Miller and Miller
[2014] FamCA 591
•30 July 2014
FAMILY COURT OF AUSTRALIA
| MILLER & MILLER | [2014] FamCA 591 |
| FAMILY LAW – PROPERTY – Where the husband received an inheritance during the marriage which has a “special value” for family members – Where wife seeks to retain the home – Where parties have future earning capacities and similar superannuation interests – Where a superannuation splitting order is not considered appropriate – Where the husband’s contributions are deemed greater due to the inheritance – Where there is to be a small adjustment to the wife in considering factors set out in Section 75(2) of the Family Law Act 1975 (Cth) |
| Family Law Act 1975 (Cth) ss 75(2), 79(1), (2) & (4) |
| Bevan & Bevan [2014] FamCAFC 19 Bishop & Bishop [2013] FamCAFC 138 Boland v Yates Property Corp Pty Ltd (1999) 74 ALJR 209 Bolger & Headon [2014] FamCAFC 27 Bonnici & Bonnici (1992) FLC 92-272 Brisbane City Council v. Mio Art Pty Ltd & Anor [2011] QCA 234 Brisbane City Council v The Valuer-General for the State of Queensland (1978) 140 CLR 41 Bronzel v State Planning Authority of SA (1979) 21 SASR 513 Chapman & Chapman [2014] FamCAFC 91 Dickons & Dickons [2012] FamCAFC 154 Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor (2003) 129 LGERA 65 Housing Commission of New South Wales v San Sebastian Pty Ltd (1978) 140 CLR 196 Russell and Russell (1999) FLC 92-877 Spencer v Commonwealth (1907) 5 CLR 418 Stanford v Stanford [2012] HCA 52 St John Ambulance Association (WA) Inc v East Perth Redevelopment Authority (2011) 114 LGERA 112 Teal & Teal [2010] FamCAFC 120 |
| APPLICANT: | Ms Miller |
| RESPONDENT: | Mr Miller |
| FILE NUMBER: | PAC | 3081 | of | 2013 |
| DATE DELIVERED: | 30 July 2014 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 15 & 16 July 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Campton |
| SOLICITOR FOR THE APPLICANT: | Caldwell Miller Cox |
| COUNSEL FOR THE RESPONDENT: | Mr Tockar |
| SOLICITOR FOR THE RESPONDENT: | Delaney Lawyers |
Orders
That within forty-two (42) days from the date of these Orders, the husband do all things necessary and sign all necessary documents so as to transfer to the wife, on a date nominated by her within that period, his interest in the former matrimonial home at B Street, Suburb C, New South Wales, being the whole of the land contained in folio identifier …, and that concurrently with the transfer, the wife do all acts and things necessary to refinance the existing mortgage to the National Australia Bank Limited secured over the said home so as to release the husband from all or any liability in relation to the said mortgage provided that the husband shall sign, when requested and submitted to him, the appropriate discharge authority.
That pending transfer of the former matrimonial home to the wife, the husband pay, as they fall due and payable, all mortgage payments to the National Australia Bank Limited and all outgoings, including Council rates, water rates and insurances in respect to the property, as they fall due and payable.
That upon completion of the transfer of the former matrimonial home to the wife, the husband shall concurrently, if he has not already done so, vacate the property leaving the said property in good order and condition.
That the husband be restrained from removing fixtures and fittings, including blinds, curtains and light fittings, from the former matrimonial home at B Street, Suburb C when vacating the said property.
That within fourteen (14) days from the date of these Orders, the husband do all things necessary and sign all necessary documents to transfer to the wife his interest in the Caravan presently in his possession and facilitate a delivery of that caravan in good order and condition to a place nominated by the wife within seven (7) days from the date of these Orders.
That within three (3) months from the date of these Orders, the husband pay to the wife the sum of $92,000.
