SALMA & SALMA

[2020] FCCA 1917

FEDERAL CIRCUIT COURT OF AUSTRALIA

SALMA & SALMA [2020] FCCA 1917

Catchwords:
FAMILY LAW – Property Settlement – contributions – weight to be given to initial contributions by wife.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79(2) & (4)

Cases cited:

Re: L (Litigants in Person Guidelines) (2001) FLC-072

Stanford v Stanford (2012) 247 CLR 108

Fielding & Nichol [2014] FCWA 77 @ [42]

Jabour & Jabour [2019] FamFC 78

Wallis & Manning (2017) FLC 93-759

Pierce v Pierce (1999) FLC 92-844

Dickons v Dickons [2012] 50 FamLR 244

Applicant: MR SALMA

Respondent: MS SALMA

File Number: LNC 888 of 2019

Judgment of: Judge McGuire

Hearing dates: 30 June, 1 & 2 July 2020

Date of Last Submission: 2 July 2020

Delivered at: Launceston

Delivered on: 30 July 2020

REPRESENTATION

Counsel for the Applicant: Mr M. Doyle

Solicitors for the Applicant: Clarke & Gee

Respondent appeared in person

ORDERS

1. That within sixty (60) days of the date of these orders the wife pay to the husband a lump sum of $258,167.

2. That should the payment referred to above be by way of a splitting order from the wife’s superannuation entitlement with Super Fund B then not later than forty-nine (49) days from the date of these orders the parties jointly bring in settled orders accordingly together with evidence of procedural fairness on the relevant superannuation fund.

3. That contemporaneously with the payment referred to in order (1) hereof the husband transfer to the wife all his right, title and interest in the following absolutely:

   (a)The property situate at C Street, Suburb D in Tasmania;

   (b)The wife’s Motor Vehicle 1;

   (c)The yacht;

   (d)The balances of any bank accounts or like investments in the sole name of or to the benefit of the wife as at the date of these orders;

   (e)All personalty and chattels in the possession of or under the control of the wife as at the date of these orders; and

   (f)The wife’s superannuation policy and entitlement with Super Fund B but subject to these Orders.

4. That contemporaneously with transfer and vesting orders in order (3) hereof the wife transfer and/or vest all right, title and interest in the following to the husband absolutely:

   (a)The assets of the business;

   (b)The balances of any bank accounts or like investments in the sole name or to the benefit of the husband as at the date of these orders;

   (c)All personalty and chattels in the possession of or under the control of the husband as at the date of these orders; and

   (d)The husband’s superannuation policy and entitlement with Super Fund F.

5. That provided, in any event, that should the wife at her election to be made and advised to the husband’s solicitors within twenty-eight (28) days of the date of these orders, choose to place the former matrimonial home at C Street, Suburb D in Tasmania on the market for sale then the parties co-operate on the sale of that property through an agent as agreed between the parties, and failing agreement then as determined by the delegate of the President of the Real Estate Institute of Tasmania, such to be by private treaty or by auction as recommended by the agent and then at a sale price or reserve price as advised from time to time by the agent and that the proceeds of sale be disbursed as follows:

   (a)To the payment of reasonable costs and disbursements on the sale; and

   (b)As to the balance between the parties so as to give effect to an overall division of the parties’ property inclusive of superannuation as set out in [20] of the reasons herein as to 62.5% to the wife and 37.5% to the husband.

6. That the parties each have liberty to apply in respect of order (5) herein.

7. That pursuant to Section 81 of the Family Law Act 1975 the parties intend that these Orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.

IT IS NOTED that publication of this judgment under the pseudonym Salma & Salma is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT LAUNCESTON

LNC 888 of 2019

MR SALMA

Applicant

And

MS SALMA

Respondent

REASONS FOR JUDGMENT

Applications

1. These are property proceedings initiated by the husband.  He seeks final orders whereby there be an equal division of the parties’ net property inclusive of superannuation entitlements.

2. The wife argues that the property of the parties, inclusive of superannuation, be divided as to a net 70% to her and 30% to the husband.

3. The husband was represented by solicitors and a solicitor advocate at the hearing.  The wife represented herself.  She did so in a most proficient and well-prepared manner.  Ms Salma was at all times courteous to the Court and to Counsel for the husband.  As a litigant in person, the Court went to some lengths to explain the procedure to her.[1] 

   [1]Re: L (Litigants in Person Guidelines) (2001) FLC-072

Background

1. Both parties are 67 years of age.  They commenced cohabitation in Country E in 1985.  They married in 1986 and separated finally on 30 September 2018 although the husband had left the former matrimonial home in August 2017.

