McInness-Villaflor & Chilcott
[2006] FMCAfam 502
•25 September 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| McINNESS-VILLAFLOR & CHILCOTT | [2006] FMCAfam 502 |
| FAMILY LAW – Property – marriage and relationship of eleven years in duration – weight to be given to husband’s superior initial financial contributions – weight to be given to wife’s contributions as parent and homemaker – whether those contributions were made in arduous circumstances and so should merit an additional adjustment – assessment of section 75(2) factors – husband a medical practitioner with a superior earning capacity to the wife who has qualifications as a registered nurse and in education – relevance to be given to wife receiving significant inheritance in the period after the parties’ separation – just and equitable. |
| Family Law Act 1975 – ss.75, 79, 117 |
| Kennon & Kennon (1997) FLC 92-757 Weir & Weir (1993) FLC 92-338 Lee Steere v Lee Steere (1998) FLC 91-626 Ferraro v Ferraro (1993) FLC 92-335; Clauson v Clauson (1995) FLC 92-595 Wardman & Hudson (1978) FLC 90-466 Pierce & Pierce (1999) FLC 92-844 Russell v Russell (1999) FamCA 187 Danielian & Danielian [2003] FamCA 473 Waters & Jurek (1995) FLC 92-635 DJM v JLM (1998) FLC 92-816 Townsend & Townsend (1995) FLC 92-569 Coghlan & Coghlan (2005) FLC 93-220 Norbis v Norbis (1986) FLC 91-712 Mallet v Mallet (1984) 156 CLR 605 Kowaliw & Kowaliw (1981) FLC 91-092 Farmer & Bramley (2001) 27 Fam LR 316 Clauson & Clauson (1995) FLC 92-595 |
| Applicant: | MARGARET ANN McINNESS-VILLAFLOR |
| Respondent: | PETER BERNARD CHILCOTT |
| File Number: | DNM159 of 2005 |
| Judgment of: | Brown FM |
| Hearing date: | 30 and 31 August 2006 |
| Delivered at: | Darwin |
| Delivered on: | 25 September 2006 |
REPRESENTATION
| Counsel for the Applicant: | Ms Elliott |
| Solicitors for the Applicant: | Marris & Co |
| Counsel for the Respondent: | Ms Davis |
| Solicitors for the Respondent: | Davis Norman |
ORDERS
The wife pay to the husband the sum of $30,000.00 within 30 days of these orders.
Concurrently with the payment referred to in order 1 hereof, the husband transfer to the wife, at the wife’s expense, the whole of his right title and interest in the property situated at Unit 18/58 Bayview Boulevard, Bayview Haven in the Northern Territory of Australia.
Concurrently with the transfer of the property referred to in order 2 hereof the wife deliver to the husband a discharge of the mortgage from the Savings and Loans Credit Union secured against the said property and indemnify the husband and keep him forever indemnified in respect of the aforesaid mortgage and all charges and outgoings related to the said property.
The husband be declared the beneficial owner, to the exclusion of the wife, of the property known as and situate at Unit 4/128 Coonawarra Road, Winnellie in the Northern Territory of Australia.
Within 60 days of the date of these orders the parties arrange for the following items of property to be placed with a public auctioneer who shall arrange for their sale by public auction on a date to be agreed between the parties:
(a)The wooden yacht Harmony;
(b)The quintrex boat;
(c)The forklift;
(d)The marine motor;
(e)The items of boating gear which relate to Harmony and the quintrex boat.
In the event that the parties are unable to agree on the identity of a public auctioneer to conduct the foresaid auction sale, the auctioneer will be as nominated by the President of the Law Society of the Northern Territory.
In the event that the parties are unable to agree on a date on which the aforesaid auction will take place, it will be as directed by the auctioneer appointed pursuant to orders 5 and 6 hereof.
Each party has the right to bid for any item of property at the aforesaid auction and after payment of all necessary expenses related to the conduct of the aforesaid auction the proceeds are to be divided between the parties in the proportion of 65% to the husband and 35% to the wife.
That within 30 days of the date of these orders the wife deliver the following items of furniture to the address nominated by the husband at the husband’s expense:
(a)The red cedar chest of drawers;
(b)The red cedar glass fronted bookcase;
(c)The white beech sideboard with cane ends;
(d)The red cedar bookcase;
(e)The red cedar liquor cabinet.
That the husband indemnify the wife and keep her forever indemnified in respect of all taxation payable by B Chilcott Medical Pty Ltd and the Chilcott family trust.
Unless otherwise specified in these orders;
(a)Each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks records thereof, insurance policies are deemed to be in the possession of the beneficiary thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age working future provides the conditions for payment out of such entitlements.
(b)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
All outstanding applications are dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DARWIN |
DNM159 of 2005
| MARGARET ANN McINNESS-VILLAFLOR |
Applicant
And
| PETER BERNARD CHILCOTT |
Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings relate to the division of matrimonial property. The applicant is MARGARET ANN CHILCOTT, who now prefers to be known as MARGARET ANN McINNESS-VILLAFLOR. I will refer to her as “the wife”. The respondent is PETER BERNARD CHILCOTT. I will refer to him as “the husband”.
The parties were both born in 1949 and both were previously married. They began their relationship together in the early part of 1993 and finally separated, in difficult circumstances, in late December of 2004. They married in Bowen, Queensland on 2 October 1998. Their marriage was dissolved on 3 July 2006. Accordingly, the relationship and subsequent marriage between the parties, was one of approximately 11 years. It produced no children, although both parties have children from their earlier relationships.
A significant issue in this case is the weight to be given to the respective asset positions of the parties at the commencement of their relationship. It is the husband’s case that he had by far the more extensive asset base, chiefly consisting of superannuation and other accrued entitlements, which flowed from his long standing employment with the Queensland Department of Health and which resulted in him receiving a redundancy package, worth in excess of $250,000.00, in September of 1994. Essentially, it is the husband’s assertion that this sum formed the basis through which the parties were subsequently able to acquire their most valuable assets, during the course of their relationship and marriage together.
The husband is a medical practitioner by profession. He has a capacity to earn a comfortable income and was the main financial provider during the parties’ relationship. The wife has qualifications as a registered nurse, as well as in education and public health.
It is the wife’s position that her income earning skills were largely held in abeyance during the parties’ marriage. However, she asserts that she made many other varied and significant contributions during the marriage – particularly as a homemaker; carer for the husband’s children; employee in the business established to operate the husband’s medical practice; and also from her formal employment in the paid workforce, in a variety of capacities, from time to time. The wife also asserts that she herself brought in a significant amount of capital into the marriage, in the form of her interest in a piece of real property in Broome and some other monies she received from her prior husband in settlement of matrimonial property claims.
The wife places great significance on these contributions but, in addition, asserts that they were made in particularly difficult circumstances. In her evidence, she categorises the husband as being an “an emotional and violent person” towards her.[1] As such, it is her position that she is entitled to a further adjustment of property in her favour, in the terms approved by the Full Court of the Family Court in the case of Kennon & Kennon.[2] Essentially she asserts her contributions were made significantly more arduous because of the husband’s behaviour towards her during the course of the marriage.
[1] See wife’s affidavit of evidence filed 28 August 2006 at paragraph 104
[2] Kennon & Kennon (1997) FLC 92-757
In addition, at the end of the parties’ marriage and largely as a result of it, the wife asserts that her professional skills have been considerably eroded and she has lost the possibility of career advancement as a result. On the other hand, during the parties’ marriage, she asserts that the husband has been able to consolidate his career and is likely to be financially secure in future, whereas she will not be. Accordingly, it is her position that she is now at a considerable disadvantage, when compared to the husband, and this too is a significant factor, which calls for an adjustment of property in her favour.
These are the bare bones of the various areas of dispute between the parties. However, there are very many other areas of contention between them, both minor and major. Unfortunately, the proceedings were conducted in an atmosphere of acrimony. There was little spirit of cooperation between the parties and their respective legal advisors. Documents required to be filed were filed late. Details of the actual respective orders sought by the parties were not exchanged until the latest possible moment. There was considerable dispute about the value of assets and what should or should not be included in the parties’ pool of assets. However, neither party had marshalled expert evidence to resolve these issues of valuation. These various matters added to the level of difficulty confronting the court.
In particular, the wife categorises the husband as a person who has disingenuously failed to cooperate with the court process and provide her with the necessary full and frank disclosure of his current financial circumstances. Accordingly, it would appear to be the wife’s position that, if the court does establish that the husband has deliberately failed to disclose his financial position, it should not be unduly cautious in making orders reflecting this state of affairs. [3] These proceedings are designed to resolve the various disputes between the parties and finalise their financial relationship with one another, once and for all.
[3] See Weir & Weir (1993) FLC 92-338
The documents relied upon and the respective applications of the parties
The wife commenced these proceedings on 8 April 2005. On this occasion, she sought the following orders:
“1.That the real and personal property of the parties be divided in such proportions as this court deems appropriate.
2.Further/other orders as the court deems appropriate.”
At this stage, she was professionally advised.
The husband filed an affidavit in response to this application on 22 June 2005. He prepared this affidavit himself. It did not disclose the actual orders he sought in the proceedings. However, on 13 September 2005, he filed a response in which he indicated he sought the following order:
“1.That the matrimonial property of the parties acquired during the course of the relationship be divided between the parties in such shares as this Honourable Court deems just and equitable.”
By this time, he was professionally advised.
The parties were referred to two conciliation conferences. Prior to the first conciliation conference, the parties were directed to exchange valuations in respect of “any items of property in respect of which there is disagreement between them as to value” fourteen days prior to the conference. In spite of this direction, the first conciliation conference proved to be abortive because no such valuations were exchanged. The husband also failed to file the necessary statement of his financial circumstances, as had been ordered.
The second conciliation conference between the parties was scheduled for 16 November 2005. It also proved to be inconclusive, so far as the resolution of the issues in dispute between the parties. As a result, on 22 November 2005, the following orders were made:
“That this matter be listed for final hearing on 30 and 31 August 2006 at 10.00am NOTING 2 days hearing time has been allocated.
That both parties file and serve all affidavit material on which they propose to rely at trial on or before 4.00pm 2 August 2006 including final orders sought and updated financial statements.”
In her case, the wife relied upon the following documents:
·An affidavit of herself filed 28 August 2006;
·A statement of her financial circumstances filed in court on the morning of 30 August 2006.
In his case, the husband relied upon the following documents:
·An affidavit of himself filed 25 August 2006;
·A statement of his financial circumstances filed 25 August 2006.
Accordingly, both parties failed to comply with the court’s order to exchange their trial material in a timely manner. In addition, in a formal sense, neither party nor the court was aware of what orders were actually sought in the case, prior to the day scheduled for its commencement.
On the morning allocated for the final hearing, the wife’s solicitors handed-up to the court the following minute of the orders she sought in the proceedings:
“1.That the Husband do all acts and things and sign all necessary documents to transfer to the Wife all of his right title and interest in the property situated at Lot 6218, Unit 18(58) Bayview Boulevard, Bayview NT.
