Tomasetti & Tomasetti

[2000] FamCA 314

FAMILY LAW ACT 1975

IN THE FULL COURT OF THE
FAMILY COURT OF AUSTRALIA

AT SYDNEY Appeal Nos. EA16 & 25 OF 1999

File No. SY3633 OF 1998

IN THE MATTER OF: TOMASETTI
JOHN DEREK

Appellant/Husband

AND: TOMASETTI
SUSAN JOY

Respondent/Wife

CORAM: LINDENMAYER, FINN & BROWN JJ

DATE OF HEARING: 2 JUNE, 1999

DATE OF JUDGMENT: 13 APRIL, 2000

JUDGMENT OF THE COURT

Appearances: Mr J. Millar of Counsel (instructed by Thomas and Company, Lawyers, Mezzanine Level, 50 Margaret Street, Sydney, NSW, 2000) for the Appellant/Husband

Mr P. Brereton of Senior Counsel (instructed by Tress Cox & Maddox, Solicitors, Level 20, 135 King Street, Sydney. NSW, 2000) for the Respondent/Wife

INTRODUCTION

This is an appeal by John Derek Tomasetti (“the husband”) against orders made by Lawrie J on 5 March, 1999, in proceedings for property settlement which had been commenced by Susan Joy Tomasetti (“the wife”), whereby the wife is to receive 80% of the parties’ net assets. Those orders were made pursuant to s.79 of the Family Law Act, 1975 (“the Act”). There was also an appeal by the husband, pursuant to s.94(1AA) of the Act, against a refusal by her Honour, on 3 March, 1999, to disqualify herself from further hearing the proceedings. However, when the appeals were called on for hearing, the husband’s counsel (Mr Millar) informed us that that appeal was not being pursued. In due course, we shall dismiss it.

HISTORICAL BACKGROUND

The husband is currently aged 52, having been born on 15 September, 1947, whilst the wife is currently aged 40, having been born on 30 September, 1959. The parties commenced cohabitation in March 1982 and were married on 3 January, 1983. There are four children of the marriage: Emily Tennent Tomasetti, born 5 June, 1983 and therefore aged 16; William Derek Tomasetti, born 23 October, 1985 and therefore aged 14; Alexandra Susan Tomasetti, born 20 December, 1987 and therefore aged 12; and Georgia Louise Tomasetti, born 26 November, 1990 and therefore aged 9.

The parties initially separated when the husband left the former matrimonial home in May, 1997. They resumed cohabitation in December 1997 but separated under the one roof on 10 January, 1998 with the husband finally leaving the home on 3 August, 1998. Since separation all four children have resided with the wife in the former matrimonial home at Drummoyne.

In December, 1967 the husband completed his commercial pilot cadetship and was employed by Qantas. Since that time he has undertaken a number of training courses and, after a series of promotions, was promoted to his current position of Captain, flying B747 400s, in 1998. The nature of the husband’s employment with Qantas and the hours involved enabled him to undertake additional paid employment, and between 1976 and 1996 he worked as a builder during the periods he was not flying. In 1989 the husband obtained a builder’s licence.

At the time of marriage the husband had assets valued by him at approximately $237,500, including a house and a townhouse at Balmain. At the time of marriage the wife was studying at Teachers’ College and had comparatively little in the way of personal assets. The wife was the homemaker and children’s primary caregiver throughout the marriage although the husband’s limited working hours afforded him the opportunity to spend extended time with the children during the six months of the year that he was in Australia. In addition, from about 1994, the parties employed domestic help once per week.

In April, 1983 the former matrimonial home at 40 St Georges Crescent, Drummoyne was purchased, in the husband’s sole name, for $280,000. Approximately $195,000 of the purchase price was funded from the sale of one of the husband’s Balmain properties and the remainder by a loan of $85,000 from St George Building Society. The husband, with the wife’s assistance, carried out extensive renovations on the property and grounds between 1983 and 1994. The mortgage on the property was paid out in June, 1993 after the husband obtained an unsecured $45,000 loan from Qantas Staff Credit Union Limited.

In February, 1994 the husband purchased, in his sole name, a property at 23 Kamerunga Villas, Carvonica, Cairns for $85,000. The purchase price, plus $3,000 for legal expenses and stamp duty, was borrowed from Qantas Staff Credit Union with $68,000 secured against the Cairns property and the remainder advanced by way of unsecured loan. The property is let to a friend of the husband’s for less than the market rental. The husband said that this is a consideration of the tenant having paid him the sum of $20,000 at the time of the purchase of this property.