2. There are two adult children of the parties who are now 31 and 28 years of age respectively.

3. The wife is employed as a health care worker.  The husband is formally retired from his previous self-employment as an artist and, before that, as a public servant. 

4. There is no evidence that either party has re-partnered in the sense of support or dependency.

5. Both parties are in reasonable health although the husband complains of suffering from anxiety.

6. The parties met and commenced their relationship in Country E.  They later moved to England and in 2006 moved further to Australia settling in Launceston.

The Issues

1. In a broad sense, the dispute between the parties is as to the weight that the Court attributes to contributions and specifically to the wife's superior pre-cohabitation contributions and, secondly, on the wife's argument, superior contributions by her in the latter part of the marriage during the parties living in Tasmania from 2006.

Credit

1. Both parties gave evidence and were cross-examined. The wife provided copious documents which were tendered as a bundle although some have not been read into evidence given that they constitute negotiations between the parties. Nevertheless, and understandably given a thirty plus year relationship, many documents that might evidence financial transactions are no longer available.  As such, the Court is required to rely to a large degree on the recollections of the parties and the veracity of their evidence.  Having had the advantage of seeing and hearing both parties give their evidence, I am satisfied that they are each essentially witnesses of the truth and any historical differences are simply as a result of the flux of time and divergence of recollection.

The Relevant Law

1. Issues of settlement or alteration of parties’ interests in property are provided for in s.79 of the Family Law Act 1975 ('the Act').

2. The Court is to establish the elements of the property pool and attribute value to those elements into the pool itself. 'Property' can include assets, liabilities and financial resources. Amendments to the Act provide that superannuation is to be 'treated as property' although it is not often capable of crystallisation in the sense of a tangible asset. Nevertheless, the authorities suggest and permit that a trial judge can approach the division or alteration of the property pool on a 'two pool' approach separately as to tangible property and superannuation or alternatively, on a 'one pool' approach which is the preferred approach of both parties here.

3. It is generally accepted that the date of the trial is the appropriate date for establishing the value of the property pool.

4. The High Court in Stanford v Stanford[2] emphasised that the Court must, before considering further, and pursuant to s.79(2), determine whether it is just and equitable to make any orders for alteration of property interests. This is a preliminary question for the Court and one not to be simply conflated with the consideration of contributions under s.79(4). Their Honours said at [40]:

   … The question of whether it is just and equitable to make a property settlement order should not be answered by starting with an assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s.79(4). The power to make a property settlement order must be exercised in accordance with legal principles including principles which the Act itself lays down. To conclude that making an Order is 'just and equitable' only because of and by reference to various matters in s.79(4) without a separate consideration of s.79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.

   [2] (2012) 247 CLR 108

5. Later Full Court consideration[3] observed that whilst contributions are not necessarily a determinative answer to the s.79(2) question, such contributions may be a factor in determining whether there be justice and equity in altering property interests under that subsection.

   [3] Fielding & Nichol [2014] FCWA 77 @ [42]

6. In the matter now before me, the parties’ relationship commenced some 35 years ago.  There have been two children of that marriage.  Each of the parties have made many and varied contributions over the years towards the property pool and generally to their family unit.  They are the joint registered proprietors of the most valuable asset in that pool being the former matrimonial home.  I am satisfied that their relationship has ended.  In all of those circumstances, I am easily and comfortably satisfied that it is just and equitable to embark upon the consideration of an alteration of their property interests.

7. The Court is then to consider the contributions of the parties to the attaining, maintenance and improvement of the elements of the property pool in accordance with s.79(4) where contributions may be of a direct financial type, indirect financial contributions, or non-financial contributions including as parent and homemaker.

8. After making findings in respect of the contributions of the parties’ the Court then moves to determine whether it be appropriate, just and equitable to make any further adjustments to either of the parties on a consideration of the factors set out in s.79(4)(d)-(g) of the Act including any relevant considerations under s. 75(2).