2. That the Wife do all acts and things and sign all necessary documents to transfer to the Husband all of her right title and interest in the property situated at Winnellie.
3. That the Wife retain the following:
(i) Her shares
(ii) Nissan Maxima
(iii) Furnishings
(iv) ING Life Policy
(vi)Superannuation entitlements in her name
4. That the Husband retain the following:
(i)Suzuki motor vehicle
(ii)Asia Roxsta
(iii)Quintrex half cabin boat
(iv)Harmony Boat
(v)Rubber Ducky and outboard
(vi)Inboard motor
(vii)All boating equipment
(viii)Honda Generator
(ix)Lucas Mill
(x)Welder
(xi)Forklift
(xii)High pressure cleaner
(xiii)Freezer, computer, furnishings tools and other boating equipment.
5. That the husband pay to the wife the sum of $299,100.
6. That the husband indemnify the wife in relation to any taxation liability in relation to P.B. Chilcott Medical Pty Ltd and in relations to any other debt of the company.
7. That the husband return to the wife her personal belongings as described in her Affidavit.
8. That the wife return to the husband his personal belongings.”
The arrival of this document was one factor which caused counsel for the husband, Ms Elliott, to seek to have the matter stood down for an hour, whilst she formulated the orders sought by her client. She also hoped to be able to resolve the valuation issues concerning the parties’ numerous chattels. In time, this led to the production of a handwritten minute, in which the husband indicated he sought the following orders:
“1.That the wife receive 35% of the value of the property of the marriage.
2.To achieve this the husband to:
1) Transfer to her the Bayview Unit and the wife do take over the mortgage on the said property.
2) The wife do keep all other items in her possession (other than the furniture items owned by the husband)
3) The husband to return to the wife any of the personal items of hers in his possession.
4) That the boat “Harmony” be sold as is, where is, and the proceeds equally be shared between the parties.
5) Each party to keep his or her own super entitlements.
6) The wife pay to the husband a sum to make the total to him equal 65%.”
Prior to the hearing of 30 August 2006, neither party sought to have the matter listed before the court in order to seek orders to rectify any of the issues to do with the late filing of material; the disputes regarding valuation issues; or any alleged failure to provide an appropriate exchange of documentary evidence. Accordingly, my impression is that both parties were equally at fault in the preparation of this matter, which was largely left to the last moment by both of them.
The consequences of this are two-fold. Firstly, due to a lack of adequate notice of what the other’s case is, the parties are robbed of the opportunity to negotiate effectively with one another. As a result, the chances of settlement being reached are much reduced. It might be said that, due to the acrimony between the parties, the chances of settlement were slight. This may be so, but the parties were still entitled to know how far apart they were and so be able to make some sort of pragmatic assessment of whether to pursue settlement or not, in the light of the likely extent of the legal costs on hearing, when compared to what is actually at stake.
Secondly, the late filing of material heightens the impression that the process is one of trial by ambush. This is particularly so in respect of the wife’s claim on the basis of Kennon’s case, which was raised at a very late stage. In all the circumstances, these matters, in my view, considerably weaken the wife’s criticisms of the husband, for purportedly being lacking in candour. Both parties are to be criticised for their lack of expedition in this matter and their failure to comply with orders of the court.
Brief background
The wife was born on 19 April 1949. The husband was born on 13 May 1949. The husband obtained his medical qualifications in 1973. The wife qualified as a registered nurse in 1971, at the Bendigo Base Hospital in Victoria. She obtained a midwifery certificate in 1987. Prior to the commencement of the parties’ relationship, she also obtained qualifications as a child health nurse. In 1991, she completed a bachelor of applied nursing degree at Curtain University in Western Australia.
The parties commenced their relationship in March of 1993, whilst both were attending a master of tropical medicine and public health course at James Cook University in Townsville. At this time, the husband had been the Medical Superintendent of the Mareeba Hospital for about seven years. He earned a salary of approximately $100,000.00 per annum.
The wife had been living and working in Broome for several years, where she had a house. This property had been rented out, whilst the wife attended the university course in Townsville. She was also receiving an Abstudy allowance from the Commonwealth Government. Prior to undertaking this tertiary study, the wife had been employed as a Senior Health Educator at the Regional Aboriginal Medical Service in Broome.
It seems the husband had some difficulties with his employer, Queensland Health, in regards to his position at Mareeba and was engaged in litigation with the Department around this time. Ultimately, in September of 1994, he received a payment from them comprising an ex-gratia payment ($50,000.00); accrued leave entitlements ($58,283.51); study leave entitlements ($35,117.95); legal costs ($20,026.19); and workers compensations ($9,153.82). This totals $172,581.47. It is also the case that the husband had approximately $83,000.00 in accrued superannuation at the time, which seems to have been realised, rather than rolled over. The total sum therefore is $255,581.47.
During 1993, the wife travelled between Broome and North Queensland, to attend university. She stayed with the husband in his accommodation, supplied by Queensland Health, in Mareeba. The husband’s separation date, from his employment with Queensland Health, is 5 August 1994, after 6 years and 6 months service. It seems clear that the wife was living predominantly with the husband from early 1994 onwards.
In September of 1994, the parties purchased their first home together at Holloways Beach, Cairns for $180,000.00. It was purchased outright. It seems clear that the husband used some of his redundancy monies for the purchase. The parties lived in the property together. The husband had previously been married and had four children. The wife had also been married and had two children. The evidence does not disclose the specific dates of birth of any of these children. However it seems that, at the commencement of the parties’ relationship, the wife’s children were aged 20 and 16 years respectively and the younger child concerned lived with his father. The husband’s children were aged 20, 16, 14 and 10 years. The 20 year old child was living with his mother and the three youngest children lived with the parties.
The wife shared her interest in her property at Broome with a former partner. The property was subject to a mortgage. The former partner’s interest in the property was ultimately acquired by the wife and the mortgage renegotiated. This occurred around early 1995. It is a source of considerable controversy between the parties as to how this occurred. It being the husband’s position that he financed the acquisition of the former partner’s interest and thereafter made the necessary mortgage repayments. The wife does not agree.
The Broome property was sold in 1997 for $190,000.00, which after the mortgage and other expenses were paid, realised a nett amount of $64,000.00. This sum was utilised to purchase a vacant block of land at Salonika Beach in Queensland. No additional monies were borrowed to purchase the land, which seems to have been a good buy. It was sold, at a considerable profit, in 2004. The sale price in 2004 was $271,000.00.
In either 1997 or 1998, the parties purchased a block of vacant land at Bowen in Queensland for $56,000.00. Again, no monies were borrowed to purchase this land. It too was sold in 2004, for $70,000.00, realising a more modest profit. Both the land at Salonika Beach and Bowen were investments and accordingly their sale attracted capital gains tax. As the properties were jointly owned, both parties were assessed to pay capital gains tax.
In 1997, the wife also received a payment of $25,000.00, from her first husband, as part of a matrimonial property settlement. She utilised this sum to purchase parcels of shares in various companies. She still retains some of those shares, although others have been sold, particularly in the period after the parties separated.
The husband has not provided a precise chronology of his employment, during the period of the parties’ relationship. However, it is clear that he was regularly employed during the period and earned a comfortable income as a doctor. The parties lived well. The husband has a particular interest in boating and woodworking and it seems he indulged his hobbies, without demur from the wife, during the marriage.
From 1994 to 1996, the husband was employed in Cairns. It seems he worked in a 24 hour medical centre. During this period, the wife worked for 1 year, on a full time basis, as a TAFE Lecturer. Between early 1996 and April 1997, the husband was a medical officer, employed by Queensland Health, at Woorabinda. He also had a right to private practice in the area. The wife worked as a medical receptionist for about a year, in conjunction with the husband’s practice and later was a clinical nurse consultant at the Woorabinda community, for a similar period of time.
Between May 1997 and April 1998, the husband worked as a medical practitioner in Glenden. The wife worked in his practice as nurse. In 1998, the family moved to Bowen and the husband purchased an interest in a medical practice. The parties took out business loans to purchase the goodwill and fixtures, which related to the medical practice.
Around this time, the husband established the Chilcott Family Trust. Associated with the trust was a company, P B Chilcott Medical Pty Ltd, of which the husband is the sole director and shareholder. The wife was employed by the company. The trust and the company were a means to divide income from the medical practice between the parties. The parties lived in Bowen between 1998 and 2002. During this period, the wife obtained part-time work as a lecturer/tutor at Townsville TAFE and also worked part-time as a nurse. The husband continued to work in the medical practice.
The wife portrays the husband as a somewhat querulous and litigious individual, who has a fixation with the administration of Queensland Health. She asserts this has led him to be involved, directly and indirectly, in several episodes of litigation with the Department, either as a quasi legal advisor to some other person or as self-represented party. The husband concedes that he did personally bring some proceedings, which related to his assertion that Bowen was “over doctored”. He acknowledges that he lost this case and costs were awarded against him personally.
This unsuccessful piece of litigation appears to have been one of the precipitating factors in the family leaving Bowen in 2002. The husband obtained a position as a medical practitioner on Bathurst Island, in the Northern Territory. P B Chilcott Medical Pty Ltd apparently obtained the contract with the Northern Territory Government to supply medical services on Bathurst Island. The income received by the company was distributed via the related trust, between the husband and the wife.
In the early part of the parties’ period on Bathurst Island, the wife worked as a casual tutor for the Batchelor Institute of Tertiary Education, which had a campus on Bathurst Island. She also tutored primary school children on the Island. The parties were provided with accommodation
Prior to the parties moving to the Northern Territory, they liquidated their various property interests in Queensland. As previously mentioned, these interests included the land at Bowen and Salonika Beach. The Holloways Beach property was also sold for $212,000.00. The parties used some of the proceeds to pay off their debts, particularly the business loans relating to the Bowen Medical Practice.
There is controversy between the parties as to the husband’s rate of remuneration, during the period he was working on Bathurst Island, from April 2002 onwards. The husband asserts it was around $145,000.00 per annum, together with a cash bonus of $24,000.00 per annum, received from the Health Insurance Commission, which is an incentive designed to encourage medical practitioners to remain working in remote parts of Australia. It is the wife’s position that the husband’s salary was considerably more.
The wife’s father fell ill in 2003. The wife left Bathurst Island to care for him in Darwin, where he lived. In 2004, the parties purchased a unit at 18/58 Bayview Boulevard, Bayview Haven for $370,000.00. The purchase was secured by a deposit of $74,000.00 and the remainder was provided by way of a mortgage advance from the Savings and Loans Credit Union. The property was registered in the names of the parties as tenants in common, as 99% to the wife and 1% to the husband.
This is a matter of considerable controversy between the parties. From the wife’s perspective, this was done with the husband’s full knowledge and consent, in order to safeguard the property from execution because of the legal costs assessed against the husband, as a result of the unsuccessful action against Queensland Health. From the husband’s perspective, he believes that it was a device by the wife to divest him of his proper entitlements to the property. As matters have unfolded, the issue is now of marginal relevance.
