Moore & Moore
[2008] FamCA 32
•25 January 2008
FAMILY COURT OF AUSTRALIA
moore & Moore
[2008] FamCA 32
FAMILY LAW – PROPERTY - Second settlement proceedings between same parties with grown up children - Initial order by consent in 1994 distributing $538,000 pool 67% to wife and 33% to the husband set aside pursuant to s 79A(1A) and discretion re-exercised - Husband’s application for s 78 declaration as to parties shares in former matrimonial home on trust principles declined - Husband alleged unequal overall contribution based on claims against wife of extravagant spending, lack of commitment to the family and the marriage, pre-occupation with extraneous interests and recreations - Wife counter argued “equality is equity” in 20 year marriage except in cases of gross unevenness of contribution or when demands of economic justice otherwise dictate - Comparative analysis of English and Australian approaches in discretionary decision-making - The development of the modern law of property division in Australia and overseas traced - The role and function of social values in discretionary decision-making considered - The meaning and practical content of the prevailing relevant concept of contribution in s 79(4) discussed - Wealth transferring principles identified - The partnership notion of marriage contrasted with the evaluative method of ascertaining quantum of entitlement – The need for authoritative Full Court guidelines discussed.
Held:
1) Net pool of $2,255,851 - inclusive of superannuation interests- shared equally based on assessed contribution entitlement.
2) Wife’s award adjusted to 55% for income and superannuation disparity.
Ferraro v Ferraro (1993) FLC 92-335
JEL and DDF (2001) FLC 93-075
Fisher v Fisher (1986) 161 CLR 438
Taylor and Taylor (1979) 143 CLR 1
Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566
Collins (1990) FLC 92-149
Dudley v Dudley (1705), Prec. Ch. 241
Thomas v Thomas(1995) 2 FLR 668
Marriage of Way (1996) FLC 92-702
Rediffusion (Hong Kong) Ltd v Attorney-General of Hong Kong (1970) AC 1136
N & N [2000] FamCA 688
Calverly v Green (1984) 155 CLR 242
Kennon v Kennon (1997) FLC 92-757
Wilcock v Sain (1986) 11 Fam LR 302
Norbis v Norbis (1986) 161 CLR 513
The Queen v Joske; ex parte Shop Distributive and Allied Employee’s Association (1976) 136 CLR 194
Breen v Williams (1996) 186 CLR 71Rex v Wilkes (1770) 4 Burr. 2527
Muschinski v Dodds (1985) 160 CLR 583
Baumgartner v Baumgartner (1987) 164 CLR 137
Cominos v Cominos (1972) 127 CLR 588
Lansell v Lansell (1964) 110 CLR 353
D & D (2006) FLC 93-300
House v King (1936) 55 CLR 499
Gronow v Gronow (1979) 144 CLR 513
Mallet v Mallet (1984) 156 CLR 605
SL and EHL [2005] FamCA 132
McFarlane v Tayside Health Board (2002) 2 AC 59
Mabo v The Queen (No 2) (1991) 175 CLR 1
Dietrich v The Queen (1999) 177 CLR 292
Queen v L (1991) 174 CLR 379
Breen v Williams (1996) 186 CLR 71
Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349
Miller v Miller: McFarlane v McFarlane[2006] 2 AC 618
Onus v Alcoa of Australia Pty Ltd (1981) 149 CLR 27
Shewring (1988) FLC 91-099
White v White [ 2001] 1 AC 596
Porter v Porter (1969) 3 All ER 640
Haldane v Haldane (1977) AC 67
Bermingham v Corrective Services Commission of New South Wales (1988) 15 NSWLR 292
Kowalski (1993) FLC 92-342
Moge v Moge (1992) 43 RFL (3)(d) 345
Pettitt v Pettitt [1970] AC 777
Calverley v Green (1984) 155 CLR 242
Gissing [1971] AC 886
Wirth v Wirth (1956) 98 CLR 228
Stack v Dowden [2007] UKHL 17
Rolfe (1977) 34 FLR 518
Wardman v Hudson(1978) FLC 90-466
Potthoff (1978) FLC 90-475
Pickard (1981) FLC 91-034
Eves v Eves [1975] All ER 768
Hofman v Hofman (1965) NZLR 795
Browne v Green (1999) FLC 92-873
Watchel v Watchel (1973) Fam 72
Todd (No 2) (1976) 9 ALR 401
Money & Money (1989) FLC 92-010
Shaw (1989) FLC 92-010
Farmer v Bramley(2000) FLC 93-060
Figgins (2002) FLC 93-122
Graham v Graham [2003] NIfam 14
Cordle v Cordle (2002) 1 WLR 1441
Foster v Foster (2003) 2 FLR 29
GW v RW (2003) 2 FCR 289
P v P ( Inherited Property) (2005) 1 FLR 576
Cowan v Cowan [2001] 2 FLR 192
Lambert v Lambert [2003] Fam 103
Parlour v Parlour (2004) 2 FLR 893
Sorrel v Sorrel (2006) 1 FLR 497
Cardile and LED Builders (1999) 21 CLR 38
U and U (2002) 211 CLR 238Charman v Charman [2007] 1 FCR 33.
Kowaliw (1981) FLC 91-092
Benson (1984) FLC 91-581
Townsend (1995) FLC 92-569
Shewring (1988) FLC 91-926
Fisher v Fisher (No. 2) (1986) FLC 91-767Zykv Zyk (1995) FLC 92-644
R v R [1992] 1 AC 599
Crapp v Crapp (1979) FLC 92-615
D v D [2006] FamCA 245
Beck and Beck (No 2) (1983) FLC 91-318
Robertson and Austin [2003] VSC 80
Waters and Jurek (1995) FLC 92-635Dwyer v Kaljo (1992) DFC 95-127
Evans v Marmont (1997) DFC 95-184
Bennett v Parker (2000) 27 Fam LR 8.Howlett v Neilson (2005) 33 Fam LR 402
Best v Best (1993) FLC 92-418
Collins (1990) FLC 92-149
Egan v Canada [1995] 2 SCR 513
Ferguson v Ferguson (1978) FLC 90-500
Carter and Carter (1981) FLC 91-061
K & K (unreported Family Court of Australia, O’Ryan J, 30 August 2005).
Harrington v Harrington (2007) FLC 93-317
E & E (Financial Provision) [1990] 2 FLR 233
Aroney v Aroney (1979) FLC 90-709
Poulos (1984) FLC 91-515
Zdravkovic (1982) FLC 91-220
GBT and BJT [2005] FamCA 683
Aleksovski (1996) FLC 92-705
McLay(1996) FLC 92-667
G & G (2002) 2 FLR 1143
Wachtel v Wachtel(1973) 2 WLR 366
Chorn v Hopkins (2004) FLC 93-204Myers v Myers (1987) DFC 95-056.
Williams v Williams (1985) FLC 91-628
W & W [2005] FamCA 181
Clauson v Clauson (1995) FLC 92-595
APPLICANT:
Ms Moore
RESPONDENT:
Mr Moore
FILE NUMBER:
(P)BRF
4921
of
1994
DATE DELIVERED:
25th January 2008
PLACE DELIVERED:
Brisbane
JUDGMENT OF:
Carmody J
HEARING DATE:
30th July 2007 and 19th September 2007
REPRESENTATION
COUNSEL FOR THE APPLICANT:
Mr Baston
SOLICITOR FOR THE APPLICANT:
Hawthorn Cuppaidge & Badgery
COUNSEL FOR THE RESPONDENT:
Mr Hackett
SOLICiTOR FOR THE RESPONDENT:
Berck & Associates
Orders
(1)I direct that within seven (7) days the parties’ lawyers consult with each other in order to reach agreed terms of settlement if possible and file a draft minute of consent orders by close of business on 6th February 2008. Otherwise the parties must exchange and email to my associate written submissions about the just and equitable terms of order and what assets each of them wants to retain or receive, together with draft proposed orders by no later than 4.00 pm on 14th February 2008.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Carmody delivered this day will for all publication and reporting purposes be referred to as Moore & Moore.
Family Court of Australia at Brisbane
FILE NUMBER: (P)BRF4921 of 1994
MS MOORE
Applicant
And
MR MOORE
Respondent
REASONS FOR JUDGMENT
Introduction
1.This is an unusual case of a second property settlement proceeding between the same parties.
2.Orders pursuant to both ss 78 and 79 of the Family Law Act 1975 (Cth) (FLA) declaring and/or altering the parties’ legal and beneficial interests in property are sought.
3.Normally, the spousal property adjustment power in s 79 is a once and for all proposition but here the wife invokes a rarely used discretion to set aside a previous property order made in 1994 and have it replaced by another more just and equitable one. She claims that anything other than equal division appropriately adjusted for her likely future needs and other factors would be unjust and inequitable and, therefore, beyond power.
4.The husband, on the other hand, argues that the 1994 orders were final and determinative and the court has no jurisdiction to reopen the question of property settlement. He further contends that the comparative quantity and quality of contribution since reconciliation should be assessed on settled “short” marriage principles.
The material facts
5.The disputing couple married in 1983, separated 11 years later, divided their matrimonial property on agreed terms then (without formally dissolving their union) reconciled and resumed cohabitating for another 10 years before finally divorcing. They are now both middle aged and have three adult children: a 22 year old daughter (who lives independently) and two boys, aged 20 and 18, who still reside with the father in the former family home at T.
6.The husband is a successful professional. The wife has recently taken up employment as a secretary.
7.The parties first separated in March 1994. At that time there was jointly owned real estate at A. The husband also owned a farm at B and a block of land in T.
8.A consent order finalising property and maintenance arrangements was sealed in August 1994. The settlement was based on a property pool of $538,067 which was distributed 67% or $360,504 to the wife (including $30,000 in lump sum spousal support) and 33% or $177,563 to the husband.
9.After the terms of the order had been implemented the parties reconciled and by early 1995 had resumed cohabitation.
10.The wife purchased I property with her share of the marital assets. It was rented out until it was sold in 1996 for $170,000. The proceeds were used to acquire the husband’s legal title in T with the common intention of building a new house on it in the future. The husband later contributed $632,384 (78%) of the total cost of construction.
11.For the next three years the family lived in B. The wife was paid a wage to manage the farm while the husband commuted daily to Brisbane for work.
12.The farm was sold in 2004 to establish a joint self-managed superannuation fund with the proceeds.
13.A co-owned investment property was purchased on interest only bank finance in February 2005. The rent was directly credited against the mortgage account and any additional expenses met out of the husband’s income. It was later sold at a loss.
14.Separation under the one roof began on 15 October 2005 and continued until the wife and daughter left the family home on 17 March 2006. The marriage was formally dissolved on 4 April 2007.
The competing claims
15.Understandably both parties want to keep the former family home which is the major asset available for distribution.
16.The wife seeks 65% of the net pool for past contribution and relief against disparity in earning capacity and retirement savings. This would see her keep accrued superannuation of $171,645, own the former family home outright and receive a cash payment of about $100,000 in addition to retaining the $121,000 odd dollars worth of non-superannuation property currently in her possession.
17.The husband applies for an s 78 declaration that the wife holds the legal title to the former family home on trust for him in proportion to their agreed financial contributions, eg 78% to him compared with 22% to her.
18.Alternatively he asks for s 79 orders that the wife transfer title to the former family home in exchange for 25% of the net asset pool or approximately $220,000 after adjustment of between 1.75% and 6.25% for ill-health and ongoing care of the boys for the next four years while they remain full-time students taking his total claim up to 75% - 80% of the net pool.