That liberty is granted to either party to apply on short notice as to implementation or enforcement of these Orders.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Miller & Miller has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 3081 of 2013
| Ms Miller |
Applicant
And
| Mr Miller |
Respondent
REASONS FOR JUDGMENT
The property issues for determination in these proceedings between the Applicant wife and Respondent husband are complicated by the overwhelming significance of an inheritance received by the husband as a consequence of his late grandmother’s death in 2008. some five years prior to separation.
To understand the significance of the inheritance, it is convenient to consider a brief overview of the financial relationship between the husband and the wife.
The wife is now aged 37 and the husband aged 43.
The husband has two children from his previous relationship. Those children at the time of cohabitation were aged four and two. The husband had an ongoing child support obligation for those children during cohabitation. The children formed part of the parties’ household on a limited basis during cohabitation.
The parties commenced cohabitation in April 2002 and married in 2006. There are two children of the marriage, who at the date of the trial were aged almost six and four.
The parties separated in mid-2011 under the one roof. Later the wife left the then matrimonial home at Suburb C taking with her the two children of the marriage. The children have remained in the primary care of the wife.
Prior to cohabitation and in 1996 the wife obtained employment with D Pty Ltd and in 2000 the husband obtained employment with the same company.
At the commencement of the parties’ cohabitation the wife had savings of about $22,500, a motor vehicle subject to a loan, some IAG and D Pty Ltd shares and accruing superannuation. At that time the husband had minimal accrued superannuation, some D Pty Ltd shares and outstanding debts comprising a credit card debt of about $1,500 and a $15,000 personal loan.
Subsequent to the commencement of cohabitation and in November 2002 to the wife purchased in her maiden name a cottage property at E Town for the $270,000. The purchase price and purchase costs comprised a mortgage advance of $262,155 and the wife’s savings at that time.
The parties moved to reside in the E Town property and during its ownership certain renovations were undertaken to the property.
In October 2006 the husband received a small workers compensation payout of about $28,000 following an injury earlier that year. Those funds were applied substantially to payout his pre-cohabitation debt and to the purchase of the caravan presently owned by the parties.
In September 2007 the wife sold the E Town property with the net proceeds of sale being about $103,000. With those proceeds of sale the parties jointly purchased the present matrimonial home at B Street, Suburb C in about April 2008. The purchase price of the property was $210,000 and the parties borrowed by way of mortgage the sum of $170,000.
In March 2008 the husband’s paternal grandmother, Ms F, passed away. Her estate is yet to be administered.
In 2008 the first child of the marriage, G, was born. Shortly before his birth, the wife received a redundancy payout consequent upon the termination of her employment with D Pty Ltd. The payout received was $69,000 net of tax. Of that amount $50,000 was paid by the wife in reduction of the mortgage secured over the home and the balance was applied to renovations and expenses of the household.
In 2010 the second child of the marriage, H, was born.
Twelve months later in June 2011 the husband and wife separated under the one roof in the matrimonial home, and in August/September 2011, the wife and the children left the matrimonial home to live with the wife’s mother, leaving the husband in occupation of that property.
Subsequent to separation the wife continued to make payments towards half the outgoings in relation to the property and half the mortgage payments until February 2014, notwithstanding that she and the children were no longer living in the home.
The wife has had the primary care of the children after separation with the husband paying modest child support of about $40 per week per child.
The father spends time with the children on an alternate weekend basis and for block periods during the year and on other special days.
The parties’ concession as to contributions
It is conceded by the parties that contributions of the parties over the years of cohabitation to trial should be regarded as equal, save for a consideration of the following issues:
a)the disparity in assets at the commencement of cohabitation;
b)the receipt by the wife of her redundancy payout; and
c)the wife’s contributions post-separation until trial.
Otherwise, in relation to the non-matrimonial assets, being the husband’s inherited assets, it was not contended that the wife made any contribution to those assets.
