May Laguna and Laguna and Ors

[2007] FamCA 320

FAMILY COURT OF AUSTRALIA

MAY LAGUNA & LAGUNA AND ORS [2007] FamCA 320

FAMILY LAW – PROPERTY - Settlement – Contribution - Husband’s alcohol addiction and impact on contributions assessment.

Family Law Act 1975 (Cth)

Ferraro and Ferraro (1992) 16 Fam LR 1
Kowaliw and Kowaliw (1981) FLC 91-092
Browne and Green (1999) FLC 92-873
Norbis v. Norbis (1986) FLC 91-712
Kennon and Kennon (1997) FLC 92-757
Soblusky and Soblusky (1976) FLC 90-124
Ferguson and Ferguson (1978) FLC 90-500
Fisher and Fisher (1990) FLC 92-127
Doherty and Doherty (1996) FLC 92-652

APPLICANT: Ms May Laguna

RESPONDENT: Mr Laguna

2^ND RESPONDENT: Mrs May

3^RD RESPONDENTS: Mr and Mrs Laguna

INDEPENDENT CHILDREN’S LAWYER: Legal Aid Commission NSW

FILE NUMBER: SYF 2407 of 2006

DATE DELIVERED: 30 March 2007

PLACE DELIVERED: Sydney

JUDGMENT OF: Moore J

HEARING DATE: 29, 30, 31 January & 1, 2 February 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Richards

SOLICITOR FOR THE APPLICANT: Briggs & Associates

COUNSEL FOR THE RESPONDENT: Mr Lethbridge SC with Mr Cook

SOLICITOR FOR THE RESPONDENT: Frontier Law Group

Orders

1. The proceeds of sale of the home owned jointly by the parties at C, Sydney are to be distributed as follows:

   (a)      in payment of estate agents commission and legal costs on sale;

   (b)in repayment of all principal and interest due and payable to the mortgagee the Second Respondent pursuant to the first registered mortgage;

   (c)as to the balance of proceeds of sale:

   (i)to the wife 62.5%

   (ii)to the husband 37.5%.

1. Subject to order 3, each party is entitled to retain all property of whatsoever description presently owned and in their possession. 

1. The furniture and household chattels of the parties are to be distributed equally between them on a ‘two lists’ basis for which purpose the following is to apply:

   (i)within 14 days from the date of these orders the wife is to prepare two lists of items of approximately equal value and provide a copy to the husband;

   (ii)within a further 14 days the husband is to notify in writing of his selection of one of the lists;

   (iii)within 7 days of notifying his election the parties are to arrange to distribute the chattels according to the lists selected and each is entitled thereafter to retain absolutely the items on the list referable to that party. 

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 2407  of 2006

Ms May Laguna

Applicant

And

Mr Laguna

Respondent

And

The wife’s mother

2^nd Respondent

And

The husband’s parents

3^rd Respondents

REASONS FOR JUDGMENT

[In this judgment the parties will be referred to as ‘husband’ and ‘wife’ to assist in later editing to ensure anonymity in publication]

Proceedings

1. Proceedings were instituted in this Court in March 2006 by the wife filing an application seeking parenting and property orders.  The husband later filed a response seeking different orders in both proceedings and that included an application to set aside a mortgage registered over the parties’ home at C in favour of the wife’s mother.  This saw the intervention of her mother [second respondent] who sought certain relief including, amongst other things, delivery up of vacant possession and payment of principal and interest owing under the mortgage agreement. 

2. It is not necessary to go into the detail of this satellite litigation because on the last afternoon of the last day of the hearing agreement was reached about the husband’s dispute with the second respondent, consent orders were made, and the second respondent exited from the proceedings.  The orders of 2 February 2007 are in these terms:

   1.The application made by the Husband for orders 1, 2 and 3 of the Husband's Response to an Application for Final Orders ("Response") filed 11 May 2006, and so much of any other part of that Response which seeks relief as against the Second Respondent, be dismissed.

   2.That the Husband's Amended Cross-claim filed with leave in this Court on 31 January 2007 and marked Exhibit 7 be dismissed.

   3.That at the expiration of 21 days from the date of these orders the Husband and the Wife give vacant possession to the Second Respondent of the premises situate at and known as [C], New South Wales being the land contained in folio identifier […] ("the Property").

   4.Order that the Husband and Wife pay to the Second Respondent the sum of $2,306,815.52.

   5.Order that the Husband pay to the Second Respondent the Second Respondents costs of these proceedings, agreed at $249,500 inclusive of GST.

   The Court notes the agreement of all parties that the Second Respondent will refrain from exercising her power of sale as mortgagee under the mortgage dated 29 November 2003 registered number […]("the Mortgage") of the Property for a period of 6 weeks from the date of these Orders subject to and conditional upon the following:

   (a)The Husband and Wife provide to the Second Respondent within 7 days a signed agency agreement appointing a real estate agent as agreed between all parties or in default of such agreement such agent as shall be nominated by the Second Respondent to submit the Property to public auction within 6 weeks of the date of these orders.

   (b)The Husband and Wife shall forthwith, and in any event within 7 days of the date of these orders, appoint an independent solicitor as agreed between all parties, and in default of such agreement, as nominated by the Second Respondent to act on the sale of the Property.

   (c)The auction to take place within 6 weeks of the date of these orders by such auctioneer as is agreed by all the parties, and in default of such agreement as nominated by the Second Respondent.

   (d)The Property is sold at the said auction.

   (e)The reserve price for the said sale be set at $4.15 million, or such other price as all parties shall agree, or if the parties are unable to agree, at the reserve price recommended by the selling agent and auctioneer appointed for that purpose, and in the event of disagreement between them, at the mean of their recommended prices.

   The Court further notes the agreement of all parties that the furniture in the house on the Property may remain in the house until a contract for the sale of the Property is exchanged or the property is sold at auction.
   The Court further notes the agreement between the Second Respondent and the Husband that the Second Respondent will first proceed to satisfy the liability of the Husband to her under Order 5 from the proceeds of sale of the Property and will not otherwise proceed against the Husband personally in respect of the said liability unless and to the extent that there are insufficient proceeds to meet that liability.
   The Court further notes the agreement between all parties that the Second Respondent is entitled, as mortgagee pursuant to the Mortgage, to receive from the proceeds of sale of the Property payment sufficient to discharge in full her entitlement to payment under Orders 4 and 5, and interest thereon, together with any further costs and expenses which she incurs in connection with the sale of the Property, in priority to any payment to the Husband and the Wife.
   Note: "all parties" means the Husband, the Wife and the Second Respondent.

3. While the hearing was pending, the husband’s parents filed an application seeking parenting orders in their favour, in particular for their grandson to spend time with them regularly at times specified.  Their application was later amended and further amended by a minute of order tendered at the hearing.  The detail is not relevant now because parenting issues were resolved and orders made by consent on 30 January in the course of the hearing, not only as between the parents but also as between the parents and the paternal grandparents.  The independent children’s lawyer who had been appointed by earlier order supported the making of those orders.  They are in these terms:

   “1.      That the child, [a son], born 7 November 2003 live with the Wife.