19.Although accepting that ordinarily the husband should be awarded up to 6.75% for the boy’s education and accommodation the wife contends that no adjustment ought actually be made here because since separation the husband and the boys have occupied her share of the former matrimonial home while she has had to house and re-enter the workforce without financial or other assistance from the husband.
20.The polar positions taken by the parties on the share entitlement issue complicates the already difficult task set for me by the legislation. The wife’s broad approach to assessment contribution is based on a partnership model of marriage which assumes for the purposes of disputes over matrimonial property that each party has contributed more or less equally to the wealth and welfare of the family over the entire length of the marriage and, justice and equity require an equal division of the net assets accumulated in that time.
21.The husband, by contrast, adopts the more traditional so called “evaluative” method to the calculation of entitlement involving a comparison of the parties’ actual performance in their respective roles and counting of their breadwinner and homemaker/parent contribution down the years. He claims a substantial contribution disparity developed in the five years to the date of separation which as a matter of principle would be unjust to ignore. Although conceding that in a marriage that lasted as long as this one did giving all types of contribution appropriate weight irrespective of roles often, though not always, will be an equal sharing of the parties’ property he argues that the degree of unevenness of contributions here justifies unequal sharing.
22.There is authority for both techniques. This means that at some point it will be necessary for me to resolve the judicial division[1] between those cases preferring the strict evaluative method and others favouring a true partnership concept when assessing or ascertaining entitlement or sharing under s 79.
[1] cf. Ferraro v Ferraro (1993) FLC 92-335 and JEL and DDF (2001) FLC 93-075.
23.But first a brief look at the statutory scheme for property division on separation or divorce.
The law of who gets what when a marriage fails in Australia
24.The Family Law Act 1975 (the FLA) confers a “formidable”[2] exclusive jurisdiction on this court over property proceedings between spouses arising out of their marriage.[3]
[2] Dickey, A, ‘The moral justification for alteration of property interests under the Family Law Act’, (1988) 11(1) UNSW Law Journal 158.
[3] s 4(1) definition of “matrimonial cause” par (ca)(i) . This is distinct from a commercial or other type of relationship.
25.Subsection 79(1) confers while subs (2) confines the width of power. Together they allow the reallocation of ownership rights by orders that in all the circumstances are just and equitable to make.
79(1) [Orders] In property settlement proceedings, the court may make such order as it considers appropriate:
(a)… altering the interests of the parties to the marriage to the property.
79(2) [Just and equitable requirement] The court shall not make an order under this section unless it is satisfied that, in the circumstances it is just and equitable to make the order.
26.In exercising the property power, judges can declare the parties’ legal rights and title in disputed property according to general principles of law and equity pursuant to s 78(1). Or may go even further under s 79 and actually alter the ownership rights of the parties in their present property. An order adjusting property interests is not reflective of an existing right but creates and allocates as well as identifies a beneficial interest in property.[4]
[4] Fisher v Fisher (1986) 161 CLR 438.
27.The statutory system begins where the ordinary rules end and involves:
… a process that requires comparison, evaluation and analysis not intuitive solutions.[5]
[5] Finn, P, ‘Equitable Doctrine and Discretion in Remedies’, in William R Cornish et al (eds) Restitution: Post, Present and Future, (1998) 251-274 at 262.
28.Before a court makes a declaration of constructive or resulting trust as a remedy in relation to matrimonial property it should first decide whether having regard to the issues and the litigation there is another more suitable way to quell the controversy. [6]
[6] cf. Bathurst City Council v PWC Properties Pty Ltd (1998) 195 CLR 566 at 585.
29.Here there is a clearly a much better option in the more flexible and extensive s 79 power which is to be used “… to do justice within the limits of the jurisdiction the Act confers on it”.[7] The alteration power in s 79 exists for the sole purpose of resolving and, where appropriate, altering the ownership rights of former marriage partners in their property by discretionary order. Unlike s 78 it is not controlled by fixed legal rules or precedents as in the common law tradition but involves the constrained and reasonable exercise of a broad-based discretion consistently with stated and other settled legal principles of justification and quantification within a statutory framework of mandatory and optional considerations.
[7] Taylor and Taylor (1979) 143 CLR 1 at 6.
30.The statutory provision is couched in the following terms:
79(4) [Matters to be taken into account] In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution 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 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 mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(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 mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
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 homemaker or parent; and
d) the effect of any proposed order upon the earning capacity of either party …; and
e) the matters referred to in subsection 75(2) so far as they are relevant; and
f) any other order made under this Act affecting a party … or a child of the marriage; and
g) any child support … a party … has provided, is to provide, or might be liable to provide in the future…. [emphasis added]
31.One, some or all of the 17 maintenance or prospective adjustment factors in s 75(2) incorporated by reference in sub s (4)(e) can also be relevant. These include the age, health and financial position of the parties, the capacity of each of them for gainful employment, reasonable self support and child support needs, the duration of the marriage and its economic impact generally, and the social costs of lost employment opportunities and parenting[8] as well as the effect of re-partnering and any justice related issues.
[8] See for example Collins (1990) FLC 92-149 at 78-043 et seq; ss 75(2)(b), (c), (d), (e), (k)
32.In broad terms an FLA order redistributing interests in spousal property is legally justified solely on the basis of either or both proven past contribution by a party to the wealth or welfare of the family as adjusted due to foreseeable needs and other likely future economic factors.
33.Other statutory considerations include the effect of any proposed order on the earning capacity of either party (s 79(4)(d)) and any other order affecting a party or child of the marriage such as child support (ss 79(4)(f)and (g)) .
34.Section 79 is one of those uncommon “rule/compromise” discretions lawmakers rarely grant to decision-makers in the belief that they themselves will develop better and more effective jurisprudence over time.[9]
[9] cf. Schneider, C, 'The Next Step: Generalisation, Definition and Theory in American Family Law', (1985) 18(3) Michigan Journal of Law Reform 1039; 'Rethinking Alimony: Marital Decisions and Moral Discourse' (1991) Brigham Young University Law Review 197.
35.Section 43(a) - (c) of the Act requires the court, in exercising its jurisdiction under the Act (including, presumably, construing its terms), to give attention to the need to preserve the institution of marriage to give the widest possible protection and assistance to the family and the need to protect the rights of children and promote their welfare. These statutory principles are mandatory and must be kept firmly in mind when the Act is being construed, applied or compared with the content of others. The mutuality principle embodied in ss 72 and the ‘clean break’ doctrine implicit in s 81 are also important.[10] So too is the FLA’s ‘no fault’ policy. None of these, of course, are prescriptive rules.[11] They aid not govern the discretionary process and their role in the context of the property claims under consideration is clearly limited.
[10] Norbis & Norbis (1986) 161 CLR 513 at 521.
[11] Dickey, A, Family Law, 5th ed, Law Book Co, NSW, 2007 at 87.
36.Section 79 relief can only currently be accessed by marriage partners. Property disputes between other partners are dealt with by similar but usually less generous State legislation.[12] The existence of the parallel statutory regimes gives couples in a diverse society freedom to choose between one and the other.[13] Although there is increasing societal recognition and acceptance of de-facto relationships and alternative family arrangements in Australia, Jenni Milbank insists that the conventional marriage has always been regarded as “an institution”[14] and should not be equated with other less formal unions.[15] This is wholly consistent with Martha Fineman’s view that the way we as a society perceive family relationships in critical to how we “select, develop, and apply rules governing property distribution at divorce”.[16] Some account should be taken by the law and the courts of the decision of the parties not to marry: it is one thing to relieve the unequal impact of the relationship but quite another to treat the parties as if they had actually married because a valid marriage has always had a favoured position under the law.
[12] See for example Pt IX Property Law Act 1974 (QLD) ss 255-344. Between 1984 commencing with NSW and ending with Western Australia as recently as 2002 laws were enacted throughout the states and territories to deal with disputes between unmarried (including in South Australia) same sex de-facto couples. These provisions rely more heavily on the FLA than other state de-facto statutes. Contribution to property or family welfare and almost all of the s 75(2) adjustments are covered. There is, however, no provision for spousal maintenance or superannuation splitting.
[13] Bailey-Harris, R, ‘Property Division on Separation: Will the married and unmarried pass at the crossroads?’, (1985) 8 UNSW Law Journal 1 at 19.
[14] s 43(a) Family Law Act
[15] Milbank, J, ‘The Changing Meaning of ‘de facto’ Relationships’ (2006) 12 Current Family Law 82 at 86. See also Chisholm, R, Jessup O, & O’Ryan S “De facto property decisions in NSW: Emerging Trends and Policies” (1991) 5 AJFL 214 at 257-260.
[16] Fineman, M L, ‘Societal Factors Affecting the Creation of Legal Rules for Distribution of Property at Divorce’, (1989) 23 Family Law Quarterly 279.
37.Thus, a spouse has standing to apply for property redistribution solely on marriage without any further qualification based on the intimate nature or length of the relationship.[17]
[17] cf. s 260 Property Law Act 1974 (QLD); D v McA (1986) 11 Fam LR 214.
38.Likewise, a husband or wife can take action to alter property interests during a subsisting marriage whereas a de-facto partner has to wait until the relationship has ended.[18] Spouses also have a legally enforceable right of maintenance under s 72 of the FLA because of their mutual obligation of lifelong support. Other cohabitees generally don’t.
[18] s 283 Property Law Act 1975 (QLD).
39.Even traditional equitable remedies such as resulting or constructive trust cases can depend on whether the parties were married or not. In Calverly v Green[19] for instance, Mason, Brennan and Deane JJ ruled that the presumption of advancement or gift which applies in favour of wives whose husbands purchase a property in their sole name has no application to de-facto relationships. Their Honours also held that despite the similarity between marriage and long standing de-facto relationships it would be wrong to draw the favourable inference of intended joint beneficial ownership of property contributed to unequally in the case of:
…a relationship devoid of the legal characteristic which warrants a special rule effecting the beneficial ownership of property by the parties to a marriage.[20]
[19] (1984) 155 CLR 242.
[20] (1984) 155 CLR 242 at 260.
40.Arguably, marriage and cohabitation are not necessarily or always functionally or sociologically identical because of the “myriad of matters” which go to make up and differentiate a marriage from “more casual transitory relationships” referred to by the Full Court in Kennon.[21] Hence, not all the justifications for property division in marriage necessarily apply to de facto couples.[22] The former may be thought more likely to lead to the partnership of parenthood and traditional relationship roles and the latter varied patterns of workplace participation.[23]
[21] (1997) FLC 92-757.
[22] Parkinson, P, ‘Quantifying the Homemaker Contribution in Family Property Law’, (2003) 31 Federal Law Review 1 at 8.
[23] Parkinson, P, ‘Quantifying the Homemaker Contribution in Family Property Law’, (2003) 31 Federal Law Review 1 at 12.
41.A recent study into the relationship between marriage and employment, earnings and housework[24] found that overall men in Australia are more likely to be employed if they are married than if they are single or merely cohabit. If already employed, they are also more likely to work longer hours and be in management or supervisory positions. In comparison, marriage only affects the hours that married women work. There is well documented evidence that marriage is good for men in terms of their earnings.[25] Marriage is said to increase men’s earning potential because they are more productive in employment after marriage, largely as a result of the unpaid labour performed by women in the home which frees men up to dedicate themselves to a career. Research shows, for instance, that married men earn 15% more, on average, than unmarried men[26] whereas, by contrast, marriage had little influence on the level of female wages. On the other hand, wives do more childcare and routine housework than their husband’s.[27] Married women are also found to be spending six more hours a week doing domestic work than women in de facto relationships[28].
