Pye and Pye
[2008] FMCAfam 716
•11 July 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PYE & PYE | [2008] FMCAfam 716 |
| FAMILY LAW – Property – assessment of weight to be given to initial contribution – inheritances received during marriage – inheritances received after separation – assessment of s.75(2) considerations. |
| Family Law Act 1975, ss.75(2), 79 |
| Bonnici & Bonnici (1992) FLC 92-272 Williams & Williams [2007] FamCA 313 |
| Applicant: | MS PYE |
| Respondent: | MR PYE |
| File Number: | SYC 8165 of 2007 |
| Judgment of: | Altobelli FM |
| Hearing date: | 12 May 2008 |
| Date of Last Submission: | 12 May 2008 |
| Delivered at: | Sydney |
| Delivered on: | 11 July 2008 |
REPRESENTATION
| Counsel for the Applicant: | Ms Christie |
| Solicitors for the Applicant: | Hamer & Hamer |
| Counsel for the Respondent: | Mr Foster |
| Solicitors for the Respondent: | Gayle Meredith & Associates |
ORDERS
That the wife pay to the husband the sum of $50,376 within 60 days of today’s date.
That simultaneously with the wife’s compliance with Order 1 herein, that the husband do all acts and execute all documents necessary to cause to be transferred to the wife the whole of his interest in the property situated at and known as Property M in the State of New South Wales being the whole of the land comprised in Certificate of Title folio identifier [7] subject to existing encumbrances thereon (if any).
That within 28 days:
(a)That the wife make available to the husband all photographs and video film in her possession and control which includes any photographs and video film footage of the two children of the marriage to enable the husband to copy the photographs and film and that within 60 days of the husband receiving the photographs and video film footage that he return them to the wife.
(b)That the wife make available for collection by the husband from the Property M property all of the husband’s personal effects which are currently housed in the shed at the rear of and/or underneath the Property M property.
That the wife indemnify and keep indemnified the husband with respect to all rates, taxes, insurances and all outgoings referable to the Property M property.
That the wife be restrained by way of injunction from claiming or in the future making claim as a result of having been a beneficiary of the [X] Family Trust.
That the husband and wife indemnify and keep indemnified the other of them with respect to all liabilities in their own name and attaching to the assets in their possession and/or control.
That the husband be solely entitled to the whole of his entitlement in the [P] Superannuation Fund and the wife be solely entitled to the whole of her entitlement in [R] Super.
That subject to these Orders that the husband be declared solely entitled to the exclusion of the wife to all property both real and personal in his ownership, possession and/or control including but not limited to:
(a)The property situated at Property D in the State of New South Wales (“the Property D property”);
(b)The whole of his interest in the [X] Family Trust;
(c)The 1998 Holden VT motor vehicle in his ownership and control;
(d)All bank accounts or accounts with other financial institutions in his name;
(e)All life insurance policies in his name;
(f)The aluminium commuter boat in his possession;
(g)The furniture and contents of the Property D property;
(h)The husband’s business known as [T].
That subject to these Orders that the wife be declared solely entitled to the exclusion of the husband to all property both real and personal in her ownership, possession and/or control including but not limited to:
(a)All bank accounts or accounts with other financial institutions in her name;
(b)The Peugeot motor vehicle in her possession;
(c)The wife’s interest in her business known as [P] ;
(d)Subject to Order 3.2 herein, all of the furniture and contents in Property M.
That in the event of either party refusing or neglecting to sign within 14 days after receipt of a written request to do so any documents necessary to put into effect the terms of these Orders, that the Registrar of the Sydney Registry of the Federal Magistrates Court is hereby appointed to execute such document in the name of the defaulting party pursuant to the provisions of Section 106A(1) of the Family Law Act1975 (as amended).
I grant leave to both parties to relist this matter before me on 14 days notice as regards interpretation, implementation or enforcement of these Orders.
IT IS NOTED that publication of this judgment under the pseudonym Pye & Pye is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 8165 of 2007
| MS PYE |
Applicant
And
| MR PYE |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for alteration of property interests, commonly known as a property settlement. There is little dispute about the vast majority of the facts. The case was conducted in less than three hours of court time, and yet the case raises complex issues about assessing contribution and future needs. Both the applicant wife and respondent husband are 46 years old. They have two children currently aged
17 and 15, both of whom live with the wife. Some important dates in this case are as follows:
a)Date of Cohabitation: May 1988
b)Date of Marriage: November 1988
c)Date of Final Separation: 23 December 2003
d)Application filed: 22 November 2006
Thus, the parties cohabited for over 15 years, but the present case was heard almost four and a half years after separation.