It was not contended that there were disparate contributions to the parties’ respective superannuation interests. Both parties had some accumulated superannuation at cohabitation, the quantum of which is not known. Thereafter, their present entitlements further accumulated during cohabitation and thereafter to hearing in circumstances where there is no issue as to their equal contribution to same. It is thus not proposed to deal with the superannuation in a separate pool but to include the superannuation in the overall pool for adjustment.
Matters for determination
The approach to the determination of an application under s 79 of the Act is set out in Stanford v Stanford [2012] HCA 52 and further considered by the Full Court in Bevan & Bevan [2014] FamCAFC 19 and Chapman & Chapman [2014] FamCAFC 91.
The process ordinarily involves a staged process.
The Court must identify the existing legal and equitable interests of the parties in the property, the liabilities and financial resources of the parties at the time of the hearing and then whether it is just and equitable to make a property settlement order.
Such a consideration should not be guided by an assumption that the parties’ rights to or interests in property are or should be different from those that then exist. The question is whether those rights and interests should be altered.
There is no presumption that one or other party has the right to have the property of the parties divided between them or a right to an interest in marital property that is fixed by reference to the various matters in s79(4) of the Family Law Act 1975 (Cth) (“the Act”) (Stanford (supra)). This consideration addresses the prohibition in s 79(2) of the Act.
The Court needs to conclude that it would be unjust or unfair to leave property rights intact.
In many cases, this requirement is readily satisfied where the parties are no longer in a marital or de facto relationship and, thus, for example, the common ownership or use of property by husband and wife will no longer be possible or the express or implicit assumptions that underpinned existing property arrangements, such as the accumulation of assets or financial resources by one for the benefit of both, have been brought to an end with the relationship.
In particular, such a circumstance arises where both parties seek adjustive orders but are unable to agree as to same.
If the Court so determines the Court then considers the contributions made by the parties as defined in s 79(4)(a) to (c).
The Court must then consider s 79(4)(d) to (g), in particular the subjective considerations as to the parties, by having regard to the provisions of s 75(2) in so far as they are relevant.
The Court can then consider the “justice and equity” of the actual orders to be made: Russell & Russell (1999) FLC 92-877, Teal & Teal [2010] FamCAFC 120, in the context of the Court’s obligation to make “appropriate orders” as provided for in s 79(1) of the Act.
In this matter the parties, throughout their cohabitation have acquired assets and benefits ostensibly for their benefit into the future and for that of their children. Some of those assets are jointly held. Both of the parties seek disparate orders in relation to the disposition of those assets and, accordingly, it is just and equitable for the Court to make orders under s 79 of the Act
The property pool
The significance of the husband’s inheritance, referred to above, is reflected in the draft working balance sheet marked into evidence as Exhibit J. It is contended by the husband that his real estate interests in the estate of his late grandmother have a value of $695,600. As will be seen later, the wife asserts that that value should be the greater figure of $928,933. There is no dispute as to the remainder of the husband’s entitlement in the estate and that entitlement has a value of $26,524. His total interest in the estate is $955,457 if the wife’s real estate value is accepted.
The matrimonial assets, including the former matrimonial home at Suburb C, have a gross value of $364,695, less agreed liabilities of $167,903, leaving a net value of $196,792. In addition, the parties have superannuation entitlements that are agreed in the total sum of $189,804. The total matrimonial pool is thus $386,596.
The total matrimonial pool being $386,596 approximates about 30 per cent of the overall property of the parties, including the inheritance, having regard to the wife’s contention as to the value of the inherited assets.
It is well settled (Bonnici & Bonnici (1992) FLC 92-272) that property does not fall into a protected category merely because it is received as an inheritance. In Bonnici (supra) the Full Court said:
39. However, the problem that present (sic) faces the Court, is as to whether a finding that the parties had contributed equally can be justified given the very substantial assets that came into the husband’s hands shortly prior to the end of the marriage.
