission by presenting a schedule purporting to quantify the magnitude of that shortfall at more than $67,000.  The schedule summarises the mortgage instalments he paid, the parties’ income from employment, and the child support that would have been payable had an assessment been made according to the statutory formula each year from 1 July 1993 until 30 June 2001.  No issue was taken with any of the figures. 

1. However, I think the exercise is somewhat flawed when regard is had to a number of considerations not reflected in the schedule itself and therefore not factored into the shortfall figure calculated:

   • The wife did not seek a child support assessment over the years until mid-2001.  Had she done so, there would have been the opportunity to have it considered in the light of their respective circumstances other than factors inherent in the statutory formula.  It may not have produced any different result, despite the wife receiving capital payments of more than $82,000 between 1995 and 1999.  But the point is more that her capital receipts are not taken into account in the formula whereas her property would have been a consideration in any process to review the assessment had one been applied for. 
   • By limiting the quantification to the period from mid-1993 to mid-2001 Mr Foster has avoided calculations related to the first two and a half years of separation.  What the obligation would have been in those years I could not say, but if introduced to the exercise it could well make a difference to the bottom line.  I just do not know.  In any event, the exclusion of those years ignores the receipt by the wife of money from the sale of the Town O land which she retained through the children’s accounts, at least.
   • A monetary exercise of this nature also tends to obfuscate the benefit to the wife of exclusive occupancy of the family home for all these years, it does not take account of the other payments the husband made related not only to house insurance and private health cover for the children but also to insurance of the contents of the home, and it does not make allowance for the capital contribution he made to the reduction of debt related to the home, either in 1991 or in 1993. 

1. It is not that the reduction to a mathematical calculation is to be wholly disregarded; it is more that it has to be seen in more objective perspective and weighed with other considerations overall. 

1. In weighing those considerations relevant to their post-separation contributions, I conclude the balance favours the wife overall.  In my assessment, the husband has made a proper contribution over these years towards the support of the wife and the children all things considered.  What puts her ahead in the end result is the greater amount she has spent on repairs and improvements to the home and I consider there should be some further allowance for her role with the children (with regular assistance from their father) over the years of their dependency. 

1. As for their contributions under s 79(4)(a)-(c) overall until now, Mr Foster submitted they should be assessed as favouring the wife at between 75 per cent – 80 per cent whereas Ms Langley submitted on behalf of the husband the assessment should be one of equality.  In my opinion the proper assessment is between these two poles and falls at 65:35 in her favour.  That represents a differential of 30 per cent which, in monetary terms, is almost $130,000.  That is a proper recognition of the differential in their respective contributions in my assessment. 

Section 75(2) factors

1. I should say that even though counsel concentrated in their submissions on contributions to the equity in the H home and each accepted the other party had made no contributions to the other assets presently held by the other party or to the superannuation interests of the other party, that is not to say those other assets or superannuation interests are ignored at the stage of considering any adjustment under s 75(2).  In other words, whatever the approach to contributions, consideration of the relevant s 75(2) factors cannot be confined to the ‘pre-separation’ asset and the ‘post-separation’ assets and interests ignored.  The relevant factors must be evaluated against the whole or total property, whenever and however acquired and whoever contributed to them, as at the date of hearing.  To support that view,  it will suffice to cite a passage from the judgment of Wilson and Dawson JJ in Norbis:

   ‘If the matters referred to in s 75(2) were relevant and had to be taken into account under s 79(4)(d) [now s 79(4)(e)] they could only be considered against the whole of the financial background of the parties.  So much is clear from the terms of the legislation itself and it has been so interpreted by the decisions of the Family Court.’

2. First, to their property.  Applying the contribution assessment to the equity in the H home, the husband would be entitled to receive payment of $151,494 and the wife entitled to $281,346.  Adding this to their other property, the husband would have total assets of $425,839, including his superannuation, and when his debts of $182,900 are deducted he would have net assets of $242,939.  On the other hand, the wife would have total assets of $346,003, including her superannuation, and when her debts of $51,140 are deducted she would have net assets of $294,863.  In other words, her net assets would exceed his by some $52,000. 

1. The parties are the same age and, being in their late 40’s, they both have the same number of years of working life ahead of them before retirement age.  As the evidence demonstrates, there is a disparity in their current income.  Yet whereas the husband is likely to continue to earn income at that level for the remainder of his working life (at least there is no reason to assume he cannot do so) the wife’s future earning capacity was the subject of evidence and submission.  The evidence came in the form of two reports from Dr L, orthopaedic surgeon, who examined her on two occasions for the purpose of these proceedings and that related to difficulties she has experienced and continues to experience as a result of her back injury in 1992.  The earlier of his two reports was prepared when she was undertaking part time work.  The long term prognosis then was expressed to be ‘guarded’ and the opinion expressed that her ability to find work on the open labour market was compromised by her injury.  He concluded it is likely her ability to work would deteriorate over time.  The second report was prepared after she had moved to full time work, a step she maintained she had been taken under ‘pressure’ from her employer to accept a full time position rather than any inclination on her part.  In expressing his opinion on this occasion, Dr L said amongst other things:

   This lady’s long term prognosis from a musculoskeletal point of view is very guarded and she will have difficulty continuing in full time work.  She must take care to minimise bending, lifting and twisting activities in order to minimise her symptoms. 

