Quaresmini & Quaresmini
[1999] FamCA 1314
•17 September 1999
[1999] FamCA 1314
FAMILY LAW ACT 1975
IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA Appeal No NA8 of 1999
AT BRISBANE File No BR5930 of 1997
BETWEEN:
MR Q
Appellant Husband
- and -
MS Q
Respondent Wife
REASONS FOR JUDGMENT OF KAY & BURR JJ
CORAM: FINN, KAY & BURR JJ
DATE OF HEARING: 3 August 1999
DATE OF JUDGMENT: 17 September 1999
APPEARANCES: Mr Page, Senior Counsel, instructed by Peter J Sheehy, Solicitor, PO Box 12045 Elizabeth Street, Brisbane, 4002, appeared on behalf of the Appellant Husband.
Mr Waterman of Counsel, instructed by Bennett, Carroll & Gibbons, PO Box 6030, Upper Mt Gravatt 4122, appeared on behalf of the Respondent Wife.
Q and Q
NA 8 of 1999
Coram: Finn, Kay and Burr JJ
Date of appeal: 3 August 1999
Date of judgment: 17 September 1999
PROPERTY – Contributions – Future needs – Asset pool $935,000 – Erroneous finding of equal contributions despite H’s large initial financial contribution and $135,000 inheritance at end of relationship – Excessive weight given to W’s homemaker contribution and post-separation liabilities incurred by H in family business – Incorrect approach to W’s future income loss due to role as carer – Inappropriate to impose total costs of children solely on H – Discretion re-exercised
The parties were married for 20 years. They had four children. H brought to the marriage two type A commercial licences and vehicles, one type B commercial licence, equity in three properties and a jointly contributed equity in a fourth property. W’s pre-marriage contributions were limited to the deposit on the fourth property, some labour, and $2,000 used for joint purposes. During the marriage the parties traded through corporate and partnership entities in commercial vehicles, building and landscaping businesses. On their mutual evidence, both spouses worked very hard - H working 18-20 hour days in the business and W being the homemaker (with some paid help) and doing administration.
For several years H resisted W’s advice that they rationalise their businesses to reduce debt. W left the company books of account in disarray at separation. H inherited $135,000 shortly before separation. W had the care of the three youngest children who were aged 16, 14 and 12 at trial.
The proceedings before the primary judge were centred on the size of the asset pool and whether either party had mismanaged assets. His Honour found an asset pool of c$935,000. He off-set H’s inheritance against an increase in business liabilities since separation. W’s contribution to the welfare of the family (despite there being almost no evidence on point) was regarded as being as disproportionate as H’s direct financial contributions. The parties were found to have made equal contributions.
His Honour then considered the s 79(4)(e) factors. W could become qualified and enter full-time employment once the youngest child completes school. If it became necessary to sell the businesses, H could anticipate obtaining alternative employment. His Honour calculated that the three children who still lived with W would cost $92,300 in the coming 4½ years until the youngest became independent, which was about 10% of the asset pool. W had sought $180 per week in spousal maintenance which was taken to be an estimate of her needs. Over the 4 remaining school years this totalled $37,440, but since she could obtain part-time work an allowance of $20,000 was made for her support while caring for the children. The costs of the children ($92,300) plus the costs of self-support ($20,000) plus arrears of spousal maintenance ($7,251) totalled $119,551, or 12.7% of the net asset figure.
A 12.5% adjustment was made in favour of W. It was ordered that H pay W $584,375, being 62.5% of the $935,000 pool. A form 63 application in which W sought lump sum child support was dismissed, as was H’s application for arrears of spousal maintenance to be discharged.
On appeal, H challenged the finding of equal contributions and the manner in which the 12.5% adjustment for the s 79(4) factors was made. H conceded that the adjustment for arrears of spousal maintenance was proper.
1.1 Held, in allowing the appeal and re-exercising the discretion (per Kay & Burr JJ, with Finn J concurring generally in a separate judgment):
1.1.1.1 Contributions
Contributions of all relevant kinds must be identified and weighed to arrive at an outcome which is appropriate, just and equitable.
In finding equality of contributions (Bates (1985), Mallet (1984), Lee Steere (1985)), inadequate weight must have been given to H’s initial financial contribution (Pierce (1999), Bremner (1995), Way (1996)) and to H’s inheritance, as compared with excessive weight given to W’s homemaker contributions and H’s post-separation business losses.
Maintenance arrears (no relevant appeal ground)
Per Kay & Burr JJ - It was noted that the trial Judge ought not have dismissed H’s application for arrears of spousal maintenance to be discharged and made an adjustment for the arrears.
Cf Finn J - The approach taken was open under s 75(2)(o).
W’s loss of income whilst caring for the children
Per Kay & Burr JJ - The approach taken indicated confusion over the application of s 75(2) principles to property cases (Smee (1965), Mullane(1983)). In maintenance cases it must first be determined whether the applicant is capable of self-support. In property proceedings obligations towards children can be considered but must be balanced against factors affecting the other spouse. The quantification of any adjustment here needed to be calculated with regard to the relative capital positions of the parties and their capacity for self-support.
Cf Finn J - Agreed with the above concerns but found that it was probably open to make an award of $20,000 to W.
The adjustment for the care of the children
It was necessary to consider the s 79 factors combined and then make an appropriate order. Here W had the care of three dependent children and H would be likely to be assessed for nil child support because of his taxable income, which would not reflect W’s needs or H’s capital position.
The calculation of the total cost of support and imposition of that amount on H ignored the statutory principle that parents should equitably share in the cost of raising their children..
1.1.1.2 The discretion re-exercised
Relevant considerations on contributions included H’s initial financial contribution, inheritance, direct financial contributions during the marriage, and any post-separation loss due to H’s refusal to rationalise the business; and W’s direct and indirect financial contributions, and roles as primary caregiver and homemaker during the marriage, and carer to the children post-separation. An appropriate result on contributions was a 60% apportionment in favour of H.
The relevant s 79(4)(e) factors were the 60:40 capital imbalance, W’s role in supporting the children, W’s desire to remain at home while the children complete their education, both parties’ capacity for employment, and H’s arrears of maintenance. An appropriate outcome was for W to take one half of the asset pool plus arrears of maintenance.
Appeal allowed
Discretion re-exercised and W to take 50% rather than 62.5% of $935,000 pool plus arrears of maintenance.
Costs certificates granted to H and W for their costs of the appeal
Not reportable
This is the husband's appeal against orders made by the primary judge on 19 February 1999, which had the effect of dividing the net assets of the parties (said to be $935,000) as to 62.5 per cent to the wife and 37.5 per cent to the husband. The husband contends that the assets should have been divided equally.
Background
The husband was born in 1948 and the wife in 1949. After a courtship, which began in 1972, they married in 1977. Cohabitation ceased in October 1996.
There were four children born of the marriage: V born 1979, X born 1981, Y born 1983, and Z born 1985. At the date of the judgment of the primary judge the three youngest children were aged 16, 14 and 12. All three children were living with their mother.
The trial Judge made the following findings relating to the pre-marriage contributions of the parties:
“Pre-Marriage Contributions - Husband
3.1The husband had bought his first [type A commercial] licence in 1971 for $18,000.00 when 23 years old, and is justifiably proud of that fact, and of the other property, which his many years of hard work contributed to the marriage. The wife acknowledges that throughout the marriage and, as I understand it, the time she has known him, he has often worked up to 18 hours per day. …
3.2The $18,000.00 in 1971 purchased the [type A commercial licence and other equipment]. The husband soon enough acquired a second [type A commercial] licence, paying as he recalls some $11,000.00 or $12,000.00 for it which, together with the then cost of the [equipment] and […] brand new car, involved a total expenditure of some $15,000.00. The date of the second purchase...was certainly well before the parties married; and the husband's unchallenged evidence was that no money was owing on either [type A commercial] licence at the time of marriage.
