Tate and Dunstan
[2016] FamCA 38
•2 February 2016
FAMILY COURT OF AUSTRALIA
| TATE & DUNSTAN | [2016] FamCA 38 |
| FAMILY LAW – Property settlement – de facto relationship 29 years – both parties elderly – how to deal with s 90SF(3) and the question of percentages where justice and equity is the fundamental issue. |
| Family Law Act 1975 (Cth) |
| Aleksovski v Aleksovski (1996) FLC 92-705 De Winter and De Winter (1979) 4 Fam LR 583 Farmer & Bramley [2000] FamCA 1615; (2000) FLC 93-060 Hickey and Hickey & the Attorney-General for the Commonwealth of Australia (Intervenor) [2003] FamCA 395; (2003) FLC 93-143 JEL v DDF [2000] FamCA 1353; (2001) FLC 93-075 Norbis and Norbis (1986) 161 CLR 513 Steinbrenner & Steinbrenner [2008] FamCAFC 193 |
| APPLICANT: | Mr Tate (Litigation Guardian) |
| RESPONDENT: | Ms Dunstan (Litigation Guardian) |
| FILE NUMBER: | MLC | 6777 | of | 2014 |
| DATE DELIVERED: | 2 February 2016 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 20 January 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Nicholson |
| SOLICITOR FOR THE APPLICANT: | Brygel Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Weil |
| SOLICITOR FOR THE RESPONDENT: | Perry Weston Lawyers |
Orders
That within 90 days, the respondent pay to the applicant $150,000.
That each party otherwise retain, to the exclusion of the other, all other assets in their respective possession.
If the payment referred to in (1) is not paid by the due date, the respondent do all things necessary to place the home at F Town on the market for sale and from the settlement of any sale, the proceeds be applied:
(a) First, to pay any costs and expense of the sale;
(b) Secondly, to pay any costs due to complete the rectification of the title;
(c)Thirdly, to pay to the applicant $150,000 plus interest under the Family Law Rules 2004 which shall accrue from the 90th day from the making of these orders until payment; and
(d) Fourthly, to pay the balance to the respondent.
IT IS CERTIFIED:
That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
Subject to any applications for costs, the respective applications and responses be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Tate & Dunstan 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 MELBOURNE |
FILE NUMBER: MLC 6777 of 2014
| Mr Tate |
Applicant
And
| Ms Dunstan |
Respondent
REASONS FOR JUDGMENT
Mr Tate (“the applicant”) is aged 92 years. He seeks a property settlement payment from Ms Dunstan (“the respondent”) who is aged 73 years following the conclusion of their de facto relationship of about
29 years duration.
This litigation was conducted on behalf of each party through a litigation guardian. The applicant and the respondent commenced some form of relationship in 1981 and commenced living together in April 1985. In June 2014, the parties appear to have formally separated and in July of that year, the applicant entered a retirement home.
In August 2014, the applicant began these proceedings.
As the legal title positions of the parties’ respective property interests stand, the applicant has about $284,000 worth of assets and the respondent has about $912,000. That view depends upon a number of findings and determinations to which I shall now turn; on any view, the parties have about $1.2 million between them.
One issue is whether certain things should be excluded from the division of the parties’ property. The ultimate issue however is what is just and equitable to both parties.
The applicant seeks approximately $284,000 from the respondent.
The respondent agrees that the applicant is entitled to something, but she would confine the order to a payment of $50,000. In my view, neither of those positions is just and equitable. For the reasons that follow, the payment of $150,000 is just and equitable.
There is no dispute that the applicant and the respondent were in a de facto relationship. No jurisdictional issues of any nature were raised (such as those found in s 90SK(1) and (1A) or in s 90SM(9) or s 90SA of the Family Law Act 1975 (Cth) (“the Act”)). There is also no dispute that the de facto relationship has broken down and that the application has been brought within time (see
s 44(5)).
The only issue is the alteration of property interests.
Section 90SM provides that after the breakdown of the de facto relationship, the Court may make such order as it considers appropriate altering the interests of the parties in their property. The use of the word “appropriate” is not an indication of an unfettered discretion. Section 90SM(3) provides that the Court must not make an order unless it is just and equitable to do so. In this case, both parties agree (by their setting out of the financial parameters of their dispute) that it is just and equitable to make an order. That is particularly relevant here because the major asset is an unencumbered home of which the respondent has sole proprietorship. The main source of the respondent’s income is the money she receives from an MLC “Masterkey” Allocated Pension but MLC described these payments as a superannuation interest coming from its “Universal Super Scheme”. Relevantly, a certificate was tendered in evidence that the “withdrawal value” of this superannuation interest is $222,618. That it is a splittable interest.