   2.        That the said child spend time with the Father during the following periods and subject to compliance with Orders 3 and 5 hereof:-

   i.(a)     That subject to Order 3 from 9am until 3pm on each Wednesday and Sunday commencing 4 February 2007 and 7 February respectively.

   ii.(b)    That these periods shall be supervised as follows:-

   i)         By Dial-An-Angel for the period from the making of these orders until the Health Care Professional appointed pursuant to Order 5 hereof has issued a report advising that the Husband has demonstrated compliance with all appointments, investigations, treatments and recommendations with such report to be prepared on or before six (6) weeks from the date of the initial appointment.

   ii)       From the date of the report as prepared in accordance with Order 2(ii)(b)(i) above by [the husband’s parents].

   3.        That without prejudice and admissions, the Husband be restrained from consuming any alcohol or non prescription drugs or for a period of twenty four hours prior to any time he spends with the said child.

   4.        That in the event that the Husband appears to be affected by alcohol or any non prescription drugs then the Father’s time shall be suspended or terminated by [the Third Respondents] and the Third Respondents shall notify the Wife as soon as practicable.

   5.        That the Husband shall forthwith attend upon health care professionals as nominated by [Dr A] for the purpose of seeking investigation and/or treatment for any substance abuse or other disorders and being in accordance with the recommendations contained in [Dr A’s] report.  That further the Husband shall attend for such testing, treatment and for such duration as the said Health Care Professional shall recommend.

   6.        That the Independent Child’s Lawyer shall forward [Dr A’s] reports to the said Health Care Professional referred to in Order 5 above.

   7.        That the said Health Care Professional to forward, in a timely fashion any reports, test results or other relevant correspondence to the Independent Child’s Lawyer who shall forward such reports to the Wife, Husband and Third Respondents.

   8.        That in the event of the Husband failing to attend upon and complying with the Health Care Professional’s recommendations and/or treatment then the Husband’s time with [the son] and being in accordance with Order 2(i)(a) hereof shall be supervised by a supervisor employed by Dial-An-Angel.

   9.        That [the Third Respondents] spend time with the said child as follows:

   a.        From 3pm until 7pm on each alternate Wednesday.  The first such period of time being the 7 February 2007.

   b.        From 6pm on Friday until 10am the next day on one occasion during November 2007.

   c.        During 2008 and in each year thereafter for two weekends per calendar year from 10am Saturday until 6pm Sunday, with the dates to be agreed to by the Wife and the Third Respondents and failing such agreement by the Third Respondents giving not less than four (4) weeks notice in writing.

   d.        That [the Third Respondents] shall ensure that the said child is not left in the sole care or removed from their care by the Husband.

   10.      That to give effect to Orders 2(i)(a) and Order 9 hereof the Third Respondents shall cause the said child to be collected from the Wife’s residence at the commencement of the time the said child is to spend with either them or the Husband and the Wife will cause the said child to be collected from the Third Respondents residence at the conclusion of those times.

   11.      That pending the said child attending school the Wife be restrained from arranging for the said child to attend pre school at times when the said child would be in the care of the Father or Third Respondents.

   12.      That all parties be and are hereby restrained from denigrating one another in the presence or hearing of the said child.

   13.      That the Order for the appointment of the Independent Child’s Lawyer continue for a further period of twelve (12) months.

   14.      That the Wife, Husband and Third Respondent pay the costs of the Legal Aid Commission as follows:

   a.        $2,4199.99 within six (6) months from the date of these orders.

   15.      That the parties have liberty to apply on the giving of seven (7) days notice in writing.

4. It remains to determine the parties’ property claims. 

Approach – property settlement

1. Section 79 empowers the court to make such orders as it considers appropriate altering the interests of parties to a marriage in property, including an order for a settlement of property in substitution for any interest in the property.  It is not to do so unless it is satisfied that in all the circumstances it is just and equitable to make the order and in considering that question it is obliged to take into account the various matters set out in s 79(4).  A long line of cases at appellate level establish that the first step in that process is to identify the property and ascertain its value; the second step is to evaluate the contributions of various kinds each have made; the third step is to consider adjusting the contribution assessment after taking account of any relevant factors set out in s 75(2); and finally, it is necessary to stand back and review the outcome to ensure it brings about a just and equitable distribution of property in all of the circumstances [see eg. Ferraro and Ferraro (1992) 16 Fam LR 1].

Evidence

1. A great deal of evidence was given by all parties but much of that fell away when the dispute between the husband and the second respondent and the parenting proceedings were resolved.  In as much as the evidence canvasses history relevant to the remaining property dispute, the core developments are for the most part uncontentious.  In as much as there is dispute about the history, that will be discussed and findings made about it in the course of recording events relevant to the decision. 

2. Mr F valued chattels and there is no dispute about those figures although some chattels were not valued by him.  Mr O valued the C property which is to be sold and the market will determine that now.  Mr J, accountant, was engaged to report on matters related to the mortgage/loan issues.  There was also a report tendered from Mr S, accountant, related to certain financial accounts and the wife’s loan account with a company. 

Orders sought

1. In documents filed over time the orders sought by each party has shifted in the detail, but it is accepted that their major asset, the C home, is to be sold.  Their remaining differences relate to the proportion of net proceeds each should receive having regard to their other property, more particularly what is to be paid out of the gross proceeds before distribution of the balance remaining between them.  That is significant when regard is had to the terms of the last minute resolution of the dispute between the husband and the second respondent and the subsequent amendment of the husband’s application at the outset of his counsel’s closing address.  After making provision for sale, the orders ultimately sought are these:

   ‘………on settlement of the sale of the former matrimonial home the proceeds of sale to be distributed as follows:

   a.In payment of estate agents commission and legal costs on sale;

   b.In repayment of the principal and interest due under the mortgage in favour of the second respondent

   c.The balance will then be distributed in this order and priority:

   (i)65% to the husband;

   (ii)35% to the wife and from her share the wife is to pay the husband:

   (a)$850,000

   (b)a sum equal to all of the interest paid to the second respondent pursuant to paragraph b. hereof

   (c)50% of the costs the husband has agreed to pay to the second respondent by consent orders made 2 February 2007

2. The wife’s proposal about distribution of the proceeds, however, as set out in her amended application filed 24 January 2007, is in these terms:

   ‘….the proceeds of sale be distributed as follows:

   a.in payment of estate agents commission and legal costs on sale;

   b.in repayment of all principal and interest due and payable to the mortgagee [the Second Respondent] (“the mortgagee”) pursuant to the first registered mortgage number…..

   c.in repayment of all monies owing by the wife to [J] Pty Limited (“[J]”) save and except monies incurred by the wife in costs and disbursements in the proceedings;

   d.as to the balance of proceeds of sale:

   (i)       to the wife 70% plus an amount equivalent to 70% of all interest paid to the mortgagee by way of accrued and current interest pursuant to the mortgage;

   (ii)      to the husband 30% less an amount equivalent to 70% of all interest paid to the mortgagee by way of accrued and current interest pursuant to the mortgage. 

