Sattle and Easton
[2012] FMCAfam 1166
•5 November 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
SATTLE & EASTON [2012] FMCAfam 1166
FAMILY LAW – Property – alteration of property interests – short marriage – no children – assessment of contribution and s.75(2) factors – risk of under-valuing wife’s non-financial contributions – add back of funds used for pornography, prostitutes and mistresses – waiver of privilege.
Evidence Act 1995 (Cth), ss.55 and 135
Family Law Act 1975 (Cth), ss.75(2), 75(2)(o), 79, 79(2), 79(4), 79(4)(b), 79(4)(c), 79(4)(d), 79(4)(e), 79(4)(f), 79(4)(g), 117
Blanks & Blanks (2006) FamCA 354
C & C (1998) FamCA 143
DJM and JLM (1998) FLC 92-816
GBT & BJT (2005) FamCA 683
Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143
MH v MZ (2005) FLC 93-226; (2005) 34 Fam LR 169
Kennon (1997) FLC 92-757
Kowaliw and Kowaliw (1981) FLC 91-092
McMahon & McMahon (1995) FLC 92-606
Mann v Carnell [1999] 201 CLR 1
M & M (1998) FamCA 42
Mayne (2011) FamCA FC 192
Money v Money (1994) FLC 92-485; (1994) 17 Fam LR 814
Moran v Moran [No.6] (2010) NSWSC 240
Norbis v Norbis (1986) 161 CLR 513; (1986) FLC 91-712
Omacini & Omacini (2005) FLC 93-218
P & P (2002) FamCA 1006
Pierce v Pierce (1998) FLC 92-844
Sharpe & Sharpe (2010) FamCA 250
Townsend and Townsend (1995) FLC 92-569
Williams & Williams [2007] FamCA 313
Applicant: MS SATTLE
Respondent: MR EASTON
File Number: SYC 2110 of 2011
Judgment of: Altobelli FM
Hearing dates: 30 and 31 August 2012
Date of Last Submission: 31 August 2012
Delivered at: Sydney
Delivered on: 5 November 2012 REPRESENTATION
Counsel for the Applicant: Ms Gillies
Solicitors for the Applicant: Aitken Lawyers Pty Limited
Counsel for the Respondent: Mr Richardson SC
Solicitors for the Respondent: Barkus Doolan Kelly ORDERS
THE COURT NOTES the following definitions for the purpose of these Orders:
A.1.“Property G” means the property situated at and known as Property G in the State of New South Wales being the whole of the land contained in Folio Identifier (omitted) together with the improvements, fixtures and fittings erected thereon and/or attached thereto, of which the parties are the registered proprietors;
A.2.“husband’s car” means the (model omitted) motor vehicle registered in the husband's sole name;
A.3.“(omitted) home loan” means the loan secured under mortgage registered number (omitted) to (omitted) Bank, secured upon the title to the Property G property;
A.4.“husband’s car loan” means the agreement between the husband and (omitted) Financial Services;
A.5.“wife’s bank accounts” means accounts held by the wife with (omitted) Bank and (omitted) Account in her sole name or solely operated by her;
A.6.“husband’s bank accounts” means accounts held by the husband with (omitted) Bank and (omitted) Bank in his sole name or solely operated by him;
A.7.“husband’s stockbroking account” means the (omitted) trading account in the husband’s name;
A.8.“wife’s business” means the business operated by the wife known as (omitted);
A.9.“husband’s loan to Ms W” means the personal loan made by the husband to Ms W which is owed to the husband;
A.10.“(omitted) credit card” means the (omitted) credit account number (omitted) in the husband's sole name;
A.11.“wife’s contents” means all contents of the wife’s home including furniture and furnishings at the Property G property;
A.12.“husband’s contents” means all contents of the husband's home;
A.13.“wife’s jewellery” means jewellery in the wife’s possession;
A.14.“husband's (omitted)” means the husband's entitlement to programs held by him with the (omitted);
A.15.“husband’s superannuation” means the entitlement of the husband under (omitted) Pension Plan and the (omitted) Pension Plan;
A.16.“wife’s superannuation” means the entitlement of the wife under (omitted) Superannuation Fund
THE COURT MAKES AN ORDER UNDER SECTION 79 OF THE FAMILY LAW ACT, 1975, IN TERMS OF THE FOLLOWING ORDERS 1 TO 5 AND FURTHER ORDERS IN TERMS OF ORDERS 6 AND 7:
1.That within 3 calendar months of the date of these Orders the parties do all acts and things and execute all documents necessary to effect a sale of the Property G property for the best price reasonably obtainable as set out in the following manner:
1.1.list the Property G property for sale by public auction within 28 days of the date of these Orders with such agent as the parties may agree to appoint and in default of agreement as to agent within 14 days of the date of these Orders with such agent as the President of the Real Estate Institute of NSW shall appoint (“the agent”) and the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
1.2.the reserve price for the purpose of such auction shall be such price as may be mutually agreed upon by the parties or, in the absence of agreement reached within 28 days prior to the date of the auction sale, the reserve price shall be the price nominated as the fair market value thereof by a valuer appointed by the President for the time being of the NSW Division of the Australian Property Institute (Inc) (“the valuer”) and the costs of and incidental to such appointment and valuation to be borne equally by the parties as and when same fall due;
1.3.the valuer shall, if requested by either the husband or the wife at a date 3 calendar months after the date upon which the Property G property is first listed and thereafter at 3 calendar monthly intervals until the Property G property is sold, nominate an updated sale price;
1.4.the parties shall each co-operate in every way with the agent including (without limiting the generality of the foregoing):
1.4.1.making the key available to the agent;
1.4.2.allowing inspection of the Property G property at all reasonable times requested by the agent;
1.4.3.doing or saying nothing to hinder or prevent a sale being effected;
1.4.4.ensuring the Property G property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
1.4.5.signing all documents requested by the agent in relation to the listing for sale of the Property G property except a contract or agreement for sale which has not been authorised by the parties' solicitors;
1.5.in the event the bidding at the auction does not reach the reserve price the parties or such of them as attends the auction may negotiate with the highest bidders or any other interested person and effect a sale of the Property G property at a price which is not more than 10% below the reserve price, or at such other price as the parties agree upon in writing;
1.6.if the Property G property remains unsold, the parties shall do all acts and things and sign all documents necessary to immediately relist the Property G property for sale by public auction again, on a date nominated by the agent and at such auction there shall be no reserve price unless otherwise agreed by the parties in writing;
1.7.the parties shall instruct such solicitor as they agree upon to have the conduct of the sale on behalf of both parties or, in the absence of agreement reached within 14 days of the date of these Orders shall instruct such solicitor as may be appointed by the President for the time being of the Law Society of New South Wales (“the solicitor”) the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
1.8.the parties shall each execute a contract for sale in the form prepared by the solicitor having the conduct of the sale at the sale price;
1.9.neither party may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the Property G property or to any commission;
1.10.the party not in possession shall be entitled upon reasonable notice to enter and view the state of repair of the Property G property.