Having decided that it is just and equitable to alter the parties’ property interests or, more relevantly, alter the legal interests of the respondent in favour of the applicant, the Court is obliged to consider what order should be made taking into account:
(a)The financial contributions made by each to the acquisition, conservation or improvement of any of the property of the parties (whether or not that property still exists);
(b)The non-financial contributions made to those same properties;
(c)The contributions made to the welfare of the family;
(d)The effect of any proposed order upon the earning capacity of either party; and
(e)The matters referred to in s 90SF(3) insofar as they are relevant.
In respect of (e) above, the Court is obliged here to consider:
(a)the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship ); and
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
…
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain; and
…
(f)subject to s 90SF(4), the eligibility of either party for a pension, allowance or benefit under:
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) a standard of living that in all the circumstances is reasonable; and
…
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties;
…
(p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship;
…
(r) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
…
It is to those foregoing matters that I turn after consideration of the relevant facts about the past, the present and, significantly in this case, the future.
Procedural issues
Each party was represented by counsel. The rules of evidence would be expected to be applied but each party agreed that there were no objections to the evidence of the other and no rulings were required. That was sensible because the evidence was given by the litigation guardians who had to do the best they could in seeking information. Much of this evidence related to events over 30 years.
The limited evidence restricts the number of findings that can be made.
The respondent conceded that the applicant was an elderly man with health problems but there was limited medical evidence as to his current state of health. Much was left to speculation about the parties’ respective futures but it was not controversial that the applicant’s longevity of life is limited.
Neither side sought to cross-examine any witnesses.
Neither party sought to discharge the orders relating to the other’s litigation guardian.
Positions of the parties
The applicant’s position was that all assets including the capital value of the respondent’s “pension” should be included for division. It was conceded that some of the respondent’s legal fees had been paid from her savings whilst the applicant had “borrowed” from his family. There is no evidence about these loans or how the repayment of them was being treated. It is also odd that the applicant has $48,000 in his bank accounts yet would need to resort to the assistance of his family.
Ultimately, counsel for the applicant submitted that the sum of $26,850 said to be what the applicant had borrowed, should be treated as a liability in the list of assets. On the respondent’s side of the ledger, her bank balances had been reduced because she had paid some of her legal fees.
The original source of the respondent’s payments to her lawyers remains unclear. It is not appropriate to speculate whether they came from the sale of property traced back to when the applicant was said to have advanced the respondent money from a sale of his legal interests nor whether it came from the current MLC “pension” and Centrelink benefits. The evidence does not permit a finding.
Similar questions arise about the applicant’s sources because he has shares and investments which provide income. His financial situation shows that his income exceeds his expenditure. Thus, some of the divisible property is presumably post-separation earnings where the source of the capital remains obscure. Notwithstanding the applicant’s argument about the reduced capital in the “pool” because the respondent has paid her legal fees from savings, I think the fairest way to deal with this is to ignore the supposed legal debt of the applicant. To the extent that it is to be repaid, the applicant will have ample funds to do so without prejudicing his lifestyle.
The respondent submitted that the MLC policy should be excluded from the division because it was the respondent’s source of income. Whilst it is the current source of income, there are other possibilities such as Centrelink. There is no evidence about any impact on the respondent if the “pension” was used to fund a payment to the applicant. There is no doubt from Exhibit A1 that the MLC money is capital and is splittable. Because of the respondent’s age, I have presumed (although again, there is no evidence of this) she can access some or all of the capital.
I acknowledge that based on the structure of the investments that make up the agreed capital value, any reduction to the capital value of the MLC superannuation fund is bound to alter the income stream from it. There is no evidence about that.
The applicant’s view is that I ought simply fix the sum due to him and allow the respondent to work out how to make the payment. I reject that because to do so would not enable the Court to know the consequences of any order and how the respondent’s financial position, particularly vis a vis the applicant, would be for the future.
It seems probable (and on the evidence, I can put it no higher than that) the applicant has contributed at least indirectly to the respondent’s superannuation interests by providing support for her (as she did for him) whilst she was employed and accruing superannuation entitlements. That indirect contribution is a factor that the Court is required to take into account by s 90SM(4).
