R and L

[2007] FMCAfam 365

FEDERAL MAGISTRATES COURT OF AUSTRALIA

R & L [2007] FMCAfam 365

FAMILY LAW – Property – waste argument – contribution made more arduous – weight to be given to initial contributions – future needs arising out of disparity in earning capacity.

Family Law Act 1975, ss.75, 79

Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervenor) (2003) FLC 93-143
Kennon and Kennon (1997) FLC 92-757
Kowaliw and Kowaliw (1981) FLC 91-092
Norbis v Norbis (1986) 161 CLR 513
Pierce and Pierce  (1998) FLC 92-844
Williams & Williams [2007] FamCA 313

Applicant: R

Respondent: L

File Number: NCM2456 of 2005

Judgment of: Altobelli FM

Hearing date: 12 March 2007

Date of Last Submission: 13 March 2007

Delivered at: Sydney

Delivered on: 7 June 2007

REPRESENTATION

Counsel for the Applicant: Mr Bateman

Solicitors for the Applicant: Dawson Solicitors

Counsel for the Respondent: Mr Sundstrom

Solicitors for the Respondent: Lea K Smith Solicitor

ORDERS

1. Within 42 days of the date of these orders the husband pay to the wife $48,303.25 and at the same time give her a discharge of the Greater Building Society mortgage secured against the property situated at

   
   

   LB and TB in the State of New South Wales.

2. Simultaneously, upon compliance by the husband with Order 1, the wife do all acts and things and sign all documents as are necessary to transfer to the husband all her right, title and interest in the property situated at LB and TB in the said State (“the properties”).

3. In the event that the husband fails to comply with Order 1 each party shall immediately take all necessary steps and execute all necessary documents to cause the properties to be sold by private treaty at a price to be agreed on between the parties and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee and to distribute the proceeds of the said sale as follows:

   (a)In payment of agent’s commission and advertising expenses and legal expenses of the sale and rate adjustments pursuant to the contract(s) for sale;

   (b)In discharge of the mortgage in favour of the Greater Building Society Limited registered over the property;

   (c)$48,303.25 to the wife together with interest calculated under the Family Law Act and Rules, calculated from the 43^rd day after the making of these orders, to the date of payment.

   (d)The balance to the husband.

4. That in the event that the properties fail to be sold by private treaty within a period of three (3) months from the date Order 3 becomes operative, then each party take all necessary steps and execute all necessary documents to cause the property to be sold by auction at the earliest possible date at a reserve price to be agreed upon between the parties and failing such agreement to be determined by the President of the Australian Property Institute of New South Wales or his nominee and that the proceeds of the sale be distributed in accordance with order 4 herein.

5. That pending the sale of the property the husband continue to pay, as they fall due, all regular instalments in respect of the mortgage, council rates, water rates and household insurance in respect of the properties, and shall indemnify and keep indemnified the wife in respect of any such amounts, and if any such amounts remain unpaid as at the date of sale of the properties, the husband shall be solely liable for any such arrears.

6. That each party has no claim other than dealt with in these orders against any asset or financial resource in the other party’s care or control.

7. That pursuant to s.106 of the Family Law Act, in default of either or both of the husband and wife doing all such things and executing all such documents as may be needed to comply with these orders that a Registrar of the Newcastle Registry of the Federal Magistrates Court of Australia or such other person appointed by the Court is authorised to do all such acts and things and execute all such documents on behalf of either or both of the husband and the wife.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
NEWCASTLE

NCM2456 OF 2005

R

Applicant

And

L

Respondent

REASONS FOR JUDGMENT

Introduction and background

1. This is an application for alteration of property interests under s.79 of Family Law Act, commonly known as a property settlement application. The applicant is R and the respondent is her former husband, L. I will call them the wife and the husband respectively. At the time of the hearing, the wife was 47 years old and the husband 45 years old. They started living together in about December 1996 and finally separated in November 2004, though there was a period of separation between December 1999 and mid-2001. The wife and the husband married on 27 April 2002. There are no children of this marriage, but the wife has two daughters from a previous marriage. The husband has two sons and a daughter from a previous marriage.

2. It was by no means a long period of cohabitation and marriage, and it was at times a very tumultuous one between the wife and the husband. They argued a lot. They consumed considerable amounts of alcohol.

