Sinclair & Sinclair
[2012] FamCA 388
•25 MAY 2012
FAMILY COURT OF AUSTRALIA
| SINCLAIR & SINCLAIR | [2012] FamCA 388 |
| FAMILY LAW – PROPERTY SETTLEMENT – parties married in 1959 and disputed the date of separation as being either 1970 or 1985/1986 – very significant contributions by the wife as a result of inheritance – assessments of contribution and s 75(2) factors and the approach to be taken about not only the assessment but the weighting of such matters. |
| Evidence Act 1995 (Cth) Family Law Act 1975 (Cth) |
| Aleksovski and Aleksovski (1996) FLC 92-705 Bonnici and Bonnici (1992) FLC 92-272 Bremner and Bremner (1995) FLC 92-560 Dickson and Dickson (1999) FLC 92-843 Elgabri & Elgabri [2009] FamCA 227 Farmer and Bramley (2000) FLC 93-060 Froth & Froth [2007] FamCA 1608 Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 Kennon and Kennon (1997) FLC 92-757 Mallet and Mallet (1984) FLC 91-507 Mistle & Mistle [2010] FamCA 29 Pierce and Pierce [1998] FamCA 74; 24 Fam LR 377; (1999) FLC 92-844 Schirmer and Sharpe (2005) FLC 93-213 Vokic & Vlass [2012] FamCA 56 Waters & Jurek (1995) FLC 92-635 |
| APPLICANT: | Mr Sinclair |
| RESPONDENT: | Ms Sinclair |
| FILE NUMBER: | MLC | 3576 | of | 2010 |
| DATE DELIVERED: | 25 MAY 2012 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 17 May 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr O’Shannessy |
| SOLICITOR FOR THE APPLICANT: | Barbayannis Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Puckey |
| SOLICITOR FOR THE RESPONDENT: | Bowlen Dunstan & Associates Pty |
Orders
That by 4.00pm on 22 June 2012, the wife sign all such documents as may be required (as presented by the husband) to transfer to the husband, at his expense, all of her interest in the property at S Road, E suburb being the land described in Certificate of Title Volume … Folio ….
That by the same date, the wife pay to the husband $118,000.
That each party be solely entitled to the exclusion of the other to all other property in the name and possession of such party as at this date.
That the application of the husband filed 9 February 2012 and the response thereto of the wife filed 27 January 2012 are otherwise dismissed save as to issues of costs.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Sinclair & Sinclair has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT HOBART |
FILE NUMBER: MLC 3576 of 2010
| Mr Sinclair |
Applicant
And
| Ms Sinclair |
Respondent
REASONS FOR JUDGMENT
This dispute is about what is a just and equitable division of the property of the husband and the wife.
Mr Sinclair (“the husband”) and Mrs Sinclair (“the wife”) married in 1959 and their union produced three children, the first of whom died just after birth. The other children are now adults. There is a very big dispute about when they separated. On one view it was 1970 and on the other, 1985/1986.
Between them, the parties have over $7 million in assets most, if not all, is controlled by the wife who had received it from her father many years ago.
It was common ground that the husband has assets of about $194,000 but of that, $50,000 was paid by the wife to the husband under an order of this Court. That that sum has been used for legal fees by the husband for this case. As such, the husband has about $72,000 in capital from which his investment pension is paid, some small savings and shares and a modest motor car.
The husband seeks assets of about $1.8 million including a house worth $800,000 and $1 million in cash.
It was also common ground that the wife has about $7.1 million represented by real estate (including the house that the husband seeks) cash in the bank, chattels and shares.
Section 79(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that in property settlement proceedings, the Court may make such order as it considers appropriate altering the interests of the parties to their property.
The rider to the appropriateness of the order is that the Court is mandated not to make an order unless it is satisfied that, in all the circumstances, which means all those known to the Court, it is just and equitable to make the order.
The wide discretion is only further limited by s 79(4) which requires of the Court that when it is considering what order, if any, to make, it must take into account the following:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
For the purposes of this case, sub-paragraphs (f) and (g) above are irrelevant.
Traditionally, the approach of the Court to the resolution of property disputes has been to use four steps. They were described as determining the property of the parties, assessing and giving weight to their respective contributions, making any necessary adjustment because of the relevant factors in s 75(2) of the Act and ultimately, making a decision which is just and equitable. (See Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143). Theoretically, that is simple but harder to put into practice.
In Mallet and Mallet (1984) FLC 91-507 the Justices of the High Court of Australia made a number of statements about the approach of the discretionary determination in s 79. As examples, Wilson J said that what the Act required in determining whether an order was just and equitable, was for the Court to take into account any contribution made by a party as it was described in s 79. His Honour said:
It is a wide discretion which requires the court to assess the value of that contribution in terms of what is just and equitable in all the circumstances of a particular case. There can be no fixed rule of general application.