3. These positions mark out a considerable gap in outcome.  As for their personalty, they agree there is to be a distribution of furniture and other chattels.  The wife proposes a division by agreement and in default of agreement distribution by the ‘two lists’ method provided she is entitled to retain the furniture and effects set out in annexure “A” and they are omitted from the lists.  They would each retain whatever other property they now own. 

4. Apart from how the payments to the second respondent are to be dealt with, there are other disputes to be resolved about what makes up the net assets and therefore what property is available to be divided.  They will be addressed later. 

Background

1. The husband (41) and the wife (40) met in 1987 while both were studying at university.  The husband graduated in 1989 with a degree in law and commerce and the wife graduated in 1991, also with a degree in law and commerce.  They married in January 1994.  They had not lived together beforehand.  Their son, S, was born in November 2003.  Their final separation occurred in December 2004 and they were divorced in 2006. 

2. When they married neither had any assets of any real significance to these proceedings.  They had a joint interest in two paintings they had acquired together.  The wife had two other paintings, a motor vehicle, some jewellery and a small superannuation entitlement.  She had no debts. The husband had a motor vehicle, some furniture and personal effects.    He owed $6,000 on his credit card, paid by her father. 

3. The wife was [and remains] a beneficiary of a discretionary family trust [the RF and J M…Foundation] whose trustee is J Pty Limited [J].  She is the secretary of J but she is neither a director nor shareholder.  J Pty Ltd, owned and controlled by her mother, is the registered owner of commercial property in Sydney.  The husband is also a beneficiary of a family trust, presumably controlled by his parents or one of them. 

4. At the time they married the husband was employed with a law firm in Sydney and the wife was employed as a store manager with a retail outlet.  Not long after the marriage they moved to New York where the husband had accepted an offer of employment with a New York law firm.  They lived in New York for around 2 ½ years until August 1996. 

5. Initially the wife sought employment in New York as a fashion journalist but she was unsuccessful and a few months later she took employment as assistant editor at a property news organisation.  She remained working there until they left New York.  Her earnings were quite modest compared to the much more substantial earnings of her husband. 

6. In August 1996 they moved to Hong Kong where the husband had been transferred.  The move is a contentious issue and they each bring a different perspective to it.  The husband’s position is that he wished to remain in New York and the move was made to enable the wife to be closer to her family in Sydney.  That is probably how it was, though the move turned out to be financially lucrative because their financial circumstances improved considerably in the six years they remained living there, attributable largely to the husband’s substantial earnings.  In 1998 he sat for and passed the New York Bar exam.  Around mid-2000 he accepted an offer of a partnership with a UK based law firm though his position remained located in Hong Kong. 

1. While living there they commenced share trading and accounts were established in Sydney and Hong Kong for that purpose.  In all likelihood the husband managed the investment portfolio. 

2. After their arrival, the wife took a position with a newspaper for a short time before she obtained employment as a marketing manager with a luxury goods retailer.  But this was short lived because she came to Sydney not long afterwards and stayed with her parents until January 1997 when she returned to Hong Kong.  In May 1999 she again returned to Australia.  Her father was in ill health and he passed away in October of that year.  She remained here throughout that time - the husband visited on several occasions - and she returned to Hong Kong in January 2000.  She then worked as a freelance fashion homeware stylist and journalist until May 2002 and earned a relatively modest income of no more than $30,000 per annum.  Over the years she accompanied the husband on occasions on international business trips. 

3. They came to Australia in December 2001 and, in a state of deteriorating health, the husband was hospitalised in January 2002.  This was to be the first of several hospitalisations over the next few years.  He discharged himself after several days and his whereabouts were unknown for a number of weeks.  As events developed they returned to Hong Kong, but he did not return to work and his arrangement with the law firm was terminated in March 2002.  After his unsuccessful attempts to secure other employment in Hong Kong, they returned to Australia in September 2002 and they have remained living here since. 

4. It is the wife’s case, which I accept, that by this time the husband’s health had deteriorated considerably.  The return to Australia was her suggestion.  While this was resisted by the husband, who could see no opportunity here for his level of legal skills, they returned nonetheless. 

5. At the time they had savings in the order of $2 million which had been accumulated during the years of absence, mostly related to the time they were in Hong Kong. 

6. Initially they lived with the wife’s mother in her apartment and then they moved to live with the husband’s parents in C.  There was a brief separation in January 2003 [there had been many earlier separations] when the wife left and returned to her mother’s apartment, but after reconciling they resumed living with his parents. 

7. After the return to Australia the husband did not take up paid work.  As he explained it, he gave his resume to several legal recruitment firms but this did not result in any offers of employment in Sydney.  He also made contact with firms based in the United States with offices here but there was no success there either. 

8. From 2002 the wife undertook work for J Pty Ltd related to its management of commercial properties and the property portfolio generally and she contributed her earnings of $2,400 net per month to their living expenses.  Apart from their savings, this was their only source of income.  During the separation in January 2003 the wife bought a 1997 Porsche for $79,000 which came from money she borrowed from J Pty Ltd. 

9. In June 2003 the husband was admitted to hospital for the second time, on this occasion under the supervision of a psychiatrist.  It was a month before he was discharged. 

10. In October 2003, after a lengthy search for a suitable home, they purchased a home at C for $3.6 million.  In circumstances that were controversial earlier [and remain so as between the parties] they borrowed $2.1 million from the wife’s mother who obtained the funds partly from money she had on deposit and partly from repayment of a loan to J.  The terms of the advance were stipulated in a mortgage document signed in circumstances that were also controversial earlier.  That provided in part for the payment of interest on the $2.1 million after 1 November 2005 at the rate then applying to home loans and reserved the payment of interest after that date as subject to waiver at the discretion of the mortgagee, effectively the wife’s mother.  The balance of the funds necessary to complete the purchase came from their own funds which were transferred to Australia. 

11. After settlement in late October 2003 they moved into the C home.  At the time they also had a portfolio of shares, accounts with Citibank in New York and with Westpac in Sydney, and substantial artworks and furniture and effects which they had begun collecting while in New York.  The wife also had the Porsche she had acquired earlier in the year and around this time there was purchased in the husband’s name a Peugeot motor vehicle for $34,000 which came from the first home owners grant plus savings.  Their son was born shortly after the settlement. 

12. By this time the wife was receiving an income from J Pty Ltd of $3,500 net per month and that continued until December 2004.  She contributed the money she received from J Pty Ltd towards their living expenses. 

13. With their marriage continuing its downward spiral throughout 2004, the husband was hospitalised again in September 2004.  It is indicative of the gravity of his condition that he was in an induced coma for 30 days, in intensive care for 6 weeks, and in hospital for 3 months before being admitted to a rehabilitation hospital. 