2.In the event that the Property G property is sold in accordance with paragraph 1 of these Orders, then on settlement of the sale of the Property G property, the proceeds of sale be paid in the following manner and priority:
2.1.all costs and expenses of sale including legal costs and disbursements, agents’ commission, advertising expenses, valuers’ fees and auction expenses (including repayment of any such expenses as have been paid by either or both of the parties);
2.2.the full amount required to discharge the (omitted) Bank home loan;
2.3.the full amount required to pay out the (omitted) credit card;
2.4.the amounts required to pay all municipal and water rates outstanding with respect to the Property G property;
2.5.the sum of $190,520 to the wife;
2.6.the balance to be paid to the husband.
3.That pending the sale of the Property G property, the wife shall be permitted to continue to reside in the Property G property but only on the condition that she:
3.1.promptly attends to all acts required of her pursuant to paragraphs 1 and 2 of these Orders;
3.2.pays all municipal and water rates and taxes and all other outgoings in respect of the Property G property; and
3.3.makes and be responsible for the payment of all moneys due and owing pursuant to any mortgage registered as security over the Property G property.
4.In the event that it be contended by the husband that the wife has failed to comply with any of the provisions, the husband shall have liberty to bring an application on short notice to have the wife excluded from the Property G property.
5.Except as specifically provided for by any paragraph comprising these Orders to the contrary, as against the husband, the wife is the sole owner of and the husband has no interest in:
5.1.wife’s bank accounts;
5.2.wife’s contents;
5.3.wife’s business;
5.4.wife’s jewellery;
5.5.wife’s superannuation;
5.6.all other personal property (including choses in action) of whatsoever nature and kind in the possession of the wife at the date of the making of these Orders.
6.Except as specifically provided for by any paragraph comprising these Orders to the contrary, as against the wife, the husband is the sole owner of and the wife has no interest in:
6.1.husband's (omitted) program;
6.2.husband's bank accounts;
6.3.husband’s contents;
6.4.husband’s stockbroking account;
6.5.husband's car;
6.6.husband's loan to Ms W;
6.7.husband’s superannuation; and
6.8.all other personal property (including choses in action) of whatsoever nature and kind in the possession of the husband at the date of the making of these Orders.
7.Except as specifically provided for by any paragraph comprising these Orders to the contrary:
7.1.the husband hereby indemnifies the wife from and in respect of all actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband including the husband's car loan;
7.2.the wife hereby indemnifies the husband from and in respect of all actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife.
8.In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders, then the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act 1975, to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
IT IS NOTED that publication of this judgment under the pseudonym Sattle & Easton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEYSYC 2110 of 2011
MS SATTLE Applicant
And
MR EASTON Respondent
REASONS FOR JUDGMENT
Introduction
1.This case is about altering the property interests of a husband and a wife, commonly known as a property settlement.
Background
2.The husband in this case was born in the United Kingdom and is now 34 years old. The wife was born in Australia and is also 34 years old. They commenced living together in January 2004, married in November 2005, and separated in October 2010. There were no children born to their relationship.
3.Throughout the period the husband was employed with a major (omitted), originally in Australia, and then in England. He was made redundant in June 2012. The husband continues to live in England. The wife also worked in (omitted), initially in Australia, then in England where the parties lived, and then again in Australia when the parties returned. Her employment with a leading Australian (omitted) ended in late 2005. From 2008 the parties established a business known as (omitted), operated by the wife. This was a business involving (omitted).
4.At the time the relationship commenced in January 2004 the parties were, in fact, living in England. The husband was offered employment with the same (company omitted) in Australia and they returned here in mid-2004. It was in July 2010 that the husband resigned from that employment receiving a substantial amount by way of benefits. He then returned to England. The parties agreed that relationship ended in October 2010.
5.In September 2006 the husband and the wife purchased what became the former matrimonial home in Sydney’s (omitted) suburbs. It is the major asset in the present proceedings. The parties lived there from the date of acquisition of the home, the wife established (omitted) from the premises and, indeed, continues to live there today. The husband moved from the former matrimonial home on separation.
Orders Sought
6.The wife, who is the applicant in these proceedings, asks the court to make an order for the transfer to her of the former matrimonial home on the basis that she will discharge the mortgage and become responsible for all outgoings in relation to the home. She otherwise proposes that the husband keep everything else he has and the wife everything else she has.
7.The husband’s proposal is contained in his case outline. He proposes that the former matrimonial home be sold and that he retain all of the sale proceeds. The wife would otherwise retain what she has and, likewise, he retain what he has.
8.The polarisation in these proposals is indicative of the intensity with which this matter was litigated. Each party made criticisms of how the other behaved and conducted themselves after separation and during the course of these proceedings. Much of the evidence in this regard is irrelevant and did not assist the court in determining the legitimate dispute between the parties.
The Issues9.The cases advanced by both the wife and the husband raise issues about the constitution of the balance sheet, assessment of contribution, and assessment of any applicable s.75(2) considerations.
10.The wife gave evidence, as did the husband. There are no issues as to credit for either party despite what each might feel about the other. Each has accused the other of non-disclosure, or failure to make timely disclosure. These assertions are largely unfounded, and the court is satisfied that, by the time of the final hearing, there were no issues of non-disclosure.
The Applicable Law
11.The preferred approach to the determination of an application under s.79 of the Family Law Act1975 (Cth) is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
12.The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under ss 79(4)(d), 79(4)(e), 79(4)(f) and 79(4)(g) including s 75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
13.One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole. My discretion in this regard should be exercised having regard to the facts of this case.
14.Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by each spouse in bringing assets into the marriage. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at pars 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In MH v MZ (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
15.Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
16.In relation to add-backs, the applicable law can be found in decisions such as the Full Court's decision in Omacini & Omacini (2005) FLC 93-218 that describes the situations in which add-backs are appropriate.
30.To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a)Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-816 the Full Court said at 85,262:
“11.6 For reasons set out in Farnell, s.117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s.117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.”
(b)Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
“In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under s.75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.”
(c)In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec.75(2)(o) to applications for settlement of property instituted under the provisions of sec.79.”
31.As the Full Court said in Browne and Green (1999) FLC 92-873 at 86,360:
“44.We agree with her Honour that the principles stated by Baker J in Kowaliw certainly do not constitute any form of fixed code. They are no more than guidelines for use in the exercise of the discretionary jurisdiction conferred by s.79 of the Family Law Act 1975. Nevertheless, they have over the considerable period of time since they were enunciated, become a well accepted guideline in this jurisdiction – a guideline the use of which assists in the achievement of the important goal of consistency within the jurisdiction.”