The financial contributions made by the husband at the commencement of cohabitation, during the marriage, and after separation, make the assessment of contribution quite difficult. The situation is made even more complex by the lengthy period of time since separation. The assessment of what are commonly known as s.75(2) factors was also highly contentious.
Background
There are a number of uncontested facts which I set out below:
a)When the parties purchased the former matrimonial home in Property M in early 1988, currently occupied by the wife and children, the husband contributed about $100,000 of the purchase price of $162,500. The balance was provided by way of joint bank loan.
b)In March 1996 the wife received an inheritance of $25,000.
c)In July 1999 the husband received an inheritance the total value of which was $826,458.
d)In July 2006 the husband received a further inheritance of $150,000.
Moreover the parties agreed that:
e)The wife was to retain the former matrimonial home as part of her share of the settlement, subject to any adjustment in favour of the husband.
f)Apart from issues of assessing the financial contribution arising out of the facts set out above, all other forms of contribution during cohabitation were to be treated as equal.
I was provided with the following joint balance sheet as at 7 May 2008.
| Assets | Agreed Value | Comments |
| Husband’s funds in accounts | $180,153 | The H contends that of this sum $150,000 representing his inheritance from his grandmother should be excluded. |
| Wife’s funds in accounts | $2,398 | |
| Husband’s car | $4,000 | |
| Wife’s car | $10,500 | |
| Husband’s aluminium commuter boat | $2,000 | |
| Husband’s contents | $1,000 | |
| Husband’s business “[T]” | Nil | |
| Wife’s business “[P]” | Nil | |
| Wife’s 987 [N] shares | $4,895 | |
| Wife’s contents | $5,000 | |
| Wife’s personal effects | $3,000 | |
| Property D | $690,000 | |
| Property M | $500,000 | |
| Loan to Ms S | $135,000 | |
| TOTAL ASSETS | $1,537,946 | |
| Liabilities | ||
| Husband’s debt re sewerage connection | $30,000 | |
| TOTAL LIABILITIES | $30,000 | |
| NET ASSETS | $1,507,946 | |
| Financial Resources | ||
| [X] Family Trust | $362,137 | |
| Superannuation | ||
| Husband [P] Superannuation Fund | $60,724 | |
| [R] Super | $9,724 | |
| TOTAL SUPERANNUATION | $70,482 | |
| TOTAL POOL | $1,940,565 |
During cross examination of the husband, the wife’s counsel did attempt to challenge the value that the husband had attributed to the [X] Family Trust. This arose out of a discrepancy between the stated current value and the amount standing to the credit of the husband’s loan account in the trust tax return. In her closing submissions, however, counsel for the wife conceded, quite properly I believe, that fluctuations in the value of shares held by the Trust could easily explain the difference. The husband also argued, albeit without too much enthusiasm, that the [X] Family Trust should be a financial resource and not an asset. The evidence indicates that the husband established it, the husband controls it, and the moneys held by the trust represent the husband’s inheritance from his father. I therefore treat it as property, despite its designation in the above schedule. There was also an issue about add-backs with the wife submitting that $31,361 in legal fees paid by the husband should be added back to the pool. I do not accept this. As the evidence will indicate below these funds most likely came from inheritances received by the husband after separation. There was no cross examination about this issue. I decline to treat the legal fees paid as an add-back.
The wife conducted her case on the basis that the contributions made by the husband would result in assessment of 70:30 in his favour, but that a s.75(2) adjustment should then be made in the wife’s favour of 10 per cent.
The husband conducted his case on the basis that the last inheritance, i.e. the July 2006 inheritance, should be excluded from the pool for all practical purposes as it came in two and a half years after separation. On this scenario, counsel submitted contribution favoured the husband 75:25. If the last inheritance were to be included in the pool, contribution should be 82:18 in favour of the husband. The husband conceded that there were s.75(2) factors operating in favour of the wife, but these should only be assessed at 2.5 percent.