14. These hospitalisations are related to what is an issue here: the husband’s abuse of alcohol during their relationship and its impact on his behaviour, not only in so far as that is relevant to the decision about parenting orders [now resolved] but also to the assessment of contributions in their property dispute.  The husband’s evidence denying or minimising substance [alcohol and illegal drugs] abuse and the adverse impact on his behaviour makes a credit finding necessary.  But not a lot needs to be said about it, nor was there in closing address, because his own evidence makes the result incontestable.  His reliability was convincingly impaired by the contradictory and inconsistent nature of much of it, as the transcript would demonstrate.  Having said that, there is a submission that the husband worked long hours extremely hard over the years and he was extremely efficient at what he did.  That, it is submitted, is inconsistent with any finding that he was somebody regularly affected by alcohol, at least up the point when they returned from Hong Kong.  But whatever apparent logic that argument might attract, the longer view of the facts suggest otherwise.  His state of health exhibited by the time of the first hospitalisation in early 2002, which saw his employment cease some months afterwards, attests to that and then there were further hospitalisations to follow, including an admission in an extremely grave state in 2004.  It would be naïve to think that state was achieved over a relatively short period.  What the wife said of the history of alcohol and other drugs in their relationship can be accepted and to the extent the husband put that in dispute, her version is preferred.

15. The history begins very early in their relationship.  Alcohol and illegal drugs were taken in the late 1980’s but were not a problem initially.  With the move to New York and long working hours, he began to drink more steadily, he continued to smoke marijuana regularly, and he was using cocaine.  He became reclusive and uncommunicative and on occasions he became extremely agitated and argumentative.  It affected their relationship as well as his physical health.  The wife expressed concerns to his family and had regular conversations about his drinking and weight loss with his parents.  His drinking increased after the move to Hong Kong and he became increasingly belligerent and abusive.  In 1996 when she was in Sydney there was a meeting between their parents about it.  He went on binges to the point of passing out regularly and he regularly drank until he was semi comatose.  He also used cocaine.  Holidays to Europe in 2000 were disastrous; he drank regularly, he was obnoxious and argumentative and there was an episode in Milan involving police which led to her making her way to London without him.  At times he was violent towards her and there were frequent short separations.  His health deteriorated and he suffered memory loss, irritability, weight loss and insomnia.  Over the years while living in New York, Hong Kong, and during visits to Sydney she had consulted counsellors to assist in dealing with the problems linked to his alcohol and drug abuse. 

16. There was a reprieve after the first hospitalisation in early 2002 but this was short lived and his behaviour resumed and his health remained in jeopardy.  This was also the pattern following the second hospitalisation in mid-2003.  After the birth of their son the relationship deteriorated significantly.  He was physically violent towards her and threw things around the house.  Police were called to the home in March 2004.  In June 2004 he was arrested for drink driving and had his licence suspended.  In July 2004 she obtained an interim apprehended violence order against him, though she did not ultimately proceed to a final hearing.  This was followed by another hospitalisation in September 2004 in a dire condition and that is where he remained for some months.  But after his discharge and later in December 2004 he was again arrested for drink driving and also charged for driving without a licence. 

17. She left the home and the marriage on 31 December 2004, taking her son with her, and she went to live with her mother and step-father.  That is where she remains living.  The husband has remained in occupation of the C home, at least until required to vacate it by agreement with the wife’s mother. 

18. Since the separation there have not been a lot of developments relevant to the property dispute:

    (a)From January 2005 the wife facilitated contact between the child and his father by taking the child to the home at C or to the home of the paternal grandparents up to several times a week.  This ceased in March 2006 and there was no contact until orders were made on 28 June 2006 providing for supervised contact between the child and his father on Wednesdays and Sundays each week for 4 hours.  The supervision was undertaken by staff from Dial-an-Angel and usually occurred at the home of the paternal grandparents who were also usually present. 

    (b)In February 2005 she sold the Porsche which had been bought with funds from J Pty Ltd two years earlier.  She received $45,000.  She kept $30,000 which she deposited to her bank account and used towards living expenses for herself and the child and she paid the balance of $15,000 to J Pty Ltd in reduction of her loan account.  She then had the use of the Peugeot. 

    (c)Other money for her support and S’s needs have come from government benefits, assistance from her mother, not only with accommodation but with the costs of food and other expenses such as babysitting and holidays, and loans from J Pty Ltd which has also been the source of payment of legal costs and disbursements related to these proceedings.  She has received no distributions from the family trust and has done no paid work for J Pty Ltd.  She received no child support from the husband for a time until an assessment issued for payment of $6 per week.  She has been responsible for virtually all of the child’s expenses including medical, education and extra curricular expenses. 

    (d)From funds available to her, she has paid various expenses related to the C home as set out in paragraphs 229 and 230 of her primary affidavit.  At some point she removed some of the contents, later identified in schedules. 

    (e)The husband has paid some of the council rates, water rates, utilities related to his occupation and he has maintained the property.  He has had no income and has met this expenditure as well as living costs and some of his legal fees from the sale of shares, credit cards and money advanced by his father. 

    (f)In September 2005 the wife’s mother notified them she will be requiring payment of interest under the mortgage at the rate of 7.32%.  It was not paid and the default provisions of the mortgage became operative, leading to her claims for possession and repayment of the loan with interest. 

    (g)In the face of the husband’s failure to agree to a sale of the home, the wife filed an application on 1 May 2006 seeking orders including an order for sale of the home.  Interest had been accruing, on her calculation, at the rate of $3,250 per week and no money had been paid.  As well as the principal and interest the wife’s mother maintained they owed her $12,000 for legal costs and disbursements related to the loan agreement. 

19. It is the wife’s case, which is accepted, that her mother has assisted them financially in ways not yet mentioned.  She provided $11,000 to become established in New York, she regularly gave them gifts of money, she paid return airfares between Sydney and Hong Kong, and she provided her with a credit card for the purchase of special items.  On her estimation her mother subsidised her expenses while they were in Hong Kong to the tune of about $20,000 per annum.  After the child was born her mother purchased nursery furniture and paid expenses related to the birth.  Her financial support since the separation was mentioned earlier. 

20. It is the husband’s evidence, which can be accepted, that his parents have also assisted them.  When they lived with his parents after the return to Australia a lot of their expenses were paid by them.  He has had further financial assistance since separation, part of which has been used towards the maintenance of the home and paying rates and the like. 

21. It is also the wife’s case that she made various non-financial contributions over the years they were together in ways set out in paragraph 231 of her primary affidavit.  They are unchallenged and can be accepted.  Added to that, she was primarily responsible for running their household, though it is accepted there were cleaners engaged to assist with domestic chores both in New York and Hong Kong.  It is probable the husband at times did home cooking.  Her responsibility for the care of the child since his birth cannot be doubted. 

22. The wife’s current income consists of two government benefits of $119 per week and $246 per week plus child support of $6 per week.  As for the future, she says she does not anticipate returning to paid work until the child is much older.  She may be able to carry out some paid work for J Pty Ltd when he commences school.  She remains living with her mother and step-father but, as she explained it, the constraints of the limited space of living in an apartment which is also her mother’s place of business are not ideal. 

