S & S

[2005] FamCA 1195

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA
AT BRISBANE No. (P) BRF 2978 of 2004

BETWEEN:
S

Applicant Wife

AND:

S
Respondent Husband

REASONS FOR JUDGMENT

BEFORE THE HONOURABLE JUSTICE CARMODY

Date of Hearing: 18 August 2005.

Date of Judgment: 17 November 2005.

Appearances: Mr. Page of Senior Counsel, instructed by MacDonnells, Solicitors, of 14/259 Queen Street, Brisbane, Qld, 4000, appeared on behalf of the Applicant Wife.

Mr. Kirk of Senior Counsel, instructed by Evans & Company, Family Lawyers, of PO Box 7117, Gold Coast MC, Qld, 9726, appeared on behalf of the Respondent Husband.

Name of Case:  S AND S
File Number:  BRF 2978 of 2004
Date of Hearing:                 18 August 2005
Date of Judgment:              17 November 2005
Coram:  Carmody J

Catchwords: FAMILY LAW – PROPERTY SETTLEMENT – General principles of adjustive jurisdiction under Family Law Act 1975 (Cth) – The s 79 process – “breadwinner” vs “homemaker” contributions – significance of substantial initial contributions in context of marriage of average duration.

Legislation:Family Law Act 1975 (Cth), ss 43, 72, 75(2), 79, 81, 117(2A)

Cases considered: Aleksovski and Aleksovski (1996) FLC 92-705

Baumgartner and Baumgartner (1987) 164 CLR 137
Beneke and Beneke (1996) FLC 92-698
Biltoft and Biltoft (1995) FLC 92-614
Brandt and Brandt (1997) FLC 92-758
Bremner and Bremner (1995) FLC 92-560
B & R (Unreported, Full Court appeal No. EA 41/93, Ellis, Lindenmayer and Bell J, 21 September 1993)
Calverley v Green (1984) 155 CLR 242
Chorn and Hopkins (2004) FLC 93-204
Clauson and Clauson (1995) FLC 92-595
Collins and Collins (1990) FLC 92-149
Crawford and Crawford (1979) FLC 90-647
Dawes and Dawes (1990) FLC 92-108
Dickson and Dickson (1999) FLC 92-843
  Elias and Elias (1977) FLC 90-267
Evans and Marmont (1997) 41 NSWLR 70
Eves v Eves [1975] 3 All ER 768
  Farmer and Bramley (2000) FLC 93-060
  Ferraro and Ferraro (1993) FLC 92-353
  Fisher and Fisher (1986) 161 CLR 438
  G and G [2001] FamCA 1453
  GBT and BJT [2005] FamCA 683
Gissing v Gissing [1971] AC 886
Harris and Harris (1991) FLC 92-254
Hickey and Hickey (2003) FLC 93-143
Howlett v Neilson (2005) 33 Fam LR 402
Hunt and Zuryn (2005) FLC 93-226
Jordan and Jordan (1997) FLC 92-736
Kennon and Kennon (1997) FLC 92-757
  Lee Steere and Lee Steere (1985) FLC 91-626
  Mallet and Mallet (1984) 156 CLR 605
  McMahon and McMahon (1995) FLC 92-606
  Money and Money (1994) FLC 92-485
  Norbis and Norbis (1986) FLC 91-712
  Pettitt and Pettitt [1970] AC 777
  Phillips and Phillips (2002) FLC 93-104
  Pierce and Pierce (1998) FLC 92-844
  Robb and Robb (1995) FLC 92-055
  Roney and Roney (1979) FLC 90-709
  Rosati and Rosati (1998) FLC 92-804
  Shaw and Shaw (1989) FLC 92-010
Shewring and Shewring (1997) FLC 91-926
Waters and Jurek (1995) FLC 92-635
  Zyk and Zyk (1995) FLC 92-644

In her application for property settlement, the wife sought an order for a 50/50 division of property, as well as $500 per week for spousal maintenance. In his reply, the husband sought an order for property settlement in the proportion of 85/15 in his favour. Valuation issues included deduction of potential realisation costs as a liability and the notional add-back of pre-paid litigation-related costs.

Held

1. The discretionary power in s 79 to alter property interests between spouses fulfils a remedial role in family property law by preventing economic anomalies which might otherwise occur because of the circumstances of the marriage or its breakdown if the court made no order in relation to the income, property or financial resources of the parties. It is justified on at least five possible grounds - intention, contribution, reliance, partnership and need.

2. Because, as a matter of settled principle in Australia, there is no discrimination between spouses or their respective roles, financial contributions made to the wealth of a marriage from business revenue, investment returns or work for wages are of no greater value in terms of quantum than those in kind contributions made to the welfare of the family in a domestic context.

3.    The domestic activities of a wife must be assessed in financial terms and given substantial, not merely token, monetary value and can be found to equate with the income earning activities of her husband after a comparatively short period if she undertakes particularly significant domestic responsibilities such as, for example, bearing and looking after children within a few years of marriage.
4.    Likewise, a substantial homemaker and child-care contribution during a marriage that lasts a significant period of time can even justify a share of the property brought into, or acquired after the end of, a marriage.
5.    The difficulty of reflecting substantially disproportionate contributions at the beginning of the marriage in orders directed to the division of the property at the end of the marriage is, as the Full Court recognised in Zyk, still an acute one. It is ordinarily just and equitable that the differential be treated as significant but cases, such as Crawford; Money; and Bremner, emphasise that the disparity may be eroded over time and/or by the contributions of the parties during the course of the marriage. How and to what extent this is done is a difficult problem and one which is not susceptible to precise analysis. That is largely because it depends upon a number of variables, such as the initial difference, the use subsequently made of those assets, whether or not they have increased in value, due to the efforts of the parties, or external forces, the length of the marriage, and the size and impact of other contributions made in the intervening period (cf. Pierce and Clauson).

6. There may be cases where (a) it is appropriate to assess the contributions of the parties by reference to their direct financial contribution or; (b) an order which results in returning to each party that which they contributed directly would be just and equitable. However, this is not such a case.
7. The wife gave birth to and reared two children during the marriage. Her contribution based award must not be limited to an amount which puts her back on her feet or where she would have been if the parties had never met. It should recognise that, notwithstanding its shorter than anticipated duration, the marriage has given her a reasonable expectation that her life as once again a single woman (now with children) need not revert to what it was before her marriage. This expectation should not be disappointed.

8. The wife made both an indirect financial and direct non-financial contribution by fulfilling her role as home maker and parent, thus freeing the husband up to involve himself fully in the business and increase its productivity and profitability.
9. The parties represented to the taxation authorities that the wife was a bona-fide employee of the business operated by the husband and was paid a salary as such. Consequently, the husband or his business paid less tax than he (or it) was actually liable for. Thus, she also made a significant direct financial contribution by reason of the wage paid to her as a result of her employment by the husband’s business.
10. The parties’ overall contribution during cohabitation had been different but was of equal value.

11. However, taking into account the disparity of assets brought into the marriage, the length of the marriage itself, and the parties' post-separation contributions, particularly by the wife, in relation to the two children of the marriage, the wife's overall s 79(4) contribution to the current value of total net assets is assessed at 20 per cent.
12. This adequately reflects the husband’s very substantial and unmatched initial capital contribution (which should be regarded as representing about 60 per cent of the current value of the parties' net assets), the use made of it and its ongoing significance over the course of the marriage, as well as his considerable income contribution over that time. It is also intended to recognise and reward the wife’s indirect contribution to the appreciated value of the husband’s business and other assets and to his increased earning capacity by the support she provided through business discussions and by allowing him the freedom and giving him the encouragement to continue its operations, as well as the fact that she allowed substantial savings to the parties by accepting house-keeping as a wage and expenses for herself and her children as distributions, in addition to reflecting her significant homemaker contribution during the marriage and the primary care-giving role she played in relation to the two children of the marriage on an ongoing basis even after the marriage failed.
13. There are a number of well-established bases for making adjustments to contribution based elements on account of s 75(2) factors. The most relevant here are those in pars (b), (c), (d), (e), (k), (l), (n), (na) and, insofar as the husband’s Robb claim is concerned, (o).
14. It is clear that s 79(4)(d) and (e) is not a source of social engineering or a back door method for sympathetic judges to even up the parties financial positions. Nevertheless, the obligations of the parties to a marital relationship lasting for "a not insignificant period" of five years or more do not end with the failure of the marriage (Kennon at 84,303).
15. The paragraphs of s 75(2) are intended (among other things) to compensate a spouse for diminished earning capacity as a consequence of the role division in the marriage, provide adequately for a spouse who continues in the role of being primary care-giver of children, divide superannuation fairly as an economic benefit built up during the course of the marriage, and remedy wrongful conduct of a spouse in diminishing the assets available for distribution
16. The rationale for making an adjustment pursuant to par (b) of subsection 75(2) is to be found in what Fogarty J had to say in Waters and Jurek at 82,378 - 823 and it is clear from Collins that, in the context of the court's discretion under s 79, the application of s 75(2) factors is not limited to increases on the basis of financial need and the effects of the different roles played by the parties in this marriage.
17. There is no rule of law or discretionary principle requiring some causal connection between economic discrepancies and the marriage relationship to activate s 75(2)(b): cf. Guest J in Farmer and Bramley at 87,981 and Kay J in the same case, as well as the comments of the Full Court in Dickson.
18. One of the major (unstated) objectives of an adjustment is meeting the adequate housing needs and reasonable living standards of any children of the marriage via s 75(2)(d) and (e).
19. Thus, even where the marriage is a relatively short one, securing a reasonable standard of living (having regard to all the circumstances, including the asset wealth of the non-resident party) for the parent caring for young children of the marriage, is a legitimate quantifying principle.
Introduction

This is a defended property settlement and spousal maintenance application by the wife.
There are five major issues:
(i)        the size and makeup of the pool of property;
(ii)       the comparative value of the wife’s homemaker contribution;
(iii)her entitlement to an adjustment for disparity in post-separation economic positions and other factors;
(iv)      the appropriate distribution and proper form of orders;
(v)the husband’s liability to pay lump sum or periodic spousal maintenance.
In her amended application filed 13 July 2005 the wife seeks 50 per cent of the parties' net assets and $500 a week spousal maintenance. However, Senior Counsel for the wife submits that a just and equitable order would (a) provide for the property to be divided as to 40 per cent to the wife and 60 per cent to the husband (b) involve the provision of the former matrimonial home (c) payment of periodic payments to the wife, as well as (d) a splitting order in relation to the superannuation of the husband to make up the difference. In the event that the amount payable to the wife exceeds 10 per cent of the pool, Senior Counsel for the wife suggests that further submissions on the form of orders and costs should be heard on a date to be advised.
In a Form 1A filed on 10 February 2005 the husband concedes a maximum 15 per cent of the pool to the wife in cash or property. It is not clear whether this is inclusive of lump sum maintenance or not. At trial, Senior Counsel for the husband argued that it could not possibly be just and equitable for a wife to take any more than 10 per cent of the asset pool which was built up by the husband over his working life in circumstances where the husband was aged 43 at commencement and had devoted the previous 28 years of his working life to create a business from scratch in 1984 so that it was making $200,000 a year plus in profits, whereas the wife at 38 had a car, some furniture and $9,000 in debts and was in need of assistance to help raise her two sons of a previously failed marriage. He submitted, however, that in the event the amount payable to the wife was more than $200,000 (approximately 10 per cent of total net assets), the husband would seek to make up any deficit by way of a superannuation split.

The Section 79 process

Australia is a separate property regime. Marriage itself does not affect the property interests of spouses.
Under the general law the ownership rights of parties are determined by their respective contribution in line with the established legal principles and equitable doctrines discussed by the High Court in Calverley v Green. [1] In the absence of any evidence or rule to the contrary, legal title is presumed to be held beneficially on trust - resulting, implied or constructive - in proportion to the financial or other recognised contribution made to the purchase, improvement or conservation of the property in question.
[1] (1984) 155 CLR 242.
Whether a person, including a registered owner of the legal estate, acquires any equity in disputed property, despite not having provided any funds to acquire it, depends on the actual or presumed intention of the actual purchaser or, in more modern times, the demands of equity and good conscience.
However, section 79 of the Family Law Act, 1975 enables a judge exercising matrimonial jurisdiction in property proceedings between former spouses to make "appropriate" orders altering their existing interests in property by transfer or settlement if (and only if) it is "just and equitable" in all the circumstances to do so.
The adjustment power in s 79 fulfils a remedial role by preventing economic discrepancies and inequalities which might otherwise occur because of the circumstances of the marriage or its breakdown if the court made no order in relation to the income, property or financial resources of the parties. [2] It is justified on at least five possible grounds - intention, contribution, reliance, partnership and need.
[2]Patrick Parkinson, "Judicial Discretion, the Homemaker Contribution and Assets Acquired After Separation", (2001) 15 Australian Journal of Family Law, 155 at 168.
As Patrick Parkinson explains [3]:
"Intention issues arise when the parties' clear enough intentions with regard to the ownership of the property are not reflected in the legal title. Contribution issues arise where the ownership of the party does not reflect fairly the contributions made by the other party which have a nexus with the acquisition, maintenance or improvement of the property. Reliance issues arise from such factors as sacrifices that (mostly) women make by adjusting their workforce participation to care for the home and family on an assumption about the stability and permanence of the relationship (and encompasses other related justifications of vulnerability and dependency). Partnership as a justification approaches the issue of property alteration in terms of the commitment to equality and the sharing implicit in the notion of marriage as a joining of lives. Need as a justification flows from the commitment of life-long mutual support which has traditionally been inherent in the marital relationship. This justification is different from reliance because it assumes no causal link between the marriage and the reason for the need".
[3]Patrick Parkinson, Quantifying the Homemaker Contribution in Family Property Law, (2003) 31 Federal Law Review 1 at 8.
All these and other matters are covered in subsec 79(4) and the 16 paragraphs of s 75(2).
Pars (a) and (b) of sub-s 79 (4) relate to the past contribution of the parties, direct and indirect, to their accumulated wealth, whereas par (c) refers to the contribution made by each of them to the overall welfare of the family, including as parent or homemaker. The contribution in each category, which need not, and often will not be financial, must - not merely may - be considered.
The present and future needs, together with other relevant s 75(2) factors, including the financial means, resources and earning capacities - actual and potential - and future needs of the parties are also mandatory considerations by virtue of par (4) (e). Other subsidiary matters are mentioned in pars (d), (f), and (g) of sub-s (4).
The basic rationale for the power to alter private property interests on separation or divorce in Australia, however, lies in the binding nature of the marital relationship and its hallmark features of "give and take". Marriage in this country is "an institution" involving the union of a man and woman to the exclusion of all others, entered into voluntarily for life: see s 43 of the Family Law Act. It is, first and foremost, a sacred covenant. Couples who marry, unlike those who merely cohabit, solemnly commit to each other in the presence of witnesses, for better or worse, richer or poorer, in sickness and in health until death.
Included in the marriage vows is the promise, reflected in s 72 of the Act, to always maintain the other to the extent of their respective means and needs: cf. Evans and Marmont .[4] Spouses spend their lives together as a socio-economic unit or partnership of equals.[5] They do not combine merely with a view to profit but dedicate their lives to each other and to such worthy pursuits as raising a family and making a meaningful contribution to society as a whole.
[4] (1997) 41 NSWLR 70 at 79 re: de facto relationships.
[5] Ferraro and Ferraro (1993) FLC 92-353 at 79,579.
There are, as the Full Court observed in Kennon, [6]
" . . . a myriad of matters, large and small, which go to make up that union and differentiate it from more casual transitory relationships. It means sharing the minutiae of family life, support during good and bad times, care and intimacy . . . It - that is, marriage - is an intimate sharing of mutual but diverse talents for . . . joint benefit".
[6] (1997) FLC 92-757 at 84-299.
Consequently, value is accorded to the "emotional" as well as the more "tangible" contributions of the parties to each other. Weight is given to "the realities of married life" and the different "qualities" which each brought to the marriage.[7]
[7] at 84,299-300 per Fogarty and Lindenmayer JJ.
Parenthood also has major financial implications for couples who marry and, according to Professor Parkinson, is one if not the most important justifying principles for the alteration of family property interests and, because of withdrawal from work-force participation of the homemaker (usually the mother) to meet child-care needs, is a primary concern in evaluating the par (c) contribution. [8]
[8]Parkinson Fed. Law Rev. at 13.
Typically, married couples divide roles and responsibilities and reciprocal duties of devotion between themselves. They perform different but complementary rather than competitive functions, and choose to live in a way that will enable them to attain their common goals, both as individuals and a family, expecting their relationship to last a lifetime: Waters and Jurek [9].
[9] (1995) FLC 92-635 at 82,379.