The Issues
The matters referred to above thus gave rise to the following issues for determination:
a)How should the July 2006 inheritance of $150,000 received by the husband be treated – as part of the overall pool of assets, or separate to it?
b)How should contribution be assessed having regard to:
i)What even the wife concedes is a substantial financial contribution by the husband at cohabitation and via inheritances? and;
ii)The agreement that all other forms of contribution during cohabitation should be treated as equal; and
iii)The post-separation contribution which the wife argues she made by way of caring for the children.
c)How should the s.75(2) factors operating in favour of the wife be assessed?
The Applicable Law
The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole.
My discretion in this regard should be exercised having regard to the facts of this case.
Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by the husband in bringing property into the marriage. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26-29, 32 and 36:
26. We think that there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution towards the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing or the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in so doing it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
36. In this case whilst it remains arguable that the trial judge did not give ample weight to the husband’s contributions when measured not in terms of their initial value but in terms of their ultimate value to the parties, given the myriad of other contributions identified by the trial judge, the lack of evidence that would point clearly to the growth in the asset being attributed to forces other than the mutual effort of the parties and taking into account that similar gains made to the wife’s investments have been left in the pool of assets, we cannot say that this case falls outside of the acceptable range that would make it appropriate for the Full Court to interfere. Accordingly the appeal is dismissed.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards. I must have regards not just to the initial value of a contribution, but its ultimate value to the parties as well.
The July 2006 Inheritance
On July 29 2006 the husband’s grandmother died and he received an inheritance of about $150,000. The husband asserts that this inheritance is reflected in the cash funds held by him in bank accounts. This is not challenged by the wife. By the time the husband received the inheritance they had been separated for two and a half years.
The husband argues that as it could not be said that the wife had contributed in any way to this inheritance it should, both as a matter of law and practicality, be excluded from the pool of assets. The husband relied on the Full Court’s decision in Bonnici (1992) FLC 92-272 as authority for his argument. Even though not cited by the husband, the Full Court’s decision in Burke (1993) FLC 92-356 is probably another case that could be used to support the husband’s argument.
I believe this submission is misconceived. Whether or not an asset (whether property or financial resource) is included in the asset pool is a question that is considered at step 1 of the approach referred to by the Court in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener). This is, for all practical purposes, a question of characterisation of the nature of the asset in question. How an asset is then treated for the purposes of assessing contribution i.e. the weight to be attributed to it, is for all practical purposes a question of quantification. Thus to submit that a post-separation inheritance is not an asset to be included in the pool of assets is to confuse quantification with characterisation. A close reading of the Full Court’s decision in Bonnici reveals that it was concerned with quantification and not characterisation. Thus at p.79020 of the judgment the Full Court states:
The more difficult issue in this case is as to whether the same should be treated differently from other types of property in which the parties clearly have an interest.
The answer, we consider, must depend upon the circumstances of individual cases. If, for example, in the present case, there had been no other assets than the husband’s inheritance, but the wife had, as his Honour found, clearly carried the main financial burden in the support of the family and also performed a more substantial role as a homemaker and parent than the husband, then it would clearly be open and indeed incumbent upon a Court to make a property settlement in her favour from such an inheritance.
A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question.
The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances.
It is true, however, that Fogarty J in Burke suggested there was an alternative approach. His Honour states at p.79762:
There are two ways of dealing with the wife’s post-separation inheritance. One is to take it out of the pool of property to which the equal contribution otherwise applies. The alternative is to increase the wife’s percentage contribution to the total pool of property in the proportion that the $66,000 bears to the total figure and reduce the husband’s overall contribution accordingly. In this case I think it more convenient to adopt the former of those approaches and that largely accords with the approach adopted by counsel.
On my reading of the judgment Fogarty J did take the post-separation inheritance out of the pool of property as a matter of convenience.
He was not propounding a rule of general application. In any event the facts in Burke did not give rise to a claim by one spouse for post-separation contribution to the welfare of the family, whereas the present case clearly does. The distinction is a significant one.
To exclude an asset from the property pool has the tendency to make it immune from a claim for post-separation contribution such as that referred to in Farmer & Bramley (2000) FLC 93-060. As counsel for the wife submitted, the Full Court’s decision in this case clearly points to a post-separation inheritance being treated as an issue of quantification of a contribution made.
The July 2006 inheritance of $150,000 received by the husband should thus remain part of the joint balance sheet referred to in paragraph 5 above.
Assessing Contribution
The uncontested facts are that the husband and the wife made the following significant financial contributions during cohabitation and up to July 2006:
| Party Making Contribution | Amount of Contribution and Date Contribution is Made | Percentage this represents of the current value of the current pool |
| 1. Husband | $100,000 1988 | 5.1% |
| 2. Wife | $25,000 1996 | 1.2% |
| 3. Husband | $826,458 1999 | 42.5% |
| 4. Husband | $150,000 2006 | 7.7% |
If one looks simply at a dollar value of the contribution made by each spouse (i.e. the “initial value”), expressed as a percentage of the current value of the pool of assets including both superannuation and
non-superannuation assets, the result is that the husband contributed 55.3 percent, and the wife 1.2 percent, and thus they jointly contributed 43.5 percent. On this very simplistic approach to assessing contribution the husband would receive 55.3 percent plus half of 43.5 percent (21.75 percent) equalling 77.05 percent. Conversely the wife would receive 21.75 percent plus 1.2 percent equalling 22.95 percent.
Counsel for the husband submitted the husband’s financial contributions are all largely intact and separately identifiable.
The submission was also made that the real value in dollar terms of the husband’s contribution (i.e. the “ultimate value”) is in fact much greater because of the accretions in value to the home, and the assets representing the two inheritances received by him. This approach produces a higher percentage. If one assumes that the husband’s contribution to the acquisition of the family home at Property M was 61 percent ($100,000 out of $162,500) his percentage contribution to that home would total 80 percent (61 percent plus half of 39 percent). In dollar terms that amounts to $400,000. When one adds to this the savings in the husband’s accounts ($180,153), loan to Ms S ($135,000), [X] Family Trust ($362,137) and Property D ($690,000), the total becomes $1,767,290 or 91 percent of the total combined pool.
The husband’s final submission was that contribution ought to be assessed 80:20 in his favour. This is a figure which is more than the 77.05 percent referred to in paragraph 21 above, but less than the
91 percent referred to in paragraph 22 above. By necessary implication the argument would have to be that 91 percent could not possibly be just and equitable to the wife, but that 77.05 percent would not justly reflect the “value to the parties” of the husband’s financial contribution in the Williams & Williams sense.
The husband argues that the pool of assets in this case could be broadly sub-divided into two categories – the matrimonial pool consisting of assets to which both the husband and wife can be said to have contributed, and the non-matrimonial pool to which only the husband contributed. While this is a perhaps convenient rule of thumb it is certainly not a principle of law. I am satisfied that s.79 and the cases that have been referred to above mean that contribution is assessed in a global and holistic sense to all of the property whenever acquired.
This marriage is too long, in my opinion, to adopt an asset-by-asset approach, and the husband did not present his case on this basis.
To make the artificial but nonetheless convenient distinction between a matrimonial and non-matrimonial pool is again to confuse characterisation with quantification. One can understand the husband’s argument though because the “hypothetical” matrimonial pool on the facts of this case is not more than $572,975 or about 30 percent of the total value of the pool. His argument is that the husband cannot be left with nothing of the matrimonial pool, a result that would occur if the wife’s application is granted.
For the wife, however, it was argued that to give her less than
30 percent would be to undervalue the totality of the wife’s financial and non-financial contribution, direct and indirect. For the wife it was argued that anything less than 30 percent becomes tokenism and could not possibly be just and equitable. But to give the wife 30 percent would be to give her the totality of the hypothetical matrimonial pool.
Post-Separation Contribution
Before examining these submissions further I propose to deal with the wife’s claim for post-separation contribution. Her evidence was that she remained in the former matrimonial home, which was in a poor condition, and completed essential maintenance after separation together with a small renovation to a bathroom. She also paid outgoings and utilities relating to the property. Her evidence about the financial cost associated with maintaining and caring for the children is set out at paragraphs 59-64 of her affidavit. By way of overview the wife’s evidence paints a picture of her having to carry a larger share of the costs of the children and maintaining the property as compared to the husband. She was not challenged on this evidence.