3.3By that time, the husband was also the owner of a [type B commercial] licence, for which he had originally paid $1,000.00. He also owned premises at [3 B Street, Suburb C], which he had purchased for $11,000.00 in 1969 when 21 years old. He had borrowed $5,000.00 of this price, and the rest appears to have been savings from his own hard work. His evidence was that very little money was owing on this debt at the time of marriage.
3.4There were three other premises which had been purchased prior to the marriage, and I am satisfied on the evidence that the wife made a direct financial contribution to the purchase of one of those, and an indirect contribution to converting two of them into premises fit for habitation and rental. Two of these were more premises in [B Street, Suburb C], numbers [1] and [2], and the third item of real estate was at [1 D Street, Suburb E].
3.5This last property appears to have been purchased by the husband in 1975, and his evidence was that he borrowed the necessary funds, and paid the loan off, with income from the two [commercial vehicles] and rent from [3 B Street, Suburb C]. …I accept the husband's evidence described above, being satisfied that the property at [3 B Street] helped secure the borrowed funds paid off as described.
Pre-Marriage Contributions - Wife
4.1It appears on the evidence that the parties purchased a second property at [B Street] (No. [2]) in the same year (1975) that the husband purchased [1 D Street]. …she had borrowed $2,500.00, and contributed a further $400.00 of her savings to supply the deposit on this property, which was purchased for $25,513.00. This property became an asset of the [Q] Partnership, which now conducts the a (sic) [type A commercial] licence the parties own, and owns and manages other premises at [D Street, Suburb E] (Nos. [2 and 3]) acquired after the marriage.
4.2The partnership also purchased 'shortly before the marriage' (wife's affidavit of 11 September 1998) the premises at No. [1 B Street, Suburb C] for $23,657.00. Those premises also were an asset of the [Q] partnership. The evidence does not disclose with any precision the source of funds which were the deposit on No. [1 B Street], but there seems to be agreement that the property was paid off with earnings from [commercial vehicles] and from rents from the other [B Street] properties not occupied by the parties after their marriage, and from rent at [1 D Street].
4.3Apart from the monies she contributed as described which funded the deposit on No. [2 B Street], the wife contributed her labour to the task of 'stripping out' No. [2 B Street], which involved removing the kitchen, scrubbing the walls, hosing the premises, and repainting them. A vinyl floor was laid. At No. [1 B Street], the husband and wife stripped down the walls and insides, but the restoration (such as it was) of those premises was completed by a person for whose services the husband paid. …
4.4The wife owned a block of land at [F Street, Suburb G] at the time of marriage, which she had purchased for $1,700.00, and a private motor vehicle. Her pre-marriage contributions however appear limited to the deposit on No. [2 B Street] and some relevant labour there and at No. [1]. …
4.5It will be seen that on the evidence the then 29 year old husband brought significant assets into the marriage, consisting of :
·Full beneficial ownership of two [type A commercial] licences.
·Full beneficial ownership of a [type B commercial] licence.
·A significant equity in [3 B Street, Suburb C].
·An equity in [1 D Street, Suburb E].
·An equity in [1 B Street, Suburb C] .
·A jointly contributed equity in [2 B Street, Suburb C].
4.6 …
4.7The wife has asserted that she sold her private motor vehicle late in 1976 for $2,000.00, and paid the funds received into her own account, and used those for 'joint purposes'…I will accept that claim. …If one adds this $2,000.00 to the contributions described above, the position still remains that the assets introduced into the marriage by the husband were very significant, and that by comparison those she contributed were far, far less.”
During the course of the marriage the parties traded through various corporate and partnership entities. They traded in the transport industry as well as being involved in the building and landscaping industry. From time to time they invested in real estate.
The pool of assets that was ultimately available for division between the parties was found by the trial Judge to be as follows:
Assets
1. Premises at [1 D Street] $215,000
Premises at [4 D Street] $ 95,000
Premises at [5 D Street] $300,0002. Plant and machinery, excluding [equipment]
which the parties have agreed be sold $116,3043. The values of the 2 [commercial vehicles] as MVs $ 10,000
4. The husband's one-third interest in 2 properties
inherited from his mother's estate (apparently
as tenant-in-common with his 2 brothers)
[H Street, Suburb J] $280,000
[K Street] $125,000
$405,000
One-third interest = $135,0005. Wife's jewellery $ 4,100
6. [Machinery] $ 15,000
7. [Type B commercial] licence $ 49,300
8. Two [type A commercial] licences $509,600
9. - -
10. Cash in hand $ 10,170
11. Trade debtors $ 900
Liabilities
1. Clean-up cost of [1 D Street] $ 7,500
2. Joint liability to [Mr L] $ 56,841
3. Debt to [M Bank] $163,000
4. Joint liability to [Mr N] $ 36,400
5. Further debt to [Mr N] $ 29,300
6. Trade creditors $228,573
7. Liability to [O Credit Union] $ 1,500
Total net assets as calculated by the trial Judge:
Total assets $1,456,489
Total liabilities $ 523,114
“Total net assets $ 933,375”
His Honour subsequently rounded this sum off to $935,000.
The role of the parties during the marriage
The wife deposed in para 42 of her affidavit of evidence in chief (Appeal Book 136):
"Both of us worked extremely hard in the business. [Mr Q] would frequently work 18 to 20 hours per day. I would work frequently from prior to 6.00am, return home to care for the children and ensuring they were ready for school, then back to the business and remaining there until 7.00pm or 8.00pm then cooking the children dinner."
That evidence was not challenged by the husband. We were taken to no further evidence as to what the role of the wife as homemaker and parent entailed, nor does a reading of the transcript disclose that the matter was investigated at trial.
Much of the dispute between the parties before the trial Judge centred around the size of the pool of assets and whether or not either of the parties had mismanaged the assets in such a way as to lead to the conclusion that one or other of the parties' contributions should be given greater weight. There was little dispute that the husband had made large initial contributions, nor was there any dispute that in 1995, almost at the end of the parties' period of cohabitation, the husband had inherited property to the value of $135,000 to which the wife could not be seen to have made any contribution.
The parties’ earning capacities
10. The other findings of significance relate to the parties' intellectual capacities:
“2.1 …the wife is a literate, numerate, and intelligent person with a strong personality; and reasonably forthright in her views.
2.2 The evidence discloses that the husband has [learning difficulties]. He is described by a psychologist and […] teacher, [Mr P], as functionally illiterate, and an example of just what the ‘average man’ can actually do. Mr. [P] remarked that, despite the husband's considerable intellectual and educational difficulties, he had developed impressive compensating skills, and the capacity to pick those areas where he had the most likelihood of success, and to focus intensely on tasks in those areas. He was judged by Mr. [P] as having real life skills.
2.3 I thought the husband a numerate person and, despite Mr. [P]'s description of him as having ‘considerable intellectual difficulties’, I thought the husband was an obviously intelligent, if somewhat obsessive, person who had taken the ending of the marriage very hard, had great difficulty in accepting that a reconciliation would not occur, and in coping with that fact.”
11. The trial Judge concluded that the wife was intelligent and able to qualify herself for part-time employment and then enter full-time employment in about four years time once the youngest child completes her education. He found that the husband would be qualified to drive commercial vehicles and could expect either paid or self-employment in an industry involving building, landscaping or transport.
The judgment
12. The judgment occupies some 58 pages. Much of it is concerned with ascertaining the asset pool. Those findings were not the subject matter of this appeal.
13. After making the findings already set out relating to pre-marriage contributions, his Honour made the following observations under the heading "How the group was run":
“8.1 The parties appear to agree that by the mid-1990's the wife was urging, and the husband was refusing, to sell property to reduce debt, and to get out of the businesses conducted by [R] Nominees. The wife considered them unprofitable compared to the [commercial vehicles] and their rental properties, and she was in a position to know. The parties agree that she worked full-time in and about their businesses from at least 1985 onwards, and she contends that she did from the time when [W] was 3 months' old. On any view, she had been [doing administration] for the Group for at least 11 years by the time of separation.
8.2 …
8.3 …
8.4 …The wife's own evidence was that she did not always send out invoices to customers of [R] Nominees, nor chase up its debtors…
8.5 …[T]he wife's evidence is that office stress and her own non-attendance to invoicing of customers was worse in the period from October 1995 to October 1996, namely the time of separation. She describes there having been a high degree of staff turnover, and a frequent build-up of unread mail. On her evidence, which was not challenged, the husband insisted on reading all incoming mail himself and, given his reading difficulties and the amount of time he was obliged to spend elsewhere, unread correspondence would mount.
8.6 …[N]either party accuses the other of having dishonestly abused the system they created, but each blames the inefficiencies, and their resultant consequences, upon the other.
8.7 The wife deposes to having hidden unpaid invoices from business creditors from the husband, and having done so because he would deal with the situation by simply becoming angry with and abusive to her because there was no money to pay those invoices. Likewise, she hid from him summonses, and even warrants.”
14. Once the parties separated the husband discovered that the books of account, which had been in the province of the wife, were in a very confused state. There was $30,000 cash unbanked. There were invoices worth $20,000 not yet rendered for work done over two years. There were many unpaid accounts and unattended summonses and warrants. His Honour said:
“9.3 The husband deposed to being horrified at the discovery of unpaid cash, unbilled invoices, and such summonses and warrants as he located. I do not think he can be blamed for any tardiness in his occasionally idiosyncratic way of dealing with these unexpected difficulties facing him at separation. The affidavit evidence does show that he did manage to deal to the parties' advantage with at least some problems created by the non-lodgment of returns. …”
15. His Honour then concluded that he accepted the husband's assertion that he had been conducting the parties' business post-separation as best he could:
"13.3 I do not think the evidence supports a finding of deliberate under-effort by the husband."
16. Having found the initial contributions as previously mentioned, and having identified that of the current pool of assets approximately $135,000 related to the recent inheritance, his Honour then, under the heading "The Wife's Contribution" (there being no similar heading "The Husband's Contribution"), indicated that he would offset any weight to be given to the husband's inheritance and some other small assets acquired post-separation against a deterioration in the balance sheet of the parties brought about by an increase in liabilities since separation. His Honour said (emphasis added):
“17.1 It will be remembered that the wife was remarked to have contributed to at least $1,310,000.00 of the total assets, and not to the sums representing the husband's interest in his mother's estate, present cash in hand, and trade debtors. These latter figures total $146,070.00. It might be thought that this last figure should be deducted from the net assets in light of the wife's non-contribution to it; but on the other hand a significant part of the parties' overall liabilities consists of trade creditors of the businesses, and the liabilities to at least some of those creditors would have been incurred after separation. The wife had consistently argued for a number of years that the businesses of [R] Nominees should be sold. It has been the husband who, on the evidence, has persisted for some years in endeavouring the keep intact all of his business structures in their present locations, even though these have caused him an overall net deficit in most years. His attachment to them appears as much emotional as financial, and perhaps due to his determination to persist in conducting businesses he knows intimately rather than moving on.
17.2 …
17.3 The evidence given does not allow me to make any finding of the extent by which the parties' liabilities have been increased since separation, although this has obviously happened with the trading loss in the 1997 financial year. There is no reason for expecting the businesses of [R] Nominees will return a profit in either the 1998 or 1999 financial years. On the figures appearing in the husband's affidavit and Form 12 last-mentioned, I think it fair to proceed on the basis that his insistence on continuing to operate ventures, known for some years to be loss-making, has increased the liabilities of the parties in the two-and-a-quarter years since separation. Reductions in the overall indebtedness of the parties has come from the sale of assets as already described, and not from the income generated from by these businesses. On the figures which do appear in the evidence, I think it unlikely that the overall net increase in the parties' indebtedness which has resulted from continuing to trade in all arms of the [Mr Q] Group does not at least equal in amount the value of those assets to which the wife had not contributed. I think it does justice to proceed on the basis that a calculation of the net result of the assets and liabilities to which she had made a contribution will produce the same result as above, namely net assets in the region of $935,000.00.”
17. Apart from the internal inconsistency of saying that the evidence does not allow of any finding and then making a finding, the paradox of the manner in which his Honour dealt with these matters at those paragraphs was that in the immediately following paragraph 17.4 his Honour said:
"Neither counsel attempted in evidence to identify the liabilities of the parties which had arisen solely since separation, and both were content to proceed on the basis of a joint and several responsibility for all liabilities."
18. The reasoning behind the conclusions ultimately reached by his Honour on the s 79 application are set out in paras 18.5 to 18.9 of his Honour's reasons for judgment (emphasis added):
“18.5 I turn now to the Section 79(4) factors; adopting the numbering therein :
(a)[The husband] has worked very hard before [the marriage], during it, and after separation. The reduction in the parties' outstanding debts to [S Bank] since 1 March 1998 by some $481,000.00 has resulted from the sale of the three (3) [B Street] properties. Numbers [1] and [3] were really contributed by him alone, and only No. [2] can be regarded as jointly contributed. The sale of Nos. [1] and [3] reduced the parties' joint debt by some $291,000.00. The husband's contribution post-separation to the reduction of debt by the sale of those two assets, introduced by himself to the marriage, means that his considerable disparity in financial contribution has continued.
(b)The wife's non-financial contribution has been made to the acquisition, improvement, and continuation of the present businesses and remaining real estate of the [Mr Q] Group. I do not think there can be any doubt that her contribution to the running of the businesses was a particularly significant one, since there is really no other explanation for the collapse which has occurred since separation. I think it obvious that the husband has been reliant on her in many ways…
(c)I consider that on the evidence the wife's contribution to the welfare of the family, including her contribution post-separation, is really just as disproportionate compared to the husband's as is his financial contribution (direct and indirect) to their property compared to hers. He contends that she had the benefit of considerable paid assistance in the home during the marriage, but she is entitled to reply that the role of office administrator required her to be either next-door or across the street, dependent on which premises were then used as the matrimonial home. As the husband spent so many hours out of the home and at work, hers was plainly the far greater role as homemaker and carer for the children. While the husband focuses upon the immense financial contribution his years of work have given, he is either unable to accept the contribution she has made to the family or to admit that it has value.
Because I consider that the immense disparity in financial contributions to the property of the parties in favour of the husband is matched by the immense disparity in the wife's contribution to the family welfare over the years, and because I consider that the wife's indirect contributions to the Company businesses at least matched the husband's more obvious ones, I think that it is a just result to "adjust" the financial contributions made by the husband and the variety of contributions by the wife, and to regard it as just and equitable to make orders altering their interests in the property so that they are regarded as having contributed equally to that net asset figure of $946,000.00.
…In a long marriage, other contributions of all kinds are likely to outweigh a particular financial contribution, or indeed weigh equally with those other contributions in the light of the overall contributions by both parties. I find that this should be considered to have happened here.
...
18.6 Section 75(2) Factors (adopting the numbering therein) :
(a) The evidence shows the wife to be in good health, and she certainly appears capable of employment. Her affidavit shows that she considers herself to have considerably more business acumen than the husband. If she is correct in this, then she may well successfully be self-employed in some venture in the future.
The husband contends that if he is forced to sell the [commercial vehicles] and businesses of [R] Nominees he will really only be qualified to drive [commercial vehicles]. I think he also has a considerable demonstrated degree of experience, knowledge and skill with [building, landscaping and transport]; and could expect either paid or self-employment in that field, or in [commercial vehicles].
(b) …
(c) The wife is presently responsible for [X], [Y] and [Z]. She has been solely responsible since separation and, on the evidence, that position will continue. Annexure "A" to her affidavit of 2 November 1998 describes her calculation of the needs of each child. …
Those figures contend that her needs in respect of [X] and [Y] are $250.00 per week, and [Z] (in essence) $200.00 per week. If I assumed that the children remained her responsibility until each was 18, and attended school or had similar expenses until then, then this would mean a need in her to provide for :
· [X] for one year =
$250.00 per week x 52 weeks = $13,000.00· [Y] for 2.5 years =
$13,000.00 x 2.5 = $32,500.00· [Z] for 4.5 years =
$200.00 per week x 52 x 4.5 = $46,800.00
Total : $92,300.00
========
This is a calculation of the extra direct cost at present day values which the wife can expect to bear from her acceptance of the obligation to provide for the needs of the parties' children until aged 18. That resultant specific figure is just under 10 per cent of the net assets of the parties.
(d) …
(e) Both parties have the responsibility to support their children, and the husband is $7,251.00 (as at 4.11.98) in arrears of maintenance ordered to be paid to the wife. That maintenance could be expected to have helped support the children.
(f) …
(k) I do not think that the duration of the marriage has affected the earning capacity of the wife. She has effectively been working as an office manager and gaining that experience for a number of years.
(l) …the wife will lack a capacity for full-time employment while [Z] continues to attend school, and accordingly for at least four more years. I think it appropriate to make an adjustment in her favour to recognise that she may choose to remain as a carer to the children full-time until then, although she may obtain part-time employment. I think she is intelligent and able enough to qualify herself soon for part-time employment.
RESULT OF THE S.75(2) AND S.79(4) FACTORS
18.7She had sought $180.00 per week for spousal maintenance pending settlement, and I assume that that was her estimate of her needs. On a yearly basis, that is $9,360.00 and, over four years, $37,440.00. This is 4.00 per cent of the parties' net assets. The wife has not clearly demonstrated that it would be just and equitable to make an adjustment of the full extent of that amount in her favour since she may well undertake the part-time work open to her. Since she has already done some part-time work since separation, and it is as likely as not that she will again, I think I should consider it reasonable to regard her as having a need of $20,000.00 for her own support occasioned by her role in supplying care to the parties' children.
18.8If one adds that notional $20,000.00 to the $7,251.00 arrears of maintenance as at the time of trial, and the calculated figure of $92,300.00 at present day values needed by her to satisfy the needs of the children, the resulting figure ($119,551.00) is about 12.7 per cent of the parties' net asset figure. …
18.9...I understand that what is sought is really an increased lump sum for the wife reflecting her reasonable needs as future carer for their children.
I think these needs have been established by the evidence, and the s. 75(2) matters to which I have referred are relevant in making it just and equitable to alter the parties' interests so that the wife receives 62.5 per cent of the available net property of the parties. …”
19. The final matter dealt with by his Honour, apart from issues of costs, was to dismiss a Form 63 application filed on behalf of the wife under which she sought the payment of lump sum child support. As that dismissal is neither the subject of the appeal or cross-appeal it is unnecessary to deal with the reasons given for its dismissal save for noting that in the course of so doing his Honour found:
"19.2 On the evidence, the husband is unlikely to have a taxable income, if he continues in his present mix of businesses."
The Appeal
20. The appeal has two distinct aspects to it.
It was asserted that having regard to the unchallenged evidence as to the husband's initial contribution and his inheritance, a finding of equality of contribution demonstrated an error on behalf of the trial Judge, and that the appropriate conclusion should have been to favour the husband in the ratio of at least 60/40.
It was submitted that the manner in which his Honour dealt with the s 79(4)(e) adjustments was wrong both in principle and in outcome.
21. The s 79(4)(e) adjustments, as made by the trial Judge, contained three components, namely an adjustment for the cost of maintaining the children in the future, an adjustment for the loss of income of the wife, and an adjustment for arrears of interim spousal maintenance.
22. It was conceded before us that the adjustment for interim spousal maintenance was a valid adjustment to make, perhaps not by means of an alteration of property interest but rather as means of an enforcement of the existing order. Either way it was an appropriate exercise of discretion to order a payment by the husband to the wife from his share of the assets to allow for those arrears. It was submitted that the manner in which an allowance was made for the other two matters demonstrated an erroneous exercise of discretion.
Appellate Principles
23. This was a discretionary judgment. The circumstances in which the Full Court should interfere with a discretionary judgment are well known. In Gronow v Gronow (1979) 144 CLR 513 Stephen J said at 519-20:
“The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his (sic) decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge's discretionary decision on grounds which only involve conflicting assessments of matters of weight.”
24. In House v. The King (1936) 55 CLR 499 at 504-505 Dixon, Evatt and McTiernan JJ said:
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he (sic) allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
25. Absent any error of fact or mistake or misapplication of law, the task of an appellate court when reviewing a property alteration decision has been conveniently restated in Sheargold (EA 82 of 1997, unreported, delivered 7 May 1998) by the Full Court (coram Fogarty, Lindenmayer and O’Ryan JJ) in the following manner:
“7.2There are several preliminary matters which bear repeating although they are the constant theme of property appeals in this Court based upon these or similar grounds. They have been identified in a number of cases over the years, including in more recent times the decisions of this Court in Ferraro (1993) FLC 92-335 at 79,565 et seq and Clauson (1995) FLC 92-595 at 81,908 et seq. They are frequently summarised by reference to the well known passage in the judgment of Brennan J (as he then was) in Norbis (1986) FLC 91-712 at 71,578, (1986) 161 CLR 513 at 540 about the 'generous ambit within which reasonable disagreement is possible'.
7.3In addition, these appeals to this Court are not in the nature of a re-trial in which the members of that Court may substitute their own conclusions on these essentially discretionary matters for those of the trial Judge. Unless the conclusion of the trial Judge can be characterised as “unreasonable or plainly unjust”, or within other similar terms denoting a conclusion that the decision falls outside a reasonable exercise of the generous discretion in the particular circumstances of that case, then an appeal based upon those grounds necessarily fails. That is not to say that such a conclusion cannot be demonstrated in an individual case, but it marks out the parameters of the exercise.”
Conclusion as to approach taken
26. Whilst it was recognised that the exercise of s 79 power is a discretionary exercise and that there was a generous ambit within which that discretion could be exercised, we are of the view that the manner in which the trial Judge approached his task was flawed. There are many roads a Judge may travel to reach a decision which is a proper exercise of discretion. There are many acceptable but different views as to when that destination has been reached. There are however some roads that lead to the wrong destination and some that leave the traveller lost. Unfortunately the trial Judge appears to have taken a wrong turning.
27. To simply add up the cost of keeping the children in the future, and visit that cost directly upon the husband, was to ignore essential principles of child support, namely that parents are to share equitably in the support of their children (s 66B(2) Family Law Act 1975, s 114(b) Child Support (Assessment) Act 1989). Further, the quantification of any adjustment to be made for any potential loss of income by the wife due to her ongoing role as a homemaker or parent would need to be calculated having regard to the relative capital position of the parties and their own capacity to provide for self-support.