Thus, by and large, marriage is a joint venture where parties can expect to cushion each other from the winds of misfortune that blow during the course of their relationship. The degree of the buffer may depend on how much individual sailing they do without consultation or indeed contrary to the wishes of the other: Harris [10]; Beneke.[11]
[10] (1991) FLC 92-254.
[11] (1996) FLC 92-698.
Each party expects the other to contribute as much as they can in their chosen or allocated sphere. They do not keep a running record or account of who does what for the overall benefit of the family. What each partner gives or gives up is not assessed in purely monetary terms or to the extent that they have financial consequences. To paraphrase the contemporary American poet, E. E. Cummings, what is done by one alone is done for the other. The degree of effort counts for more than the actual results achieved. What matters most is whether each of them pulled their weight and shouldered their fair share of the burden.
In Shewring[12], Nygh J emphasised the importance of evaluating the respective efforts of the parties rather than the results they achieved. His Honour expressed the opinion that any qualitative assessment of contribution should be based on the principle that each party should make such contribution as can reasonably be expected having regard to the nature of the party's capacity, the ability of each of the parties and expectation of the spouses.
[12] (1997) FLC 91-926 at 79,572.
The s 79 exercise, therefore, involves a global assessment of the proportionate responsibility of each party for the acquisition, maintenance and improvement of the property which represents the fruits of the totality of their joint efforts in their diverse but equally valuable roles in the marriage partnership[13], quantifies their respective contribution to the accumulated wealth and overall welfare of the family, apportions the gains and losses they made, compensates them for unmet expectations or lost opportunities and misplaced reliance on the strength of assurances about the permanence and stability of the relationship, and provides for their likely future financial needs.[14]
[13] Mallet and Mallet (1984) 156 CLR 605 per Deane J.
[14] Parkinson, Fed. Law. Rev. at 10.
The idea of assessing contribution goes back to the late 1960's and early 1970's when the House of Lords was developing the doctrine of trusts in cases such as Pettitt and Pettitt [15] and Gissing v Gissing[16], which held that some kind of trust could be inferred where former spouses or partners had an implied common intention to share ownership of the disputed property arising from contributions that were referrable, directly or indirectly, to the acquisition, maintenance or improvement of the disputed property.
[15] [1970] AC 777.
[16] [1971] AC 886.
As that field of law developed, it was held that a party could contribute "indirectly" to the acquisition of property by bearing other household expenses, such as paying for the groceries, while the other spouse paid the mortgage instalments.[17] In this way, contributions were linked to the purchase price or maintenance costs of the property. A wife's work as homemaker was an indirect contribution because it freed the other spouse up for "bread winning" related activities.
[17] Eves v Eves [1975] 3 All ER 768 at 772 per Lord Denning MR.
Caring for the daily needs of the family, including children, represented an indirect investment in the earning capacity of the primary income earner on behalf of the partnership and his success in the workplace is to a large extent their success as a couple and the marriage as a joint venture.
The domestic activities of one spouse could properly be regarded as assisting in - and thus as contributing towards - the acquisition of property by the other spouse through his or her business activities under par (b). The wife who looks after the home and family was seen as contributing as much to the parties' property as the wife who went out to work.
This approach was reflected in the original provisions of s 79 of the Family Law Act. [18]
[18]It was not until much later that the law of constructive trusts in Australia developed to the point that courts of general jurisdiction began taking much the same approach to property rights alteration in other domestic situations: see, for example, Baumgartner (1987) 164 CLR 137, where the person claiming an interest in it had made no direct monetary contribution to the purchase, improvement or conservation because it would have been unconscionable for equity to deny the financial interest that had accrued to the claimant through the apportionment of pooled household income between living expenses and wealth accumulation.
However, since amendments in 1983, as well as being given credit under s 79(4)(b) for the non-economic contribution her efforts make to property by, for instance, promoting the success of a business [19] or to the extent that she frees her husband to earn the income, save on expenses, and build wealth, a party's contribution as homemaker and parent is simultaneously recognised and assessed in its own right under par (c), irrespective of whether it had any indirect nexus to property or not.
[19] Dawes and Dawes (1990) FLC 92-108.
This important change accentuates the partnership aspect of the marital relationship and places a quantifiable monetary value on family welfare related efforts - independently of those made by the breadwinner - even though they did not actually generate income or accumulate capital.
The par (c) contribution is, as Patrick Parkinson points out, not simply about housework and childcare but “about ensuring that a spouse is not economically disadvantaged by the role specialisation during the course of a marriage”. It is not really concerned with role performance and does not simply measure the quantity or quality of the contribution having regard, not merely to what is given but also to the cost to the party giving it. Nor is the homemaker contribution quantified solely by the comparison by the complementary efforts of the other partner. Thus having domestic help does not disqualify a party from being a homemaker in the relevant sense.[20]
[20] Roney and Roney (1979) FLC 90-709 at 78,789.
The value of the homemaker contribution is now ascertained without any external point of comparison with property (whenever acquired) on the basis of the contribution of the parties to the marriage as a whole and to the effort they made rather than their economic achievements. The "what" a homemaker contributes tends to be more important than the "what to".
This has led to a respectable (and growing) body of opinion that non-economic contributions to the welfare of the family do not provide a proper legal basis for altering property interests and that par (c) of subsec 79(4), unlike pars (b) and (c), has no justifying principle.[21]
[21]P. Parkinson, "Reforming the law of Family Property", (1999) 13 Australian Journal of Family Law, 117 at 126.
Parkinson, for example, argues that "…one cannot express contributions in percentage terms without explaining the nexus between the contribution made and the fund out of which the assessed contribution is a percentage. [22]
[22]op cit at 126.
Dickey [23], suggests that the justification probably lies not in what the contributor, most often the wife, has done to promote the welfare of the family in the past, but in the effect that the contributions have had, especially as a result of foregoing employment opportunities upon the spousal's present and future economic position. To this extent, par (c) should be aligned not with the contribution considerations of pars (a) and (b) but " . . . with the general maintenance considerations of pars (d), (e) and (f)".
[23]Anthony Dickey QC, The Moral Justification for Alteration of Property Interests under the Family Law Act, (1988) 11 UNSWLJ.
Whatever legal basis, par (c) does or does not have its role and function within the alteration process is clear enough. The contribution of the stay at home mother to the marriage partnership must be assigned a financial value not only by reference to property acquired during the course of the marriage but against the current value of the parties' combined net assets at the date of hearing.
Giving all types of contribution equal weight, irrespective of the roles undertaken in making them, will usually - but not always - result in an equal division of the fruits of the joint efforts and investments of the parties during the period of the marriage but there is, of course, no general rule of equality as a starting point nor any presumption that "equity is equality" even in long marriages. [24]
[24] Mallet and Mallet (1984) 156 CLR 605.
In the leading High Court decision in Mallet[25], Mason J (with whom Deane J concurred) noted that in conducting the exercise of evaluating and balancing financial and homemaker contributions (difficult though it may be in some cases) it is open for a judge to conclude on the facts of the case that:
" . . . the indirect contribution of one party as homemaker or parent is equal to the financial contributions made to the acquisition of (the matrimonial home or superannuation benefits or pension entitlements) on the footing that that party's efforts as homemaker and parent have enabled the other to earn an income by means of which the home was acquired and financed during the marriage. To sustain this conclusion, the materials before the court will need to show an equality of contribution - that the efforts of the wife in her role were the equal of the husband in his".
[25] (1984) 156 CLR 605.
Mason J also went on to express the view that a conclusion in favour of equality of contribution may not be as readily reached where the property in issue consists of assets acquired by one party whose ability and energy has enabled the establishment or conduct of an extensive business enterprise to which the other party has made no financial contribution and where the other party's role does not extend beyond that of homemaker and parent.
Every case depends on its own facts and what is important is somehow to give a reasonable value to all the elements that go to making up the entirety of the marriage relationship.[26]
[26] cf. Aleksovski (1996) FLC 92-705 per Kay J (dissenting) at 83,443.
However, it is plainly not the case that the contributions of the parties should be considered as making it just and equitable that there be an order only concerning increases in the value of assets over and above initial or post-separation contributions.[27] Or, putting it another way, where the value of contributions during a relationship is roughly equal in a case where the value of the assets at the beginning and end of the relationship is much the same, the party making a substantially greater initial contribution cannot expect to receive it back undiminished.
[27] Howlett v Neilson (2005) 33 Fam LR 402 at 410 [35] per Hodgson JA.
28 (2005) 33 Fam LR 402 at 410 [36].
As Hodgson JA pointed out in a recent de facto property case of Howlett v Neilson [28], a woman who spends 10 years as a homemaker in a 10 year relationship in which substantial assets of, say, $5,000,000 brought in by the other party have not increased markedly by the time it ends, may be entitled to a distribution of property because, although the contribution of the parties was equal in wealth and welfare terms, it has cost her a lot more in terms of lost opportunities for developing skills and career advancement.
The domestic activities of a wife must be assessed in financial terms and given substantial, not merely token, monetary value and can be found to equate with the income earning activities of her husband after a comparatively short period if she undertakes particularly significant domestic responsibilities such as, for example, bearing and looking after children within a few years of marriage. This inevitably means that in some cases a homemaker contribution is rewarded out of pre-marriage or business assets.[29]
[29] See, for example, Shaw and Shaw (1989) FLC 92-010.
Likewise, a substantial homemaker and child-care contribution during a marriage that lasts a significant period of time can even justify a share of the property brought into, or acquired after the end of, a marriage.
The difficulty of reflecting substantially disproportionate contributions at the beginning of the marriage in orders directed to the division of the property at the end of the marriage is, as the Full Court recognised in Zyk [30], still an acute one. It is ordinarily just and equitable that the differential be treated as significant but cases, such as Crawford [31]; Money [32]; and Bremner [33], emphasise that the disparity may be eroded over time and/or by the contributions of the parties during the course of the marriage. How and to what extent this is done is a difficult problem and one which is not susceptible to precise analysis. That is largely because it depends upon a number of variables, such as the initial difference, the use subsequently made of those assets, whether or not they have increased in value, due to the efforts of the parties, or external forces, the length of the marriage, and the size and impact of other contributions made in the intervening period (cf. Pierce [34] and Clauson [35]).
[30] (1995) FLC 92-644 at 82,517.
[31] (1979) FLC 90-647.
[32] (1994) FLC 92-485.
[33] (1995) FLC 92-560.
[34] (1998) FLC 92-844.
[35] (1995) FLC 92-595.
In Lee Steere[36] for example, the wife’s contribution over an eight year marriage in which there were three children gave her 20% of a working farm which her husband had brought into the marriage by way of contribution with a further adjustment of nearly 5% taking account of s 75(2) future needs factors.
[36] (1985) FLC 91-626.
And, in Kennon[37] itself, a childless couple cohabited for a period of about five years. At the time of the trial the husband had net assets of about $8.7M. He had much the same at commencement. All the assets which existed at the date of hearing either existed at the time cohabitation began or could be traced to pre-existing assets. The wife had domestic assistance in the course of the marriage. The Full Court awarded the wife $400,000 by way of contribution and $300,000 for s 75(2) factors.
[37] (1997) FLC 92-757.
Similarly, a spouse can make a homemaker contribution entitling her to a share of assets brought into the marriage by the other even though the effect of the marriage partnership has been mainly to dissipate rather than accumulate wealth.[38]
[38] Shaw and Shaw (1989) FLC 92-010.
In Shaw the parties cohabited for 12 years. The husband had considerable assets at the start of the marriage which were depleted by an extravagant lifestyle while the relationship lasted. There were no children. The $2M that was left to be divided was much less than the amount the husband had at the beginning. The wife had little earning capacity. On appeal, she was given 25 per cent of the reduced pool.
Thus, the modern law of contribution treats the allotted or preferred role of each party to a marriage as being of equal notional value and measures both according to the overall financial success (or failure) of the marital partnership. The direct financial contribution of a breadwinner is not seen as any more significant, in dollar terms, than the contribution made during the marriage by the homemaker.
Nonetheless, there needs to be a clear understanding of the differences between assets acquired by the joint but different efforts of the parties (including through caring for the home and family) representing the fruits of the marital partnership on the one hand and other property acquired at other times and by other ways and means because the principle that the domestic activities of one spouse can constitute an indirect contribution to property acquired by the other has obvious limits and, while equal division of joint assets, whether matrimonial or business, acquired by, through or during the marriage partnership, may be justified by the principled application of s 79, the quantification of the parties' proportionate shares pre-marriage, inherited or post-separation or other assets unconnected with the marriage relationship will usually reflect the general law of property rather than the special family law rules dealing with property settlements and transfers between former spouses.
It follows that if one spouse brings substantial assets into the marriage but the other does not, the difference in the parties' initial contribution to property is ordinarily regarded as significant. The weight of value to be attributed to a significant contribution at the end of the marriage, however, depends on the totality of each party's contributions to their property and to the welfare of the family during the marriage partnership. It is not unusual for the court to attribute diminishing significance to initial contribution of valuable property by one spouse as the period of cohabitation lengthens and, thus, the contributions, including the domestic contributions, of the other spouse increase.
Moreover, the extent to which a spouse's domestic activities contribute to his or her partner's business activities depends upon the circumstances. In some cases, a spouse's domestic activities may be regarded as making a very significant contribution to his or her partner's business activities with the result that the contributions of each may be treated as equal, especially when taking into account these same domestic contributions under par (c). This may well be the situation, for example, where the marriage was of long duration, or where the extent of one spouse's business activities not only imposed an extra domestic burden on the other but could not have been carried out unless the other assumed that extra burden. [39]
[39] Ferraro and Ferraro (1992) 11 Fam LR 124 at 171.
40 (4th ed) Law Book Co, 2002 at 712.
In other cases, however, a spouse's domestic activities may not be regarded as having made such a substantial contribution towards his or her partner's business enterprises and accumulated wealth, with the result that even taking into account the same domestic contributions as contributions to the welfare of the family under par (c) a spouse's contributions through business activities would outweigh those of his or her partner through domestic activities. This may particularly be the situation where the spouse's business activities involve the exercise of special skills, enterprise or expertise.
As Anthony Dickey, QC notes in his text, Family Law[40], the principle that domestic activities of one spouse may in their own way equate with the income earning activities of the other, is usually found to apply "…only after a marriage of reasonable duration".
The exercise of the power conferred by these provisions carries with it an extremely broad, but not unlimited, discretion, conditioned on the taking into account of the matters specified in subsection 79(4) and, insofar as they are applicable, the social policy considerations in sections 43 and 81 of the Family Law Act.[41] There is no authority to equalise the financial strengths of the parties nor, subject to s 75(2)(o), to correct economic anomalies by reference to notions of fault or blame. On the contrary, subsec 79(2) expressly requires the court to stay its hand and refrain from making any order for property division unless the alteration of existing property rights is just and equitable. Sometimes the relevant concepts of justice and equity will favour the status quo.
[41] Norbis and Norbis (1986) FLC 91-712.