Albeit the respondent’s approach was to treat the MLC fund as a pension, it was described (in Exhibit A1) as a superannuation interest. As such, the capital sum belongs to MLC. The interest of the respondent is as a member.
Section 90MD provides that a superannuation interest means an interest that a person has as a member of an eligible superannuation plan. An eligible superannuation plan is defined to mean inter alia, a superannuation fund within the meaning of the superannuation regulatory legislation. Section 90MC(1) provides that a superannuation interest is to be “treated as” property. The respondent did not argue that it was not property – her argument was that it should be quarantined or excluded.
In my view, the respondent’s interest in the “pension” is property and should be treated as such. The issue of how it is thereafter treated for division is a matter that falls within s 90SM and particularly s 90SM(1).
Akin to the issue of the respondent’s superannuation was the treatment of the applicant’s Department of Veterans’ Affairs pension. In the respondent’s summary of argument, it was described as an issue in dispute in the following manner:
The treatment of the parties’ respective pension entitlement.
The applicant’s DVA pension has not been valued, but provides him with income of approximately $37,600 per annum.
There was no evidence about a “value” of this pension. The respondent sought a greater share of the property on the basis of the likelihood that the applicant would die much sooner than she would. If that occurred, his pension presumably would cease. No evidence was presented to say otherwise. Against that, the respondent’s death would presumably mean (although again there is no evidence) the payment to his estate of a capital sum. That latter inference may be drawn because Exhibit A1 shows the capital sum invested (and the relevant unit prices) and there is no indication that the capital sum is being depleted to meet the pension payments. I have therefore inferred that the applicant’s pension is simply an income stream but the respondent’s is both capital and income.
A further issue concerned the certificate of title to the only real property in which the parties have an interest. For reasons that remain obscure, when the house was bought in 2003, the certificate of title was not transferred from the name of the vendor. The Court was informed (and the evidence shows) that the conveyancer soon thereafter retired and the relevant transfer “papers” have been lost.
The respondent has had to arrange for the rectification of the title at a cost of almost $20,000. Some of that money has already been paid from the respondent’s savings and no adjustment has been made to “add back” or include that in the list of assets and liabilities later in these reasons.
As the savings accounts are included in the assets list, the applicant has indirectly contributed to that title rectification. The outstanding sum to rectify the title is about $8000. Because I have left out the costs for legal fees of the respondent, I should also leave out the unpaid balance of the rectification costs. As the respondent is retaining the home, she can complete that task at her own timing.
Because I do not intend to give the applicant what he seeks, the respondent will be in a stronger capital position and will therefore be able to manage the outstanding payment for the title rectification. Both parties have yet to pay all of their legal fees.
The financial positions of the parties
I have already dealt with the current disparity of capital assets.
The respective financial statements of the applicant and the respondent were filed on 3 December 2015 and 18 December 2015. The applicant deposes to an income of $1013 per week made up of an estimate of $290 per week by way of dividends and bank interest and his pension of $723. Of the $1013 per week, he pays $765 to the retirement village and a small amount of $30 per week for other expenses. In other words, he has an excess of income over expenses.
The respondent’s financial position was somewhat more obscure. She has an income of $613 per week which is made up of her Centrelink pension of $298, the MLC payment of $233 and interest on her bank savings accounts and dividends of $82 per week. She did not set out any precise details as to her living expenses but conclude that she is living within her means.
Whilst it would therefore appear that the applicant is in a stronger financial positon in terms of income and his needs for money are limited, that presupposes that there is no discretionary expenditure. There was certainly none set out in his statement of financial circumstances and I appreciate the difficulty because the statement was drawn by the litigation guardian.
Even if I could conclude that the applicant is in a stronger financial position and indeed would be in an even stronger financial position if he receives a further capital payment, the amount involved is still modest.
The evidence of the parties
The evidence presented by the litigation guardians has not been challenged and indeed has been presented in a very cooperative and cost-saving manner.
The applicant is in poor health and has a number of difficulties. Dr B of the C Clinic described the applicant in November 2015 as being in a very frail state with multiple medical conditions including congestive cardiac failure and prostate cancer.
The respondent has suffered two strokes both in 2014 and was hospitalised for some time but now lives independently.