Wilson J went on to say that the objective of the section (that is, s 79) was not to equalise the financial strengths of the parties but rather to empower the Court to effect a redistribution of properties if it was just and equitable to do so having regard to the matters set out in s 79.
In the same case, Deane J said that it was important that there be consistency from one case to another about the underlying notions of what was just and appropriate in particular circumstances because otherwise, the law would become the “lawless science” of a “codeless myriad of precedent”. His Honour went on to say that it was:
…inevitable and desirable that the need for such consistency should lead the judges of the Family Court to look at what has been said and decided in prior cases for assistance and guidance in determining what is just and appropriate in the differing circumstances of subsequent cases and that shared experience and accumulated expertise should lead to the emergence of generally accepted concepts of what is prima facie just and appropriate in particular types of cases.
An examination of prior cases gives some guide in determining a range but each case shows the importance of not fettering the judicial discretion. In Bonnici and Bonnici (1992) FLC 92-272, the Full Court said that property does not fall into a protected category merely because it was an inheritance but it could be quarantined in the hands of the inheriting party if sufficient funds were available to meet the appropriate required settlement.
In Dickson and Dickson (1999) FLC 92-843 the Full Court noted that the wife had made both greater financial and non-financial contributions than the husband. The Court noted the wife had invested well, raised the family and had a steady income as well as her inherited assets. On the other hand, the husband’s income was irregular and modest. Over the 26 year marriage, there as an asset pool of $6.6 million. The trial judge adjusted matters on a 75 per cent/25 per cent in favour of the wife. The Full Court found reason to criticise the approach taken by the trial judge in respect of s 75(2) factors particularly in relation to the issues of standard of living and made an overall adjustment as to 70 per cent to the wife and 30 per cent to the husband.
In Schirmer and Sharpe (2005) FLC 93-213, the Full Court noted that significant property had been received by one party (the wife) subsequent to separation through inheritance and that up until separation, contributions had otherwise been equal. The assets were all included in “the pool” and the trial judge determined the contributions as to 90 per cent to the wife and 10 per cent to the husband but made a further adjustment of 2.5 per cent in favour of the husband. The Full Court noted the discretionary nature of the assessment and found that it was within the range.
In Mistle & Mistle [2010] FamCA 29, Le Poer Trench J dealt with a 23 year marriage where both parties brought property into the relationship and both worked as medical practitioners. At the time of separation, the assets totalled $4.2 million and subsequently, the husband received an inheritance of $9.5 million. His Honour excluded the inheritance from his calculations and divided the $4.2 million as to 80 per cent to the wife and 20 per cent to the husband.
In Elgabri & Elgabri [2009] FamCA 227, Coleman J dealt with a 25 year marriage where the husband inherited $527,000 late in the marriage. His Honour found that both parties otherwise had made equal contributions of a financial and non-financial nature. His Honour excluded the $527,000 inheritance. His Honour found the contributions equal and then made an adjustment of 7.5 per cent in favour of the wife because of the benefits that the husband had through the inheritance.
Similar cases have been dealt with by the courts and a variety of approaches have arisen which include quarantining the inheritance and dividing the balance making appropriate adjustments (see Vokic & Vlass [2012] FamCA 56 and Froth & Froth [2007] FamCA 1608).
In Pierce and Pierce [1998] FamCA 74; 24 Fam LR 377; (1999) FLC 92-844 the Full Court said that initial contributions had to be considered in the light of their impact on the assets of the parties and in light of the erosion by other contributions made by the parties subsequent to that initial contribution. Here, the erosion principle has no significance in my view because the parties started with virtually nothing, were living together for somewhere between 1959 and 1986 and have continued some form of relationship (and not necessarily a marriage relationship) for 25 years thereafter.
In Bremner and Bremner (1995) FLC 92-560 the Full Court noted that an initial substantial contribution may be eroded by later contributions even though those later contributions do not necessarily outstrip those of the other party who has not made a similar contribution. The same could be said for significant non-financial contributions at the start of a relationship at which point in time, there are no assets of substance, but which are later significantly blurred by significant financial contributions received by way of inheritance. As Kay J pointed out in Aleksovski and Aleksovski (1996) FLC 92-705 in a long marriage, a variety of factors often assume great significance and “ought not be left almost unseen by eyes dazzled by the magnitude of recent acquired capital”.
Isolating or quarantining an inheritance must be cautiously done to ensure that earlier important contributions to the family in particular, are not ignored. As will be seen by the evidence here, there is a distinct possibility of that happening if the focus is entirely on the assets received by the wife from inheritances and gifts.
As was pointed out in Farmer and Bramley (2000) FLC 93-060 the power in s 79(1) to alter the interests of parties in property extends without limitation to all property regardless of when it was received. As Finn J pointed out (at paragraph 56):
If it was to be determined that a majority of the community considered that one spouse should, as a general rule, have no entitlement to sharing property either by good fortune or good management acquired after separation by the other spouse, then the Act would need to be amended to make this clear. As the Act currently stands, the jurisdiction conferred by s 79(1) to alter the interests of spouses in property extends without limitation to all properties which either spouse is entitled (whether in possession or reversion).