3. The husband came into this relationship with assets including two properties, one at LB and another at TB. The husband also had liabilities and superannuation entitlements. One of the issues I had to decide in this case was the net value of the husband’s assets at the commencement of cohabitation.

4. At the commencement of cohabitation the wife had minimal assets other than an entitlement to superannuation pursuant to the property settlement with her first husband.

5. At the trial, I was presented with an agreed list of assets that I reproduce and incorporate into these reasons as schedule one. I observe that in relation to the agreed schedule the wife argued that there should be an add-back into the husband’s assets of a payment he had received after separation, but in respect of pre-separation employment. I will deal with this issue in due course.

Schedule 1: Assets And Liabilities At Trial	Value
Joint Assets:  Property at LB	$240,000.00
Husband’s Possession:
Property at TB	$230,000.00
Toyota Landcruiser Troop Carrier	$6,500.00
Household Contents	$500.00
Greater Building Society Account	$7,000.00
Long Service and Leave Loadings	$NK
Proceeds of Greater Building Society joint account (after deduction of payment for November 2004 of $492.00 from $2,168.45)	$1,675.00
Total: Husband’s Possession	$245,675.62
Wife’s Possession
Shares in PBG	$2,111.00
ING Account	$1,300.00
Newcastle Permanent Building Society Account	$1,033.00
844 shares in IAG	$5.021.80
Ford Falcon (hail damaged)	$500.00
¼ Share in “Bombyia” racehorse syndicate	$NR
Antique furniture	$5,000.00
Household contents	$400.00
Share of joint account with Greater Building Society	Closed
Jewellery purchased during cohabitation	$1,000.00
Total: Wife’s Possession	$16,365.80
Joint Assets	$240,000.00
Husband’s Possession	$245,675.62
Wife’s Possession	$ 16,365.80
Total Assets:	$502,041.42
Liabilities
Greater Building Society Mortgage	$228,000.00
Total Assets less Liabilities	$274,041.42
Superannuation Entitlements
Husband
CBUS	$41,305.04
AMP	$6,800.00E
AUSCAL	$7,964.97
Husband’s Total Superannuation Entitlement:	$56,070.01
Wife
HESTA	$25,225.00
SAS (after 12/2017)	$43,000.00
Wife’s Total Superannuation Entitlements	$68,225.00

1. Both the wife and the husband raised as issues the quantification of the value of the contributions they had made during the period of cohabitation, as well as future needs factors.

2. The wife raised, specifically, as a further issue requiring findings by me, that her contributions were rendered more arduous because of conduct by the husband which, she asserts, included drinking alcohol to excess, assaults, verbal abuse on the wife, and the husband’s conduct towards the wife’s teenage daughters. In addition, the wife asserts that the husband squandered a portion of his earnings on purchasing alcohol and that this constituted, in effect, a negative contribution.

3. In light of these factors, the wife seeks a property settlement of forty per cent in her favour, with the exception of the superannuation entitlements that each of the wife and husband have in their own names and would retain.

4. The husband argues that there should be no adjustment in the wife’s favour because of the matters of conduct alleged by the wife. He argues that he has made an overwhelmingly greater contribution because he brought two pieces of real estate into the relationship that continued to exist today and whose equity represents the most significant share of the available assets. Whilst the husband acknowledges that the wife ought to keep her own superannuation entitlements, he says she should only receive a five per cent share of the remaining assets.

5. Extensive affidavit evidence had been filed on behalf of the wife and her witnesses, and the husband and his witnesses. The wife and her daughters gave evidence and were cross examined. An affidavit from RC, the wife’s former husband, was read and he was not required for cross examination. The husband, his son A, his mother M L, and a friend P all gave evidence and were cross examined.

Applicable law

1. The preferred approach to the determination of an application under s. 79 Family Law Act is set out in a passage found in the Full Court’s Decisions in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39:

   The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter- related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss. 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss. 79(4)(d), (e), (f) and (g), (“the other factors'') including, because of s. 79(4)(e), the matters referred to in s. 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC 92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEL and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.

2. The wife raised what is, in effect, a waste argument in that, she says, the husband expended regular and not insubstantial money on alcohol. A succinct statement of the law in this regard is the statement by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76 644:

   As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances: 

   (a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or 

   (b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value. 

3. In submissions, one of the legal issues that became apparent is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, of course, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5:

   27. …the legislation confers a discretion upon the court which, provided the required matters are taken into account, does not dictate the employment of any particular method in the formulation of an appropriate order for the alteration of property interests. The matters which are to be taken into account will sometimes require the division of the assets, or some of them, upon the basis of their individual values, but in other cases no more than an overall division will be required. In some cases either approach may be adopted in part or in whole. 

4. Perhaps the main issue that arises 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 and Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce and Pierce[1] together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 27, 28, 29 and 32:

   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.

   [1] (1998) FLC 92-844

   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.

5. 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.

6. The final legal issue that arises in this case is that raised by the wife – the extent, if at all, that her contributions were rendered more arduous as a result of various aspects of the husband’s conduct. As the wife’s counsel conceded, the authority in this Court was the Full Court’s decision in Kennon and Kennon (1997) FLC 92-757. A useful summary of the decision is contained at page 84, 294 of the report:

   Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s 79. We prefer this approach to the concept of ''negative contributions'' which is sometimes referred to in this discussion.  

   In the above formulation, we have referred only to domestic violence, for the reasons which we indicated earlier, but its application is not limited to that…  

   However, it is important to consider the ''floodgates”  argument. That is, these principles, which should only apply to exceptional cases, may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks and so return this Court to fault and misconduct in property matters ¾  a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost.  

   However, in our view, s 79 should encompass the exceptional cases which we described above. It would not be appropriate to exclude them as a matter of policy because of this risk. It is a matter of commonsense for the lawyers involved and, where that may not be sufficient, it is a matter for a firm hand by the Court at an early stage when a case appears to raise those issues.  

   It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions)…

Issues and findings

1. Having regard to the facts of this case, the first issue in respect of which I need to make findings is to identify the assets of the wife and the husband at cohabitation, with particular emphasis on the husband’s assets at that time, having regard to his case for greater contribution. At the commencement of the case. I found it very interesting that the wife was able to address the issue of the husband’s assets at cohabitation with what appeared to be greater particularity than the husband himself could. In the summary of argument filed on the wife’s behalf by her counsel, Mr Bateman, there was a schedule which attributed values to the husband’s assets in 1996 as well as liabilities. For reasons that will become apparent shortly, it is convenient to actually incorporate this material into these reasons. I set it out below.

Assets and Liabilities:

At Commencement of Cohabitation

Property

Value

Husband’s Assets at Commencement of Cohabitation

Real Property: LB

$100,000.00

Real Property: TB

$100,000.00E

Toyota 1987 Motor Vehicle

$24,000.00E

Westpac Savings

$67.00

Collection of tools and power tools

$ NK

Total Value of Assets:

$224,067.00

Husband’s Liabilities as of 1997

Westpac Personal Loan

$24,000.00E

Mortgage to Westpac on LB

$70,000.00

Mortgage to Westpac on TB Property

$70,000.00

Debt to ex-wife per court orders

Total Value of Debt

$164,000.00

Husband’s Net Assets

$60,067.00

Husband’s Superannuation Entitlements at 17 May 1995:

Combined Trade Union Retirement Fund Trustee

$8,061.86

Property

Value

Wife’s Assets at Commencement of Cohabitation

Ford Cortina Motor Vehicle

$3,000.00

Furniture and Antiques

$5,000.00

5 Horses and riding equipment

$2,100.00

Total value of assets:

$10,100.00

Wife’s Liabilities at Commencement of Cohabitation

Credit Card Debt

Wife’s Superannuation Entitlements:
Subject to resolution of her property settlement with estranged husband

1. By contrast, the husband was unable to be this precise. In substance, the wife’s submission was that at commencement of cohabitation, excluding superannuation entitlements, the husband’s net worth was $60,000.00 approximately, which was substantially represented by the equity in his properties at LB and TB. The wife was able to do this by attributing values to each property, as well as indicating how much was owed on each mortgage.

2. I observe at this point that the precise extent of the wife’s assets at cohabitation were not an issue. She asserts that they were worth $10,000.00, apart from the superannuation entitlement that will be discussed below, and for all practical purposes, having regard to the minimal value of these assets at cohabitation and the nature of the property, it played no role in the exercise of my judgment in this matter. However, I thought it was just and equitable to the wife to simply remove her antique furniture from the agreed schedule of assets and liabilities as, doing the best I can, the evidence suggests that this antique furniture is the same as what she had at cohabitation.

3. Attempting to quantify the value of the husband’s assets at cohabitation is important in a case like this. Obviously, in the overall assessment of contribution I must also have regard to the character and identity of these assets, and, in particular, I must not lose sight of the fact that these properties, the equity of which comprised the husband’s original assets at cohabitation, are the very same properties whose equities are substantially represented in the agreed asset pool. Nonetheless, the initial value is significant.

4. The evidence in this regard was as follows.

5. A valuation was tendered in evidence (without objection) from Compass Valuation in relation to the property at LB. It indicates that the current market value of that property is $215,000.00 which, I was informed, is agreed. It also indicates that the value of that property as at 1997 was $100,000.00. That was the only evidence before me on this issue and I accept it as such. Accordingly, I find that the value of LB at or about the time of cohabitation was $100,000.00.

6. In relation to the value at the time of cohabitation of the TB property, during the course of the husband’s cross examination the wife’s counsel was able to tender (without objection) the affidavit that the husband filed pursuant to Order 17 Rule 2 in his property settlement proceedings in the Family Court at Newcastle in 1995. His evidence in that sworn document is that the LB property was valued at $110,000.00, the TB property at $100,000.00, and that the mortgage to Westpac in respect of each of those properties was $70,000.00 in each case. These figures are, in fact, supported by the personal finance application made by the husband and the wife to Westpac in September 1998 when they were refinancing the Westpac loans. In that document, signed by both the husband and the wife, the value of LB is aid to be $115,000.00, and TB $110,000.00. Having regard to the above evidence I find that the value of TB at the time of cohabitation was $100,000.00 and that in respect of each of the LB and TB properties there were mortgages securing to Westpac separate liabilities of $70,000.00.

7. The evidence above is supplemented by Exhibit A4 which is a copy of the husband’s application for review of a Child Support Assessment, signed 17 December 1997. This document not only tends to corroborate the information set out above, but also helps me to conclude that the estimate of the value of the Toyota motor vehicle together with the attribution of a Westpac personal loan in respect of it, is largely correct.

8. In a case like this where the husband knew, or certainly should have known, that one of the issues in respect of which I would need to make findings is the value of his assets at cohabitation, and he fails to positively adduce evidence in this regard, it is appropriate under the circumstances that I make findings in relation to this evidence based upon his own previous representations to Westpac Banking Corporation, the Child Support Agency, and the Family Court of Australia.

9. I should add that an annexure to the husband’s affidavit pursuant to Order 17 Rule 2, being Exhibit A2, was a letter from the trustee of the husband’s superannuation fund dated 17 May 1995 that confirms that the superannuation benefit payable to the husband on immediate retirement as of that date would be $8,061.86.

10. Having regard to the above, I accept and make findings in accordance with the schedule of assets and liabilities at commencement of cohabitation as asserted on behalf of the wife, and as I have set out at paragraph 17 above.

11. I record that the husband had made an assertion that the wife had not disclosed the extent of and value of her jewellery, but this assertion was discontinued, the concession being made in closing submissions, and the value of one thousand dollars attributed to jewellery in the agreed schedule was accepted.

12. The wife argued that on or about 3 November 2004, and about the time of separation, the husband received a severance payout from his previous employer in the sum of $3156.00. The evidence for this is found in Exhibit A5, bank statements produced by the Greater Building Society. The husband’s own evidence in cross-examination indicates that this was a payment that was received during the course of separation but attributed to employment during cohabitation. It is appropriate I add it back. Accordingly the sum of $3,156.00 will be added to the agreed schedule for the purposes of the final adjustment. However the husband has $7,000.00 in a Greater Building Society account that he asserts, without challenge, was acquired after separation. I accept this, and exclude that from the pool of assets and liabilities

Agreed schedule of assets, as amended by findings

1. Schedule 2 to these reasons sets out an amended schedule of assets to reflect the following changes that need to be made in view of the findings I have made:

   a)The sum of $3,156.00 needs to be added back to the pool as a payment received by the husband for his severance pay.

   b)The sum of $7,000.00 being the husband’s Greater Building Society account need to be removed from the pool as I find it was acquired after separation.

   c)The wife’s antique furniture worth $5,000.00 needs to be removed from the pool in order to be just and equitable to her following my finding that it was the same antique furniture she brought into the relationship.

   In relation to all other assets referred to in that list I find it was either accumulated during the relationship or the wife made a contribution to it in some way, albeit perhaps minimally.   

Schedule 2: Amended Assets And Liabilities At Trial	Value
Joint Assets: Property at LB	$230,000.00
Husband’s Possession:
Property at TB	$230,000.00
Toyota Landcruiser Troop Carrier	$6,500.00
Household Contents	$500.00
Long Service and Leave Loadings	$NK
Proceeds of Greater Building Society joint account	$1,675.00
Add-back of severance pay	$3,156.00
Total: Husband’s Possession	$241,831.62
Wife’s Possession
Shares in PBG	$2,111.00
ING Account	$1,300.00
Newcastle Permanent Building Society Account	$1,033.00
844 shares in IAG	$5.021.80
Ford Falcon AAN (hail damaged)	$500.00
¼ Share in “Bombyia” racehorse syndicate	$NR
Household contents	$400.00
Share of joint account with Greater Building Society	Closed
Jewellery purchased during cohabitation	$1,000.00
Total: Wife’s Possession	$11,365.80
Joint Assets	$240,000.00
Husband’s Assets	$241,831.62
Wife’s Assets	$ 11,365.00
Total Assets:	$493,197.42
Liabilities
Greater Building Society Mortgage	$228,000.00
Total Assets less Liabilities	$265,197.42
Superannuation Entitlements
Husband
CBUS	$41,305.04
AMP	$6,800.00E
AUSCAL	$7,964.97
Husband’s Total Superannuation Entitlement:	$56,070.01
Wife
HESTA	$25,225.00
SAS (after 12/2017)	$43,000.00
Wife’s Total Superannuation Entitlements	$68,225.00

Waste argument

1. It is convenient to deal with the waste argument here. The wife’s submissions in this regards were, specifically, that the husband had squandered a portion of his earnings on purchasing beer at the rate of a case at $30 per week during their relationship. Her counsel specifically relied upon Baker J’s decision in Kowaliw and Kowaliw (1981) FLC 91-092 referred to above. There is no shortage of evidence available to me about the expenditure of the wife and the husband on alcohol. Each of them gave evidence about this. The documents tendered from the Greater Building Society Ltd clearly indicate such expenditure. It is also perfectly clear from the evidence that both the husband and the wife expended money which was either their own, or theirs jointly, on the purchase of alcohol for consumption by either or both of them. With the greatest of respect, this argument was nonsense. Not only did both the husband and the wife purchase the alcohol, but as will be seen below, they both consumed it. There is no evidence that one spouse has acted recklessly, negligently or wantonly, to the detriment of the other or to the detriment of the value of their assets. The waste argument has no merit whatsoever.

Contributions more arduous

1. I turn now to consider the wife’s submissions that her contributions were rendered more arduous because of the husband’s conduct, not just toward her (in the form of his drinking alcohol to excess, assaults and verbal abuse) but also towards the wife’s teenage daughters.

2. Dealing with the second limb of the wife’s argument first, i.e. that her contributions were rendered more arduous by the husband’s conduct towards her teenage daughters, I reject this argument. I had the benefit of hearing evidence on this specific point from the wife, the husband, and the wife’s daughters. It is clear that the husband did not get on well with the wife’s daughters at times. There is no evidence before me from which I could conclude that there was any conduct of the husband that would fall into the category asserted by the wife, and further there is no evidence that any such conduct rendered her contribution more arduous. Indeed, as the daughters are not children of the marriage for the purposes of s.79, there must be some doubt as to whether the contribution that was rendered more arduous is a contribution coming under s.79(4).