9. To their great credit, and by the time of final submissions, the parties were able to agree the contents of the property pool and valuations as follows:

C Street, Suburb D Tasmania	$425,000
Motor Vehicle 1 (wife)	Wife	$    5,000
Yacht	$  10,500
Business (partnership)	$    7,400
Westpac E Saver account: ...67	Wife	$    1,771
Westpac Choice account: ...20	Wife	$      594
Westpac Choice account	Joint	$        10
Westpac Choice account: ...37	Husband	$    2,154
Westpac Choice account: ...38	Husband	$      500
National Bank (UK)	Joint	$        52
National Bank (UK) ...92	Wife	$  26,200
National Bank (UK): ...69	Wife	$        18
National Bank (UK): ...85	Wife	$        00
TOTAL	$479,199
Superannuation
Super Fund B	Wife	$238,277
Super Fund F	Husband	$    1,233
TOTAL	$239,510
TOTAL PROPERTY POOL	$718,709

1. The parties have given estimates as to the value of the yacht where no formal valuation was obtained.  They have agreed to compromise the figure above.  The wife initially argued for a value of the business at $18,122 but only from taxation returns prepared by the accountant.  The husband gave estimates of value of plant and equipment in circumstances where I accept his Counsel's argument that there would be no actual value for goodwill in circumstances where there are no contracts of tenure and where the husband conducted the business as a 'sole practitioner'.

2. The assets are unencumbered and neither party claims any liabilities.

3. Each of the parties has UK pension plans in payment phase.  No valuations in proper form have been given and the parties agree that such constitute income only.

Contributions

1. The wife says that the parties commenced cohabitation in Country E in 1985.  Her trial affidavit deposes at [13] her financial position then as follows:

   a.My first property a terrace house G Street, City H, Country J,   E$160,000

   b.     Second property a terrace house K Street, City H, Country J,   E$120,000

   c.      First investment policy   E$98,000

   d.     Second Investment policy   E$98,000

   e.      National Health Service Contributions

   (NI) combined   E$2,410

   f.      1986 Building Society Balance       E$29,278

   g.     National Insurance Contributions  E$2,694

   h.     UK Bank Balance   E$ unknown

   i.      Country E Bank Balances   E$ unknown

2. Interestingly, the husband's trial affidavit is completely silent as to the wife's financial position as at the date of commencement of cohabitation.  Nevertheless, the wife was cross-examined intricately as to her financial position as of 1985.  As mentioned above, I generally find the wife to be a witness of the truth.  She did concede, however, that her recollection is understandably vague in some detail as to valuations, purchase prices, sale prices and times of sale of the some assets.  She agreed that some of the values given above in Australian dollars are her estimates of current value of those assets, such as the Country J properties.  Generally, however, the wife did not retreat under cross-examination as to her ownership of the above listed assets as at the date of commencement of cohabitation.  The Court however is not assisted by any evidence of any detail as to valuations of her assets as of that date.  Nevertheless, it is not the task for this Court to conduct an historical audit on a precise mathematical basis in respect of contribution.  In that sense, I am satisfied that the wife owned two homes in Country J with substantial equity at the time and I am satisfied on the balance of probabilities as to her investment policies and their quantum.

3. Importantly, I accept the wife's evidence that her ownership of properties in Country J and then subsequently some equity in an apartment property at Suburb L, Sydney represented a strong financial contribution relative to the husband's contribution at the time and also as a form of 'springboard' for the current wealth of the parties given subsequent sales of the Country J properties and the Suburb L property and the purchase of real property in the United Kingdom and eventually the former matrimonial home in Launceston.  The nature of these contributions as appreciating, ‘hard assets’ is also relevant in their subsequent use.  That is their existence and sale is effectively traceable in the current wealth of the parties as distinct from depreciating assets.

4. The husband has not claimed to have owned any property as at the date of the commencement of the relationship.  Both parties suggest, and their evidence in Court confirms, some separation of their personal finances during their relationship and particularly in the early years when both were employed.  There is also evidence, however, of later joint accounts and, of course, joint purchases of real property.

5. The parties’ relationship endured from 1985 until their separation in 2018.  Not surprisingly during that relationship there were a myriad of contributions.  Significantly, each of the parties worked in their chosen fields, the wife as a health care worker and the husband as an artist/public servant.  They both contributed in a varying extent over different times as homemaker and parent dependent upon the work commitments of the other party.  Certainly until they moved to Tasmania in 2006 there can be little argument that their contributions during the relationship overall must be seen on an equal basis in respect of employment, homemaker and parenting roles.  Relevantly, however, during this period the wife also received an inheritance ($35,000) together with a student loan which is not repayable ($60,000) and University scholarship (E$18,041) at times where she says she continued to earn from her employment.  During this period the husband received an inheritance of $8,000.  I accept, therefore, that the wife made a superior financial contribution by reason of these injections albeit of limited import given the length of the relationship and relativity of the total contributions of all types.