[24] Baxter, J and Gray, E, For Richer or Poorer: Where women men? End marriage (Paper presented at 8th Australian Institute of Family Studies Conference, Melbourne 12-14 February 2003).
[25] Hewitt, B, Western, M and Baxter, J, ‘Marriage and Money: the Impact of Marriage on Men’s and Women’s Earnings’, (Paper presented for the Australian Sociological Conference, Brisbane, 2002) at > November 2007 at p3.
[26] Baxter, J and Gray, E, ‘For Richer or Poorer: Women, men and Marriage, (Paper presented Women, Men and Marriage’, (Paper presented to 8th Australian Institute of Family Studies Conference. Melbourne, 12-14 February, 2003) at 11.
[27] ibid at 13.
[28] ibid at 13.
42.The main reason for observing a distinction between the concept of marriage and other loving and respectful domestic relationships in family law is to be found in s 43(a) of the FLA which defines marriage as a voluntary and exclusive heterosexual union entered into for life.
43.Not all civil partnerships involve such a public and enduring commitment in which two people identify themselves more as “us” than as “you and me”. The mutual benefits and responsibilities that come with marriage start at the point of that commitment. From then on they give priority to one another’s needs and exert efforts and make sacrifices for each other.[29]
[29] See Cavendish, C, ‘Why we all need to commit’, The Times (London), 22 November 2007.
44.On the nature of a de facto relationship Young J said in Wilcock v Sain:[30]
When parties enter into a marriage they do so consciously, knowing that they are entering into a voluntary union of one man and one woman for life and that there are obligations, both moral and legal, with respect to each other and their property. Many people in our society deliberately choose not to enter into that marriage relationship. Some do it because they value marriage so highly that they do not wish to, at least initially, take on the full responsibilities of that state. Others deliberately do not do it because they have already had an unfortunate experience with marriage. To construe (de facto legislation) … so that the parties who have deliberately refused to enter into marriage are to be deemed for all purposes as if they had gone through the ceremony of marriage, completely defeats those common intentions.
[30] (1986) 11 Fam LR 302 at 305.
45.Couples who marry, unlike those who simply move in together as if they had, promise (and presumably intend) to stay that way permanently, that is, until death parts them or, at least, indefinitely. They do not contemplate separation in their joint lifetime. Nor do they arrange their socio economic relationship around the rules of property law or equity. As Anthony Dickey points out they are more likely to want to leave it to the law of succession.[31] In those circumstances it would be clearly wrong to leave former marriage partners at the mercy of general property law in the event of divorce.
[31] Dickey, A, ‘The Moral Justification for Alteration of Property Interests Under the Family Law Act’, (1988) 11 UNSWLJ 158 at 162. cf. ss 85A, 86 and 87 of the Family Law Act 1975 (Cth).
46.Moreover, marriage is also the only voluntary relationship that cannot be duplicated, at least at the same time, because of the law against bigamy.
47.No doubt the law and the attitude of the community relating to property division are still evolving. It may be that, one day, the same principles will apply to all cohabitation relationships by reference to the same criteria regardless of whether the adults are of different sexes and formally married to each other or not.
48.This might happen when more attention is paid to the family and less to the matrimonial aspects of property redistribution problems. Time will tell.
The remedial nature of s79 relief
49.The law of matrimonial property division is ultimately about working out personal conflict and intimate socio-economic relationships. The adjustment process is concerned with how to solve the practical problem of disparities in the financial position of separating or divorcing spouses by redistributing wealth in a just and equitable way without needlessly displacing or departing from the fundamentals of the institution of private property.
50.While not formally established as a court of equity as other superior courts are,[32] the Family Court of Australia is nonetheless the quintessential court of good conscience and has always applied equitable principles by analogy to reach just outcomes in settling spousal property.
[32] See ss.21(2), 31(1), 38(2), 40(1), 42(1) of the Family Law Act 1975(Cth).
51.Equity generally follows the law but provides relief when none is otherwise available because it does not "suffer a wrong to be without a remedy".[33]
[33] Snell, E , Megarry, R E & Baker , P V (eds),‘Snell's Principles of Equity’ (27th ed), Sweet & Maxwell, London, 1973 at 27. However, it will not usually help a person who acts unconscionably or who does not come "with clean hands".
52.One of the best definitions of the nature of equity was given by Lord Cowper in Dudley v Dudley:[34]
Now equity is no part of the law, but a moral virtue, which qualifies, moderates and reforms the rigour, hardness and edge of the law … it does also assist the law where it is defective and weak in the constitution (which is the life of the law) and defends the law from crafty evasions, delusions, and new subtleties, invented and contrived to evade and elude the common law, whereby such as have undoubted right are made remediless; and this is the office of equity, to support and protect the common law from shifts and crafty contrivances against the justice of the law. Equity does not thus destroy the law or create it, but assists it.
[34] 1705, Prec. Ch. 241 at 244 cited by Lord Hodson in National Provincial Bank v Ainsworth (1965) AC 117 at 1224.
53.What equity assists the law to do is attain approximate justice which is precisely what courts are here to do. Justice is defined in the famous Justinian Institutes as: “ the set and constant purpose to give every [person their] due”. [35] The modern equitable notion of economic justice or fairness in a family law setting requires that the parties’ accumulated assets be divided according to special rules having regard to the distinctive and intimate nature of the relationship which the general law does not do. Hence the provisions of s 79.
[35] As quoted in Wells WAN Evidence and Advocacy, Butterworths, Sydney (1988) at p 12.
54.A contested claim of a spouse to a beneficial interest in the other spouse’s property can only be pursued and enforced by means of the relief that the section itself provides. Until a judicial conclusion is reached that it would be unjust or unfair to leave private property rights intact and an order is made altering them, a spouse has no greater rights in matrimonial property than he or she would otherwise have had.[36]
[36] Fisher v Fisher(No. 2)(1986) FLC 91-767.
55.The decision to exercise the jurisdiction at all or in favour of either party is made on the basis of a forensic enquiry into the existence of facts or circumstances enlivening the court’s special property settlement jurisdiction and only then does it proceed to consider whether or not relief is to be granted.[37] Thus, neither alteration of rights nor redistribution of property interests is guaranteed.
[37] Rediffusion (Hong Kong) Ltd v Attorney-General of Hong Kong (1970) AC 1136 at 1155.
56.Section 79 offers relief not a right. It creates a right to apply for equitable remedy beyond what equitable or legal doctrines offered at the time of its introduction or even now.[38]
[38] Prior to 1975, an owner spouse had no legal duty to share his or her property except for a limited extent under the general law. Spouses and all other cohabitees had to seek relief under the laws of trust, contract, the doctrines of unjust enrichment, unconscionable conduct and estoppel.
57.The FLA adjustive regime was introduced as a substitute for the strict legal and equitable doctrines that simply did not satisfactorily resolve property disputes between former spouses. To this extent s 79 is an example of proprietary remedialism involving a judicial reconciliation and reallocation of contested ownership rights consistently with the demands of individual and distributive justice.[39] It is a form of statutory redress which grew out of the inability of the common law courts to remedy its own inherent inadequacies to prevent unfairness.
[39] cf. Birks, P, ‘Rights Wrongs and Remedies’, (2000) 20 OJLS 1; Birks, P, ‘Three Kinds of Objection to Discretionary Remedialism’, (2000) 29 WALR 1. See also Evans, S, ‘Defending Discretionary Remedialism’, (2001) Sydney Law Review 463 at 467.
58.In Haldane v Haldane[40] the Privy Council constructed the then relatively new New Zealand Matrimonial Property Act, 1963 by endeavouring to ascertain what was perceived to be wrong with the pre-existing property law. The Judicial Committee held that the mischief remedied by statutes like the FLA was a legal system that:
“…enabled the husband to claim as his exclusive property all the bread left over from immediately consumption while vouchsafing to the wife only whatever crumbs she manages to scrap together by her own fortuitus and rare economic activity supervening on her domestic duties (which) was denying pro tanto the concept of marriage as a partnership of free equals in which the partners performed complimentary functions. [41]
[40] (1977) AC 673.
[41] (1977) AC 673 at 689.
59.This means that it should be interpreted generously and implemented according to its true spirit as well as its letter.
60.Section 79(4) is mandatory but not exhaustive of matters considered in arriving at a just and equitable verdict. Its provisions are fundamental but still only part of a wider inquiry. They are a set of precepts not a code. Each of the listed factors must be taken into account but none of them, including those mentioned in subs 79(4)(a)-(e), can claim hierarchical priority in the discretionary exercise.[42] On the contrary they form an interlocking sometimes overlapping framework which judges are guided by in the performance of their duty. It is important not to apply them in isolation. Considering contribution or need and nothing else may not always produce a just and equitable result in all circumstances.
[42] cf. Lambert v Lambert [2003] Fam 103 at [6] per Thorpe LJ.
61.This is clear from both the terms of s 75(2)(o) and the just and equitable requirement itself.
62.The FLA is just as important for what it does not say as it is for what it does. Unstated contextual matters may have a relevant bearing on what is fair in the circumstances having regard to contribution and the specific factors mentioned in s 79(4). Some examples are: the duration of the relationship;[43] the extent to which the financial affairs of the parties have been mixed, intermingled or integrated; the nature and source, timing and use of a contribution and the economic consequences of having made it; the parties conduct; the impact of separation or divorce on the financial circumstances of the parties; and their common intentions or understandings.
[43] This is specified in s 75(2)(k).
Discretionary decision making
63.A discretionary system requires courts to deal with all cases on the basis of general directions as to what matters to take into account rather than precise rules.
64.Exercising the s 79 discretion involves a balancing process which cannot be performed in isolation, that is, without regard to the legislative provisions or settled principles. Apart from the explicit criteria set out in the legislation and material features of the case that must or can be taken into account and any authoritative guidelines laid down for trial judges[44] or decided cases, academic writings, persuasive dicta from other common law jurisdictions often help when choosing determinants in a particular case. So too can public policy considerations.[45] However, the extent to which social assumptions or community values and expectations play a proper role in judgments about family property is a topic of ongoing debate and divided judicial opinion.
[44] JEL and DDF (2001) FLC 93-075.
[45] cf Breen v Williams (1996) 186 CLR 71 at 115 per Gaudron and McHugh JJ; Mason at 5
65.Dr Simon Evans describes[46] discretion as:
…a technique (or rather a set of techniques) for contextualising legal decisions in the manner which experience reveals is impossible by the use of rules alone. As a legal technique, it enables decision making that cannot be encapsulated in rules. Its virtue is its potential to produce morally sensitive and morally nuanced decisions and to mediate effectively between competing values.
[46] Evans, S, ‘Defending Discretionary Remedialism’, (2001) 23 (4) Sydney Law Review 463 at 482.
66.Discretion is seen as being the best, most responsive and sometimes only practical way the law can cope with the infinite diversity of circumstances that arise in this setting. It has obvious advantages: flexibility and factually rather than legally dictated outcomes as well as some practical disadvantages like inconsistency, confusion and unjudicability. Experience has also shown that overall it is more effective and efficient than a rule-bound approach which lends itself to circumvention tactics and is prone to attract the intricate use of technicalities to exploit loopholes which in turn only leads to the introduction of even more rules and sub-rules.
