Throsby and Pike
[2008] FMCAfam 1391
•19 December 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| THROSBY & PIKE | [2008] FMCAfam 1391 |
| FAMILY LAW – Property – contribution – s.75(2) factors – just and equitable order. |
| Family Law Act 1975, ss.75(2), 79 |
| Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 Norbis v Norbis (1986) 161 CLR 513 Pierce v Pierce (1998) FLC 92-844 Williams & Williams [2007] FamCA 313 |
| Applicant: | MS THROSBY |
| Respondent: | MR PIKE |
| File Number: | SYM 8652 of 2006 |
| Judgment of: | Altobelli FM |
| Hearing date: | 28 October 2008 |
| Date of Last Submission: | 28 October 2008 |
| Delivered at: | Sydney |
| Delivered on: | 19 December 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Lloyd |
| Solicitors for the Applicant: | Fritchley Solicitor |
| Counsel for the Respondent: | Mr Levy |
| Solicitors for the Respondent: | Humphreys & Feather Solicitors |
ORDERS
I direct the solicitor for the wife to provide to my associate and the solicitor for the husband a minute of order which gives effect to this judgment within 28 days.
If any application for costs is to be made then written submissions not exceeding 500 words be provided by the applicant for costs within
28 days. Any response to the costs application and/or form of order relating to Order 1 above be provided to the court 14 days thereafter.
IT IS NOTED that publication of this judgment under the pseudonym Throsby & Pike is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYM 8652 of 2006
| MS THROSBY |
Applicant
And
| MR PIKE |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application for alteration for property interests under s.79 of the Family Law Act, commonly known as a property settlement. The applicant is the wife, Ms Throsby, a 54 year old [occupation omitted]. The respondent is her husband, Mr Pike, a 70 year old retired [occupation omitted]. They commenced cohabitation in June 1994, married in December 1995, and separated in July 2006 after a period of 12 years cohabitation.
The husband is currently 70, and the wife 54. They have one child, [X], who is 12 years old. By consent I made parenting orders in relation to [X].
Background
When the parties commenced cohabitation in 1994, they were both coming out of previous marriages. The wife at that time had three children from her previous marriage. Both the husband and the wife entered into property settlements with their former spouses. They each assert that they contributed what they received from their respective settlements into the marriage, and used the same towards the acquisition of what is now the former matrimonial home at Property S, or its conservation and improvement.
There is a dispute between the parties as to what, precisely, their respective initial contributions were, and there is a further dispute as to how I should assess their initial contribution having regard to subsequent events. The above represents, in effect, the major issue in this case. There was a minor issue about the constitution of the asset pool in that the husband asserted that there should be an add-back in relation to legal fees paid by the wife.
However, I am satisfied from the evidence that any legal fees paid by the wife were derived from income she earned in the post separation period. There are unpaid legal costs for both parties so I propose to disregard them in terms of the asset pool, but take them into account in a general sense under s.75(2).
Thus, for all practical purposes, the pool of assets and liabilities is agreed. As indicated above, the main issue seems to be identifying and then assessing the weight to be given to initial contribution. However, there is also an issue about whether there should be a section 75(2) adjustment in favour of the wife.
The wife and [X] continue to live in the former matrimonial home at Property S, though it is common ground that the property must be sold. The wife seeks an order that she receive 65 per cent of the net sale proceeds on sale of the property. This figure represents what her Counsel, Mr Lloyd, submits was the greater contribution that she made at the commencement of the relationship, as well as a s.75(2) adjustment in her favour principally derived from the fact that she will have the majority care of [X].
On behalf of the husband, his Counsel, Mr Levy, submits that the evidence indicates that it was the husband who, in fact, made the greater financial contribution and that, therefore, contribution should be assessed in his favour at 60 per cent. He further submits that there should be no s.75(2) adjustment because [X] spends five nights out of 14 with the husband, as well as four afternoons.
In addition, there is a significant age difference, which is adverse to the husband, and the wife has a good earning capacity. Thus, according to Mr Levy, there should be no s.75(2) adjustment.
Issues
Having regard to the brief background relating to the case set out above, the issues appear to be as follows:
(1)To identify, and to then assess, the initial contribution made by the husband and the wife at the commencement of and during the period of the marriage.
(2)To assess whether there should be a s.75(2) adjustment in favour of the wife.
(3)To make a just and equitable order under the circumstances of the case.
Applicable Law
The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole.
My discretion in this regard should be exercised having regard to the facts of this case.
Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by each party in bringing property into the marriage. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
Pool of Assets
As indicated above, the pool of assets is agreed between the parties and I reproduce the same below with the exception of any reference to paid legals or to assets having a value of less than $1,000.
Assets
Value ($)
Property S
1,050,000
Teachers CU (Husband)
7,000
CBA (Husband)
18,500
IAG Shares (Husband)
3,595
IAG (Joint)
1,174
Holden (Husband)
6,000
Contents (Husband)
5,000
Boat
15,000
NAB 326 (Wife)
8,192
CBA (Wife)
6,756
IAG Shares (Wife)
2,918
AMP Shares (Wife)
2,836
Barina (Wife)
10,000
Contents (Wife)
20,000
Superannuation (1) (Wife)
68,205
Superannuation (2) (Wife)
22,979
Total Assets
1,248,155
The husband has a financial resource available to him in that his superannuation entitlement has been commuted to a pension which pays him $1,005 per week. Each year that pension is increased in accordance with movements in the Consumer Price Index. A valuation was obtained of the husband pension entitlement and the parties agree that its value is $594,570, but that, under the circumstances, it should not be characterised as property.