The Balance Sheet
17.At the commencement of the hearing I was provided with the following agreed balance sheet:-
Ownership Description Wife/de facto partner’s value Husband/
de facto partner’s valueASSETS 1 J Property G (FMH) – valued 1,200,000 1,200,000 2 J (omitted) Bank – Choice #(omitted) (W: as at 21/08/12) (H: amount agreed but see note to item 35) 375 0 3 W (omitted) Account #(omitted) (W: as at 20.8.12) (H: amount agreed but see note to item 35) 6,000 0 4 W (omitted) Business Cheque Account #(omitted) (W: as at 21/08/12) 877 877 5 W (omitted) Bank – #(omitted) (W: as at 21/08/12) 3,945 3,945 6 W (omitted) shares (15 shares x $25.30 per share (W: 28/08/12) 380 380 7 H (omitted) Account #(omitted) (W: as at 13/08/12) (H: as at 28.8.12) 3,826 3,826 8 H (omitted) Account #(omitted) (£1.14 + US$47.96) (W: as at 13/08/12) (H: as at 28.8.12) 48 48 9 H (omitted) Account #(omitted) (W: £2,866 as at 02/08/12) (H: £2,202.62 as at 28.8.12) 3,350 3,350 10 H (omitted) Account #(omitted) (H: account closed) 0 0 11 H (omitted) Account #(omitted) (£107,033 W: as at 12/07/12) (H: £50,935.16 as at 28.8.12) 77,460 77,460 12 H (omitted) Account #(omitted) (£1,770 W: as at 01/08/12) (H: £2,000 as at 28.8.12) 3,041 3,041 13 H (omitted) Account #(omitted) (W: as at 25/07/12) (H: £6,658.15 as at 28.8.12) 10,125 10,125 14 H (omitted) Credit Card (H: £241.99 as at 28.8.12) 368 368 15 H (omitted) employee awards 80,347 80,347 16 H (omitted) fx trading account (H: as at 28.8.12) 30,900 30,900 17 H (vehicle omitted) (H: £41,915) E100,000 62,545 18 H Loan to Ms W (W: £5,595) (H: £3,750) 8,538 5,705 19 W Loan made by Wife 0 0 20 H Household contents 9,054 9,054 21 W Household contents 12,000 12,000 22 W (business omitted 22,500 22,500 23 W Jewellery NK 24 H Barkus Doolan Kelly Trust Account (H: $70,896 but see note to item 38) 45,810 0 25 W Aitken Lawyers Trust Account (H: $11,102 but see note to item 37) 0 Total E$1,618,944 $1,526,471 ADDBACKS 26 H Funds spent by Husband to conduct extra-marital affairs prior to separation E11,250 0 27 H Funds spent by Husband on online sex and dating sites prior to separation E32,140 0 28 H Funds paid to Husband upon resignation of (company omitted) (less funds repaid) 104,902 0 29 H Funds paid to Husband (after tax) from (company omitted) interests 92,659 0 30 H Funds paid to Husband (after tax) from (omitted) interests 6,303 0 31 H Funds paid to Husband (after tax) from (omitted) stock unit conversion (gross US$198,395.85) 192,774 0 32 H Funds paid to Husband (after tax) from (omitted) Superannuation – accumulated while working in Australia 96,670 0 33 H Funds retained by Husband from sale of (vehicle omitted) (08/10) 22,350 0 34 H Bonus received by Husband after separation but accrued prior to separation 76,218 0 35 W Preliminary distribution of property settlement being funds withdrawn from the offset account (see note) 0 201,175 36 W Paid legal costs (H: $41,464 but see note to item 35) 0 0 37 W Paid legal costs (H: $43,969 but see note) 0 0 38 H Legal costs (see note) 0 0 Total E$635,266 $201,175 LIABILITIES 39 J (omitted) Home Loan #(omitted) (W: as at 21/08/12) 601,734 601,734 40 W (omitted) Credit Card (omitted) (previously (omitted)) (W: as at 21/08/12) 1,956 1,956 41 H Loan from (omitted) Financial Services (£52,000) 79,168 76,100 42 H (omitted) Credit Card (omitted) (H: as at 28.8.12) 3,826 3,826 43 H (omitted) Credit Card (£9,957 W: as at 07/08/12) (H: see item 14) 0 0 44 H (omitted) Credit Card (omitted) (H: £1,997.45 as at 28.8.12) 3,038 3,038 Total $689,722 $686,654 SUPERANNUATION Member Name of Fund Type of Interest Wife/de facto partner’s value Husband/
de facto partner’s value45 W (omitted) Superannuation Fund #(omitted) as at 6.8.12) Accumulation 55,430 55,430 46 H (omitted) Pension Plan (£60,468.17) Accumulation 90,230 90,230 47 H (omitted) Pension Plan (£5,097.95) Accumulation 7,600 7,600 Total $153,260 $153,260 FINANCIAL RESOURCES Ownership Description Wife/de facto partner’s value Husband/
de facto partner’s value48 Total $ 0.00 $ 0.00 TOTAL ASSETS, SUPERANNUATION
& ADDBACKSE$2,407,470 $1,880,906 (TOTAL LIABILITIES) ($689,722) ($686,654) TOTAL NETT ASSETS E$1,717,748 $1,194,252 18.A number of issues arise. There is an issue about item 2, a (omitted) Bank account, as well as item 3, an (omitted) Bank account. The determination in relation to these items is dependent on the determination about item 35, which will be dealt with below. As it is, the court intends to make the add-back asserted at item 35 and, on this basis, items at 2 and 3 on the balance sheet should be noted as zero, to avoid double counting.
19.There is an issue about item 17 which is the husband’s (vehicle omitted) motor vehicle. The wife asserts it has value of $100,000, the husband $62,545. In a case where the husband and wife spent between them over $200,000 in legal costs, it is unusual that there would not be a valuation of this motor vehicle. The only evidence was exhibit H10, the husband’s own exhibit, which is a document extracted from the United Kingdom equivalent of the (omitted). This document, somehow, justifies the figure advanced by the husband. The court accepts the figure advanced by the husband, but only because it is an admission against interest. Exhibit H10 is a document of questionable usefulness. In any event, there is no objective basis for the wife’s assertion of a higher value.
20.There is an issue about item 18, a loan by the husband to his current de facto partner, Ms W. The dispute is about the quantification of this loan. There was no discernable evidence in this regard. I accept that the husband’s figure is an admission against interest. Item 18 should read $5,705.
21.There is an issue about items 24 and 25 being legal fees paid by both parties. In relation to the wife’s case for the husband’s legal fees paid to be added back, the case fails. The husband contends, and the evidence amply supports, that any legal fees paid came from his income in the post-separation period. The husband, quite properly, conceded that if his legals were not added back, then neither should the wife’s. Accordingly, items 24 and 25 should read nil.
22.Items 26 and 27 are asserted add-backs by the wife. It is the wife’s case that towards the end of the relationship, and then immediately after separation, the husband had wasted significant joint funds on expenses such as online pornography, prostitutes and mistresses. She asserts that these expenses include travel and accommodation, online debits to pornographic websites, and membership fees to dating agencies and “sugar daddy” organisations. The husband does not deny the conduct in question, nor the expenditure. He submits that the wife has not established, firstly, why these funds should be added back and, secondly, how the figures were calculated.
