OM & GM

[2005] FamCA 1221

[2005] FamCA 1221 FAMILY LAW ACT 1975

IN THE FULL COURT      
OF THE FAMILY COURT OF AUSTRALIA                  Appeal No EA64 of 2005
AT SYDNEY  File No PAF1180 of 2004

BETWEEN:

OM
Appellant Wife
- and -

GM
Respondent Husband

REASONS FOR JUDGMENT

CORAM:  KAY, HOLDEN & WARNICK JJ
DATE OF HEARING:                 5 December 2005
DATE OF JUDGMENT:             5 December 2005

APPEARANCES:  Mr Givney of Counsel, instructed by, Maclarens Lawyers, 232 Merrylands Road, Merrylands, NSW 2160 appeared on behalf of the Appellant Wife.

Mr Dura of Counsel, instructed by Levy Partners, 14 Pope Street, Ryde NSW 2112, appeared on behalf of the Respondent Husband.

OM v GM
EA64 OF 2005
CORAM:  Kay, Holden & Warnick JJ
DATE OF HEARING:         5 December 2005
DATE OF JUDGMENT:     5 December 2005

Catchwords:  APPEAL – PROPERTY SETTLEMENT – ASSESSMENT OF CONTRIBUTION - S 75(2) ADJUSTMENT - 25½ years of cohabitation – four children, one under 18 years – asset pool of $1M – trial Judge divided the assets as 62½ per cent to the wife (assets of some $630,000, $170 000 of which was an equity which the wife would not realise during the course of her father's lifetime) and 37½ per cent to the husband (assets of about $370,000) – trial Judge assessed contributions as equal throughout marriage – wife’s parent’s found by trial Judge to have made a significant contribution in terms of looking after the children and contributing $187 000 in irregular cash amounts between 1991 and 2005 – husband's mother worked in parties' shop for 5 years with token wages– wife had a $170 000 interest in a property recently transferred to her by her brother – interest quarantined out of the pool for contributions and brought back in for s 75(2) factors – on contributions of $840 000 pool wife received 57½ per cent and husband received 42½ per cent – asserted the evaluation of contributions gave an inadequate weight to the value of the capital that had been contributed by the wife's family – discretionary evaluation of contributions within acceptable range as was a further adjustment of $30 000 in favour of the husband because of capital disparity  and differential income earning capacity – whilst the award was generous to the husband, no error demonstrated.

1. KAY J:  This is an appeal against orders that were made by Coleman J on 6 May 2005.  His Honour determined that a pool of assets of approximately $1m should be divided so that the husband to receive by way of a cash payment $357,606 from the wife, and in addition retain assets to the value of approximately $15,000.  The wife was to retain the balance of assets in the pool.  It will be seen the division of the assets was thus around about 62½ per cent to the wife and 37½ per cent to the husband.  The wife appeals against the orders suggesting that the orders should have been more favourable on her behalf to an extent perhaps of as high as 70 per cent plus a pool of assets being divided in her favour.

Background

1. The background to the matter is that the parties married in 1978 and separated in 2003 after 25½ years of cohabitation.  There are four children born of the marriage aged 25, 22, 18 and 15 at the time of the trial.  The youngest two children at least remain in the care of the wife, the 18 year old completing her high school in the year of the trial, and the 15 year old likely to remain dependent for the next two or three years. 

1. The husband was 52 years of age and the wife was, at the time of the trial, 48.  She was in employment.  The trial Judge found that she was earning $1261 per week, but in fact that included some provision for child support.  For our purposes it is sufficient to say that she is in secure employment earning slightly in excess of $1000 a week, the husband was earning around $770.

1. The trial Judge found that the parties, throughout the course of the marriage, basically made an equal contribution towards the income, expenditure and the like and in a role of homemaker and parent.  Both had worked long and hard for the 25 years they were together.  They had been able to accumulate assets through their joint endeavours assisted significantly by the wife's parents in capital terms, and significantly by both the husband's and the wife's parents in effectively unpaid labour that was provided to assist the family in its day to day activities.  Those matters were ultimately described by the trial Judge under the heading "Contributions" as being the contribution of the husband's mother, who was paid $100 per week cash but worked six days a week for a period of over five years in a business that was run by the husband and the wife, and throughout the course of the marriage the wife's parents providing care for the children when the wife was working.  That could be as much as four years per child stretched over the period the parties had children, and I am reminded that the children are 10 years in age apart from eldest to youngest, so that the extra care provided by the wife's parents would have stretched over some 14 years. 