In addition, around this time, the parties also purchased an industrial shed situated at 4/128 Coonawarra Road, Winnellie, for the sum of $135,000.00. The property is unencumbered and is registered in the name of the Chilcott Family Trust. The shed was acquired to store the parties’ not inconsiderable chattels, particularly woodworking machinery and boating paraphernalia.
The parties separated, in difficult and acrimonious circumstances, on Christmas Day of 2004. It is common ground between them that they had an argument on this occasion. The police were called to the unit. The parties have differing views as to what occurred between them during the argument. Ultimately, the husband was charged with two counts of aggravated assault on the wife. He contested both charges in the Magistrates Court at Darwin. He was acquitted of one count. In respect of the other, he was found guilty but placed on a good behaviour bond in the sum of $1,000.00, without a conviction being recorded.
This incident also caused the wife to apply for a domestic violence order against the husband. The husband also contested this application, which was ultimately determined, in the wife’s favour, on 20 April 2005. As a result, the husband was restrained from assaulting or approaching the wife for a period of 12 months. Needless to say, these matters have contributed significantly to the current difficult relationship between the parties.
In February 2005, P B Chilcott Medical Pty Ltd’s contract with the Northern Territory Government, to provide medical services on Bathurst Island, was terminated. The husband instituted some legal proceedings in regards to this matter, which he believed was both arbitrary and unlawful. It seems these proceedings were largely unsuccessful. It is also the husband’s position that he was emotionally and physically incapable of paid employment, as a medical practitioner, in the period after the parties’ separated, as a result of these various travails.
Since the parties separated, the wife has continued to live in the Bayview Haven unit. The husband has made no contributions towards the recurrent mortgage payments on the property. The wife has only been able to pay the recurrent interest on the loan. The wife’s statement of financial circumstances indicates that she is paying $477.50 per week in this regard. This too forms a considerable bone of contention between the parties. However, the wife has never made an application for spousal maintenance from the husband.
It seems to be the case that, for much of 2005, the wife nursed her father. He passed away in February of 2006. The wife received a bequest from her late father’s estate, in a sum of approximately $206,000.00. She also inherited a motor vehicle from him. In March of 2006, the wife obtained work as a registered nurse in the health clinic at Ngukurr. Her salary is $64,445.00 per annum. She is provided with accommodation at Ngukurr. She has a contract to work as a nurse at Ngukurr, which will expire on 31 December 2006. Thereafter she has a position at the Katherine Hospital in the Accident and Emergency Department and as a midwife. Her anticipated salary is $58,000.00 per annum.
Since the parties separated, the husband has been using the industrial shed in Winnellie, as his Darwin residence. The property was apparently renovated by the parties so that it included a mezzanine level. The wife asserts that the cost of installing this mezzanine was approximately $20,000.00[4] It is the husband’s position that the wife entered the shed, without his knowledge, in May of 2005, and removed a number of items of property from it, specifically a wooden filing cabinet, in which he stored documents. The wife does not dispute that she removed this filing cabinet. However, there does seem to be some level of dispute between the parties as to what documents the filing cabinet actually contained. By implication, it seems to be the husband’s position that the filing cabinet contained many of the documents, which the wife asserts he has concealed from her.
[4] See Exhibit “A”
The husband was not employed between February and July of 2005. Between 4 July and 8 August 2005, he was employed as a locum medical officer at Groote Eylandt. It is his position that he earned a gross salary of $18,000.00 during this period. In the latter part of 2005, he had a further three month locum at Jigalong, in Western Australia and earned a further amount of $25,000.00 gross. Since January 2006, he has again been retained as a locum on Groote Eylandt.
The husband asserts that the value of the Groote Eylandt locum is in the vicinity of $135,000.00 per annum.[5] He is hopeful that it will be converted to a permanent position as a medical officer for him, from 1 September 2006 onwards. It is the wife’s position that the husband has duplicitously understated his income for these various periods and the amounts he can anticipate receiving in future, if he is successful in his application to become a medical officer. She asserts that the position at Groote Eylandt is likely to recoup the husband a sum in excess of $240,000.00 per annum.
[5] See Exhibit “1”
Since the husband left his employment on Bathurst Island, in a formal sense, he has no longer been employed by P B Chilcott Medical Pty Ltd. He is employed directed by the Northern Territory Government. Accordingly, there is no longer any benefit to the husband of him splitting his income with the wife, through the trust, for taxation purposes or for the wife to be an employee of either the trust or the company. The husband has also in recent times become a PAYG tax payer.
However, in the aftermath of the parties’ separation, there remains considerable controversy between them regarding the financial position of the company and the husband’s taxation liability arising from it. The husband has not completed tax returns for the years ending 30 June 2005 and 2006. His taxation documents for the year ending 30 June 2004 are mislaid. The wife views these matters as suspicious, as she does the apparent failure of the husband to provide any bank account statements for accounts operated by him for the period after January 2005. She asserts that the only logical inference, which can flow from these matters, is that the husband’s income position and actual cash liquidity is far better than he currently asserts. On the other hand, the husband asserts that he has no savings of any significance but considerable liabilities to the Australian Taxation Office.
In particular, there is a controversy about how the court should deal with an amount of money, which stood in an account called the Latitude Account, around the time the parties separated. This account related to the mortgage on the Bayview Haven unit. It is what is commonly called an “off set interest” account, the purpose of which was to receive deposits of any surplus funds which the parties had, which could be used to defray the amount of interest payable by them on the mortgage. It being in their interests to have as much money in the Latitude Account as possible, for as long as possible, before their necessary living and business expenses were paid out of it.
It is the husband’s case that, whilst he was nominally employed by P B Chilcott Medical Pty Ltd, the company was paid by the Northern Territory Government, for its medical services, three months in advance. In order to reduce interest payable on the mortgage, these advances were placed in the Latitude Account, before being returned to the company, when needed, in order to pay its liabilities, particularly tax and the other expenses of its employees and general running.
Around separation, the wife asserts that approximately $76,000.00 was deposited in the Latitude Account. The husband deposes that this sum has been properly accounted for by him, particularly in regards to the reimbursement of monies owed to the company and for monies improperly withdrawn by the wife, in particular to make a loan of between $20,000.00 and $25,000.00 to her son, Carsten.
It is the wife’s position that this sum ($76,000.00) should be notionally added back into the parties’ pool of assets and treated as a distribution of marital assets already and prematurely received by the husband. The husband asserts that there is no proper basis to treat the sum in this way.
In July of 2005, the wife received an income tax assessment, which included an assessment of capital gains tax arising from the sale of the Queensland real properties. The taxation assessed as payable by her was $10,241.35. The wife has paid this sum. After the parties separated, the wife sold approximately $10,000.00 worth of her shares, in order to cover her living and other expenses. The husband asserts that this sum should be notionally added back into the parties’ pool of assets and dealt with as a premature distribution of marital assets in the wife’s favour.
The parties have acquired many chattels during their marriage. These items include tools, motor vehicles, boats and marine gear. At the outset of the case, it became apparent that there were disputes about the value of many of these items, but no proper expert evidence, sufficient to enable the court to resolve these issues appropriately, was available. Neither I nor the parties themselves having any appropriate expertise in such matters.
The parties own a wooden yacht “Harmony”, which is moored in a marina at Bayview Haven. It seems to have been an ambition of the husband to re-build the yacht. He purchased a timber mill for this purpose. However, the yacht has deteriorated markedly since the parties separated and is now in danger of sinking. Both parties signified to the court that they did not want “Harmony” any longer. There are a number of items of equipment, which relate to “Harmony”. In the absence of any proper valuation evidence, the parties have agreed that both “Harmony” and these pieces of equipment should be sold and the proceeds divided between them, as the court deems appropriate.
At the conclusion of the parties’ evidence and indeed after their lawyers had completed final submissions, a further issue of great emotional moment arose between the parties. In their respective orders sought, each party had delineated that he or she sought the return of items of special emotional attachment. In the wife’s case, she sought the return to her of items of property which she had owned prior to the parties’ relationship. To his great credit, the husband indicated his willingness to return these items of property to her.
From the husband’s perspective, he sought the return to him of a number of items of furniture, particularly those constructed from red cedar, some of which had been built by him. The wife was prepared to return some of these items of furniture but two remained in contention, particularly a red cedar glass-fronted book case and a red cedar liquor cabinet. Regrettably, although no specific evidence has been provided as to the value of these items of furniture, it is necessary for the court to make a decision as to who of the parties should retain them in future.
The legal principles to be applied and the issues in the case
The process to be followed for the division of the parties’ property is well established by law.[6] The relevant legal principles are primarily contained in sections 79 and 75(2) of the Family Law Act 1975. I am required to follow a number of specific steps.
[6] See Lee Steere v Lee Steere (1998) FLC 91-626; Ferraro v Ferraro (1993) FLC 92-335;
Firstly, I must ascertain what are the parties’ assets and liabilities as at the date of trial.[7] As previously indicated, the matters for consideration under this first step occasion considerable controversy between the parties in the following areas:
[7] See Wardman & Hudson (1978) FLC 90-466
·Should the wife’s inheritance, received by her after the parties separated, be included in the pool of marital assets?
·Should any of the sum of $76,000.00, which was standing in the Latitude Account around the time of the parties’ separation be nominally added back into the parties’ pool of marital assets?
·Should the sum of $10,000.00, received by the wife from the sale of shares, be notionally added back into the parties’ pool of marital assets?
·Should the parties’ savings, at the date of trial, be included in the pool of assets, given the time which has passed since the parties separated?
·Should the remainder of the husband’s taxation debt, including the capital gains tax liability, remaining for the year ending 30 June 2004, be included as a joint marital liability?
·Should the parties’ legal fees be included in some way?
·Should the husband’s potential liability for costs in the sum of $25,000.00, arising from his failed litigation concluded in Queensland in 2002, be included as a joint matrimonial debt?
·Should the husband’s liability in respect of the lease secured against the Suzuki motor vehicle in the husband’s possession, be included as a joint matrimonial liability?
·Should a camper van, purchased by the husband after the parties separated, which is subject to a loan agreement, be included in the parties’ pool of assets?
·Should a motor vehicle, inherited by the wife, from her father’s estate be included?
·How should the court approach the parties’ respective future entitlements to superannuation?
Otherwise, the parties agree as to the value of their other major items of property, other than those which they have agreed should be sold.
Secondly, I must ascertain the contributions which each party has made towards those assets. Contributions fall into two broad categories. The first kind is contributions to the property: financial contributions and non-financial contributions, made directly or indirectly, by or on behalf of a party to the marriage to the acquisition, conservation or improvement of any of the property.
The second kind is contributions to the welfare of the family: in the words of the section, “the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage, including any contribution made in the capacity of home maker or parent.” It is clear from the authorities that this second kind of contribution must be given appropriate weight and is not to be treated as a token matter or as a contribution which is inherently less valuable or important than a financial contribution to property.