23.The evidence does demonstrate that money was used for the purposes contended in the period leading up to separation, and perhaps shortly afterwards, but certainly in the twilight period of the relationship. The evidence suggests that the wife was not aware of this expenditure, and that the husband did not facilitate her becoming aware of the same. There is only one source of income from which this expenditure was paid - the husband’s income. His total income and benefits in the 2010 financial year was $877,168. The add-back claimed is $43,390, or less than five per cent of his income in that year. Senior counsel for the husband submits, and the court accepts, that this is a factor relevant to the exercise of discretion.
24.The wife’s case, in effect, is that the money expended is property of the husband and wife and used for the benefit of the husband only, and that if he had not spent it, it would otherwise have been available for distribution between the husband and the wife: Omacini (2005) FLC 93-218; Townsend (1995) FLC 92-569. It was not contended by the husband, nor could it be reasonably so contended, that the expenditure was for his reasonable necessary living expenses: Marker (1998) FamCA 42 (1 May 1998); C & C (1998) FamCA 143 (8 October 1998).
25.The expenditure bears the characteristic of being reckless, negligent or wanton, the overall effect of which was to reduce or minimise the pool of assets: Kowaliw (1981) FLC 91-092. Senior counsel for the husband argued that it was not in the public interest for courts to conduct this sort of detailed examination of the appropriateness of expenditure. He submitted, rhetorically, would it extend to the purchase of Playboy magazines? True it is that it is “not the court’s function to conduct an audit of the marriage or of the relationship finances”: Mayne (2011) FamCA FC 192, Fawkes DCJ par 77 and par 78. However, the expenditure is clearly “property” for the purposes of s.79. The husband seeks to exclude it from the balance sheet and, the court finds, advances no cogent reasons for doing so. Section 79(2) enjoins the court to make a “just and equitable” order. Whether the expenditure in question is 5 per cent of the husband’s income, or 50 per cent, it cannot be a just and equitable order from the wife’s perspective if the sum in question is arbitrarily excluded from the pool of assets available for distribution between them, in the circumstances of this case.
26.As for the quantification of the amounts, examination of paragraphs 83, 84 and 85 of the wife’s affidavit, together with the husband’s (omitted) bank statements (exhibit W2) provides this quantification. Items 26 and 27 will be added back to the pool of assets as notional property, and as otherwise described on the balance sheet.
27.There is an issue about items 28, 29, 30, 31, 32, and 34. The moneys in question were paid to the husband upon his resignation from the financial institution that he had worked for. He was working with this financial institution in Australia since early 2004, resigned from the Australian office in 2010 and joined the UK office that year, but later ceased his employment there in June 2012. The parties separated in October 2010. The wife’s case is that the benefits were clearly derived from the husband’s employment during the relationship, and should come into the pool. The husband’s case is that the situation is not as clear cut as the wife asserts and that, for example, some of these entitlements represent long-term incentives, dependent on both performance and retention. Thus, when the husband’s employment was terminated in 2012, at least some part of these benefits reflect compensation for lost employment, as opposed to compensation for work performed. This is an interesting argument that is not born out by the evidence. Indeed, the report of Mr G of (omitted) dated 16 August 2012, where one might expect to see facts or opinions to support such a submission, is silent on this. What is abundantly clear is that when the husband’s employment was terminated in June 2012 all of his outstanding employee awards vested. The Mr G report also supports the contention that all of these benefits accrued during the parties’ relationship. The wife’s case is made out in this regard. Items 28, 29, 30, 31, 32 and 34, should be included in the balance sheet.
28.There is an issue about item 33, funds retained by the husband by the sale of his (vehicle omitted) in August 2010. The evidence is clear in this regard - this was property owned at the time of cohabitation, and then sold. It was a premature distribution of assets. Item 33 should be included as notional property on the balance sheet.
29.There is an issue about item 35. The husband contends that immediately prior to separation the balance of an account known as the offset account which, principally, comprised the proceeds of sale of the husband’s motor vehicle, was $201,175. On the husband’s case the wife, without his knowledge and consent, removed the totality of these funds. He contends that this was a premature distribution of a proportion of the matrimonial assets.
30.The transaction in question occurred on 21 October 2010. The evidence indicates that the wife withdrew $180,000 from the offset account, and deposited into an account in her name only. The wife’s evidence is that this money was used to pay the mortgage payments over the home, council rates, household repairs, “as well as supporting myself until I found employment in about January 2011,” (wife’s affidavit, par 88). The husband’s evidence in this regard is found at pars 100, 101, 102, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113 and 114, including what he asserts to be the consequences of the wife’s failure to return these funds, after he had caused his solicitors to make a request in this regard. For example, he asserts, and the wife did not challenge, that the loan repayments on the mortgage increased by more than $1,000 each month, as a result of the wife removing the funds which were otherwise kept in the offset account, and thus reduced their interest liability. The husband was clearly concerned about what he perceived to be the intransigence of the wife and her solicitors in relation to returning the funds, particularly in circumstances where the wife returned to full-time employment so shortly after separation. Indeed, that is the wife’s own evidence. She found employment in January 2011, less than three months after the date of separation.
31.The wife swore two financial statements, one on 31 March 2011, and one on 17 August 2012. In both of these financial statements she deposes to having a surplus of income over expenditure. All that is left of the offset account is about $6,000 (formerly, item 3 of the balance sheet). The sum of $180,000 should be added back. There is no evidence that indicates the need for the wife to have acted in the manner she did. It could not be said that either her actions, or motives, were reasonable. It would not be just and equitable to characterise her expenditure of the moneys in question as reasonable, nor would it be just and equitable to exclude the sum from the balance sheet. The sum of $180,000 should be included at item 35. There was no evidence that assisted the court in understanding the basis of the husband’s contention for a higher figure.
32.There is a further issue about the liabilities at items 42 and 44. There is probably substance to the wife’s contention that these liabilities were incurred in the post-separation period and, therefore, ought not be included on the balance sheet. Given that one of the issues the court must decide in this case is whether to approach the alteration of property interests on a global or asset by asset basis, the court prefers to deal with these items by allocating them to a particular pool, in a way that does not prejudice the wife’s concerns. Indeed, even though not formally raised by the parties, there appear to be a number of items from 5 to 16 that are more equitably dealt with by allocation to particular pools from which contribution is assessed, rather than by exclusion from the balance sheet. These matters will be dealt with in due course.
