Poole & Poole - [2008] FMCAfam 835

FEDERAL MAGISTRATES COURT OF AUSTRALIA

POOLE & POOLE

[2008] FMCAfam 835

FAMILY LAW – Property settlement – application to set aside prior property settlement orders on grounds of implied consent – resumption of cohabitation immediately after prior orders made – making of prior orders condition precedent to resumption of cohabitation – no implied consent – parties subsequently entering into cohabitation agreement purporting to be a binding financial agreement – husband propounding agreement as binding and determinative of parties’ property interests in wife’s successful application to have agreement held not to be binding – consent implied from husband’s propounding of financial agreement.

FAMILY LAW – Property settlement – assessment of contributions – husband owning unencumbered home at commencement of cohabitation – husband’s parents making significant cash gifts to husband during parties’ cohabitation – 14 year cohabitation – assessment of non-contribution adjustment.

Family Law Act 1975 ss.79, 79A(1A)

Applicant:

MS POOLE

Respondent:

MR POOLE

File Number:

CRC 10 of 2007

Judgment of:

Halligan FM

Hearing date:

1 July 2008

Date of Last Submission:

1 July 2008

Delivered at:

Coffs Harbour

Delivered on:

2 July 2008

REPRESENTATION

Counsel for the Applicant:

Mr Theobold

Solicitors for the Applicant:

Ticli Blaxland Solicitors

Counsel for the Respondent:

Mr Loomes

Solicitors for the Respondent:

Green and McKay Solicitors

ORDERS

Orders are made in accordance with paragraphs 3.1 to 3.8 of the final orders sought in the wife's application filed on 10 January 2007, subject to the following amendments:
(a)In paragraphs 3.1, 3.2 and 3.4.3 insert "$154,000" in lieu of "$280,000".
(b)In paragraph 3.1 insert "56" in lieu of "28".

IT IS NOTED that publication of this judgment under the pseudonym Poole & Poole is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
COFFS HARBOUR

CRC 10 of 2007

MS POOLE

Applicant

And

MR POOLE

Respondent

REASONS FOR JUDGMENT

Introduction

These are property settlement proceedings under the Family Law Act 1975 in which the wife seeks to have previous property settlement orders set aside under s.79A(1A) of the Act and new orders made in their place requiring the husband to pay her $154,000. The husband seeks a dismissal of the wife's application.

Background

The husband is 47 being born in 1961. The wife was born in 1971 and is 36. The parties commenced cohabitation before marriage. The date of the commencement of cohabitation is in dispute and I will deal with this in a moment.
The parties married in 1997 and finally separated on 23 August 2005. They were also separated from 14 August 2000 to 1 May 2001. There were other separations. When they occurred and their duration is not disclosed by the evidence.
There are two children of the parties' marriage, [B] born in 1998 aged 10 and [C] born in 2002 who will turn 6 shortly.
The parties have consented to parenting orders that I made on

30 June 2008
. They provide for equal shared parental responsibility, the children to live with the mother and spend time with the husband on alternate weekends from Friday after school to 5 pm Sunday, from after school overnight each Tuesday to before school Wednesday and for half school holidays with specific provisions for Mothers and Fathers Days and the parents and the children's birthdays.
From separation the husband had been spending weekend time with the children from Friday to Saturday afternoon. The longer alternate weekend time provided for in the parenting orders commenced about a month ago.

The evidence

It was ultimately submitted on behalf of both parties that their financial and non-financial, direct and indirect contributions up to the time of the hearing were equal, apart from property or assets they introduced at the commencement of cohabitation and gifts from the husband's parents. While there is considerable difference in the evidence of the parties as to the contributions which are said to be equal the common point of equality means that it is unnecessary to resolve many of those forensic controversies. However, in order to assess the totality of the parties' contributions it is necessary to assess these contributions to some extent. It is also appropriate to resolve the issue about the date of cohabitation.
The wife said cohabitation commenced in August 1990 when she was working for the [X]. In cross-examination she agreed she commenced with the [X] in September 1990. She said when cohabitation commenced she was still working part-time at [P], where the parties first met, but that she had received the offer for employment at the [X] and was soon due to commence working there when cohabitation commenced.
The husband in his evidence-in-chief said that at the commencement of the parties living together, the wife was employed at [P], not at the [X] as she had contended. He said the wife commenced full-time work with the [X] in 1994. In cross-examination he was emphatic that cohabitation did not commence in 1990 but in 1994. He said cohabitation commenced not long after the wife commenced full-time work at the [X]. When taken to his affidavit evidence that the wife was working at [P] and not the [X] “at the commencement of our living together”, he said ultimately that the affidavit was incorrect and should have said when they started going out together when she worked at [P].
This evidence of the husband is unconvincing. He clearly has difficulty remembering when various events occurred. While the wife's evidence-in-chief of working at the [X] at the commencement of cohabitation in August 1990 was incorrect, her explanation of this inconsistency in her evidence was more credible than the husband's explanation for the inconsistency in his evidence.
His explanation that his affidavit should have referred to the wife working at [P] not the [X] when they started going out is unconvincing because it was made in response to a specific contention in the wife's affidavit and it was made in the context of the husband in the preceding paragraph using the same expression, “commenced living together”. Putting the consecutive paragraphs of his affidavit together, his evidence was that they commenced living together in 1994 and at that time the wife was working at [P], not the [X]. This renders his suggestion that the second paragraph of his affidavit should have referred to the parties commencing to go out together rather than commencing to live together an unlikely explanation.
I therefore find that cohabitation commenced in 1990.
At the commencement of cohabitation the husband owned a new two bedroom brick veneer home on two and a half acres of land at Property L unencumbered. There is no evidence as to its then value. He was working full-time at [P].
At the commencement of cohabitation the wife was working part-time at [P] and owned a motor vehicle. The following month she commenced part-time work at the [X]. She mentioned for the first time in cross-examination that she had savings in an unspecified amount at the commencement of cohabitation. I will return to this in a moment.
The husband continued in full-time employment throughout the parties' cohabitation. During the parties' relationship he left [P] and worked as a gardener for a period, then about five or six years ago he commenced work at [O] where he continues to work.
The wife commenced full-time work with the [X] in 1994. She took maternity leave for about 15 months around about the birth of [B], receiving the equivalent of nine weeks pay. She returned to part-time work with the [X] then took another period of over 12 months maternity leave around the birth of [C], again receiving nine weeks pay. She again returned to part-time work with the [X] where she continues to work 20 hours per week.
I am satisfied that during the parties' cohabitation each of the parties contributed their earnings to the household. The wife paid the family health insurance and says she contributed her income to other family expenses, including towards the repayment of mortgages at different times. The husband denies some of these contributions and asserted the wife spent her money on herself. However, there was no suggestion in the husband's case of waste or extravagance in the wife's expenditure. Even if she did spend all or most of her income on herself - and I am not satisfied she did - it would still be a relevant financial contribution by the wife, being for legitimate expenses of a member of the parties' household that relieved the husband of the obligation to meet that expenditure himself and freeing his income for other things.
The wife said she contributed $2,000 to meet the costs of erection of a roof over a barbecue area at the Property L property in 1993.

The husband conceded construction of the roof and an unspecified contribution by the wife, but not the contribution she alleged.

The husband's inability to quantify the amount the wife contributed to the roof leads me to accept the wife's evidence.
In 1995 the wife bought a villa at Property T from her father for $95,000, paying a $9500 deposit and borrowing the balance. She said in cross-examination that the deposit came from pre-cohabitation savings that she had. The villa was rented and the rent applied to the mortgage.
The wife's evidence suggests that other than for pre-cohabitation savings, she would not have had the funds to pay the $2,000 for the barbecue roof. She was not successfully challenged in cross-examination in relation to the suggested pre-cohabitation savings despite her failure to mention her savings in her evidence-in-chief and the lack of any real explanation for that failure. I therefore find that the wife had pre-cohabitation savings of about $11,500.
In 1996 the husband borrowed $30,000 secured by mortgage over the Property L property to pay for extensions to that property.
In February 1999 the wife sold the Property T villa for $105,000. The mortgage balance then was around $81,700. The wife could not say how much the net proceeds of sale were. The net proceeds must have been less than $23,000 after agent's commission and legal fees on the sale. By the month after the sale the wife had $18,139.94 in a separate bank account which she said principally represented the balance of the proceeds of sale. I therefore find that the net proceeds of sale of the villa were unlikely to have been more than $18,000.
On 31 March 1999 the wife paid $5,000 from the villa proceeds of sale towards the mortgage on the Property L property. She said she spent the balance of the proceeds of sale of the villa on family living expenses. In fact, she said the very reason she sold the villa was to generate funds to meet family living expenses.
The wife paid $5,110 on 10 May 1999 for installation of a septic system at the Property L property, and on 10 August 1999 she paid $4,005 for the driveway at the property to be stencilled. While the husband ultimately conceded these payments were made by the wife from her separate bank account, where the wife obtained these funds is not apparent from the evidence. If she spent the proceeds of sale of the villa as to $5,000 in a payment to the mortgage and the balance on living expenses, she having said as I have mentioned that she sold the villa for the very purpose of meeting living expenses while she was on unpaid maternity leave, that would leave the husband or his parents as the only other possible sources of the funds used by the wife to make these payments.
Issues such as these seem to have played a significant part in driving this litigation. Yet at the end of the day it seems unlikely to make any great difference to the ultimate outcome. The only sources of funds for the parties were pre-cohabitation property and assets, their earnings during cohabitation and gifts from the husband's parents. There is no issue about the gifts from the husband's parents or the parties' income. Thus, the actual source of funds to make particular payments during the parties' cohabitation is largely irrelevant unless they can be sourced either to pre-cohabitation assets or to gifts from the husband's parents.
The wife received a lump sum of $10,451.26 from the [X] on

20 July 1999
when she returned to part-time work after her maternity leave. She said she paid $10,300 of this off the mortgage on the Property L property on 27 October 1999. Her bank statements show this to be incorrect as she only had $4,564 in her account on

26 October 1999
. The amount withdrawn from her account on

27 October 1999
was $2,000. There is no evidence as to what was done with these funds.
The wife's attempts in cross-examination to suggest that perhaps she drew the $10,300 paid off the mortgage on 27 October 1999 on her credit card cannot change the fact that her evidence was incorrect and contradicted by her own financial records that she had in her possession. However, this is another example of what is ultimately a futile argument. There is no issue that the wife contributed in a relevant sense the whole of the lump sum she received from the [X].
In late 1999 the husband bought a property at Property W for $235,000 using bridging finance. That finance was secured on both properties. To do so the pre-existing mortgage on the Property L property needed to be paid out. The husband's parents gifted a sum of about $10,000 to assist in doing so and the parties contributed the balance. The husband's parents also gave the husband sums totalling $43,650 to assist with the purchase of the Property W property.
The wife said that from 10 December 1999 until 14 August 2000 she paid the whole of her income to service the bridging finance. The husband denied it. This is another irrelevant dispute. However, the wife contributed her income, she contributed it. If some or all went to the interest repayments on the bridging finance, it was a direct financial contribution to the preservation of both properties. To the extent none of it went directly to service the bridging finance but met other household commitments, it was an indirect financial contribution by the wife to the preservation of both properties as it freed the husband's income to be applied to service the loan.
The parties separated on 14 August 2000. The husband said this was for the fourth time, but there is no evidence of earlier separations.
The husband sold the Property W property in October 2000. Settlement statements show none of the proceeds were paid to either party, but $49,264.03 was paid to "A and [P] Payne". The husband's father's name is [A] Payne. There is no evidence that the husband owed his parents any money, the significant financial support they provided to him being in the form of gifts, not loans. The husband was not cross-examined about this transaction.
During this separation the husband sold the Property L property for $170,000 and purchased a property at Property R for $180,000.