The husband’s evidence on this issue is found at paragraphs 51-70 of his affidavit. He asserts that there were periods of time when the children spent half time with him (e.g. Abbey – from separation in December 2003 through to October 2004; Christopher from separation to July 2005 and then from July to November 2006). He also asserts that the wife lived in a de facto relationship in the home between November 2005 and November 2006. He deposes to being unemployed from the date of separation to December 2005. Both parties had access to savings of $127,827 as at the date of separation. The husband asserts that the wife had used half of that money. The husband’s evidence was not challenged in this regard.
Even on the husband’s evidence, however, by July 2006 his time with and care for the children had reduced significantly, and by then he was spending no time at all with Abbey. Between April 2005 and May 2006 he asserts that they agreed that he would pay receipts relating to the children’s expenses and half private medical insurance premiums and internet expenses. After May 2006 he paid periodic child support initially at the rate of $560 per month, then $607 and currently $1,000 per month.
On a close review of the evidence the wife’s claim for post-separation contribution is not strong. For a period the husband shared in the care of the children. She had occupation of the former matrimonial home to the exclusion of the husband, and, indeed, shared it with her de facto partner for a year. She also had access to considerable joint savings at separation. There was a period when the husband was himself unemployed. All of these factors combine to lead me to conclude that there should be no adjustment in the wife’s favour for post-separation contribution.
This means that the overall issue of contribution in this case can be examined solely from the perspective of separation, and not subsequent events.
Discussion and Conclusions about Contribution
Both the ‘initial value’ and ‘ultimate value’ approaches to assessing contribution are unsatisfactory and have the potential to result in unjust and inequitable outcomes for the parties. In cases such as the present a “broad-brush” approach to assessing contribution does not work.
The true complexity of the diverse contributions made during a marriage relationship over 15 years cannot easily be depicted in affidavits. The Full Court requires me to consider “the myriad of other contributions that each of the parties has made during the course of their relationship.” (paragraph 26 in Williams & Williams). That requires a “fine brush” approach to assessing contribution.
The husband’s initial contribution towards acquisition of the former matrimonial home is clearly significant on the ‘ultimate value’ approach, though arguably under-valued on the ‘initial value’ approach. This contribution occurred right at the commencement of the marriage. It was the family home. All of the evidence indicates that the costs of the “conservation and improvement” of the home (to pick up the wording in s.79(4)) came out of contributions made by both the husband and the wife. Section 79(4) of course looks at contributions financial and non-financial, direct and indirect. It invites a holistic assessment of the minutiae of myriad contributions that resulted in that asset being preserved for the benefit of the family. From this perspective, therefore, it is quite inappropriate to adopt the ‘ultimate value’ approach to assessing contributions to the former matrimonial home. It could not be said that it was only the husband’s contribution, or predominantly the husband’s contribution, that resulted in the increase in the value of the property. The ‘ultimate value’ approach therefore over-values the husband’s contribution to the home.
The husband’s inheritance in the sum of $826,458 was received in July 1999, about 3½ years before separation. This included the property at Property D which has a value of $400,000 according to the husband. This evidence was not challenged by the wife. The husband describes this property in his affidavit (paragraph 31.1) as being at that time “a 1940’s fibro home in need of repair.” It has an agreed current market value of $690,000. During the 3½ year period referred to above (i.e. July 1999 – December 2003), the husband’s own evidence is that he was unemployed between August 2002 and December 2005 (paragraph 15 husband’s affidavit). Of course during this period the parties had available to them redundancy payments received by the husband, as well as his inheritance. But the fact remains that in an analysis of the myriad contributions that must have taken place so far as Property D is concerned, it would be inconceivable that the husband made all contributions to it, and the wife none. Hence the ‘ultimate value’ approach over-values the husband’s contributions to Property D.
It would not be just and equitable to the wife to simply attribute all of the increased value in this property to the husband.
The analysis set out above becomes much more difficult when the focus is turned to the other significant assets in this case i.e. the husband’s savings attributable to the inheritance from his grandmother, and the balance of the inheritance received from his late father manifested in the form of the loan to Ms S, and the [X] Family Trust. With these assets it is not possible to discern from the evidence any form of contribution that might have been made by the wife, in any form not already discussed. The ‘ultimate value’ approach to contribution is more appropriate as regards these assets.
