FEDERAL CIRCUIT COURT OF AUSTRALIA
| MANION & MANION (No.2) | [2020] FCCA 1458 |
| Catchwords: FAMILY LAW – Property settlement – assessment of future needs of the parties – where Husband has diagnosis of A Syndrome – where common between the parties that an adjustment of 10% be made in Husband’s favour on the parties’ percentage contributions as assessed by the Court. EVIDENCE LAW – Credit – where Court makes finding as to credit – where finding as to credit limited to evidence as to gambling. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79, 79A Family Law Rules 2004 (Cth), r.19.04 Federal Circuit Court Rules 2001 (Cth), rr.24.03, 24.04 |
| Cases cited: Livesey (formerly Jenkins) v Jenkins [1985] All ER 106 |
| Applicant: | MR MANION |
| Respondent: | MS MANION |
| File Number: | SYC 6204 of 2017 |
| Judgment of: | Judge Morley |
| Hearing date: | 15 April 2019 |
| Date of Last Submission: | 15 May 2019 |
| Delivered at: | Sydney |
| Delivered on: | 10 June 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Schonell SC |
| Solicitors for the Applicant: | Landerer & Company Solicitors |
| Counsel for the Respondent: | Dr Barnett |
| Solicitors for the Respondent: | Linden Legal |
ORDERS
That the Court make an order under section 79 of the Family Law Act 1975 (Cth) as follows:
(a)That within two (2) months from the date of this order, the Husband pay to the Wife the sum of $47,969.75;
(b)That simultaneously with payment by the Husband to the Wife of the sum referred to in paragraph (1)(a) hereof, the Wife sign all documents and instruments and do all things necessary to transfer to the Husband the whole of her right title and interest in the former matrimonial home property at B Street, Town C in the State of Queensland being the whole of the land in Lot ... Registered Plan ...01 (‘the property’) and simultaneously with such payment the Husband shall be solely responsible as between the Husband and the Wife for all outgoings payable in relation to the property and the Husband shall indemnify and keep indemnified the Wife in relation to all and any such payments.
(c)That in the event that the Husband does not pay to the Wife the sum referred to in paragraph (1)(a) herein within two (2) months from the date of this order, then the parties shall sign all documents and instruments and do all things necessary to list for sale the property at a listing price agreed upon between them with a real estate agent agreed upon between them and shall proceed to a sale of the property at a sale price agreed upon between them and following such sale the proceeds of sale shall be applied as follows:
(i)In adjustment of rates on settlement;
(ii)In payment of agent’s commission (if any) on sale;
(iii)In payment of legal and all other proper costs of sale;
(iv)In payment to the Wife of the sum of $47,969.75 together with any interest payable thereon pursuant to the terms of the Family Law Act 1975 (Cth);
(v)In payment of the balance to the Husband.
(d)That in the event that paragraph (1)(c) operates and the property does not sell by private sale within five (5) months from the date of this order then the parties shall sign all documents and instruments and do all things necessary to list the property for sale by public auction with an auction agent agreed upon between them at a reserve price agreed upon between them and shall proceed to a sale at a sale price agreed upon between them and the parties shall be equally responsible for all costs and expenses of the auction payable prior to the auction sale and following such sale the proceeds of sale be applied as provided in paragraph (1)(c) hereof.
(e)That in the event that paragraph (1)(d) operates and the property does not sell by public auction in accordance with paragraph (1) (d) hereof then the property shall be resubmitted for sale by private treaty in accordance with the provisions of paragraph (1) (c) hereof and the property shall be resubmitted for sale by public auction at six (6) monthly intervals from the last public auction and be resubmitted for sale by private treaty between such auctions, until the property shall be sold and upon such sale either by public auction or private treaty the proceeds of sale shall be applied as provided in paragraph (1) (c) hereof.
(f)That in the event that the parties are unable to reach agreement in relation to an auction agent, a real estate agent, a listing price, a reserve price, or a sale price whether for a sale by public auction or by private treaty, then the parties shall and do hereby appoint the President for the time being of the Real Estate Institute of Queensland or his or her nominee to determine such disputed matter or matters and the parties shall thereafter act in accordance with that determination and the parties shall be equally responsible for the costs and expenses of the President or his or her nominee in making such determination.
(g)That the Husband is the sole owner in law and in equity as between himself and the Wife of:
(i)All personal property now in his possession or control;
(ii)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his own name;
(iii)All interests in life insurance policies, total and permanent disablement benefits, disability support pension and superannuation funds standing in his own name; and
(iv)All furniture, furnishings and effects presently situate in the property.
(h)That the Wife is the sole owner in law and in equity as between herself and the Husband of:
(i)All personal property now in her possession or control;
(ii)All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in her sole name;
(iii)All interests in life, trauma and total and permanent disablement insurance policies and superannuation funds standing in her sole name;
(iv)All furniture, furnishings and effects presently situate in the property at D Street, Suburb E, NSW; and
(v)All interests in the company and business known as F Pty Ltd.
(i)That the Husband is the sole owner in law and in equity as between himself and the Wife of the Motor Vehicle 1 registration number ... and the Husband shall indemnify and keep indemnified the Wife in relation to all liabilities in respect of the said motor vehicle, whenever and howsoever arising.
(j)That the Wife is the sole owner in law and in equity as between herself and the Husband of the Motor Vehicle 2 registration number ... and the Wife shall indemnify and keep indemnified the Husband in relation to all liabilities in respect of the said motor vehicle, whenever and howsoever arising.
That in the event that either party refuses or neglects to comply with any part of these orders in relation to the execution of any deed, instrument or document, the Court appoints and authorises the Registrars of the Federal Circuit Court of Australia, Sydney Registry, to execute such deed, instrument or document in the name of the party who so refuses or neglects and further appoints those Registrars to do all acts and things necessary to give validity and operation to the deed, instrument or document.
IT IS NOTED that publication of this judgment under the pseudonym Manion & Manion (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 6204 of 2017
| MR MANION |
Applicant
And
| MS MANION |
Respondent
REASONS FOR JUDGMENT
Introduction
These are final property proceedings under the Family Law Act 1975 (Cth) (‘the Act’) between Applicant Husband Mr Manion born in 1962 (‘the Husband’) and Respondent Wife Ms Manion born in 1967 (‘the Wife’).
There is one (1) child of the marriage, Mr G born in 2002. He is now 18 years old. He lived with his mother after separation and continued to do so at the time of the hearing. His father has paid his school fees and will continue to do so until he finishes his secondary education.
The hearing was listed for two (2) days commencing 15 April 2019. The delay in issuing this Judgment and making orders is deeply regretted. In preparing these Reasons for Judgment, the Court had careful regard to the evidence, as well as the transcripts of the evidence and submissions.
The Applicant was represented on hearing by Mr Schonell of Senior Counsel. The Respondent was represented on hearing by Dr Barnett of Counsel.
The parties commenced cohabitation in 1988 (on the Husband’s evidence, 1988) and were married in 1990.
On the Husband’s evidence, separation occurred on 18 December 2015 when the Wife and the child moved out of the matrimonial home.
On the Wife’s evidence, she regards separation as having occurred on 23 March 2017 when the Husband sent a text message to the Wife with words to the effect that the marriage was over.
Neither party sought to press the date of separation as an issue to be established on the evidence at hearing. It was a long marriage.
Documents relied upon
On final hearing, per his Case Outline document, the Husband relied upon the following documents:
a)Amended Initiating Application filed 29 March 2019;
b)Affidavit of the Husband sworn 26 February 2019;
c)Affidavit of the Husband sworn 19 March 2019;
d)Financial Statement of the Husband sworn 20 March 2019;
e)Affidavit of Rachel Jan sworn 19 March 2019;
f)Affidavit of Mr H sworn 5 March 2019;
g)Affidavit of Mr J sworn 10 April 2019; and
h)Affidavit of Mr K sworn 4 April 2019.
The Husband tendered the following material:
a)A1 – a bundle of material produced on subpoena by Casino L;
b)A2 – a Financial Statement sworn by the Wife on 15 November 2017 and filed 16 November 2017;
c)A3 – material produced on subpoena by Bank M being a statement for a credit card account ending #...8 for the periods 1 April 2018 to 30 April 2018, 1 August 2018 to 31 August 2018, and 1 September 2018 to 30 September 2018;
d)A4 – Statements #4 and #5 for the CBA Complete Access account ending #...8 in the Wife’s name being for the period 22 March 2013 to 21 September 2013;
e)A5 – Statements for the CBA Business Transaction account ending #...4 for the business F Pty Ltd for the period 1 April 2018 to 27 September 2018 and 1 October 2018 to 7 March 2019; and
f)A6 – a letter from Landerer & Company to the Husband dated 15 April 2019 enclosing a costs estimate pursuant to Rule 19.04 of the Family Law Rules 2004 (Cth).
On final hearing, per her Case Outline document, the Wife relied on her affidavit filed 22 March 2019. The Case Outline document provides the orders sought by the Wife which were “taken from Wife’s Amended Response”,[1] however I note that no formally filed Amended Response appears on the Court file.
[1] Wife’s Case Outline, 7.
While not mentioned in her Case Outline document, the Wife filed other material in the lead up to the final hearing:
a)Financial Statement of the Wife filed 22 March 2019;
b)Affidavit of Ms N filed 22 March 2019;
c)Affidavit of Ms O filed 22 March 2019; and
d)Affidavit of Ms P filed 22 March 2019.
The Wife sought to rely upon an Affidavit sworn by her and filed 10 April 2019. After deliberating, I did not admit the Affidavit of 10 April 2019 on the basis of it being hearsay.
The following tenders were made by the Wife:
a)R1 – entries for Golden Casket lottery between 1 January 2010 and 8 April 2019 for account or card ending #...4;
b)R2 – entries for NSW Lotteries between 1 July 2010 to 8 April 2019 for Mr Manion;
c)R3 – a letter from Linden Legal to Respondent dated 15 April 2019 enclosing costs estimate pursuant to Rule 19.04 of the Family Law Rules 2004 (Cth);
d)R4 – a Financial Statement sworn by the Applicant Husband on 19 September 2017 and filed 20 September 2017;
e)R5 – Bank M Statement of Account for the period 24 June 2014 to 6 February 2019; and
f)R6 – the Wife’s calculations of how she has spent funds, but not admitted for a hearsay purpose.
Background
Unless indicated to the contrary, the matters set out below are findings of the Court.
The Husband will be nearly 58 by the time of the release of this Judgment. He has significant health issues, is unable to work, and has no earning capacity. The Wife is 55 years old and is a health care worker running her own practice in Sydney. She is in good health, and presented in cross-examination as being confident about the future growth of her practice. She agreed that she could also work as an employed health care worker if the necessity arose.
At the time of commencement of cohabitation, the assets of the Husband and Wife were relatively modest. The Husband had some superannuation, a motor vehicle, and savings of about $22,500.
During the relationship, both parties were in paid employment. The Husband was made redundant in about 2010. The Wife continued in employment until becoming self-employed in 2013.
During the relationship, the Husband and the Wife purchased and sold properties, generally for profit. They operated an unsuccessful business for a period. Their evidence indicates that they enjoyed a good lifestyle, and both enjoyed gambling.
In 1994, the Husband received a redundancy payment of $66,000. In 2010, the Husband received another redundancy payment of $97,000 together with $15,000 in share options. In 2012, the Husband received an inheritance of $55,000, together with an early payout from his superannuation of $56,000.
In April 2013, following the sale of the matrimonial property at Suburb Q, the parties divided equally between them just over $1,000,000. Between 2010 and the date of sale of this property, the Husband undertook significant renovations and improvements. Also in 2013, the Husband developed the first symptoms of what was to become a crippling illness, and the Wife decided to open her own practice. By 2014, the Husband had been diagnosed with A Syndrome. This is an autoimmune disorder which is a significant neurological disease of the nervous system and for which there is no cure. The evidence indicates that the Husband is not employable and will be significantly disabled for the rest of his life.
The Husband had a TPD policy which appears to have been taken out in 2010. The payments were made from the joint funds of the parties. In 2015, the proceeds of that policy were received by the Husband in the sum of $1,100,000.
In 2016, the Husband moved to the property in Queensland known as B Street, Town C. It is a property jointly owned by the parties. He continues to live there. The joint tenancy was severed in June 2017, so that this property is held by the parties as tenants-in-common in equal shares. This property represents the most valuable item on the joint balance sheet. The mortgage on this property was paid out with the funds from the TPD payment.
In 2016, the Wife received her share of an inheritance from the estate of her late mother totalling about $239,000.
Both the Husband and the Wife engaged in gambling. The evidence before the Court leads it to conclude that, in terms of volume (that is, the amount of money actually gambled), when contrasted to the Wife’s gambling, the Husband’s was modest. The evidence from Casino L alone suggests that between 2010 and 2019, the Wife spent over $3 million in gambling, for a return of $2.8 million.
The Court does not accept the evidence the Wife gave that she allowed other persons to use her card for gaming purposes, and thus the extent of her gambling was exaggerated in the business records.
The Court does not accept the submission made on her behalf that the records from Casino L are unreliable because they do not refer to significant winnings in 2015 and 2016. The Casino L records are based on the presentation of a membership card when gambling. There was no evidence to suggest that gambling could not take place without using a membership card. There is no evidence to establish that the winnings in question reflect gambling when she did not use a membership card. The onus of disclosure in this regard was always on the Wife. The Court is not satisfied that she has disclosed the real extent of her gambling in terms of money expended, winnings, and losses.
For reasons set out below, the Court does not accept the Wife’s evidence generally about her gambling. The Wife’s gambling was not, in any event, limited to Casino L. The full extent of the Wife’s gambling losses is not known to the Court but, by extrapolating the Casino L records alone, it would extend to hundreds of thousands of dollars. Only the Wife knows, and the Court is not satisfied that she has properly disclosed this.
Applicable law
Financial disclosure
Before embarking on any discussion of the law relating to how a property settlement is decided by a Court under section 79 of the Act, I must say something about disclosure.
In financial proceedings between parties under the Act, full and frank disclosure by each party of their financial circumstances is required and is an essential part of the operation of the relevant parts of the Act.
Rule 24.03 of the Federal Circuit Court Rules 2001 (Cth) (‘the Rules’) relates to each party to financial proceedings under the Act making full and frank disclosure of his or her financial circumstances in a Financial Statement or Affidavit filed in the proceedings.[2] Parties are required under Rule 24.04 to produce certain documents relating to their financial circumstances to the other party within 14 days after the first Court date.[3] Beyond that, the Act, the Rules, and the decided cases make it abundantly clear that full and frank financial disclosure is the obligation of all parties to financial proceedings under the Act.
[2] Federal Circuit Court Rules 2001 (Cth) r 24.03.
[3] Federal Circuit Court Rules 2001 (Cth) 24.04.
I am satisfied on the evidence, and I find that the Wife has failed to make full and frank financial disclosure. In particular, I find that the Wife has failed to make proper disclosure about the extent of her gambling activities. There is a clear obligation for all parties to proceedings relating to financial matters under the Act to make a full and frank disclosure of all relevant financial circumstances. A mere compliance with the rules of Court or practice directions does not alter the basic principle of that need for full and frank disclosure.[4] Rule 24.03 requires, as stated above, that all parties make full and frank disclosure of all relevant financial circumstances in their financial proceedings.[5]
[4] Briese & Briese (1986) FLC 91-713, [5]. See also Livesey (formerly Jenkins) v Jenkins [1985] All ER 106.
[5] Federal Circuit Court Rules 2001 (Cth) 24.03.
The duty of full and frank financial disclosure has been referred to throughout the life of the Act in innumerable cases. The duty is an absolute one.[6] Consequent upon the obligation of parties to make full and frank disclosure, where there is clear evidence of non-disclosure, the Court should not be unduly cautious in making findings in favour of the innocent party.[7]
[6] In the Marriage of Kannis (2002) 172 FLR 464.
[7] In the Marriage of Weir (1992) 110 FLR 403.
I am satisfied that the Wife has failed to make full and frank financial disclosure.
Property settlement
The law relating to a property settlement between parties to a marriage starts with section 79 of the Act. Section 79(4)(e) incorporates the provisions contained in section 75(2) of that Act.
The starting point for the proper understanding of the legislative process mandated by section 79 of the Act is the decision of the High Court of Australia in Stanford.[8]
[8] Stanford & Stanford (2012) 247 CLR 108.
In that decision, the High Court held that section 79(2) requires that at the outset of the Court’s decision-making process relating to that section, the Court must consider whether or not, in all the circumstances, it is just and equitable to make an order under section 79(1) altering the interests of the parties to the marriage in property.[9]
[9] See, especially, Stanford & Stanford (2012) 247 CLR 108, [35].
In deciding that question, the Court should start by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property identified as forming the matrimonial asset pool, and as a necessary part of that process, identify the liabilities of the parties according to ordinary common law and equitable principles and under legislation, and, one may say necessarily, identify according to ordinary common law and equitable principles and under legislation the rights, if any, of the parties in relation to any asserted resources of the parties that may, if it is considered just and equitable to proceed with the property settlement, be taken into account in the Court’s consideration of the matters referred to in section 75(2) of the Act, to which section 79(4)(e) directs the Court’s attention.[10]
[10] Stanford & Stanford (2012) 247 CLR 108, [37].
The High Court noted in Stanford at paragraph 42:
[42] In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the Husband and Wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the Husband and Wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).[11]
[11] Stanford & Stanford (2012) 247 CLR 108, [42].
This is such a case. In this matter, the parties have not only separated but have rearranged their financial affairs to reflect this.
I find that it is just and equitable to proceed with a property settlement under section 79 of the Act.
In determining what orders should be made having regard to section 79(4) of the Act, the Court must ensure that the terms of any property settlement order are themselves just and equitable.[12]
[12] See, eg, Stanford & Stanford (2012) 247 CLR 108, [51].
I note here the following paragraphs of Stanford:
[36] The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not "to be exercised in accordance with fixed rules", nevertheless, three fundamental propositions must not be obscured.
[37] First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to "altering the interests of the parties to the marriage in the property" (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
[38] Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs "as [the judge] thinks fit", in any question between Husband and Wife as to the title to or possession of property, is a power which "rests upon the law and not upon judicial discretion". And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong:
The judge called upon to decide proceedings of that kind is not entitled to do what has been described as 'palm tree justice'. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down.
[39] Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is "just and equitable" to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that "[c]ommunity of ownership arising from marriage has no place in the common law". Questions between Husband and Wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be "decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses". The question presented by s 79 is whether those rights and interests should be altered.
[40] Third, whether making a property settlement order is "just and equitable" is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down". To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.[13]
[13] Stanford & Stanford (2012) 247 CLR 108, [36]-[40] (original emphasis).
In Bevan v Bevan,[14] the Full Court of the Family Court of Australia considered the High Court’s decision in Stanford and the High Court’s guidance therein on how section 79 is to be interpreted and implemented. The Full Court endorsed the continuing application of the four-step approach set out by the Full Court in Hickey,[15] noting that it is in the nature of a preferred approach to consideration of the appropriate property settlement under section 79, as opposed to being a statutory requirement.[16]
[15] Hickey & Hickey & Attorney-General for the Commonwealth of Australia (‘Hickey’) [2003] FamCA 395.
[16] Bevan v Bevan [2003] FamCA 395, [71]-[72].
The four-step process referred to in Hickey at paragraph 39 is as follows:
a)First, to identify and value the property, liabilities, and financial resources of the parties;
b)Second, to identify and assess the contributions of the parties and express them as a percentage of the net value of the property;
c)Third, to identify and assess any relevant factors under section 79(4)(d) to (g), including relevant matters referred to in section 75(2) (as required by section 79(4)(e)) and determine the adjustment, if any, to be made to the contribution entitlement percentage arrived at the second step; and
d)Fourth, to consider the effect of the result arrived at the end of consideration of the first three steps, and to resolve what order is just and equitable in all the circumstances.[17]
[17] Hickey [2003] FamCA 395, [39].
The Full Court pointed out in Hickey that pursuant to the wording of section 79, there can only be one property settlement order under that section at any one time and that the one property settlement order is final, subject only to anything that may be properly done pursuant to section 79A of the Act.[18]
[18] Hickey [2003] FamCA 395, [47].
The Full Court held in Fontana:[19]
… Indeed, the authorities are consistent in finding that assessing contributions is not an accounting exercise but a holistic one (Brandt & Brandt (1997) FLC 92-758; Norbis & Norbis (1986) 161 CLR 513).[20]
[19] Fontana & Fontana [2018] FamCAFC 63.
[20] Fontana & Fontana [2018] FamCAFC 63, [27].
The Court is required to consider the parties’ contributions made on and from the commencement of their relationship, during their relationship and following separation.[21]
[21] See, eg, Jabour & Jabour [2019] FamCAFC 78.
The approach to determining the appropriate percentage of the net value of property in relation to the contributions of the parties, at step two of the four-step process, requires an assessment of contributions by, or on behalf of, each of the parties in a holistic manner, rather than attaching specific contributions to a specific item of property and making a determination upon that basis. To do the latter would be to disregard the whole of the contributions made during the whole of the relevant period of the relationship by or on behalf of each of the parties. As the Full Court said in Dickons & Dickons[22] at paragraphs 14 to 16:
[14] As is plain from earlier decisions of this Court, regard must be had to the use made of contributions of various types so as to compare the contributions made by each of the parties during the course of, and over the length of, their relationship (see, for example, In the Marriage of Pierce (1998) FLC 92-844) But that is an entirely different proposition to, as it were, causally linking contributions with their asserted financial “product” or “value”. The former recognises that the nature, form and extent of contributions made by each of the parties might differ; the latter suggests that the absence of a causal link counts as no contribution at all.
[15] The search for a causal link might be seen to come instinctively to the necessary inquiry and all the more so when regard is had to s 79(4)(a) which refers to financial contributions made “...directly or indirectly...” “...to the acquisition, conservation or improvement of any of the property ...” and goes on to also refer to the financial contribution made “...otherwise in relation to any of that last-mentioned property...” The terms of that sub-paragraph might, naturally enough, be seen to suggest a causal link between those contributions and the “financial product” which those contributions of that type are said to have produced. That same requirement might also be seen to suggest that relevant contributions of that type can be seen to be quantifiable – or, at least, conceptualised – in monetary terms, in contradistinction to contributions made pursuant to s 79(4)(c).
[16] While that apparent “causal connection” might be seen in s 79(4)(a) (and (b)), no such connection is apparent from the terms of s 79(4)(c); contributions of that latter type are not linked by the words of the sub-paragraph to the “...acquisition, conservation or improvement of any of the property...” or, indeed, to “property” at all. This is not a legislative oversight; the 1983 amendments to the Act which inserted the current s 79(4)(c) were specifically intended, relevantly, to remove any suggestion that there needed to be a causal link between contributions of that type and any particular asset or property. The Explanatory Memorandum to the Family Law Act Amendment Bill 1983 provides, at Clause 36, that a specific purpose of the re-casting of s 79(4) was, relevantly, to:
... revise sub-section 79(4) to remove the possibility of an interpretation of the sub-section requiring that there be a nexus between a spouse’s contribution and a specific item of property in section 79 proceedings ...[23]
[22] Dickons & Dickons [2012] FamCAFC 154.
[23] Dickons & Dickons [2012] FamCAFC 154, [14]-[16].
The Court is required to make a holistic value judgment in the exercise of a discretionary power of a very general kind.[24] The principle was expressed succinctly by the Full Court in the joint judgment of Bryant CJ and Ainslie-Wallace J in Fields & Smith[25] at paragraph 168:
...the task is to consider the contributions holistically over the whole period from the commencement of cohabitation to trial, and the analysis requires the Court to weight all of the contributions of all types prescribed by section 79(4) made by both parties across the entirety of the relationship until the time of Hearing, including the post-separation period.[26]
[24] In the Marriage of Harris (1991) 104 FLR 458, 464.
[25] Fields & Smith [2015] FamCAFC 57.
[26] Fields & Smith [2015] FamCAFC 57, [168].
The Full Court has been repeatedly clear that the approach to property settlement under section 79 of the Act is not an accounting exercise. Of particular relevance to this matter is the comments of the Full Court in Grier & Malphas[27] at paragraph 129, where Murphy and Kent JJ said:
As the Chief Justice points out, with those principles in mind, the trial judge adopted a broad-brush approach to the parties’ respective expenditure. Nowhere error is established by reason alone of that approach; authority eschews “overly pernickety analysis” and section 79 demands neither an audit nor an exercise in accounting. However, when significant sums of money are said by one party or the other to have been “wasted” or to amount to a unilateral “premature distribution of property” and the evidence is suggestive of either or both, an analysis of the relevant sums and their use is needed.[28]
[27] Grier & Malphas (2017) 55 Fam LR 107.
[28] Grier & Malphas (2017) 55 Fam LR 107, [129].
The approach adopted by trial judges to the concept of ‘addbacks’ over the years since the commencement of the Act has varied between placing back into the matrimonial asset pool no-longer existent assets as ‘notional assets’ and giving them a value and dealing with them as if they still existed, to taking any such notional assets into account at step three of the four-step process when considering the matters referred to in section 75(2) of the Act and, in particular, at section 75(2)(o), “Any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account.”[29]
[29] Family Law Act 1975 (Cth) s 75(2)(o).
In AJO v GRO,[30] at paragraphs 30 to 31, the Full Court identified three types of addbacks that are commonly encountered in property settlement decisions:
[30] AJO & GRO (2005) 191 FLR 317.
[30] To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM v JLM [1998] FamCA 97; (1998) 23 Fam LR 396 the Full Court said (at 410-411):
11.6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In In Marriage of Townsend [1994] FamCA 144; (1994) 18 Fam LR 505 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said (at 509):
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the Husband did was to distribute to himself an asset in which the Wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the Husband as a matter to which regard should be had under section 75(2). It seems to me that the Husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the Husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in In Marriage of Kowaliw [1981] FamCA 70; [1981] FLC 91-092 at 76,644:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.
[31] As the Full Court said in Browne v Green [1999] FamCA 1483; [1999] FLC 92-873 at 86,360:
[44] We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s 79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction — a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.[31]
[31] AJO & GRO (2005) 191 FLR 317, [30]-[31].
In AJO & GRO,[32] the Full Court was careful to point out the difference between a ‘premature distribution’ and expenditure on reasonable day-to-day expenses and, in particular, expenditure on reasonable self-support.[33]
[32] AJO & GRO (2005) 191 FLR 317.
[33] AJO & GRO (2005) 191 FLR 317, [39]-[42].
In In the Marriage of Weir,[34] the Full Court extended the application of addbacks to cases where the Court found there had been a deliberate failure by one party of the obligation to make full and frank financial disclosure, finding:
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.[35]
[34] In the Marriage of Weir (1992) 110 FLR 403.
[35] In the Marriage of Weir (1992) 110 FLR 403, 407 – 408.
In Talbot & Talbot,[36] the Full Court said:
Where one party unilaterally distributes to themselves property which no longer exists and which, but for that premature distribution, would be susceptible to section 79 orders, justice and equity may require the Court to take account of the dissipated property by adding it back as against the dissipating party (Townsend & Townsend [1994] FamCA 144; (1995) FLC 92-569). Whether that should occur, or whether the dissipation should be taken into account pursuant to section 75(2)(o), or indeed at all, are all matters requiring the exercise of a trial judge’s discretion (Townsend; Omacini & Omacini; Cerini & Cerini [1998] FamCA 143).[37]
[36] Talbot & Talbot [2015] FamCAFC 132.
[37] Talbot & Talbot [2015] FamCAFC 132, [31].
In Vass & Vass,[38] the Full Court said the following at paragraphs 137 to 139:
[137] At [50] to [65] of the First Reasons under the heading “Add-backs,” the trial judge held that $25,000 withdrawn by the Husband from the parties’ bank accounts post-separation should be added back into the pool of assets, and further concluded that $50,000 which the Husband had, post-separation, paid to his parents, purportedly in repayment of a loan from them, should also be added back.
[138] There is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan & Bevan [2013] FamCAFC 116; (2013) FLC 93-545 – or, more particularly, the decision of the High Court in Stanford & Stanford [2012] HCA 52; (2012) 247 CLR 108 - is authority for any necessary contrary solution. Some statements made by the High Court may lead to the conclusion that references to “notional property” as have been referred to in decisions of this court and at first instance may need to be reconsidered.
[139] The decisions referred to seek to remind the Court that, however the exercise of discretion might seek to deal with property that is said to be the subject of “add back”, proper consideration must be given to existing interests in property, and the question posed by s 79(2) as a separate inquiry from any adjustment to property interests by reference to s 79(4) if a consideration of s 79(2) reveals that it is just and equitable to alter existing interests in property.[39]
[38] Vass & Vass [2015] FamCAFC 51.
[39] Vass & Vass [2015] FamCAFC 51, [137]-[138].
The reference in the Full Court’s decision in Vass to the Full Court’s decision in Bevan & Bevan was to the comments made in obiter by Bryant CJ and Thackray J:
[79] We observe that “notional property”, which is sometimes “added back” to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under section 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that section 79(4) and in particular section 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.[40]
[40] Bevan v Bevan (2013) 279 FLR 1, [79].
The question of addbacks was again considered by the Full Court in Masoud & Masoud[41] in paragraphs 90 to 99 of that judgment, and in particular at paragraph 97 where the Court said:
[97] ... The way in which non-existent property is to be treated remains a matter for judicial discretion (see Townsend & Townsend FLC 92-569) ... the provision of an agreed balance sheet providing for the inclusion of notional property would not mandate his Honour’s acceptance of it or that he would treat the notional property in the same way as had the parties.[42]
[41] Masoud & Masoud [2016] FamCAFC 24.
[42] Masoud & Masoud [2016] FamCAFC 24, [97].
In that case, the Full Court held that it was open to the trial judge in the exercise of discretion to deal with asserted addbacks in a manner different to that proposed by either of the parties, or indeed by the parties jointly, as reflected in that case by the treatment of addbacks in an agreed balance sheet.
Most recently in Shan & Prasad,[43] the Full Court in dealing with the issue of addbacks said at paragraphs 130 and 131:
[130] ... A Court cannot create property for the purposes of alteration. Section 79 empowers a Court to alter interests of the parties to the proceedings in property. Property is defined in section 4 of the Act to mean:
... [In] relation to the parties to a marriage or either of them – means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.
[131] As French CJ said in Kennon & Spry [2008] HCA 56; (2008) 238 CLR 366 at 390, “‘property’ in section 79 is to be read as part of the collocation ‘property of the parties to the marriage’”. It is to be read widely and conformably with the purposes of the Act. Gummow and Hayne JJ said at 397 that “the term ‘property’ is not a term of art with one specific and precise meaning”. The purpose of the Act as set out in section 79(1) is to alter interests in property to which a party has an interest in possession or reversion.[44]
[43] Shan & Prasad [2018] FamCAFC 12.
[44] Shan & Prasad [2018] FamCAFC 12, [130]-[131].
Issues
By the time of closing submissions, the issues in dispute had crystallised, and are as follows:
a)The Court will need to make findings as to credit.
b)There was an issue about the date of separation, but in closing submissions both parties acknowledged it was not an issue that the Court needed to decide. The Court believes that the determination of the issue would have made no difference to the outcome of the case.
c)There were a number of issues about the balance sheet, particularly in relation to addbacks and liabilities.
d)The assessment of contributions was highly contentious, with the focus being on the significance of the Husband’s TPD payment, and how the Wife’s non-financial contributions are to be assessed.
e)Finally, there was an issue about the assessment of any adjustment for the future needs of the parties.
Each of these issues will be dealt with below.
Credit issues
Senior Counsel for the Husband submitted that the Court would need to make credit findings, even though the factual disputes arising from the evidence were not extensive. The Court agrees. One of the most significant issues for the Court is to assess the relevance, if any, to the Court’s finding of what is a just and equitable order altering property interests, of the gambling activities of the Husband and the Wife during their relationship.
The Court finds that both the Husband and the Wife engaged in gambling, but that the extent of the Wife’s involvement was significantly greater than that of the Husband. A relevant issue for this Court is whether the Wife properly disclosed the nature and extent of her gambling activities. It is in respect of this issue that the credit issues loom large. The Court notes, however, that any credit finding in respect of this issue does not necessarily permeate the rest of the Wife’s evidence.
It is important to recognise that the attack on credit was from the Husband’s side only. No submission was made in the Wife’s case suggesting that the Husband’s evidence, on any issue, lacked candour.
Senior Counsel for the Husband submitted that the Court would find the Wife to have been an unimpressive witness who was non-responsive, evasive, opportunistic, prone to make self-serving statements, and inconsistent. The Court accepts this submission, but limits its findings in this regard to gambling issues.
Gambling was clearly a regular activity engaged in by the Wife during the relationship, and afterwards. It was an expenditure item that was never disclosed in her sworn Financial Statement. The inconsistencies between the evidence she gave in cross-examination and in her affidavit about her gambling activities are starkly inconsistent with the independent business records tendered into evidence. Her denials about continued gambling even in the period leading up to the hearing were unconvincing. Her failure to acknowledge that her financial difficulties at that time were a function of her gambling activities was inherently inconsistent with the objective records to which she was taken in cross-examination.
In short, much of the Wife’s evidence relating to her gambling activities was plainly implausible, and the Court finds the Wife to be an inherently unreliable historian on this issue.
Balance sheet issues
The agreed balance sheet is reproduced below:
| Assets | ||||
| Ownership | Description | Wife’s Value | Husband’s Value | |
| 1 | J | B Street, Town C QLD | $800,000.00 | $800,000.00 |
| 2 | H | Bank R account ending #...9 | $210,000.00 | $210,000.00 |
| 3 | H | Westpac Choice account ending #...1 | $509.00 | $509.00 |
| 4 | H | Westpac e-Saver account ending #...4 | $11,022.00 | $11,022. |
| 5 | H | Bank R account ending #...4 | $1,334.00 | $1,334.00 |
| 6 | W | Bank R account ending #...6 | $24.00 | $24.00 |
| 7 | W | Bank R Saver account ending #...9 | $10.00 | $10.00 |
| 8 | W | Westpac Choice account ending #...7 | $19.00 | $19.00 |
| 9 | H | Motor Vehicle 1 | $7,500.00 | $7,500.00 |
| 10 | W | Motor Vehicle 2 | $33,000.00 | $33,000.00 |
| 11 | H | Contents – B Street, Town C property | $10,000.00 | $10,000.00 |
| 12 | W | Contents and Jewellery – D Street, Suburb E | $3,000.00 | $3,000.00 |
| TOTAL | $1,076,418.00 | $1,076,418.00 | ||
| Addbacks | ||||
| Ownership | Description | Wife’s Value | Husband’s Value | |
| 14 | W | Monies advanced to the Wife in January 2018 as an interim property distribution pursuant to Orders made by Henderson J on 20 December 2017 | $52,000.00 | $52,000.00 |
| 15 | H | Legal fees paid | $89,857.00 | |
| 16 | W | Legal fees paid | $18,416.00 | |
| TOTAL | $160,273.00 | $52,000.00 | ||
| Liabilities | ||||
| Ownership | Description | Wife’s Value | Husband’s Value | |
| 17 | W | Loan from Ms P | ($62,200.00) | $NIL |
| 18 | W | Loan from Ms S | ($19,520.00) | $NIL |
| 19 | W | Car loan from ANZ Bank | ($30,000.00) | ($30,000.00) |
| 20 | W | Westpac credit card account ending #...7 | ($26,127.00) | $NIL |
| 21 | W | F Pty Ltd | ($53,930.00) | |
| TOTAL | ($191,777.00) | ($30,000.00) | ||
| Superannuation | ||||
| Ownership | Description | Wife’s Value | Husband’s Value | |
| 22 | H | Super Fund T (as at 21 February 2019) | $216,351.00 | $216,351.00 |
| 23 | W | Super Fund U (as at 3 March 2019) | $308,429.00 | $308,429.00 |
| TOTAL | $524,780.00 | $524,780.00 | ||
| Total Asset Pool | Wife’s Value | Husband’s Value |
| Assets | $1,076,418.00 | $1,076,418.00 |
| Addbacks | $160,273.00 | $52,000.00 |
| Liabilities | ($191,777.00) | ($30,000.00) |
| Superannuation | $524,780.00 | $524,780.00 |
| Net Total exclusive of superannuation | $1,044,914.00 | $1,098,418.00 |
| Net Total inclusive of superannuation | $1,569,694.00 | $1,623,198.00 |
The first issue that arises for determination is in relation to items 15 and 16. On behalf of the Wife, it was contended that these amounts should be added back as representing legal fees paid up by the parties consistent with authority such as NHC & RCH.[45]
[45] NHC & RCH [2004] FamCA 633.
Senior Counsel for the Husband resisted this, emphasising that consistent with Full Court decisions such as Trevi & Trevi,[46] addbacks are a matter of discretion for the Court. In this case, he submitted the discretion should not be exercised in favour of adding back because the source of the funds in the Husband’s case could ultimately be traced back to his TPD payment. The relevance of this, Senior Counsel contended, was apparent from the significant disparity in the contended addbacks. If nearly $90,000 is added back as notional property of the Husband, but only about $18,500 on the Wife’s part, the greater contribution of the Husband needs to be recognised.
[46] Trevi & Trevi [2018] FamCAFC 173.
With respect to Senior Counsel, the Court does not agree. At this stage, the Court is simply making findings about the balance sheet, that is, step one of the conventional approach to making orders altering property interests. Senior Counsel’s acknowledgement that the $90,000 came from the Husband’s TPD payment merely emphasises why it ought to be added back. The contribution that he has made to this relationship is assessed at a later stage.
The Court accepts the Wife’s submissions that both payments contended as addbacks at items 15 and 16 of the balance sheet should be allowed.
The next issue for determination relates to the liabilities of the Wife noted at items 17, 18, 20, and 21. The first three items are liabilities of the Wife which she seeks to bring onto the balance sheet. Even the Wife’s own evidence in cross-examination establishes that these liabilities were incurred by her after separation. Counsel for the Wife sought to justify their inclusion in the Balance Sheet on the basis that the Court would be satisfied from the Wife’s evidence of the necessity of these borrowings as they were applied for her normal everyday necessary living expenses.
The Court does not accept this submission. There was ample evidence before the Court about the Wife’s extensive gambling activities after separation, and in fact right up until shortly before the hearing. It is neither necessary, nor possible, to quantify the frequency and extent of her gambling activities in the post-separation period. The strong impression formed from the evidence, especially the Wife’s own evidence in cross-examination, is that it was substantial. It beggars belief that she would now seek to include on the balance sheet as a liability loans which may have directly or indirectly financed her gambling activities.
The contended liabilities at items 17, 18 and 20 are not allowed.
At item 21, the Wife seeks to include on the Balance Sheet a liability of the company which conducted her practice. This was strongly opposed in the Husband’s case, on the basis that there was no valuation of the practice, and there was no evidence of the value of the plant, equipment, fixtures, and fittings, let alone the tax losses, associated with the practice. In cross-examination, for example, the Wife agreed that she had carried forward tax losses of about $204,000. She agreed that there was leased equipment in respect of which no balloon payment was payable at the end of the lease. In the circumstances, the Court declines to allow this liability on the balance sheet.
Having regard to the Court’s findings, therefore, the pool of the assets and liabilities in this case is as follows:
| Assets | ||||
| Ownership | Description | Wife’s Value | Husband’s Value | |
| 1 | J | B Street, Town C QLD | $800,000.00 | $800,000.00 |
| 2 | H | Bank R account ending #...9 | $210,000.00 | $210,000.00 |
| 3 | H | Westpac Choice account ending #...1 | $509.00 | $509.00 |
| 4 | H | Westpac e-Saver account ending #...4 | $11,022.00 | $11,022. |
| 5 | H | Bank R account ending #...4 | $1,334.00 | $1,334.00 |
| 6 | W | Bank R ending #...6 | $24.00 | $24.00 |
| 7 | W | Bank R Saver account ending #...9 | $10.00 | $10.00 |
| 8 | W | Westpac Choice account ending #...7 | $19.00 | $19.00 |
| 9 | H | Motor Vehicle 1 | $7,500.00 | $7,500.00 |
| 10 | W | Motor Vehicle 2 | $33,000.00 | $33,000.00 |
| 11 | H | Contents – B Street, Town C property | $10,000.00 | $10,000.00 |
| 12 | W | Contents and Jewellery – D Street, Suburb E | $3,000.00 | $3,000.00 |
| TOTAL | $1,076,418.00 | $1,076,418.00 | ||
| Addbacks | ||||
| Ownership | Description | Wife’s Value | Husband’s Value | |
| 14 | W | Monies advanced to the Wife in January 2018 as an interim property distribution pursuant to Orders made by Henderson J on 20 December 2017 | $52,000.00 | $52,000.00 |
| 15 | H | Legal fees paid | $89,857.00 | $89,857.00 |
| 16 | W | Legal fees paid | $18,416.00 | $18,416.00 |
| TOTAL | $160,273.00 | $160,273.00 | ||
| Liabilities | ||||
| Ownership | Description | Wife’s Value | Husband’s Value | |
| 17 | W | Car loan from ANZ Bank | ($30,000.00) | ($30,000.00) |
| TOTAL | ($30,000.00) | ($30,000.00) | ||
| Superannuation | ||||
| Ownership | Description | Wife’s Value | Husband’s Value | |
| 18 | H | Super Fund T (as at 21 February 2019) | $216,351.00 | $216,351.00 |
| 19 | W | Super Fund U (as at 3 March 2019) | $308,429.00 | $308,429.00 |
| TOTAL | $524,780.00 | $524,780.00 | ||
| Total Asset Pool | Wife’s Value | Husband’s Value |
| Assets | $1,076,418.00 | $1,076,418.00 |
| Addbacks | $160,273.00 | $160,273.00 |
| Liabilities | ($30,000.00) | ($30,000.00) |
| Superannuation | $524,780.00 | $524,780.00 |
| Net Total exclusive of superannuation | $1,206,691.00 | $1,206,691.00 |
| Net Total inclusive of superannuation | $1,731,471.00 | $1,731,471.00 |
Assessment of contributions
The Husband contended that contributions should be assessed in his favour as to 70%. This was based primarily on his initial contribution, the contribution of an inheritance, and then what he described as the significant financial contribution arising as a consequence of the TPD payment.
The Wife contended that contributions should be assessed equally. This is based on the contributions she made, and the fact that the premiums on the TPD insurance that led to the payment to the Husband were paid to out of joint assets and income during the relationship. Moreover, there was a period during the relationship when she was the sole income earner. She was the primary caretaker of the parties’ child even after separation, and the principal homemaker. She supported the Husband when he was ill, before separation. Since separation, she has had the sole care of the parties’ child, albeit with some financial support from the Husband. The Wife has had to pay rent since separation, whilst the Husband has occupied to the matrimonial property mortgage free.
The Court will firstly consider the implications of the contribution of the Husband’s TPD payment.
The policy itself was not in evidence. Perhaps it should have been. It is not entirely clear when the TPD policy was taken out. The impression from the evidence is that it was a long-standing policy as at the time that the Husband made the claim on it. Counsel for the Wife submits, and the Court accepts, that at some stage during the relationship, the decision was made to use joint funds towards the payment of premiums on the policy. The Court accepts that, in this respect, the policy was financed by the Husband and the Wife.
There was also a period of years between 2010 and 2015 when, in all likelihood, the premiums were paid out of the Wife’s own income or, alternatively, in part or in whole, using sale proceeds of property. The Court accepts that the claim on the policy by the Husband, and the subsequent payment, was made towards the end of the relationship.
In submissions, Counsel for the Wife accepted the general proposition that the payment was a form of income protection for the Husband. In that sense, it is a capital payment to replace his future income. If the parties had still been together, therefore, it would have simply replaced what he would have earned. Counsel submitted that, notwithstanding, the payment was a product of the contribution that was jointly made.
Senior Counsel for the Husband argued that much of the existing pool of assets finds its origin in the TPD payment. He submitted that the TPD payment was a contribution by the Husband. He acknowledged that the Wife made a contribution towards the maintenance of this asset, but what triggered the payment to the Husband was not attributable to anything the Wife had done, but rather as a consequence of his catastrophic health issues.
A number of cases have considered TPD payments, or payments which have a nature similar to TPD payments. In Perrin & Perrin (No. 2),[47] the Full Court stated:
[38] As stated in Hayton v Bendle [2010] FamCA 592; (2010) 43 Fam LR 602 at [105], “[i]t has always been the task of courts making orders pursuant to s 79 to properly examine the nature, form and characteristics of the property forming part of the pool for division”. An examination of the nature, form and characteristics of the Husband’s superannuation interest reveals that a component of his entitlement under the PSS was the amount of his salary at the date of discharge. This is clear from s 10 of the Police Regulation (Superannuation) Act 1906 (NSW). The Wife’s contributions as a parent to the Husband’s children and as a homemaker allowed the Husband to maintain his employment as a police officer, and earn that amount of salary.[48]
[47] Perrin & Perrin (No. 2) [2018] FamCAFC 122.
[48] Perrin & Perrin (No. 2) [2018] FamCAFC 122, [38].
It is well established that a spouse can indirectly contribute to his or her partner’s salary. For example, in T & T [Pension Splitting],[49] at [143] Watts J states:
… the Wife can point to contributions that she made that are relevant to the amount of the Husband’s salary at the date of discharge.[50]
[49] T & T [Pension Splitting] [2006] FamCA 207.
[50] T & T [Pension Splitting] [2006] FamCA 207, [143] (original emphasis).
In that case, the Wife’s contribution was assessed as 15%. On this matter, I refer also to the cases of Darcy & Darcy,[51] Fane & Lemott,[52] Linch & Linch,[53] and Jarvis & Seymour.[54]
[51] Darcy & Darcy [2011] FMCAfam 126.
[52] Fane & Lemott [2013] FamCA 604.
[53] Linch & Linch [2014] FamCAFC 69.
[54] Jarvis & Seymour [2016] FCCA 1676.
In Schmidt & Schmidt,[55] Watts J considered the direct contributions in the matter:
[107] The husband was hurt when being exposed to a risk in the course of his employment to which members of the general work force would not normally be exposed. Consequently he receives a superannuation interest equivalent to 100 percent of his salary (s 10(1A)(c) PRSA).
[108] The wife cannot claim any direct contribution arising from the husband being hurt on duty.[56]
[55] Schmidt & Schmidt [2009] FamCA 1386.
[56] Schmidt & Schmidt [2009] FamCA 1386, [107]-[108] (emphasis added).
His Honour then immediately addressed whether the Wife had made indirect contributions:
[109] The wife has made contributions after separation in her role as parent to the two children of the marriage. I infer that the wife’s role as parent has to some degree, at least initially during the period of the husband’s impairment, increased, although over time that additional contribution which the wife has made has lessened as the husband has recovered. The wife can point to contributions that she made to the amount of the husband’s salary by supporting him in the move to V and to his move to N associated with his employment. I infer that during the course of the cohabitation the wife made sacrifices to enable the husband to pursue his career. There were additional burdens imposed upon the wife, particularly around about the time of the birth of the first child when the husband was away from the home because of his promotion.
…
[110] The level of salary which the husband received at the time that he was hurt on duty is in part a result of contributions made by the wife during the cohabitation.[57]
[57] Schmidt & Schmidt [2009] FamCA 1386, [109]-[110] (emphasis added).
After this consideration, his Honour then made an allowance of 10% to the Wife:
I assess the wife’s contribution to category 1 of the husband’s superannuation interest at 10 percent.[58]
[58] Schmidt & Schmidt [2009] FamCA 1386, [112].
The Court accepts that the TPD payment in this case was not generated out of a salary in the same way as a TPD component of superannuation. The analogy, however, of financial and non-financial contributions towards an insurance premium for a TPD policy is a compelling one.
In Netis & Kipling,[59] Tree J stated:
The proceeds of a claim for damages for personal injury is to be treated as a contribution by the party who suffered the injury, but not considered in isolation, as all contributions must be weighed and considered at the same time: Aleksovski & Aleksovski [1996] FamCA 111.[60]
[59] Netis & Kipling [2019] FamCA 363.
[60] Netis & Kipling [2019] FamCA 363, [9].
However, a payment in respect of disablement made under a policy of superannuation maintained in respect of the employment of a party during the course of the relationship is to be considered differently, in that the other party may have indirectly contributed to that superannuation interest.[61]
[61] Perrin & Perrin (No. 2) [2018] FamCAFC 122, [39].
With respect to his Honour, he correctly establishes the limitations of the Husband’s reliance in his case on the Full Court’s decision in Aleksovski.[62] All contributions must be weighed and considered, and not just his alleged sole contribution through the TPD payment.[63]
[62] Aleksovski & Aleksovski [1996] FamCA 111.
[63] Netis & Kipling [2019] FamCA 363, [9].
In Beckett & Beckett,[64] Altobelli J observed:
[127] Quite part from the fact that the evidence in this case clearly points to the Father’s Total and Permanent Disability claim having the intention to compensate him for future economic loss, that is the approach that has been adopted in other cases involving TPD claims. Thus, for example, in Martell & Allard [2012] FMCAfam 326, Baker FM (as she then was) discussed the TPD claim in that case at paragraphs 124-128 of her judgment. She found, in effect, that the TPD claim was a compensation for future economic loss. She found, as the Court will find in this case, that the other spouse can indeed be found to have contributed to this fund, but not on an equal basis. In Taylor & Taylor [2016] FamCA 451, Kent J at paragraph 88, again characterised a TPD claim as having the character of compensation for future economic loss. In Irving & Parkes [2015] FCCA 3049, Small J at paragraphs 218-220 again found that a TPD claim was intended to compensate for loss of future earning capacity. Whilst Her Honour did in fact exclude the fund from the asset pool for division, noting that the fund was received after separation, she nonetheless acknowledged that it would be a significant financial resource under s.75(2). As it turns out, on the present facts, the Court declines to treat the TPD funds in the same fashion. The Court will find that the Mother has, in fact, made a contribution to that fund, albeit not equally. Moreover, the post-separation contribution that the Mother has made in this case is also significant.[65]
[64] Beckett & Beckett [2017] FCCA 608 (28 March 2017).
[65] Beckett & Beckett [2017] FCCA 608, [127].
Thus, the issue for the Court is to assess the contribution that the Wife has made to the TPD payment. All her contributions must be assessed holistically and have regard to contributions financial and non-financial, direct and indirect, and her contribution as homemaker and parent. The contribution in question is not just before separation, but afterwards as well. The task is rendered difficult in this case because both parties made contributions in the manner described to other assets, albeit that the TPD payment represents a substantial part of the asset pool.
The significance of gambling on the assessment of contributions was not clearly articulated in the Husband’s case. The evidence establishes that both parties gambled, and lost more than they won. The evidence establishes that at least in terms of volume, the Wife’s gambling was significantly greater than that of the Husband. That there were gambling wins is not in dispute. It is not possible to quantify losses on the evidence before the Court. The overall impression is that, certainly as to the Wife’s gambling, it would have been in the order of hundreds of thousands of dollars between cohabitation and shortly before the hearing, but it is not possible to quantify this precisely let alone by reference to the period of cohabitation itself.
In the Husband’s Case Outline document he contends that the Court should relevantly take these losses into account. By closing submissions, however, the relevance of gambling was not specifically articulated. This is understandable as it is not possible to establish the extent of gambling losses. The Wife’s case was that they both gambled and thus it was not a factor relevant to the assessment of contribution. This is a simplistic approach to the issue given the clear evidence about the disparity in gambling activities and the little that is actually known about the Wife’s own gambling losses.
In relation to gambling, therefore, the Court is of the view that it ought to be taken into account not as a contribution factor, but as a consideration under section 75(2)(o).
The Court assesses contributions in the Husband’s favour as to 65%. This reflects the different contributions made by each of the Husband and Wife, direct and indirect, financial and non-financial, and as homemaker and parent. It reflects contributions up until the date of the trial. The most significant factor operating in the Husband’s favour was the TPD claim. Having regard to its nature and form, and the circumstances in which it was received, his contributions are assessed to have been significantly greater than that of the Wife.
In passing, the Court notes the submissions made on the Husband’s behalf seeking to attribute some significance to the fact that the Wife still retains her TPD policy. If this is said to have some present value that is relevant for the present purposes of making an alteration of property interests, no evidence was led to about this. It was not contended that it was a financial resource. It could, conceivably, be a relevant factor under section 75(2). The very nature of the TPD policy, however, is that it has no value to the policyholder unless total and permanent disability takes place.
An adjustment under section 75(2)?
In the parties’ respective Case Outlines, they each contended for a 10% adjustment in favour of the Husband. Their respective positions were maintained in closing submissions. The Court acknowledges that, in each case, the contention for a 10% adjustment in favour of the Husband was presented on the assumption that the Court would accept the underlying submissions about how the Court would assess contributions. Thus, the Wife’s acknowledgement of a 10% adjustment was based on her contended assessment of contributions at 50%, and the Husband’s proposal for a 10% adjustment was based on his contended assessment of contributions at 70%.
The Court assesses the section 75(2) adjustment in favour of the Husband at 10% based on an assessment of contribution in his favour at 65%. The differences in the future needs of the Husband and the Wife are stark. She is in good health, and he is in very poor health. She is in full-time employment, and he is unemployable. She has a good future earning capacity, and he has no future earning capacity. I further note that the Wife no longer has the care of a minor, the parties’ child being now aged 18 years.
The Husband’s health condition is debilitating. He will have significant costs meeting his future care needs. The medical evidence supporting the Husband’s case in this regard is clear and compelling. In a general sense, the Court also takes into account the evidence about the parties’ gambling. The Court also notes the Wife’s other debts as identified above.
A just and equitable order?
The Court is comfortably satisfied that a final order in the Husband’s favour as to 75% to is just and equitable. This gives to him an entitlement of $1,298,603.25 and to the Wife $432,867.75. Assuming that the Husband retains the home he lives in, and based on their current asset position, and on the basis that they each keep what they presently hold (other than the house), there would need to be an adjustment in the Wife’s favour of $47,969.75. The Husband has capacity to pay this out of existing funds. The Wife will thus receive an amount to reduce her liabilities. The Wife will need to transfer her interest in the home to the Husband in return for the payment.
The Court will adopt as the template for its orders the orders sought by the Husband in his Amended Initiating Application filed 29 March 2019.
Accordingly, I make the orders as set out at the commencement of these Reasons.
I certify that the preceding one hundred and nine (109) paragraphs are a true copy of the reasons for judgment of Judge Morley
Associate:
Date: 10 June 2020
- AGLC
- MANION & MANION (No.2) [2020] FCCA 1458
- Case
- [2020] FCCA 1458
- Decision Date
CaseChat Overview and Summary
The court was required to determine the extent of each party's financial and non-financial contributions to the marriage, considering factors such as the Husband's receipt of a Total Permanent Disability insurance payout and the Wife's significant gambling losses. Additionally, the court had to assess the future needs of the parties, taking into account the Husband's diagnosis of "A Syndrome," and whether an adjustment to their assessed contributions was warranted on this basis. The court also made findings regarding the Wife's credit in relation to evidence concerning her gambling activities.
Judge Morley found that the Husband had made greater contributions to the marriage. The Wife's gambling losses were assessed as a factor under section 75(2)(o) of the *Family Law Act 1975* (Cth). The court also noted that there was common ground between the parties that a 10% adjustment in the Husband's favour was appropriate based on their future needs, specifically in light of his medical condition.
The court ordered that the Husband pay the Wife a sum of $47,969.75 within two months, and simultaneously, the Wife was to transfer her interest in the former matrimonial home to the Husband, who would then be solely responsible for all outgoings related to the property. Provisions were made for the sale of the property by private treaty or public auction if the Husband failed to make the payment within the specified timeframe, with detailed arrangements for the application of sale proceeds and dispute resolution regarding sale terms. The orders also clarified the sole ownership of various personal property and vehicles between the parties.
Orders
Orders of the court
1.
That the Court make an order under section 79 of the Family Law Act 1975 (Cth) as follows:
(a) That within two (2) months from the date of this order, the Husband pay to the Wife the sum of $47,969.75;
(b) That simultaneously with payment by the Husband to the Wife of the sum referred to in paragraph (1)(a) hereof, the Wife sign all documents and instruments and do all things necessary to transfer to the Husband the whole of her right title and interest in the former matrimonial home property at B Street, Town C in the State of Queensland being the whole of the land in Lot ... Registered Plan ...01 (‘the property’) and simultaneously with such payment the Husband shall be solely responsible as between the Husband and the Wife for all outgoings payable in relation to the property and the Husband shall indemnify and keep indemnified the Wife in relation to all and any such payments.
(c) That in the event that the Husband does not pay to the Wife the sum referred to in paragraph (1)(a) herein within two (2) months from the date of this order, then the parties shall sign all documents and instruments and do all things necessary to list for sale the property at a listing price agreed upon between them with a real estate agent agreed upon between them and shall proceed to a sale of the property at a sale price agreed upon between them and following such sale the proceeds of sale shall be applied as follows:
(i) In adjustment of rates on settlement;
(ii) In payment of agent’s commission (if any) on sale;
(iii) In payment of legal and all other proper costs of sale;
(iv) In payment to the Wife of the sum of $47,969.75 together with any interest payable thereon pursuant to the terms of the Family Law Act 1975 (Cth);
(v) In payment of the balance to the Husband.
(d) That in the event that paragraph (1)(c) operates and the property does not sell by private sale within five (5) months from the date of this order then the parties shall sign all documents and instruments and do all things necessary to list the property for sale by public auction with an auction agent agreed upon between them at a reserve price agreed upon between them and shall proceed to a sale at a sale price agreed upon between them and the parties shall be equally responsible for all costs and expenses of the auction payable prior to the auction sale and following such sale the proceeds of sale be applied as provided in paragraph (1)(c) hereof.
(e) That in the event that paragraph (1)(d) operates and the property does not sell by public auction in accordance with paragraph (1) (d) hereof then the property shall be resubmitted for sale by private treaty in accordance with the provisions of paragraph (1) (c) hereof and the property shall be resubmitted for sale by public auction at six (6) monthly intervals from the last public auction and be resubmitted for sale by private treaty between such auctions, until the property shall be sold and upon such sale either by public auction or private treaty the proceeds of sale shall be applied as provided in paragraph (1) (c) hereof.
(f) That in the event that the parties are unable to reach agreement in relation to an auction agent, a real estate agent, a listing price, a reserve price, or a sale price whether for a sale by public auction or by private treaty, then the parties shall and do hereby appoint the President for the time being of the Real Estate Institute of Queensland or his or her nominee to determine such disputed matter or matters and the parties shall thereafter act in accordance with that determination and the parties shall be equally responsible for the costs and expenses of the President or his or her nominee in making such determination.
(g) That the Husband is the sole owner in law and in equity as between himself and the Wife of:
(i) All personal property now in his possession or control;
(ii) All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in his own name;
(iii) All interests in life insurance policies, total and permanent disablement benefits, disability support pension and superannuation funds standing in his own name; and
(iv) All furniture, furnishings and effects presently situate in the property.
(h) That the Wife is the sole owner in law and in equity as between herself and the Husband of:
(i) All personal property now in her possession or control;
(ii) All shares, debentures, units in unit trusts, bank, building society or credit union accounts standing in her sole name;
(iii) All interests in life, trauma and total and permanent disablement insurance policies and superannuation funds standing in her sole name;
(iv) All furniture, furnishings and effects presently situate in the property at D Street, Suburb E, NSW; and
(v) All interests in the company and business known as F Pty Ltd.
(i) That the Husband is the sole owner in law and in equity as between himself and the Wife of the Motor Vehicle 1 registration number ... and the Husband shall indemnify and keep indemnified the Wife in relation to all liabilities in respect of the said motor vehicle, whenever and howsoever arising.
(j) That the Wife is the sole owner in law and in equity as between herself and the Husband of the Motor Vehicle 2 registration number ... and the Wife shall indemnify and keep indemnified the Husband in relation to all liabilities in respect of the said motor vehicle, whenever and howsoever arising.
2.
That in the event that either party refuses or neglects to comply with any part of these orders in relation to the execution of any deed, instrument or document, the Court appoints and authorises the Registrars of the Federal Circuit Court of Australia, Sydney Registry, to execute such deed, instrument or document in the name of the party who so refuses or neglects and further appoints those Registrars to do all acts and things necessary to give validity and operation to the deed, instrument or document.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.