The husband received assistance from his parents in the form of a gift for the deposit of $18,000 on Property R.
On 14 August 2001 the wife signed terms of settlement for property settlement orders. The husband subsequently signed the terms of settlement and orders were made by consent in accordance with those terms of settlement in the Coffs Harbour Local Court on 30 April 2001.
It is these orders that the wife seeks to have set aside. They provide for each of the parties to retain the property of which they were then seized.
According to the application for consent orders on which these orders were made, the husband had the Property R property worth $180,000 unencumbered, a $5,000 insurance policy, a motor vehicle worth $29,000, $4,000 in a credit union, and furniture and effects worth $4,000. He suggested in that application that he owed his parents $40,000. He had contended in his most recent financial statement relied on for this hearing that he owed his father $91,650. However, his father's evidence was that the payments totalling $91,650 were all gifts, not loans. According to the application for consent orders, the wife had a $12,000 motor vehicle, $1,800 in the bank, and furniture and effects worth $1,000.
The parties resumed cohabitation on 1 May 2001. At about this time the husband paid the wife $20,000, which was given to him by his father for the purpose. This gift took the total money given to the husband by his parents in the 18 months between November 1999 and May 2001 to $91,650.
The wife's evidence was that she wanted to reconcile with the husband and he told her that he would only agree to do so if she agreed to these consent orders. It is not entirely clear to me how the payment of $20,000 was regarded. It is common ground it was paid to the wife. It was known to the parties' solicitors that such a sum was to be paid, even though it was not part of the property settlement orders. In any event, I emphasise that the wife's application to set these orders aside is not made under s.79A(1) but under s.79A(1A). Hence, it is not part of the wife's case that her consent was vitiated in any way or that the circumstances surrounding the making of these orders entailed a miscarriage of justice.
What is significant about the resumption of cohabitation on
1 May 2001 in the context of the wife's application to set the orders of 30 April 2001 aside, is that the wife's own evidence is that the husband required these orders to be in place as a condition precedent to resuming cohabitation. It therefore cannot be suggested that the circumstances of the parties resumption of cohabitation, at least initially, supports an inference that the parties intended by their resuming cohabitation that the consent orders be set aside. In fact, it is quite the contrary.
The wife said she used the $20,000 she received from the husband as to $11,000 to buy a motor vehicle and the balance to repay debts she had accumulated during the separation. I accept this unchallenged evidence.
After reconciling on 1 May 2001 the parties continued to intermingle their finances as they had done before separating in 2000. Property R became the matrimonial home. The wife fell pregnant with the parties' second child.
On 15 January 2002, both parties then being aware of the wife's pregnancy, the parties signed a cohabitation agreement prepared by the husband's solicitor. It was expressed to be a binding financial agreement under the Act, but on 26 February 2008, on the hearing of the matter as a preliminary issue and on the wife's application, I found that the agreement failed to comply with s.90G of the Act and hence was not in fact binding on the parties.
The cohabitation agreement, having recited the fact of the separation in 2000 and the reconciliation on 1 May 2001, but not mentioning the consent property settlement orders made on 30 April 2001, provided that in the event of the parties separating in the future each party would keep the property ascribed to that party in schedules to the agreement and that the parties would “share in and equally own” any asset or liability acquired after the reconciliation on 1 May 2001.
The property ascribed exclusively to the husband under the cohabitation agreement was the Property R property, a motor vehicle, a motorbike, a total of $80,000 in bank accounts, any contingent interests in the estates of his parents, and any property demonstrably in his possession prior to 1 May 2001. The property ascribed exclusively to the wife was a motor vehicle, $7,500 in bank accounts, any contingent interests in her parents' estates, and any property demonstrably in her possession prior to 1 May 2001.
The source of the husband's $80,000 in savings referred to in the cohabitation agreement is unexplained. Based on the tenor of the agreement ascribing to each party property he or she had immediately before resuming cohabitation on 1 May 2001, the clear inference is that the husband had the $80,000 cash savings as at 30 April 2001. That means that for his affidavit verifying the application for consent orders to have been correct, he must have acquired this sum, or at least $76,000 of it, between February and March 2001. However, the husband was not cross-examined about these matters and the wife's case to set aside the property settlement orders if not based on a miscarriage of justice because of the suppression of evidence or the giving of false evidence. I therefore give this matter no further consideration in deciding the wife’s application.