23. The husband, who presently has no source of income other than his parents, does not see any prospects for employment in his field of expertise and so he has pursued other potential means of deriving an income.  As he explained it, he has an interest in fine food preparation and last year he devoted considerable time to preparing to compete in a televised food contest and he has attempted to locate premises suitable for a restaurant he would like to establish.  At the time of hearing this had not come to fruition.  He has also devoted time to developing a clothing line for children and that had reached the stage of some garments being produced in Bali, but it is still in early stages.  Nonetheless, he hopes to be able to establish a business and earn income from these ventures in the future. 

24. Before leaving discussion of the background and moving to other matters, it will be convenient to address arguments by counsel about the view to be taken of certain aspects of the evidence. 

25. The first relates to the question of approach to the payment of interest to the wife’s mother from November 2005.  The amount of interest payable is now substantial at $194,014 and the legal costs are $12,801 making a total payable of $206,815.  The consent orders which led to the exit of the second respondent after the close of the evidence provides for this amount to be paid.  Nonetheless, the husband seeks to share the responsibility for payment of this interest and costs and the wife’s case is that he should take responsibility for it. 

26. Mr Richards submits the husband ‘wasted’ their joint assets by embarking upon the course of conduct that he did and that interest was incurred by reason of the position he steadfastly took and maintained.  The wife’s position was that the home should be sold before the interest began to run.  That is supported not only by her evidence about it but by correspondence directed to the husband by her solicitors seeking his agreement to put the property to sale and there is further support for it in the application she ultimately brought in May 2006 in an effort to have the home sold which, inferentially, would have minimised the interest burden.  None of her approaches saw any willingness by the husband to sell the property, either before the November 2005 date or afterwards until the last day of the hearing when he gave his consent to sale.  That his position was doomed to failure, it is submitted, is apparent from concessions he made in the course of his evidence and his actions amount to a calculated waste for which he, and not the wife, should bear the responsibility. 

27. The principle underlying this submission derives from authority which establishes that economic losses suffered by the parties should be shared by them just as gains are shared, though not necessarily equally, but that will be displaced in circumstances where losses have been occasioned by deliberate waste or dissipation of assets – see Kowaliw and Kowaliw (1981) FLC 91-092. And so the question arises whether the situation outlined falls within that discussion in Kowaliw at 76,643, 44:

    ‘Marriage is for most couples an economic partnership.  Married couples live together and work together with the ultimate object of purchasing a home, paying it off, acquiring other assets with the overall object of attaining a higher standard of living.  The reported decisions in respect of applications for settlement of property under sec.79 of the Act are unanimous that both parties should share the economic fruits of a marriage, having regard to the provisions of sec. 79(4) and sec. 75(2), although not necessarily equally.

    Is not, however, the converse equally sustainable?  In other words, should not financial losses incurred by parties to a marriage or either of them, whether incurred jointly or severally, be shared by them in the same manner as the financial gains?

    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.’

    [See also Browne and Green (1999) FLC 92-873].

1. What is required in order for this guideline to apply is a finding that the husband had ‘embarked upon a course of conduct designed to reduce or minimise’ the value of the parties' assets or that he had acted ‘recklessly, negligently or wantonly’ with the assets thereby causing their reduction in value.  Obviously the submissions for the wife relate to both strands. 

2. On the one hand, there can be no doubt the husband did resist the wife’s attempts to sell the home before interest would begin to run in November 2005 and he did so in the face of an unmeritorious case which he maintained until closing submissions at the hearing and after he had given evidence earlier that plainly demonstrated a lack of evidentiary support for his position.  But whatever might be said of the conduct of the proceedings in any later costs claim, it is difficult to bring the issue to account in the contribution assessment or, as Kowaliw suggests, as a s 75(2) adjustment.  I say that because, in the circumstances of this particular case, there is no way of assessing in any realistic way the underlying premise; namely, the financial consequence of his refusal resulted in financial detriment to the parties or, to put it another way, a diminution in value of assets ultimately available. 

1. Had a sale occurred by November 2005 there would certainly be no interest [now a hefty sum of over $194,000] deducted from the proceeds before distribution.  But I find it difficult to say they would have been better off by selling early and making that saving when there is no evidence to back up that conclusion; that is, there is no evidence of the value of the property at that time and therefore what they might reasonably have expected from a sale.  To say they would have been better off financially by an earlier interest free sale is unsupported surmise.  To the contrary, it may well be that a sale at the current agreed value – or whatever it actually sells for – puts them in a better financial position even if they have to pay the interest and even if they had invested the proceeds of a November 2005 sale until now.  But again that is unsupported. 

2. On the figures to be set out shortly, it will be seen that the increase in value between a purchase at $3.6 million and sale at $4.15 has been largely absorbed by the interest/costs component payable to the mortgagee and the portion the parties would receive in return for their $1.7 million investment would be about $143,000 from which there would be deducted sale costs.  This leaves very little increment on their own initial investment, despite an increase in value over the whole time of around $550,000.  But even looking at it from this perspective does not help the wife’s argument of financial detriment because the missing piece of evidence, an opinion about value at the end of 2005, remains the problem. 

3. In the result, while Mr Richards’ argument certainly has its attraction, financial detriment is not an inevitable conclusion or the only conclusion from delay which attracted an interest obligation, and to draw that conclusion would be to make an unjustified leap.  It follows I find the argument unsustainable and must put it aside in any assessment to follow. 

4. There is also an argument from Mr Lethbridge to the effect that the orders dealing with sale proceeds should be structured so as to have the wife held responsible for payment of $850,000 of the $2.1 million to be repaid to her mother.  This appears to be founded on an alleged representation the wife made to the husband of this amount being provided by her mother as an advance against her inheritance or a gift or something of that kind rather than provided by way of loan.  The submission has no merit.  It is not supported by any credible evidence from the husband, the mortgage document he signed is inconsistent with it, and when put to the wife and her mother they rejected it.  As I find, there is no support for any representation about $850,000 in the arrangement and it follows there will be no provision for the wife to pay such sum to the husband from her share of the proceeds, as his amended application proposes. 

Assets and liabilities

1. The parties’ current assets and liabilities are set out below.  They are agreed figures for the most part and to the extent findings are necessary to explain the figures they will follow thereafter.  Of course the home is to be sold and that may very well be for a price different from that agreed at the hearing.  Nor is it known what the sale expenses will be.  These uncertainties will be dealt with by orders for a proportionate share of the net proceeds but the agreed figure will be used here merely to reflect their approximate positions in dollar terms. 

   1. Joint - home

   C home             4,150,000

   Less

   Mortgage plus interest plus fees       2,306,815

   1,843,185

   2. husband

   HSBC shares   67,793

   Other securities   12,000

   Citibank     1,000

   Alpha motor vehicle     2,500

   Paid legal fees   20,266

   Superannuation BT   4,500

   Total:   108,059

   3. wife

   Bank accounts      3,338

   Peugeot motor vehicle   20,000

   Paid legal fees  100,531

   Solicitors trust account   45,000

   Superannuation REST   3,052

   Total:  171,921

   Less

   Loan J Pty Ltd           145,531

   Credit cards                   3,289         148,820     23,101  1,974,345

   4. joint – to be distributed in specie

   Contents [at his parents]  330

   Contents [at her mother’s]                 24,670

   Contents [in storage]                  275

   Contents [at her mother’s]                 12,100

   Contents C home         156,900

   Contents C home   10,923   205,198

   Total net assets:  2,179,543

1. It will be noted that I have separated out the items of furniture and other household chattels.  That is because they are to be distributed in specie and their removal will leave the other items to be distributed in proportions assessed. 