Nothing in the Act refers to a requirement that contributions be measured simply by reference to the assets currently held by a party.
Accordingly, the assessment and weight to be given to the contributions must be a discretionary one and in circumstances such as the case here, prior cases are of little assistance.
To make matters more difficult, the assessment of the contributions to which I have just referred may also be affected by further consideration by the Court of the factors set out in s 75(2) of the Act. It has been made clear that s 75(2) is not to be used as a source of social engineering or as means of evening up the financial positions of the parties to the marriage (see Kennon and Kennon (1997) FLC 92-757 and Mallet and Mallet (supra)).
In Waters and Jurek (1995) FLC 92-635 Fogarty J noted the importance of s 75(2) and the emphasis on giving those factors real rather than token weight (see 85,871). His Honour said:
The connection between the s 75(2) factors and a just and equitable property order is more difficult since the criteria are expressed very broadly and are fundamentally prospective in their operation. The provision does not invite a process of social engineering.
To look prospectively, is to effectively examine the economic circumstances of each party. Having regard to such matters as age, health and standard of living, it is important to see what impact any order would have on each party having regard to their economic circumstances. It is not about social engineering but rather ensuring that after a lengthy relationship and considering those factors, a fair result is obtained for both parties. As has been pointed out above, the fact that one person loses some of the windfall received subsequent to separation, to which the other party has made no direct contribution, does not mean that the outcome is not fair to both having regard to all of the circumstances of the case.
In this case, I propose to take the global approach as it is the only way in which I can assess all of the required matters over the very long period of the lives of the husband and the wife.
The parties
The recollection of both parties was unreliable. Each accused the other of embellishing, exaggerating or just forgetting what had happened over the 52 years since they married.
Much of the focus of the parties concerned a period of time in which the greatest portion of their wealth fell into the hands of the wife. The minor focus was on a relatively more recent period up until when the proceedings began.
In respect of both periods of focus, I shall make findings of fact based on the standard which is the balance of probabilities. However, it is important to note that I do not find that either party deliberately lied. I have little confidence that I have a comprehensive picture of exactly what happened but in my view, there is sufficient evidence to enable me to draw the conclusions necessary to satisfy the matters that I earlier mentioned.
Positions of the parties and submissions in the respective outlines
At the commencement of the hearing, Mr O’Shannessy of counsel on behalf of the applicant husband said to me that his client was seeking an assessment under which contributions were determined at 20 per cent of the pool and there should be a further five per cent adjustment for the factors set out in s 75(2) of the Act. He said that that adjustment of five per cent assumed a finding by me that he urged in respect of contribution. He pointed to the fact that in one way or another, there should be an adjustment of between five and 7.5 per cent in favour of the husband.
He went on to point out that his client was seeking the $800,000 property in which he was living at E suburb plus a cash sum.
Mr O’Shannessy submitted that if I was not to find in favour of his client in those terms, then the Court would have to address the issue of the husband living in the E house as a life tenant based upon a spousal maintenance entitlement.
Mr Puckey of counsel on behalf of the wife made clear that there was always going to be a property order because the husband had assets in his possession. The wife’s case was that the assets should remain where they were and if that was the finding, a maintenance order could be made because the husband would satisfy the threshold test in s 72 of the Act. The wife’s position was that the husband could have right to occupy the property for his lifetime as a maintenance but not property, entitlement.
The wife’s position was that even if there was a property settlement, the E property should not be transferred to the husband and the wife wanted it back. It was clear that from the wife’s perspective that if the husband did not receive an order in his favour greater than the value of the E property, the husband would have to vacate the property and deliver it to the wife. Even if the husband received more than the value of the property, the wife’s position was that she wanted the E property back. The wife’s view was that the husband would therefore be paid in a cash sum.
The parties’ focus
Both before and after their marriage, it was clear that the wife’s father did not approve of the husband. The feeling was mutual. It was the wife’s evidence that one week before the marriage, her father asked the husband to sign a handwritten “pre-nuptial agreement” and when requested to do so, the husband signed it. The husband said that it was a document containing a forgery of his signature. He said the first he saw of this document was when he saw the wife’s affidavit to which it was attached. That is, over 50 years later. Although the signature on the marriage certificate which was appended only days after the “pre-nuptial” document was said to have been signed, looks remarkably similar to that on the “pre-nuptial agreement”, there is no forensic evidence about it and because I am mindful of s 140(2) of the Evidence Act 1995 (Cth) requiring me to take a cautious approach where a serious consequence might flow from a finding, I do not find the document was signed by the husband. Ironically, in my view, nothing turns on the point.