Surgery….has been suggested but she is reluctant to proceed with that at this time.

This lady’s long term prognosis remains guarded.  Her clinical situation is fairly static and has been so for some time.  Her symptoms may have deteriorated but her objective signs have not changed since I last assessed her.’ 

1. None of this was the subject of any cross-examination and so this stands.  I conclude therefore that the prognosis is guarded and, noting the warning about bending, lifting and twisting to minimise her symptoms, she may well have difficulty continuing in full time work.  The disparity in current earnings and this guarded prognosis about her capacity to continue with full time work weighs in her favour. 

1. But there are other factors to be balanced against that.  While the husband has a higher income at present and no inhibitors to his continued full time work, he also has obligations (with his wife) to two quite young children who at eight years of age are still in their middle primary school years.  As such, there are many years of child rearing and financial commitment to their upbringing ahead of him and, though it can be expected he and his wife will share that responsibility, it is nonetheless a factor to be weighed in his favour here. 

1. Overall, it is my assessment the wife should receive a further 2.5 per cent in her favour.  That represents in monetary terms a further $10,821.  It may not seem a great amount of money but then the young family the husband has to support is a weighty counter-balance. 

Just and equitable requirement

1. The overall conclusion I come to is that the parties are entitled to a division of the equity in the home in the proportions of 67.5 per cent to the wife and 32.5 per cent to the husband.  Therefore, she will be entitled to retain $292,167 and he will need to be paid $140,673.  This represents a differential in their ultimate entitlements of $151,494 which is a proper recognition of the greater contributions overall made by the wife along with adjustment in her favour of relevant s 75(2) factors while recognising at the same time the contributions made by the husband and his future prospects and responsibilities. 

1. In my opinion, orders giving effect to this will bring about a just and equitable division of their property.

Form of orders

1. The wife asks to retain the home.  It was her formal application that the home be transferred to her without any requirement to pay the husband any funds.  I could not find that to be a just and equitable outcome by any means.  As assessed, she will have to pay him $140,673 (say, $140,675).  Perhaps in anticipation of some payment being required, she has made some enquires of her capacity to borrow money and this was said to be $150,000.  Given the level of the mortgage she would have to take over and the level of unpaid council rates, plainly that would be insufficient for her to retain the home.  In that event, the consequence would be a sale and that would mean the wife would have to locate other less expensive premises more within her means.  That said, it may well be she has other resources available to her that are not apparent from the evidence and I think it fair she be given an opportunity to acquire the husband’s interest if she is able.  A month should be sufficient time to decide whether she can achieve that and to make the necessary payment to retain the home.  Therefore, the orders will provide for her to pay the amount assessed on or before a month from the date of the orders and if not paid within that time the home will be sold and their entitlements distributed accordingly. 

1. For those reasons, the Orders will be:

2. On or before one month from this date, or such further time as the parties agree in writing, the wife is to pay to the husband the sum of $140,675.

1. Contemporaneous with payment of the sum referred to in order 1 hereof, the husband transfer to the wife all his right title and interest in and to the property known as and situated at Town H in the State of New South Wales (“the home”) and the wife

   (i)hand to the husband a discharge of the mortgage in favour of the ANZ Bank presently registered against the home; and

   (ii)pay to the local Council any outstanding rates owing in respect of the home. 

1. Save for orders 1 and 2 hereof, the wife is entitled to retain absolutely any and all property presently in her possession of which she is the owner, including her entitlement to superannuation, and the husband is entitled to retain absolutely any and all property presently in his possession of which he is the owner, including his entitlement to superannuation. 

1. If payment is not made in accordance with order 1 hereof within the time stipulated or agreed, the home is to be sold at public auction for the best obtainable price and the proceeds of sale are to be paid in priority as follows:

   (i)        the costs and expenses related to the sale;

   (ii)       discharge of the mortgage in favour of the ANZ Bank;

   (iii)payment of outstanding council rates and other adjustments required on settlement;

   (iv)      32.5 per cent of the balance to the husband; and

   (v)       balance to the wife. 

   I certify that the previous 77 paragraphs are a true copy of the judgment delivered by the Honourable Justice Moore. 

   Associate: