Stueck & Stueck
[2025] FedCFamC1A 68
•16 April 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Stueck & Stueck [2025] FedCFamC1A 68
Appeal from: Stueck & Stueck [2024] FedCFamC2F 1406 Appeal number(s): NAA 295 of 2024 File number(s): BRC 15613 of 2022 Judgment of: RIETHMULLER J Date of judgment: 16 April 2025 Catchwords: FAMILY LAW – APPEAL – Property – Where appellant argues that amount of overcapitalisation was greater than that conceded by the respondent at trial – Where appellant argues the primary judge erred in accepting the concession of the respondent that the overcapitalisation was around $500,000 – Where appellant claims that the Court should make an assessment based on the use of funds during the relationship as opposed to initial contributions – Where appellant argues primary judge failed to properly exercise discretion – Consideration of authorities on overcapitalisation – Where no detailed argument or authorities regarding overcapitalisation were put to the primary judge – Ground of appeal not established – No error of discretion as per House v The King (1936) 55 CLR 499 established – Appeal dismissed – Costs awarded. Legislation: Evidence Act 1995 (Cth) s 144
Family Law Act 1975 (Cth) ss 75, 117
Cases cited: Browne v Green (1999) FLC 92-873; [1999] FamCA 1483
CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67
Dickons & Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Farley & Manoly [2013] FamCAFC 93
G & G [2001] FamCA 1138
Hackshaw & Hackshaw [2010] FamCA 1123
House v The King (1936) 55 CLR 499; [1936] HCA 40
In the Marriage of Chance & Bryant (Appeal No 2 of 1986, 20 March 1986); C v B [1986] FamCA 70
Kowaliw & Kowaliw (1981) FLC 91-092; [1981] FamCA 70
MacKinnon & Talbot [2023] FedCFamC1A 156
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Sharman v Evans (1977) 138 CLR 563; [1977] HCA 8
Vrbetic & Vrbetic (1987) FLC 91-832
Willmore and Willmore (1988) FLC 91-975; [1988] FamCA 45
Number of paragraphs: 32 Date of hearing: 6 March 2025 Place: Parramatta Counsel for the Appellant: Mr Hackett Solicitor for the Appellant: Bruce Dulley Family Lawyers Counsel for the Respondent: Mr Strong Solicitor for the Respondent: Mills Oakley Lawyers ORDERS
NAA 295 of 2024
BRC 15613 of 2022FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS STUECK
Appellant
AND: MR STUECK
Respondent
ORDER MADE BY:
RIETHMULLER J
DATE OF ORDER:
16 APRIL 2025
THE COURT ORDERS THAT:
1.Appeal NAA 295 of 2024 is dismissed.
2.The appellant pay the respondent’s costs in the amount of $15,000.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Stueck & Stueck has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
RIETHMULLER J:
The appellant appeals against property settlement orders made by the primary judge. The appellant’s argument on the appeal is limited to how the primary judge dealt with the over‑capitalisation of a real property.
BACKGROUND
The primary judge identified at the beginning of the judgment:
1The [appellant] wife is 37 years old and the Respondent husband is 46 years old. The parties commenced cohabitation in 2010, married [in] November 2017, separated [in] March 2022 and were divorced [in] May 2023. Sustaining a relevant relationship of 12 years.
At the commencement of the relationship, the appellant had a motor vehicle worth around $15,000 and superannuation of around $12,500: total assets of around $27,500.
The respondent brought considerable wealth to the relationship, around $1.25 million in assets and $252,919 in superannuation: a total of around $1.5 million.
The parties were both members of the military during the relationship, the respondent leaving the military before the relationship ended. The total of their taxable incomes during the relationship were similar. There were no children of their union. The primary judge found that:
47The evidence clearly establishes that throughout the relationship the husband and wife jointly made contributions of the nature referred to in s.79(4) to the best of their individual abilities. I am satisfied that the husband was able to do more of the physical work relating to renovations than the wife but nevertheless the wife was also contributing to the best of her ability to those renovations over various properties.
48The evidence clearly establishes that both the husband and wife supported each other during the relationship in relation to their individual careers and the changes they both made to their careers. There were times when the wife was away for training purposes and there were times when the husband was away on deployment.