28. Ultimately it was submitted that if the assets were divided 60/40 in favour of the husband on contribution, then the imbalance in the relative capital position of the parties, together with the wife's requirements for the children and any other relevant s 75(2) considerations, would lead to an adjustment of a further 10 per cent of the pool in her favour, thus ending with an equal division (save for the maintenance arrears which had arisen as a result of the husband's failure to comply with an interim order requiring him to pay $180 per week by way of spouse maintenance pending the outcome of the property proceedings).
Contribution issues
29. The trial Judge was clearly conscious of the imbalance in respect of direct contributions which favoured the husband, but he sought to offset those by two matters which he held favoured the wife.
30. His Honour specifically sought to offset the recent inheritance against the liability to the creditors incurred after separation. Whilst conceding that neither counsel attempted to identify the liabilities of the parties which had arisen solely since separation, and having otherwise stated he could make no finding about the extent of the losses, his Honour found that it was unlikely that the overall net increase did "not at least equal in amount the value of those assets to which the wife had not contributed". This offsetting of a positive contribution as against a negative contribution has to be seen in light of the trial Judge's findings that there was no deliberate under effort by the husband and that his continued involvement in businesses which appeared to be losing money was:
"as much emotional as financial, and perhaps due to his determination to persist in conducting businesses he knows intimately rather than moving on."
31. The second matter identified by the trial Judge as a direct contribution was the initial capital contribution, which his Honour described as an "immense disparity". He said, however, that this immense disparity was matched by "the immense disparity in the wife's contribution to the family welfare over the years". That finding has to be viewed, however, in light of the wife's evidence that the husband spent 18 to 20 hours a day working in the business (his Honour's finding being "the wife acknowledges that throughout the marriage and, as I understand it, the time she has known him, he has often worked up to 18 hours per day"). It also has to be seen in light of the findings that whilst the wife's contribution to the business was a valuable one, the areas in which she exercised control were left in disarray when the parties separated.
32. At the date of the hearing the parties had been separated for two years. The wife had continued to care for the children post-separation, with little to no assistance from the husband. His Honour said, as already set out:
"I consider that on the evidence the wife's contribution to the welfare of the family, including her contribution post separation, is really just as disproportionate compared to the husband's as is his financial contribution direct and indirect to their property compared to hers... As the husband spent so many hours out of the home and at work, hers was plainly the far greater role as homemaker and carer for the children."
33. The necessary corollary to that finding must be that his contribution, during the course of the marriage at least, whilst far lesser as a homemaker and child carer, could not be seen on an overall basis as being any less in terms of the effort put into the marriage partnership. He was working as long and as hard as he possibly could. She was working as long and hard as she possibly could. In each of their spheres each was doing as much as they possibly could. It is difficult to see how a conclusion could be reached in those circumstances, that the contribution made by one should be given any more weight than the contribution made by the other.
34. It was clearly open to his Honour to make an allowance for the wife's contributions to the post-separation care of the children and for the husband's contributions in a negative way for any losses incurred post-separation through bad business management in the face of repeated requests by the wife to adopt a more prudent course of action. These were matters properly given consideration.
35. The initial contribution consisted of two type A licences and some real estate. Of the $935,000 of assets presently available, $509,600 represents the present value of two type A commercial licences. The real estate at 1 B Street and 3 B Street (which the husband had owned since 1969) was sold in 1997 for $291,000. In a pool of assets of $935,000 the immense significance of the initial capital contribution and the significance of the recent inheritance ($135,000) can be put into proper perspective when they have a present day value equivalent to about 100 per cent of the pool available for division.
36. In the circumstances of the case, where there was a finding of an immense disparity in initial financial contribution, which contribution not only introduced the core capital of the parties but provided the source of income for them throughout much of the marriage, coupled with a recent and comparatively large inheritance, it is difficult to see what findings could possibly have led the trial Judge to conclude that there had been an equality of contribution when considering all of the relevant s 79(4)(a),(b),and (c) considerations.
37. The s 79 exercise is not a pure accounting exercise. It is an exercise in identifying the various matters to be considered under s 79 and weighing them up one against the other before reaching what is an appropriate order to be made, which order may not be made unless it is just and equitable. The manner in which disparate contributions are to be measured, especially including initial capital contributions, has been the subject matter of much discussion. Recently in Pierce and Pierce (1999) FLC 92-844; 24 Fam LR 377, Ellis, Baker and O'Ryan JJ made reference to several of the authorities (Bremner and Bremner (1995) FLC 92-560; (1994) 18 Fam LR 407, Way and Way (1996) FLC 92-702 and Money and Money (1994) FLC 92-485; 17 Fam LR 814, which in turn referred to Lee Steere and Lee Steere (1985) FLC 91-626; 10 Fam LR 431, White and White (1982) FLC 91-246; 8 Fam LR 512 and Crawford and Crawford (1979) FLC 90-647). Their Honours said at FLC 85,881, Fam LR 385-6:
“28. In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. 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. …See also Campo and Campo (unreported, Full Court (Ellis, Lindenmayer and Finn JJ), Sydney, delivered 19 May 1995 at pages 21 and 22 of the joint judgment) and Zahra and Zahra (unreported, Full Court Sydney, delivered 3 October 1996, per Ellis J. at page 10)."
38. The authorities referred to in Pierce (supra) do not go as far as the primary judge did when he said that:
"in a long marriage, other contributions of all kinds are likely to outweigh a particular financial contribution, or indeed weigh equally with those other contributions in the light of the overall contributions by both parties. I find this should be considered to have happened here."
39. There is no principle that the length of the marriage leads to a likelihood that other contributions will outweigh or weigh equally with "a particular contribution". It is a matter of assessing the contributions of all relevant kinds in each case to arrive at an outcome which is both appropriate and just and equitable. In some cases particular contributions may be outweighed or equalled by other ones. In other cases particular contributions may be so disproportionate to other contributions as to merit special recognition.
40. The task of weighing up these competing contributions is one of the essential tasks that a trial Judge exercising s 79 jurisdiction must carry out. However, that task is subject to the caveat expressed by Mason and Deane JJ in Norbis (1986) 161 CLR 513 where their Honours indicated that issues of establishing contribution are often barren issues because other factors become more significant. Their Honours observed at 524:
"The Family Court has rightly criticised the practice of giving over-zealous attention to the ascertainment of the parties' contributions, and we take this opportunity of expressing our unqualified agreement with that criticism..."
41. Like the Full Court in Rosati and Rosati (1998) FLC 92-804 at 85,039; 23 Fam LR 288 at 309 (para 6.18, we are of the view that it was not open to his Honour in the exercise of discretion to conclude that, overall, the parties' total contributions were equal. In our judgment, in order to arrive at that conclusion, his Honour must have given grossly inadequate weight to the husband's initial contributions and to the inheritance, and conversely must have given grossly excessive weight to the wife's contributions to a homemaker and parent and to the losses generated in the business when the husband was conducting it post-separation.
42. As already mentioned, the evidence relating to the wife's involvement with the children was not the subject of challenge. It was of very short compass. In written submissions made by counsel for the wife it occupies no more than one sentence (Appeal Book 353):
"The wife was also the primary caregiver in respect of the four children apart from some employed assistance."
43. In Bates (1985) FLC 91-627 at 80,090; 10 Fam LR 420 at 428, the Full Court (coram Fogarty, Maxwell and Nygh JJ) in dealing with a farming case looked at the facts of that case and said:
"A major contribution which each of them made to the property was their respective activities on the farm. The husband was the farmer of the property, the wife was the mother and homemaker and she also made direct physical contributions to the improvement of the home itself and some contributions to the farming activities. Within those respective spheres both parties carried out their responsibilities satisfactorily and no criticism was made of either party in respect of those matters. In our view the circumstances of this case justify the conclusion that within their own particular and agreed spheres of activity during the period of their marriage their contributions ought to be treated as equal. That conclusion is supported by the fact that the parties were members of a partnership in the conducting of the farming business throughout virtually the whole of the period of their marriage together."