As previously mentioned, the wife took something in excess of 12 months' maternity leave with nine weeks' pay around the birth of [C], then returned to work part-time 20 hours a week on 14 February 2003.
There is dispute between the parties about a garage sale and what happened to the proceeds of sale. I am not satisfied it affects the result in this case other than in one respect. The husband suggested that both parties sold items they had separately acquired during the separation at the garage sale and each contributed money thus generated to the joint purchase of a refrigerator for the household, reinforcing the impression of an intermingling of the parties' finances during this period in ways difficult to reconcile with either the consent property settlement orders or, for that matter, the cohabitation agreement.
During their cohabitation, both parties made contributions as homemakers and parents, although the detail of those contributions is in issue. I am satisfied that the wife made the greater contribution to the care of the children, among other reasons because she took maternity leave around the birth of each child and worked part-time on resuming work after each birth whereas the husband worked full-time throughout cohabitation.
This is not a criticism of the husband for being the primary breadwinner. Rather, it recognises that the wife was available to care for the children more than the husband was by dint of her working fewer hours. The wife conceded that the husband contributed to the maintenance, upkeep and improvement of the properties they lived in during their cohabitation.
The final separation occurred on 23 August 2005 when the wife left the Property R property with the children. She had about $2,585 in savings at that point; the husband had $20,000 in savings.
Since separation the husband has continued in occupation at the former matrimonial home at Property R which is unencumbered and has been paying child support as assessed from time to time. The wife has lived in rented accommodation with the children.
The husband has paid the $20,000 savings he had at separation to his solicitor for costs of these proceedings.

The applicable law

As mentioned, the wife seeks an order setting aside the property settlement orders made on 30 April 2001 under s.79A(1A), which is in the following terms:
(1A) A Court may, on application by a person affected by an order made by a Court under section 79 in property settlement proceedings, and with the consent of all the parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
Express consent to setting aside property settlement orders is not the only consent that may be recognised for s.79A(1A). The Court may construe behaviour of the parties as supporting a consensual discharge of orders (McCabe v McCabe (1995) FLC 92-634). This inferred consent may arise from the way the parties conduct their financial affairs during the resumption of cohabitation after the property settlement orders are made (McCabe, above), but a resumption of cohabitation without more is probably insufficient to support an inference of consent (Ryan v Ryan, [2001] FamCA 1822, unreported, 12 November 2001, Coleman J).
While circumstances surrounding a resumption of cohabitation may not support an inference of consent to set prior property settlement orders aside, the facts may establish that such an intention crystallises or arises as time progresses (McCabe, above). The Court must consider the whole of the relevant evidence and a Court drawing an inference of consent from the parties' conduct must explain the process of reasoning that leads it to draw the inference (Ryan, above).
In applications under s.79A(1A) involving an implied or imputed consent to setting the orders aside, the Court must seek to achieve a proper balance, described by Carmody J in M & M, [2006] FamCA 1453, (2006) FLC 93-298, (2007) Fam LR 712, at [94], thus:
Section 79A(1A) is a remedial section to be construed so as to ensure that it achieves its object but it '… cannot be used to circumvent the basic principles that there can only be one property settlement between parties to a marriage’: Kowalski (1993) FLC at 79-627.
Even if the Court is satisfied of consent, the Court's power under s.79A(1A) to set aside prior orders remains discretionary, as the use of the word "may" in the subsection clearly signifies. The Court is unlikely to set prior orders aside unless, amongst other things, either materially different orders are appropriate in their place or there is some purpose in justice and equity between the parties why the orders should be set aside.
If the prior orders are to be set aside, whether or not to make a further property settlement order falls to be determined by reference to s.79. The Court may make such order as it thinks proper (s.79(1)), but it must not make an order unless satisfied it is just and equitable to do so (s.79(2)). In deciding whether to make an order, and if so, what order, the Court must have regard to those of the considerations in s.79(4), including s.75(2), the provisions of which are incorporated in s.79(4) by reference, as may be relevant in a particular case.
In Hickey v Hickey; Attorney-General for the Commonwealth (Intervenor) [2003] FamCA 395, (2003) FLC 93-143, (2003) 30 Fam LR 355, the Full Court explained the preferred approach in determining property settlement proceedings under s.79 as follows (FamCA at [39], FLC at 78,386, Fam LR at 370):
39. The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. The approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meanings of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”), including because of s.79(4)(e) the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established in step 2. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
Where the pool of divisible assets and resources includes a superannuation interest the Full Court in C & C [2005] FamCA 429, (2005) 33 Fam LR 414, (2005) FLC 93-220, has indicated that whether or not a splitting order is sought the superannuation interests of the parties should preferably be placed at the first step of the decision-making process in a separate pool to the non-superannuation assets and liabilities, and that steps two and three should be applied separately to the superannuation pool and to the non-superannuation pool. I prefer that approach in this case.