When the parties married, they were in their early 20s. Each was employed but neither had any assets. They lived in a house provided by the wife’s father and did not pay rent. That was a situation that continued for many years. In the early days, the parties struggled financially.
In 1961, the parties lost their first born child.
The wife’s evidence was that over the ensuing few years, both worked, two children were born and the husband did not help much although he had various jobs.
An important issue in the proceedings from the parties’ perspective was the date they each said they separated. It was the wife’s version that:
In 1970…I advised the husband that the marriage was over.
She said she went to a solicitor to seek a divorce but the husband stopped her and begged her not to do so. Thereafter, she said the husband slept on the couch and “the relationship was from that time well and truly at an end”.
According to the husband’s evidence, his view of the wife up until 1995 was rather uncomplimentary. He referred to leaving the family home for short periods and staying with his brother. He said:
The wife and I finally separated in about 1985/86.
He said he and the wife were together for their daughter’s 21st birthday and separated thereafter. So confident was the husband about the separation that he was able to use as his benchmark, the football grand final of 1986. He remembered who won it and that he and the wife were separated at that time. He was not challenged that Hawthorn beat Carlton in September 1986.
Unlike the husband, the wife was very confident about the ending of their relationship in 1970. She said she made him open his own bank account. It seemed common ground that up until that point in time, he had not had one. However, it was the husband’s evidence that he did not open that account until 1982 or 1983. That evidence is consistent with the timing of the husband’s view about at least the physical separation. He pointed to a hospital benefits insurance booklet that showed his name and that of the wife still being together and him paying the premiums after 1970. The wife’s response was that she had the insurance prior to marrying the husband and she put his name on the account. All of these incidents highlight a personal relationship in serious trouble between 1970 and 1985 even if the parties viewed the state of their marriage differently.
However, the husband was asked about “events” that he referred to in his evidence that he might have attended between 1971 and 1984 and he struggled to recall any but the most vague.
An issue upon which the husband focussed to show the wife’s poor memory was her evidence about an illness of the husband. It had nothing to do with the substantive issue but was obviously important to the wife. Her affidavit said that the husband was unwell in 1961 and it affected her approach to sexual relations with him. The wife, as the respondent, led oral evidence that the year and the name of the doctor who treated the husband as described in her affidavit, were wrong. Neither of those matters had been put to the husband in cross-examination. It was submitted by counsel for the husband that this was an example of the wife’s poor reliability as an historian. The wife’s explanation was that she did not read the affidavit carefully and the draftsperson had been the one who had made the mistake. In isolation, there is sense in what the wife said. The originally drafted date was unlikely to be correct because two children were born after that time. I accept it was an error.
Another issue about which the wife was criticised was her varying versions about the date of separation. There is an inconsistency in her trial affidavit and her divorce application but in my view, it too does not affect the substantive issue. In part, that is due to the fact that separation can also be a state of mind of the parties and hindsight does not assist them.
A third issue was that the wife said she was an only child whereas she acknowledged she had a brother. Inaccurately written but emotionally correct, the wife has had no relationship with her brother for many years. The brother was disowned by her father and the wife continued that denial.
I referred to the first of those three incidents as being in isolation. Altogether, these incidents show a 77 year old woman who resented the intrusion of this litigation into her life. Her eye for detail was not as accurate as it should have been for litigation in which the microscopic analysis was inevitable. This general dismissal of the importance of detail spilled over into other matters of evidence. The wife was cross-examined about her bank statements showing consistent withdrawals from a branch at Melbourne racetrack meetings. She strongly and indignantly denied she gambled and maintained she was just getting money out of those accounts for her adult daughter and did not want to withdraw at her local bank because it was embarrassing. That explanation was implausible and I do not accept it. However, the cross-examination was undertaken to reflect her poor recollection of details relating to the period of when she asserted separation occurred. If the husband had been a better historian and the issue made some difference, there might be a concern but in this case there was not.
Another example of the wife’s lack of recent accuracy concerned her financial position. She had sworn a financial statement without the precise details of her various bank accounts albeit she knew overall how much she had under her control. It was just that the amounts were shown as estimates. That may reflect more on the drafter than the witness because the affidavit to which the wife swore said
The information in the financial statement and any attachments to it which are within my personal knowledge are true. Where I have given an estimate in this financial statement, it is based on my knowledge and is given in good faith.
Whether the wife had actually read and understood the Family Law Rules 2004 (rule 13.04 and rule 13.05) which is something she referred to in that affidavit is hard to know and she was not asked about it but I was left with the impression that her memory was fine but her eye for accuracy was lacking because she resented the intrusion as she saw it, by the husband. As a witness, the wife was loquacious, argued with counsel, apologised to me for her behaviour and then repeated the performance.
The wife said she loved the husband but it was just that he hated her. It was the husband’s case that the wife managed his finances. He produced letters addressed to him care of the wife’s address. She acknowledged having read them and having passed them on if they were important. She denied she had ever spoken to the husband’s financial advisers yet letters to the husband referred to discussions involving her. That could not have been made up or forged nor was it so suggested.