44. Wilson J in Mallet and Mallet (1984) 156 CLR 605 at 636 said:
"The Act requires that the contribution of a wife as a homemaker and parent be seen as an indirect contribution to the acquisition, conservation and improvement of the property of the parties regardless of where the legal ownership resides. The contribution must be assessed, not in any merely token way, but in terms of its true worth to the building up of the assets. However, equality will be the measure, other things being equal, only if the equality of respective contributions of the husband and wife, each are judged by reference to their own sphere, are equal."
45. In Lee Steere and Lee Steere (1985) FLC 91-626 at 80,077; 10 Fam LR 431 at 442 the Full Court observed of Mallet (supra) as follows:
“How should the contribution of a woman who fulfils primarily the role of homemaker and parent be assessed? The decision of the High Court in In the Marriage of Mallet, supra, is authority for the proposition that the court should not start off with any presumption or rule that equality of division is necessarily a just and equitable result. But their Honours did not decide that the contribution of a wife as homemaker and parent was necessarily inferior to that of the husband/breadwinner. Indeed, all of their Honours agreed that the contribution of the wife was to be assessed in a substantial and not merely token way: at FLC p79,111; ALR p196 per Gibbs CJ; at FLC pp 79,118, 79,119; ALR pp207, 208 per Mason J; at FLC p79,126; ALR p218 per Wilson J; at FLC p79,129; ALR p222 by necessary inference per Deane J; and at FLC p79,131; ALR p 226 per Dawson J. Several of their Honours went further and accepted the proposition that the contribution of each spouse within their respective roles were (sic) equal, for example the contribution of a good homemaker and parent is in principle equal to that of a good breadwinner, although the use of special skills in one’s profession or business may have to be given greater weight than the essentially indirect contribution of the homemaker to that business. Thus Wilson J states at FLC p 79,126; ALR p 218: ‘However, equality will be the measure, other things being equal, only if the quality of the respective contributions of husband and wife, each judged by reference to their own sphere, are equal’ (our emphasis). See also the similar remarks of Mason J at FLC p79,120; ALR p209.
It is therefore possible to arrive at the conclusion that in a marriage there has been an equality of contribution by each of the parties within his or her own sphere: that of the wife as a good homemaker and parent and that of the husband as a breadwinner. The ’partnership concept’ of marriage derives support not only from Deane J, at FLC p79,128; ALR 221, who dissented, but also to a certain extent from Mason J at FLC p79,120; ALR p209 and Dawson J at FLC p79,132; ALR p227, albeit limited to non-business assets.”
46. The role undertaken by the wife was an important one. The mutual evidence of the parties was that each laboured as hard as they could in their respective spheres during the course of the marriage. Nothing was identified by the trial Judge as indicating some special aspect of the role that each played that would merit an additional weighting in that person's favour vis a vis both effort and outcome in the course of the marriage. There are no findings of the trial Judge in this case which would lead to the conclusion that the quality of the husband's contributions during the marriage judged by reference to his own sphere were in any way unequal to those of the wife.
Section 79(4)(e) considerations
47. Turning then to the s 79(4)(e) considerations (expressed by the trial Judge to be the s 75(2) factors). The three matters which led his Honour to make a further alteration in favour of the wife after having found equality of contributions were specifically identified as:
$7,251 arrears of maintenance
a "need of $20,000 for her own support occasioned by her role in supplying care to the parties' children"
$250 per week for each of the two eldest children and $200 per week for the youngest child until they attain 18 (a total of $92,300) said by the trial Judge to be:
"a calculation of the extra direct cost at present day values which the wife can expect to bear from her acceptance of the obligation to provide for the needs of the children until aged 18."
48. In our view, the approach in the latter two of these matters is inconsistent with the proper exercise to be applied under s 79(4)(e).
49. At the outset of the proceedings the trial Judge identified the matters which were in issue before him. The wife had an amended Form 7 which sought:
"That an account be taken of the property of the parties, wife to obtain 70 per cent thereof and the husband 30 per cent thereof."
She also had a Form 63 application seeking lump sum child support. There were some reserved costs issues that had to be dealt with, and finally there was an application filed by the husband seeking a discharge of interim spousal maintenance orders made 30 June 1997. It was common ground that there were outstanding arrears in the sum of $7,251. The liability to meet those arrears depended upon the outcome of the husband's application for a retrospective discharge of the maintenance order.
Maintenance arrears
50. Whilst there was no formal application before his Honour seeking enforcement of the arrears, the matter proceeded both before the trial Judge and before us on the basis that if the arrears were found to be owing they should be met. There was no challenge to the trial Judge's dismissal of the application for variation of maintenance. It was acknowledged by Mr Page SC on behalf of the husband that arrears were owing and ought to be paid and that it was convenient that an order be made directly requiring the payment of those monies notwithstanding the absence of an enforcement proceedings.
51. His Honour's method of dealing with the arrears was to incorporate them into the s 79 order. Such an approach can be justified under s 75(2)(o) which enables the Court to consider:
"any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account."
The fact that there are outstanding arrears may make it just and equitable that there be a greater portion of the property transferred to the wife to expunge those arrears. Such a course is consistent with s 97(3) in that it enables the court to proceed without undue formality and endeavour to ensure the proceedings are not protracted. However, such a course is inconsistent with Order 6 of the orders pronounced by the learned trial Judge, namely:
"That the application filed 21 August 1998 by the husband for an order discharging arrears of spousal maintenance be dismissed."
52. If the dismissal of the application to expunge the arrears was to stand then there ought not have been an adjustment to make an allowance for the arrears. If there was to be an adjustment to make allowance for the arrears, then the application to discharge the arrears should have been granted. There is no appeal ground directly in relation to that point before us and we simply pass comment about it without making any formal orders to give effect to our comments.
Wife's loss of income whilst remaining at home to care for the children
53. The second of the figures allowed for by the trial Judge was the sum of $20,000 calculated in the manner set out in para 18.7 of his judgment. His Honour concluded that as the wife had sought $180 per week spousal maintenance pending settlement, that was an estimate of her needs into the future. His Honour then multiplied that figure by 52 to reach an annual basis of $9,360, which over four years (number of school years left for Z) came to $37,440. On the basis that the wife "may well undertake the part-time work open to her" his Honour concluded that it would not be just and equitable to make an adjustment to the full extent of the sum of $37,440. He allowed $20,000.
54. The approach adopted by his Honour indicates a confusion between the application of s 75(2) considerations in property cases and the application of s 75(2) considerations in maintenance cases. If the section had been applied in a maintenance case, it would have first been necessary to demonstrate that the wife was unable to adequately provide for herself. In order to do that one would have had to pay significant attention to the amount of capital she was to receive by way of alteration of property interest, namely, without any other adjustment on his Honour's figures, 50 per cent of $935,000. That capital sum, coupled with her part-time earning capacity and the limitations on the husband's earning capacity, may well have led a court to conclude under s 74 that it would be inappropriate to make any maintenance order at all.
55. Whilst it is clearly open to a trial Judge to take into account in property proceedings the fact that a wife's earning capacity is going to be limited by reason of her obligation to children, that factor has to be weighed up as against factors affecting the other spouse and generally not treated in a simple mathematical manner of asking how many dollars will the wife lose as a result of carrying out this task.
56. Whilst it may well have been appropriate for the trial Judge to make some allowance to the wife for the loss of income she would suffer by reason of her continuing role as a parent, the measure of that loss had to be tempered by the capital available to each party and the earning capacity and state of health of each party. In this case the only measure of compensation appears to be the extent of the loss. The other factors do not appear to have been considered at all by the trial Judge.