67.Rules, on the other hand, are more binding and restrictive. They either apply to a given situation or they don’t. They may have unintended or unjust consequences due to an inability to respond to unforseen exigencies. The adjustive discretion has the attraction of allowing decision-makers to better achieve the purpose of the Act and permits incremental adjustment which may be particularly important during times of rapid social change.[47]
[47] cf Hawkins, K (ed), The Uses of Discretion, Clarendon Press, Oxford 1992 at 4.
68.A central element of judicial discretion is the ability to choose the determinants or principles for the just resolution of what is ultimately, in the family context, an intensely personal social and economic human relationship. The practice of acting according to principle is indispensable to dispensing of justice. Principles “initiate, direct and maintain sound reasoning”.[48] General principles are, of course, broader propositions with wider application than specific rules derived from either ratio or statute.
[48] Wells WAN Evidence and Advocacy, Butterworths, Sydney (1988) at p32
69.There is a risk of serious injustice in preferring precedent to principle in family law cases and, in any event, attempts to structure the adjustive discretion “by judicial decision” are likely to fail for the reason given by Brennan J in Norbis v Norbis.[49] Judges must not be prevented from doing justice because of too strict an adherence to precedent or a legislative ‘straight jacket’ which leaves them with no fairer alterative.
[49] (1986) 161 CLR 513 at 539.
70.Principles have a 'dimension of weight'.[50] They may operate in one theatre but not in another albeit strikingly similar one. Their 'weight' or significance is variable depending upon the prevailing circumstances or the overriding influence of a higher principle or practice. This allows judges, subject to the doctrine of precedent and stare decisis (to the limited extent they apply) the “discretionary space”[51] to give "practical expression to the words and purpose of the legislation after taking account of relevant policy considerations … making necessary value judgments".[52] Thus, discretion has been aptly described as the ‘hole’ in Dworkin’s ‘doughnut’ of maxims or rules for action.[53]
[50] Dworkin, R, 'The Model of Rules" (1967) University of Chicago Law Review 14.
[51] Loughlan, P, ‘No Right to the Remedy? An Analysis of Judicial Discretion in the Imposition of Equitable Remedies’, (1989) 17 MULR 132 at 135.
[52] Mason, A, ‘The Nature of the Judicial Process and Judicial Decision-making: A Matter of Judgment’ in Sheard, R (ed), A Matter of Judgment: Judicial Decision-making and Judgment Writing (Judicial Commission of NSW, 2003) at 1.
[53] Dworkin, R M, Taking Rights Seriously, (1977) Cambridge Mass: Harvard University Press at 31.
71.In The Queen v Joske; ex parte Shop Distributive and Allied Employee’s Association[54] Mason and Murphy JJ explained:
Many examples are to be found in the exercise of judicial power of orders which alter the rights of the parties or are the source of new rights. Likewise, there are countless instances of judicial discretion with no specification of the criteria by reference to which they are to be exercised – nevertheless they have been accepted as involving the exercise of judicial power…it is no objection that the function entrusted to the court is novel and that the court cannot in exercising its discretion call in aid standards elaborated and refined in past decision: it is for the court to develop and elaborate criteria regulating the discretion having regard to the benefits which would be expected to flow from the making of the order…and the impact which such an order will have in the interests of person who may be affected.[55]
[54] (1976) 136 CLR 194.
[55] (1976) 136 CLR 194 at 215-216.
72.What is "just and equitable" in this jurisdiction is not merely a matter of individual opinion.[56] The appropriateness or practical fairness of property settlement orders can be objectively assessed by reference to statutory criteria and accepted legal principles.
[56] Sanders v Sanders (1967) 116 CLR 366 at 379-380 per Windeyer J. Yet, the property settlement power has consistently been held by the High Court to be a valid exercise of the power of the Commonwealth Parliament; Lansell v Lansell (1964) 110 CLR 353; Sanders v Sanders (1967) 116 CLR 366.
73.The discretion is judicial not administrative or arbitrary. The distributive power involves legal reasoning not judicial fiat.[57] It is governed by established tests or proper standards[58] and is not the same thing as a general power to decide what is “fair and reasonable”[59] or to alter property rights “whenever justice and good conscience require it”.[60]
[57] Finn, P, ‘Equitable Doctrine and Discretion in Remedies’, in Cornish, W R, et al (eds) Restitution: Post, Present and Future, (1998) 251-274 at 267-273.
[58] cf Redge v Spicer; ex parte Waterside Workers Federation of Australia (1957) 100 CLR 312 at 317.
[59] Foskett v McKeow [2000] 2 WLR 1299 at 1304-1305.
[60] Baumgartner v Baumgartner (1987) 164 CLR 137 at 152.
74.As Lord Mansfield said in Rex v Wilkes:[61]
Discretion, when applied to a court of justice means sound discretion guided by law. It must be governed by rule; not by humour: it must not be arbitrary, vague and fanciful: but legal and regular
[61] (1770) 4 Burr. 2527 at 2539 [98],
75.In other words the discretion is a principled and rational choice made by a judicially trained mind within the confines of certain restrictions. It is validly exercisable only in the right circumstances. There is no place for ‘palm tree’ notions of justice or ‘soup kitchen’ ideals.[62] There will always be some actual or perceived unfairness the court is incapable of curing.[63] The available options are narrower than the breadth or the range of opinion held within the community. This means that someone will almost always be disappointed.[64] The court is not at liberty to give effect to what Kitto J described in Redge v Trade Practices Tribunal; ex parte Tasmanian Breweries Pty Ltd[65] as "its own idiosyncratic conceptions and modes of thought". Nor is it free to "act on broad policy considerations unrelated to the facts of the particular case or to what is adjudged appropriate to the means, interests, and needs of the parties to the marriage or the children".
[62] See too Sackville, R, ‘The Emerging Australian Law of Matrimonial Property’, (1977) MULR 353 at 363.
[63] Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435.
[64] This proposition is an extension of comments of the Honourable Justice Spiegelmann AC, Chief Justice of New South Wales in A Guide to Sentencing: Launch of Publication of Judicial Conference of Australia, Sydney, 5 October 2007.
[65] Cominos v Cominos (1972) 127 CLR 588 at 593 per Walsh J.
76.The discretionary power to divide the assets of former spouses was described by Waite LJ in Thomas v Thomas[66] as “almost limitless” and by the Full Court in the Marriage of Way[67] as “almost unappealable”. It is so general that Professor Patrick Parkinson complains that there is so little normative guidance provided by the current law that the judicial discretion is “almost unbridled”[68]
[66] (1995) 2 FLR 668.
[67] (1996) FLC 92-702
[68] Parkinson P, The Diminishing Significance of Initial Contributions to Property’ , (1999) 13 Australian Family Law Journal 52 at 66.
77.It is clear, however, that the use of the power confided in the court by s 79(1) and (2) to vest and divest proprietary rights must be justified in the circumstances by one of the six considerations set out in subs 4 or by the legitimate processes of legal reasoning via analogy, induction and deduction from the starting point of a proper understanding of the conceptual foundation of those principles.[69]
[69] Muschinski v Dodds (1985) 160 CLR 583 at 615.
78.The statutory scheme allows a judge the latitude to select the appropriate response to a claim from a suite or menu of options. It does not provide any justification for paternalistic judges to do almost anything at all. Making orders for which there is no legislative foundation simply on the basis that doing so relieves a hardship is a temptation to be scrupulously avoided. It is beyond jurisdiction and power. As the Full Court observed in N & N,[70] it is difficult to see how the making of a benevolent or charitable but otherwise legally unjustified order “ … is ultimately any less of an injustice ...”. Discretions of this kind are inconsistent with the concept of judicial power under the federal Constitution.
[70] [2000] FamCA 688 at [43].
79.This conforms with what Deane J said in Muschinski v Dodds:[71]
Notions of what is fair and just are relevant only in the confined context of determining whether conduct should, by reference to the legitimate processes or legal reasoning be characterised as unconscionable for the purposes of a specific principle of equity.[72]
[71] (1985) 160 CLR 583 at 621.
[72] (1985) 160 CLR 583 at 615.
80.One of its most negative features is a tendency to make it easier for decision-makers to fall into error and act on improper or extraneous considerations. It can also permit a judge to substitute his or her own personal standards rather than give effect to legal policy or community values. Discretionary-based outcomes are not always consistent or predictable and may not necessarily result in like cases being treated alike. The legislative constraints acting on the discretion are intended to ensure that it serves rather than defeats the interests of justice in most cases. So too does the requirement to give reasons for decisions and other mechanisms of accountability including public scrutiny and the appeal process.
81.There is, however, a strong presumption in favour of the correctness of s 79 decisions or intermediate conclusions.
82.Appeals against a discretionary judgment can only properly succeed if it is founded on the application of a wrong principle, mistaken facts vitiating extraneous considerations or because significantly relevant factors were not taken into account. The exercise of a discretion may legitimately also be reviewed on the ground that a substantial wrong has occurred because of discretionary error resulting in unreasonable or plainly unjust orders.[73] Appeal courts are therefore slow to set aside a property settlement decision which “only involves conflicting assessments of matters of weight.”[74]
[73] House v King (1936) 55 CLR 499 at 504; Gronow v Gronow (1979) 144 CLR 513 at 519-520; Mallet v Mallet (1984) 156 CLR 605 at 621.
[74] Gronow v Gronow (1979) 144 CLR 513 at 520; Australian Coal and Shale Employees Federation v The Commonwealth (1953) 94 CLR 621 per Kitto J at 627. See also Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1985) 162 CLR 24 per Mason J at 48.
83.Thus, on the one hand, the s 79 discretion is a fairly strong one in the Dworkinian[75] sense since it demands the use of judgment rather than mechanical standards and can only be reviewed and reversed on appeal in limited circumstances. But, in another sense the discretion is a comparatively weak one because there are legally provided standards or controls against which the “correctness” of an interpretation can be judged.
[75] cf. Dworkin, R M, Taking Rights Seriously, (1977) Cambridge Mass: Harvard University Press at 69.
84.Regrettably, the controversy about rules versus discretion is not the only contentious aspect of the s 79 power. The important question of whether and how much legitimate influence societal values or attitudes have is even more vexed and warrants careful consideration before proceeding
The influence of community ideals and moral values
85.Finn J expressed the obiter view in D &D that: [76]
… in the pluralist society of present day Australia, little assistance is to be gained from a search by trial judges, or indeed by intermediate appellate courts, for the underlying philosophy or values of the provisions of s 79. The task – not itself always easy – is to apply those provisions to the facts of the particular case. In other words, to determine the parties’ contributions (financial and non-financial, direct and indirect) to the acquisition, conservation and improvement of the past and present property of the parties, hence the welfare of the parties’ family.
[76] D & D (2006) FLC 93-300 at [12].
86.Warnick J also briefly discussed the influence of societal values and underlying legal principles in exercising the alteration discretion but did not examine the question in detail because it was not the subject of specific argument on the appeal. [77]
[77]cf His Honours closer consideration of the issue in SL & EHL [2005] FamCA 132.
87.In reality, all discretionary decisions are laden with latent assumptions about social facts, values and trends. There are core relationship values deeply embedded so as to be almost merged with the organising concepts and principles used by the law to resolve competing spousal claims. Some are so obvious that they can safely be assumed to be taken for granted by everybody. In respect of others there is plenty of room for equally reasonable and rational differences of informed opinion with no particular opinion being uniquely right.[78]
[78] Norbis v Norbis (1986) 161 CLR 513 at 518 per Mason and Deane JJ.