1. His Honour identified both of those as very significant contributions made on behalf of the parties by their respective parents, although he could not make a mathematical assessment of the value of the contribution.

1. The other matters that have been focused upon in the course of these proceedings relate to the provision by the wife's parents of $187,000 provided in irregular amounts between 1991 and the time of the trial, utilised often significantly in the acquisition of real estate or in the improvement of real estate, but some with some used for motor vehicles and school fees and general living expenses. 

1. The final other contribution feature identified by the trial Judge, perhaps not of major significance, was a $7000 personal injuries award received by the husband relating to injuries he sustained prior to the marriage.

1. The pool of assets which I have said in broad terms was about a million dollars included an interest in a property (‘the property’) recently transferred to the wife by her brother, that interest being said to be worth $170,000.  This is a one quarter interest in a home occupied by the wife's father.  He was the owner as to one half of the property.  The wife's brother, A, is the registered proprietor of another one quarter interest in the property, and the wife's other brother, B, had been the registered proprietor of the one quarter interest which found its way into the wife's name.  It was effectively quarantined out of the pool of assets for the purposes of determining the contributions of the parties towards the assets they had accumulated and then brought back in to the pool in determining issues of s 75(2) adjustments.

1. What his Honour did was to evaluate the contributions to a pool of $840,000, the most significant item of which was the former matrimonial home occupied by the wife and the children said to have a net value of in round terms $760,000.  His Honour concluded that pool should be divided 57½ per cent in favour of the wife and the 42½ per cent in favour of the husband.  That would be seen as giving the wife the first 15 per cent of the asset pool, approximately $120,000 worth credited to her, when weighing up the various contributions that I have already identified.  It was urged in this appeal that the evaluation of contributions gave an inadequate weight to the value of the capital that had been contributed by the wife's family.

1. It was conceded by counsel on behalf of the respondent husband that the evaluation on contributions was at the generous end of the spectrum in favour of the husband, but it was not conceded that it was outside a range that was available to the trial Judge. 

1. It is convenient for me to remind the reader of this judgment that this is an appeal against a discretionary judgment and that the parameters of such an appeal are well known.  They are described in House v The King (1936) 55 CLR 499, at pp 504-505 and in Gronow v Gronow (1979) 144 CLR 513 amongst others. Basically such an appeal is a search to determine whether or not there has been an error of law or a failure to draw conclusions that were appropriate on the evidence, or alternatively the reaching of a conclusion that was an unjust conclusion. Absent the demonstration of any such error, then the appeal cannot succeed, it being an exercise of discretion about which there may be legitimately held wide and divergent views within a generous ambit.

1. In this case the trial Judge concluded that at the end of a 25½ year marriage a distribution based on contributions in favour of the wife with a differential of 15 per cent or $120,000 was the appropriate outcome.  He identified all of the relevant matters that the parties put before him and reached a conclusion that it was at the end of the spectrum more favourable to one party than the other.  To argue that it was the wrong conclusion would merely simply be giving weight to some factors rather than others.  It may well be that another tribunal hearing the same facts would give more weight to the capital introduced by the wife's parents, but that is not the test that moves an appellate court to interfere.

1. The determination of a property proceeding effectively requires four steps to be taken.  The first is to find out what the property is, and in this case there is no dispute about the size of the pool of the assets.  It consisted of assets to the value of $840,000 plus the wife's interest in the property, which I will deal with separately shortly.  The second step is to evaluate the contributions to that pool and I have already dealt with that on the basis that the pool of assets at $840,000 was divided, whilst favourably to the husband, within what I would consider to be an acceptable range. No other error has been demonstrated.

1. The property was effectively quarantined out of that pool of assets, because it came to the wife with no contribution whatsoever by her or by the husband.  It was a property that is occupied by the wife's father and it was the unchallenged evidence that it was intended that for the whole of his lifetime he would continue to remain in the property and the wife would not disturb that. The trial Judge thought it appropriate to remove it from the pool for the purposes of determining contributions through which the husband could be expected to receive a share.  He did however bring it back in to the next part of the exercise, the third step, which the authorities recognise, that is evaluating the other matters that are of relevance under s 79(4), particularly 79(4)(e) which brings in the factors set out in s 75(2) of the Family Law Act 1975.