Separation was controversial. The applicant had been unwell when the respondent suffered her strokes. The respondent told the litigation guardian that she asked the applicant to give her a “break” for about eight weeks and consequently, the applicant left the home whilst she was in hospital and did not return. It was common ground that the relationship came to an end not just because of the respective capacities of the parties to care for themselves and for each other. There were problems within the relationship albeit not comprehensively described.
Dr D, by affidavit, said that the respondent has a significant speech impediment making communication difficult. Her communication is a significant disability and she will require assistance. He said that she needed ongoing surveillance of her risk factors because of the possibility of recurrent strokes and she requires management of hypertension. The problems have created reactive depression which has necessitated the use of local psychiatric services to assist. He thought there would be no change.
In respect of what the parties had at the commencement of the relationship, there was some dispute. The applicant said he had about $395,000 in assets which included an interest in a superannuation fund, a unit with a modest equity and an interest in a property with the respondent which they had acquired as tenants-in-common as to one-third to the respondent and two-thirds to the applicant. There were motor cars and chattels. At that time, the applicant was working as a national sales manager for a company but retired in September 1986. Thereafter, he received the Department of Veterans’ Affairs pension. The respondent agreed that the applicant had investments or superannuation when their relationship commenced along with the interest in the unit but she was not able to say that she was aware of those assets in 1985. There was a dispute about the chattels but in my view it is so long ago that it is irrelevant.
The respondent maintained she had not long separated from her former husband and had received a property settlement as a result of which she had $42,500 and it was that sum that she applied to the purchase of a property with the applicant. I conclude that at the commencement of the relationship, the applicant had a greater financial position than did the respondent but the exact disparity is hard to define.
Subsequent to the commencement of the relationship, there were a number of real estate purchases and those continued throughout the relationship. I am satisfied on the evidence of the litigation guardians (which has been largely drawn from title searches) that in 1985 when the cohabitation commenced, a property was purchased for $75,000 of which the applicant contributed $50,000 and the respondent $25,000. Most interestingly, they registered the title as tenants-in-common as to two-thirds to the applicant and one-third to the respondent. There were then subsequent real property transactions one of which was the sale just mentioned and the proceeds were indeed distributed according to the tenancy-in-common. They then purchased a property at Suburb E and the contributions of the applicant were greater. Again, they registered as tenants-in-common as to two-thirds to the applicant and one-third to the respondent. That however did not reflect the actual contributions in money terms. Neither party said why that happened.
In 1997, further transactions took place and another property was purchased but this time the respondent purchased it alone. She then purchased other properties. It is clear that in 1997 when the Suburb E property was sold, the applicant who would have been entitled (as the tenant-in-common) to two-thirds, gave the bulk of the funds to the respondent. It would be a reasonable inference that thereafter that money was used by the respondent for the acquisition of various properties.
Notwithstanding that the applicant had retired, the respondent continued to work apparently as a medical records clerk until she reached the age of about 60 or 62 years which was sometime around 2002 or 2004. The MLC superannuation policy shows the respondent’s contribution commencing in that fund in July 2004. There is no evidence as to how or where any lump sum came from but it is reasonable to presume that it was because the respondent had retired and she would have been eligible for some sort of funding because she had been working for a number of years.
As the parties’ relationship continued, I conclude they shared financial expenses. Evidence was given about the payment of travel expenses but in my view, it would be hard to draw any conclusion having regard to the lack of certainty about what the parties’ intentions were at those times.
In the litigation guardian’s affidavit on behalf of the respondent, it was said that the respondent had indicated that while they did purchase two properties together, they otherwise maintained separate finances. It is difficult to conclude whether that was for a particular purpose or what impact it ought to have on the ultimate outcome. In my view, having regard to the duration of the relationship and what would otherwise appear to be a pooling of their resources along with the various activities in the early part of the relationship under which they purchased property as tenants-in-common but not in equal shares, the only appropriate conclusion is that this was some form of joint venture where they each contributed to the best of their ability and did not worry after 1997 about the niceties of who was contributing what.
There is no doubt that at various times, the respondent purchased properties in her own name. No tax returns were tendered into evidence to indicate whether there was some specific investment strategy and whether income was split or otherwise. Much of what is contained in paragraphs 26 to 29 of the litigation guardian’s affidavit on behalf of the respondent is argument, submission and opinion. Whilst neither party submitted that the evidence should be rejected, I remarked at the time, and counsel for the respondent did not demur, it must be seen as of little probative value. It is conjecture.