In April or May, 1997 the husband purchased, in his sole name, a unit at 1/202 “Harbour Point”, Birkenhead Point for $557,500. To enable the purchase of that property (including payment of stamp duties) and to discharge his unsecured loans from Qantas Staff Credit Union Limited, the husband obtained a loan facility from Citibank Limited in the sum of $680,000. The monthly repayments to be made by the husband on that loan total $4,108. After final separation the husband placed the unoccupied unit on the market for $580,000 but it had not, as at the time of trial, been sold.

Since 1996 the husband has experienced problems with his knees, and in December, 1997 he underwent orthopaedic surgery. During his recovery he was cared for by the wife at the former matrimonial home. The husband anticipates being forced to prematurely resign from Qantas if the symptoms prevent him from passing the airline’s annual medical examination.

In March, 1998 the wife filed an application seeking that, within 28 days, the husband transfer to her his interest in both the Drummoyne property and its contents and the motor vehicle in her possession and that he pay her $150,000 by way of lump sum spousal maintenance. The wife also sought that each party be declared the sole owner of all property in their possession or control. In the alternative, the wife sought, firstly, that her application be adjourned until 15 September, 2002 or on the date upon which the husband’s superannuation entitlement otherwise vests and that, at that time, the husband pay to the wife, by way of property settlement, such sum as is determined to be just and equitable and, secondly, by way of partial property settlement, the Drummoyne property be sold and the net proceeds be divided 65% to the wife and 35% to the husband.

JUDGMENT OF THE TRIAL JUDGE

When the matter came before Lawrie J on 1 March, 1999, the wife withdrew her application for an adjournment pending the vesting of the husband’s superannuation entitlements, and sought that the Court then deal with the property and spouse maintenance issues.

At the outset of her reasons for judgment, her Honour noted the young ages of the parties’ four children and found that the wife had, in practical terms, at least ten years of parenting ahead of her. In addition to those demands, her Honour found that the oldest child, Emily, presented as a special case as her needs dictate that she will require some degree of parenting for the rest of her life.

Her Honour then went on, at Appeal Book pp.16-19, to identify the parties’ assets, finding their principal item of property to be the former matrimonial home at Drummoyne which had an agreed value of $1,610,000 and which was occupied by the wife and four children. Her Honour also found that at the time of its purchase in April, 1983 the husband contributed $195,000 to the $280,000 purchase price.

The trial Judge then considered the value of the unit at Birkenhead Point which her Honour found had been purchased by the husband after the parties’ initial separation in about May, 1997. Her Honour found that the property was listed for sale at $580,000 and was presently unoccupied. Her Honour then found the Cairns property, which had been purchased by the husband in 1984, to have a current value of $100,000 and found that it had, since its purchase, been rented to a former employee of the husband for less than the market rate. The trial Judge noted that that situation arose as a result of the tenant having (according to the husband) given $20,000 to the husband in “1984” [sic. - 1994], notwithstanding the fact that a figure of only $3,000 was “able to be evidenced by some sort of record”.

Her Honour also found (at Appeal Book p.17) that the parties had the following in the way of more minor assets:

ASSET $

Husband’s car 20,000

Wife’s car 25,000

Husband’s tools, paintings dinghy etc 20,000

Wife’s jewels 10,000

Husband’s shares 7,787

Wife’s shares 5,070

Husband’s expected tax refund 6,000

Wife’s expected tax refund 900

Husband’s net long service and annual leave 79,180

Furniture (with both husband and wife) 35,000

In assessing the parties’ liabilities, the trial Judge noted that the original mortgage on the former matrimonial home had been discharged in June, 1993 and that, at about the time of separation, the husband refinanced the parties’ debts by securing a Citibank loan in the sum of $680,000. Her Honour found that $580,813.50 of that debt related to the purchase of the unit at Birkenhead Point and the associated legal expenses and stamp duty (Appeal Book p.17). The trial Judge further found that $54,000 which had been owing on the Cairns property was also refinanced by the Citibank loan, that approximately $15,000 of it had been expended by the husband upon legal costs, and that an estimated $30,000 of the loan facility was used to meet several miscellaneous family expenses including school and orthodontist fees, car repairs and share purchases (Appeal Book p.18).