40. We have no doubt that his Honour was correct in rejecting the submission that these assets were a “resource” and not property. …
41. The more difficult issue in this case is as to whether the same should be treated differently from other types of property in which the parties clearly have an interest.
42.The answer, we consider, must depend upon the circumstances of individual cases. If, for example, in the present case, there had been no other assets than the husband’s inheritance, but the wife had, as his Honour found, clearly carried the main financial burden in the support of a family and also performed a more substantial role as a homemaker and parent than the husband, then it would clearly be open and indeed incumbent upon a Court to make a property settlement in her favour from such an inheritance.
43.A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question. (emphasis added)
44.The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances. Such circumstances might include the care of the testator prior to death by the husband or wife as the case may be or other particular services to protect a property. See H and H (1978) FLC 90-487. But there was no evidence of this in the present case despite submissions by counsel for the wife to the contrary. Accordingly, we think that in the present case the monies received by the husband from the sale of the freehold and from his uncle’s estate should not be brought into account.
More recently the Full Court in Bishop & Bishop [2013] FamCAFC 138 observed at [28] and [29]:
28.We agree with the assertion in Ground 3 that his Honour was not constrained by what the Full Court said in Bonnici about the treatment of inheritances. As the Full Court emphasised in that decision, and as we cannot emphasise too strongly, each case in this jurisdiction will depend on its own facts or circumstances.
29.However, we would not interfere with his Honour’s decision because of his view that he was bound by authority to exclude the inheritance from the calculation of “the asset pool”. This is because his findings or conclusions in the last three sentences of [41] would support the approach which he took of excluding the wife’s inheritance from the “asset pool” and regarding the husband’s contributions to it as “nil”. His Honour did, however, have regard to the inheritance in the context of his consideration as to whether any adjustment was required to be made to the division of the property to which the parties had contributed, on account of the matters contained of s 75(2) of the Act. This, in our view, was an approach open to him.
The matrimonial asset pool represents a modest percentage of the overall assets of the parties. The husband’s inheritance was received by him some 3 years before separation, although for reasons not explained the estate remains unadministered.
The parties were actively engaged with the rural property during cohabitation and the husband thereafter.
The parties’ cohabitation was for nearly 10 years, with two young children.
In the circumstances, it is appropriate that the inheritance from part of the pool for adjustment purposes.
The property pool of the parties, save for the issue as to the valuation of the inherited real estate comprises the following:
Joint Matrimonial home at Suburb C $275,000
Joint Caravan $ 30,000
Husband Motor vehicle 1 $ 1,500
Wife Motor vehicle 2 $ 15,000
Husband Boat $ 5,000
Husband Motorcycle $ 3,500
Husband Firearms $ 2,650
Husband Household contents $ 2,000
Wife Household contents $ 2,000
Wife 204 IAG shares $ 1,201
Wife 1,459 D Pty Ltd shares $ 7,747
Husband 1,670 D Pty Ltd shares $ 8,867
Joint NAB account funds $ 123
Husband Family First Credit Union account funds $ 710
Wife NAB account funds $ 2,541
Wife MacArthur Credit Union account funds $ 856
Husband Cattle $ 6,000
Husband Deceased estate interest in real property $928,933 $ 695,600
Husband Deceased estate interest in cattle $11,433
Husband Deceased estate interest residuary estate $15,091
Total assets: $1,320,152 $1,086,019
Liabilities (agreed):
Joint Mortgage matrimonial home at Suburb C $154,325
Wife NAB credit card $ 769
Wife BankWest credit card $ 4,048
Husband NAB credit card $ 7,865
Husband Family First Credit Union debt $ 896
Total liabilities: $167,903
Superannuation (agreed):
Wife Australian super $ 93,044
Husband One Path super $ 76,459
Husband Cbus super $ 6,952
Husband Auscoal super $ 13,349 Total superannuation: $189,804
Total Net Assets (including superannuation): $1,342,053 / $1,108,720
The valuation dispute: “special value”
The valuation dispute was focused on two portions of rural land inherited by the husband from his late grandmother’s estate. The land presently comprises a rural property on which the husband’s father conducts a small farming enterprise that the husband’s father, and his father before him, have done for many years.