Part of the evidence in those paragraphs showed that the respondent maintained that she had undertaken various aspects of renovating and preparing properties for sale including “cleaning, removal and laying of new carpets, tiling and painting”. This “evidence” was put before the Court on the basis that it indicated a greater contribution by the respondent which arose from the increased value of the ultimate property sale prices. I cannot comfortably conclude that the original money that gave rise to the respondent’s purchase came from her. There is also no expert evidence to tell me whether or not the respondent’s physical labours contributed to the increased sale values as distinct from natural market forces.
In the affidavit on behalf of the applicant, it was said that each party cared for the other when unwell although the respondent maintained that she did all of the housework. There is some support for the respondent’s position because the applicant conceded that the respondent like to shop and “style” household items but she also “cooked very well and kept the home clean and tidy as a housekeeper”. Against that however, the applicant said that he was responsible for keeping the garden, mowing the lawn and the general household maintenance as necessary, a fact disputed by the respondent.
It is difficult to make any assessment as to whether these contributions had any significant impact on the value of the assets as distinct from each party fulfilling their respective roles in the relationship where each was doing the best that they could. Each concedes that during the period of time that they were unwell, the other looked after the person who was ill.
The respondent indicated that she was in good health until 2014 when she had the strokes to which I have referred. She maintained that the applicant had aged and needed increasing assistance and required “further and more intense assistance during periods of ill health”. The evidence was not specific and I do not know whether the burden upon the respondent (if indeed she became the applicant’s carer), was any greater than one would expect in a relationship of two people of their ages and their states of health.
In my view, the only safe conclusion to draw from this is that both parties were in a relationship with which both were comfortable and it was only when illness occurred in 2014 that the relationship fell apart. On that basis too,
I ought conclude that each was doing the best they could to provide care and concern for the welfare of the other.
The applicant’s position is that the contributions of the parties should be deemed as equal. Whilst that was not the respondent’s position in the outline, her counsel, in my view quite appropriately, said that everything was gravitating towards an equal contribution over this long relationship with adjustments either side for various issues.
I agree there is little difference between the applicant and the respondent in respect of contributions and I would assess all of the factors save for
s 90SM(4)(e) as equal.
Section 90SF(3)
I turn then to s 90SF(3) (as referred to in s 90SM(4)(e)).
This concerns the future but also the present. The evidence that each party presented was sparse. In relation to the applicant, it was said that he is now in poor health and his physician supported that conclusion. Counsel for the respondent submitted that with the applicant’s absence from court, it was most likely that he was not leaving his bed. I have no evidence about the state of the applicant’s quality of life and indeed, mobility. I am not prepared to conclude that he is on his deathbed.
The respondent’s evidence was that she has the medical problems to which
I have already referred. The affidavit traversed the financial position and then “argued”:
It would seem likely that (the respondent) will have significantly greater needs into the future, being some 20 years younger than (the applicant) who is sadly extremely unwell.
The argument then went on:
It is imperative in any settlement that (the respondent) retain her home, both financially and for her emotional well-being. If forced to sell, she would have limited capacity to buy a new home for herself and would have no prospect of obtaining finance, and such an outcome would clearly be inequitable.
Whilst that is not evidence, it is the main focus of both parties and the basis upon which the justice and equity issue is to be determined. By the same token, the submission really contains a “wish list”. Nothing was said about the impact upon the superannuation pension if some of the capital were to be taken away nor, as I have already indicated, whether the respondent could receive a greater pension entitlement from Centrelink as a result of reduced income streams. The respondent’s income stream will be reduced by simply the transfer of the capital sums in the bank accounts to the applicant. I have no evidence as to how the respondent will be affected by the loss of a capital sum but I infer that despite her health position, she is unlikely to need significant monies to improve her quality of life. Although the respondent was hospitalized by her strokes and has difficulty with communication, she is living independently. It was not suggested that specific current needs had to be addressed by any financial adjustment. It I also do not know whether there is any foundation for her assertion that she could not purchase another property. There is no evidence about the impact if she was required to live in rented accommodation where she would have more capital and hence a greater income stream than having her own home with the attendant costs of rates and maintenance. All of these things are subject to conjecture and therefore, my reference to a “wish list”.