33.Having regard to the matters set out above the balance sheet in this case will be as follows:-
Ownership Description Value ASSETS 1 J Property G (FMH) - valued 1,200,000 2 J (omitted) Bank –#(omitted) (W: as at 21/08/12) (H: amount agreed but see note to item 35) 0 3 W (omitted) Account #(omitted) (W: as at 20.8.12) (H: amount agreed but see note to item 35) 0 4 W (omitted) Business Cheque Account #(omitted) (W: as at 21/08/12) 877 5 W (omitted) Bank – #(omitted) (W: as at 21/08/12) 3,945 6 W (omitted) shares (15 shares x $25.30 per share (W: 28/08/12) 380 7 H (omitted) Account #(omitted) (W: as at 13/08/12) (H: as at 28.8.12) 3,826 8 H (omitted) Account #(omitted) (£1.14 + US$47.96) (W: as at 13/08/12) (H: as at 28.8.12) 48 9 H (omitted) Account #(omitted) (W: £2,866 as at 02/08/12) (H: £2,202.62 as at 28.8.12) 3,350 10 H (omitted) Account #(omitted) (H: account closed) 0 11 H (omitted) Account #(omitted) (£107,033 W: as at 12/07/12) (H: £50,935.16 as at 28.8.12) 77,460 12 H (omitted) Account #(omitted) (£1,770 W: as at 01/08/12) (H: £2,000 as at 28.8.12) 3,041 13 H (omitted) Account #(omitted) (W: as at 25/07/12) (H: £6,658.15 as at 28.8.12) 10,125 14 H (omitted) Credit Card (H: £241.99 as at 28.8.12) 368 15 H (omitted) employee awards 80,347 16 H (omitted) fx trading account (H: as at 28.8.12) 30,900 17 H (vehicle omitted) (H: £41,915) 62,545 18 H Loan to Ms W (W: £5,595) (H: £3,750) 5,705 19 W Loan made by Wife 0 20 H Household contents 9,054 21 W Household contents 12,000 22 W (business omitted) 22,500 23 W Jewellery 24 H Barkus Doolan Kelly Trust Account (H: $70,896 but see note to item 38) 0 25 W Aitken Lawyers Trust Account (H: $11,102 but see note to item 37) 0 Total E$1,526,471 ADDBACKS 26 H Funds spent by Husband to conduct extra-marital affairs prior to separation E11,250 27 H Funds spent by Husband on online sex and dating sites prior to separation E32,140 28 H Funds paid to Husband upon resignation of (company omitted) (less funds repaid) 104,902 29 H Funds paid to Husband (after tax) from (company omitted) interests (omitted) 92,659 30 H Funds paid to Husband (after tax) from (company omitted) interests (omitted) 6,303 31 H Funds paid to Husband (after tax) from (omitted) stock unit conversion (gross US$198,395.85) 192,774 32 H Funds paid to Husband (after tax) from (omitted) Superannuation – accumulated while working in Australia 96,670 33 H Funds retained by Husband from sale of (vehicle omitted) (08/10) 22,350 34 H Bonus received by Husband after separation but accrued prior to separation 76,218 35 W Preliminary distribution of property settlement being funds withdrawn from the offset account (see note) 180,000 36 W Paid legal costs (H: $41,464 but see note to item 35) 0 37 W Paid legal costs (H: $43,969 but see note) 0 38 H Legal costs (see note) 0 Total E$815,266 LIABILITIES 39 J (omitted) Home Loan #(omitted) (W: as at 21/08/12) 601,734 40 W (omitted) Credit Card (omitted) (previously (omitted)) (W: as at 21/08/12) 1,956 41 H Loan from (omitted) Financial Services (£52,000) 79,168 42 H (omitted) Credit Card (omitted) (H: as at 28.8.12) 3,826 43 H (omitted) Credit Card (£9,957 W: as at 07/08/12) (H: see item 14) 0 44 H (omitted) Credit Card (omitted) (H: £1,997.45 as at 28.8.12) 3,038 Total $689,722 SUPERANNUATION Member Name of Fund Type of Interest value 45 W (omitted) Superannuation Fund #(omitted) ((omitted) as at 6.8.12) Accumulation 55,430 46 H (omitted) Pension Plan (£60,468.17) Accumulation 90,230 47 H (omitted) Pension Plan (£5,097.95) Accumulation 7,600 Total $153,260 FINANCIAL RESOURCES Ownership Description value 48 Total $ 0.00 TOTAL ASSETS, SUPERANNUATION
& ADDBACKSE$2,494,997 (TOTAL LIABILITIES) ($689,722) TOTAL NETT ASSETS E$1,805,275 Contribution at Cohabitation
34.The wife’s case is that as at the date of cohabitation, December 2003, she had savings totalling about $50,000 and superannuation of about $37,619. The documents annexed to her affidavit corroborate this.
35.The husband agrees that cohabitation commenced in December 2003. At the time his assets included an (omitted) motor vehicle subject to a lease, superannuation with his employer, and bonuses due and paid somewhat later in January 2004. In addition, the husband had stock units in his employer in 2002, which did not vest until January 2005. The husband was not able to establish the value of his assets at cohabitation, in evidence. Nonetheless, given that he was earning a substantial salary at the time, and having regard to the quite extensive evidence before the court about the husband’s work related benefits at a later time, it is clear to the court that the work related assets and benefits the husband had at cohabitation were of a substantial value.
36.In the circumstances, and doing the best the court can do, at cohabitation the husband and the wife seemed to enter into their relationship with assets of about equal value. If there is any difference in value, it is minor when one has regard to the total value of the asset pool today.
Contribution during Cohabitation
37.Cohabitation commenced in London where the husband had been transferred to for work purposes The relationship was a growing, emerging one before January 2004 when, even on the wife’s case, cohabitation commenced in London. It is part of her case that she left her job in Australia for the purposes of commencing this relationship. On balance, that is probably a correct view of the evidence. In any event, when in England, they travelled when the husband was not working. The wife actively sought work and was, in fact, employed by March 2004. This means that the wife was out of work for only a period of months, before becoming re-employed. The husband was then re-transferred back to Australia and the wife succeeded in also being transferred back to Australia with her employer at the time. The evidence indicates that by July 2004 both were in Australia and working full-time.
38.In October 2005 the wife’s position became redundant, and this led to her receiving total termination payments of $66,763. The wife sought employment but was not successful in this regard until three months after the date of separation. In mid-2008 she established an (business omitted) called (omitted), using start-up capital of $25,000. The evidence indicates that the husband was fully aware of this, and supported it, even though he may either have had views then, or developed views later, about the viability of the business.
39.During the entire period of the marriage the husband was employed and earned a substantial salary and benefits. He asserts at par 63 of his affidavit that his total income during the marriage was $4,675,459. This was not challenged in cross-examination.
40.In July 2006 the parties purchased the matrimonial home. The evidence indicates that the deposit and stamp duty they contributed towards the purchase price was joint money in the sense that it was moneys that had been accumulated by both of them during the course of their relationship. Completion of the purchase was funded by a bank with a loan of $895,000.
41.The wife’s evidence is that since her redundancy she continued to perform all domestic duties in the home except for the use of a cleaner in about late 2007 or early 2008. She contends that she continued to cook, making the husband’s breakfast, lunch and dinner every day, cleaning and ironing most of his clothes, painting the side fence, oiling outdoor furniture and a deck, and coordinating work that was performed on the home. She was also responsible for maintaining the parties’ finances. The wife was challenged about some of this evidence and it is clear that the husband and wife had a very comfortable lifestyle that included holidays, dining out, the use of house cleaners, dog walkers and launderers, but that does not necessarily detract from the wife’s evidence about what she herself describes as domestic duties.
42.The husband is critical of the wife for not pursuing other employment opportunities outside of her main field, which was in (omitted). There is no evidence, however, of a job offer not taken up. The husband’s criticism is unfair in the circumstances.
43.The husband and the wife cohabitated, married, and intended to start a family before the relationship broke down.