The orthodox approach to exercising the adjustive jurisdiction under s 79 involves four indispensable and interrelated steps. [42]
[42] Hickey and Hickey (2003) FLC 93-143.
The first is to identify and value the parties' net property and financial resources at the date of hearing.
The second is to assess the entitlements of each party based on pars (a), (b) and (c) contribution.
The third is to decide whether there should be any adjustment to the contribution-based entitlement by virtue of any other relevant factors, such as those in s 75(2).
The second and third steps do not involve a micro accounting or audit type process undertaken in the same way as the preparation of a balance sheet in which there are a series of debits and credits. [43] It is more a matter of guided judgment than computation or mathematical precision.
[43] Dickson and Dickson (1999) FLC 92-843 at 85,869.
The fourth and final step requires the Court to consider the provisional outcome of the first three steps, and to make orders which, in both structure and substance, achieve a just and equitable overall result [44] which depends not so much on the percentage assessment, but on the real impact they have in actual money terms. [45]
[44]          Phillips and Phillips (2002) FLC 93-104 at par 66.
[45]          Clauson and Clauson (1995) FLC 92-595.
The goal is to finally and fairly terminate financial relations between divorced or separated spouses by determining and, if necessary, altering their respective interests in their accumulated property to achieve justice and equity.
Importantly, however, any interest a spouse may have in the property of another party to the marriage is not automatically created by common intention, monetary or non-monetary contribution to the wealth or welfare of the family unit, lost opportunities, or by future financial needs but by the making of the order and until one is made a spouse has no greater rights in matrimonial property than he or she would otherwise have had.
In Fisher [46], Mason and Deane JJ said at 453:
"For present purposes what is important is that s 79 authorises the making of curial orders altering interests in property with a view finally to determining the financial relationship between the parties of the marriage and avoiding further proceedings between them : s 81. Orders so made are to endure beyond the termination of the relationship; indeed, they are generally made after the relationship has ended. They fall within the central area of a marriage power because they create rights (emphasis added) which are grounded in that relationship. True it is that orders made under s 79 do not give effect to antecedent rights arising by virtue of the marital relationship. Instead they perform a dual function of creating and enforcing rights in one blow so to speak . . . However, the rights are created by virtue of the exercise of a judicial discretion which necessarily takes account of the considerations arising out of the marital relationship . . . . They are rights which would not have come into existence but for the relationship . . . [T]hey have their source in that relationship, though they are created by a curial order, and they are intended to endure beyond termination or dissolution of the marriage or death of a party".
[46] (1986) 161 CLR 438.

The property pool

The single valuer assesses the net worth of the parties to be $1,422,775 before allowance for notional realisation and taxation costs.
The parties have financial interests in three business entities:
-E Su Pty. Ltd. as Trustee for the S Family Trust;
- E So Pty. Ltd.; and
- S Superannuation Fund.
The trust services the entertainment industry by providing equipment for productions including corporate conferences, exhibitions, award presentations and outdoor events. It operates from premises owned by the husband and the S Unit Trustee on the Gold Coast.
The husband is the principal and controller of the trust which commenced operations in 1989 and has recently started to expand into the audio-visual industry. The income of the trust is generated from two sources, namely hire income and sales. According to the single valuer, the turnover and profitability of the trust has decreased each year since 2002 with a slight recovery in 2005. The valuer estimates the future maintainable earnings of the trust business to be $155,414 but assesses its net worth at $Nil.
All the shares in E So Pty. Ltd. are owned by the husband. The company has historically been used to receive distributions from the S Family Trust. It does not trade, has significant retained earnings, and is valued at $287,209. If the company was to be wound up the additional tax payable by the husband at the marginal rate of 48.5 per cent would be $75,905.
The units in the S Unit Trust are wholly owned by the S Family Superannuation Fund.
The trustee of the S Family Superannuation Fund is E Su Pty. Ltd. The only member of the fund is the husband. The principal assets are cash and units in the S Unit Trust.
Unit 1 of the Gold Coast business premises is owned by the S Unit Trust and S Family Superannuation Fund. It was acquired before cohabitation in 1996. Units 2, 3 and 4 are owned by the husband personally. Unit 3 is not used for purposes of the business and units 1, 2 and 4 are rented to the S Family Trust at a nominal rent.
Unit 1 has an agreed value of $304,935 (but up to 30 June 2005 was recorded in the books of account at $180,676; Unit 2 was bought for $95,000 back in 1991 and is worth $229,135; Unit 3 was acquired in he second year of the marriage in 2000 and is valued at $237,026, while Unit 4 was acquired in 2001 for $228,904 - totalling exactly $1M..
There are three valuation related findings to be made under this head. The first is whether alleged third party and family debts of the parties should be included as liabilities. The second is whether notional capital gains tax should be brought to account or not. The third is whether the legal costs of the parties should be added back.

The mother-in-law’s debt

The husband’s mother claims $22,000 as the unpaid balance of a series of loans totalling $32,000 to help the husband establish his business “many years ago”. (par 132-134 of her affidavit filed 15 July 2005). The loan is not evidenced in writing. No details of interest rate or repayment arrangements are disclosed. I could find no reference to the debt in the books of account of E Su Pty. Ltd., the S Family Trust or the husband’s personal tax records. It is not mentioned in the husband’s updated financial statement filed 15 July 2005 or in either of his affidavits.
An additional $110,000 loan in 2002 is, by contrast, included as an existing liability of the business in schedule 2 of exhibit 1, attracts 9 per cent interest and is being repaid monthly.
I have a discretion to disregard an alleged unsecured third party liability, entirely or in part, where it is too vague or uncertain or is unlikely to be enforced.[47]
[47] cf. Biltoft and Biltoft (1995) FLC 92-614.
I am not satisfied that this is a genuine debt or that the husband will ever be called upon by his mother to repay it. Accordingly, it will not be deducted from the gross assets in assessing the value of the pool.

The wife’s credit card debt and liability to son

The wife claims a debt of $3,000 on her Visa card and $1,088 as a third party loan from her son, D, in paragraphs 50 and 51 of her financial statement filed 13 July 2005. The evidence of the wife is that these amounts were incurred after separation to assist her with living expenses. The only income the wife had after November 2004 was from business drawings in the sum of $550 net per week. D is her second son of a previous marriage. Again, there is no reference to the loans in either of the wife’s affidavits. None of the usual details about how the loan to her son was incurred or how and when it is to be repaid is provided. There is no mention of periodic repayments at item 29 of page 4 of the wife’s updated form 13. There is no affidavit from D. I am not prepared to deduct the alleged debt to D on the inadequate information supplied. However, there is enough in relation to the credit card debt (which was not really challenged by the husband) to regard it as a liability. I infer from the information at item 30 of the updated financial statement that the credit card has been cancelled and that the wife is paying the debit balance off at the rate of $50 per week.

Pre-paid litigation costs

The wife argues that the $38,381 the husband has already paid his lawyers for their services in connection with these proceedings should be added back into the pool because that amount should otherwise have been available for distribution. The wife has not paid her legal expenses yet and, according to her updated form 13, she currently owes an estimated $90,000.
There are three clear categories of cases where the Court has determined that it is appropriate to notionally add back assets that no longer exist to the pool of current assets to avoid injustice to one of the parties. These cases are when the parties have already expended money on legal fees; where there has been a premature distribution of matrimonial assets; and where one party has embarked on a course of conduct which in effect or by design has reduced the value of the parties’ property.
The most recent discussion by the Full Court of the principles to be applied when determining whether to add back funds spent after separation to fund litigation was in Chorn & Hopkins (2004) FLC 93-204.
In that case their Honours, Finn, Kay and May JJ considered earlier authorities on the point and held that those decisions established that[48]:
[48]          at 79,322-23
“56   ...   While the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57.           If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party who has had the benefit of them.
58.  If funds used to pay legal fees have been generated by a party post separation from his or her own endeavours received in his or her own right (for example, by way of gift or inheritance) they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post separation income or acquisitions.
59.  Outstanding legal fees themselves are generally not taken into account as a liability.
60.  If in the exercise of the discretion it is determined that legal fees already paid should be taken into account as a notional asset, then normally any liability associated with the acquisition of the moneys used to pay the legal fees should also be taken into account.”
The approach taken by the trial judge in that case was found wanting because he failed to satisfy himself whether the money the husband used to pay his lawyers existed at separation or came from post separation borrowings or income and/or whether the wife had some interest in the fund.
The only evidence is that the husband’s costs were paid from pre-marriage savings which he also claims as an initial contribution. He cannot have it both ways. If it is an initial contribution then it became a matrimonial asset and did not remain his separate property. He is entitled to be credited with that contribution subject to the so-called erosion principle and countervailing contributions by the wife under par (a) of ss 79(4). The corollary of this, however, is that because it existed at separation the wife may be seen as having a legitimate interest in the fund.
I think the most appropriate course to take is to write back the amount of the pre-payment as a notional asset of the husband’s and leave the savings to be considered at step 2 when valuing the parties’ respective contribution to the marriage.

CGT and sales costs

The husband claims that notional CGT and sale costs on certain real properties of $110,333 and notional tax on retained business earnings of $75,905 be brought to account. The wife is opposed on the basis that the liability is too contingent or speculative.
The CGT and selling expenses relate to three factories owned by the husband and a fourth held by his superannuation fund. They have been purchased progressively since 1991 and are rented to the trading trust operating the husband’s light and sound company.
The circumstances in which tax and selling costs should be taken into account in valuing an asset were discussed by the Full Court in Rosati and Rosati (1998) FLC 92-804. The following guiding principles were identified by the Court at 85,043:
“(1)Whether the incidence of capital gains tax should be taken into account in valuing a particular asset varies according to the circumstances of the case, including the method of valuation applied to the particular asset, the likelihood or otherwise of that asset being realised in the foreseeable future, the circumstances of its acquisition and the evidence of the parties as to their intentions in relation to that asset;
(2)If the Court orders the sale of an asset, or is satisfied that a sale of it is inevitable, or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then, generally, allowance should be made for any capital gains tax payable upon such a sale upon determining the value of that asset for the purposes of the proceedings;
(3)If none of the circumstances referred to in (2) applies to a particular asset, but the court is satisfied that there is a significant risk that the asset will have to be sold in the short to mid term, then the court, whilst not making allowance for the capital gains tax payable on such a sale in determining the value of the asset, they take that risk into account as a relevant s 75(2) factor, the weight to be attributed to that factor varying according to the degree of risk and the length of the period within which the sale may occur;
(4)There may be special circumstances in a particular case which, despite the absence of any certainty or even likelihood of a sale of an asset in the foreseeable future, make it appropriate to take the incidence of capital gains tax into account in valuing that asset. In such a case, it may be appropriate to take the capital gains tax into account at its full rate, or at some discounted rate, having regard to the degree of risk of a sale occurring and/or the length of time which is likely to elapse before that occurs.”
The principle stated in paragraph (2) of the quoted extract from Rosati was interpreted by a differently constituted Full Court in the more recent case of G & G [2001] Fam CA 1453 as including income tax. Putting it briefly, without, I hope, over-simplifying the rule, for CGT and related outgoings to be included in a s 79 balance-sheet as a liability, there must be an intention by the owner to sell the subject property in the foreseeable future, or a significant risk that it will have to be sold in the short to mid-term even if final orders leave it in the hands of the liable party or the sale of it is not seen as an inevitable or probable consequence of family litigation.
The wife points to par 621 of the husband’s affidavit filed 15 July 2005 as clear evidence of his intention to continue operating and developing his light and sound business and asks me to infer that he is more likely to retain the Gold Coast factories as an investment than sell them.
Notably, the valuer was not advised of any plans to wind up the group or sell any specific assets within it.
I am satisfied that the factories in question were acquired as investments with a view to their ultimate sale for profit. However, I am not persuaded that the sale of all, some or any of them is intended, inevitable or even likely in the foreseeable future either as a result of the orders I make in these proceedings or in the ordinary course of the husband’s business.
According to its 2005 balance sheet, E So Pty. Ltd., which was used as a corporate beneficiary of the family trust for tax purposes, has retained profits of $291,943. Tax will be payable on the retained earnings (if they still exist) if and when the company is liquidated.
There is no indication that the company will be wound up. Turnover and profit improved slightly in 2005. The husband’s future plans do not suggest that he will sell the business, wind it up or access the retained earnings of E So Pty. Ltd. and thus incur tax liability by way of dividend.
Accordingly, neither the capital gains tax nor the notional tax on retained earnings or sale costs will not be taken into account for the purposes of valuing the factories or other business assets.
The distributable pool of superannuation and non-superannuation property of the parties therefore is:
Non Superannuation   $
1.        Former Matrimonial Home  425,000
2.        Interest in Property (Units 2, 3 and 4
Gold Coast business premises)       695,065
3.        S Group
(a)      Plant and equipment     3,727
(b)Interest in Related Entities:
(i)The S Family Trust
(E Su Pty. Ltd. ATF)
(ii)E So Pty. Ltd.  287,209
(iii)       Loan   50,955

Superannuation
Husband
S Superannuation Fund  385,819
(a)AMP Endowment Personal Super Plan   43,375
(c)Zurich Superannuation     11,360
(d)Colonial Super Retirement Fund   28,451
Wife
(a)Westpac Superannuation (A/C 1)   8,267
(b)Westpac Superannuation (A/C 2)   1,653

4.Bank Accounts
Husband –Westpac 9,068

5.Motor Vehicles
(a)Husband (included in Plant & Equipment of Business)
(b)Wife 11,000

6.Other Assets
(a)Furniture
- Wife   5,000
- Husband   10,000
(b)Jewellery of Wife   4,500
(c)Surrender Value of AXA Flexipol Life Insurance
of Husband9,929

(d)AMP Shares   9,604
(e)Taxation refund due to parties
- Wife   3,605
- Husband   10,173

Liabilities
(a)      School fees   (1,800)
(b)      Dental fees (Husband)   (7,000)
(c)       Wife’s Visa Card   (3,000)
Agreed Pool   1,963,787

Add-backs

(e) Legals paid by Husband 38,381
Notional Distributable Value 2,002,168

Contribution

The next step in the adjustive process is to identify and value the contribution made by each spouse to their property and the family.
On the basis the authorities he cites at par 2.2.5 of his written summary of argument, Senior Counsel for the husband contends that the short period of cohabitation, the wife’s negative financial position at the start, and the fact that much of her home-making parent contribution must be ignored, makes a percentage assessment exceptionally difficult. The disparity in what the husband brought in, the use to which it was put and the substantial earnings the business generated throughout dictate, in his submission, that the wife’s entitlement on contribution must be minimal viz, in the vicinity of 5 per cent.
Senior Counsel for the wife, in response, submits that appropriate contribution weighting would result in an award of 25 per cent of the disputed property to the wife, having regard to the benefits the wife’s home making duties gave to the husband by allowing him to develop the business to the stage it is at now and increase his future earning capacity. Senior Counsel for the wife asserts that in the course of the period of cohabitation the contributions of the parties were equal but that a 75/25 distribution in the favour of the husband on the basis of contribution would recognise his initial and post separation contributions and adequately cover any adjustment pursuant to s 75(2)(o) under the Robb principle.

Relevant history

The parties’ relationship lasted for seven years from 1997 to 2004. There are two children of the marriage, J aged 7 and S who turns 4 in October.
This was the wife’s second marriage. She has two older children JN and D who were 13 and 11 respectively when the parties commenced cohabitation. They resided with the parties and were supported by the husband as members of the one family without assistance from the wife's first husband.
When the parties met the wife had a telephone sales job whereas the husband was the proprietor of the business conducted by E Su Pty. Ltd. as trustee of the S Family Trust since 1984. He also had around $50,000 in savings.
The husband was the sole owner of the unencumbered fully-furnished former family home purchased in 1988 and a motor vehicle. He owned a factory (Unit 3) on the Gold Coast in his personal capacity.
In addition, the husband held AMP, Zurich and Colonial superannuation at the commencement of the relationship as well as having established his self-managed fund which had accumulated contributions from the husband’s income in previous years and owned the units in the S Unit Trust and factory premises (Unit 1) on the Gold Coast.
In the years 2000 to 2004 the trust acquired significant plant and equipment to the value of more than $1.4M.
The husband’s taxable income in 1997 was $227,471 and $144,786 in the following year. The net profit of the business in 1997 was $70,226 and $13,265 in 1998.
Net profits for the last four trading periods according to the single valuer’s report were:
2002$348,626
2003$53,810
2004$47,152
2005$24,675
The business is not as profitable today as it was in previous years. The assessed maintainable earnings of the business are $155,000 per annum.
The wife brought in her car, some furniture of disputed value, and debts to her sister ($8,000) and AGC ($1,500). Her liabilities exceeded her assets. She was 38 years of age. A $29,000 Mercedes motor vehicle was purchased by the husband for the wife’s day to day use in 1998.
The husband was the only source of income for the household via his business activities for the duration of the marriage which he was free to devote himself to with the wife's blessing and support.
The husband also made a welfare contribution by sharing some of the home making and parenting responsibilities for the children and taking time off from work to help with their birthing and rearing.
He provided financially for, and gave considerable support to, the wife's children from her first marriage, D and JN. He trained JN in the entertainment lighting industry for more than three years. The boys lived with the parties as part of their family from September 1997 until the wife moved out of the former matrimonial home in September 2004. However, this, if anything, is an adjustment rather than a contribution factor. [49]
[49] Robb and Robb (1995) FLC 92-055.
The services of a cleaning lady, maintenance of the yard, outside maintenance and assistance with internal domestic work were provided and paid for by the husband as required.
The wife’s role in the marriage was predominantly as homemaker and parent. She was also paid a “wage” by the business of $350 per week until October 2004. The wife's direct involvement in the business, however, was limited to some advice and late night discussions. Her income was used for household expenses and to pay off her pre-marriage debts. The wife also received “distributions” from the family trust of $133,356 over the period of cohabitation. This gave the trust a tax advantage. In November 2004 the wife received a tax refund of $16,000 as a result of PAYG tax paid by the business which she used for her own living expenses. Since then she has been paid $550 a week by the husband from business drawings for her financial support.
The wife has had the primary care of the children since final separation in September 2004, although the husband has had substantial contact and continued to maintain the wife and the children. Under consent orders the husband will have the children under his care for 40 per cent of the year until they finish school.

The assessment

The basic question for me in this case is : how are the husband's 'breadwinner' and business related and other efforts inside and outside the home to be compared with and measured against the work done by the wife over the same period inside the house in her role as primary parent and homemaker?
Just how difficult it is to answer that question correctly can be gauged to some extent by how far apart these parties are on the issue. Both are represented by senior counsel with long experience in this field. Yet one of them emphatically argues that an award of 5 per cent to the wife for contribution would be just and equitable; whereas the other is just as adamant that nothing less than a 25 per cent share will do.
What makes the assessment process especially problematic in this matter in contrast to others is that the marriage was relatively short (although perhaps more in the average range) [50] and the only significant direct financial contribution to property was made by the husband from his business interests and activities which were well-established before the relationship began.
[50]In 1996 the median duration between marriage and separation was 7.6 years. Of couples who divorced in that year, 37% separated within the first 5 years and a further 22% separated in the next 5 years - 1996 Marriages and Divorces Australia, ABS, Canberra, 1997.
An added complication is that, apart from the savings of $50,000, there is limited evidence about the value of the home, factory units, business plant and equipment and other, including superannuation, assets the husband owned at commencement. This makes it hard, if not impossible, to identify and quantify just how much of their appreciated value is attributable to the joint effort of the parties during their seven years together. This is not to suggest, however, that ascertaining each party's entitlement is simply a matter of comparing their financial situations at the beginning and end of their liaison and splitting the difference.
Finally, I am called upon to decide what kind and extent of property alteration, if any, the full-time parenting of two young children, one born early and the other late, in the relationship, justifies after the marriage has ended or, to put it another way, what weight or value should be accorded to raising children and maintaining the family on a full-time basis for six or seven years in the modern era?
The weight to be given to different contributions and the difficulty in comparing and valuing them was recognised by the Full Court in Ferraro [51] in the following passage at 79,572:
"The task in evaluating and comparing the parties' respective contributions where one party has exclusively been the breadwinner and the other exclusively the homemaker, is a most difficult one to perform because the evaluation and comparison cannot be conducted on a 'level playing field'. Firstly, it involves making a crucial comparison between fundamentally different activities, and a comparison between contributions to property and contributions to the welfare of the family. Secondly, whilst a breadwinner can be objectively assessed by reference to such things as that party's employment record, income and the value of the assets acquired, an assessment of the quality of a homemaker contribution to the family is vulnerable to subjective value judgments as to what constitutes a competent homemaker and parent and cannot be readily equated to the value of assets acquired. This leads to a tendency to undervalue the homemaker role".
[51] (1993) FLC 92-335.
52 (1990) FLC 92-108 at 77,729.
Later in the judgment the court adopted, with approval, the passage in Dawes[52], emphasising the significance in cases of this sort of the contribution which a wife and homemaker makes to the business assets controlled by the husband. The court went on to warn that a failure to recognise the fact that the wife's performance of her role as homemaker and parent during the relationship was not just a contribution under subsec 79(4)(c) but can also be a significant contribution under subsec 79(4)(b), can also result in an under-valuation of the wife's role.
The Ferraro marriage lasted 27 years, with the wife principally playing the role of carer in the home and the husband a very active and successful businessman. Their assets were assessed at $10M at trial and $12M on appeal.
Mrs. Ferraro received 37.5 per cent of the net assets from the Full Court instead of the 40 per cent awarded by the trial judge but little in the case to explain why one was within the range and the other not.
The outcome of the appeal suggests that where there is a very large pool of property in the order of millions of dollars after a long marriage to which one party has essentially made the homemaker contributions and the other by skill created those assets, recognition of those contributions will often produce a division approaching 40 per cent to the homemaker where the marriage is around 30 years, and perhaps 30 per cent where the marriage is around 20 years.
However, the marriage I am concerned with lasted 6 or 7 years and neither the tendency to equal division of family assets nor the guidelines in Ferraro apply. The duration of a marriage is relevant under par (d) of subsec 79(4) but may, of course, be highly significant in assessing pars (b) - (c) contribution too, because, as I mentioned earlier, the shorter the duration of the marriage the less weight may be attached to the domestic role. Conversely, where the marriage is of considerable duration the greater the likelihood that contribution by one party in the capacity of homemaker and parent will be treated as equal to the financial contribution of the other party even where that financial contribution has been a considerable one. [53]
[53] See Harris and Harris (1991) FLC 92-254.
But my task is to measure and value contribution not time. And what does the term "short marriage" mean anyway? Where in terms of years is the point between a wife who must expect less because her marriage did not last long enough and she who can expect a full entitlement?
There may be cases where it is appropriate to assess the contributions of the parties by reference to their direct financial contribution or that an order which results in returning to each party that which they contributed directly would be just and equitable. However, this, in my opinion, is not such a case. [54]
[54] cf. McMahon (1995) FLC 92-606.
The cases suggest that in a marriage of no great length a childless couple who make roughly equal contributions during the marriage will usually see a property order made leaving the bulk of the assets remaining with the party contributing them, where there are no other s 75(2) factors leading to a different result.
In Zyk, for instance, the parties were married for eight years. The wife's initial contributions were five times that of the husband. The couple had no children. Their net assets at trial were $806,452. A property division of 35 per cent to the husband and 65 per cent to the wife was upheld by the Full Court, which expressed the view that where parties start their marriage with little or no property their contributions during the marriage will usually be regarded as approximately equal.
In the case of GBT and BJT [55] - a so-called short marriage - the Full Court heard an appeal against a property settlement determination of 87.5 per cent in favour of the husband and 12.5 per cent to the wife, plus a further adjustment pursuant to s 75(2) of a net pool of assets totalling approximately $3,000,000, including within it the husband's substantial accountancy practice. The marriage lasted six years. Both parties had been married before but neither had any children. At the commencement of the relationship the husband was a partner in an accountancy firm that employed the wife as a secretary. She was 30 at the date of marriage. He was 48. The husband established his own practice shortly after the marriage. The wife worked in the business for three years before retiring. She had re-partnered and was earning a good wage at the time of trial. The husband had income of about $15,000 per month.
[55] [2005] Fam CA 683.
Allowing the appeal, Kay, Holden and Warnick JJ reduced the wife's contribution by 5 per cent and cut the s 75(2) adjustment in half, slashing her overall award from 17.5 to 10 per cent or 42.5 per cent of the pool.
In arriving at the conclusion that the contribution assessment was manifestly excessive, their Honours said at [58] - [60] :
". . . [the trial judge] found that the husband had clearly made the greater financial and non-financial contributions and although the wife had made the greater contributions as a homemaker that is only of marginal significance . . . " : (emphasis added).
"Having regard to such ultimate conclusions, as against the fact that 12.5 per cent of the assessed pool meant a payment to the wife on account of contributions of $395,917, we are of the view that the assessment was manifestly excessive. We consider that on the findings made, an assessment within a narrow band 5 - 7.5 per cent to the wife was the range of discretion.
Taking the most favourable to the wife and assessing her contributions at 7.5 per cent results in an assessment of 5 per cent less than that nominated by the trial judge. While in circumstances dealing with much more substantial and even contributions by each party, 5 per cent, more or less, than awarded by a trial judge might not render the trial judge's award manifestly insufficient or excessive, here 5 per cent less represents a 40 per cent reduction of the amount awarded".
But the wife in the present case gave birth to and reared two children during the marriage. Her contribution based award must not be limited to an amount which puts the wife back on her feet or where she would have been if the parties had never met. It should recognise that, notwithstanding its shorter than anticipated duration, the marriage has given her a reasonable expectation that her life as once again a single woman (now with children) need not revert to what it was before her marriage.
The marriage in Pierce[56] lasted ten years and also saw the birth of two children. The husband brought in $226,000 and the wife $11,000. At the date of separation the pool was $319,000 plus superannuation of slightly more than $50,000. The Full Court has assessed contribution to the non-superannuation property at 70% for the husband adjusted upwards by 5% for his likely future needs as the resident parent.
[56] (1998) FLC 92-844
In Hunt and Zuryn[57], the parties (the husband aged 50 and the wife 42) lived together for 11 years. They had two school-age children. The husband brought in between $257,000 and $339,000, compared with $46,000 for the wife. The pool at trial was $1.2 M. The wife earned $30,000 per annum throughout, whereas the husband was employed (sometimes part-time only) for 5 out of the 11 years. He spent the remaining 6 years renovating various investment properties registered in his name. The parties pooled their earnings and shared the par (c) role unequally in favour of the wife.
[57] (2005) FLC 93-226
The trial judge assessed the wife's entitlement at 33.5 per cent (25 per cent based on contribution and 8.5 per cent for future needs). The Full Court altered this to 37.6 per cent (32.5 per cent contribution and 5.1 per cent for s 75(2) factors).
Senior Counsel for the husband contends that the husband’s bread-winner contribution was “massive” involving provision of the family home, funding all household expenditure including the living and education expenses and emotional support for the wife’s older children without any offsetting contribution by their natural father. Senior Counsel for the husband acknowledges the wife's role as "primary homemaker and parent" during the marriage but reminds me not to give her credit for her caring of D and JN from 1997 to 2004.
He submits that the wife made no direct or indirect financial contribution during the seven year period of cohabitation and that any tax advantage received by the trust or him personally (which he puts in the range of $18,000 to $66,000 in the six years after 1998) was "almost negligible" in the context of maintaining the wife and her two children of her former marriage.
I find, however, that (as she contends) the wife did make both an indirect financial and direct non-financial contribution by fulfilling her role as home maker and parent, thus freeing the husband up to involve himself fully in the business and increase its productivity and profitability. She also made a significant direct financial contribution by reason of the wage paid to her as a result of her employment by the husband’s business.
The parties represented to the taxation authorities that the wife was a bona-fide employee of the business operated by the husband and was paid a salary as such. Consequently, the husband or his business paid less tax than he (or it) was actually liable for.
In Lee Steere [58], the Full Court acknowledged that " . . . the splitting of income tax is a direct and immediate financial benefit to the husband and to that extent a direct financial contribution on the part of the wife" and any argument to the contrary is, as Senior Counsel for the wife submitted, unsustainable in view of the decisions in Elias[59] and Jordan.[60]
[58] (1985) FLC 91-626.
[59] (1977) FLC 90-267.
[60] (1997) FLC 92-736.
Nor do I accept the proposition advanced by Senior Counsel for the husband on behalf of the husband that "most of the wife's homemaker contribution has to be ignored because two of the four children she looked after were hers from a previous relationship. Raising two children might be easier than rearing four in some cases but may equally be considerably harder in others.
In my opinion, the wife's contributions here were significantly greater than those in GBT and BJT (7.5 per cent over 6 years, with no children) but less than those in Money (25 per cent over 11 years, with two children), Hunt and Zuryn (32.5 per cent in 11 years, with two children) and Pierce (25 per cent over 10 years, with two children). Because the periods of cohabitation were nearly twice as long, the asset pools were substantially less and the disparity in initial assets not as great.
The husband's initial contribution remains a significant factor, deserving proper weight, having regard to the obvious disparity in value between what the parties had at commencement and their present significance in light of the off-setting contributions by both parties during the relationship and the other factors referred to by the Full Court in Zyk [61] and Pierce [62] in the context of the concept of marriage as a partnership and the period of time that this particular couple were partners.
[61] (1995) FLC 92-644.
[62] (1999) FLC 92-844.
In Lee Steere [63], the judges of the appeal division said:
"By bringing pre-marital assets, however acquired, into the pool, that party is to that extent making a contribution which cannot be matched by the party who brings few, if any, assets into the marriage.
The longer the duration of the marriage, depending on the quality and extent of her contribution, the more the proportionality of the original contribution is reduced . . . The proposition that the strength of a contribution made at the inception of the marriage is eroded, not by the passage of time but by the offsetting contribution to the other spouse, still holds true".
[63] (1985) FLC 91-626.
For the purposes of my own assessment of the relative values of the parties' respective contributions pursuant to pars (a), (b) and (c) of s 79(4), I am reasonably satisfied, on the whole of the evidence, taking into account what counsel for each of the parties has put forward on their behalf, and giving due weight to the disparity of assets brought into the marriage by both parties, and based on a finding of equality in relation to the other contributions during the marriage, the length of the marriage itself, and the parties' post-separation contributions, particularly by the wife, in relation to the two children of the marriage, that the wife's contribution to the current value of total net assets should be assessed at 20 per cent.

This, in my view, adequately reflects the husband’s very substantial and unmatched initial capital contribution (which should be regarded as representing about 60 per cent of the current value of the parties' net assets) and the use made of it and its ongoing significance over the course of the marriage, as well as his considerable income contribution over that time. It is also intended to recognise and reward the wife’s indirect contribution to the appreciated value of the husband’s business and other assets and to his increased earning capacity by the support she provided through business discussions and by allowing him the freedom and giving him the encouragement to continue its operations, as well as the fact that she allowed substantial savings to the parties by accepting house-keeping as a wage and expenses for herself and her children as distributions, in addition to reflecting her significant homemaker contribution during the marriage and the primary care-giving role she played in relation to the two children of the marriage on an ongoing basis even after the marriage failed.