This second step occasions controversy between the parties in the following major area:
·Should a “global” or “asset by asset” approach be taken towards the assessment of the parties’ various contributions made during the marriage? In particular, should contributions made in respect of the wife’s inheritance and the husband’s superannuation, accumulated prior to the parties’ relationship, be assessed separately to the parties’ contributions towards their other assets. In this regard, what is the relevance of the length of the marriage between the parties?
·What weight should be given to the husband’s financial contributions in the form of his “termination package” received by him from Queensland Health in September 1994 and his other savings and assets, which he had at the commencement of the parties’ relationship? In the overall context of this case, are they contributions which “merit special recognition”?[8]
·What weight should be given to the wife’s contributions, as a parent and homemaker, during the marriage, particularly in regards to the husband’s children?
·What weight should be given to the parties various financial contributions during the marriage as wage earners?
·Is the wife entitled to any further adjustment of property in her favour because of the husband’s alleged violent and anti-social behaviour towards her? Were her financial and homemaking contributions thus made more arduous than they ought to have been as a result of this purported conduct?
·What weight should be given to the wife’s initial financial contributions, in the form of her interest in the Broome property and the sum of money which she subsequently received from her first husband, which was used to acquire the shares currently standing in her name?
[8] See Pierce & Pierce (1999) FLC 92-844 at 85,811
At the end of the second step of the process, the wife asserts that the parties’ various contributions should be assessed as being 53 or 54% in her favour. On the other hand, it is the husband’s position that his contributions should be regarded as being superior to those of the wife by a magnitude of 70/30% in his favour.
The third step involves the assessment of the parties’ prospective needs, by reference to the factors set out in section 75(2) of the Family Law Act 1975. Pursuant to section 75(2) (o), the Court is entitled to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. In the main, section 75(2) deals with the prospective needs of the parties. This area too, occasions controversy between the parties in the following areas:
·The wife submits that she has a significantly lesser income earning capacity than the husband. He being a medical practitioner able to earn in excess of $200,000.00, whilst she is able to earn a sum of, at best, around $60,000.00 per annum. It is the wife’s position that during the 11 years of the relationship, both her nursing skills and other professional qualifications have deteriorated through lack of regular application. In particular, she is now forced to renew her skills and has been deprived of the prospect of career advancement as a result of the marriage. She asserts that it is unlikely now, given her age, that she will be able to achieve a managerial or executive position in either the field of education or health, areas in which she has particular interests and skills.
·On the other hand, it is her position that during the marriage, she assisted the husband to maintain his professional qualifications and his future career is now secure.
·For his part, the husband asserts that during the parties’ marriage, the wife was able to acquire a number of professional qualifications. She has also worked in her chosen professional areas, both during the marriage and afterwards. As such, he asserts that it cannot be established that the marriage between the parties has had any significant implications for the wife’s income earning capacity.
·It is the wife’s position that she is lesser prepared financially for retirement than the husband and was prevented from acquiring superannuation during the marriage because of it.
As a result of these various factors, the wife asserts that she is entitled to a further distribution of property, in her favour, in the vicinity of 6 to 7%. The husband does not accept that such a distribution would be appropriate. It is his position that the wife has sufficient skills to secure adequately paid employment for herself in future and indeed acquired many of these skills during the marriage. In addition, he points to the fact that the wife has access to a considerable sum of cash, as a result of her father’s bequest, as being another factor which militates against any further distribution of assets in the wife’s favour.
Finally in determining what order the court should make under section 79, the court must be satisfied that in all the circumstances, it is just and equitable to make the relevant orders. Overall, it is the justice and equity of the actual orders that the court must consider.[9]
[9] See Russell v Russell (1999) FamCA 187
In following the various steps required of me pursuant to section 79 of the Family Law Act 1975, I bear in mind what was said by the Full Court in Danielian and Danielian[10] as follows:
“The task of the court in proceedings under s 79 is not akin to an accounting exercise. The task is to examine the facts of each case carefully to decide what is appropriate and just and equitable in the circumstances. There cannot be expected to be a universal answer to that question on any given set of facts. It is of the essence of judicial discretion that different minds may comfortably arrive at different conclusions. By and large, marriage is a joint venture where parties can expect to buffer each other from the winds of misfortune that blow during the course of their relationship. The degree of the buffer may depend on how much individual sailing they do without consultation or indeed contrary to the wishes of the other. But there can be no certain answer to how much that should be when applying s 79 principles.”
[10] Danielian & Danielian [2003] FamCA 473 at paragraph 49
The “overriding requirement” of section 79 is that considerations of justice and equity should inform each step of the process. The exercise I must undertake is not a “process of social engineering”[11] or of equalisation of assets or financial resources.
[11]See Waters & Jurek (1995) FLC 92-635 at 82,375
At the outset, I am at pains to point out to the parties that the task I must undertake is not a simple accounting or arithmetical task. In the jargon of the times, I cannot “crunch the numbers” to come up with a division of their property, which is not open to challenge or incapable of different interpretation. The task, set out for me in this case, requires me to balance and compare contributions which are by their nature different. The discretion I have is a wide one.
The evidence
I found both parties to be generally honest witnesses, who attempted to give a true account of their relationship and financial circumstances, as they each saw it. However they now have quite different perspectives on these matters and, as a result, they have quite different views about some significant matters, although they agree on many others. This is not unusual.
People’s recollections of the specific details of events are liable to fade over time and when those events need to be reconstructed for the sake of adversarial proceedings such as these, it is only to be expected that such a subsequent reconstruction should favour the party making it. In addition, adversarial proceedings, particularly those infused with a high degree of mutual antipathy, such as the current proceedings, encourage the parties concerned to be suspicious of one another and to assign malign motives for the conduct of a former spouse, often without any proper evidentiary justification.
The wife was a more emotional witness than the husband. It was clear to me that she remains aggrieved at what she believes has been the unreasonable behaviour of the husband both before and after the parties separated. At times, I believe her antipathy for the husband caused her to exaggerate his failings and attribute sinister motives for his behaviour, which were not properly based.
The husband was a more collected witness. I did not find him to be the manipulative or cunning person the wife portrayed. I do not believe that he has consciously or deliberately tried to conceal evidence from the court. Although the wife did bookwork and some accounting for PB Chilcott Medical Pty Ltd during the marriage, the husband seemed to have more knowledge of the company structure and how it worked in practice than the wife.
For obvious reasons, proceedings such as these encourage the parties concerned to emphasise their own contributions and minimise those of the other party concerned. I think this natural tendency was more marked on the wife’s part than the husband’s.
The wife is highly critical of the husband for not having attended to his taxation returns for the past two financial years and for not producing contemporary bank records. Although the husband is a professional person, who has an understanding of financial matters, he seems to be somewhat lackadaisical about them.
Neither party seemed to me to have a particularly frugal disposition and both seemed to have taken what money was available during their marriage and worried about the accounting details later. Certainly, during the parties’ marriage, there is no evidence to indicate that the husband ever denied the wife financially or concealed assets from her.
I accept that the circumstances surrounding the end of the parties’ marriage were traumatic for them both. In addition, the wife had the heavy emotional burden of providing care for her ailing father. Undoubtedly the current proceedings have been conducted in an atmosphere of some bitterness. Both parties have probably said and done things, in the heat of the moment, which they have come to regret later.
However, having viewed all the evidence in this case, I do not consider that it can be said that there is any cogent evidence from which it can be inferred that the husband has consciously set about arranging his affairs with an intention to defeat any possible claim the wife has against him.
In these reasons for judgment, findings of fact are made on the balance of probabilities, following my observations of the witnesses concerned and consideration of the affidavit material and other documents tendered in the case. In what follows, statements of fact constitute findings of fact.
The first step – the pool of assets
The parties agree on the value of their most significant assets, the two pieces of real property at Bayview Haven and Winnellie respectively. They have also agreed on the value of their motor cars and some other significant chattels. In addition, documents exchanged between the parties, have revealed the current value of their respective superannuation; some life insurance; and the wife’s share portfolio.
a) The parties legal fees arising out of these proceedings
Both parties have sought to include liability for legal fees, arising out of these proceedings, to be included in the parties’ table of assets and liabilities. No specific details of those fees have been provided, particularly whether they are anticipated fees or ones which have been paid to date.
The general rule in family law property proceedings, provided by section 117(1) of the Family Law Act 1975, is that parties pay their own costs in proceedings such as these. In DJM v JLM[12] the Full Court held that it was appropriate, in some cases, for legal fees, which had been paid prior to hearing from marital assets, to be notionally added back into the pool of property in order to avoid the erosion of the principle enshrined in section 117(1). In this case, there is no evidence before me to indicate that legal costs have been paid by one or other of the parties from marital assets. Accordingly, I propose to disregard the parties’ liability for such costs in these proceedings.
[12] DJM v JLM (1998) FLC 92-816 at 85,262
b) The wife’s inheritance
The wife’s inheritance was received by her over a year after the parties separated. There is no evidence to indicate that the late Mr Villaflor wished to benefit the husband in any way. It seems clear it was his intention that the bequest would be the wife’s alone. In all these circumstances, I propose to include the wife’s inheritance and the value of the car which was bequeathed to her in the parties’ pool of assets but in a discrete table and will deal with the parties’ contributions towards its acquisition on a separate basis to those of their other assets.
c) The husband’s superannuation
It is the husband’s position that his superannuation, acquired by him prior to the parties’ relationship and to which he has made no contributions since, should be excised from the parties’ pool of assets. I do not agree. In my view, the sum should be included but again the parties’ individual contributions towards that sum should be assessed separately to the contributions that they have made to the other of their assets.
d) The legal costs awarded against the husband
It is the husband’s position that these costs, which he believes amount to some $25,000.00 should be included as a joint matrimonial debt. There is a high degree of uncertainty about whether the government instrumentality concerned will seek to execute against Dr Chilcott. It is now almost five years since the award of costs were made. The matter has not been formally raised with the husband for some time. For obvious reasons, he has no wish to enquire whether the issue has been finally dropped. He is hopeful that it has. From his point of view, “no news is good news”.
In my view, in all these circumstances, there is too much uncertainty in whether or not this liability will crystallise to include it as a joint matrimonial debt. On balance, it appears more likely than not that the costs will not be pursued, given the time which has elapsed since they were awarded.
e) Tax payable for year ending 30 June 2004
The wife was assessed to pay tax, including capital gains tax, in an amount of $10,241.36 for the year ending 30 June 2004, on the basis of an income of $81,442.00 of which $55,258.00 was capital gains.[13] In the same period, the husband was assessed to pay $68,960.05 in tax, $27,350.00 of which was capital gains tax.[14]
[13] See Exhibit “B”.
[14] See Exhibit “3”.
The wife has paid her tax as assessed. She did this in the period after the parties separated. The husband has not as yet been able to pay all the tax assessed against him. He has entered into an agreement with the Australian Taxation Office to pay the tax off in instalments of $500.00 per fortnight. Approximately $13,000.00 remains outstanding. He seeks that this sum should be included as a joint matrimonial debt.