3. There was much evidence that went to the first limb of the wife’s argument that her contributions were rendered more arduous because of the husband’s conduct. One of the most notable things about this evidence is that all of the relevant evidence in relation to it was contained in the wife’s affidavit filed 5 December 2006, less than 1 week before the first date that was allocated for the hearing of this matter. Given the importance attached by the wife to this aspect of her case, as is evident from the amount of time taken up by this issue at the hearing, it was rather incongruous that the evidence would only appear in an affidavit that was filed in the last moment. Indeed, had the matter been reached on the 11 of December, one wonders whether the affidavit would have been allowed in the first place. In any event, the wife in the said affidavit gives evidence of alleged violence on 20 December 2004 at the LB property, in 1998 at TB, and in July 1997 at LB. She also gives evidence about another incident at LB in 1998, April 2004 at LB and another incident in 2003, presumably at LB. Some of these allegations, but by no means all, are corroborated by the affidavits of the wife’s children J & T.

4. For reasons that I will set out below presently, I need not go into the detail of this evidence in any significant way. I do record, however, that the wife, the husband, the wife’s two daughters and P all gave evidence either in relation to the consumption of alcohol by both or either of the husband and wife, or the violent incidents referred to. I also had the benefit of subpoenaed material from the New South Wales Police. Dealing with all this evidence in a global fashion, I am able to find as follows. The regular and extensive consumption of alcohol was a feature of the relationship between the wife and the husband. Both drank heavily. The husband drank more than the wife. They frequently became intoxicated. The intoxication led to arguments, which often escalated into violence. This alcohol-induced family violence involved both the wife and the husband as both perpetrator and victim, on different occasions.

5. Notwithstanding the above, there was no evidence of a plausible nature that indicated that the wife’s contributions were made more arduous. The onus was on the wife, who made these allegations, to prove that the alleged violent conduct by the husband towards her “had a significant adverse impact upon” her contributions to the marriage. In other words, she has failed to demonstrate that as a result of the husband’s conduct, her contributions became “significantly more arduous than they ought to have been”. But even if I am wrong on this point, and I have failed to put adequate weight on what I consider to be the inadequate evidence linking the violence to contribution, the fact is that I find that the wife was as often a perpetrator of the violence as she was a victim of it. I stress that on the evidence before me all of the violence was fuelled by the excessive consumption of alcohol by both parties. Their lifestyle did not, however, affect their ability to contribute in the broad sense, within the relationship. It certainly did not make the contribution they made more arduous.

Greater contribution

1. I turn now to deal with the husband’s submission that his contribution was overwhelmingly greater than that of the wife. The husband’s case was that this greater contribution by him was attributable not just to the assets that he brought into the marriage; but the fact that he earned a significantly higher income than the wife during the marriage; that he provided financial support to the wife in caring for her two daughters from the previous marriage; and that the husband shared with the wife the indoor homemaking duties as well as performing all of the outdoor home duties.

2. A finding that the husband made a greater financial contribution both at the commencement of cohabitation and during the relationship is inescapable on the evidence. He certainly earned more than the wife did during the period of cohabitation. There is no doubt from the evidence, however, that during the period of cohabitation there was a co-mingling of the husband and wife’s finances. This ultimately culminated with the property at LB being transferred into the joint names of the husband and wife in April 2004. That the co-mingling of finances effectively started from the commencement of their relationship is evident from the way the evidence about the use of one primary bank account from which either could draw funds, and the overall quite common manner in which the wife and the husband ordered their finances in the context of what they thought was going to be a long term relationship.

3. The husband had debts at the commencement of cohabitation and the wife assisted in the repayment of that debt, both directly, and indirectly. The husband increased his Westpac mortgage in October 1998, partly by way of consolidating loans, and partly to provide some additional cash. Further monies are borrowed in August 2000 to effect extensions to one of the properties. The Westpac loan is again refinanced in March 2002 to refinance the existing loan as well as to provide funds to carry out improvements to the LB property as well as to pay for the wedding.

4. In October 2003 the parties approached the Greater Building Society to refinance the Westpac loan, having made an application for $219,000.00. That loan was in fact taken out on 30 April 2004. It is interesting to trace how the debts attributable to the properties owned by the husband prior to cohabitation increase from about $140,000.00 at cohabitation to $193,000.00 March 2002 to $219,000.00 by 30 April 2004, to the current agreed debt to the greater Building Society of $228,000.00. Along the way, of course, the husband and the wife effect improvements to LB, pay for their wedding, pay tax debts, credit card debts, purchase the wife’s motor vehicle and so forth.

