RH & JH

[2005] FamCA 1295

[2005] FamCA 1295

FAMILY LAW ACT 1975

IN THE FULL COURT       
OF THE FAMILY COURT OF AUSTRALIA                   Appeal No EA36 of 2005
AT SYDNEY  File No PAF2957 of 2003

BETWEEN:

RH
Appellant Wife
- and -

JH
Respondent Husband

REASONS FOR JUDGMENT

CORAM:  KAY, HOLDEN & WATTS JJ
DATE OF HEARING:                 9 December 2005
DATE OF JUDGMENT:             9 December 2005

APPEARANCES:  Mr Sansom of Counsel, instructed by, King Cain, Solicitors, DX 3104, Bathurst, appeared on behalf of the Appellant Wife.

Mr Kearney of Counsel, instructed by, Kenny Spring, Solicitors, DX 3103, Bathurst, appeared on behalf of the Respondent Husband.

RH v JH
EA36 of 2005
CORAM:                   Kay, Holden & Watts JJ
DATE OF HEARING:         9 December 2005
DATE OF JUDGMENT:     9 December 2005

Catchwords:           APPEAL – PROPERTY SETTLEMENT - ASSESSMENT OF CONTRIBUTION - S 75(2) ADJUSTMENT – 16 year marriage – three children now living with mother, the youngest being eight years of age - asset pool of $513,703 that included superannuation of about $82,000 - trial Judge divided the assets as 60 per cent to husband and 40 per cent to wife – wife sought 65 per cent – only issue on contributions was that shortly prior to separation the husband received from his mother's estate the forgiveness of a $50 000 mortgage loan made to the parties in 1988 and a further sum of about $75,000 which monies were expended in relation to the family – trial Judge found that without the inheritance contributions would have been approximately equal but concluded that the husband was to receive 67½ per cent for contributions and 32½ per cent to the wife – Full Court found there was a clear error in the trial Judge’s assessment as her Honour gave the husband $180,000 credit in a pool of $513,000 for the very late contribution of about $125,000 – appeal allowed – Full Court decided a more appropriate assessment on the pool of assets on contributions would be to adjust the pool to 60 per cent in favour of the husband and 40 per cent in favour of the wife – Full Court found the outstanding s 75(2) factor that required serious and significant adjustment in favour of the wife is that the she is left with the care and control of the three children – Full Court found the appropriate further adjustment is another 12½ per cent in favour of the wife, which would leave the wife’s entitlement to the pool of assets in its entirety at 52½ per cent and the husband at 47½ per cent.

KAY J: 

1. This is a wife’s appeal against property orders that were made by Stevenson J on 9 March 2005.  Her Honour determined that there was a pool of assets valued at $513,703 that included superannuation of about $82,000. She determined that that pool should be divided in favour of the husband on a contribution basis as to 67½ per cent with an adjustment back in favour of the wife of another 7½ per cent for s  75(2) factors, leaving an overall division of the pool of assets as to 60 per cent in favour of the husband and 40% in favour of the wife.

1. The wife has appealed and has sought a substantial change in the outcome to perhaps even the extent of an order of 65 per cent of the pool of assets in her favour.

Background

1. At the date of trial the husband was aged 49 and the wife 39.  The parties married in 1987, separating in 2003.  There were three children born of the marriage - K born in 1992, R in 1995 and B in 1997.  The three children reside with their mother pursuant to the orders made by her Honour that are not the subject of appeal.  The wife has since formed a new relationship and has a child born of that relationship.

1. The evidence relating to the acquisition of the pool of assets was that it was acquired through the extent of the hard labour of both of the parties, starting off very modestly in the course of their relationship and gradually building up assets, the most significant of which was the former matrimonial home which had a value of $435,000 subject to a mortgage of some $67,554.

1. The only unusual aspect of contribution was that the husband’s parents had provided $50,000 in 1988 by way of a mortgage loan at a favourable interest rate to the parties to assist them in the acquisition of the home. Subsequently shortly prior to separation the husband’s mother had died and he had received from her estate the forgiveness of the mortgage loan and a further sum of about $75,000 which monies were expended in relation to the family.  Her Honour made that finding and that would seem to be the only issue between the parties in determining an outcome on contribution.

1. Her Honour concluded that without what her Honour described as the late inheritance, it was appropriate that the contribution of the parties should be viewed as approximately equal, but that the inheritance shifted the balance of the contribution assessment.  Her Honour concluded it shifted to the extent of 67½ per cent in favour of the husband and 32½ per cent in favour of the wife.

1. On the pool of $513,000 that has the effect of giving the husband the first 35 per cent of the pool, which as I indicated on a pool of $513,000 meant the husband was getting a credit of about $180,000 for the very late contribution of about $125,000.  It seems, whether the trial Judge was misled into her assessment by reason of submissions that had been made by counsel for the parties, or whether she misunderstood the mathematical effect of the assessment that she was making, that it appeared that there was a clear error in her Honour’s assessment.  What I suspect her Honour might have intended was to create a 17½ per cent differential between the parties, which would have found itself with the husband receiving about $90,000 more than the wife, but that by adding 17½ per cent to his half share, as her Honour found he would otherwise be entitled to, it had the double effect of removing the same amount from the wife, creating the disparity as I have indicated of 35 per cent of the pool and giving the husband far too much credit, it would seem, for the disparity in contributions.