49It is not in dispute that the husband received significant tax-free dollars that were utilised to purchase shares from his three deployments during the relationship.
50It is also not in dispute that since separation the husband has continued to reside in the former matrimonial home, the [Suburb B] property, and he has continued to maintain, to the best of his ability, the payment of outgoings and maintenance of the property. The husband sets out in his trial affidavit the work he has done and the expenditure he has met in relation to the [Suburb B] property post separation, and the husband was not challenged on any of this evidence.
(footnotes omitted)
After considering the contributions of the parties over their 12-year relationship, the primary judge assessed the parties’ contributions at 37 per cent to 63 per cent in favour of the respondent. This assessment represented around $1.05 million to the appellant and $1.78 million to the respondent.
The primary judge went on to determine that the respondent ought to receive an adjustment of 5 per cent having regard to various factors under s 75(2) of the Family Law Act 1975 (Cth), including the appellant’s entitlement to $455,662 from her father’s estate, the respondent’s lower earnings, the likely impact upon the respondent’s ability to continue in employment due to the respondent’s physical and psychological injuries, and the appellant having re-partnered to a spouse that earned a little more than the appellant. There was no challenge to the primary judge’s findings in this respect.
GROUND OF APPEAL
The appellant argued one ground of appeal, framed as:
1.The trial judge’s assessment of contributions is both outside a reasonable exercise of discretion and contrary to the evidence.
(Notice of Appeal filed 8 November 2024)
During the trial, the appellant argued that whilst the respondent brought significantly greater assets to the relationship, “the post separation treatment of the assets in the [respondent]’s sole name and control would see a reduction in that contribution based assessment due to [the respondent’s] poor decisions” (at [43]).
The primary judge found that that the assets brought to the relationship by the respondent were sold and most of the proceeds were used to improve the Suburb B property as “this property was acquired by the parties to be their “forever home” (at [44]).
The primary judge accepted that the respondent “made the appropriate concession” that the improvements to the Suburb B property resulted in the property being “over capitalised to the tune of $500,000.00” (at [45]). The appellant argued that the primary judge erred in accepting the respondent’s concession that the over capitalisation was $500,000.
The primary judge said of this issue that:
52It was submitted on behalf of the [appellant] that the expenditure by the [respondent] towards the [Suburb B] property has not really seen an increase in the value of that property when one takes into account the increase in value as a result of general market effects. The submission continued that as a result of considering the general market effects, I would effectively devalue, or put another way, give less weight to the initial contribution.
53In my view that submission is somewhat artificial because I must take into account the entire property pool which consists of assets other than the [Suburb B] property and the overall effect of the initial contribution to that property pool.
During the hearing of the appeal, it was put that the evidence established that the overcapitalisation was a greater sum. Little was put to the primary judge in this regard, beyond pointing to a valuation of the Suburb B property at the time of separation of $1.225 million and a general submission that the respondent spent “one and a half million” on improvements on the property (Transcript 18 July 2024, p.90 lines 38–47).
The specifics of this argument were first articulated in oral submission on the appeal. The argument proceeded on the basis that the respondent conceded that he sold the “entire property pool to fund the renovation and development of the [Suburb B] Property” (affidavit of the respondent filed 21 June 2024, paragraph 157), which it was argued was $1.65 million. The appellant argued that the works were completed around 31 December 2021, at which time the Suburb B Property was valued at $1,225,000, showing an increase from the purchase price of $626,500 of only around $600,000. Thus, it was argued that the overcapitalisation was around $1,050,000.
The argument put by the appellant on appeal is not as straightforward as it appears. The valuation of the Suburb B property accepted by the primary judge at the time of trial was $1.525 million, that is around $900,000 greater than the purchase price. This fact alone would reduce the simplistic calculation of overcapitalisation to $750,000, however, it does not provide a basis for determining the extent of the overcapitalisation in the pre-separation period nor the post-separation period. Significantly, the respondent pointed to invoices showing the greater expenditure on the Suburb B property (over $900,000) was prior to separation, when the parties had acquired the property to be their “forever home”. On this simplistic analysis, around $750,000 was spent after separation where the value of the Suburb B property increased by $300,000 from $1,225,000 to $1,525,000. These figures lead to an argument that the post‑separation overcapitalisation was around $450,000.