2. Their superannuation entitlement is included with other property.  It is too minimal to warrant separate consideration. 

3. Mr Lethbridge contends [relying on paragraph 77 of the husband’s affidavit] there should be added back as a notional asset of the wife’s the sum of $21,000 withdrawn by her from the bank account.  His submission located the timing at the time of separation but, as Mr Richards pointed out, the withdrawal was made in July 2004, months before separation, and the wife was not asked anything about it when the opportunity presented.  It could not be inferred the money was still there at separation and nor could it be inferred it was spent in a manner requiring her to be solely responsible for it.  I accept there is nothing to justify this money being seen as a notional current asset in her hands. 

4. For the wife it is contended $28,000 should be added back to the husband’s assets.  This sum represents money held in an account with Citibank in the United States at separation [$22,000 US].  The husband agreed he had retained and spent the money.  Rather than be added back as an asset, regard can be had to the fact he had that money available when post separation contributions are assessed. 

5. There are differences about the treatment of paid legal fees and so far as the wife is concerned that is tied up with the treatment of her loan account with J Pty Ltd.  The debt the wife has to J Pty Ltd currently is agreed at $270,171 and of that amount it is also agreed $145,531 is referable to paid legal fees.  The balance of $124,640 is referable to other expenditure by the wife, including the debt of $67,500 or thereabouts [see annexure 5 to exhibit 3] at the time of separation.  Mr Richards does not dispute adding back the wife’s legal fees provided the amount borrowed from J Pty Ltd is included as her debt.  The husband disputes whether the loan account debt is repayable at all. 

6. On the state of the wife’s loan account generally, it is the result of transactions through the account both pre-separation and post-separation.  The drawings post-separation have been treated differently, not as a salary offset by profit distributions at the end of the year, but as a loan.  That said, the wife has not been undertaking work for J Pty Ltd in that period.  In circumstances where she has had little available in the way of funds from joint assets accumulated during the marriage, next to no financial support from the husband with her expenses and S’s needs, it is entirely understandable that she would look elsewhere for funds and there is no dispute she did so to the extent indicated from J Pty Ltd. 

7. As to $145,000, her legal costs were paid from drawings.  As for the balance remaining of $124,640, that represents drawings since separation but also, in part, the balance owing at separation which included the money used to purchase the Porsche.  But that was sold and part of the proceeds was used to also fund post separation living expenses.  The use of funds for living expenses to that level does not seem unreasonable in all of her circumstances.  But of course that does not mean the amount is repayable.  If not repayable on the probabilities then it should not be brought to account directly here as her debt. 

8. On that issue, Mr Lethbridge’s submissions are relatively brief.  He suggests it can be inferred the ‘loan’ arises more as a consequence of the present proceedings than of money being due and payable.  He points out there has been no demand for repayment and the Trust has provided assistance to the wife over a number of years and therefore it has been the source of a long history of benefaction.  Moreover, there was a change in the way distributions were made from a time near to separation and in any event exhibit 10 demonstrates the Trust ultimately will become the alter ego of the wife so a call for repayment is really, as he put it, ‘robbing Peter to pay Paul’.  That said, he concedes drawing the inference urged would require rejection of the evidence of the wife’s mother on the topic and he notes that when it was put to her she rejected the proposition that she would not demand repayment. 

9. Even so, acknowledging her evidence that she does require repayment, it seems to me more probable than not that the wife will not be called upon to repay the amount owing, at least in the short term or in the more immediate foreseeable future.  I say that because that scenario sits rather oddly with her mother providing on the one hand financial support post separation as described in the evidence and on the other insisting on repayment of a debt when it comes through J Pty Ltd which she controls.  It may be that later management of the Trust will see the debt reduce, such as being offset by distributions, or it may remain at the current level for longer yet.  But I think it more probable than not that the wife will not be called on to repay it in any period soon so as to justify deducting it as a liability here.

10. That said, there is no reason the component of her loan account drawings to pay legal costs should benefit the husband by being added to her assets, even if she does not have to repay the sum in the immediate future, or even at all.  So while her loan account should not be brought to account as a debt requiring immediate or reasonably foreseeable repayment, nor should her paid legal fees be brought to account vis-a-vis the husband as an asset. 

11. The husband’s situation is a little different.  He has paid a total of $51,266.  But in his case part of the fees paid came from the sale of assets accumulated in the course of the relationship, not just from borrowings which are said to amount to $31,000 for legal fees.  He gave a figure of $35,000 for the sale of the shares but he gave no breakdown of the component for legal fees.  Presumably the deduction of borrowings from the amount paid is the answer; namely, $20,266.  The rest of the $35,000 was used for living expenses [see his financial statement].  This augments the funds in the Citibank account available to him from assets accumulated during the relationship.  What has been brought to account is the amount paid for legal fees from joint assets, $20,266, and his use of joint assets for living expenses will be taken into account in assessing post separation contributions. 

12. The husband’s obligation to pay costs to the second respondent is reflected in the orders he consented to on 2 February.  At this stage it is proper to regard that as his obligation from whatever he receives as his entitlement.  In as much as he might seek to have the wife bear part of that burden in my opinion that is a costs argument and not to be evaluated here. 

Evaluation of contributions

1. A global approach has been taken by both counsel in making their submissions and that is appropriate [see Norbis v. Norbis (1986) FLC 91-712].

2. The parties were married for almost 11 years and their son, now aged less than 3½ years, was born a little over a year before their separation 2¼ years ago.  Neither brought any assets of enduring significance to the relationship and so all they have now has been accumulated over that time by efforts of one kind or another from both. 

3. For the first 8 years or so, until early 2002, the husband was in full time employment earning a high salary.  They had a comfortable material lifestyle over those years and significant savings and investments were accumulated in that time.  There is no reason to doubt the husband’s evidence that he had a high level of skills and he carried a massive workload which was highly complicated, stressful and time consuming.  It is accepted he worked hard and long hours and that saw him progress in his field.  But it had a price and, as will be discussed shortly, the price was paid not only but him but also by his wife.  For her part, her earnings during times she was in employment were much more modest and so her direct financial contributions from earnings throughout those years up to 2002 bear no real comparison with his.  Her family provided financial assistance during those years in various ways she described and that must be added to her contributions up to that point.  On their return to Australia she was the one who mainly worked for J Pty Ltd and they were able to derive a steady though not large income from that source until their separation.  The arrangement must have meant they did not have to dip into their capital for every single expense they incurred that was not met by either of their families. 