Is there consent to set the prior orders aside?

The wife's application clearly indicates her consent to setting the orders aside. I am satisfied that consent by the husband to this course ought to be inferred for the following reasons.
It is clear, on the wife's case, that the resumption of cohabitation on 1 May 2001 did not involve any consent by the husband to setting aside the property settlement orders made the previous day. Quite the contrary. The existence of these orders was, according to the wife, a condition precedent to that resumption of cohabitation.
However, the wife then fell pregnant and at the husband's instigation the parties entered into a cohabitation agreement in January 2002. The terms of this agreement were different to the consent orders and were to an extent inconsistent with them. Whereas the effect of the property settlement orders would have been that the parties' interests in property acquired thereafter would have fallen to be determined by reference to the general law, the agreement specified that the parties would “share in and jointly own” property acquired after the resumption of cohabitation. Further, the cohabitation agreement dealt with additional property to that dealt with under the property settlement orders, in particular an additional $76,000 in savings which were to be the husband's alone.
However, of even more significance, in my view, is the fact that the cohabitation agreement was expressed to be a binding financial agreement pursuant to s.90C of the Act. As such, it would clearly replace the prior property settlement orders.
Further, the husband as recently as February this year resisted the wife's application to have the agreement set aside or held not to be binding, asserting that it rather than the property settlement orders of 30 April 2001 governed the parties' financial affairs.
The fact the cohabitation agreement was not in fact a binding financial agreement under the Act, in my view, cannot change the fact that the husband proposed it as a replacement for the property settlement orders and as recently as February this year in these proceedings advocated the position that it operated in lieu of the property settlement orders.
I am satisfied that the husband's conduct is so inconsistent with the continued operation of the property settlement orders that he must be taken to have consented to their being set aside. I am satisfied that if the wife can demonstrate that materially different orders should now be made in their place then, absent any other matter raised by the husband going to the exercise of the Court's discretion to set the orders aside, such as prejudice or hardship, the prior orders should be set aside. As no issues of prejudice or hardship were in fact advanced on behalf of the husband I proceed on the basis that if the wife demonstrates that materially different orders should be made then the prior orders should be set aside.

The pool of divisible assets, liabilities and resources

Turning then to that determination, the first step is to determine the pool of divisible assets, liabilities and resources. Apart from two issues, the parties agreed as to the pool of divisible assets. The parties agreed to omit a number of ancillary items of property and some liabilities from consideration.
The husband submitted that $20,000 he paid to the wife at the time of the property settlement orders in 2001 should be written back as a present asset in the wife's hands.
The Full Court's decision in Townsend v Townsend (1994) 18 Fam LR 505, (1995) FLC 92-569, is authority for the proposition that funds or property in which one party has a legitimate interest which are expended or disposed of by the other party after separation may be brought to account as part of the pool of divisible assets. However, subsequent Full Courts have emphasised that parties are entitled to meet their own reasonable needs from moneys and property available to them and writing back assets dissipated since separation should be the exception rather than the rule (Marker v Marker [1998] FamCA 42, unreported, 1 May 1998; Cerini v Cerini [1998] FamCA 143, unreported, 8 October 1998).
I proceed on the basis that these authorities apply both to the dissipation of property after final separation and to the dissipation of property during a separation following which the parties reconcile. It is not entirely clear that the wife in fact received the $20,000 during separation. The husband's father said he advanced the $20,000 to his son for payment to the wife in “about May 2001”. The parties resumed cohabitation on
1 May 2001. However, I will proceed for present purposes on the basis that the wife received and expended these funds during a period of separation.
The wife's evidence is that the $20,000 the husband paid her in 2001 was expended as to $11,000 on a motor vehicle, which the wife brought back into the relationship on the resumption of cohabitation, and the balance was used to pay debts incurred during the separation. There is no evidence as to what the debts related to or how they arose.
I am not satisfied the funds spent on the motor vehicle should be brought to account as a notional asset in the wife's hands now.