The wife pointed to the fact that it was the husband who wanted a divorce albeit she was the one who successfully applied to the Federal Magistrates Court in 2010.
Like the wife, the husband wanted the Court to accept his version of the time of separation and/or the ending of the relationship.
For someone who was said by the wife to have hated her, his evidence was the opposite. He said that at various times, he collected a newspaper and delivered it to her door. If her blinds were drawn, he left the paper at the front door. Despite being apparently excluded from the wife’s life, he mowed her lawns and sent her documents about his financial position.
The husband too was flippant and argumentative but acknowledged his memory of the events of the 1970s and 1980s was not good.
The husband’s affidavit evidence was bold in its assertions about what he had done. He said he not only mowed lawns at an investment property but paid for all the maintenance costs of the mower. The wife’s evidence was that she paid for the repairs and repaid him what he paid for. Almost as an afterthought, when challenged about that arrangement, the husband said that he then gave the wife money for accounts that she had paid. That was inconsistent with the wife paying for most things including, ironically, buying a ride-on mower which the husband used. Until that point, the husband was using a push mower. All of these events occurred well after even the husband said the parties were separated.
The wife’s eye for detail about the mower for the investment property was obvious because she said that she warned the husband about riding over sticks presumably to avoid repair costs arising from damage that he might have caused. It is more probable that the wife paid those expenses as she asserted. The husband produced some repair invoices and tendered them but acknowledged they came from the wife’s discovered documents. The husband did not produce invoices from the same source that showed much more financial activity by the wife. The husband’s evidence was therefore selective.
In another odd indication of the husband’s similar lack of eye for detail, his affidavit referred to his contribution to gardening and mowing at another investment property (in between tenants). I am satisfied that for 18 years there was one tenant and the property was then sold when they moved on. The husband did not dispute the wife’s evidence about that and when pressed as to how often he mowed the property, he said he did not know. This piece of evidence was more about the importance of being accurate than lying or embellishing his evidence about his contribution because he must have always known that the wife would know who the tenants were.
Another strange example of the husband’s lack of accuracy related to a horse. In August 2011, the wife sold a horse from a variety of horses that she had. It was called “X”. In December 2011, all of the wife’s remaining horses were valued. In March 2012, the husband swore his affidavit of evidence in chief and referred to the fact that X had run in a race just weeks before but noted that it had not been included in the horse valuation exercise in the previous December. The clear inference in the husband’s material was that the wife was withholding a horse from the valuation exercise. The husband had not made any inquiry about it in circumstances where he easily could have done so. His credibility was attacked on the basis that it would equally have been open to his lawyers to inquire and/or search for readily available details.
It is not the lawyer’s responsibility although it might have been sensible for them to have made at least an inquiry of the wife’s lawyers, because the husband swore the affidavit. In isolation, this factual statement would be troubling. Collectively however, all these matters show a man who found the exercise of putting together admissible evidence inconvenient and one where he left the finer details to others to work out. In the giving of his evidence, I warned him that his flippant responses could be seen as an acknowledgement that what was being put to him in cross-examination was correct whereas in reality he was denying what was being suggested.
Like the wife, the detail was not something that the husband took seriously. For a man of his age, he should have taken more care and been conscious that his presentation was going to affect the outcome of these proceedings.
Fortunately for both parties, these negatives are still able to be seen in the context of a much simpler and wider picture.
There is no doubt about how the asset pool largely came into existence. It was the direct result of either the wife’s father’s distribution of assets to her upon his death or her acquisition with him of assets during his lifetime and which she received by survivorship or absolutely.
Important findings that can be made
On all of the available evidence, I find that the husband worked shiftwork in his most consistent job and provided his pay packet to the wife which went towards the support of the wife and the children. It was accepted by the wife that he did the best he could in terms of support of the family. In turn, from his earnings, the wife gave him money which might be described as an allowance. He used that for his own purposes.
I find that although the husband said he provided $10,000 towards a motor car, it is implausible having regard to the finding that I have just made about his “allowance” because he could not have saved that sort of money if he was giving all his pay to the wife and had no bank account until 1982 or 1983.
I find further that the separation in the sense of the ending of the marriage did not occur in 1970. The marriage relationship may have come to an end that time in a sense of any intimacy but the parties continued to live a life dependent upon each other financially even if it was with the benefit of the assistance of the wife’s father.
In 1992 the husband handed $100,000 to the wife. The circumstances of that money being paid over are controversial but having regard to what I have earlier said about the reliability of the evidence of each party, I do not accept either party’s version of the precise details. The husband’s version was that he gave the money to the wife from his redundancy package and it was by way of a loan which was to carry 10 per cent interest. No evidence was given about the terms and conditions of any loan and certainly no evidence was given about any repayments or the prospect of how the husband would pay significant tax on interest earned on such a loan. A significant number of years has passed and no claim has ever been made for a repayment of the loan.