Contribution
In the wife's evidence she asserts that at the commencement of cohabitation she owned a property at Property W, which was sold shortly thereafter for $320,000. In addition, she asserts that she had a motor vehicle worth $9,000, and furniture worth approximately $40,000. I place no weight on the evidence she gives about the value of her car and furniture, but I do accept that her property at Property W had a value of $320,000 having regard to its sale shortly after cohabitation. She gives evidence that there was a mortgage on the Property W property to the St George Bank in the sum of $90,000.
The wife agreed in evidence that the mortgage of $90,000 was discharged by the husband shortly after cohabitation. In addition, she agrees that the husband also had a property at Property D.
The wife gives evidence that in 1997 the parties purchased the former matrimonial home at Property S for $440,000. They used the sale proceeds of Property W, $320,000, to acquire Property S and borrowed the balance. She agrees that when the husband sold his property at Property D they were able to discharge the mortgage over Property S.
In the husband's evidence he asserts that at the time of cohabitation, in addition to the unit at Property D, he also had a lump sum of $83,900, a sailing boat, a motor vehicle, savings in St George accounts totalling $11,000 approximately and furniture and furnishings. The husband paid $90,000 off the mortgage on the wife's property at Property W. The source of these funds was the cash that he had available to him at the time of cohabitation.
The husband agrees that they purchased the former matrimonial home and had to borrow from the St George Bank to cover the difference between the sale proceeds of the wife's property at Property W and the purchase price. He says that they borrowed $157,000 from the St George Bank, which amount was repaid once he sold his unit at Property D.
If one pauses there, as at the time that the mortgage to St George on the former matrimonial home had been discharged, the respective contribution of the husband and wife could be characterised as follows. If the purchase price was about $450,000, including stamp duty and expenses, then the husband contributed $90,000 plus $157,000, totalling $247,000. The wife provided the rest, namely $213,000.
In very broad terms, the husband contributed 55 per cent, and the wife 45 per cent to the purchase price.
Even allowing for some uncertainty about the precise purchase price, and whether it included the expenses associated with the purchase such as stamp duty, the fact is that over 10 years ago the parties each contributed half (plus or minus 5 per cent) towards the purchase price of a property which, today, is worth more than twice what it was purchased for. Viewed from the perspective of the date of the hearing there seems little logic in seeking to extrapolate from such insignificant differences in contribution over a decade ago any meaningful conclusion as to the differential in assessment of contribution.
Indeed, I am quite puzzled as to why this matter is even being litigated having regard to the remarkably narrow issues that call for determination, in the context of facts which are barely contentious.
I accept that the evidence of the husband and wife diverges about who paid the deposit and/or stamp duty, and who funded the subsequent renovations to the property, and who paid for materials and contractors and did work themselves with or without the assistance of family members, and who cared for the wife's children and [X] at various times during the relationship. But at the end of the day, even a cursory review of the facts by an objective bystander would result in the conclusion that from the perspective of the date of the hearing the myriad contributions made by each of the husband the wife, though perhaps different in quantity and quality, in the end result amounts to equality for section 79 Family Law Act purposes.
This is not because there was any presumption of the quality, but rather because it is the irresistible inference from all the evidence submitted by the parties themselves. This matter should have settled. The ridiculous polarisation that occurred when each of the husband and the wife submitted that their contribution should be assessed at 60 per cent reflects very poorly on the parties. Each made an ambit claim that made it almost impossible for the other to contemplate the obvious settlement that lay before them and which would have saved them thousands of dollars in legal fees, and even more valuable court time that could have and should have been used for other cases.
Having regard to all of the evidence a conclusion of equality of contribution after a 12 year relationship where they each came in with almost the same financial contribution is, inescapable.
Section 75(2) Adjustment
The husband says that he is much older than the wife. Whilst he is retired he derives a comfortable weekly pension. He has no capacity for employment and undertakes a substantial role in caring for their child, [X] - five nights per fortnight and four other afternoons in that period. He is not paying child support, but has not, apparently, been assessed to pay child support.
The wife asserts that, notwithstanding the matters referred to above, she is the one who is primarily responsible for the care of [X], including the costs of his care. She earns more than the husband from her salary as a teacher, share dividends, and family tax benefit. She has superannuation entitlements.
Her responsibility for the care of [X] does lead, in my opinion, to an adjustment in her favour under s.75(2) in the sum of 5 per cent. It is not a major adjustment, I acknowledge, but it will at least assist the wife and [X] to reaccommodate themselves once the sale of the home has gone through.
Just and Equitable Order
Having regard to the matters set out above the wife would receive 55 per cent of a net pool of assets of $1,248,155 at $686,485. Of course, from this will need to be deducted the various investments, motor vehicle, contents, and superannuation. And nonetheless, this will provide a figure of approximately $544,599 which will be a substantial contribution towards the cost of reaccommodating herself. From the husband's perspective he will receive approximately $561,669 which, when deducting his investments, could result in about $506,574 to be used for reaccommodation if that is what he so desires.
Under the circumstances of this case, I think the end result is just and equitable and I so order.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Monique Robb
Date: 19 December 2009
Throsby and Pike [2008] FMCAfam 1391
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