Adjustment factors

The recognition and assessment of contributions in the overall socio-economic partnership is only part of the section 79 exercise. Section 79(4)(e) requires me to consider the matters in s 75(2).
There are a number of well-established bases for making adjustments to property interests of the parties on account of s 75(2) factors. The most relevant are those in pars (b),(c),(d),(e), (k), (l), (n), (na) and, insofar as the husband’s Robb claim is concerned, (o).
These include not only the needs and continuing care of children: s 75(2)(c) - (d) and (l), but also the differences in earning capacity and superannuation entitlements : s 75(2)(f), and economic loss for which one of the parties should be held responsible : s 75(2)(b) and (o).
However, one of the major objectives of an adjustment power, according to Patrick Parkinson ought to be meeting the adequate housing needs and reasonable living standards of any children of the marriage via s 75(2)(d) and (e). [64] Section 75(2)(g) requires the court to consider "a standard of living which in all the circumstances is reasonable" and par (j) directs attention to the "extent to which (one) party . . . has contributed to the income, earning capacity and financial resources of the other party".
[64]Unfinished Business : Reforming the Law of Property Division, National Family Law Conference, Sydney, July 2000 at page 4.
The effects of the different roles played by the parties in this marriage in adjusting property interests is also important: Waters and Jurek (supra). Despite what Guest J said in Farmer and Bramley [65], it is clear from Collins that, in the context of the court's discretion under s 79, the application of s 75(2) factors is not limited to adjustments on the basis of financial need.
[65] (2000) FLC 93-060
Senior Counsel for the husband argues that the marital property should be divided strictly according to contribution without any modification for means or future needs. Senior Counsel for the wife, on the other hand, proposes a 15% upward adjustment to the wife’s contribution based entitlement on account of the future ongoing responsibilities she will have for the children and the significant disparity in income earning capacities and property.
Section 75(2) is intended, among other things, to alleviate financial need, compensate a spouse for diminished earning capacity as a consequence of the role division in the marriage, provide adequately for a spouse who continues in the role of being primary care-giver of children, dividing superannuation fairly as an economic benefit built up during the course of the marriage, remedying wrongful conduct of a spouse in diminishing the assets available for distribution or for some other reason related to the circumstances of the marriage.
In the aftermath of marriage breakdown both parties need to re-establish themselves. The lifestyle funded by the husband, contributed to by the wife, and enjoyed by the whole family during the marriage, is over.
The wife's ongoing obligation to take primary care and meet the needs of the two young children of the marriage until adulthood is the factor to be given the serious attention and substantial weight under s 75(2). This is not confined just to the financial implications of child care responsibilities but must also take into account the social and moral duties that go with that function.
In Brandt (1997) FLC 92-758 at 84,345 the Full Court relevantly observed:
“If, when evaluating factors under s 75(2), it is appropriate to give consideration to such non-economic matters and presumably it is important to weigh into the process the pleasure, company and sense of purpose that children bring from both now and in the future. The difficulty in evaluating such matters demonstrates why approaching the matter in the manner his Honour did is not an appropriate course to be adopted. It is proper to take into account the economic ramifications of having responsibility for the children and the quasi economic contributions involved in raising children which includes washing, ironing, cooking, transporting and the like. It is appropriate to bear in mind salary and income opportunities foregone because of the responsibilities to children. It is appropriate to recognise that such responsibilities involve sacrificing leisure and recreation time. It is however very difficult to give economic value to either the emotional trauma involved in raising children or the rewards and compensation that come, often very late in life, when role playing is reversed between parent and child.”
Even where the marriage is a relatively short one, securing a reasonable standard of living (having regard to all the circumstances, including the asset wealth of the non-resident party) for the parent caring for young children of the marriage, is a legitimate quantifying principle.
This object can lead to that parent receiving a substantially increased share of the available assets where it is necessary to satisfy the provisions referring to the standard of living which is reasonable in the circumstances and the caring for children.
However, s 79(4)(na) requires the court to consider "any support under the Child Support (Assessment) Act that a party to the marriage has provided or is to provide for the child of the marriage".
As Senior Counsel for the husband rightly points out, the husband will be required to bear most of the burden and financial support for the children to age 18 and probably beyond. By the time S is 18 the husband will be 66 years of age, so the balance of his effective future working life will bear this financial obligation. Even though the children will principally reside with the wife, the combination of lengthy school holiday periods and the three week rotating living arrangements for the children mean that they will reside with him for 40 per cent of the year and there can be no realistic expectation that the wife will financially assist him in respect of child support or education costs during that period.
This is clearly relevant but the child support liability of the husband is no more than he can afford or is needed to meet his proper obligations to maintain his children. This is not a case where the assessment for child support diminishes the resources from which a party can comply with the terms of a property order.
The wife relies on the inequality in earnings and economic position as another substantial adjustment factor. Senior Counsel for the husband acknowledges that there exists today (as they did at the start) a “massive” disparity but says that that alone does not justify an adjustment in the wife’s favour because they have nothing to do with the marriage. The wife’s earning capacity, he argues, has always been minimal and will thus be reflected in the spousal maintenance order. He notes that in GBT and BJT, a decision referred to earlier in connection with contribution issues, the Full Court referred to the need to have regard to the shortness of the marriage (it was, as I have already mentioned, six years) in dealing with economic discrepancies. The adjustment there was 2.5 per cent. However, Senior Counsel for the husband contends that the unevenness in earnings and capital existed at the start of the marriage and nothing that has happened in the short time since then warrants any adjustment in the wife’s favour. He says that the wife should not benefit because she was for all intents and purposes really “a passenger for six out of a working life that was 28 years old at commencement”.
Senior Counsel for the wife submits that the approach taken by the Full Court in GBT and BJT is of no or little assistance here and distinguishes it on the grounds that (a) the period of cohabitation was six years not seven; (b) there were no children; (c) the wife had re-partnered; and (d) she had significant qualifications as an accountant.
The role and function of s 75(2)(b) as an adjustment factor is authoritatively dealt with in Collins. [66]
[66] (1990) FLC 92-149.
It is clear that the provision either alone or in combination with other relevant matters mentioned in 75(2) is not a source of social engineering or a back door method for sympathetic judges to even up the parties financial positions. Nevertheless, the obligations of the parties to a marital relationship lasting for "a not insignificant period" of five years or more do not end with the failure of the marriage (Kennon at 84,303). There is no rule of law or discretionary principle requiring some causal connection between economic discrepancies and the marriage relationship to activate s 75(2)(b): cf. Guest J in Farmer and Bramley [67] at 87,981 and Kay J in the same case [68], as well as the comments of the Full Court in Dickson. [69]
[67] (2000) FLC 93-060.
[68] at 87,950.
[69] (1999) FLC 92-843.
In Waters and Jurek (supra), Fogarty J reminded trial judges to give real rather than token weight to relevant s 75(2) factors. In that case, both parties were high income earning psychiatrists. The wife did not argue that her lesser income was attributable to her role in the marriage. Nevertheless, the trial judge awarded her $50,000 on that ground. The Full Court refused to disturb this and was willing to accept that adjustment could be made to increase a party's share of property under s 75(2) for economic disparity between the parties even though it was not the direct result of role division within the marriage.
Disparity in income and earning capacities, according to Fogarty J at 199-200, is a common basis for making an adjustment under s 79. In his Honour's view:
"The rationale for that usually lies in the circumstance that the difference in income earning capacities is significant and/or has arisen directly or indirectly as a consequence of the marriage and the roles that the parties played during it.
. . . On separation, the partnership (marriage), and the division of roles and responsibilities which it produced come to an end. Individually, the parties are left largely in the personal situations that the marriage has assigned them. However, the world outside the marriage does not recognise some of the activities that within the marriage used to be regarded as valuable contributions. Homemaker contributions, for example, are no longer financially equal to those of the breadwinner. Post-separation, the party who had assumed the less financially rewarding responsibility of the marriage is in an immediate disadvantage. Yet that party often cannot simply turn to more financially rewarding activities. Often, opportunities to do so are no longer open or if they are time is required before they can be accessed and acted upon.
When the marriage ends especially where the marriage has been a long one (emphasis added) one can separate the parties as individuals from the people they became in the context of the marriage relationship, and the allocation of duties, roles and responsibilities which it entailed. In some cases, an adjustment is called for because it would be unjust for the roles and activities of the party, which were recognised until separation, and which largely determined or influenced the personal development of that party and the arrangements between the parties, to suddenly count for little, while those of the other party, which were of equal significance during the marriage, to now have a far greater financial impact outside the home - in circumstances where it was a joint decision of the parties that that be the way in which they would conduct their affairs, and where that decision was made in the expectation of the relationship continuing.
An order under s 79 would be unjust and inequitable in its operation if it failed to address the manner in which the value of the parties' roles, adopted in the course of, and for the purposes, of the marriage, can be altered by the fact of separation. Those roles can be instantaneously converted into liabilities. The equality of the parties' positions is terminated.
This court values differing kinds of contributions of parties equally while the marriage subsists. It would be inconsistent with the equality which that position recognises not to take into account the transformation which the termination of the relationship results in, at least in terms of the capacity for present and future income generation. This is a matter which is independent of the 'needs' of the parties. In some cases it will coincide with the presence of needs, but it does not rely on that presence. It rests on the broader base, one which I think it well characterised as 'just and equitable'". (Emphasis added).
In Clauson [70], the parties cohabited for 10 years and the wife retained care of four children after separation. She had worked during the marriage but was unemployed at the time of trial. The assets were worth $1.5 million and the husband had a substantial income. The trial judge assessed the wife's contribution at 25 per cent and made a further adjustment of 15 per cent under s 75(2).
[70] (1995) FLC 92-595.
In allowing the wife's appeal, the Full Court held that an adjustment of 15 per cent fell below the legitimate exercise of discretion. Their Honours said[71]:
"The relevant factors are quite striking in this case. In particular, they relate to the enormous disparity in the income and earning capacities coupled with the circumstance that the wife is the custodian of four children aged between three and eight . . . It has long been recognised that in most cases the most valuable 'asset' which a party can take out of the marriage is a substantial reliable income earning capacity . . . There is, we think, at times a tendency to assess s 75(2) factors in percentage terms without considering its real impact, and we think there is a legitimacy in the views expressed in more recent times that the court has tended to operate in this area within artificially delineated boundaries. . .That is, it appears almost to be inevitable that the s 75(2) factors will be assessed in a range between 10 per cent and 20 per cent. A number of cases will justify an assessment outside those parameters but in any event it is the real impact in money terms which is ultimately the critical issue. (Emphasis added).
[71] at 81,910-11
The rationale for making an adjustment pursuant to par (b) of subsection 75(2) is to be found in what Fogarty J had to say in Waters and Jurek at 82,378 - 823. I am satisfied that the disparity in the parties' current and likely future financial circumstances and the wife's employment potential and income potential arise as a result of the differential in their earning power during the marriage, their joint decision as to the way they would and did conduct their financial affairs, the people they became in the context of the marriage relationship, and the allocation of roles, duties and responsibilities that entailed and of the sudden and striking transformation of the wife's situation due to the termination of that relationship.
However, the fact that the husband's greater earnings are generated by a business which has itself been included in the divisible pool has to be kept firmly in mind when considering the question of adjustment for disparity in earning capacities, which is no more than a particular application of the more general principle governing the subsec 75(2) exercise, namely that the financial circumstances of the parties have to be seen as they will be after property orders are made and not merely in the light of their pre-existing circumstances.
The husband is relatively young, highly qualified and experienced in his field. He has run a successful business for many years and is readily employable in his own or someone else's firm. The wife is currently wholly financially dependent on the husband. She is healthy and also relatively young but has no recent employment experience. Her employment prospects are limited by her age, parenting obligations (at least until S commences school in 2007), lack of recent experience and relevant trade skills and qualifications, as well as her specific retraining requirements.
Both parties have significant legal costs to pay (amounting to the equivalent in the order of 15 per cent of the total asset pool). The wife accepts that the majority of these were incurred in relation to the parenting matters, which included unproven allegations of domestic violence and child sexual abuse against the husband. The consent orders that the parties were finally able to reach contain an express provision that each party bear their own costs.
Senior Counsel for the husband says that while it is proper for me to have regard to the legal costs of each that are outstanding, it would be “grossly unjust and inequitable” for the wife to achieve an adjustment on account of her outstanding legal costs in the circumstances of this case because of her conduct in making unsubstantiated allegations, forcing him to defend his reputation and fight to remain a substantial part of the children’s lives. An adjustment would mean that the husband was paying for the wife to mount a false campaign against him in the parenting proceedings as well as pay for his own which would, according to Senior Counsel for the husband, be “understandably difficult” for the husband to accept and grossly unjust to expect of him.
Senior Counsel for the wife replies with a submission that the liability is one which has to be met regardless of how it arose. The application of s 75(2) should not be confused with the provisions of s 117(2A). To apply a “merit test” for such an exercise would require a finding that the wife’s allegations were baseless and no such funding is possible on the evidence before me. I agree. I will make some general allowance for the size of the outstanding legal bills because it is a relevant financial circumstance.
As the bulk of the costs were occasioned by a children's dispute which has since settled in terms ensuring that neither party has any prospect of gaining an order for the other to contribute to the costs caused by that dispute, and no blame can be attributed to either of the parties or apportioned between them, there is no basis for saying that one or the other should not have expended the funds. That is not something that can be properly determined in a contested property proceeding or at this stage of the process.
In Lee Steere [72], the Full Court held that any legal costs each of the parties may be liable to pay, subject of course to any reimbursement by way of an order for costs, should be taken into account in assessing the financial resources of the parties. This is not a back-door way of awarding costs to a party who has been refused (or waived a claim for) the whole or part of his or her costs. It is one thing to take account of costs in calculating current financial positions. This is part of the normal inquiry under s 75(2). It is quite another to award a party a specific amount for the purpose of meeting the costs of legal services (which can only be done on a costs application under s 117).
[72] (1985) FLC 91-626 at 80,076.