I agree that this sum should be included as a joint matrimonial liability. The parties’ various contributions towards meeting their tax liabilities, which arose during their marriage, largely as a result of the sale of the Bowen and Selonika Beach properties, prior to hearing, can be assessed in terms of post-separation contributions.
f) The money standing in the Latitude Account at separation
The wife seeks that the sum of $76,000.00, which was deposited in the Latitude Account around the time of separation, should be notionally added back into the parties’ pool of marital assets and thereafter treated as if it had been received by the husband. She cannot point to any specific asset into which the sum has been translated by the husband. Rather she is suspicious of the husband and believes that he has malignly misappropriated the monies in order to reduce his potential liability to her.
For his part, the husband asserts that the monies have been properly utilised. In his affidavit material, the husband deposes as follows:
“At the date of separation we did not have any savings. The loan account for the Bayview unit is a latitude account and it works on the principle that any excess monies deposited into the account reduce the amount of interest. All the family savings were deposited into the latitude account and by November of 2004 the actual amount had depleted to $76,000. This included a good faith loan from the Company in the sum of $24,000 which comprised of excess company funds. The medical company received 3 monthly payments in advance for my employment contract on Bathurst which meant that $36,000 was received every 3 months. Each month $12,000 was to be transferred back to the Medical Accounts so that wages could be paid and other business of the Company carried out. In November 2004 there was an amount of $24,000 which was to be quarantined for Company use.
The Wife has resigned from the Trust in January 2004 after I discovered that she had paid an amount in the sum of $20,000-$25,000 to her son in the form of a loan from the Trust, she got the money by transferring it from the Company not from any profits of the Trust. The loan to her son was in defiance of my instructions to her as Director of the Company.
In November 2004 it became clear to me that the Wife did not understand that the money we had in the latitude account was not for her personal use. She invoiced the Company for $2,800 for items which were clearly not Company business. At this time she was threatening me with divorce and I was worried abut funds being depleted even more. Therefore, I withdrew the $24,000 which was owed to the Company and this left $52,366 in the account. I withdrew half of this by way of my share in the sum of $26,183 and out of the Wife’s share of $26,183 I withdrew the $2,836.27 which she had over deducted from the Company accounts and I returned $20,000 which she had given to her son.”[15]
[15] See husband’s affidavit of evidence at paragraphs 21-23
The wife acknowledges that she did withdraw some funds from the account in question, which she advanced to her son for a car. She asserts that the sum involved was $13,000.00 and the remainder of the monies advanced were her own. I did not find her evidence in this regard particularly convincing and it is my view that the sum she withdrew is likely to have been more than $13,000.00.
The wife is critical of the husband that he has not been able to provide any documents to support his evidence as outlined above. This is so. However, I accept that in the period following separation, both he and the company had a number of recurrent expenses. I accept therefore that the sum of $76,000.00 no longer exists and has been largely consumed by the husband in legitimate living expenses.
The wife’s counsel is also critical of the husband for referring to “family savings” being deposited into the Latitude Account. By implication, she suggests that the sum concerned had the characteristics of capital. I do not think there is anything unduly sinister in the husband’s terminology. Rather, he has probably been loose with his words. The sum concerned was income rather than capital and it seems to have been the parties’ practice to utilise such income rather than save it. The account in question was a rotating one into which as much surplus cash was deposited as possible, in order to reduce interest liability on the parties’ mortgage. It was not a savings account per se.
For all those reasons, I do not propose adding the sum back as sought by the wife. I do not think that the husband’s use of the money in the period after separation can be regarded as a “premature distribution” of marital assets to him in the sense used by Nicholson CJ Townsend and Townsend.[16]
[16] Townsend & Townsend (1995) FLC 92-569 at 81,654
For the same reason, I do not propose to include the sum of $10,000.00, which the wife realised from the sale of a portion of her shares. It is clear that, in the difficult circumstances which prevailed after the parties separated, she had need of this sum, which has been consumed in legitimate purposes.
g) The campervan and the suzuki vitara motor vehicle
In the period after separation, the husband purchased a camper van. He makes no direct reference to this vehicle in his affidavit material. No specific documentation has been provided in respect of it. It is his position that he has little equity in the vehicle. His counsel asserted that the vehicle was worth approximately $55,000.00 and was subject to a loan of $48,000.00. In these some what unsatisfactory circumstances, I propose including the camper van in the parties’ pool of assets at a net value of $7,000.00.
The husband also had a suzuki vitara motor vehicle. The parties agree that it is worth $12,000.00. Where they are in dispute is whether the vehicle is subject to a lease agreement in favour of Toyota Finance. It is the husband’s position that he is liable to pay out the residual on this motor vehicle of $12,700.00 on 11 September 2006. He has provided documentary evidence in respect of this payment. Accordingly, I propose to include this sum as a joint matrimonial liability.
h) Parties’ savings
Both parties have savings in their possession at the present time. The wife has a sum of approximately $15,000.00 and the husband has a sum of approximately $9,000.00. These amounts should be included in the parties’ pool of assets and liabilities.
For all these reasons, I find that the parties’ pool of assets available to be distributed between them comprises the items detailed in the following table. I have placed the parties’ superannuation in a separate pool to their other assets, in accordance with the principles laid down by the Full Court in Coghlan and Coghlan.[17]
[17] Coghlan & Coghlan (2005) FLC 93-220
I reach this view because it is appropriate that the parties’ contributions towards the acquisition of that superannuation should be assessed separately to the contributions which they have made to their other assets. This is particularly so in respect of the husband’s superannuation, which he acquired prior to the parties commencing their relationship.
Non Superannuation Assets
$
Bayview Haven Unit
$ 415,000.00
Winnellie Shed
$ 175,000.00
Household Contents (husband)
$ 3,000.00
Household Contents (wife)
$ 3,000.00
Asia Rocsta Motor Vehicle (husband)
$ 3,000.00
Suzuki Vitara Motor Vehicle (husband)
$ 12,000.00
Maxima Mitsubishi Motor Vehicle (wife)
$ 5,000.00
Lucas Mill (h)
$ 8,000.00
Tools (h)
$ 5,000.00
Shares (w)
$ 19,100.00
Life Insurance (w)
$ 2,200.00
Husband’s Savings
$ 9,000.00
Wife’s Savings
$ 15,000.00
Camper Van (Net Interest) (h)
$ 7,000.00
Harmony (Yacht)
To be sold
Quintrex Boat
To be sold
Motor
To be sold
Forklift
To be sold
Boating Gear
To be sold
Total
$ 681,300.00
Liabilities
Mortgage on Bayview Unit
$ 296,000.00
Australian Taxation Office Debt
$ 13,000.00
Residual Pay-Out on Suzuki
$ 12,700.00
Total Liabilities
$ 321,700.00
Total Assets
$ 359,600.00
Additional items
Wife’s Inheritance
$ 196,000.00
Wife’s motor vehicle inherited from her father
$ 5,000.00
Total
$ 201,000.00
Superannuation
Uni Super (wife)
$ 300.00
Hesta (wife)
$ 18,700.00
Q Super (wife)
$ 13,000.00
Sun Corp (husband)
$ 75,400.00
Q Super (husband)
$ 19,300.00
Current Superannuation (husband)
$ 14,000.00
Total
$ 140,700.00
The Second Step – Assessment of Contributions – Section 79 (4)(a) to (c)
I now turn to the second of the steps in the exercise under section 79, namely an assessment of the parties’ contributions within the context of section 79(4)(a) to (c). These provisions are as follows:
“Section 79(4) in considering what order (if any) should be made under this section in proceedings with respect to any property of the parties to a marriage or either of them, the court shall take into account –
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them;
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of home maker or parent.”
Section 79(4) requires that the court look at the entirety of the contributions, both financial and non-financial, to the welfare of the family, as well as to the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation and improvement of any particular asset and may be taken into account generally as contributions in a total sense. The task required of me pursuant to section 79(4) of the Family Law Act 1975 thus is to weigh and assess the disparate contributions of the parties to arrive at an outcome, which is both appropriate and just and equitable in all the circumstances. Contributions, which are different in quality and nature, must be compared. The exercise is not purely an arithmetical or accounting one.
In assessing the parties’ contributions towards the acquisition of the assets of their marriage, it is necessary to consider whether the court should adopt a global approach or an asset by asset approach. In the former, the court assesses the parties’ contributions to their assets in a total or comprehensive manner. In the latter, the court assesses the parties’ contributions to individual items of property.
Both approaches are legitimate, however the High Court has held that the global approach is generally more convenient, particularly when it is necessary for the court to assess contributions, which are different in nature. In Norbis v Norbis[18] it was said as follows:
“Although it is natural to assess financial contributions under sec. 79(4)(a) by reference to individual assets, it is also natural to assess the contribution of a spouse as home maker and parent either by reference to the whole of the parties’ property or to some part of that property. For ease of comparison and calculation it will be convenient in assessing the overall contributions of the parties at some stage to place the two types of contribution on the same basis, i.e. on a global or, alternatively, on an “asset-by-asset” basis. Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient.”
[18] Norbis v Norbis (1986) FLC 91-712 at page 75, 268 per Mason CJ & Deane J
In a separate judgment delivered in Norbis[19], Wilson and Dawson JJ said as follows in regards to the issue as to whether a global or asset by asset approach was preferable in the assessment of marital contributions pursuant to the section 79 exercise:
“If the parties’ interests in specific items of property differ or they have made differing contributions, it may be desirable to proceed upon an item by item basis in the division of the property between them. In such a case, justice and equity may best be served by treating the items separately for the purpose of determining the proportions in which they are to be divided, particularly if the overall division is to be effected by the transfer or retention of interests in individual assets, as was convenient in this case.”
[19] Norbis v Norbis (supra) at 75,173 – 75,174
Clearly the most important consideration in whether to adopt a global or asset by asset approach is which approach is more conducive to achieving an outcome which is “just and equitable”. Factors which have been identified as influencing the decision include the duration of the marriage in question and how the parties themselves have dealt with any particular item of property during it.
More recently, following the passage of Part VIIIB of the Family Law Act 1975, which is the part of the Act which deals with the division of superannuation interests, the Full Court of the Family Court has approved an individual approach to the assessment of parties’ specific contributions to superannuation, as distinct from other items of property. As has already been noted, pursuant to the court’s decision in Coghlan, I have separately tabulated the parties’ superannuation interests in this case.
In part, the rationale behind this approach is that superannuation entitlements may bear a very different quality to other types of property, the value of which can be readily ascertained by sale and can be easily transferred to others, such as real or personal property. Superannuation interests cannot be readily transferred and realization of superannuation depends on a variety of factors, some outside the control of the beneficial owner.
a) The parties’ initial contributions
At the commencement of the parties’ relationship, I find that the husband had liquid assets, in the form of his termination package from Queensland Health, in an amount in excess of $250,000.00. In addition, he owned two motor vehicles, worth about $10,000.00 and had savings of at least $40,000.00. He also had the Suncorp Superannuation, which remains largely unaltered to the present. As previously indicated, as a result of his redundancy, the husband was able to provide all the funds for the purchase of the parties’ first home at Holloways Beach.