There is little doubt that the applicant has a secure position in the retirement home. The bulk of his income goes towards his daily care and any extra sums that he receives will simply increase his capital position as well as his income stream. There is no evidence to indicate that such a course of action would increase the quality of his life.
Conclusion about the respective assessments
I have already indicated that in my view, it is appropriate to make a finding that the parties contributed equally in all of the aspects of their relationship over the period of 29 years. The real question in this case is the adjustment that should be made for the matters set out in s 90SF(3) that are relevant and to which I have earlier referred. Counsel for the applicant conceded that there should be a 5 per cent adjustment in favour of the respondent but when challenged, agreed that there was no magic in that figure. Counsel for the respondent resisted any such mathematical approach and urged the Court to look at the reality of the situation in this case. Counsel for the respondent submitted that the applicant was well cared for and had no needs whereas the respondent who was much younger and whose life expectancy could be concluded to be much greater, had the problems of health that she had to deal with and it would be difficult for her to move from a home. It was similarly put that when one compared the income streams of the parties, the applicant had the Department of Veterans’ Affairs pension which although it might not have a capital value, was a guaranteed stream until the death of the applicant. On the other hand, any treatment of the MLC policy as capital meant that a reduction of the capital would reduce the income stream and therefore the quality of life.
Ignoring the applicant’s liability and the unpaid title rectification costs, I find the interests of the parties and the values of the equities are as follows:
The F Town property $560,000
Applicant’s savings and investments $311,100
Respondent’s savings $115,654
Respondent’s superannuation $222,619
Respondent’s car $4,950
Respondent’s shares $8,706
Total $1,223,029
What is a just and equitable outcome?
In De Winter and De Winter (1979) 4 Fam LR 583, 589, Gibbs J noted that the discretion conferred upon the Family Court to make orders affecting financial interests under s 79 of the Act is “extraordinarily wide”. Notwithstanding the court was referring to the marriage relationship, the legislature has used the same language relating to de facto relationships. I see no reason to think that the same judicial pronouncements would not apply here.
In this context, it is worth recalling the comments of the High Court in
Norbis and Norbis(1986) 161 CLR 513, where Wilson, Dawson and Brennan JJ cautioned against the strict adoption of judicially formulated guidelines as fetters on the discretionary powers conferred by the Act. Wilson and Dawson JJ said:
…the legislation confers a discretion upon the court which, provided the required matters are taken into account, does not dictate the employment of any particular method in the formulation of an appropriate order for the alteration of property interests. … As Gibbs C.J. pointed out in Mallet:
"It is proper, and indeed often necessary, for the Family Court, in dealing with the circumstances of a particular case, to discuss the weight which it considers should be given, in that case, to one factor rather than another. It is understandable that practitioners, desirous of finding rules, or even formulae, which may assist them in advising their clients as to the possible outcome of litigation, should treat the remarks of the court in such cases as expressing binding principles, and that judges, seeking certainty, or consistency, should sometimes do so. Decisions in particular cases of that kind can, however, do no more than provide a guide; they cannot put fetters on the discretionary power which the Parliament has left largely unfettered. It is necessary for the court, in each case, after having had regard to the matters which the Act requires it to consider, to do what is just and equitable in all the circumstances of the particular case."
We think it is not possible to take the question of guidelines further than this. Nor is it desirable to attempt to do so. With all respect to those who think differently, we believe that the sound development of the law, in this area as in others, is served best by following the tradition of the common law. The genius of the common law is to be found in its case-by-case approach. The decision and reasoning of one case contributes its wisdom to the accumulated wisdom of past cases. The authoritative guidance available to aid in the resolution of the next case lies in that accumulated wisdom. It does not lie in the abstract formulation of principles or guidelines designed to constrain judicial discretion within a predetermined framework. There is no reason to think that the traditional approach, when applied in the family law area, leads to arbitrary and capricious decision-making or that it leads to longer and more complex trials.
Brennan J said:
It is one thing to say that principles may be expressed to guide the exercise of a discretion; it is another thing to say that the principles may harden into legal rules which would confine the discretion more narrowly than the Parliament intended. The width of a statutory discretion is determined by the statute; it cannot be narrowed by a legal rule devised by the court to control its exercise: Gardner v. Jay; followed in Huntley v. Alexander. When a statutory discretion is to be exercised within prescribed limits according to what is "just and equitable", as in the Family Law Act1975 (Cth) (see s. 79(2)), it is impossible to devise a controlling legal rule which will do justice and be equitable in every case which comes within those limits and falls within the scope of the rule. There will always be an exceptional case. If it were possible to predicate of a legal rule that its application to every case falling within its scope would invariably produce a just and equitable result, there could be no objection to its application. In such a case, however, the limits of the discretion would not be narrowed by judicial decision because the legal rule would be found to be implicit in the text of the statute.