Thus, the total amounts incurred by each party ought to be taken into account in calculating their current financial position: cf. B & R [73] .
[73]Unreported, Full Court appeal No. EA 41/93, Ellis, Lindenmayer and Bell JJ, delivered 21 September 1993.
In an appropriate case, of course, some allowance can be given to a step-parent who makes a contribution directly or indirectly to the care and financial support of step-children. However, the significance of this factor can easily be overstated, and nothing said in that case mandates any automatic adjustment.
Nonetheless, it is a circumstance which, in my opinion, the justice of the case requires to be taken into account in the husband's favour at this stage of the process.
All in all, an increase of 7.5 per cent to the wife's contribution based entitlement in my view is called for. This reflects her comparatively poorer post-separation economic position and will provide her with sufficient funds to re-establish herself adequately and enjoy a reasonable, though not lavish, lifestyle in her new situation as a single parent.
An overall award of 27.5% of the net pool to the wife amounts, in dollar terms, to $550,596 and the balance to the husband equals $1,451,572. In my opinion, dividing the property pool in these proportions satisfies the requirement of justice and equity in s 79(2) and rewards the wife for her contribution to the wealth and welfare of the family during the marriage and adequately compensates her for the losses and economic disadvantages caused by separation but not at the expense of the husband's legitimate entitlement.

Spousal maintenance

The wife seeks spouse maintenance of $500 a week if she receives or retains property less than 30 to 40 per cent of the pool.
Senior Counsel for the wife also submits that if a lump sum order for maintenance was made then the purchase period of three years rather than the 18 months suggested by the husband should be used based on $500 a week without any discount.
There is no real dispute that the husband has a capacity to provide spouse maintenance to the wife to the extent that she is unable to support herself. However, Senior Counsel for the husband points out that the husband’s 2005 income tax return and the financial statements of the companies and trust disclose that, after tax and child support are deducted from the husband's taxable income of $62,204, he will be left with $31,756 net, which equates with $610 a week, in circumstances where his own declared needs are $447 a week for himself and $180 a week for the children when they are with him and $48 for rates. Therefore on his 2005 earnings the husband will have to eat into capital just to support himself and pay child support for the wife. He also owes $120,000 in legal costs and if he is ordered to pay the wife around $200,000 in property entitlement he will have to borrow it (or he could sell one of the factories) at commercial rates would take another $14,000 per annum from his available funds in interest only.
There has not been any real attack on the reasonable needs of the wife either. She is currently without employment but Senior Counsel for the husband says that it ought be anticipated that she will be sufficiently resourceful to get employment such as in telephone sales, retail sales and dress shop type employment in which she has some experience hopefully prior to when S commences full-time school in January 2007. She has available to her two of three free weekends, half lengthy school holiday periods and set parenting schedules which will assist casual employment if she seeks it.
Therefore Senior Counsel for the husband reasons that if any spouse maintenance order is to be made it should be limited to 18 months such that the wife would need to demonstrate by early 2007 that she had attempted to get employment if there was to be any continuation and, if so, at what level, having regard to the husband’s then earnings.
Senior Counsel for the husband acknowledges that the amount of $500 a week sought by the wife is “not outrageous” but suggests (without specifying how) that it is still capable of being reduced somewhat.
He points out that the discretion in s 72 requires regard to be had to the duration of the relationship and emphasises that the fact of marriage itself does not justify the payment of indefinite spousal maintenance. He acknowledges that having regard to the short duration of cohabitation, the husband’s limited capacity and the wife’s untapped capacity for employment particularly within the next 18 months, there is some justification for spousal maintenance in a sum less than $500 a week limited to no more than 18 months when the youngest child goes to school to give the wife the opportunity and incentive to return to paid employment.
He suggests that an alternative to periodic spousal maintenance would be a lump sum order which will assist in the clean break requirement.
I find that the wife is unable to adequately support herself for a range of reasons including her responsibility for the care and control of two pre-school age children of the marriage and the disadvantage she suffers in the labour market. I find her reasonable needs $500 a week and that that need is likely to continue for no less than two years. I am satisfied that the husband is reasonably able to maintain the wife at that rate for that period and that having regard to the matters referred to in subsection 75(2) it is proper to order him to provide such maintenance.
Accordingly, I propose to make the following orders, pursuant to s 79 of the Family Law Act, as and by way of property settlement, to take effect within seven days. The parties have permission to re-list within that time to correct any miscalculations or technical defects and to make any submissions they wish about the appropriate split and form of order.

Property orders

That the Husband pay to the Wife the sum of $516,571 within 60 days of the date of this order.
That the Wife is the owner and the Husband has no interest in:
(a)the Mercedes motor vehicle;
(b)the furniture in her possession;
(c)her superannuation entitlements with Westpac (Plan 1) of $8,267 and Westpac (Plan 2) of $1,653;
(d)bank credits in her sole name.
(e)taxation refund of $3,605.
(f)jewellery of $4,500.
That the Husband is the sole owner of and the Wife has no interest in:
(a)the real property registered in his name;
(b)the shares held by him and other interests or entitlements including loan funds in E Su Pty. Ltd., E So Pty. Ltd., the S Family Trust and the S Self-Managed Superannuation Fund;
(c)the entitlements of the Husband in the AMP, Colonial and Zurich Super Funds and Westpac Term Life Policies;
(d)any monies standing to the credit of the Husband in any bank accounts in his sole name;
(e)all furniture and furnishings in his possession;
(f)any life assurance policy in his name and shares held in publicly listed companies.
That in the event that any party to these orders refuses or neglects to comply with any or all of the provisions of these orders, the Registry Manager of the Family Court of Australia at Brisbane is hereby appointed, pursuant to Section 106A of the Family Law Act to execute all deeds and documents in the name of the Husband and/or the Wife and to do all acts and things necessary to give validity and operation to these orders.
That unless otherwise specified in these orders and save for the purposes of enforcing any moneys due under these or any subsequent orders.
(a)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)each party be solely liable for and indemnify the other against any liability encumbering any items of property to which that party is entitled pursuant to these orders;
(c)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

Spousal Maintenance

That the Husband pay spousal maintenance to the Wife of $500 per week for a period of two years commencing from the date of these orders.

Further Orders

Senior Counsel's attendance be certified pursuant to Rule 19.50 of the Family Law Rules.
That should either party wish to make an application for costs, then:
(a)the applicant for such costs must file and serve an application in Form 2 together with written submissions within 14 days of today's date;
(b)the respondent to that application must file and serve any response thereto within 21 days of receipt thereof;
(c)the applicant must file and serve any reply to that response within a further 7 days of receipt thereof.
That all applications be otherwise dismissed and the proceedings removed from the list of cases awaiting finalisation.
I certify that the preceding 196 paragraphs
are a true copy of the Reasons for Judgment
herein of the Honourable Justice Carmody

………………………………….
Associate
Date: 17 November 2005

[2005] FamCA 1195

17 November 2005

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