Probate of the will of the deceased was granted in the Supreme Court of New South Wales on 8 August 2008. The estate remains unadministered with the various parcels of real estate remaining in the name of the deceased and not yet transmitted to the executors or any of the entitled beneficiaries. Further, the estate continues to operate the small rural enterprise conducted on the deceased’s land holdings. That enterprise is run by the husband’s father, who has lived on the property and run the enterprise for many years.
The deceased’s will contains the following provision:
It is my specific wish that each of my beneficiaries who may receive any real property under the terms of this Will, shall consult with my son [Mr I] with regard to the future use of that property or any sale of that property.
It is to be noted that the deceased did not provide for her son a life estate in the real estate to ensure his ability to remain thereon during his lifetime. As the will provides, there is merely an obligation to consult imposed on the beneficiaries. Accordingly, the wishes of the respective beneficiaries would be determinative of the use of the subject land or any sale.
It is common ground between the parties that the husband may call for the transfer of the land from the executors, to which he is entitled under the will of the deceased, at any time.
The properties in dispute are lot J, deposited plan 1045717, and lot K, deposited plan .... The husband is solely entitled to lot J and has a one third share with his siblings in lot K.
The single expert valuer valued the husband’s interest in lot J at $40,000 and the husband’s interest in lot K at $20,000.
Lot J comprises 4.05 hectares and is zoned as general rural land. The lot retains a dwelling entitlement. A dwelling may be erected on the property provided that the dwelling is erected by a family member of the person who owned the land as at 24 April 1969. It is common ground that that condition has been met. As a consequence, the husband may erect a dwelling on the lot whilst he retains the property and subsequently the property can be sold by him with the dwelling on it to a non-family member. However, if sold in its present state as vacant land to a third party purchaser, the dwelling entitlement would cease to exist and that third party could not construct a dwelling thereon.
The single expert report notes:
The subject lot therefore holds a “special value” value to a family member but the family member cannot realise a value above a rural land (without building entitlement) value until the dwelling is constructed and an occupation certificate is issued.
Lot K comprises 4.058 hectares and, like lot J, similarly has attached to it a concessional family dwelling entitlement upon the same terms and conditions.
By letter dated 11 July 2014 the wife’s solicitors enquired of the single expert as to whether the single expert was aware that the husband in the proceedings was a grandson of the deceased owner of lots 2 and 4 and, as such, it was a person who would be in a position to take advantage of the concessional family dwelling entitlement referred to above. In his response the single expert said as follows:
2. We valued these lots on a “Market Value” basis under the Australian Property Institutes definition of value. The subject properties (Lot J & K) only have a right to construct a dwelling if the dwelling is constructed by a relative as outlined in our original report. We refer to comments under valuation rationale on page 4 of our original report. Based on the definition of market value we cannot assume the properties have a dwelling entitlement and have valued these properties accordingly.
3.We do acknowledge however that the subject properties may have a “Special Value” to a relative of the land owner. In this case, [MrMiller] being a grandson of the owner. As stated in the valuation report, a relative is entitled to a building entitlement under the concessional allotment provisions of the planning approval. However, this building entitlement is extinguished if the property is sold on the open market to a non-related purchaser.
4. The definition of “Special Value” as defined in the Australian Property Institute Professional Practice is as follows:
A term relating to an extraordinary element of value over and above Market Value. It is an increment of value that could be applicable to a particular owner (in this case a relative of the owner) of the property rather than to the market at large; that is, Special Value is applicable only to a purchaser (beneficiary) with a special interest. (emphasis removed)
The single expert valuer concluded:
5. In regard to this Special Value definition and on the basis that it is established that [Mr Miller] has a special interest in the subject lots, as a relative of the owner and; in addition, it is reasonably foreseeable that [Mr Miller] would development (sic) the subject allotments for the purpose of erecting a dwelling; …
The single expert then ascribed and assessed “special value” to the husband as the grandson of the property owner as follows:
Lot J: $210,000
Lot K: $ 83,333 (reflecting his one-third entitlement)
It was contended on behalf of the wife that the uplift in value as a consequence of the special value ascribed to the husband should be included in the property pool for the purposes of adjustment between the parties.