I believe that the correct approach in this case involves:
a)Ignoring artificial distinctions between matrimonial and non-matrimonial pools of assets as such distinctions are not based on any principle of law and in any event are not supported by the evidence; and
b)Avoiding the ultimate value approach to assessing contributions because it tends, on the facts of this case, to over-value the husbands contribution and fails to recognise the myriad other contributions made by the wife; and
c)Apply the initial value approach whilst also recognising and giving weight to the value to the parties of these assets at the time of hearing.
Thus on the initial value approach, based on my calculations at paragraph 21 above, the husband would receive 77.35 percent which his counsel submits should be increased to 80% to reflect the ‘value to the parties’ of his contribution. It is difficult to argue with this analysis having regard to the state of the current law. It is the outcome of the application of the case-law, s.79, and the evidence in this case.
Section 75(2) factors?
The wife seeks a s.75(2) adjustment in her favour of 10% while the husband says it should only be 2.5%. The former produces a differential of 20%, whilst the latter 5%. The wife submits that: she has the primary care of the 2 children aged 17 and 15; the husband has a greater income and earning capacity; the husband has greater assets as a result of the alteration of property interests; and the husband has greater superannuation.
The wife does indeed have the care of the 2 children but having regard to their age this is not a significant s.75(2) factor. The husband pays about $230 per week by way of child support for them. Whilst I am sure that it does not cover all of the costs attributable to the children, it is a meaningful contribution to that cost.
The wife discloses a weekly income from her employment of $1,538 per week. The husband discloses $998 based on a self-estimate.
The cross examination of the husband led me to conclude that his estimate was self-serving and under-stated. The estimate he gave in his quarterly GST and PAYG instalment notice (exhibit W3) tends to suggest that his actual income is considerably greater. I find that his income from personal exertion is at least as high as that of the wife, and possibly considerably higher.
Both parties earn an income through their respective businesses which offers some degree of flexibility as regards deduction of expenses and possible income splitting. The husband has the considerable advantage of assets held through the [X] Trust which I have found to be his property, rather than a financial resource. He also has considerably more superannuation that the wife.
If the husband receives 80% of a total net pool of assets of $1,940,565, he receives total assets of $1,552,452 and the wife $388,113, a differential between them of $1,164,339. This is a significant matter I take into account under s.75(2)(b).
The totality of these considerations leads me to conclude that an appropriate adjustment in this case is 5%, producing a differential of 10% of $194,056 approximately. To go any further would, in my opinion, be placing too much weight on the s.75(2) considerations, at the expense of the s.79(4) considerations.
Just and Equitable?
Having regard to the above the wife would receive 25% of a total pool of $1,940,565, or $485,141.25. This would be constituted as follows:
| Wife’s funds in accounts | $2,398 |
| Wife’s car | $10,500 |
| Wife’s [N] shares | $4,895 |
| Wife’s contents | $5,000 |
| Wife’s personal effects | $3,000 |
| Property M home | $500,000 |
| Wife’s superannuation | $9,724 |
| $535,517 | |
| Less entitlement | $485,141 |
| Payment to Husband | $50,376 |
The husband receives a net pool of 75% or $1,455,423
Is this a just and equitable outcome under the circumstances? On the unique facts of this case, I believe that it is. On her own financial statement the wife has a surplus of income over expenditure in the sum of $147 per week which suggests to me that she does have the capacity to service a relatively modest mortgage of about $50,000. It is quite possible that the wife will be left feeling that, as her counsel so valiantly submitted, her contribution over a 15 year marriage that produced 2 children has been undervalued. A reality check, however, is to hypothesize about her entitlement had the husband not received his two inheritances. The pool of assets would have been significantly smaller, as would have been the share to which she was entitled.
Orders
I propose to make orders in terms of the minute proposed by the husband save that the amount payable to him will be $50,376, and that I will grant leave to the parties to relist this matter before me on
14 days notice as regards interpretation, implementation or enforcement of these orders. I note that the husband proposes certain orders about photographs and personal effects. These do not seem to be contentious on the pleadings, but I did not receive submissions from the wife’s counsel about them. If there is anything contentious about them the wife should use the leave I have granted to relist before me.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Monique Robb
Date: 11 July 2008
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