5. The evidence indicates that the wife received both the benefit and the responsibilities associated with all of these transactions. It is artificial in the extreme for the husband to deny that the wife made any contribution towards the servicing of these liabilities, whilst nonetheless, and in effect, asking her to share his responsibility for them. Whilst it is not clear beyond doubt, on the balance of probabilities I find that the husband could not have borrowed from Westpac in 1998 without having the wife as a co-applicant and thus taking into account her income. That is plainly evident from Exhibit A1. It is also apparent the wife had some savings during the course of cohabitation, and whilst I cannot be sure about the precise source of these savings, I am satisfied that she applied sums towards the household and towards the renovations of LB.

6. I think a distinction should be made, however, to the contribution the wife alleges in general terms to the TB property, as opposed to the contribution to LB. The period during which the TB property was not rented out was not, in fact, long in proportion to period of cohabitation. A distinction needs to be made in this regard. Her contribution to the TB property was, therefore, minimal.

7. There was undue attention paid in this case to the issue of who did what discrete tasks around the home. The attempts by both the husband and the wife to minimise the contribution that they both made in terms of homemaking is unbecoming of them. During the course of the marriage the contributions each made to homemaking were about equal.

8. By way of summary of my findings in relation to the contributions of the parties to the marriage, therefore:

   a)The husband made a clearly greater financial contribution at the commencement of cohabitation as is evident from the table set out at paragraph 18 which is, in itself, part of the wife’s own case.

   b)The husband clearly made a greater financial contribution during the period of cohabitation as a result of his greater income. This is plainly apparent from unchallenged aspects of the parties’ own affidavits.

   c)There is no evidence to support a waste argument, or an argument that the wife’s contributions were made more arduous by conduct of the husband.

   d)The contributions made by each of the husband and the wife to the welfare of their family, including extended family, and to homemaking is equal.

   e)The wife made a substantial contribution during the marriage in participating in servicing the husband’s debts, and in conserving and improving his properties but her contribution in this regard to the TB property was minimal.

Submissions

1. In his closing submissions, Mr Bateman, Counsel for the wife, submitted that the wife’s contribution under s.79 should be quantified at about 40 percent, of which five percent was attributable to an adjustment pursuant to the Full Court’s decision in Kennon and Kennon (1997) FLC 92-757. As I have rejected the latter claim, this leaves the wife’s claim for contribution at 35 percent. However, and this is important to recognise, the claim for 35 percent was based on all assets with the exception of the superannuation entitlements of both the husband and the wife. Counsel’s submission in this regard is that as the amount of superannuation they each have is reasonably proximate to each other, and as neither party seeks an order to interfere with that superannuation entitlement, the approach should be as indicated above. I will return to consider superannuation below.

1. If I were to award the wife 35 percent for contribution out of the pool of approximately $265,000.00 this gives her an entitlement of $92,750.00, out of which needs to be deducted the value of the agreed items in her possession, namely $11,365.00. That would mean the husband pays to her $81,385.00. The converse situation, of course, is that the husband gets 65 percent, or assets to the value of $172,250.00. Leaving out s.75(2) factors and superannuation, this would mean that the wife who came into this relationship with $10,000.00 (in round figures) comes out of the relationship with $81,385.00, a multiple of eight. The husband, who came into the relationship with $60,000, leaves the relationship with $172,250.00, a multiple of three. Mr Bateman’s submission of 35 percent for the wife is unrealistic and quite inconsistent with my findings about contribution set out at paragraph 44 above. It would not be just and equitable to the husband.

2. In his closing submissions on behalf of the husband, Mr Sundstrom conceded that notwithstanding his client’s initial position that contribution (again excluding superannuation) should be 95 percent, a more realistic would be 80-85 percent. Mr Sundstrom argued that such a high percentage was necessary to reflect the fact that the most valuable assets available today are the very same assets that the husband held at cohabitation – namely the two properties at LB and TB. His argument is that these properties formed the “ springboard” for the current assets of the parties and that the husband must receive credit for this. On Mr Sundstroms’s analysis, on the wife’s best outcome she should receive 20 percent of $265,000.00 which is $53,000.00 less what she has in her possession ($11,365) resulting in a payment of $41,635.00. Interestingly, even on his own analysis, this is a multiple of four in terms of what the wife brought into the relationship.