The approach to the division
Section 90SM of the Act requires the Court to “take into account” the matters there set out but it does not provide the power to alter interests; that is found in s 90SM(1). The provisions relating to contribution and the like (s 90SM(4)) are only relevant if the Court decides that it is just and equitable to make an order. That applies here on not just the respondent’s case but also on any view of what legal interests in property each party currently has.
The nature and form of the assessment both as to contribution and the parties’ future circumstances is most commonly undertaken by talk of percentages. In Aleksovski v Aleksovski (1996) FLC 92-705, Baker and Rowlands JJ said at 83,437:
It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment. (my emphasis)
Then, in 2003, the Full Court (Nicholson CJ, Ellis & O'Ryan JJ) in Hickey and Hickey & the Attorney-General for the Commonwealth of Australia (Intervenor) [2003] FamCA 395; (2003) FLC 93-143 discussed “a four step approach” saying:
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. (my emphasis)
As Brennan J said in Norbis (supra) at 539-541, guidelines expressed in developing jurisprudence had to be expressed in very general terms. His Honour said:
Detailed guidelines are unsuitable for application to circumstances which are quite diverse. Moreover, any guideline must allow for a permissible difference in the standards and values accepted as reasonable by the community…
…
What appears just and equitable to the eyes of some appears unjust and inequitable to the eyes of others. Guidelines necessarily express standards and values; not legal standards, but standards and values derive from sources which the court thinks appropriate…
His Honour went on to talk about the “generous ambit within which reasonable disagreement is possible”. It was not suggested here that other cases of comparable circumstances would provide any guide. No authority was cited to indicate that justice and equity required a specific formula or approach.
Thus, consideration of the parties’ contributions in percentage terms may in many cases be helpful (if not the best way) to show how a determination was just and equitable but there are cases such as here, where an emphasis on percentage calculations may ultimately obscure the financial realities facing the parties.
Percentage assessments are the preferred methodology but they cannot be the only one. That is because the court must be satisfied that the outcome or order is just and equitable rather than the assessment of the parties’ contributions. (see JEL v DDF [2000] FamCA 1353; (2001) FLC 93-075 at [140]).
In Farmer & Bramley [2000] FamCA 1615; (2000) FLC 93-060 at [49], Finn J described the process thus:
...Given that awards under s 79 are virtually never calculated with mathematical precision, no amount of enumeration of, or indeed of evaluation of, contributions, or of the s 75(2) matters, or indeed of any of the matters listed in s 79(4), can ever explain exactly why a particular figure, or more usually a percentage, is eventually arrived at (other than that it is within the recognised “range”). Absent a strict mathematical approach, the reasons for judgment requirement ultimately becomes impossible of total fulfilment in the jurisdiction under s 79. (again, my emphasis).
Finally, there is the observation of Coleman J in Steinbrenner & Steinbrenner [2008] FamCAFC 193, where his Honour said:
Given that the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion, whether it be in the assessment of contributions in the matrimonial cause, assessment of damages in a personal injuries case, or determination of compensation in a land resumption case.
Despite the fact that each of the parties proposed their orders in dollar sum terms, the applicant also took the mathematical path and used percentages. The respondent’s approach was based upon her capacity to pay without destabilising any of her financial position whilst pointing to the applicant’s absence of need for money.
In my view, this is a case where the justice and equity can only be determined by a consideration of the reach or consequences for each party of any order but it cannot be simply done as an exercise in assessing needs. To do that would ignore all of the emphasis in s 90SM(4) on the efforts that the parties had put into their relationship over the years.
It is also necessary to consider whether this assessment should be undertaken on either a “global” basis or on an “asset by asset” basis because each of those produces different results for different assets both in respect of contribution but also as to how an alteration of those assets would affect each party. In respect of the respondent, I consider the asset by asset examination must be done in assessing what further adjustment should be made after a finding of equality of contribution. That is because there are different results for her depending upon which asset provides the payment to the applicant. That is the “reach” of the proposed order.