Whilst historically there is evidence of discussions as between the husband and the wife in relation to the prospect of erecting a dwelling on lot J, there is no evidence that the husband has such an intention in the foreseeable future. There is no evidence at all in relation to any intention of the husband or his siblings who are entitled to lot K of erecting a dwelling on that property.
In cross-examination, the single expert gave evidence as to the prospective add-on costs of erecting a kit home dwelling with a construction cost of about $100,000 on lot J. In addition add-on costs, as the best could be determined by the single expert, of $30,000 for power, $10,000 - $15,000 for road access and unknown bush fire report costs. There are also unknown sewerage and drainage costs and development costs, adding a significant margin to the cost of construction. Development requirements are more particularly were set out in correspondence provided to the husband by letter from Suburb C City Council dated 31 October 2013.
In considering the prospective overall costs of constructing a dwelling on lot J and the prospect of that property after development being sold to a third party purchaser, the single expert was unable to express a view as to whether there would be ultimately any profit to the husband.
The principle as to the valuation of land at its “highest and best use” is well settled (Spencer v Commonwealth (1907) 5 CLR 418 at 441).
The principle of “highest and best use” has been repeated in a series of authorities relevant to the valuation of real property (see Brisbane City Council v The Valuer-General for the State of Queensland (1978) 140 CLR 41; Housing Commission (NSW) v San Sebastian Pty Ltd (1978) 140 CLR 196 and The Valuer-General v Fenton Nominees Pty Ltd (1982) 150 CLR 160).
The principle was stated by Pullin J in Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor (2003) 129 LGERA 65:
18. … The test of market value is well known. It is what the hypothetical purchaser desiring to purchase the land would have had to pay for it on the date of resumption to a hypothetical vendor willing to sell it for a fair price but not desirous to sell: Spencer v Commonwealth [1907] HCA 82; (1907) 5 CLR 418.
19.Regard must be had to every element of value which the lands possess. Every such element must be taken into consideration insofar as they increase the value to the owner of the land: Minister of State for Home Affairs v Rostron [1914] HCA 66; (1914) 18 CLR 634 at 637. In short, regard should be had to the highest and best use of the subject land, meaning the most advantageous use of the subject land having regard to planning and all other relevant factors affecting its present and future potential: Adelaide Clinic Holdings Pty Ltd v Minister for Water Resources (1988) 65 LGRA 410 at 415.
It is common ground that in the event that lots J and K were sold as they are at present, the price that would be realised would be the lower value first ascribed by the single expert. That price would reflect the “highest and best use” in relation to the properties in a disposition to a non-family third party purchaser, who would have no right to erect a dwelling thereon.
The concept of ‘special value” in relation to land is a concept well-known in relation to resumption or compulsory acquisition of land. Although in many cases “value to the owner” is no more than the market value which the land will yield, there are some cases in which there is a special value to the owner, which takes compensation above market value: Bronzel v State Planning Authority of SA (1979) 21 SASR 513 at [524]. (See also Callinan J Boland v Yates Property Corp Pty Ltd (1999) 74 ALJR 209 at [269] and the detailed consideration in St John Ambulance Association (WA) Inc v East Perth Redevelopment Authority (2011) 114 LGERA 112 at [134] – [136], Brisbane City Council v. Mio Art Pty Ltd & Anor [2011] QCA 234 and see Hyam, A, Valuation of Land in Australia, 3rd ed at 280 - 302).