The wife’s version was that the husband contributed the money towards the support of the family. This would have been a significant amount of money in the scheme of the earnings of the parties at that time. The wife’s evidence was that she used the funds for the benefit of her children but apart from her statement about the general use of the money, there is no evidence to corroborate what she did precisely. Having regard to the wife’s unreliability as earlier mentioned, I do not find that it was specifically targeted for family purposes.
Both parties said that the money was paid by the husband and the wife used it. I accept that it was a significant contribution by the husband arising out of his employment of many years even on the wife’s evidence. Of what the husband could have contributed, it is a large sum of money. What the husband otherwise received at that time in terms of superannuation and the redundancy is reflected in the pool of assets because the husband retained the balance. To that extent, he has made a contribution of some substance.
I further find that over the years, the husband mowed the lawns at the family home as well as undertook some maintenance on the investment land at the beach property but if he did anything in relation to the other investment property, it was certainly minimal.
Over the earlier years of the marriage, the wife fulfilled the main role as homemaker and parent to the children. The husband’s role must have been limited because he worked shiftwork.
I am able to find that in respect of the financials contributions, on the evidence, the wife’s contribution was greater than that of the husband. That includes their income and capital contributions.
In respect of non-financial contributions, there are a number of contributions each made but that on any view, the wife’s was greater than the husband. The preservation of property is an example.
In respect of the homemaker and parent role, the husband did contribute but the wife fulfilled a much greater role than the husband.
The current financial positions of the parties
I have already set out what the parties have left under their respective control. Each party enjoys good health. Neither party has any responsibility to support any other person. There is a clear delineation between the financial wealth and resources of the wife and that of the husband. Even if I accepted that the wife was not giving money to her daughter but rather gambling, she is in the privileged position of having something in the vicinity of $260,000 per year income at her disposal. The husband is living on an annuity which is being reduced in capital value. His lifestyle is otherwise supported by a tax-payer funded pension. His financial statement shows that he lives frugally and modestly.
On any view therefore, of the pool of over $7 million, an undeniably significant portion is directly attributable in a financial sense to the wife. There is a recognisable contribution by the husband both in financial and non-financial terms for the reasons above. It is the assessment and quantification of those contributions that first must be addressed before the issue of any adjustment or entitlement is considered.
The financial statements of the parties
The wife filed two financial statements. In terms of assets, the statements showed her undisputed wealth but also more recently, an income of $257,000 or thereabouts per annum. The husband’s financial statement showed his undisputed assets and an income of about $27,000 per annum, $18,000 of which came from Centrelink. His expenses were between $25,000 and $26,000 per annum and he was not challenged on that lifestyle nor in the circumstances could he be.
Other witnesses
Each of the parties relied upon a small number of witnesses. Do they add anything to the evidence that might influence the outcome? None of those witnesses was required for cross-examination but each party relied upon their evidence.
Mr C
Mr C is a friend of the husband and has known him for many years. He related what the husband told him about the husband’s perception of the contributions he had made. That did not assist.
Mr A Sinclair
Mr Sinclair is the brother of the husband. His evidence was that prior to the disputed separation period, he watched both the parties and noted the husband’s contribution. His evidence did not take the matter much further including as to the issue of the separation time.
Ms J
Ms J is an acquaintance of both parties. She corroborated the wife’s evidence about going to see a solicitor in about 1970 for a divorce. That too sheds little light on the issue of contribution.
Each of the witnesses to whom I have just referred add little of probative value.
Spousal maintenance
It was generally agreed between counsel that in the event that I accepted the wife’s position and made a property order that gave the husband effectively what he had in his possession, there would be an entitlement to use the home in which the husband is currently living and that I should contemplate allowing him to live effectively as a life tenant in that property for the rest of his days. It was put by counsel for the wife that if I was to make any property order, it should be a cash payment and the wife would want the return of the property.
The husband’s position as expressed by his counsel was that I should allow the husband a fixed money entitlement of which he should have the proprietary entitlement to the house in which he is now living and that over and above that sum of $800,000 value, he should be paid a further amount in cash. To the extent that such an order was made, there could be no obligation by way of spousal maintenance thereafter.
Counsel for the husband submitted that in the event that I rejected his client’s proposal, there was a spousal maintenance entitlement which was described as a lump sum as well as a periodic payment.
The pool
At the commencement of the hearing, the parties very sensibly agreed on what the pool was. Each of the parties has added back to the pool their respective legal fees. In respect of the husband’s $50,000, it was common ground that that sum had been paid to him by the wife pursuant to an order made in December 2011.