6. The wife then argues that the Court should consider giving her some loading for superior contributions in the period during their residence in Tasmania from 2006 until separation.  She was quite clearly the major financial contributor from her continuing employment as a health care worker in Tasmania.  The husband commenced an art business.  He did so in partnership with the wife and received some bookkeeping and other assistance from the wife with the business also giving the parties some taxation advantages by reason of the partnership.  The thrust of the wife's argument, as I understand it, is that while she worked to her remunerative and professional capacity, the husband's business was not financially successful and he did not pursue alternative remunerative employment to his potential such as in public service.

7. The husband's evidence was not entirely satisfactory or persuasive in respect of this period of the parties’ relationship where he perhaps tends to overstate his role as 'homemaker' and to argue some explicit agreement as to a delegation of financial responsibilities and roles.   His trial affidavit sworn 22 June 2020 at [22) – [23) says:

   22.    Like any other marriage, Ms Salma and I contributed in different ways.  We never sat down and discussed our marital roles.  We shared parenting tasks on an equal basis, but I completed the majority of the daily home chores and family and household responsibility.  I made significant non-financial contributions to the relationship as a parent and homemaker.  Essentially, we made day-to-day adjustments to our routines to share parenting tasks on an equal basis whilst in Tasmania.

   23.    In a general sense, I was responsible for cooking, cleaning, shopping, house and garden maintenance.  We did have a cleaner who attended the house on a fortnightly basis, but I otherwise completed the significant majority of cleaning tasks.  In between completing work on my business, which occupied the majority of my days, (my emphasis) I would do cleaning and otherwise attend to the house and the cooking.

8. However, and again perhaps in an effort to shore up his case, at [32] of the same affidavit the husband deposes:

   My agreed role as a homemaker has adversely affected me by my withdrawal from the workforce.  I am seeking orders that fairly make up for that financial and career disadvantage, over and above a splitting order for a proper share in our superannuation…

9. After considering their affidavit evidence and the evidence in cross-examination of each of the parties, I am satisfied that they did enter into a partnership for the running of the husband's business.  I am satisfied that it was not as financially successful as had been anticipated.  I am satisfied that the wife worked to her capacity and potential in her occupation as a health care worker.  I am not, however, satisfied that other avenues of remunerative employment were easily open to the husband at his age and limited qualifications.  It seems clear that the wife entered the 'partnership' with an understanding that there would be taxation benefits.  Whilst she clearly encouraged and assisted the husband in his business, there is no evidence that she actually and forcefully urged him to undertake any alternative employment.  Further, and even from the conflict in his own sworn affidavit, I reject any suggestion that the husband suffered 'adversely' by reason of what appears to have been a joint decision for him to pursue his business.  Overall, therefore, and where it is clear that both parties continued to contribute as homemaker (and as parent for one of their sons for a short period), I am of the view that the wife acquiesced in the husband establishing and conducting his business and, as such, the wife should receive no ‘loading’ simply because of her superior earning during this period.

1. Since separation the wife has continued in employment and relevantly has continued to contribute to her superannuation entitlement.  This is a contribution by her alone.

2. Consequently, the force of the wife's argument for a loading of 20% on her behalf on account of contributions must be considered primarily in respect of her conceded superior initial contributions together with relatively minor discrepancies in contributions during the relationship and post-separation.  The husband's Counsel suggests in his final address that the wife should receive a loading of ‘5-10%’.  The wife seeks a 20% loading.

3. Although each factual platform that comes before this Court is different, it is relevant to note a recent decision of the Full Court in Jabour & Jabour[4] which involved a relationship of some 27 years where an issue as to contributions including the husband's superior initial financial contribution were at the crux of the appeal but also where there was a form of ‘windfall’ during the relationship such that was not evident here.  Helpfully, their Honours in Jabour (supra) provided an historical consideration of relevant authorities in respect of this vexed issue of the weight to be afforded parties where there are unequal initial contributions.  Importantly, from Jabour (supra) it must be emphasised that the Court’s consideration is an holistic one in respect of the myriad of contributions that are brought to a relationship and the trial judge should not extract and consider any particular contribution in isolation.  To my mind the crucial ingredients of any such consideration involve a melting pot of the time, quantum, context, effect, and relativity.  That is, the length of the marriage will usually be indicative of the fact of numerous and varying contributions.  The nature of the contribution may still be evident in that particular asset or later purchased assets or being used as a 'springboard' for current wealth.  Alternatively, there may have been a contribution of an asset of rapidly depreciating type and hence of little current value or relevance to the parties’ current wealth.  In Wallis & Manning[5] the Full Court said:

   The length of a marriage is important, then, in assessing the respective contributions of the parties, particularly when it is said that significant capital contributions made early in the marriage are a dominant feature of that assessment.