88.Remedial laws affect property rights and interests highly prized by the contesting parties. 'Rules' of disposition weigh against some and in favour of other interests. The requirement that the judge's choice in resolving a dispute over an issue be reasoned and impartial is not a requirement that it be value-free. No rule on an issue of law is completely value free.[79]
[79] Keeton, RE, Judging, West Publishing Co, St. Paul, Minn ,1990 at 20.
89.Relevant notions of justice and equity are clearly drawn from community standards. Underlying values or mores need to be ascertained for the essential purpose of giving practical expression to applicable legal principles in the adjustment process.[80]
[80] Cardozo, B, The Nature of the Judicial Process, Yale University Press, 1949 at 112 as cited by Mason, A, ‘The Nature of the Judicial Process & Judicial Decision-Making’, in Sheard, R (ed), A Matter of Judgment : Judicial decision-making and judgment writing, Judicial Commission of NSW, NSW, 2003.
90.As Lord Steyn said in McFarlane v Tayside Health Board:[81]
Judges' sense of the moral answer to a question, or to the justice of a case have been one of the great shaping forces of the common law. What may count in a situation of difficulty and uncertainty is not the subjective view of the judge but what he reasonably believes that the ordinary informed citizen would regard as right.
[81] (2002) 2 AC 59 at 82.
91.Of course, it does not follow that decisions or approaches which do not have a high level of community support must be wrong. The area is extremely complex and despite their subjectivity, judges’ intuitive views on whether a particular outcome is fair may reflect a better understanding than members of the public of the issues or the objects of the law or the facts of the case. Consequently, the judge is "not powerless to raise the level of prevailing conduct”.[82]
[82] Cardozo, B, The Nature of the Judicial Process, Yale University Press, 1949.
92.Recognising that judges are always making contestable choices between competing considerations and conflicting interests, one of the US Supreme Courts greatest jurists and legal philosophers, Benjamin Cardozo,[83] ridiculed the idea that the judiciary were or thought by others to be beyond human limitation and believed that nothing would be done to “…help the cause of truth by acting and speaking as if they (are)”.
[83] Cardozo prefers the expression "the accepted standards of right conduct" or "mores of the times" to community values.
93.In his classic work on the nature of the judicial process Cardozo conceded that subjective reason is a flaw in any human institution which can not be entirely be supplanted by the duty of a judge to objectify the law:
…the forces…which judges…avail to shape the form and content of their judgments…are seldom fully in consciousness. They lie so near the surface, however, that their existence and influence are not likely to be disclaimed. But…[d]eep below consciousness or other forces, the likes and dislikes the predilections and the prejudices, the complex of instincts and emotions and habits and convictions which make the man [sic] whether he be litigant or judge.[84]
[84] Cardozo, B, The Nature of the Judicial Process, Yale University Press, 1949 at 167.
94.Likewise in the 2003 Hamlyn Lectures[85] Justice Michael Kirby of the High Court said:
Somewhere between the spectre of a judge pursuing political ideas of his or her own from the judicial seat irrespective of the letter of the law, and the unrealistic mechanic deified by the strict formalists, lies a place in which real judges perform their duties; neither wholly mechanical nor excessively creative.
[85] Justice Michael Kirby, Judicial Activism: Authority, Principle and Policy in the Judicial Method (2004) ch 3, based on Justice Michael Kirby, ‘Judicial Activism: Authority, Principle and Policy in the Judicial Method’ (Speech delivered at the Hamlyn Lectures, 55th Series, Cardiff, 23 November 2003).
95.There are a number of notable illustrations of the influence of values in shaping legal principle in our own generation. They include the discussion by Brennan J in Mabo v The Queen (No 2)[86] and Dietrich v The Queen.[87] In Mabo (No 2) the value of non-discriminatory treatment of indigenous interests influenced the majority conclusion that the extinguishment of rights and interests based on the concept of terra nullius was a policy that had no place in the contemporary law of Australia,[88] even though it had not been previously recognised in the cases or the statute itself.[89]
[86] (1991) 175 CLR 1 at 42.
[87] (1999) 177 CLR 292.
[88] (1992) 175 CLR 1 at 46 per Gummow J.
[89] There is also a detailed discussion in the joint judgment of Gleeson CJ and Hayne J in R v Carroll (2002) 213 CLR 635 of the policy considerations of finality and fairness on which the double jeopardy rule is based. These “values” informed the view their Honours ultimately took of the relevant principle.[89] cf Mason, A, “The Nature of the Judicial Process and Judicial Decision-making: A Matter of Judgment” in Sheard, R(ed), A Matter of Judgment: Judicial Decision-making and Judgment Writing (Judicial Commission of NSW, 203) at 4.
96.In the Queen v L[90] the High Court held that older authorities did not establish that marriage involved the irrevocable consent of the wife to sexual intercourse. The majority of the court considered that even if that proposition was supported by previous authority it should no longer be accepted because it is "… so out of keeping with the view that society now takes of the relationship between the parties to a marriage."[91]
[90] (1991) 174 CLR 379.
[91] (1991) 174 CLR 379 at 390.
97.Admittedly, the cases referred to above are final appeal court decisions but even a trial judge is informed by values in making the choice between competing principles or interpretations.[92] This is a routine and accepted feature of any rational and acceptable system of justice. It is no less true whether or not they are adverted to when the choice is made.
[92] Breen v Williams (1996) 186 CLR 71 at 115 per Gaudron and McHugh JJ.
98.In Kleinwort Benson Ltd v Lincoln City Council[93] Lord Goth explained the trial judges role:
When a judge decides a case which comes before him [sic] he does so on the basis of what he understands the law to be. This he discovers from the applicable statutes, if any, and from precedents drawn from reports of previous judicial decision… in the course of deciding a case before him, he may, on occasion, develop the common law in the perceived interests of justice, though as a general rule he does this only interstitially…this means not only that he must act within the confines of the doctrine of precedent, but the change so made must be seen as a development, usually a modest one, of existing principle and so can take its place as a congruent part of the common law a whole.[94]
[93] [1999] 2 AC 349.
[94] [1999] 2 AC 349 at 377.
99.In many cases, it may be appropriate to stand by existing authority and leave any change to the legislature (or a higher court) but as Sir Anthony Mason once noted:
The judge is entitled, indeed bound, when occasion arises, to go beyond logical and analogical reasoning and to examine and assess relevant policy considerations or values. Occasion to do so may arise not only in those cases where there is an absence of authority but also in cases where the correctness of earlier authority, particularly non-binding authority, is in question.[95]
[95] Mason, A, ‘The Nature of the Judicial Process and Judicial Decision-making: A Matter of Judgment’, in Sheard, R (ed), A Matter of Judgment: Judicial Decision-making and Judgment Writing , Judicial Commission of NSW, 2003 at 1.
100.Where there is no clear or at best conflicting principles, practices or precedents dictating the result in a particular case, as is often the case in this discretionary realm, the law to be applied is identified by reasoning analogy and logic to or from first principles whether stated or not as adjudication extended or modified to meet the justice of the case at hand.[96] The judicial task is one of ascertaining the relevant principles and through an exercise of rational and reasoned judgement reaching a decision which is both generated and justified by an assessment of the relative weight and importance of those principles.[97] This leads to dispute resolution without resorting to extra legal standards and a process of which is directed towards finding the right answer; that is, the one which the parties are entitled to have.[98]
[96] United Engineering Workers Union v Bevanaygagam [1968] AC 383. cf Mason, A, ‘The Nature of the Judicial Process and Judicial Decision-making: A Matter of Judgment’, in Sheard, R (ed), A Matter of Judgment: Judicial Decision-making and Judgment Writing, Judicial Commission of NSW, 2003 at 4.
[97] Dworkin, R M, Taking Rights Seriously, (1977) Cambridge Mass: Harvard University Press at 137.
[98] Ibid at 137.
101.In Norbis v Norbis,[99] Mason, Deane and Brennan JJ all recognised the s 79 process as one calling for value judgements by trial as well as appellate courts.
[99] (1986) 161 CLR 513.
102.Stephen J made the same point Onus v Alcoa of Australia Pty Ltd[100] saying:
Courts necessarily reflect community values and beliefs.
[100] (1981) 149 CLR 27 at 42.
103.So too did the Australian Law Reform Commission in its report on matrimonial property:[101]
The weighing of the factors listed in s 79(4) and s 75(2) involves value judgments in which opinions may differ among judges as well as … people generally. How should financial contributions be weighed against non-financial contributions as homemaker and parent? Does work done by one spouse as a homemaker and parent contribute only to the acquisition of assets for domestic use, or to all assets acquired by the other spouse, including business assets? How should the future needs of the custodial parent be balanced against the spouses’ respective contributions during the marriage? [102]
[101] Australian Law Reform Commission, Matrimonial Property, Report No 39 (1987).
[102] Australian Law Reform Commission, Matrimonial Property, Report No 39 (1987) at 30. See also Chisholm, R, ‘Perceptions and Values: Their Role in Family Law Decisions’, (2003) 16(4) Australian Family Lawyer 1 at 13.
104.Similarly Lord Nicholls referred to the elusive concept of fairness in Miller v Miller: McFarlane v McFarlane[103] as:
… an instinctive response to a given set of facts. Ultimately it is grounded in social and moral values. These values, or attitudes, can be stated. But they cannot be justified, or refuted by any objective process of logical reasoning. Moreover, they change from one generation to the next.[104]
[103] [2006] 2 AC 618.
[104] [2006] 2 AC 618 at [4].
105.The presence and influence of “values” in the context of discretionary decision making was given detailed treatment by Warnick J sitting in the trial of SL & EHL.[105]
[105] [2005] FamCA 132.
106.The case involved a long marriage of 35 years and four children. Neither party had assets of much value at commencement. At the time of trial the net assets exceeded $12 million which was derived mainly from the husband’s income as an accountant and profit on property developments and other investments. The wife’s contribution was predominantly as homemaker and parent.
107.Warnick J described the abstract concept of “fairness” as a choice of parameters or principles observing at one point:
What is fair will depend upon the criteria – the values – used for measurement. For example, is marriage a partnership, the fruits of which ought to be equally shared, as long as each partner has performed ‘usual’ or ‘assigned’ duties during its course? Or, irrespective of the way that during cohabitation the parents viewed their separate contributions in agreed roles, the partnership agreement having foundered, does a ‘winding up’ involve a retrospective reallocation of the worth of contributions by an eternal arbiter.[106]
[106] SL & EHL [2005] FamCA 132 at [236].
108.Noting the qualitative as well as quantative aspects of the relevant process,[107] Warnick J discussed the need to acknowledge the presence of values in the assessment of contributions at length.
[107] Mallet v Mallet (1984) 156 CLR 605 per Wilson J at 636.
109.His Honour went on to identify two specific aspects of the role and function of values in determining financial relief within the statutory framework provided by Pt VIII. Firstly, the intrinsic “value” given to a role and its reach (result or product) which his Honour suggested, would mostly be derived from “considerations beyond the individual case”. Secondly, the assessment of the quality with which a particular role was performed.[108]
[108] SL & EHL [2005] FamCA 132 at [233].
110.His Honour carefully analysed the various judgments in Mallet [109] and identified that there is both reliance on and unstated support for the proposition that various values are to be brought to bear upon the consideration of the roles of the parties and their performance during a relationship. The assessment of quality necessarily involves a comparison with external “values”. This leads to a focus on the parties’ “reasonable efforts” rather than on the role they played or the results achieved.
[109] (1984) 156 CLR 605.