57. The rather complex relationship between maintenance and property settlement has been the topic of discussion for many years. In Smee and Smee (1965) 7 FLR 321 at 328 Sugarman J of the Supreme Court of New South Wales said:
"Section 86(1) is not merely an alternative mode of providing for maintenance. Sections 84(1) and 86(1) are directed to different ends and refer to different considerations - Section 84(1) to means, earning power and conduct, and Section 86 to what is considered just and equitable in the circumstances of the case (even though this may involve some regard's (sic) being had to conduct). Orders under both sections may have, of course, be made in the same case.
...
However, where applications are made under both sections, each, as Wallace J said in Horne v Horne (1963) 3 FLR at 394 'would generally speaking attract consideration in relation to the other'; and, in particular, the benefit obtained by one spouse under an order for a settlement, and the detriment it imposes upon the other spouse, must be material matters for consideration in making an order for maintenance."
58. The danger of approaching the matter from a purely mathematical basis is also exemplified by the discussion of the High Court in Mullane and Mullane (1983) FLC 91-303; 8 Fam LR 777. An order for alteration of property interests is incapable of variation other than via s 79A. An order for maintenance is capable of variation as circumstances change. If an allowance is made to a spouse to compensate for loss of income and the circumstances of the parties subsequently change, such an order made as an exercise of a maintenance power is capable of being varied, but if made as an exercise of a property power then generally speaking it is incapable of being varied. The use of the property power to make allowance for such anticipated future matters may lead to an injustice. Whilst some allowance might appropriately be made for these factors when evaluating future needs, the inability to make adjustments if circumstances change would indicate that a precise mathematical calculation could lead to an unjust outcome.
The adjustment for the children.
59. Similar considerations apply in the manner in which his Honour calculated that an adjustment be made to take into account the fact that the mother had "the care and control of a child of the marriage who has not attained the age of 18 years under s 75(2)(c)".
60. Just as in Burke and Burke (1981) FLC 91-055; 7 Fam LR 121 the Full Court said at FLC 76,452 and Fam LR 122:
"It is not necessary for judges to justify their decision in property and maintenance cases by reference to precise mathematical calculations"
it can be said that it is not always desirable to so do. The exercise is a broad exercise of discretion. Some judges may think it appropriate to apply a mathematically precise consideration whilst others may eschew that approach. The danger in approaching the matter via a direct mathematical consideration is that it makes it easier for an appellate tribunal to ascertain error.
61. The task that his Honour had to undertake was to make an order that was appropriate taking into account all of the factors under s 79 combined. It was rightly conceded that it was appropriate for his Honour to consider that the wife had to care for three dependant children, the youngest of whom still had at least four years of education, and that she was unlikely to receive significant assistance from the husband without bringing complex child support proceedings. The taxable income history of the parties was such that it was clear that the husband would be likely to receive a nil assessment of child support, or one that clearly would not reflect either the needs of the wife to provide for the children nor the capacity of the husband to meet those needs. A proper assessment of child support could only be achieved by agreement of the parties or by proceedings for a departure order, which would pay attention not only to the income of the parties but to their property and other financial resources.
62. The powers to be exercised under s 79 of the Family Law Act are often complementary to the powers to be exercised under the provisions of the Child Support (Assessment) Act. One ground for departure from administrative assessment of child support is that the administrative assessment is not just and equitable because of any payments, and any transfer or settlement of property made or to be made (whether under this Act, the Family Law Act or otherwise) by the liable parent to the child, to the carer entitled to child support or any other person for the benefit of the child (s 117(2)(c)(ii)). Similarly, another ground for departure from administrative support of child assessment is contained in s 117(2)(c)(i) which enables the court to make a departure if an unjust and inequitable determination of child support is achieved in regard to the income earning capacity, property and financial resources of either parent of the child. Section 79(4) of the Family Law Act specifically requires the court to take into account any child support under the Child Support (Assessment) Act that a party to the marriage has provided, is to provide or might be liable to provide in the future, for a child of the marriage (see s 79(4)(g)).
63. What his Honour did in determining the extent of any adjustment he made under s 79(4)(e) was to calculate the full needs of the children at $250 per week for each of the two eldest children and $200 for the youngest child without reference to the capacity of either parent to meet those needs and then visit the entire cost upon the husband. Whilst the adjustment to be made in favour of the wife is a matter of discretion, it still has to be a discretion exercised in accordance with normal principles applicable to the obligations of parents towards their children. On the one hand, such a capital adjustment is frequently made to recognise a disparity in capital needs in housing children. If that was the basis upon which this judge had approached the matter then it may well have been difficult to offer much criticism. But what his Honour did was to calculate the entire cost of keeping the children on a weekly basis and then visit the entirety of that cost upon the husband.
64. In the circumstances where his Honour was starting from a position where each party was to be entitled to capital of approximately $460,000 before any other adjustments were made, and bearing in mind the limitations that the trial Judge had made as to the husband's intellectual capacities, the positive findings he made as to the deterioration of the husband's financial affairs once the wife had left him, and particularly bearing in mind the obligation of each of the parents to contribute towards the maintenance and support of the children, it cannot, in our view, be said to be either appropriate or just and equitable to pass on the entire economic burden of the support of the children to the father. In so doing, no attention was paid to the provision of s 79(4)(g) as to the child support the father might be liable to provide in the future if proper proceedings were brought against him, nor was any attempt made to give recognition to general principles already referred to in respect of the mutual obligation of parents towards their children.
The discretion re-exercised
65. Given the errors identified above, in our view, the orders as made by the trial Judge cannot stand. We have been invited by both parties in those circumstances to re-exercise the discretion of the trial Judge rather than remit the matter for rehearing.
66. In our view, the salient features to the re-exercise of discretion are these:
1. The huge discrepancy in initial capital contribution favouring the husband;
2. The property to the value of $135,000 inherited by the husband in 1995;
3. The great effort which the husband put in during the course of the marriage towards the acquisition, conservation and improvement of the financial position of the parties and the support he provided for the parties and for the children;
4. The great effort the wife put in, in the course of the marriage, both towards the acquisition, conservation and improvement of the property of the parties and the role she played as the primary caregiver for the children and the homemaker;
5. The role the wife played post-separation in maintaining the children;
6. The unquantified loss, if any, which might have been attributed to the husband's stubbornness in refusing to rationalise the assets of the parties post-separation.
67. It is our assessment that the submission made on behalf of the husband that the imbalance in those various factors should properly be reflected by the husband receiving 60 per cent of the asset pool and the wife 40 per cent is an appropriate submission to adopt.
68. The relevant s 79(4)(e) factors which then need to be recognised are:
1. The imbalance of capital created by the distribution of the property 60/40 in favour of the husband;
2. The support that the wife has to provide for the three children of the marriage, albeit the youngest has already attained 14 years of age;
3. The desire of the wife to remain at home caring for the children, at least on a part-time basis, until the youngest completes her education;
4. The superior intellectual capacities that the wife has for obtaining gainful employment;
5. The proven ability of the husband from a young age to earn a living for himself and acquire assets;
6. The fact that the husband owes $7,251 to the wife by way of arrears of interim maintenance.
69. In the circumstances, we are of the view that an appropriate order to be made is that the wife receive one half of the asset pool, plus the sum of $7,251. We have been informed that the husband has already paid to the wife as a condition of a stay of the original orders a sum equivalent to one half of the asset pool, namely $467,500. There will therefore remain outstanding by reason of the operation of these orders the sum of $7,251 still to be paid to the wife. The performance by the husband of that obligation is more than adequately secured by slight amendments being made to the interlocutory orders made by the primary judge on 30 April 1999. In the circumstances, it has been agreed by counsel for the wife that it would be appropriate that we discharge Order 3 of the orders made on 19 February 1999 which orders were made in anticipation that the husband may default in his obligations to pay the initial sum ordered of some $584,000 to the wife.