Approach to Assessment of Contribution
44.The husband contends that the court should adopt a modified asset by asset approach, on the basis of three separate pools of property. The first pool would consist of the jointly owned property, the balance of the loans secured against the property, the balance of the credit card liability at the date of separation and of the notional add-back that relates to funds extending to the credit of the off-set account at separation. The second pool comprises all other property and liabilities that are individually held by the husband, and the third pool comprises all other property and liabilities that are individually held by the wife. In senior counsel for the husband’s written submission it is contended that this approach recognises a traditional approach in the existing case law for cases of short, childless marriages, and is supported by the very disparate contributions made during the relationship, and the very significant contributions made by the husband in the period since separation.
45.Senior counsel referred to the Full Court’s decision in McMahon & McMahon (1995) FLC 92-606 and, in particular, a passage at page 82043. Whilst there were differences on the facts between the present position, and McMahon (e.g. in McMahon the parties had strictly divided their assets and completely separated their financial affairs, which is not the evidence in the present case), nonetheless, the principles stated by the Full Court are applicable. In McMahon the Full Court referred to the High Court’s decision in Norbis (1986) FLC 91-712 and, in particular, a passage from the reasons of Wilson and Dawson JJ at page 751-73 where they said:-
If the parties’ interests in specific items of property differ or they have made different contributions, it may be desirable to proceed upon an item by item basis in the division of property between them. In such a case, justice and equity may best be served by treating the items separately for the purpose of determining the proportions in which they are to be divided, particularly if the overall division is to be effected by the transfer or retention of interests of individual assets, as was convenient in this case.
46.Counsel for the wife’s concern is that such an approach minimises the contribution that is made by a homemaker. Indeed, the Full Court in McMahon recognised this in a passage at 92-606, reflecting the High Court’s concerns in all this in relation to the difficulty of assessing contribution by a spouse as homemaker on an asset by asset approach, as opposed to by reference to the whole of the parties’ properties. The court does not accept counsel for the wife’s submissions as to the inappropriateness of an asset by asset approach having regard to the wife’s contribution as a homemaker on the facts of this case. Whether or not there is injustice to the wife really depends on the allocation of assets into individual pools. It is that exercise which will either hinder, or facilitate, the assessment of any contribution she has made as homemaker. An asset by asset approach is therefore appropriate on the facts of this case. Whilst the court acknowledges the further submissions made by senior counsel for the husband at 7.8 of his Case Outline, in support of an asset by asset approach, the court does not accept that these matters (primarily based on the perceived unreasonableness of the wife’s claim, and approach to litigation) are relevant.
47.Turning to the pools of assets contended, the court agrees that there should be three pools with one consisting primarily of joint assets, the other of the husband’s assets and the final one the wife’s assets. The court does not accept, however, the husband’s contentions for what should be included in the joint pool. The husband’s case is that, for all practical purposes, anything in joint names should be included in the joint pool, but anything in the husband’s sole name should be included in a separate pool on the basis that he has made all the contributions to it. Such an approach would be plainly unjust and inequitable to the wife. The focus should not be on how the parties have labelled, or characterised their assets as joint or separate, but rather on the fundamental nature of the asset, having regard to when and how it was acquired. On this preferred approach, therefore, most of the assets on the balance sheet fall into the first pool, i.e. the joint pool, because they were accumulated during or as a result of the marriage. Each party’s contribution can then be assessed as regards that pool, having regard to what senior counsel described as the disparate and significant contributions made.
48.In fact, it is easier for the court to identify the second and third pool with the remainder being left in the first pool.
49.The second pool would consist of the husband’s own assets. Items 7, 8, 9, 10, 11, 12, 13 and 14 inclusive on the balance sheet fall into the second pool. Doing the best it can on the evidence before it, the court characterises these items as being items accumulated by the husband in the post-separation period without reference to the period of the marriage. On the same basis, items 16 and 18 appear, prima facie, to have a post-separation genesis. Likewise, the liabilities at items 42, 43 and 44 appear to have that post-separation genesis. It should be noted in this regard that the wife makes no claim for post-separation contribution, nor is one reasonably available on the present evidence.
50.The third pool would consist of the wife’s sole assets. This would include item 5, and the liability at item 40, as both appear, prima facie, to have a post-separation genesis. In this regard, the husband makes no claim for post-separation contribution.
51.The first property pool, consisting of joint assets and those other assets having the genesis in the marriage include items 1, 4, 6, 15, 17, 20, 21, 22, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 39, 41, 45, 46 and 47. The common feature of the items in this pool is the genesis within the marriage and the wife’s ability to assert that she has made a contribution under s 79(4) to these assets.
Assessment of contribution
52.On the evidence before the court it appears that the wife has made no contribution to the assets in pool two, and the husband no contribution to the assets in pool three, and, accordingly, all of the assets and liabilities in pool two should remain with the husband and, likewise, with the wife as regards pool three. The real contention arises in relation to pool one.
53.As indicated previously in these reasons, the court finds that, for all practical purposes, the parties’ initial contribution was approximately equal.
54.During the period of cohabitation the evidence indicates that both the husband and the wife applied their income for the purposes of their mutual benefit. They each made financial contributions. They each made non-financial contributions. The wife asserts that she made a contribution in the capacity of homemaker. The husband asserts that he played a role in this regard, but I did not understand his case to be that his contribution to homemaker was on par with that of the wife or, indeed, anywhere near it. There is no doubt that the husband’s financial contribution was significantly greater than that of the wife. He worked for the entire period of the relationship, whereas the wife did not. His income was considerably greater than hers. The husband is critical of the wife unilaterally withdrawing funds from the off-set account and his contention is that her conduct resulted in a financial detriment to the parties. The evidence suggests the financial detriment was in having to pay more interest on the mortgage loan. That could have been avoided if the moneys had been kept in the off-set account. With the benefit of hindsight, the wife was unwise to have so acted, whether or not she acted on advice given to her by those who represented her. To visit the consequences of this, however, is problematic. To the extent that the husband sought to argue that financial detriment to the parties was caused by the wife’s unreasonable stance in refusing to sell the former matrimonial home, whilst the evidence does suggest there was a decline in value of the property, there is nothing in the evidence to suggest that the wife’s actions were causative of the decline in value. The court accepts that, on the evidence before it, that the wife’s conduct did result in financial detriment to the parties, but the court is unable to assess it. Rather than treat it as a matter of contribution, it is best to treat it as a s 75(2)(o) consideration.
55.The husband submits that an overall finding of 75 per cent to the husband and 25 per cent to the wife is just and equitable. The wife contends that such an adjustment greatly minimises the financial and non-financial contribution that the wife made, particularly as homemaker.
56.How should the contribution be assessed in this case?