   [4] [2019] FamFC 78

   [5] (2017) FLC 93-759

4. An earlier Full Court in Pierce v Pierce[6] opined:

   28.In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contributions.  It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife.  In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. 

   [6] (1999) FLC 92-844

5. Whilst the nature of the initial contributions as appreciating or depreciating assets might be significant, it is not so simple as there being a relationship between contributions and their ultimate product in the current property pool.  In Dickons v Dickons[7] the Court said at [14]:

   As is plain from earlier decisions of this Court, regard must be had to the use made of contributions of various types so as to compare the contributions made by each of the parties during the course of, and over the length of the relationship (see for example, in the marriage of Pierce (1998) FLC 92 – 844).  But that is an entirely different proposition to as it were, causally linking contributions with their asserted financial 'product' or ‘value'.  The former recognises that the nature, form and extent of contributions made by each of the parties might differ; the latter suggests that the absence of a causal link counts as no contribution at all.

   [7] [2012] 50 FamLR 244

6. In summary, therefore, the task for this Court is to treat the wife's conceded superior initial financial contribution as one of those myriad of contributions to this relationship rather than weighing the myriad of contributions during the relationship against the wife's initial contribution.

7. I am able to find that the husband had no assets of value as at the date of commencement of the relationship.  At this time the wife brought into the relationship some considerable assets in the form of two pieces of real property and considerable investment savings.  Those assets were utilised, together with the product of other direct and indirect contributions, for the benefit of the parties including significantly the later purchases of properties in Suburb L, two properties in England, and ultimately the current former matrimonial home.  I have already found that the parties’ contributions during their relationship were many and varied.  In circumstances, therefore, where the dollar value of the wife's wealth as at the date of the commencement of the relationship, although substantial, is not perhaps so important as its subsequent use as appreciating assets, it is an initial contribution that must be given some weight within the overall contributions of these parties.  Put simply, it was a substantial and dominant initial direct financial contribution.  It was one that has had a ‘springboard’ and traceable effect on the parties’ current wealth.  Even considering the numerous and important contributions of both parties in the following years, there should be some recognition of the impact of the wife’s superior initial financial contribution.  This, together with the other relevant contributions during the relationship and post-separation as set out above, leads me to a conclusion that the property pool should be divided as to 62.5% to the wife and 37.5% to the husband.

Section 75(2) Factors

1. The husband argues that there should be an adjustment in his favour of 5 - 10% on account of s.75(2) factors. His Counsel emphasises the current income disparity between the parties. The wife argues that there should be no adjustment to either of them by reason of s.75(2) factors.

2. Both parties are 67 years of age. Whilst the wife continues to work, she concedes in the witness box that her work life is limited and already cut back from full time. The husband has chosen to retire from what was effectively self-employment. The evidence suggests that he retains his business equipment. His own affidavit at [29] shows some continuing capacity to work as an artist. He himself deposes that this was a career choice made upon the parties’ relocation to Tasmania. The sworn financial statements of the parties suggests that their respective needs are not extravagant and both live relatively simple lifestyles. Whilst the wife has remained in the former matrimonial home, she has met the costs of its upkeep and where the husband apparently lives with a relative and, according to his sworn financial statement, without payment of rent. Both parties receive UK pensions and, in the husband’s case, in addition to his Australian pension. They will each benefit from a distribution of their current joint wealth which in a large part is comprised of the home and wife's superannuation entitlement of around $200,000. She will not be able to continue to contribute to her superannuation for long into the future. Indeed, the fact and impact of these very orders under s.79 of the Act, will impact significantly on the wife's future where she proposes orders which ‘split’ most of her superannuation to the husband. In all of those circumstances, I am not of the view that it is just and equitable to make any further adjustments in favour of either of the parties.

Conclusion

1. In conclusion, the property pool inclusive of superannuation will be divided as to 62.5% to the wife and 37.5% to the husband. The property pool inclusive of superannuation has a value of $718,709.  I calculate the husband’s entitlement to be $269,516.  The husband will retain his superannuation ($1,233), his art equipment/business ($7,400), his Westpac Choice account ($2,154), his 2^nd Westpac Choice account ($500), the joint Westpac Choice account ($10) and the joint UK Bank account ($52) being a total of $11,349 with a consequent payment by the wife to the husband of $258,167.  I will allow the wife the opportunity to utilise her superannuation if she wishes but must also provide for the contingency that the home might need to be sold to provide for the husband’s entitlement.

I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Judge McGuire

Associate:

Date: 30 July 2020