The wife’s financial position, at the commencement of the relationship, is less easy to discern. However, I have no difficulty in reaching the conclusion that she was in a significantly less financially secure position than the husband. I find that the wife had an interest in the Broome property but am unable to find precisely what this was worth in monetary terms.
The wife’s former partner was paid the sum of $14,500.00 for his interest in the Broome property. Around February of 1995, in the early stages of the parties’ relationship, they borrowed $139,000.00 from the Commonwealth Bank. This seems to have been the means by which the sum of $14,500.00 was raised. It seems clear that the husband paid the recurrent mortgage payments of $700.00 per fortnight, as he was employed and the wife was not. The property was sold in 1997 for $190,000.00, realising a profit of $64,000.00. This tends to suggest that the wife’s initial equity property was not particularly great and it seems clear that the husband made some direct financial contributions towards the sum which was ultimately realised.
The husband’s savings and the amount realised from the Broome property enabled the parties to purchase the parcels of land at Salonika Beach and Bowen respectively. These properties, particularly Salonika Beach, together with the former matrimonial home, are the basis on which the parties’ current wealth is built.
In my view, it is clear that the husband, at the outset of the parties’ marriage, had significantly more assets than the wife. In terms of the parties’ current nett asset position (excluding superannuation and the wife’s inheritance) there has not been a marked increase in the parties’ wealth during the 11 years of their relationship.
One of the central issues in this case is the weight or significance, which the court should give to this initial superior injection of capital made by the husband into the parties’ marriage at its outset, when compared to the parties’ other and different contributions made during their subsequent 11 year relationship, particularly as some of those contributions have not of themselves led to an increase in wealth.
The section 79 exercise often requires the court to assess contributions which are by their nature significantly different. A corporation or government department is able to ascribe value to the efforts of its servants by the amount of salary it attributes to them for the performance of those efforts. Such a task is not so easy to perform in respect of a parent or homemaker, who receives no actual salary for the labours he or she performs but who, nonetheless, makes a significant contribution towards the wellbeing of a family as a whole. In addition, the task must be performed when members of Australian society hold very different views as to the nature of marriage itself and the economic consequences of divorce.[20]
[20] See Mallet v Mallet (1984) 156 CLR 605 at 607-8
It is in this context that the actual length of a particular marriage assumes greater significance. For obvious reasons, the longer a marriage is, the more financial implications it is likely to have for the parties concerned. This is particularly so if one party to the marriage concerned surrenders financial independence, in the form of being able to be in the paid workforce, to provide homemaking or parenting services to the family concerned.
b) The parties’ contributions during the marriage
The relationship and subsequent marriage between the parties was one of approximately 11 years. It is a significant period of time. I have no difficulty in reaching the conclusion that their marriage should be regarded as one of equals and that the parties themselves pooled their resources during it, for their common good.
The wife provided the majority of the homemaking responsibilities. These included ministering to the husband’s children. In addition, she provided assistance in the husband’s medical practice, from time to time. The husband provided the majority of the financial contributions, in the form of his recurrent wages, although the wife was also involved in the paid workforce from time to time.
Accordingly, neither party can be said to be in any way a “passenger” during the marriage, as both were equally occupied during it. During the period of the parties’ relationship, in my estimation, although their various contributions are different, they should be regarded as essentially equal for the purposes of the section 79 exercise.
It is the wife’s case that because she is not biologically related to the husband’s three children, her contributions made towards the parenting of these children have a special significance. In the context provided by this case, I do not agree. One of the wife’s children also lived with the parties for some time. My impression is the parties regarded themselves and their children as a blended family. Accordingly, in my view, this is not a factor which calls for any special recognition in the wife’s favour at this stage and is not one which causes me to change my assessment that the parties’ various contributions, during their marriage, should be regarded as equal.
It is also the wife’s case that her various contributions, during the marriage, were made significantly more onerous by reason of the husband’s conduct towards her. Apart from the wife herself, there is no evidence to support her claims, which the husband refutes. In particular, the wife has called no expert medical or psychological evidence in support of her claim that her self-esteem suffered as a result of what the wife terms the husband’s “mental and physical abuse” of her.
In general terms, the wife alleges as follows:
“Violence in our relationship started to escalate from 1996 until our final separation. The Respondent would yell and abuse me. The Respondent would disrespect my opinion and would call me names or would abuse me if I did anything which he did not agree with.
The Respondent was an emotional and violent person to me during our relationship. He was rude to me and often belittled me by saying that I was stupid. He would often criticise me for doing various things. He was often dismissive of me and simply ignored my conversations. I suffered from very low self esteem because of the manner in which Peter treated me during many years of our relationship.
The Respondent would call me, a ‘stupid fucking thing’. He would tell me that I was a ‘fucking idiot’ if I did not know something that he thought that I should know. He would become very angry and aggressive towards me on occasions.
The Respondent looked down on me and would not allow me to participate in decision making in our family. The Respondent’s attitude and behaviour towards me made me lose my self confidence and lowered my self esteem. I became sad and depressed because our relationship was ending.”[21]
[21] See wife’s affidavit of evidence at paragraphs 102, 104-106
In particular, between 1998 and 2002, the wife alleges the husband blocked her way from leaving the bedroom or the toilet on several occasions, pushed her and held doors closed against her. Further, in 2003/2004, the wife alleges that the husband compelled her to see a psychiatrist, against her will. In addition, in July 2004, the wife alleges that the husband abandoned her in Broome and drove back to Darwin without her. The wife also alleges that the husband removed some of her personal items in October of 2004. She also relies on the circumstances surrounding the parties’ final separation, in December of 2004, to which reference has already been made.
I have no doubt, having observed both parties, that their relationship was at times a turbulent one, which was also periodically deeply unhappy. Given the manner in which the current proceedings have been conducted, I also have little difficulty in reaching the conclusion that the parties were prone to having verbal and at other times physical altercations with one another. However, I do not consider that one party can be described as propagator of this behaviour alone. Perhaps the husband was not always easy to live with, particularly when he was preoccupied with his litigation against the Queensland Health Department. However, it is not the purpose of these proceedings to reinsert fault or blame into the factors relevant to determine financial matters such as this.
In this regard, it is appropriate to set out the relevant passages from the Full Court’s decision in Kennon:
“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 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.
In the above formulation, we have referred only to domestic violence, for the reasons which we indicated earlier, but its application is not limited to that.
And further on:
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 relative 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).”[22]
[22] See Kennon & Kennon (supra) at 84,294-5
I accept that some aspects of the wife’s marital experience were unhappy. So too were the husband’s. However, on the evidence before me, I do not find these matters to be exceptional in the terms referred to by the Full Court. In particular, I find it difficult to discern from the wife’s evidence that the matters of which she complains had a “discernable impact” upon her capacity to contribute towards the family.
Indeed, it is the wife’s case that she was fully occupied during the parties’ marriage. She was able to undertake a number of courses of study. She had employment, in responsible positions, in the paid workforce. There is no evidence to indicate that she was not functioning to the full extent of her capacities in these various endeavours. Accordingly, I do not assess the wife as being entitled to any additional weighting in regards to the division of the parties’ property by reference to these various factors.
In assessing the parties various contributions under this heading, I take into account that the wife received a cash payment of $25,000.00 by way of matrimonial settlement with her first husband. This sum was utilised to purchase shares in the wife’s name, some of which remain. This is not a factor which causes me to reappraise my view that the parties’ various contributions, during their marriage, should be regarded as essentially equal.
c) The parties’ contributions in the period post separation
A period of just over 20 months has elapsed since the parties separated. From the wife’s position, this has been a period of financial austerity. I accept this is so. She has been providing a monthly sum of between $1,760.00 and $1,910.00 to pay the interest only on the parties’ mortgage on the unit at Bayview Haven. She has also paid the other outgoings related to it. She has however had the benefit of living in the property and wishes to retain it at the conclusion of these proceedings.
The husband has been living, when in Darwin, in the Winnellie warehouse, which is unencumbered. I accept that he was unable to work in the period immediately following the parties’ separation. I do not think that this was a ploy to diminish, in some way, the wife’s claim in these proceedings because the husband did pursue employment, for which he is qualified, in the latter part of 2005 and 2006. This has provided him with a comfortable income.
Financial necessity has also compelled the wife to return to the workforce. Like the husband’s, her employment has been arduous because of the remote location at which she has worked. However, her employment has also provided her with a satisfactory income, although one which is markedly less than the husband’s, because of their different skills.
Although the husband has had a markedly higher income than the wife, in the period following separation, I also accept that this has been a position of some financial strain for him. Both parties have had to struggle with their respective taxation liabilities, particularly relating to the significant capital gains resulting from the sale of their Queensland properties. In the wife’s case, she has paid the sum of $10,241.35. In the husband’s case, he has paid at least a similar amount.[23]
[23] See Annexure H to the husband’s affidavit filed 25 August 2006.
In addition, given the taxation position of the husband and PB Chilcott Medical Pty Ltd, as at the end of the financial year in June 2004, when tax of $68,960.05 was payable,[24] I accept that it is the case that monies standing in the Latitude Account were utilised to pay part of this tax debt in the period following the parties’ separation.
[24] See Exhibit “3”.
Thereafter, the husband has largely been a conventional PAYG tax payer. I accept his evidence in regards to the sums he has received for the various locums, which he has undertaken. In these circumstances, although the husband can be criticised for his laxity in failing to prepare his tax returns, I do not believe that there is anything inherently sinister in this omission on his part.
Since January of 2006, the husband has been employed as a medical officer at Alyangula on Groote Eylandt. His most recent contract reveals a base salary of $134,596.00 per annum. He is provided with additional benefits, primarily accommodation and travel to and from Darwin. It is the wife’s position that, at such a rate of remuneration, the husband should have access to more funds than he has revealed in these proceedings. Accordingly, she invites the court to draw an adverse inference against the husband and conclude that he has failed to make a full and frank disclosure of his financial circumstances.
My impression of the husband is that he is not particularly adept at saving money. I also accept that he has incurred significant expenses in the period since the parties separated and has also had some periods of unemployment. The wife points to the husband’s failure to provide comprehensive bank statements for his accounts in the period after the parties separated. The husband has provided only details of his accounts as at the date of trial.
However, apart from her suspicions, the wife cannot point to the identity of any alleged secreted funds. It is the husband’s position that he provided all the information that he thought he had to provide. In this context, the wife did not seek any specific orders for discovery. I did not disbelieve the husband in respect of his explanation regarding his bank accounts. As previously indicated, I did not find him to be a disingenuous or manipulative person. In all these circumstances, I do not believe the inference, which the wife seeks, will lie.