1. His Honour identified those factors in his judgment by firstly drawing reference to the modest disparity in the earnings of the parties which favoured the wife. He indicated that the wife was in secure employment and had been for the last 10 years with the one employer, whereas the husband's employment, which was of fairly recent times, indeed less than a year before the trial, was not secure and was uncertain.  The husband had some health issues that were troubling to the trial Judge, and the trial Judge said:

“Although it's a difference of degree it would be unrealistic and unfair to the husband not to conclude that the wife is in a somewhat better position in terms of health and earning ability than he is.”

1. So those factors favoured some possible adjustment in favour of the husband. 

1. The trial Judge indicated that he was conscious that the wife had the care of the child who would not be 18 for another 2½ years, and that was a matter that favoured her, and if they were the only factors the trial Judge said they would offset each other and would not lead to any further adjustment.  

1. In evaluating the s 75(2) matters the trial Judge made a passing reference to the husband's financial arrangements since separation saying there were some odd aspects to it.  The husband had formed a new relationship and the terms of that relationship were economically advantageous to the husband in that he was provided with support by the person with whom he had formed a new relationship, a Mr A.  The precise manner of that support remained a little confusing.  There was some examination of Mr A's financial affairs, but there was not much examination of the benefits that flowed from Mr A's financial affairs to the husband, other than it was summed up by the trial Judge in this way, paragraph 19:

“Subsequent to separation the husband and [Mr A] have lived together initially in [a] property owned by [Mr A]…and since October 2004 in [another] property being purchased by [Mr A]….  [Mr A] has contributed significantly to the husband's living expenses in the post separation period, approximately $23,000 being 'owed' as a debt of honour by the husband to [Mr A] by virtue of such assistance.”

1. The evidence of Mr A,which was not a matter of any serious challenge was that since he and the husband began residing together he had been predominantly paying for the respondent's daily living expenses, but as the husband obtained work the husband was able to assist a little more with the daily living expenses.  This was done pursuant to an arrangement in which, and I quote from the affidavit:

“Immediately prior to residing together the respondent and I had a conversation about his financial situation.  He said to me words to the effect, 'I'm finding it difficulty living with mum coming here to use the office and go back to mum's at night.  I know I am unemployed at the moment, so I'll be unable to pull my weight financially.  When I'm working solidly again I will pay you back what I owe you, first and foremost the set up costs of consultancy.'  I said, 'I'll agree to help you out financially, but you know everything is 50/50 with me.  You will need to pay for groceries, utilities and the rent when you are back on your feet.  You will also need to pay me back any other money that you owe me when you're able.'  He replied, 'Okay, and when my property settlement comes through I'll pay you whatever I still owe you.'”

1. He then went on to say that since the husband had obtained some work the husband had paid him back about $3700 towards moneys advanced to the husband. 

1. The trial Judge was aware of those matters and made findings that effectively in a sense favoured the wife in that they ameliorated the husband's needs for his own support, but still concluded that weighing those matters into account he would not have made any adjustment for s 75(2) factors in favour of the wife by reason of the fact she had the child living with her.

1. Before leaving the s 75(2) adjustments the trial Judge turned to the capital disparity that the contribution based entitlements created, and pointed out that that capital disparity, including the property, was $290,000, but that the property was one to which neither of the parties had made any contribution.  The wife would not gain any benefit from it in the foreseeable future or potentially until the death of her father, he being aged in his early 80s and was of sound mind and body, and concluded: 

“Given the contribution based entitlement to the wife to the [property] interest and its absence of availability to her the financial resource it represents must be of limited significance for present purposes, although there's no expert evidence to the real value of interest in the property at present in light of the limitations revealed in the evidence.”

1. His Honour then concluded on the basis of the capital disparity that a further adjustment of $30,000 in favour of the husband was appropriate, and that ended effectively the property adjustment, save that his Honour took off the amount that the wife has to pay the husband a further sum of $10,000. 

1. At the invitation of the parties his Honour had capitalised future child support and directed that should be in the sum of $10,000, notwithstanding that the wife had sought capitalisation in the sum of $15,000.  In the course of this appeal we asked counsel to do some calculations of child support according to the formula based upon the known evidence of the parties income and the figure of about $4000 a year was mentioned, so that for 2 and a half years a figure of $10,000 seemed to be quite an appropriate figure for that adjustment.