I have taken into account the original sources of the real properties, the superannuation of the respondent and the respective savings have all come from the joint endeavours of the parties. The fact that accounts and titles were set up in specific ways could be seen as the parties keeping their finances distinctly separate but in this case, the evidence does not permit such a view. If it did, an asset by asset approach would be fairer. Here, the sale of property earlier in the relationship which culminated in an abandonment of the tenancy in common situation remains unexplained. It would not be safe to speculate. Even if there was such speculation, it would not necessarily enable a conclusion to be drawn that the person who did not hold the legal title did not have some equitable entitlement by virtue of either a resulting or constructive trust. In those circumstances, the only fair way is to approach the contribution assessment globally.
Thus, contributions should be assessed holistically but each party’s future should be examined (at least from the respondent’s position) on how any order would affect the financial position of the respondent because of the alteration of specific assets. That is effectively an asset by asset basis.
In my view, the evidence supports a conclusion that the parties’ various contributions throughout the entire relationship have been equal.
As I have already indicated, s 90SF(3)(e) requires the Court to contemplate (insofar as they are relevant) the variety of factors there set out.
The parties’ ages and states of health are relevant only in respect of the financial consequences arising from any order. There is little (if any) relevance in the factors mentioned in s 90SF(3)(c), (d), (e), (h), (i), (j), (k), (l) and (m). The focus must be on s 90SF(3)(a), (b), (f), (g), (n) and (r).
The main financial differences between the parties can be starkly seen when the various proposals are contemplated. The three sources of the respondent’s capital are all potential areas available to satisfy any order favouring the applicant. The respondent wants to keep the home and any change of that environment has obvious consequences whereas there is little or no prospect of the applicant changing his environment. Putting off the sale of the home for the purposes of satisfying any entitlement of the applicant may also be pointless on the assumption of the applicant’s life longevity as contemplated by the respondent. For the respondent to move to another residence would be seen as difficult because of her recent health problems but in any event, there is no evidence of what alternative accommodation is available.
The absence of detail as to what the respondent requires for living expenses along with her health issues leads to an inference that she has no need for capital. To use the $115,000 for the purposes of paying the applicant would not seem to prejudice her interests. On the other hand, the applicant has no need for money.
The resistance to touching the respondent’s superannuation is understandable but on the evidence, it is simply superannuation in a phase where the respondent could draw against it and whilst that would prejudice her income stream, there is no evidence as to why that could not be made up in some way from a Centrelink pension entitlement increase. On the other hand, the applicant would presumably (because there is no evidence as to what would happen to his capital) just increase his income stream if he received a cash sum in circumstances where he has little need for that on the basis of his current financial statement.
There are two features that stand out most. First, it is probable that the respondent will live longer than the applicant but again, she has no specific financial needs not currently being met and there is little evidence to indicate what she will need in the future. That still justifies giving the respondent more than the applicant. The second feature is that any payment to the applicant will increase his income and reduce that of the respondent. The respondent is less able to continue a reasonable and comfortable lifestyle (s 90SF(3)(g) than is the applicant because his physical capacity is unlikely to change and his financial position can only improve. In respect of the latter, the applicant has less need for protection than does the respondent. Those two factors justify an adjustment in favour of the respondent and that was a concession made by the applicant’s counsel. The degree of any adjustment is the difficulty. As indicated a percentage adjustment may not reflect the reality. In my view a lump sum is fairer.
The applicant already has assets of about $311,000. That does not reflect a fair outcome having regard to the duration of the relationship and his contributions. If $150,000 was paid to him, he would have that sum to increase his income stream and he would have more capital even if less than the respondent.
$150,000 from the respondent could come from any of the three sources. If most, if not all, of her cash was used, it would have some but not much, apparent immediate impact. Any shortfall to make up the $150,000 could come from the superannuation with minimal impact to her income stream. Importantly such a course would enable her to remain in the home and live on a similar income stream to that which she currently has.
A payment of $150,000 to the applicant would then mean that he would have 38 per cent of the parties’ assets and the respondent 62 per cent. The percentages are meaningless but the underlying value of what each has means each is receiving recognition for what they did and there will be little to alter their financial comfort for their remaining years. In my view, an adjustment of $150 is a just and equitable result for both parties.
I certify that the preceding Ninety Three (93) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 2 February 2016.
Associate:
Date: 2 February 2016
Key Legal Topics
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Family Law
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Civil Procedure
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