Costs
70. Both of the parties indicated that in the event that the appeal be allowed they would seek the granting of a costs certificate under the provisions of the Federal Proceedings (Costs) Act. We think it appropriate in the circumstances to grant such a certificate.
Postscript
71. The list of assets agreed upon by the parties was valued at $935,000. By our orders the wife is to receive one half of the value of those assets plus the $7,251 arrears of maintenance. When calculating the amount to be paid to the wife the trial Judge multiplied the value of the agreed pool by 0.625 and arrived at the sum of $584,375. His Honour ordered that such sum be paid to the wife. When the stay was granted the husband paid to the wife the 50% of the $935,000 he was prepared to concede, namely $467,500. We note that the list of assets which makes up the $935,000 includes $4,100 for the wife's jewellery. It would appear that she should have received part of her payment by her retention of that jewellery. However no point was taken before us by the husband's Counsel that the amount the husband should pay to the wife should be reduced by the value of the jewellery she retained and accordingly we make no allowance for that adjustment.
72. The formal orders of the court will be as follows:
1. That the appeal be allowed.
2. That Order 1 of the orders made by the primary judge on 19 February 1999 be amended by substituting the sum of $474,751 for the sum $584,375 therein contained.
3. That Order 3 of the said orders be discharged.
4. That the securities provided by operation of the orders of the primary judge made 30 April 1999 continue in force pending the husband's compliance with these orders.
5. That the orders for security be discharged upon payment by the husband to the wife of all monies due under these orders and under any outstanding costs which a judge of the Family Court of Australia has previously ordered to be paid by the husband to the wife.
6.That the Court grants to the appellant/husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant/husband in respect of the costs incurred by the appellant/husband in relation to the appeal.
7.That the Court grants to the respondent/wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent/wife in respect of the costs incurred by the respondent/wife in relation to the appeal.
FAMILY LAW ACT 1975
IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA Appeal No NA8 of 1999
AT BRISBANE File No BR5930 of 1997
BETWEEN:
MR Q
Appellant Husband
- and -
MS Q
Respondent Wife
REASONS FOR JUDGMENT OF
THE HONOURABLE JUSTICE FINN
CORAM: FINN, KAY & BURR JJ
DATE OF HEARING: 3 August 1999
DATE OF JUDGMENT: 17 September 1999
APPEARANCES: Mr Page, Senior Counsel, instructed by Peter J Sheehy, Solicitor, PO Box 12045 Elizabeth Street, Brisbane, 4002, appeared on behalf of the Appellant Husband.
Mr Waterman of Counsel, instructed by Bennett, Carroll & Gibbons, PO Box 6030, Upper Mt Gravatt 4122, appeared on behalf of the Respondent Wife.
73. This is an appeal by the husband against orders made with respect to property settlement by the primary judge on 19 February 1999. The factual background to this case and also the reasons for judgment of the primary judge are described in detail in the joint judgment of Kay J. and Burr J.
74. Against that background it is only necessary for me to say that the primary judge found that the value of the total net assets of the parties was $933,375.00, and that the parties should be "regarded as having contributed equally to that net asset figure". His Honour then went on to make an adjustment of 12.5% in favour of the wife on account of "s.75(2)" matters. Accordingly his Honour's primary order was that the husband should pay the wife the sum of $584,375 (being 62.5% of the apparently "rounded-up" figure of $935,000).
75. The appellant husband makes no complaint regarding his Honour's finding that the total net assets of the parties had a value of $933,375.00, nor with his Honour's apparent rounding-up of that figure to $935,000 for the purpose of calculating the amount to be paid by the husband to the wife (if the husband was to be in a position to pay the wife a lump sum). Rather the husband's grounds of appeal are limited to his Honour's finding of equality in relation to the parties' contributions, and to the adjustment of 12.5% on account of the s.75(2) matters.
76. Essentially the husband's case before us was first, that given the value of the assets which the husband had bought into the marriage (including the ownership of two type A commercial licences and a type B commercial licence, which were found to have a current values totalling over $550,000), and given also the husband's relatively recently inherited property worth $135,000, that a finding of equality of contributions had to be wrong, and that the appropriate finding should have been 60:40% in favour of the husband. Secondly, the husband asserted that his Honour's approach to the s.75(2) matters was also wrong, although it was conceded that a 10% adjustment in favour of the wife leading to an overall 50:50% division, would have been in order.
77. Notwithstanding the wide discretion vested in a trial Judge under s.79 of the Family Law Act 1975 and notwithstanding also the limitations on appellate interference with the exercise of that discretion (particularly where the disagreement concerns matters of weight), I am nevertheless satisfied that the trial Judge's assessment of the parties' contributions as equal must fall outside the broad range within which reasonable disagreement is possible.
78. As is pointed out by Kay and Burr JJ. in their joint judgment, there are no findings by the trial Judge "which would lead to the conclusion that the equality of the husband's contributions during the marriage, judged by reference to his own sphere, were in any way unequal to those of the wife". Thus I agree with their Honours' observation, that for the trial Judge to have reached the conclusion that the parties' overall total contributions were equal, he "must have given grossly inadequate weight to the husband's initial contributions and to the inheritance, and conversely must have given grossly excessive weight to the wife's contribution as a homemaker and parent, and to the losses generated in the (parties') business when the husband was conducting it post-separation".
79. As to the s.75(2) adjustment of 12.5% made by the trial Judge, it seems clear that his Honour made that adjustment for the reason that that was the percentage of the parties' total net assets which was represented (at least approximately) by the figure of $119,551.00. His Honour had arrived at that last-mentioned figure by calculating (in a fairly precise mathematical way) that the total cost of supporting the three children in the wife's care until they reached 18 years of age, would be $92,300.00. To this figure his Honour added the sum of $20,000 on account of the wife's own support (calculated on the basis of an interim spousal maintenance claim, but discounted to take account of the fact that she may obtain part-time work), together with the further sum of $7,257 due to the wife from the husband on account of an interim spousal maintenance order. These three figures totalled $119,551.00 (or approximately 12.7-12.5% of the value of the parties' net assets).
80. Although the course adopted by his Honour of including the specific figure of the maintenance arrears ($7,257) was perhaps a little unusual, it was, in my view, probably open to his Honour under s.75(2)(o) to take such a course.
81. Again, although unusual, it was probably also open to his Honour to make an award to the wife of a specific sum of $20,000 for "her own support occasioned by her role in supplying care to the parties' children", as part of the s.75(2) adjustment in a property settlement. However I share the concerns expressed by Kay and Burr JJ. that the approach adopted by his Honour in regard to this matter may indicate a confusion between the application of the s.75(2) matters in property settlement cases and in spousal maintenance cases.
82. Similarly, the specific award (calculated mathematically) to the wife on account of the support of the children, while probably in theory open to his Honour, was unusual and was capable, as indeed it did, in my opinion, of leading to a flawed result. That flawed result was that the entire economic burden of the support of the children seems to have been passed to the husband in circumstances where, according to his Honour's judgment, the wife was to receive at least fifty percent of assets totalling over $900,000. Such a result cannot possibly be just to the husband, and would in my view warrant our intervention.
83. I therefore agree with Kay and Burr JJ. that this appeal must be allowed, and that we should re-exercise the discretion of the trial Judge. I also agree with their Honours for the reasons which they have given, that an appropriate order in this case would be for the wife to receive one half of the net asset pool plus the sum of $7,257. I further agree that this is an appropriate case for the grant of cost certificates to both parties in respect of the appeal, and also with the formal orders proposed by their Honours.
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