The appellant had “not asked the valuers to inspect the property with regards to the improvements” (at [21]) which may have provided some evidence on this issue. In an attempt to overcome these difficulties, the appellant urged me to take judicial notice of property price increases due to market forces. Section 144 of the Evidence Act 1995 (Cth) provides that “proof is not required about knowledge that is not reasonably open to question and … is common knowledge in the locality in which the proceeding is being held”. However, whether there has been a general movement of property prices and how that may have affected the value of this property compared to the various improvements (or the combination of both) could not be within the meaning of the provision.
Further evidentiary difficulties confronted the appellant. The respondent gave evidence of repayments on the mortgage on the Suburb B property prior to and after separation from the proceeds of the sales of the other assets. The respondent also gave evidence that the mortgage expenses and other outgoings after separation were $87,059 and that, at least at the time of filing his trial affidavit, the respondent’s income exceeded expenses by around $549 per week. There were other significant financial issues at trial, including claims by each of the parties that the other had used or hidden monies (a total of $282,500) which were rejected by the primary judge.
The appellant does not argue that the primary judge failed to provide adequate reasons, no doubt because the detailed argument put on appeal was not put to the primary judge at trial, either in the Outline of Case filed by the appellant nor in final addresses.
In light of the state of the evidence before the primary judge, I am not persuaded that the primary judge erred in accepting the concession of the respondent that the relevant amount of overcapitalisation was around $500,000.
The primary judge’s approach to overcapitalisation
In substance, the appellant’s argument on the approach to overcapitalisation was that the Court should not simply look at the value of the respondent’s initial contributions, but “look to see what has been made of the use of those funds in the relationship and how it translates to the pool that exists at trial” (Transcript 18 July 2024, p.90 line 32).
Overcapitalisation has been considered a number of times in past cases, although none of these references were given to the primary judge:
(a)In In the Marriage of Chance & Bryant (Appeal No 2 of 1986, 20 March 1986); (sub nom C & B) [1986] FamCA 70 (“Chance & Bryant”), the Full Court considered a case where the wife had applied $55,000 from an inheritance to home extensions which only added around $10,000 to the value of the matrimonial home. The total assets of the parties were only $68,500 after a marriage of 17 years with four children. The primary judge assessed the husband’s contribution at 30per cent of the assets. However, the Full Court concluded that the husband ought to receive 40 per cent of the assets. Nygh J (with whom Joske and Butler JJ agreed) said:
When one looks at the question of contribution made by a party to the acquisition, preservation and maintenance of property it must clearly be relevant to determine to what extent that contribution is reflected in the increase in value in that property. If one looks at money which the wife spent in respect of that property and the effect it had on an increase in the value of that property then the contribution made by the wife is much less in value and effect than would at first sight appear. To that extent it is my view that his Honour erred in over-stressing the importance in monetary terms of the contribution made by the wife to the development of the former matrimonial home.
(b)In the year after Chance & Bryant, the Full Court considered the issue again in Vrbetic & Vrbetic (1987) FLC 91-832. Vrbetic concerned a two-year marriage where the parties’ net assets were found to be $85,000 and the primary judge had assessed contributions at 75 per cent to 25 per cent in favour of the wife. At the time of marriage, the husband had land with a net value of $11,000 (of the $14,000 purchase price) and the wife had a home which was sold and of which the proceeds of $58,000 were used to build on the husband’s land. Following separation, the husband had also reduced the indebtedness of the parties by around $8,000. The husband argued that as the land he had contributed to had a value of $40,000, he ought to have received more than 25 per cent of the parties’ assets which only totalled $85,000. He contended that the primary judge failed to allow him the benefit of the appreciation of the value of the land and that his Honour had erred in not giving him full credit for the loan repayments made by him post-separation. Evatt CJ (with whom Ellis and Nygh JJ agreed) said (at 76,259):
… One cannot help feeling that the proportions that his Honour has arrived at in his order do bear some relationship to what each party was able to put into the marriage at the beginning, and do bear some relationship to what they might now have had had the parties not married, that being a relevant consideration in my view in a marriage which lasted such a short time.