3. Mr Sundstrom’s assessment of the wife’s contribution at not greater than 20 percent is a much more realistic one that takes into account the findings I have made about contribution referred to above. Importantly, it also correctly accounts for the weight I must give to the fact that the wife’s contribution to the TB property is not only minimal, but negligible on the facts of this case. It is no answer to this to say that the equity in TB was only about $30,000.00 at the time of cohabitation. The real issue is the significance of TB today having regard to the agreed pool of assets. Even if the liabilities were equally apportioned across both properties, TB represents almost half the value of the net pool of non-superannuation assets. As the Full Court stated at paragraph 26 of its judgment in Williams & Williams:

   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. 

   I am satisfied that the figure of 20 percent, on the facts of this case, also adequately recognises the myriad other contributions of both the wife and the husband in this case.

4. I pause to make this observation – the use of multiples as I have done above is an interesting, and useful cross-checking mechanism particularly in cases like this where the duration of cohabitation is relatively short, there were assets at cohabitation, and findings are possible as to what the value of those assets were. However, I also need to consider the real effect of the order that I make. Whether the payment is $81,385.00, or $41,635.00, we are not talking about very substantial sums of money. But neither is the pool of assets substantial.

5. It is appropriate to consider whether there are s.75(2) factors. Mr Bateman for the wife has submitted that the s.75(2) factors arise on the basis of the significant disparity in earning capacity that exists as between the husband and the wife. He says that this adjustment should be quantified at five percent. If there is to be a s.75(2) adjustment I agree that it can only be on the basis of a disparity in earning capacity. No evidence was adduced on behalf of the wife that would suggest otherwise. Mr Sundstrom on behalf of the husband submitted that there should be no s.75(2) factors though he recognised there was a disparity in earning capacity. In this regard, he urged me to consider the impact of superannuation, as it has hitherto been excluded in the discussion above.

Superannuation

1. It is appropriate, therefore, to deal with superannuation at this point in my reasons. The agreed asset schedule indicates that the value of the wife’s superannuation is $68,225.00, which is greater than that of the husband, $56,070.00. It is clear from the evidence that during the period of cohabitation the husband’s superannuation entitlement grew from $8,061.00 to $56,070, and the wife’s grew from zero to $25,225.00 (the HESTA superannuation fund). Insofar as each of these superannuation entitlements grew during the relationship, each of them contributed in this regard. The wife’s SAS superannuation entitlement she brought into the marriage and the husband cannot be said to have contributed to it.

2. In this case, neither party asks the court to do anything other than leave the superannuation entitlements where they are. Indeed Mr Bateman’s closing submission for the wife was that as the value of the superannuation entitlements were quite close in mathematical terms, ignoring those entitlements was the only way to do justice and equity. I thought this was a surprising submission to make on behalf of the wife, nonetheless that is what I am asked to do on behalf of the wife. It certainly simplifies matters. I am satisfied that is it just and equitable to do so if I make an order the effect of which is to attribute to the wife 20 percent of the non-superannuation pool in recognition of the contribution she has made.

Disparity in earning capacity

1. Of course her superannuation entitlement is also relevant as regards her claim to a s.75(2) adjustment of five percent, because, as

   
   

   Mr Sundstrom submits, her superannuation entitlement means that her future needs are not as great. Even if that is true, in a long-term sense, it does not address the issue of the difference in the earning capacity of the parties at the present.

2. This is a relatively short relationship and there is no evidence to indicate that the wife’s earning capacity has been adversely affected by it. Nonetheless, the disparity is significant, and the pool of assets small. Even though the wife has her own superannuation entitlements. I am satisfied that a small adjustment to reflect disparity in earning capacity is just and equitable. I assess that adjustment at 2.5 percent.

Conclusion

1. I am satisfied that an outcome that provides to the wife 22.5 percent of the non-superannuation assets identified in Schedule 2 is a just and equitable outcome in her favour, and reflects the greater contribution made by the husband, as well as the future needs of the wife. This will mean that as well as returning her antique furniture, her superannuation entitlements and the other property in her possession and control, the wife will receive $48,303.25 (i.e. $265,197.42 x 22.5% = $59,669.41; less $11,365.80 = $48,303.00 rounded off).

I certify that the preceding fifty-five paragraphs are a true copy of the reasons for judgment of Altobelli FM

Associate:  Lisa Molloy

Date:  6 June 2007