There is no evidence as to any present or reasonably foreseeable intention to erect a dwelling on the subject lands. There is no evidence; indeed there is only conjecture, as to the likelihood of any profit on a disposition of the improved lands to a third party purchaser.
For these reasons, the contention as to a “special value” to the husband that should be included in the asset pool for adjustment purposes is rejected.
The assets of the parties, as referred to above, accordingly have a gross value of $1,086,019 and with superannuation total $1,275,823. After liabilities, the net figure is $1,107,920.
Contributions
In Bolger & Headon [2014] FamCAFC 27, the Full Court said:
23.This Court said some 20 years ago in Aleksovski v Aleksovski (1996) FLC 92-705, per Baker and Rowlands JJ at 83,437:
It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.
It really comes down to questions of weight. Whilst weight would and must be given to a contribution which a party makes shortly before the separation, less weight may be given to a contribution made by one of the parties to a marriage early in the cohabitation period of a long marriage, particularly in circumstances where the contribution has gone into the parties' assets or been used up in the payment of family expenses.
24. Kay J held at 83,443:
What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship. Just as early capital contribution is diminished by subsequent events during the marriage, late capital contribution which leads to an accelerated improvement in the value of the assets of the parties may also be given something less than directly proportional weight because of those other elements.
25.Of considerable significance to the approach of the trial Judge, this Court said in Dickons & Dickons [2012] FamCAFC 154:
23. We wish also to refer to the approach of the Federal Magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
24. There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
26. In passages which resonate with the arguments in this appeal the trial Judge’s reasons to which they relate, this Court went on to say:
25. Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “…giving over-zealous attention to the ascertainment of the parties’ contributions…” (Norbis v Norbis (1986) 161 CLR 513 at 524) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26. The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
27.In the same year, in Lovine & Connor and Anor (2012) FLC 93-515, this Court said:
42. As part of the process of ultimately determining just and equitable orders under s 79 there is included a complex of discretionary assessments and judgments of many components of contribution, only some of which are capable of measurement in money terms and then often only in historical, rather than present, money terms. Any dictate to the effect that in the course of assessment each disparate component part or kind of contribution must be assigned a discrete and identifiable value or percentage is antithetical to the nature of the discretion involved.
Contributions in a matrimonial sense favour the wife by reason of her initial contribution, her redundancy entitlement that to an extent accrued pre-cohabitation and more importantly post-separation contributions having the primary care of the children, receiving modest child support, her ongoing payments in relation to the home mortgage and the husband’s ongoing occupation of the home.
It is a modest proportion of the overall pool and the wife has made significant contributions over that of the husband.
However, the inherited assets represent a significant percentage of the overall pool.
Overall, contributions should be regarded as favouring the husband as to 72.5 per cent ($803,242) and the wife 27.5 per cent ($304,678). This creates a disparity between the parties of about $500,000.
On this basis, the wife would retain the home and the caravan, as agreed by the parties, and her other assets, including superannuation with a total net value of $268,247. This would require the husband to pay her an adjustive sum of about $36,500.
Section 79(4)(d) to (g)
Orders that would facilitate an outcome as above would have no effect on the earning capacity of either party. They are both in salaried PAYG employment.
The wife is aged 37 and the husband 43. Neither assert any relevant health issues.
Both parties are in full time employment. The wife is now on a salary of about $90,000 per annum. The husband’s income is about $74,000 per annum. Both parties are able to continue in full time employment into the future.
The assets and financial resources of the parties are considered above.
The wife will retain the primary obligation for the care of the parties’ two young children.
The wife has commitments to support herself and the primary commitment for the financial support and accommodation of the two children of the marriage. The husband, on the other hand, has his primary commitment to the support of himself and a modest financial commitment by way of child support for the financial support of the children, other than times when the children are in his care.
Neither party has a responsibility to support any other person.