111.This is reflective of the approach taken by the Full Court in Ferraro [110] and Nygh J’s statement in Shewring [111] that:
The assessment of the quality of the contribution should be based on the principle that each party should make such contribution as can be reasonably expected having regard to the nature of the parties’ capacity, the ability of each of the parties and expectation of the spouses.[112]
[110] (1993) FLC 92-335.
[111] (1988) FLC 91-099.
[112] (1993) FLC 92-335 at 79,572.
112.Warnick J concluded that it is not only appropriate but desirable in applying s 79 and exercising the broad discretion it confers for judges to articulate, as best they can, the values which they have adopted whether they are personal or believed to conform with the general community about what is fair. [113] What his Honour didn’t go on to do was identify whether contemporary social values places more or less emphasis on the quality of a party’s contribution than on the result measured in dollar terms.
[113] SL & EHL [2005] FamCA 132.
113.Thus, a form of judicial reasoning that explores considerations of principle and policy underlining statutory law before making a choice not necessarily either more or less value-laden than reasoning that contains no reference to principle or policy.
114.To the extent that statements of Finn J in D v D[114] are inconsistent with this proposition I respectfully disagree with them.
[114] D & D (2006) FLC 93-300 at [12].
115.Even the majority of the Full Court in Kennon[115] commented that an approach to contribution assessment that treated a high standard of living enjoyed by the wife of a very wealthy man as a down payment on property settlement was “contrary to principle under present thinking”[my emphasis].
[115] (1997) FLC 92-757 at 84,297.
116.In many instances there will be a consensus view within the community on these important questions and at other times there will be division which may vary widely across communities, but as Gibbs CJ noted in Mallet[116]:
…the Family Law Act was passed at a time when great changes had occurred, and were continuing to occur, and the attitudes of many members of society to marriage and divorce, but when it was (and it is now) difficult, if not impossible, to say that any one set of values or ideas is commonly accepted or approved by the majority of the members of society. Conflicting opinions continue to be strongly held as to the nature of marriage, the economic consequences of divorce and the effect, if any, that should be given to the fault or misconduct of a party when a court is making the financial adjustments that divorce entails.
[116] Mallet v Mallet (1984) 156 CLR 605 at 607-608.
117.How does a court or judge ascertain contemporary social values? How is the court to divine what is the majority view (if there is one) or to weigh discordant views? According to Cardozo: from experience and study and reflection; in brief, from life itself.[117]
[117] The Nature of the Judicial Process, Yale University Press, 1949 at 113-114.
118.The community's value system is partly expressed in parliamentary sources and the decided cases on point. International conventions ratified by the Australian government can also provide a useful source of modern values.[118] It is not always possible to say that certain propositions or approaches are seen as fairer as or more just than others. The existence of a diversity of views in this pluralistic and tolerant country is obviously a reason for a court to proceed cautiously. When as is often the case the usual sources do not answer all the questions a judge may be grappling with deciding a particular dispute, he or she has to fill in the gaps by making a reasoned but inevitably value weighted choice.
[118] See Minister for Immigration v Teoh (1995) 183 CLR 273; cf Minister for Immigration and Multicultural Affairs; ex parte Lam (2003) 214 CLR 1.
119.However there is a legitimate (even healthy) diversity in the range of standards and values accepted as reasonable or tolerable by the community. The area of family law is especially prone to witness direct clashes between majority and respectable minority values. Should for instance any weight be given to conduct which has caused or contributed to the breakdown of marriage? Does a financial obligation to a previous spouse rank above an obligation assumed by the respondent to another party whom he or she does not marry? What appears just and equitable to some appears unjust and inequitable to others. This presents both practical and theoretical issues for our legal system, as courts endeavour to apply the rule of law equally to all people, regardless of cultural beliefs, practices or background.[119]
[119] Chew, A, Judicial consideration of culture in child-related proceedings under the Family Law Act 1975 (Cth), (2007) 21 AJFL 173.
120.Justice and equity are evolving notions. The practical content of the relevant concept of fairness or justice and equity in relation to family property continuously redefines itself to take account of change in social conditions and circumstances so as to bring it into line with contemporary standards and values.
121.As Lord Nicholls reminded us in the seminal English House of Lords decision in White v White,[120] “the law is a living thing moving with the times and not a creature of dead or moribund ways of thought.”
[120] [2001] 1 AC 596 at 606. cf. Porter v Porter (1969) 3 All ER 640 at 643-644 per Sachs LJ.
122.Dworkin saw discretionary principles as originating in a sense of propriety developed in the profession and the public over time. They survive only while they continue to be appropriate. As a principle loses its social relevance it correspondingly loses weight in comparison to another more appropriate principle or rule. Thus, "old fashion principles gradually fade out of the law"[121] and are replaced by more contemporary ones.
[121] McAdam, A, Judicial Reasoning and the Doctrine of Precedent in Australia, Butterworths, Sydney, 1998 at 281.
123.The gradual displacement of the old values of economic dominance (power, wealth, and class) with modern standards of fairness and non discrimination, emphasise the remedial function of the law in protecting the rights and interests of the needy, vulnerable, and minority members of society.[122] This constant tension between continuity and renewal in the law is reflected in debates about the appropriate application of precedent and principles derived from community values.
[122] cf. McAdam, Judicial Reasoning and the Doctrine of Precedent in Australia, Butterworths, Sydney, 1998 at 324-3.
124.If the court is to perform its important role of keeping the law “in a serviceable state”,[123] the law must be interpreted in conformity with “contemporary values in the community”,[124] that is to say the 21st not the 19th century.
[123] Dietrich v The Queen (1992) 177 CLR 292 at 318.
[124] cf. Mallet v Mallet (1984) 156 CLR 605 Gibbs CJ at 610; see also Dietrich v The Queen (1992) 177 CLR 292 at 317-318.
125.Thus, the definite shift in the modern era towards an accentuation of the value of the partnership aspects and mutual support elements of marriage as reflected in the “equality is equity” axiom must be allowed to inform and be much more prominently displayed in contemporary first instance judgments of the Court now than they may have been at any other time in the generation of cases decided since the landmark decision of the High Court in Mallet v Mallet.
126.This is not a heresy that ignores the role of precedent or legislative principle in discretionary decision-making but a recognition of the fundamental purpose of courts to do justice according to law and the organic nature of working principles. As the legendary Oliver Wendall Holmes noted over a century ago:
“A very common phenomenon, and one very familiar to the student of history, is this. The customs, beliefs, or needs of a primitive time establish a rule or a formula. In the court of centuries the custom, belief, or necessity disappears, but the rule remains. The reason which gave rise to the rule has been forgotten, and ingenious minds set themselves to inquire how it is to be accounted for. Some ground of policy is thought of, which seems to explain it and to reconcile it with the present state of things; and then the rule adapts itself to the new reasons which have been found for it, and enters on a new career. The old form receives a new content, and in time even the form modifies itself to fit the meaning which it has received.” [125]
[125] Holmes, OW The Common Law, first published 1881, thirty eight printing, Little, Brown and Co, Boston (1945) at 5
127.Any influential subjective assumptions, rationales, beliefs and values, however, should be fully articulated and expressly acknowledged in reasons for judgment to avoid the appearance of arbitrariness or secrecy.
128.This distinctive and important element of discretionary remedialism:
“… is a commitment to candour about the basis on which remedies are awarded and withheld”. [126]
[126] Evan, S, ‘Defending Discretionary Remedialism’, (2001) Sydney Law Review 463 at 467 at 486.
129.In a period of openness and transparency it is imperative that the judgment exhibit fully the process of reasoning. This allows both the litigants, the appeal courts, and the general public to understand how the outcome was reached. Admittedly a statement of reasons no matter how detailed can only disclose some not all of the values informing the decision but it is an important safeguard of public confidence in the administration of justice.
130.A reviewer has to be able to trace the route of the result through to its reasoning to see if unreasonableness or perversity are revealed. The losing party must be able to work out how and why they lost. Otherwise justice whether actually done or not may not appear to have been done which can compromise the public confidence in the integrity and accountability of the judicial system. A statement of reasons will be insufficient if it does not do this.[127]
[127] Bennett and Bennett (1991) FLC 92-191.
131.Openly acknowledging that courts make value-laden choices will in the long run contribute to a sharper focus on issues of principle and policy and better choices.[128]
[128] Keeton, RE, Judging, West Publishing Co, St. Paul, Minn ,1990 at 20-21.
132.As Michael Kirby wrote extra-judicially:[129]
…the grant of power ..to decision makers who hold judicial office, ought to be conditional upon the exercise of that power in way which the people govern by it, understand and generally accept. To keep in the dark those affected by the exercise of power and to disguise from them the true processes engaged in is the way of autocracy which fears sharing the truth with the people. My thesis is that judicial candour, although perhaps initially unsettling to those who hanker for fairytales, is more appropriate to our times.
[129] The Hon. Justice Michael Kirby, ‘Judging : Reflections on the Moment of Decision’, (1999) 18 Australian Bar Review 4 at 8.
133.Being more explicit and frank about value implications of a choice does make an important difference, however, because it more clearly exposes to criticism and challenge both the choice and the reasons for making it. Moreover, if a judge is not to ‘state’ principles (and underlying values), even by way of recollection and self guidance, the parties are left with no indication of the basis of the judge’s decision, beyond perhaps and assertion of his (or her) instincts for justice.[130]
[130] Eekelaar, J & Maclean , M, ‘Property and Financial Adjustment After Divorce in the 1990’s – Unfinished Business’, as reproduced in Hawkins, K (ed.), The Human Face of Law: Essays in Honour of Donald Harris, Clarendon Press, Oxford, 1997 at 225-244.
The judicial search for purpose and meaning
134.The fundamental function of a court interpreting or implementing a specialist statute is to ascertain and give effect to the Parliamentary intention and do its best to attain the legislative objects as they are expressed or implied.[131] Like any other enactment the structured framework of the FLA has to be read as a whole and construed consistently with the Acts Interpretation Act 1901 (Cth).
804.In Ferraro[597] the Full Court observed, that the insertion of par (c) into s 79(4) in 1983 was intended by parliament to give increased recognition of and emphasis to domestic [598] contributions and the equal partnership concept of marriage.
[597] (1993) FLC 92-353 at 79,579.
[598] Harris v Harris (1991) FLC 92-254 at 78,705.
805.However, for so long as the obligation imposed by Wilson J in Mallet to qualitatively assess contribution remains or unless and until the court adopts a true partnership principle as underpinning the assessment of contribution under s 79(4) the system will not be truly gender neutral[599]especially in the case of short marriages.
[599] SL & EHL [2005] FamCA 132.
806.Except where the behaviour of the parties is exceptionally bad or extremely good the court does not for example make findings on the adequacy on a parties cooking or whether a party took all available opportunities to work overtime and seek promotion. In cases where a party’s performance can be shown to be exceptionally good or exceptionally poor, these matters are sometimes examined, but typically the court fairly readily comes to the conclusion that the contributions should be treated as equal in weight no different in kind.[600]
[600] Family Law Council, Submission on the Attorney-General’s Discussion Paper- Property and Family Law: Options for Change (1999) < at 7.14.
807.However, stricter guidelines would greatly help resolve some vexing practical problems still being experienced by judges in the trial division in non-standard situations.