4. Indeed, the evidence demonstrates they did receive assistance in a number of ways from their families.  The wife’s mother provided further assistance after their return in various ways, as discussed, up until their separation and the husband’s parents provided them with rent free accommodation and other assistance over the rather lengthy period they shared their home before they bought the C home. 

5. During their time together, outside his work, the husband probably contributed to household tasks by doing some of the home cooking as well as by managing their investments and oversighting their personal finances.  The wife was also involved in their finances to an extent but she was primarily responsible for the domestic chores and running of the household, assisted by paid help over the years until 2002, and she also contributed by organising in a myriad of ways arrangements that related to the husband’s plans associated with things such as his travel and appointments.  She was also primarily responsible for the care of their son after his birth during the year or so prior to their separation. 

6. To the wife’s contributions there must also be added the considerable benefit derived by both of them from the interest free period on a very large loan of $2.1 million for a period of two years which started to run a year or so before separation and continued until November 2005. 

7. The wife has also had the care of their son during the period since their separation with next to no assistance from the husband, either with day to day care and supervision or with child support.  He retained the balance of the Citibank account in the United States and he retained for his own benefit a portion of the sale proceeds of shares not used for legal costs.  Over the past 2 years plus the wife has had to call upon her mother to meet her needs and the child’s needs over and above the government benefit she has received, not only by providing her with accommodation but in many other ways including access to funds held by J Pty Ltd to meet living expenses.  The husband, in the meantime, has had the occupation of the home and while he has met some of the expenditure associated with it, so has the wife paid for some outgoings from the funds she has had available. 

8. In their submissions about contributions counsel contended for different outcomes.  Having opened the case on the basis that contributions would ultimately favour the husband by reason of his high earnings forming part of the funds used to acquire the home, Mr Lethbridge said in closing that the history would result in a small weighting in the husband’s favour but he conceded it would be open to find equality of contribution.  Mr Richards submits, on the other hand, contributions should favour the wife overall.  He does not argue against an assessment of equality of contribution up to separation but he does argue for an adjustment in her favour by reason of post separation contributions which he quantifies at a further 5%, though applied to net assets for which he contended. 

9. Before coming to that, it is necessary to address a submission from Mr Lethbridge, despite his concession of equality, which related to contributions during the course of the marriage.  Those submissions are referable to the wife’s case about the husband’s ‘conduct’ and what Mr Lethbridge called her ‘Kennon style claim’.  Of course that is a reference to the decision of the Full Court in Kennon and Kennon (1997) FLC 92-757 [per Fogarty, Lindenmayer and Baker JJ]. The majority joint judgment was delivered by Fogarty and Lindenmayer JJ and they dealt with the topic at some length, including a review of earlier cases in the Court such as Soblusky and Soblusky (1976) FLC ¶ 90-124; Ferguson and Ferguson (1978) FLC ¶ 90-500; Fisher and Fisher (1990) FLC ¶ 92-127; and Doherty and Doherty (1996) FLC ¶ 92-652; amongst others, and academic writings from various sources. They also canvassed the shift in attitude and levels of increased awareness of the prevalence and adverse impact of violence. Ultimately they questioned ‘whether the well established earlier authorities should be reconsidered and whether domestic violence can be legitimately included within the scope of s 79 without at the same time reintroducing conduct generally as a component of that section….(the) latter prospect would….be inconsistent with s 79 and its history.’  After reference to historical developments in the legislation their Honours said:

   ‘The early decisions of this Court were quick to adopt the view that ''conduct” was no longer a relevant matter under s 79. In pre 1975 legislation, conduct as such was relevant to the determination of property proceedings and, to an extent, those orders were seen to represent social and judicial disapproval of that conduct. It seems to us that in the post 1975 cases the change was to exclude what were otherwise relevant factors under s 79 because they had their origin in conduct.  That is, there may have been a failure to recognise that whilst conduct as such was not relevant to s 79, matters which were otherwise relevant within the s 79 exercise remained relevant notwithstanding that they were based in conduct. The correct position may be that such matters are relevant within s 79 not because they are based in conduct, rather despite that and because they are otherwise part of the legitimate s 79 exercise.’

10. For some reason this identification by their Honours of ‘conduct’ as they defined it being part of the ‘legitimate s 79 exercise’ seems to be almost invariably lost when the issue of violence and s 79 contributions arises.  Their Honours’ ultimate conclusion was expressed this way:

    ‘Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s 79.  We prefer this approach to the concept of ''negative contributions'' which is sometimes referred to in this discussion.’ 

11. Their Honours later went on to say:

    ‘However, it is important to consider the ''floodgates'' argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this Court to fault and misconduct in property matters a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.  

    However, in our view, s 79 should encompass the exceptional cases which we described above. It would not be appropriate to exclude them as a matter of policy because of this risk. It is a matter of commonsense for the lawyers involved and, where that may not be sufficient, it is a matter for a firm hand by the Court at an early stage when a case appears to raise those issues.  

    It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions).’

1. In the decade since this decision, there remains, in my experience, a tendency to conflate the concepts of ‘conduct’ as part of the legitimate s 79 exercise with ‘fault’ for the breakdown of the marital relationship.  The latter became irrelevant upon the introduction of ‘no fault’ divorce, specifically by abolishing the need to prove one or another of a series of forms of ‘fault’ and instead made irretrievable breakdown of the marriage the only ground for obtaining a divorce.  Of course examination of ‘conduct’ that brought about the end of the marriage is quite different from examination of ‘conduct’ that makes up a contribution as described in s 79(4) and the latter is not a back door reintroduction of ‘fault’ in the marriage breakdown through what might be called ‘marital misconduct’.  Academics such as Professor Regina Graycar [Sydney University] and Dr Juliet Behrens [Australian National University] have published on this topic and examined these distinctions.  As appellate authority establishes, the ready contention that ‘conduct is irrelevant’, often heard when violence is raised as an issue in property proceedings, is not necessarily correct. 

2. It is not correct in this case.  Mr Lethbridge submits that the wife’s case would not get over the first hurdle because he submits she failed to link it with the proposition that her contributions were made the more onerous as a result and it would also fail because, except for a few occasions, her evidence is too general to indicate what it was that led to the more onerous contributions. 

3. I do not agree.  In fact in her evidence the wife refers to counselling over the years from as early as the time they were living in New York to difficulties resulting from his substance abuse and she attributes emotional and physical exhaustion to difficulties in the relationship caused by his substance abuse and its impact on his behaviour which in turn reverberated upon the way he treated her.  His conduct, she said, had a deleterious impact on her capacity to further her career over the many years of their relationship.  That is the link Kennon makes necessary and the persistence of this serious problem over many years takes it out of the ‘floodgates’ reservation and puts it into the ‘exceptional cases’ spoken of in Kennon.  There is no doubt the husband had a significant long term problem, with alcohol particularly, and it resulted in grave illness of life threatening proportions in the months before their separation in 2004.  Nor can there be any doubt that his conduct was affected by alcohol abuse, quite adversely so towards the wife over many years in the ways she described.  Her contributions were made in those circumstances and plainly they were made all the more onerous as a result.  Mr Richards says, accurately on the evidence, the circumstances were by no means ordinary having regard to her description of their social life, amongst other things, and rather than receiving support from her husband while living far from her family, he was the source of distress. 