The parties have agreed to include their current motor vehicles in the pool of non-superannuation assets. To write back a sum referable to the wife's motor vehicle or an antecedent motor vehicle may entail a degree of double counting.
As to the balance of the $20,000, based on the authorities mentioned, it is for the husband to demonstrate a reason why the sum should now be written back. Other than the fact that it was said it was paid to the wife in 2001 during a period of separation, no reasons have been advanced why it should be written back. These comments, frankly, also apply to the expenditure of the $11,000 on the wife's motor vehicle.
In the absence of any evidence to suggest that the wife's expenditure of these funds was unreasonable I am not satisfied they should be written back. The $20,000 can and should be taken into account as a relevant financial contribution by the husband, being sourced from a gift from his parents. I note that the husband has in fact included the $20,000 as part of the cash gifts received from his parents and relies on the total of the cash gifts as supporting his contentions in the assessment of contributions.
The wife submitted that the $20,000 legal costs paid by the husband should be written back as an asset in the husband's hands now. In NHC v RCH at (2004) 32 FLR 518, the Full Court set out certain principles to guide judicial officers in the treatment of paid and unpaid legal costs in property settlement proceedings. The Full Court at para.[57], dealing with funds used to pay legal costs, said:
If the funds used existed at separation and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party who has had the benefit of them.
The husband had $20,000 savings at final separation. That fund is now gone and the husband has paid $20,000 to his solicitors for costs of these proceedings. He has paid further funds for costs that he obtained from his parents, he says by way of loan. It is not sought to bring these sums to account in the pool of divisible assets.
The situation seems to falls squarely under para.[57] of the judgment in NHC & RCH, namely the payment of legal costs with funds that existed at separation and in which the wife had a claim based on contribution. I therefore propose to add that sum back as an asset in the husband's hands now.
I therefore find the pool of non-superannuation assets comprises the following:
The property at Property R

in the husband's sole name   $355,000
The husband's whole of life insurance policy                 $6000
The husband's Toyota motor vehicle   $17,000
The husband's Suzuki motorcycle   $14,000
The wife's motor vehicle   $5000
The husband's paid legal costs   $20,000
Total   $417,000
The parties agree the pool of superannuation resources is as follows:
The wife's superannuation  $58,336
The husband's superannuation  $52,640
Total  $110,975

The assessment of contributions

Turning then to the assessment of the parties' contributions. The parties agreed that their superannuation interests should be left as they currently stand and not further taken into account. Those interests are similar, though not identical. There is little evidence about contributions specifically to those interests. There is no evidence as to when they commenced and how they have accumulated over time. The contributions, to which I will shortly refer, that result in an inequality of contribution to the non-superannuation assets are not relevant to contributions to the superannuation interests. The parties agree that other than for those matters, their contributions are equal in relation to the non-superannuation interests. In those circumstances I accept that the parties agreed approach is entirely appropriate and fully supported by the evidence.
In relation to the non-superannuation assets, it is submitted on behalf of the wife that contributions should be assessed as 70/30 favouring the husband, while for the husband it was put that they should favour him 90/10.
As mentioned, it was agreed that apart from contributions from pre-cohabitation property and assets and the gifts from the husband's parents, the contributions overall were equal.
The husband owned an unencumbered, new, two bedroom brick home at Property L at the commencement of cohabitation, although there is no evidence as to its value then. The wife had a motor vehicle and savings of $11,500 at cohabitation. The wife has made at least indirect financial contributions to the Property L home through repayments on a $30,000 mortgage taken out for improvements to it. If the husband met all the loan repayments, the wife's financial contributions of her income to household expenses freed the husband's income to that extent to be contributed to the mortgage repayments. The wife made an undisputed direct contribution of $5,000 to this mortgage traceable to her pre-cohabitation savings in the form of the proceeds of sale of the villa.
Thus, when the Property L property was used as security for the Property W purchase, the wife had made a relevant financial contribution to it. She likewise made financial contributions to the Property W mortgage.
When funds from the sale of either or both the Property L and Property W properties were contributed to the purchase of the Property R home the wife can trace a financial contribution to its acquisition through her financial contributions to those prior properties.
While the husband brought in an unencumbered home at the commencement of cohabitation and now owns an unencumbered home traceable to that first home, the wife has made significant financial contributions to the properties owned during the parties' cohabitation, and the intervening contributions by both parties, both financial and non-financial, direct and indirect, must be given due weight.
The parties cohabited from August 1990 to August 2005, except for the period from mid-August 2000 to 1 May 2001. They thus cohabited for a total of 14 years and 3 months. During that time they made significant non-financial contributions as homemakers and as parents to two children. Similarly, they both contributed all the wages they each earned over that period. These are significant contributions. While the husband's contributions of a home at the commencement of cohabitation and of the $91,650 gifted by his parents between November 1999 and May 2001 are themselves significant, the relative significance of all the contributions must be assessed together.
The home the husband owned at the commencement of cohabitation was in large measure the financial foundation on which the parties subsequently built. The wife's savings brought in at the commencement were also significant, but less so than the husband's home, and were used to acquire a second property that, when sold, generated funds that benefited the parties' household. The gifts from the husband's parents between 1990 and 2001 significantly assisted in the acquisition of the current home. But by far the greater part of the purchase price of that home came from the sale of the Property L property.
Especially where non-financial contributions are to be given substantive and not merely token recognition, it is not possible to adopt a mathematical approach in assessing contributions. This is also the case where part of the relevant financial contributions of either or both of the parties have gone to supporting the family and not directly to the building up of the parties' assets.