808.It must be possible for our most senior appellate courts to take the House of Lords lead and issue a indicative non-binding guideline as to the proper pattern or range of awards that would ordinarily be appropriate in comparable cases while leaving room for departure to meet the dictates of justice especially about how to quantify shares based on assessed contribution in non-standard situations involving pre-marriage (especially in short-term to mid-range marriages), after acquired or windfall assets after crediting each party for their financial and non-financial effort to family wealth and welfare. How, for instance, can a dollar value be placed on the relative contributions of the parties in a situation where the effort was productive of an overall loss and there are no marital assets representing the fruits of a joint venture lasting more than a decade? What principle of quantification can explain how much of the pre-marriage property should be called upon to pay for the contribution to the welfare of the family made by the homemaker or to meet his or her future needs when there was no increase in family wealth in the same period and the facts show what the wife contributed but not what to?[601]
[601] cf Shaw (1989) FLC 92-010 and the analysis in P Parkinson, ‘By Reforming the Law of Family Property’ 1999 13 AJFL 117; cf Parkinson, P, ‘The Diminishing Significance of Initial Contributions to Property’ (1999) 13 AJFL 32 and ‘Judicial Discretion: The Homemaker Contribution and Assets Acquired after Separation’, (2001) 15 AJFL 155.
809.It is plainly important that as well as meeting the ideals of individual and distributive justice all parties are seen as equal under the law and like cases are treated alike. In the absence of unambiguous and contemporary legislative assistance this requires final or intermediate appellate level articulation of principles or guidelines governing the Court’s general approach.
810.The Court will quickly lose its social relevance and moral authority as well as struggle to retain public confidence in its decisions unless it resolves property disputes in a principled and predictable, reasoned, coherent and transparent way identifying and applying the correct law to the facts in each particular case clearly and adequately explaining how and why the outcome was reached.
811.It is the proper function of intermediate as well as final appeal courts to give legal policy leadership by identifying the factors which, together with those prescribed by s 79(4) should usually be taken into account in the exercise of the discretion and then, if it is possible to express the relative importance those factors have in the majority of cases or those cases in a particular category bearing in mind the overall object. What they apparently cannot do is what the High Court rejected in Mallet by majority but then seemed to approve in a different context in Norbis.[602]
[602] In Norbis (1986) 161 CLR 513, Deane J (supported with qualifications by Mason and Brennan J) suggested to the effect that it was open to the Full Court to stipulate guidelines or norms and modified but did not strictly overrule Mallet.cf: The analysis of the majority judges in Figgins v Figgins (2002) FLC 93-122 at at 89,299.
812.If it is good enough for the House of Lords and Court of Appeal to approve and even encourage the use of starting points or yardsticks by courts performing the same exercise in the context of a similar though different legislative framework it is incumbent on our own to follow suit. The terms equal sharing or partnership are not mentioned anywhere in the MCA any more than it is in the FLA. The judgments in both White and Miller make it perfectly clear that equal division of assets is neither a presumption nor a preferred outcome except perhaps in a long marriage which is not complicated by separate property considerations or fault.
813.Miller’s partnership notion of equal sharing matrimonial assets is not inconsistent with the language in s 79(4) as well as the sentiments expressed in Ferraro and even more legitimate and fairer as the “evaluative” method for determining entitlement. Its advantage is that it is more in conformity with practical realities and social values. It is non-discriminatory and certain to promote consistency while being flexible enough to meet the circumstances in individual cases. It would go a long way to preventing the law becoming a “lawless science” of a codeless of myriad precedent and a “wilderness of single instances”[603]. It would certainly mean a reappraisal of the results in cases like D and D, and GBT and BJT[604] and other short marriage cases from a non-discriminatory gender equal perspective.
[603] Deane J in Mallet (1984) 156 CLR 605 at 641.
[604] (2005) FamCA 683.
814.The Miller approach also avoids the difficult, some say almost impossible, task posed by a property settlement contest inclined to give economic value to contributions not readily susceptible to that kind of measurement in time to compare the relevant worth and value of essentially incommensurable and incomparable contributions in order to determine the size of each party’s share.[605]
[605] See for example the comments in Figgins (2002) FLC 93-122.
815.Perhaps the pitfalls encountered in Mallet could be avoided by making the minimum statement of principle along the lines of opinion expressed by Mason J in that case to the effect that equality will equate with equity in most marriages lasting longer then 12 years where there are no “special” or “negative” contribution [misconduct] or s 75(2) considerations.[606]
[606] Mallet v Mallet (1984) 156 CLR 605 at 625.
816.An alternative general rule might be that an appropriate s 79 order will effect an equal division between husband and wife of assets acquired during the life of the marriage (the so called marital acquest) unless s 75(2) or other factors would make it unjust or inequitable in the circumstances of the particular case.[607]
[607] cf. Mallet (1984) 156 CLR 605 per Deane J at 639-641.
817.Likewise, Ferraro might support a statement of principle to the effect that in most cases the contribution of the homemaker spouse will equal that of the breadwinner except in big money cases where there is a special breadwinner contribution found in which case the homemaker spouse can expect to receive a pro-rata share of the net pool within a range of 10-15% except in circumstances justifying a different result.
818.Similar “norms” could be developed for short childless marriages or medium term relationships where the equal contribution during the marriage resulting in a equal division of the acquest with the residual being retained by the contribution party where there were no relative adjustment factors at play.
819.Guidelines are intended to clarify not alter existing law. The mandatory factors in s 79(4) still have a central role to play in achieving equity in property division on a case by case basis but the search for the just and equitable solution doesn’t have to be conducted in such a badly lit area of family law.
820.In its submission on the Attorney-General’s Discussion Paper, Property and Family Law: Options for Change in 1999, the Family Law Council suggested[608] that a just and equitable law of family property division has intrinsic or characteristic principles and deeply embedded moral values such as, for instance, the belief that marriage is a socio-economic partnership of co-equals; the partners are assumed, unless the contrary is proven to the probability standard, to have contributed equally to the designated “assets” and in most, if not all cases, can reasonably expect to be entitled to a equal share of the wealth accumulated during the marriage relationship; the law should conform and reflect with community values and views about what is fair; results should be predictable if not certain; and the adjustive discretion should be reasonably adaptable but applied as consistently as practicable. Other distinguishing features were also mentioned. All are a form of quality assurance aimed at identifying and meeting the requirements of individual and distributive justice and equity.
[608] Family Law Council, Submission on the Attorney-General’s Discussion Paper- Property and Family Law: Options for Change (1999) < at October 2007.
821.An authoritative endorsement of these precepts by the Full Court appropriately expanded along the lines of the statements of principle in the House of Lords advice in Miller would go a long way, may I respectfully suggest, to shedding more light where it is badly needed. No binding precedent including Mallet or any legislative provision, nor any contrary legal principle or rival social value would appear to stand in the way of guideline statements by the Full Court such as, for example:
·The object of the statutory scheme in Australia is to achieve economic justice and equity between spouses. It is not aimed at equalising their financial positions. The goal is to be achieved consistently with the enduring societal values of individual and distributive justice, gender neutrality and equal treatment under the law eg like cases being treated alike;
·In interpreting and implementing the provisions of the legislation it is generally to be assumed that marriage is a socio-economic partnership of co-equals and that the financial and non-financial contribution by each of the parties to the wealth and welfare of the family were equal unless a gross positive or negative disparity in contribution or conduct is proven;
·The justice and equity requirement in s 79(2) and the object of Part VIII and the parties assumed intention envisage that generally the net value of the matrimonial property[609] including passive growth in pre-marriage assets should be shared equitably which experience has shown in practice normally means equally between the parties to the marriage with or without children regardless of how long it lasted.. The reference to the ‘normal range’ was endorsed in Ferraro as a practical recognition of the circumstances in many marriages. Each party contributes in ways which might be described as the normal way in our society and that in qualitative evaluation of those matters, the likely or normal outcome is to be one of equality unless justice and equity otherwise require. The same approach is to be taken whether the parties were married for 30 years like the Whites or for 3 years as the Millers;
[609] Matrimonial party excludes property acquired before marriage or during marriage by gift or succession otherwise all property including interest and superannuation schemes is included. A home owned before marriage is also included if the parties lived in it.
·It is implicit in the modern concept of the marriage partnership that property should be shared equally between the parties unless there is a good evidence-based reason for reducing the share of a party. Good reasons for unequal sharing may relate to the source, timing, nature, and use of property acquisitions in light of the duration of the marriage, the size of the available property pool, and the comparative needs of a party or a child of the marriage may justify a substantial departure from the starting point of equality as equity. So too may special financial or non-financial contribution by a party especially in so-called “big money” cases;
·Evidence satisfying the probability standard of proof will be required to justify an assessment of the parties’ contribution as other than equal. This is consistent with the Full court statements in McLay.[610] Case law provides useful examples of circumstances in which contribution has been found to be unequal justifying a departure from equal sharing. One instance is where one party is spectacularly indolent while the other does most of the income earning and also makes the major contribution as homemaker and parent or where one party loses significant assets by gambling or drinking activities not shared or accepted by the other;[611]
[610] (1996) FLC 92-667.
[611] ibid. at footnote 130.
·Thus, unequal sharing of matrimonial property or proportionate sharing of non-matrimonial property is likely to be justified as more just and equitable under s 79(2) only where:
1) the source of funds used to acquire an asset is not derived from the income or the efforts of the parties during the marriage;
2) one spouse has destroyed, dissipated or alienated property that would otherwise be available for sharing; and
3) the nature of the matrimonial property and the use made of it justifies a departure from the principle eg as matrimonial home or for business purposes and the extent to which it is reasonable to expect it to be realized or divided; or
4) in rare and exceptional cases the quality of the parties role performance behaviour is shown to be exceptionally good or bad beyond mere infidelity or disloyalty; [612]
·There must also be an equitable (if not equal) sharing of both the economic advantages and disadvantages accruing to the parties during the marriage. This can legitimately involve compensating wives beyond need for lost income and opportunities because of the marriage or its failure;
·It is appropriate that circumstances or consequences producing inequalities between spouses unrelated to the marriage relationship to be taken into account eg lottery win or sudden ill-health after separation.
·So too should anomalies due to differences in ability or social conditions be considered. Thus, in a case of a very short and childless marriage between a wealthy and highly skilled professional person and another with few qualifications or experience that whatever readjustment should be made it should not result in ensuring that each party had an equal standard of living for the rest of their lives.
·Other recognised justifications for altering ownership rights are need based on the implied mutual obligation of lifelong support and relationship interdependence. There does not have to be a nexus between the need and the marriage or its dissolution but any significant prospective economic disadvantage arising from the way they conducted their marriage must be redressed by, for example, sharing financial resources to compensate for past sacrifices and prospective losses because of work choices made about the permanence of the relationship;
·Property settlements should give priority to the best interests of dependent children with property orders being framed to minimize the disruptive impact of parental separation on them by seeking to avoid an immediate sale of the family home. This is a silent principle in the FLA but the first consideration in the MCA. The economic burden of child care should, where it would not be otherwise unfair to a party, be equally shared by the parties. [613]
[612] These suggestions are heavily reliant on and closely reflective of the Scottish regime and approach under the Family Law (Scotland) Act 1985.
[613] cf. s 61DA of the Family Law Act 1975 (Cth).
822.The guidelines suggested above would clarify and resolve most of the areas of the law of property division under the FLA about which there is currently judicial division or conflicting case law.
823.They do not discriminate along either monetary or gender lines[614] even in short marriages and clearly do more than merely express normal ranges or patterns of awards within general rules of thumb but do not inhibit departure when justice and equity require it. They would also dispense with the need for a special contribution, wastage, financial fault and Kennon type marital misconduct doctrines because any gross disparity in conduct or contribution, positive or negative, can be accommodated within the justice and equity rule of departure.