4. Ultimately Mr Richards supports a finding of equality of contributions at separation and so the issue need not be taken any further, but he argues that contributions overall up to now should be assessed at 55/45 in the wife’s favour by reason of her greater contributions post separation. 

5. But in my assessment that would result in a differential that is just a little too weighted one way.  Weighed in the balance, all of their contributions should be seen as approximating equality at separation as argued and conceded.  Their roles differed in many respects but they each in their own way were responsible for the material achievements during those years together.  I also agree there should be some weight given to the wife for the disparity in post separation contributions, more particularly her lack of access to savings and shares or the family home, her reliance on family support, and the significant responsibility she has taken for more than two years for the care of their young son.  However, I tend to the view that a differential of 5% rather than a 5% adjustment in the wife’s favour would be a more appropriate reflection of those circumstances. 

6. Accordingly, I assess contributions overall at 52.5% to the wife and 47.5% to the husband of the net assets. 

Section 75(2) factors

1. The husband is aged 41 years.  He has had a long period of ill health which is undoubtedly alcohol related.  Mr Richards argues against a conclusion that the husband has no immediate prospects of employment or limited future earning capacity.  He takes issue with the suggestion that he would be unable to practice law in New South Wales, whether because of his absence in the field since 1994 or for other reasons related to his ability to obtain a practising certificate.  Mr Richards points out the husband was successful lawyer notwithstanding his alcohol addiction and the fact that he consented to a course of treatment does not mean he is not in good health and able to work.  He argues the husband has accountancy qualifications and he is clearly able to conduct business negotiations as his proposals with the restaurant venture indicate.  The long hours he has devoted to trying to get his business ventures established demonstrate a capacity for work.  Ultimately that is no less than the wife’s, in fact greater, as she has the overwhelming responsibility for a young child whereas he does not have that inhibitor to earnings. 

2. As I assess it, while the husband has experience and skills as a lawyer and was capable before 2002 of earning very high income from his field, I doubt he could or would return to practice of the law.  Whether or not he is admitted to practice in New South Wales seems to me to be rather secondary to other choices he is making and to his more recent commitment to treatment for alcoholism.  It is difficult to predict at this stage what the future will bring or how things will unfold.  That said, I do think it fair to see him as having some capacity to earn income, evident from the time devoted to the businesses he is trying to establish if nothing else, and by choice he continues to pursue those ventures as worthwhile rather than look to some activity with more immediate financial benefits.  It may be his ambitions will be realised but, if not, some other means of providing for himself and meeting his responsibilities will surely have to be found. 

3. The wife is aged 40 years and, while her health appears to be good, her earning capacity at this stage is also inhibited, in her case by the demands of a young child and responsibility for his care.  She has not worked in fields directly using her tertiary qualifications and presumably some further endeavour would be necessary to enable those formal qualifications to be put to use now.  In fact her experience from employment over these past years is rather patchy and she does not have a strong history behind her to re-position herself back in paid work at this point.  She has worked more recently until the end of 2004 for her mother’s company and while there can be no certainty about that being available in the future nor could it be ruled out.  If necessary, she could combine that with her parental responsibilities.  But similarly, her future is not particularly clear, with J Pty Ltd or elsewhere. 

4. Given the inhibitors and uncertainties, for different reasons, their respective earning capacities in as much as they can be assessed currently and foreseen, do not weight particularly in favour of one over the other.  But there is a significant factor favouring the wife that is less vague.  That is the likelihood of her major responsibility for the child over the coming years.  He is just over 3 years of age and there are many child rearing years ahead before his dependency comes to an end and in that time it can be expected she will take responsibility for the majority of his day to day care and supervision and that is likely to include the majority of the financial cost involved in his upbringing.  If the level of child support is any indicator of the financial support she can expect in the future – hopefully it will not be – then the burden on her will be enormous.  Of course the husband’s financial position will change when the house is sold and he receives his entitlement from these proceedings and perhaps that will be seen as an opportunity to review his financial contribution to child support, though no mention was made of it at the hearing.  Whatever the case, the current circumstances indicate that the greater financial burden will fall to the wife over the years of their son’s dependency in any event.  That is a weighty factor in her favour. 

5. Mr Lethbridge submits the family Trust constitutes a financial resource for the wife, though not able to be quantified.  Nonetheless he says Mr J’s evidence suggests a ‘significant’ income each year.  Moreover, he suggest the Trust should be seen as in the wife’s control in the future as she will become the appointor on the death of her mother who has no present intention of taking any step that would exclude her daughter as the appointor. 

6. The wife’s mother is aged 80 years but there is no suggestion of ill health.  On the probabilities, as I assess it, the Trust will be a source of funds on which the wife can draw as need dictates in the future.  It is hardly likely, given the history of financial support from her mother to this point, that her mother would see her in financial hardship.

7. The husband also has a resource, again difficult to quantify.  He is a beneficiary of a family Trust though that has not been identified as the source of any financial benefit.  His parents, on the other hand, have provided him with financial assistance since separation while he has been without income and it is also likely, given the history that he will be able to look to them for support if necessary in the future. 

8. Mr Richards argues for a further 15% adjustment in the wife’s favour which he attributes to her greater parenting responsibilities and to the disparity of earning capacity.  I am not so convinced the reality of the situation warrants account being taken of the latter but I do accept the former.  In my view an adjustment of the magnitude proposed, despite the uncertainties, would be excessive.  In my opinion what is justified is a further 10% of the net proceeds of sale of the home to the wife, the furniture to be distributed in approximately equally proportions of value, and each to retain other assets they now have, as listed earlier. 

9. That would give the wife 62.5% of the net sale proceeds of the home and the husband would retain 37.5%, they would each retain the other assets they now have and the furniture would be distributed equally between them. 

Just and equitable

1. Applying that assessment to the notional sale proceeds of the home noted earlier, they would be entitled to receive $1,151,990 and $691,195 respectively.  Obviously the actual figures will be different on sale but it is an indication of their positions.  It would give the wife with $460,795 more than the husband.  However, the husband has other assets presently worth $108,059 and the wife has assets worth $23,101.  That differential of $84,958 reduces the disparity to $375,837.  In my assessment, that differential would bring about a just and equitable distribution in all the circumstances. 

Form of orders

1. Orders for sale of the home need not be made as that was the intent of the consent orders with the second respondent.  There does need to be provision for the distribution of the sale proceeds according to the findings and in the proportions assessed. 

2. As for the furniture, that was not the subject of submission at the end of the day.  I can see no other fair way to go about distributing it than to have it apportioned by the ‘two lists’ method and orders will be made accordingly. 

3. I should add I see no need to make provision for the payment by the husband of the costs order in favour of the second respondent agreed at $249,500.  She has her rights of enforcement under that order if that becomes necessary. 

I certify that the preceding ninety-three (93) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Moore

Associate: 

Date:  30 March 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as MAY LAGUNA & LAGUNA