The superannuation entitlements of the parties are modest and have been considered above. The wife is in receipt of an income-tested family tax benefit of about $130 per week.
During cohabitation, the parties enjoyed a reasonable standard of living in modest cottage accommodation. It is the wife’s proposal that upon the home at Suburb C being transferred to her, she will sell that property with the inference that she will seek to purchase other accommodation for herself and the children, which in all circumstances, is reasonable. The husband proposes to return to reside in the short term on the rural property in respect of which he has an interest.
Neither party is cohabiting with another person.
The proposed property orders arising from contribution-based findings are set out above. The result of the parties’ entitlement on a contributions basis leaves the husband with an overwhelming disparity in his favour of about $500,000. The wife will be able to realise a modest equity in the former matrimonial home and receive a modest sum by way of a cash adjustment from the husband. This leaves her a very modest capital base upon which to seek independent accommodation for herself and the two young children of the marriage.
The husband at present has an obligation to pay child support of about $80 per week in total for the two children. His current assessment is based on a salary of about $10,000 less than his salary at present and on a salary for the wife that is $50,000 less than her current salary. It is to be inferred that any assessment that issues based on the parties’ present circumstances will see a diminution in the husband’s child support obligation for the two children. This will leave the wife with the overwhelming financial obligation for the financial support, including the provision of accommodation, for the children of the marriage.
The husband contended that the “family arrangement” that facilitated his father continuing to live on and operate the estate’s rural enterprise was a relevant consideration to the orders to be made. The father’s late grandmother provided at least for some consultation in the terms of her will as to the use of that property and/or its sale. In the circumstances, it was contended that it would be inappropriate to require the husband to make a capital payment to the wife as that would require him to either realise his interest in the estate or secure borrowings over his interest in the estate. In all of the circumstances, it is considered appropriate that any capital payment to be made by the husband should be within a more extended time period to facilitate he and his family making arrangements to accommodate any liability that he may have. In the context of submissions, a period of three months was proposed.
A consideration of the above matters is indicative of a further adjustment to the wife’s contribution-based entitlement.
It is submitted on behalf of the wife that such an adjustment should be in the range from 10 to 15 per cent. It was contended on behalf of the husband that in the event that a two pools approach was adopted, thus isolating out the husband’s inherited assets, then an adjustment of the remaining matrimonial pool in the range of 15 to 20 per cent in favour of the wife was called for.
Having regard to the fact that a one pool approach has been adopted for the very reasons foreshadowed in Bonnici (supra), it is appropriate that an adjustment in the lower range be considered.
An adjustment of 5 per cent in favour of the wife would result in a disparity between the parties of about $110,000 from the pool and reduce the overall disparity in favour of the husband to about $390,000. Such an adjustment would result in the husband being required to pay to the wife an adjustive payment of about $92,000 in lieu of the adjustive payment resulting from the contribution-based entitlements.
In considering all of the above matters such an adjustment is appropriate.
Just and Equitable and Appropriate
The orders foreshadowed as a consequence of the contribution based findings are referred to above. It is agreed between the parties that the wife is to retain the Suburb C property and the caravan, together with her other assets and personal liabilities.
It was contended on behalf of the husband that there should be a splitting order as to part of the husband’s superannuation to meet part of the wife’s claim. Both parties still have many years left in the workforce and will continue to accrue superannuation and build on the superannuation base that they both already have. In circumstances where the parties’ superannuation entitlements are all but equal and the husband seeks a superannuation split of a sum of only about $20,000, it is more appropriate that the parties simply retain their present superannuation entitlements without adjustment.
For the reasons referred to above, it is appropriate to allow the husband a reasonable time to make arrangements to fund the capital payment to be made to the wife and a period of three months will be allowed, with leave to restore the matter to the list as to enforcement, if necessary.
Accordingly, orders are made as set out at the forefront of these reasons for Judgment.
I certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 30 July 2014.
Legal Associate:
Date: 30 July 2014
0
15
1