[614] cf. Figgins (2002) FLC 93-122. Whether the doctrine of special contribution still applies in the UK post-White or in Australia post- Figgins is debatable but it is not necessary to try to answer that question here.
824.Applying them should see:
(a)all or the vast majority of the available property being shared more or less equally between the parties to a long marriage of fifteen years or more;
(b)equal sharing of the ‘fruits’ of a medium-term marriage with children–plus sharing, though not necessarily equally, of pre-marriage, post-separation or windfall assets for past partial contribution or to alleviate against assumed future child-related needs.
825.More specific guidance is also desperately needed in relation to what because of the statutory framework and language of s 79(4) we call “initial contributions”. Elsewhere it is a pre-marriage or pre-owned non-matrimonial or a separate asset of the owner or contributor which is not regarded as one of the fruits of the marriage partnership except in limited circumstances. In England it is not normally included in the pool of property subject to the equal sharing principle. This creates considerable quantification problems in short but even more so in medium term (10-15 year) unions.
826.However it is characterised, whether as a sole initial contribution by the owner or as his or her separate property as a pre-marriage asset, an item of property which does not qualify as one of the “fruits of the partnership relationship” is not immune from being shared both but whether it is or not should be depends on proof of value adding contributions made by the non-owner spouse.
827.The extent to which a non-owner acquires an interest in a pre-marriage asset or the weight sole initial contribution it carries in the global evaluation of sharing entitlements ultimately depends on the nature of the property and the five factors identified by the Full Court in Zyk[615] viz:
·the initial dollar disparity between the initial contribution or pre-owned property of the parties;
·the nature of the asset;
·the duration of the marriage;
·the use made of the asset in the course of it;
·whether the asset has increased in value and if so, by how much and why; and
·any other offsetting contribution made in the intervening period.
[615] Zyk v Zyk (1995) FLC 92-644.
828.Active growth may be credited solely or mainly to the contribution account of the party making the effort whereas passive growth may be more evenly shared because of offsetting non-financial contribution as homemaker or parent. Otherwise the appreciation value will be shared in accordance with contribution. Clarity is needed on this question because of the conflicting statements made by Lindenmayer and Fogarty JJ in Money[616] about whether equal but not outstripping contribution to the fruits of the marriage can of itself ever justify a claim to a share in premarital assets. It might under a pure partnership principle but it is hard to see how it would under the contribution counting approach or because of proven need.
[616] Money v Money (1994) FLC 92-485.
829.There is also a need for direction about when and at what point the husband like Mr Bremner loses all his entitlement to the current market value of a substantial initial contribution and why? In that case the wife did not contribute to the acquisition or improvement of the land. They jointly conserved it because rates were paid from household income to which the wife contributed her wages. All other contributions were equal.
830.The land was unimproved at the beginning and remained that way throughout the marriage. Accordingly, its use was irrelevant. The duration of the marriage might be significant under a partnership approach but its hard to see how it would have effected contribution.
831.The practical difficulty with cases like Bremner is how to explain in a conceptually sound and coherent way how an equal assessment of contribution during an admittedly long marriage not only entitled the wife to an equal share of the fruits of the marriage partnership under Ferraro but also gave her half the value of the husband’s pre-marriage land. He did not even get nominal interest back on his capital investment. To justify a share in the land contribution to the fruits would logically have had to have exceeded his as Lindenmayer J pointed out in Money.
832.Even then, it is arguable that unequal contributions to the fruits should result in a correspondingly unequal distribution of them but not of any separate property.
833.In fact the best explanation for Bremner is that it just seemed fair after such a long time to treat that property as jointly owned. Mr Bremner may beg to differ.
834.Another area of needless complexity is how a spouse can maintain a claim to pre-owned or windfall property in cases like Shaw when there are no fruits or Kennon when the fruits did not grow much during the marriage.[617]
[617] See generally Parkinson, P, ‘The Diminishing Significance of Initial Contributions to Property’, (1999) 13 Australian Family Law Journal 52 at 71-72.
835.These cases don’t reflect a contribution based assessment and are only explicable on the basis of partnership theory.
836.Business assets also create a difficulty but equal division of the growth (depending on the reason) where contribution to the marriage as a whole are assessed as equal regardless of its duration may be justified under either the Ferraro or Miller.
837.The approach taken by the House of Lords in White and Miller, raises legitimate questions about the validity of the qualitative evaluation method dictated by the High Court’s construction of s 79(4) in Mallet[618] which is prone to discriminate against effort in favour of earnings and for employed husbands at the expense of “non working” wives. It is also highly impracticable because it wrongly assumes that it is possible to compare contribution of quite a different nature and reach a conclusion about their relative value expressed in percentage terms about the available property without any point of comparison.
[618] (1984) 156 CLR 605.
838.It needs to be urgently reconsidered. It may be, that subject, of course, to the doctrine of stare decisis, a reappraisal of the majority decision by the Full Court or a re-interpretation of the terms of the statute which more closely reflects contemporary social values and a contemporary view of marriage as co-equal, socio-economic partnership in which regardless of their roles the contribution made by each party is treated as equal, whether financial or non-financial, to the property acquired or improved or value added to during the marriage may be all that is needed to fix the problem but more needs to be said on the topic by the appellate division – sooner rather than later.
839.Despite the criticism of it in Figgins, a starting point of equal sharing on a partnership principle basis with a built-in departure mechanism for good reasons which would include unfairness or inequality is a more coherent and principled basis for sharing the fruits (and losses) of a marriage partnership than trying to quantify property entitlements based on direct and indirect contribution because it assumes equal contribution and conduct in most marriages unless the contrary is shown which would result in equal sharing on the traditional approach anyway but it eliminates the need to assess quality or compare incomparable types of contribution in the majority of cases, especially longish marriages.
840.Creating a starting point where contributions are treated as equal in relation to all property including pre-marriage property and windfall instead of only in relation to property acquired during the marriage and any prior cohabitation would not be withdrawing to the pre-Mallet position or equate with the current English approach.
841.Significant sole contribution of pre-marriage or other separate assets has always been a reason not to treat contribution as equal. It is difficult to see what justification there is for having a starting point other than non-sharing of non-family assets. Prima facie there is no moral claim to any property acquired by one party before the couple met let alone a claim to equal ownership of that property. A moral claim to some share of pre-marital property may however result from various circumstances in the marriage. Where, for example, marital property has been expended in the maintenance or improvement of pre-marital property or some compensation ought to be paid out of pre-marital assets to assist the other spouse where the breakdown of the marriage places her in a position of serious economic disadvantage.
842.Thus the starting point for non-matrimonial property ought be of non-sharing with room to argue a case for some sharing of the current value of the pre-marital asset.
843.The value of pre-marriage and post-separation property returned to its owner and any capital growth during the marriage split pro rata unless there is special or negative contribution issues or a proven need for more in a short childless marriage of up to five or six years.
844.Where there was no appreciation in the assets between commencement and separation the residual property will generally be shared equally in a medium to long-term marriage based on inferences of common intention and the assumed mutuality of the benefits, both tangible and intangible, each received from the other during the marriage. This is a more coherent explanation to the sharing of a diminishing pool of assets in the case of Shaw rather than nearly contribution counting.
845.It might be even more desirable to provide a rebuttable presumption of equal contribution in the first stage (as distinct from a presumption of equal sharing as the outcome) because this would allow evidence showing the contributions were not in fact equal can be led at trial.
846.The challenge is to avoid imposing a fetter on the discretion by making binding rules in the guise of guidelines. The difference between the two can, as a comparison of the decisions of the High Court in Mallet and Norbis demonstrate, be ‘paper thin’. Much depends on the choice of the language used in giving guidance and the amount of “wriggle” room allowed for movement or departure when the circumstances justify. There must be a way of steering a middle course between Mallet and Norbis which maintains the distinction between a fetter on the discretion and a non binding principle or standard. It has to be found.
847.No doubt if the Full Court were to issue a guideline that equality is equity irrespective of the source of property or length of the marriage it would be (probably rightly criticised for) abdicating the very task it is required to undertake under the statute eg to take contribution into account. But treating the breadwinner and homemaker contribution to shared property as equal with stated exceptions would not.
848.However it is done, the provisions of s 79 need to be reinterpreted from a 21st rather than a 20th century viewpoint, in a way which confirms expands and develops the partnership theme which predated the introduction of the FLA was emphasised in the 1983 amendment and shown favour by the Full Court in Ferraro and Figgins.
849.In England[619] equal sharing or differential equality has been the norm in ancillary relief cases since 2001. Despite a degree of arbitrariness equal division of the marital acquest or as Deane J termed them in Mallet the “fruits of a totality of efforts”[620] is presumed (or assumed) to be the fairest or least worst method of ascertaining and quantifying a parties entitlement because any other approach is seen as failing to recognise not only the equal social status, intrinsic dignity and personal worth of both spouses but also their particular interdependence within the marriage relationship. This runs the risk of treating marriage as something less than a partnership of equals.[621]
[619] and Wales.
[620] Mallet v Mallet (1984) 156 CLR 605 at 641.
[621] Gray, K, Reallocation of Property on Divorce, Professional Books, Abingdon, 1977, at 68.
850.Arguably, parity of financial and non-financial contribution and rebuttable presumptive equality is likely to give effect and true recognition to the ideology of equal partnership in marriage in more cases than any other quantifier including equitable distribution based on equal contribution.
851.As Miller shows, this can be achieved consistently without parliamentary intervention or without straining the structural content of the existing provisions. All that needs to happen is for the focus and emphasis to shift away from contribution counting and comparing towards a partnership or assumed equal contribution as a starting point with departure being justified on just and equitable or fairness grounds. This would ensure consistency and predictability without sacrificing individual justice on the altar of certainty. Most importantly, it will also see justice being dispensed in (rather than with) family property law disputes according to stated legal objects, proper and well known principles and identified social values.
852.Although Family Court judges have not openly used a starting point or yardstick of equality method of quantification here since Mallet, the notion of equality is no less “…likely to offer an acceptable and useful starting point … as regards … the thread of a totality of efforts of wage-earning, homemaking and mutual support in this country as it is in England.”[622] Moreover, notwithstanding the disapproval of the use of yardsticks and starting points expressed by the majority judges in Mallet and Figgins,[623] the use of this rudimentary measurement is generally confined to longer term marriages[624] and is highly unlikely to lead to too much manifest error in those cases.
[622] Mallet v Mallet (1984) 156 CLR 605 at 640-641.
[623] (2002) FLC 93-122.
[624] cf. Lord Nicholls in Miller v Miller; McFarlane v McFarlane [2006] 2 AC 618.
853.Felberg suggests formulating the partnership model to focus less on contribution (in particular, on notions of equality and sharing) and more on needs. Given that this is an unlikely prospect, amending or reconstructing the FLA to introduce a starting point of equal sharing of assets built up during the marriage may be the best way of reflecting the marriage partnership in contemporary family property law.[625]
[625] Nareeda Lewers, N, Rhoades, H & Swain,S , ‘Judicial and Couple Approaches to Contribution and Property: The Dominance and Difficulties of a Reciprocity Model’, (2007) 21 Australian Journal of Family Law 123 at 134-137.
I certify that the preceding eight hundred and fifty three (853) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carmody.
Associate:
Date: 25th January 2008
[504] (2000) FLC 93-042
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