The flavour of much of the wife’s case is that the husband has allowed marital assets, particularly in the form of the yacht “Harmony” and its equipment, to be wasted.[25] Undoubtedly, the issue of the yacht has been a major bone of contention between the parties, as has been the value of the equipment associated with its renovation. I am not able to resolve these issues definitively, on the basis of the evidence led before me, particularly the value of these assets, as neither party has obtained appropriate valuation evidence. In these circumstances, the parties recognise that the appropriate, although perhaps unpalatable course, is that the various items should be sold.
[25] See wife’s affidavit of evidence at paragraph 53 and 56
Accordingly, in my view, it is not open to the court to make any finding that the husband has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of any particular matrimonial assets in the sense envisaged by Baker J in Kowaliw.[26]
[26] Kowaliw & Kowaliw (1981) FLC 91-092 at 76,644
In financial terms, the most significant development, which has occurred since the parties separated, is the wife’s legacy from her father’s estate which, if included in the pool of non-superannuation assets, increases its value by about 35%. Obviously, when compared to the parties’ marital assets, it is a very significant sum.
It is difficult to see that the husband has made any particular contribution, either directly or indirectly, to this sum. No particular evidence has been given of the nature of his relationship with the late Mr Villaflor. True it is Mr Villaflor lived with the parties in the latter stages of the parties’ marriage and the wife nursed him at the Bayview Haven property. However, there is no evidence to indicate that his legacy was intended to be anything other than a bequest made personally to the wife herself, as a result of the natural ties of affection and blood, which exist between father and child.
Given these circumstances, it is in my view appropriate that the court deal with the wife’s legacy ($201,000.00) separately from the parties’ other matrimonial assets and assess her contributions towards it as being total in terms of its acquisition. This does not preclude the court from considering the implications of the wife having access to this sum of money at the third stage of its deliberations.
I do not think that the situation in this case is analogous to that which arose in Farmer & Bramley[27] where, not long after the parties’ separation, the husband had a major lottery win. In that case, the relationship between the parties was one of about 12 years and a child had resulted from it. During the relationship, the wife had made significant non-financial contributions, particularly as a parent. The lottery win was the only asset from which the wife could receive some recompense for her significant contributions. That is not the case here.
[27] Farmer & Bramley (2001) 27 Fam LR 316
Conclusions in respect of contribution factors
Another factor which raises some degree of difficulty in this case is the husband’s Suncorp superannuation, which stands currently in an amount of $75,400.00. The fund was acquired prior to the parties’ relationship and has not been added to since by the direct contributions of either party. In effect, it has been quarantined from the efforts of both the husband and the wife. Given the nature of the superannuation itself and these factors, it is the husband’s position that his contributions towards to the Suncorp superannuation should be regarded as total.
In Coghlan, the majority of the Full Court said as follows:
“In summary, then, the trial Judge has a discretion as to how superannuation interests will be treated in a particular case. If superannuation is not included in the list of property but rather made the subject of a separate pool, it will be necessary where a splitting order is sought, or extremely prudent where no such splitting order is sought (in order to ensure that justice and equity is achieved) to:
a) value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);
b) consider and make findings about the types of contributions referred to in s 79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;
c) consider the other factors in s 79(4) being the matters in s 79(4)(d), (e), (f) and (g); and
d) ensure that pursuant to s 79(2) the orders in relation to the parties’ property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.
In the context of a consideration of the matters referred to in sub-paragraphs (b) and (c) of the last paragraph, the following matters may well be relevant: the relationship between years of fund membership and cohabitation (if applicable), at separation and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse’s present and/or future entitlements under the fund.”[28]
[28] See Coghlan & Coghlan (supra) at 79,646
The rationale behind the majority’s reasoning in Coghlan appears to be that, by reason of its special nature, it is often appropriate to assess contributions to superannuation interests separately to contributions made towards other more “conventional” assets. This is so one or other of the parties’ contributions to that superannuation may be given “proper recognition”. In order to ensure this “proper recognition”, it is necessary for the court to consider what is the “real nature” of the relevant superannuation interest – namely whether it is likely to be received as a recurrent pension or a lump sum or in some other manner.
As I have found, the husband brought in a considerable amount of capital at the commencement of the parties’ relationship, which greatly outweighed the capital which the wife had. In my view, it is clear that this capital largely allowed the parties to acquire the real properties in Queensland, on which some significant profits were made, particularly in respect of the Salonika Beach land. Otherwise, the nett asset base of the parties (other than the wife’s inheritance) has not significantly increased during the 11 years of their marriage and relationship.
The husband has been the major breadwinner and his comfortable income seems to have allowed the parties to live comfortably. The wife has also made significant contributions, as a homemaker and a parent, as well as having worked, both in the husband’s medical practice and for other employers. However, the income she has derived, has been far less than that which the husband generated. However, as I have already found, both parties contributed, to the full extent of their capacities, during their marriage.
The difficulty provided by the case is how the husband’s superior initial financial contributions and his other financial contributions during the marriage are to be balanced against the significant contributions which the wife has made during the period of the marriage, which have not of themselves directly resulted in the acquisition of assets.
It is a difficulty to which I have already alluded in that, pursuant to the section 79 exercise, the court is often called to compare fundamentally different things. In Ferraro, the Full Court of the Family Court noted as follows:
“The task of evaluating and comparing the parties’ respective contributions where one party has exclusively been the breadwinner and the other exclusively the homemaker, is a most difficult one to perform because the evaluation and comparison cannot be conducted on a “level playing field”. Firstly, it involves making a crucial comparison between fundamentally different activities, and a comparison between contributions to property and contributions to the welfare of the family. Secondly, whilst a breadwinner contribution can be objectively assessed by reference to such things as that party’s employment record, income and the value of the assets acquired, an assessment of the quality of a homemaker contribution to the family is vulnerable to subjective value judgments as to what constitutes a competent homemaker and parent and can not be readily equated to the value of assets acquired. This leads to a tendency to undervalue the homemaker role”[29]
[29] Ferraro & Ferraro (1992) 16 Fam LR 1 at 38
Cases involving one party having made a significant initial injection of capital, where the marriage concerned is of a significant period and which involve the court having to assess non-financial contributions pose particular problems. As the Full Court observed in Ferraro, a court such as this one must be careful not to undervalue the homemaker role. On the other hand, it may lead to injustice if, in a similar fashion, a major discrepancy in the respective contributions of initial capital is overlooked. In the past, there has been a tendency to suggest that such an initial contribution of capital is “eroded over time” by other factors, particularly homemaking contributions. The Full Court has pointed out that such a formulation is erroneous.
In Pierce & Pierce,[30] Ellis, Baker & O’Ryan JJ made reference to several of the relevant authorities. Their Honours said as follows:
“In our opinion it is not so much a matter of erosion of contribution but a question of what weight should be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions both of the husband and the wife. In considering the weight to be attached to the initial contribution, in this case the husband, regard must be had to the use made by the parties of that contribution.”
“…there is no principle that the length of the marriage leads to a likelihood that other contributions will outweigh or weigh equally with ‘a particular contribution’. It is a matter of assessing the contributions of all relevant kinds in each case to arrive at an outcome, which is both appropriate and just and equitable. In some cases particular contributions may be outweighed or equalled by other ones. In other cases particular contributions may be so disproportionate to other contributions as to merit special recognition.”
[30] Pierce & Pierce (1999) FLC 92-844 at page 85,811
Notwithstanding the wife’s significant contributions during the marriage, which are to be regarded as equal to those of the husband for the same period of time, I have come to the conclusion that the husband’s initial contribution of capital is a factor which is so disproportionate to the parties’ various other contributions that it merits special recognition. This is particularly so given that I have assessed the parties’ contributions to the wife’s inheritance and the husband’s Suncorp superannuation on an individual asset basis.
Excluding the wife’s inheritance and the husband’s Suncorp superannuation, leaves a nett asset pool of $424,900.00. Of this sum, some $65,300.00 is represented by superannuation. I appreciate that there are also a number of other assets, which have not been valued but which are to be sold. Bearing in mind all these various factors, I have come to the conclusion that the husband should receive somewhere in the range of between 60 to 62.5% of the parties’ pool of assets, leaving aside the wife’s inheritance ($201,000.00) and the husband’s Suncorp superannuation ($75,400.00) each of which its respective current holder should retain.
The third step – section 75(2) factors – the prospective needs of the parties
I am now required to consider the various matters set out in section 75(2) and in particular to consider whether any further adjustment should be made in favour of either party. The section 75(2) factors are as follows:
(a) the age and state of health of each of the parties;
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;
(d) commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person;
(f) subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under -
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party;
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain adequate income;
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
(l)the need to protect a party who wishes to continue that party’s role as a parent;
(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
(n)the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party;
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o)any other fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p)the terms of any financial agreement that is binding on the parties.
The parties are of a similar age and neither claims to have any specific health problems. Neither the husband nor the wife has re-partnered in the period since they separated. Neither has any obligation to support financially any other person. There are no children of the marriage.
It is the wife’s case that, at the end of the marriage between the parties, she is left in a position where it will be more difficult for her than the husband, to derive her income in future. Essentially, it is her position that the husband will be able to keep working, until his retirement, earning a comfortable income in preparation for that retirement, whereas she will have to struggle financially and thus will inevitably suffer a significant fall in her standard of living and straightened financial circumstances both before and after retirement. As a result, it is her position that the applicable section 75(2) factors, particularly those set out in sub-sections (b), (f), (g), (j), (k) and (o) favour her.
In this case, the husband is an experienced medical practitioner. In the past, in pursuing his profession, he has worked in remote locations throughout Australia. Undoubtedly he has the capacity to earn a comfortable salary and this will be a capacity which he will most likely retain for the foreseeable future. In addition, it seems likely that he will receive a variety of additional benefits to encourage him to continue to practice in remote places in future. These benefits include cash incentives from the Health Insurance Commission and the provision of accommodation, a motor vehicle and travel to and from his place of work.
It seems overwhelmingly likely that the husband will be successful in his application to be the resident medical officer at Alyangula. There is some dispute between the parties as to the husband’s likely level of remuneration. The husband concedes that the position was advertised, by the Northern Territory Government, as entailing a salary package worth $240,000.00 per annum. However, it is his position that, in cash terms, the position is considerably less attractive. In his view, a figure of around about $150,000.00 per annum provides a more realistic estimation of the worth of the position.
In any event, regardless of the husband’s views concerning the matter, it is clear that the husband has a capacity to earn a significantly higher income than the wife. On even the most conservative estimates, it is probable that he will be able to earn between two and three times more than she. At present, whilst she is working in a remote location, the wife is earning $64,400.00 per annum. This will reduce when she moves to Katherine. In addition, it is clear that the husband is significantly better prepared financially for retirement than the wife, as he currently has accrued 3.5 times more superannuation than she, when the Suncorp superannuation is taken into account. Although otherwise the parties’ amounts of accrued superannuation are similar.