Having regard to the significant direct financial contributions made by the husband in the form of the Property L home at the commencement of cohabitation and the funds gifted by his parents, it is clear there was an imbalance in overall contributions in the husband's favour. However, to assess the wife's financial and non-financial contributions over more than 14 years' cohabitation at only 10 per cent as put on behalf of the husband is, in my view, to grossly under-estimate or under-value her contributions.
I am satisfied that in fact the contributions to the non-superannuation assets should be assessed overall as favouring the husband in the proportions 70/30, as was submitted on behalf of the wife.

Assessment of non-contribution considerations

Both parties submitted that an adjustment to the non-superannuation assets was warranted in the wife's favour for non-contribution considerations, although the wife sought 10 per cent and the husband submitted it should be five per cent.
The parties' contribution based entitlements would give the husband $291,900 and the wife $125,100 of the non-superannuation pool, a significant imbalance in the husband's favour.
The wife is aged 36, the husband 47. The wife has the majority of the care of the parties' two children who are 10 and nearly 6. The wife's income, working 20 hours per week, is $587.80 per week.

The husband's income from full-time employment is $610 per week. The wife has entered a new relationship, but is not yet cohabiting with her friend. The husband has recently begun to cohabit with a woman who has a child. There is no evidence about the financial circumstances of that cohabitation.
The wife's ability to exercise her earning capacity is affected by her ongoing care of the children. Her currently exercisable earning capacity is somewhat less than the husband's. When she is able to work full-time it would seem that her earning capacity will be somewhat greater than the husband's based on her current income for 20 hours work per week.
Having regard to the parties' contribution based entitlement to the non-superannuation pool of assets, their respective ages, their current and prospective future earning capacities, the wife's ongoing primary care of the children and the relatively modest value of the asset pool, I am satisfied an adjustment in the wife's favour of 10 per cent is warranted.

A just and equitable order

The wife has demonstrated an entitlement to 40 per cent of the non-superannuation asset pool and hence, as I have intimated earlier, the prior property settlement order should be set aside. The wife seeks a payment to her by the husband of $154,000. This represents a little over 38 per cent of the non-superannuation asset pool and is clearly warranted on my findings. Such an order will give the husband an opportunity to retain Property Rif he wishes.
If the payment is not made within a reasonable time then Property R should be sold and the relevant sum paid to the wife. The wife proposed 28 days for that payment to be made. I am satisfied that the husband should be given greater time, but not the three months he sought. I propose to give him eight weeks.

I certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of Halligan FM

Associate: Deanne Bush

Date: 6 August 2008