Accordingly, the pool of assets is as follows:
SINCLAIR: AGREED ASSET POOL
Agreed
1. H Property 900,000
2. E Property 800,000
3. Beach property 600,000
4. L Avenue, R proceeds represented in bank accounts
5. Wife’s Fixed Deposit #...45 $1,000,00
6.1 Wife’s WBC Choice #...37 69,217
6.2 Wife’s WBC e-saver #...86 101,264
6.4 Wife’s WBC business cheque acc#…93 3524 1,174,005
7. Husband’s Savings CBA account 25,000
8. Husband’s Mazda motor vehicle 6,000
9. Husband’s shares: 650 Westfarm & 424 CBA 41,025
10. Husband’s paid legals/payment received 50,000
11. Husband’s Navigator investment pension 72,000
12. Wife’s shares 184,923
13. Wife’s Volvo motor vehicle 5,000
14. Wife’s … horses 276,000
15. Wife’s super fund inc …(named property) 3,126,247
16. Wife’s legal fees paid 60,000
NET ASSET POOL $7,320,200
Submissions as to the law
Counsel for the wife submitted that the four step process as described in Hickey (supra) should be applied but the issue was whether any order that the wife disgorge property could be described as just and equitable. It was submitted that if one contemplated the legal issues associated with the treatment of gifts, post-separation inheritances and the weighting of capital contributions generally, all pointed to conservatism with a very heavy emphasis on shying away from any endeavour to redistribute wealth. Counsel submitted all of the authorities reflect the community standards relating to what was just and equitable. In respect of gifts, the intention of the donor was important. Similarly, it was submitted that in relation to inheritance, the Court had traditionally focussed on the quantum received and the timing of its receipt. It was submitted that both of those matters and the focus of the Court reflected community standards which meant that in terms of assessing what was just and equitable, the community would see inherited assets as being quarantined from the efforts of the parties. Similarly, it was submitted that in relation to the amount of weight to be given to contributions, the authorities had looked at the impact of the contribution on the pool to be divided and that anything received after separation was treated as a contribution by the person making the payment and that that reflected the community standard in terms of what was to be assessed as just and equitable.
Counsel for the husband submitted that the only conclusion I could draw was that the wife’s case was that the husband had made a contribution which was next to nothing. To the extent that is the way that the wife viewed things, I reject it because the evidence supported the fact that he worked hard. It was further submitted that the wife gave him no credit for the fact that he contributed $100,000 used by her for the family in one form or another. He pointed to the fact that the wife did concede he had done the best he could and it was submitted, that was all that was expected of the husband in terms of a contribution. It was submitted that it was not the separation that was the delineating factor but what the parties had done both before and thereafter. I agree.
Counsel for the husband submitted that care had to be taken to examine the authorities because each of them had referred to principles that effectively said that every case had to be determined according to its circumstances. Whilst obiter guidance was given, each case had to be determined according to its own peculiar facts. Counsel referred to decisions of Full Courts about whether or not determinations of trial judges were within a “range” but that too meant that the courts were assessing contributions according to the known facts.
Counsel for the husband rhetorically asked why was it that an inheritance received immediately prior to marriage was seen as an initial contribution of the party yet a contribution that came from the same source but during the marriage was seen as something different. This was a direct reference to the wife’s position about quarantining inheritance money. The Court had traditionally looked at initial contributions as being those which the parties brought into a relationship even though the money may have been received immediately prior to the marriage from an inheritance source.
For the reasons that I have outlined earlier, this is a case which requires an assessment of the respective contributions after which, there needs to be an exercise in which they are given weight. That assessment is then subject to the adjustment having regard to the matters referred to in s 75(2) of the Act. In short, at some point, the qualification of the exercise has to become a quantification.
The contribution assessment in this case
After all these years of this relationship, the contributions can be modestly described above. The weight to be given to those contributions is determined by an intuitive approach. The recommended approach by authorities is to determine the assessments and give them weight in percentage terms but it is not necessarily critical to do so. In my view, the weight must reflect an overwhelmingly greater contribution by the wife than the husband. That analysis is measureable simply by the fact that were it not for the wife’s father, the parties would almost certainly not have had the pool of wealth they have today between them.
The inherited wealth in this case must reflect two things. First, the inheritance was received a long time ago and therefore the current wealth is a reflection of the springboard effect of the various contributions early in the marriage. Secondly, having regard to the clear donor intention reflected in how and through whom the wealth was received, the contribution was by or on behalf of the wife. But contributions come in many forms and it is inappropriate to simply look at the monetary contributions.
The longer the relationship, the greater the importance of the early non-financial contributions because like an initial financial contribution from which more wealth grows, they form the foundation of the relationship. They set up needs and obligations of the parties about support for one another and children. They set up assets that require ongoing maintenance and preservation. Thus, what happened from 1959 to 1985 in this case is important. The inherited wealth had not significantly materialised until towards the end of that period and it has the tendency to distract attention from the importance of the early period of this relationship when both parties worked extremely hard at whatever commitments they had made to each other to fulfil. True it is also that some of those contributions are offset by the benefits received but all this shows the inability of the law to simply process the outcome by some mathematical formula.