1. So when one looks ultimately at the adjustment that was made under what is called the third step and then effectively combines the second and third steps to look at the fourth step, again counsel on behalf of the husband conceded that it was at the generous end of the spectrum to the husband, but urged upon us, and I think appropriately, that it could not be said that it demonstrated any error. 

1. There were features of this case that the trial Judge found that made it appropriate at the end of the 25 year marriage to leave the parties with the result that his Honour concluded was proper; that is, that the husband would receive assets of about $370,000 and the wife would receive the balance of assets of some $630,000, albeit that included in the $630,000 was a property, an equity of $170,000, which the wife would not realise during the course of her father's lifetime.

1. Whilst other Judges may have reached a different conclusion as to the outcome of a property settlement approaching the matter in accordance with appellate principles I am not persuaded there is any error. 

1. The final matter that needs to be tidied up is the question of the ownership of the property.  It needs to be tidied up in the sense that there is a ground of appeal that relates to it, although given the manner in which the trial Judge has dealt with it by totally quarantining it from the contribution pool and then giving it what is described by the trial Judge as “limited significance”, but when one looks at the reality of the proposition almost no significance in relation to the s 75(2) adjustments, the issue is rather academic.

1. At issue is the finding by the trial Judge that the presumption of advancement that applied to the manner in which the wife acquired the property had not been rebutted on the evidence.  The evidence was that when the home was first acquired it was acquired by the wife's father and mother as to one half as joint tenants, and as to one quarter each by each of the wife's brothers.  The father said that he had done that to teach the wife's brothers some sense of financial responsibility, but that it was always understood by the parties that it was a home that belonged effectively to the wife's parents.  The wife's brother, B, apparently got into some financial difficulties and it became of concern to the wife's parents, or the wife's father, by then the wife's mother was deceased, that creditors might take some interest in B's interest in this home and this would be detrimental to the wife's father, and it was thought appropriate that an arrangement be made whereby B was divested of his interest in the home.

1. For reasons that were not at all adequately explained it was thought appropriate to transfer B's interest to the father or his nominee, and the father nominated the daughter as the nominee.  A solicitor was involved in the exercise.  No deed of trust was ever created to indicate that the daughter, that is the wife in these proceedings, held the property on trust for her father, whilst the evidence of the father was that he considered it to be his own property and would remain his own property until his death in which case each of his children would receive a one third interest in the property.  There was no explanation, as I have said, as to why it was that the property was ever placed into the daughter's name.  In those circumstances the trial Judge concluded that he was not satisfied that the presumption of advancement had been rebutted.  He was particularly concerned with the confusion arising out of the terms of the transfer of the property to the wife.

1. I cannot say that on reading the evidence I could reach a conclusion that the finding made by the trial Judge was not open to him; that is, that the trial Judge was in error in not being persuaded that there had been a rebuttal of the presumption of advancement.  The evidence in relation to the presumption of advancement comes firstly from the wife disavowing any interest in the property, but more importantly from her father's evidence that “it was never my intention she would become the owner of the property immediately.”

1. This has to be seen in terms of the explanation as to what had occurred relating to the transfer of the property, that is that the father was not involved with solicitors nor in the discussion nor did he provide them with any instructions. He was simply party to an agreement with his son as to the best way of divesting the son the interest in the property.  He said:

“It was my understanding [B] was to transfer his share in the property to me because of all the financial assistance I provided him with.”

1. He did not then go on, as I have indicated, to explain why it was necessary to put the daughter on the title. 

1. I am not satisfied that it was not open to the trial Judge to conclude the presumption had not been rebutted.  If I am wrong in that conclusion, given the way the trial Judge treated the wife's interest in the property effectively paying little if any attention to it, I would not be satisfied that the error was such that would lead me to disturb the result achieved.  I would dismiss the appeal.

1. COLEMAN J:  Yes, I would also dismiss the appeal for the reasons given by the presiding Judge and have nothing to add.

1. WARNICK J:  I agree with the reasons given by his Honour the learned presiding Judge.  There was a ground of appeal going to the asserted failure of the trial Judge to consider the justice and equity of the orders, but it was clear from submissions on behalf of the wife that the success or failure of that ground rode upon the success or failure of the arguments in relation to the assessment of contributions and s 75(2) factors.  I would also dismiss the appeal.

1. KAY J:  We do not propose to make any order for costs.  The order of the Court will be the appeal is dismissed.

___________________________________

I certify that the 37 preceding
 paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.

 Associate