…
… in a sense it has to be accepted that each of these parties has contributed considerably more than the net worth to them, of what has resulted from these contributions. The loss of this is something which in my view has to be shared between them in a meaningful way.
(c)In Willmore and Willmore (1988) FLC 91-975 Elliot J considered a case where the parties had divided their assets. The wife built a home and the husband built a log cabin. The home appreciated and the cabin depreciated considerably. When determining the property settlement orders, Elliot J said (at [90]):
The wife in this matter prudently paid for a house which is saleable and valuable; the husband put his money into a cabin which cannot be sold for dwelling and which is consequently of little more than removal value.
To take a view of the parties’ contributions ignoring this significant factor would be in my view to deny to the wife proper recognition for her prudent use of her share of the divided proceeds of the former matrimonial home.
(d)In Farley & Manoly [2013] FamCAFC 93, the primary judge did not take account of the liabilities incurred by the wife when renovating a property after separation on the basis that the husband should not be responsible for a decision in which he played no part (at [25]). The primary judge’s approach was unchallenged on appeal (at [55]).
(e)In Hackshaw & Hackshaw [2010] FamCA 1123 (at [231]–[235]), there was considerable expenditure on a farm which, when viewed in the short term, was said to be overcapitalisation, but from which the husband expected to profit in the longer term. The trial judge (after referring to G & G [2001] FamCA 1138 which concerned a long‑term investment in wine parcels) approached the issue on the basis that the wife should receive an adjustment pursuant to s 75(2)(o) of the Act to account for the fact that she would not share in the long-term benefit of the expenditure.
Vrbetic, Willmore and Farley & Manoly reflect a general proposition that I have set out elsewhere (Grant T Riethmuller and Dr Robin Smith, Family Law (Thomson Reuters, 7th ed, 2022) at [26.240]):
Where both spouses are responsible for the overcapitalisation of property, the contribution of each should reflect a reduction due to the overcapitalisation in proportion to their respective contributions. Where only one spouse is responsible for the overcapitalisation, it may be proper for that party’s contributions assessment to reflect the reduction in the value due to the overcapitalisation.
(Footnotes omitted)
Following Chance & Bryant, Professor Anthony Dickey argued that there were “problems with [the Chance & Bryant] approach, for it has regard to the ultimate financial consequences of contributions rather than their significance at the time they were made” (Anthony Dickey, “Contributions Resulting in Overcapitalisation of Property” (1986) 62 Australian Law Journal 82). There have been many cases since then confirming that it is the nature of the contribution and not its ultimate financial effect that is of primary relevance: see MacKinnon & Talbot [2023] FedCFamC1A 156 at [36]. It is the case that “contributions by a party do not necessarily have to produce a positive result for that party’s contributions…to be taken into account” (Browne v Green (1999) FLC 92-873 at 86,359).
In my view, Chance & Bryant is better understood as demonstrating the importance of looking at cases holistically, as has been stated by the Full Court: see Dickons & Dickons (2012) 50 Fam LR 244 at [21]. In Chance & Bryant, prior to the wife receiving an inheritance, the parties had a home. The application of the inheritance to improvements to the home would have been a luxury, in circumstances where they expected to share the home into the future. These aspects of the particular case weighed against a simple rateable sharing of the loss due to overcapitalisation because a rateable sharing of the loss would have left the husband with little share in the home. The reasons for the approach in Chance & Bryant are more apparent if one considered circumstances where parties spent such an inheritance on a holiday rather than improvements: it could not be appropriate that the enjoyment of the inheritance would lead to a spouse losing most of their share in a home owned before the inheritance. Spouses will be more likely to use earnings and inheritances for the enjoyment of life once they own a home, relying upon the security that home ownership provides.
In the present case, the appellant’s argument is in the terms criticised by Professor Dickey: that the primary judge ought to have merely considered the “ultimate consequences” of the respondent’s contribution, rather than “the significance [of the contributions] at the time they were made”. The appellant’s argument should be rejected. Contributions are to be considered at the time they are made, in light of the events that follow. Chance & Bryant should not be seen as authority for the contrary; rather, it establishes that the circumstances of that case required a sharing in the loss in proportions different to the monetary contribution amounts.