The wife was the major contributor to the homemaker and parent role but also at that time worked and earned an income. The husband worked shift work and made contributions to the home. The husband’s work efforts produced the redundancy from which his contribution was made to the family but also now to the pool of wealth.
Over the many years, the wife assisted the family monitor the husband’s finances and the husband mowed lawns and protected the beach investment. Those simple activities are just daily activities but with the parties living in different homes. Albeit the wife would have me accept otherwise, I do not accept that their relationship with one another came to an end until very recently.
The overwhelming feature of the list of contributions is the inheritance and that must appropriately recognised.
In my view about three-quarters of this pool of assets can be seen to be unrelated to the direct contributions of the parties themselves. As such, the husband and wife otherwise contributed equally to about the remaining one-quarter. I therefore assess the husband’s contribution to this relationship as reflected in the pool at about half of that or 12.5 per cent. Thus of a pool of $7.3 million, 12.5 per cent is $912,000. However, the husband has already received $50,000 in a sum that paid his legal fees.
Section 75(2)
Section 79(4) requires the Court to examine the factors in s 75(2) in so far as they are relevant. There are no issues here with age, health, new partners or children. The relevant distinguishing features are the disparity of capital and income-earning power. The other feature common to both is the standard of living which in all the circumstances is reasonable. It is not the function of the law to redress imperfections in living standards nor to simply look at needs. However, both of those matters are relevant considerations as to what is a standard of living that is reasonable in all the circumstances. In this case, the evidence is that the husband has been living in one settled environment of 25 years.
The adjustment by virtue of s 75(2) is required to lead to a just and equitable outcome having regard to the fact that two people have been in this marriage partnership in which they would have shared the fruits of their relationship together but now cannot do so. Normally, two households cannot divide their accumulated wealth and expect to continue a lifestyle as if they had not separated. That is something that can happen here. First, the wife will face little if any impact, on her standard of living by any adjustment. Secondly, the husband has $194,000 (less costs) and therefore by what I have assessed above, a further $718,000. There is no evidence that he could continue to live a reasonable standard similar to that which he is currently living if that was the totality of his resources even contemplating some maintenance entitlement envisaged by the wife because the husband’s rights as a “life tenant” limit what he could do. He would have to move house and there is no evidence about how I could assess that lifestyle.
Therefore, there is a justification for a further adjustment in the husband’s favour. Such an adjustment is normally undertaken in percentage terms but that is also fraught with difficulty in a pool of this size. Ultimately however as the section provides, the Court must achieve a just and equitable outcome by reference to the underlying value of the division of the assets. In my view, all of the factors warrant an adjustment and it should be in dollar terms. Whilst subjective, what the husband clearly requires is a home and some capital for security. I assess the adjustment for s 75(2) purposes at a further $200,000. That will assist the husband secure his housing as well as an income support stream for the years ahead. That order will have no effect on the wife’s future having regard to her earning capacity. In the wife’s case, she can earn that sum in less than a year.
Having made those assessments, I find that the outcome is just and equitable to both parties.
What orders should be made?
I have earlier set out the positions of the parties and in particular their focus on who should retain the E property. E property has been the home of the husband for many years. There is no dispute about its value. The wife simply wants to retain it as part of her asset portfolio. In my view, it would not be just and equitable to force the husband to move from that property and endeavour to obtain another property of similar standard having regard to his age and the length of time that he has lived there. To take the property away from the wife’s asset portfolio has no impact on her wealth because she would have otherwise paid out the husband in cash and I have not heard any evidence to indicate there is any particular emotional or other attachment to this property.
Accordingly in the circumstances it is just and equitable for the husband to retain the E property as part of his entitlement.
In those circumstances, the husband is to receive the E property, retain what he has and the wife must pay him a further $118,000. That should be paid within 30 days having regard to the fact that the wife’s cash assets are easily accessible. That payment will leave the husband with a house, $143,000 in cash, a car and the $72,000 annuity. Hopefully, if the $50,000 costs have covered his expenses he will have no more to pay. His financial statement disclosed no outstanding costs.
Spousal maintenance
It was always the husband’s case that he was entitled to spousal maintenance but more so if he did not receive what he was arguing was his entitlement.
Section 72 requires the Court to consider whether the husband meets the criteria or any of them. The fundamental issue in this case is whether or not the husband can support himself adequately without maintenance. Having regard to the orders that I have just proposed, the husband will have the capacity to support himself adequately.
In my view, there is no basis for the court to venture further into the issue and no maintenance order should be made.
At the conclusion of the proceedings, I indicated to the parties that if a costs application was made (and in this case I am not encouraging it) it should be considered by the Court on written submissions and the orders made in chambers and the parties agreed. Accordingly I shall make provision for that.
I certify that the preceding One Hundred and Eleven (111) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 25 May 2012.
Associate:
Date: 25 May 2012
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