1. That mistake having been identified in the process that her Honour undertook, the exercise then became one for this appellate Court to re-exercise the discretion based upon the material that was before her Honour, neither party seeking to put before the Court any further material.

1. When one looks at the long history of the marriage as outlined by the trial Judge, the effort that each party put in to the building up of the assets and raising the three children, and weighs into that equation the additional contribution made by the husband’s capital coming in from his side, it would seem in my view that a more appropriate assessment on the pool of assets overall would be to adjust the pool to 60 per cent in favour of the husband and 40 per cent in favour of the wife.  This would give him effectively, on a contribution basis, in the vicinity of the first $100,000 of the pool of assets which would adequately reflect, in my view, the disparity brought about by the additional contributions made on his behalf.

1. Mr Kearney has urged we should give those contributions their full weight, seeing they came in very late in the marriage, and that we should assess contribution at about 62½ per cent in favour of the husband.  To do so, in my view, would fly in the face of well known authority in this area of the amelioration effect when comparing one form of contribution with other contributions.  The $125,000 brought in very late was, of course, a very serious and significant contribution that ought to have led the Court to find a disparity of contribution, but it is a contribution that is no more or less significant than the contributions of each of the parties made throughout the very long periods that they cohabited together.

1. My view is that a 60/40 assessment of contribution in favour of the husband is appropriate.

1. That then takes us to the next step required in property proceedings of determining what adjustments should be made for s 75(2) factors.  There is one outstanding s 75(2) factor that the Court needs to take into account in this case, and that is that the wife is left with the care and control of the three children, the youngest of whom is only eight years of age now.  The impact of having to house and provide for the children is going to bear heavily upon her and will impact upon not only the outgoings that will need to be met, but will impact upon her in relation to her capacity to put herself back into the work force. 

1. The matter is somewhat complicated by the presence of the new baby.  The mother, when cross-examined, appropriately conceded that the presence of the new baby, which of course inhibits her re-entry to the work force, is not something that should be sheeted home to the expense of the husband in these proceedings. 

1. However notwithstanding the presence of the new child, the presence of the three children of the marriage is a factor that, in my view, requires a serious and significant adjustment in favour of the wife.

1. Additionally the husband has a larger proven earning capacity than the wife in any event.  He is earning somewhere short of $70,000 per annum, whereas the wife, according to matters submitted to us without contradiction, had a capacity of earning $40,000 to $50,000 late in the marriage.  That earning capacity differential will be reflected no doubt for a considerable period of time.  Additionally there is the capital disparity created on the contribution adjustment.

1. Offset against these matters is the fact that the wife is now in a stable relationship, is being supported by her present partner who is a man whose income is not significantly less than that of the husband in these proceedings, and he is said to own his own home.  Also the Court needs to pay attention to the fact that the husband is paying child support and will continue to contribute towards his children, both by paying the child support and by having frequent and liberal contact with the children.  But nonetheless, the fact of the mother’s care of the children is, in my view, a factor that needs to be given a significant amount of weight.

1. One other factor urged upon us is that by reason of the manner in which the parties have agreed to deal with the assets, the husband retains a greater proportion of the superannuation assets than does the wife - about $40,000 more - and those assets are not readily available to him whilst he continues in the work force.  It is a factor which the Full Court has indicated can be brought into account.  Precisely what weight is to be given to it will vary from case to case.

1. Combining each of those factors that I have identified, in my view the appropriate further adjustment in this case is another 12½ per cent in favour of the wife, which would leave the wife’s entitlement to the pool of assets in its entirety at 52½ per cent and the husband at 47½ per cent. 

1. I stand back and look at the outcome and perceive that the addition of the two sums leaves me with a comfortable outcome in the proceedings of slightly more of the assets going to the wife, but not as much as she would have been expected to receive had the contributions been otherwise equal.

1. The mathematics of achieving that result are that the pool of assets of the $513,000 gives the wife an entitlement of $269,694, of which she has already received $67,479, leaving a balance due to her of $202,215.  Her Honour’s orders required the payment to the wife of $138,000.  The effect of this order will be that the wife should receive an extra $64,215 which I will round down to $64,000.  In order to give effect to that figure I would vary the existing orders by substituting for the figure of $138,000 referred to in her Honour’s orders number 12 and 17, the sum of $202,000.

1. The husband has requested 90 days to pay the additional sum of $64,000 and there is no objection to that latitude being shown by the Court, and accordingly I would make orders that will reflect that concession.

HOLDEN J: 

1. Yes, I too would allow the appeal.  I agree with the orders proposed by the presiding Judge for the reasons given by him and have nothing to add.

WATTS J: 

1. I too would allow the appeal.  I agree with the reasons given and the orders proposed by the presiding Judge.  I add that I give no weight, in this case, to the matter referred to in paragraph 17.

KAY J: 

1. The orders of the Court will be:

1.    The appeal be allowed.

2.    Order 12 of the orders made by Stevenson J on 9 March 2005 be varied by adding to the first sentence the words “and within three calendar months of this date a further sum of $64,000, and by 9 March 2006 a further sum of $64,000.

3.    There will be orders for each party for certificates under the Federal Proceedings (Costs) Act.

I certify that the 24 preceding
 paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.

 Associate