However, although there is a significant discrepancy in the earning capacities of the parties and their respective preparedness for retirement, it is not the case that the wife is either bereft of financial resources or the capacity to pursue gainful employment in future. Most obviously, the wife has access to her inheritance of just under $200,000.00. This sum is likely to provide her with a significant level of financial security in future.
In addition, the wife has a number of professional qualifications, including a master’s degree, in the areas of health and education. She is a registered nurse, who has certificates in midwifery and child health. I accept that it may take some time for her to renew her skills in nursing. However, the wife seemed to me to be a highly intelligent and resourceful person, who has already made significant strides in this regard.
The tenor of the wife’s case is that, although she concedes she has professional skills, these skills have lost their currency during the parties’ marriage and her prolonged absences from the workforce, occasioned by her family responsibilities, have robbed her of the opportunity to have a more highly paid career, at a higher level, in either nursing or education. This may be so but I reiterate that the wife is not without skills and, following the parties’ separation, she has been able to return to the workforce. It is also the case that, during the parties’ marriage, the wife was able to obtain a number of professional qualifications.
Accordingly, I do not think that the wife’s position is analogous to the situation which often comes before the court involving women, say with administrative or clerical skills, who leave the workforce and are involved in long marriages and who at the end of such marriages find it significantly difficult to return to the workforce. This is not the case here. The wife is a professional person. She has been able to return to the workforce and has demonstrated a capacity to earn a comfortable income, on her return.
In addition, I think I can take some judicial notice of the fact that there is currently a shortage of skilled health professionals in Australia, particularly in the Northern Territory and particularly amongst those willing to work in remote locations. The Australian population is ageing. In these circumstances, it seems likely that the careers of professional people will be longer. It can no longer be presumed that retirement at age 65 will be the norm. Accordingly, I consider it likely that both parties will be in the paid workforce for many years to come. To some extent, this will be a matter of financial necessity for each of them but it will also provide them time to prepare financially for their respective retirements, neither of which, I think, can be considered imminent.
The question therefore is whether a discrepancy in income earning capacity alone should be sufficient to justify a further distribution of property pursuant to section 75(2) of the Act. In part, this was the issue which confronted the Full Court in Waters and Jurek[31], where Fogarty J said as follows:
“…the major issue in this case specifically and in other cases more generally – when are the one or more of the paragraph in s.75(2) “relevant”. The answer to that is to be found in the imperative words contained in s.79(2), namely that the Court shall not make an order unless it is satisfied that it is “just and equitable” to do so. These words were described by Dawson J in Mallet v Mallet (1984) FLC 91-507 at p 79,132; (1984) 156 CLR 605 at 647 as the “overriding requirement” of s.79.
Consequently, the various paragraphs in s.75(2) come into play and are to be given appropriate weight when it is concluded that they are relevant to making a property order between the parties which is “just and equitable”. This same test applies to the other paragraphs in s.79(4). The application of the “just and equitable” criterion to paragraphs such as (a) to (c) does not present the same difficulty as it does in relation to para. (e) and s.75(2). That is because (a) to (c) are directed to the contributions to the parties’ property and family to the time of the trial. They are more easily identified and are more readily translatable into the distribution of property. Paragraphs (a), (b) and (g) are also relatively specific.
In the majority of property cases little difficulty is encountered in the contribution step and increasingly in the general run of cases the conclusion is likely to be one of equality or thereabouts. There is no doubt that the centre of gravity in the determination of property cases has, especially in more recent times, moved to the evaluation of the s.75(2) factors, and the significance of that has been heightened because of recent Full Court decision which have emphasized those provisions and indicated that they should be given real rather than token weight.
The connection between the s.75(2) factors and a just and equitable property order is more difficult since the criteria are expressed very broadly and are fundamentally prospective in their operation. The provision does not invite a process of social engineering (Clauson and Clauson (1995) FLC 92-595 at 81,912). In Mallet, supra, at FLC p 79,127; CLR 638 Wilson J said that:-
“The objective of the section is not to equalise the financial strengths of the parties. It is to empower the court, following a dissolution of a marriage, to effect a redistribution of the property of the parties if it be just and equitable to do so…”
The court can only apply one or more of the paragraphs of that provision where it is satisfied that that step is relevant to arriving at a just and equitable result.”
[31] Waters and Jurek (1995) FLC 92-635 at 82,375
In this case, bearing in mind the level of qualifications the wife has and her proven ability to earn an income of about $60,000.00 per annum, when coupled with the additional factor that she has available to her a sum of approximately $200,000.00, I do not think it would be necessary, to achieve a just and equitable outcome in these proceedings, to apply any of the section 75(2) factors in the wife’s favour in this case.
Section 79(2) - Is this a just and equitable outcome?
The parties’ applicable pool of valued assets stands in an amount of $424,900.00. A range of between 60-62.5% of this sum falls between the figures of $254,900.00 and $265,562.50. Currently the husband has in his possession or control (excluding the Suncorp superannuation) assets to the value of $229,600.00. Accordingly it is instructive to note that over the eleven years of the parties’ marriage, his financial position has not greatly advanced.
The wife has currently in her possession or control (excluding her inheritance) assets to the value of $195,300.00. Therefore, in order to achieve a resolution of the matter along the lines of a 60 to 62.5/40 to 37.5% division of the parties’ valued assets, it will be necessary for the wife to pay to the husband a sum between $25,340.00 and $35,962.50. I propose ordering that the sum be $30,000.00.
The wife has the financial resources to meet this sum. She also has the ability to retain the Bayview Haven unit, which is her wish and substantially reduce the mortgage on it. As I have found, she has the capacity to earn an income and will be able to service a mortgage of some kind. Precisely how great that mortgage will be is unclear to me and will be dependent on choices the wife makes for herself in future.
I propose that the parties’ remaining unvalued assets be sold at public auction. This may not be the best means to realise the maximum amount for them. I do not know. I have reached the conclusion that given that I have effectively “split the difference” in regards to the payment of the cash sum due to the husband that he should receive 65% of the net proceeds of this sale and the wife 35%. I see no reason why either the husband or wife should be precluded from bidding for any of the items concerned if this should be their wish. I suspect the various items are likely to be of more interest to the husband than to the wife.
The final step in determining property matters is to stand back and consider whether the proposed result is just and equitable. In this particular case, in order to ensure that the outcome is just and equitable, it is not open to the court to consider what the outcome should be merely in percentage terms. It is necessary for the court to consider the actual effect of the orders that will be made.
If the orders I have come to are made, it will leave the wife with the real property in which she wishes to live. She will have a modest amount of superannuation of around $30,000.00. Currently, putting aside the payment of monies due to the husband and what she may receive from the sale of the other items of property, she has saving and shares in excess of $30,000.00. She also has over $190,000.00 in the form of the cash component of her inheritance. Accordingly she has the capacity to reduce the mortgage on the Bayview Haven property to somewhere in the vicinity of $100,000.00.
I appreciate that this is a significant sum. However the wife is a skilled person, with a capacity to earn between $50,000.00 and $65,000.00 per annum. I believe that she has the ability to service such a mortgage in future and pay it off. The ownership of the real property will give her a measure of financial security in the future. It also represents a significant capital sum.
If the proposed orders are made, the husband leaves the marriage in a not dissimilar financial position to that in which he began it. He has cash and assets to the value of about $250,000.00 and his Suncorp superannuation of $75,400.00. He has a modest and unencumbered home and the beginnings of a sum on which he can rely for financial support in his retirement. Clearly neither party leaves the marriage in a robust financial position and both parties, at the age of 57, can anticipate working for many years to come. They are both fortunate to have skills which are likely to remain in demand in the workforce, particularly the husband.
However, after their marriage of eleven years, during which both parties worked hard and made many contributions to it, the major difference between the parties is what is likely to be their future level of income. The husband is likely to be able to put behind him the financial adversities created by the end of the marriage quicker than the wife will by reason of his superior income.
As the Full Court of the Family Court recognised in Clauson[32] the most valuable “asset”, which a party can take out of a marriage, is a substantial, reliable, income earning capacity. The husband has such a capacity. As a medical officer, employed by the Northern Territory Government, he will earn a significant income and be provided with some valuable incentives and bonuses. I do not suggest that he is not entitled to these rewards. However this factor provides him with a great measure of future security. The wife also has such an asset but, for obvious reasons, it is not as valuable as the husband’s.
[32] See Clauson & Clauson (1995) FLC 92-595 at 81,911
The exercise I must follow, in dividing the parties’ assets, after the eleven years of their marriage, is not a process of “social engineering” or of attempting to equalise the financial positions of the parties.[33] Rather the object is to achieve a just and equitable outcome, after weighing and comparing the disparate factors which arise under sections 72(4) and 75(2) of the Act. Again, it is obviously not an exercise that is capable of “mathematical precision”.
[33] See Mallet v Mallet (1984) 156 CLR per Wilson J at 638
The parties have not prospered greatly during their marriage in the sense that they have not obviously added to the capital brought in at the marriage’s inception. This is obviously particularly so, so far as the husband is concerned. The wife leaves the marriage relatively better of than she began it. However the court, in pursuing its tasks under the applicable legislation, must be cautious not to undervalue contributions, made by a party, that do not of themselves add financial value. It must bear in mind that marriage is a “joint venture”.
The likely greater financial security of the husband, provided by his capacity to earn a large and secure income in the future, is a factor which significantly reduces any concern that I may have had that the financial failings of the marriage have been unduly laid upon his shoulders.
One issue remains. It concerns who of the parties should retain a number of items of furniture described as follows: a red cedar chest of drawers; a red cedar glass fronted bookcase; a further red cedar bookcase; a red cedar liquor cabinet; and a white beech sideboard with cane ends. These items of furniture are in the Bayview Haven unit. The wife particularly wants the glass fronted bookcase and the liquor cabinet because she is using both of them in the property.
It is the husband’s evidence that he made the glass fronted bookcase, prior to meeting the wife, in order to store antique medical text books, which he had collected. The wife disputes this and asserts that the item of furniture was purchased from a furniture store. I prefer the husband’s evidence.
It is the husband’s evidence, which I accept, that one of his hobbies is woodworking. He has a particular interest in working in red cedar, as his grandfather was a cedar worker. The husband concedes that he did not make the red cedar liquor cabinet. However, I accept the item of furniture has particular sentimental value to him because of his knowledge and affection for the timber from which it has been constructed.
As I have already indicated, I do not know what is the value of these various items of furniture. Inevitably, whatever decision I make, one of the parties will feel hard done by. It is not possible to satisfy both of their claims. However, I have reached the conclusion that the husband has a greater claim on the items of furniture. I propose ordering that the wife make the items available to the husband, for collection at his expense, within 30 days of the date of these orders.
To their credit, the parties have already agreed that the wife should retain a number of items of property, of sentimental value to her.
In the circumstances, I am satisfied that the orders I propose represent a just and equitable outcome. For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding one hundred and ninety three (193) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate: Lynnette Chin
Date: 25 September 2006
and Clauson v Clauson (1995) FLC 92-595
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