From a purely commercial perspective, many decisions of spouses overcapitalise property by adding or improving homes in which spouses intend to live in the longer term (kitchen renovations, patios, pools, games rooms, and the like). It is not for the courts to be critical of spouses who establish a home with the comforts they enjoy, rather than mere spartan living quarters, even if the cost is not a profitable investment from a commercial perspective. Overcapitalisation during a relationship will not generally fall within the ambit of waste which, following Kowaliw & Kowaliw (1981) FLC 91-092, generally requires intentional or reckless conduct. Whilst, in some cases, consideration should be given to “value to owner” valuations of overcapitalised property or likely long-term appreciation (see Hackshaw and G & G), such an approach was not argued in this case.
In the present proceedings, the choices concerning the improvements to the Suburb B property prior to separation were for the parties to develop their “forever home” and accounted for over $900,000 in improvements (AB, p.648). Those choices made before separation do not require that one or the other should bear a greater share of the consequences in the circumstances of this case. The argument that the respondent’s significant contributions of property a decade earlier should be limited by the effect of the use of the funds should be rejected. However, the respondent’s continuation of overcapitalisation of the Suburb B property following separation was a unilateral choice (as the Suburb B property would no longer be their “forever home” once the parties had separated) for which the assessment of contributions should be reflected (as occurred in Willmore and Farley & Manoly). It appears that it was this part of the overcapitalisation of the Suburb B property that the primary judge was referring to when accepting the respondent’s concession of $500,000. As a result, I am not persuaded that the primary judge erred in principle on this issue.
Whether the assessment of contributions was unreasonable
What remains to consider is whether the outcome is such that the Court may infer that “there has been a failure properly to exercise the discretion” (House v The King (1936) 55 CLR 499). As Brennan J said in Norbis v Norbis (1986) 161 CLR 513 at 540, “the “generous ambit within which reasonable disagreement is possible” is wide” and “marks the area of immunity from appellate interference.” The weight or importance given to evidence is a matter quintessentially for the primary judge unless an appellant can show that the primary judge was “plainly wrong”: see CDJ v VAJ (1998) 197 CLR 172 at 230–231 per Kirby J. This is because the function of the appeal court is “not to offer … a second opinion” as “[i]t cannot be too strongly said that a mere difference of opinion ... does not indicate error on the part of the trial judge”: see Sharman v Evans (1977) 138 CLR 563 at 565.
The effect of the contributions assessment by the primary judge was that the appellant’s contributions assessment represented around $1.05 million after bringing to the relationship less than $30,000. The respondent’s contributions were assessed at $1.78 million after bringing around $1.5 million to the relationship – a net increase of around $280,000. Even if all of the $500,000 overcapitalisation were hypothetically included, it would bring the respondent’s contributions assessment to $2.28 million, an increase of $780,000 from what he brought to the relationship.
On either view, the outcome resulted in the appellant receiving a far greater increase in net assets than the respondent, despite the enormous initial contribution by the respondent and the otherwise similar contributions (both earned similar amounts over the course of the relationship). The primary judge clearly took a holistic and not mathematical approach, recognising the contributions in the context of a relationship of over 10 years. The appellant has not established that the contributions assessment by the primary judge is such that one could infer that there has been a failure to properly exercise the discretion nor that it could be considered plainly wrong.
CONCLUSION
As the appellant has not established the ground of appeal, the appeal must be dismissed.
The appellant has been wholly unsuccessful in the appeal, in a case concerning financial issues. It is appropriate, having regard to s 117 of the Family Law Act 1975 (Cth), that the appellant pay the respondent’s costs on a party and party basis. The parties agreed that I ought to assess costs on a lump sum basis. I have had regard to the Schedule of Costs that each party has prepared. The respondent seeks $22,927.78 on a party and party basis. The appellant’s schedule set out her costs (on a party and party basis) as $17,538.15. The appellant had the additional work of preparing the grounds of appeal and the filing fee. I am persuaded that costs fixed in the sum of $15,000 are appropriate in the circumstances of this appeal.
I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Riethmuller. Associate:
Dated: 16 April 2025
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