57.Having regard to the matters set out above, there are three pools and, for all practical purposes, contribution needs to be assessed as regards the first pool. This pool, pool A, consists of the following superannuation and non-superannuation assets:-
POOL A 1 J Property G (FMH) - valued 1,200,000 4 W (omitted) Business Cheque Account #(omitted) (W: as at 21/08/12) 877 6 W (omitted) shares (15 shares x $25.30 per share (W: 28/08/12) 380 15 H (employer omitted) employee awards 80,347 17 H (vehicle omitted) (H: £41,915) 62,545 20 H Household contents 9,054 21 W Household contents 12,000 22 W (business omitted) 22,500 26 H Funds spent by Husband to conduct extra-marital affairs prior to separation E11,250 27 H Funds spent by Husband on online sex and dating sites prior to separation E32,140 28 H Funds paid to Husband upon resignation of (employer omitted) (less funds repaid) 104,902 29 H Funds paid to Husband (after tax) from (omitted) interests (omitted) 92,659 30 H Funds paid to Husband (after tax) from (omitted) interests (omitted) 6,303 31 H Funds paid to Husband (after tax) from (omitted) stock unit conversion (gross US$198,395.85) 192,774 32 H Funds paid to Husband (after tax) from (omitted) Superannuation – accumulated while working in Australia 96,670 33 H Funds retained by Husband from sale of (vehicle omitted) (08/10) 22,350 34 H Bonus received by Husband after separation but accrued prior to separation 76,218 35 W Preliminary distribution of property settlement being funds withdrawn from the offset account (see note) 180,000 39 J (omitted) Home Loan #(omitted) (W: as at 21/08/12) (601,734) 41 H Loan from (omitted) Financial Services (£52,000) (76,100) 45 W (omitted) Superannuation Fund #(omitted) ((omitted) as at 6.8.12) 55,430 46 H (omitted) Pension Plan (£60,468.17) 90,230 47 H (omitted) Pension Plan (£5,097.95) 7,600 Net $1,678,395 Super assets: 153,260 Non-super assets: 1,525,135 $1,678,395 58.The significant characteristics of this pool include that it totals $1,678,395, that superannuation assets amount to $153,260 or nine per cent of the pool, and non-superannuation assets amount to $1,525,135. The only joint asset is the equity in the home, about $598,266. The total value of the wife’s assets in pool A is $271,187 consisting of superannuation of $55,430 and non-superannuation assets including notional property of $215,757.
59.The superannuation component of pool A is relatively small, and on that basis the superannuation will be left where it is. Under the circumstances, there is no need for a superannuation split, and that outcome was not seriously contended for by either party.
60.The husband contended that the wife should receive 25 per cent of the pool that he contended for. Pool A is nothing like the pool he contended for. The practical impact of the husband’s proposal was that the wife would get, in recognition of her contribution, whatever assets are attributed to her in pool A. In this regard the wife’s $271,187 represents 16 per cent. The husband would receive just over $1,400,000 on the husband’s approach. When reflecting on the justice and equity of this outcome it should be remembered that both came into this relationship with about $90,000. The wife’s entitlement represents a multiple of about three, the husband’s 15. Does the difference in contribution really reflect the difference in multiples? This, of course, is merely a crude measure by which to determine justice and equity.
61.The wife contended that she should get between 36-38 per cent of the pool as she contended. Pool A is not as she contends, particularly as regards item 35. If 36 per cent is adopted, on the wife’s approach, she would receive $621,006 and the husband $1,057,389. On this approach the wife would receive about $349,819 out of the joint equity in the home. On this approach the wife would receive a multiple of 6.9 of her original contribution, the husband 11.7.
62.Senior counsel for the husband referred the court to two very helpful decisions of his Honour Justice Watts in the Family Court of Australia: Blanks & Blanks (2006) FamCA 354 (19 May 2006) and Sharpe & Sharpe (2010) FamCA 250 (26 March 2010). Both of these cases contain a very useful discussion of the relevant case law. The court adopts pars 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60 and 61 of Blanks, and pars 75, 76, 77, 78, 79, 80, 81, 82, 83 and 84 of Sharpe, and respectfully agrees with the legal analysis of Watts J. As his Honour said in both cases, however, no single case provides an exact template for what should happen in another, and they demonstrate themes, rather than binding principles. Thus, for example, the facts of this case are unlike P & P (2002) FamCA 1006 because here there can be no doubt that cohabitation increased the pool of assets available for distribution. This case is unlike GBT & BJT (2005) FamCA 683 because the wife did make financial contribution - not just at the commencement of cohabitation, but during the periods that she worked, and then the receipt by her of her redundancy in 2005, of nearly $67,000.
63.The real difficulty in this case is assessing the wife’s non-financial contribution as a homemaker. The financial contribution of the husband and wife is relatively easy to calculate. The non-financial contribution is not. The wife contends, and the court accepts, that she supported the husband in his employment in various ways, both tangible and intangible, including moving with him between the United Kingdom and Australia. The court does not accept, however, that this was to the detriment of the wife’s own employment. Such a contention is plainly inconsistent with the facts. The wife contends that she did the majority of the household tasks and the majority of homemaking duties. The wife contends that she was responsible for maintaining the former matrimonial home. The court accepts that the evidence justifies such a conclusion. The court does not accept the wife’s contentions about her primary care of the parties’ dog as a contribution under s.79(4)(c), for a dog is not considered by that provision to be part of the “family”. In theory the wife’s care of the dog could be a contribution under s.79(4)(b) to the extent that it was non-financial, and to the extent that the dog was “property” that was conserved or improved. Even if the wife’s case were so framed, it is not something that the court would place much weight on in the absence of specific evidence in this regard.
64.The wife’s contentions about her contribution as homemaker are not affected by the fact that, during the marriage, the husband and wife so arranged their household affairs so that there was domestic assistance rendered, in diverse forms, from time to time. The Full Court’s decision in Kennon (1997) FLC 92-757 at pages 84298-99 confirm that. Moreover, the lifestyle the husband and wife enjoyed in the relationship also does not detract from her claim under s.79(4)(c). As the Full Court said in Kennon at page 84299:
The standard of living which one provides to the other is not to be seen as a down payment on a subsequent property settlement.
65.The biggest risk in this case is to under-value the wife’s contribution merely because it is difficult to quantify, and because of the discretionary nature of the assessment process. Sections 79(2) and 79(4) requires the court to do justice and equity between the husband and the wife in the context of their relationship and life course, and not primarily by reference to need, and certainly not by reference to market value of services rendered. The cases referred to above and, indeed, the cases referred to in those cases, provide general guidance rather than specific guidelines. In this case the court assesses the wife’s contribution at 20 per cent, noting that her contribution was both financial and non-financial, and having regard to the size of the pool. The court recognises that this figure is greater than the contribution assessed in many of the cases referred to above, but the pool of assets here is smaller, and the financial contribution made by the wife here is larger, compared to those other cases. Indeed, one must have regard to the practical effect of an assessment of contribution of 20 per cent. The wife’s total entitlement would be $335,679. When her existing assets and notional property are considered, this would mean she receives a further payment from the sale proceeds of $64,492. In the circumstances, therefore, an assessment in the wife’s favour of 20 per cent is just and equitable. Conversely, to award her more than 20 per cent would result in a very significant downgrading of the vastly greater financial contribution made by the husband as a result of his very high earnings throughout the marriage.
Section 75(2) Considerations
66.The husband contends there should be no adjustment, whereas the wife contends the adjustment should be 20 per cent.
67.Both the husband and the wife are quite young, and in good health.
68.The wife is presently earning about $92,000 per annum in an (occupation omitted) position. The husband is currently unemployed. He was made redundant in May 2012. At par 141 of his affidavit sworn 16 August 2012 the husband states:
.. I have discussed my current situation with four recruitment agencies specialising in the (omitted) sector. Through these agencies, I have interviewed with two potential employers. With one of these employers, I have now progressed discussions through three rounds of interviews.
In the next paragraph the husband also says:
I am also examining roles away from my existing field of expertise and have had discussions with an (omitted) as well as an (omitted) company in (omitted).
There was some cross-examination of the husband about this. The court detected a certain optimism on the husband’s part in terms of his returning to work. His senior counsel submitted in closing submissions that the husband did not have a rosy prognosis for re-employment, but that is neither the husband’s evidence, nor the court’s impression of his evidence.
69.In terms of earning capacity, the best evidence of the husband’s earning capacity is his past earnings. His capacity in this regard is vastly superior to that of the wife, and it was certainly no part of the husband’s case that the wife would ever earn as much as he does.
70.If the court makes no adjustment under s.75(2), the wife will retain 20% of pool A and 100% of pool C. As that is discussed in the preceding section of these reasons, in reality the wife will have as little as $65,000 with which to re-accommodate herself and pay any outstanding legal costs. By contrast, the husband will have quite substantial assets available to him.
71.The husband and wife engaged in a very comfortable standard of living. For the wife that has changed since separation as she no longer has access to the husband’s very high income. For the wife this will further change, whether or not she retains the former matrimonial home. Either her income will go to securing a very large mortgage, or it will go to other accommodation costs. Of course, the husband is currently unemployed. In the immediate post-separation period his lifestyle did not appear to change much. For example, when he returned to England he purchased an 80,000 pound (vehicle omitted) in 2010, and sold it in 2011 to purchase a (vehicle omitted).
72.The court does not accept a contention made in the wife’s case that the marriage has affected her capacity to earn an income. It is not supported by the facts.
73.Most of the factors referred to above call for adjustment in the wife’s favour, however there are a number of factors operating in the husband’s favour. Of course, he is currently unemployed. A further adjustment in the husband’s favour results from the wife’s pre-emptive strike on the moneys held in the offset account which did increase the cost of borrowing for them. On the evidence, however, that is the only financial consequence of her actions. The court does not accept that the evidence establishes that any decline in value of the former matrimonial home should be attributed to the wife. Another relevant factor is that she is in occupation of the home, whereas he is having to pay for his own accommodation. Moreover, item 15 in pool A is at least, in part, a future benefit to the husband.
74.Notwithstanding the considerations favouring the husband, when all considerations are considered and weighted in the balance, including what the parties retain in pools B and C, the court assesses them to favour the wife to the extent of 7.5 per cent. On pool A, the monetary value of this will be about $125,880 which is certainly meaningful from the wife’s perspective, but does not, in the court’s opinion, detract from the justice and equity of the result in favour of the husband.
Justice and Equity
75.Having regard to the above, there would be a split of pool A on the basis that the wife receive 27.5 per cent, or $461,707.12, and the husband 72.5 per cent, or $1,216,836.30. The wife has assets and notional property in her name of $271,187, meaning that her entitlement from the sale proceeds of the home would be about $190,520.
76.The wife wants the opportunity to retain the former matrimonial home. The equity in it is $598,266, of which her share is $190,520. In order to keep the home she would have to refinance a mortgage of $601,734 and pay to the husband something in the vicinity of $407,746. On the evidence, therefore, the wife has no reasonable prospect of being able to do so. This was the husband’s contention, and the court accepts it. If the wife believes that she can buy the husband out, she might be able to negotiate something with him, but the orders the court would make will be for sale.
77.The husband contends that the wife should be solely responsible for all outgoings on the home, for the period that she continues to occupy the same. The court accepts this. Having regard to the wife’s financial circumstances, it is within her capacity to do so, and even if it were not, in the circumstances of this case it is an obligation the court imposes on her. To the extent that the court had the opportunity to exercise a discretion in her favour about apportioning responsibility for outgoing in a property that, as it turns out, she has a minority interest in, her conduct in the pre-emptive strike on the off-set account, and her intransigent behaviour in not returning the funds on the facts of this case, would result in the discretion being exercised against her. The obligation for her to meet all outgoings, however, arises from the time of making this order, and not retrospectively as that would cut across the assessment of s.75(2) considerations above.
Waiver of privilege ruling
78.During the course of the wife’s cross-examination by Senior Counsel for the husband on the topic of her removing money from the mortgage offset account the wife said: “It was done so on advice from my solicitor.” When the wife was asked further questions about this an objection was taken by the wife’s Counsel on the grounds of privilege. Senior Counsel for the husband submitted that the wife waived privilege by asserting she had received legal advice to do the very thing that was now the subject of challenge. He called for access to the wife’s solicitor’s file to the extent of memoranda of instruction and advice up to and including 15 October 2010 which was just prior to the date of transfer of funds out of the offset account. Counsel for the wife objected again, on the basis of privilege and relevance. The following reasons explain why the wife’s objection was upheld.
79.It is clear that at common law, a client who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege and this waiver may be express or implied: Mann v Carnell [1999] 201 CLR 1 at 13. As the majority said at paragraph 29 of the judgment:
What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.
The waiver commonly manifests itself, as it did in this case, in the context of the state of mind of a person, here the wife. Sometimes the state of mind of a person, and how it has been affected by legal advice, becomes an issue in the case. Senior Counsel for the husband gave the example of Moran v Moran [No.6] (2010) NSWSC 240 in this regard. But in the present case there was never an issue about the wife’s state of mind. The evidence before the court about the wife’s pre-emptive strike on the monies in the offset account is clear, as is the evidence about how such funds were applied. Whether the wife acted on her lawyer’s advice or not changes nothing. There is no prejudice to the husband if the court does not allow him to test the wife’s assertion about acting on advice because the facts about what the wife did are so clear. Indeed to allow the husband to test the wife’s assertion would fall foul of s.135(c) of the Evidence Act 1995. Neither the wife’s state of mind, nor the nature and quality of the advice the wife received from Mr Manning, is an issue in these proceedings. It was, indeed, mischievous to run the waiver of privilege argument when the facts about the wife’s actions were not in dispute. That is precisely what the court was trying to communicate when it referred to “common sense”, which was apparently taken by Senior Counsel for the husband as an “inference that the path I’m following displays some lack of it”, which he found both “unfortunate and premature”.
80.As the wife’s state of mind was not a relevant issue in this case, and as there could be no prejudice to the husband on the facts of this case, when the wife answered as she did there was no implied waiver of privilege.
81.Even if that were not the case, the evidence would be irrelevant under s.55 and lack probative value under s.135 of the Evidence Act 1995.
I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Date: 5 November 2012
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