Her Honour concluded that the net asset pool for division totalled $1,800,937. It is not altogether clear how her Honour reached that figure, since it appears to us that, on the figures found by her Honour for the various assets and liabilities which she identified, the net figure should be $1,818,937, calculated as follows:-

Former matrimonial home, Drummoyne  :          $1,610,000
Birkenhead Point unit  :               580,000
Cairn’s unit  :               100,000
Assets referred to in paragraph 15, above                 :               208,937
           Total Assets  :          $2,498,937
Less: Citibank loan  :               680,000
           À Net Assets  :          $1,818,937

The trial Judge (at Appeal Book p.19) found that, in addition to the parties’ property, the husband possessed significant financial resources in the form of his superannuation entitlements and loss of licence and income indemnity insurance cover. Her Honour found that, upon retirement, the husband would be entitled to “net superannuation” which, as at trial, was estimated to be worth $1,262,760. The trial Judge noted that while the husband intended to work until he turned 60, the medical evidence was that, due to arthritis, he may have to retire before that time. However, her Honour further found the husband had the added security of the loss of licence and income indemnity insurance schemes which she inferred would provide the husband with financial security if, in the event of ill health, he were forced to retire before his superannuation became available.

In relation to the superannuation scheme, of which the husband had been a member for 31 years, the trial Judge found that the husband had already accrued substantial benefits at the time cohabitation commenced, having joined the scheme some 16 years earlier. Her Honour found that if the wife were regarded as having made a direct equal contribution to the scheme during the 15 years the parties cohabited, she could lay claim to some $300,000 “if the husband were notionally to receive his superannuation today” (Appeal Book p.19).

Her Honour found that, although she had a teaching diploma and some relevant experience, the wife had devoted herself to the heavy workload of parenting of the parties’ four children, and that those obligations effectively circumscribed her capacity to gain employment. The trial Judge found (at Appeal Book p.20) “considerable force in the wife’s submission that to expect her to undertake full time employment [was] not appropriate in the circumstances”.

The trial Judge then had regard to the respective contributions made by the parties during the course of the marriage. Her Honour found (at Appeal Book p.20) that there was “no doubt that the husband has made a direct financial contribution in excess of that of the wife through the provision of the bulk of the purchase price of the former matrimonial home and also through capital gifts of [sic] legacies which came from [his] family. … All up, some $292,000 ‘non-salary’ was contributed in direct financial contribution”. Her Honour noted that, over time, that initial capital contribution decreased, as a percentage of the total cost of acquiring, conserving and improving the property, but nonetheless concluded (at Appeal Book p.21) that those additional capital contributions “must be an extra factor on the husband’s side of the ledger”. The trial Judge referred, without criticism, to the evidence of a quantity surveyor called by the husband that, in present day prices, the work performed by the husband, the wife and her father in the renovation of the Drummoyne property would cost in the vicinity of $609,000 of which the labour component was estimated to be some $424,000 (Appeal Book p.21). Her Honour did not determine the percentages in which the husband, the wife and her father contributed to those values but did note (at Appeal Book p.21) that “this was a marriage where most of the husband’s energies ha[d] been put into transforming the former matrimonial home”.

With regard to the wife’s homemaker contribution, her Honour found (at Appeal Book pp.22-23) that for the half of each year the husband was away from home, the wife was effectively a single parent caring for four young children in a house which was “almost perpetually being improved or renovated during the entire marriage”. The trial Judge further found that when the husband was at home his time was almost exclusively devoted to the renovation project about which her Honour found the wife was not particularly enthusiastic. Her Honour also found (at Appeal Book p.23) that each of the parties made some limited contribution to the “other’s sphere” in that the husband did do some parenting and the wife did do some renovating.

In relation to contributions, her Honour concluded (at Appeal Book p.23) that the parties’ non-financial contributions were equal. However, she found that the husband’s “additional introduction of capital” called for “an extra 10 percent to the husband”, and therefore found his contribution to the parties’ property to have been 60% to the wife’s 40%.

With regard to the relevant s.75(2) factors, her Honour found (at Appeal Book p.24) not only that the wife was younger than the husband but that his problems with arthritis may shorten his current career span and prevent him from undertaking alternative employment as a builder. While finding that both parties had the physical and mental capacity for appropriate gainful employment, her Honour regarded it as significant that, in addition to the disparity in the parties’ financial resources as a result of the husband’s considerable superannuation, the wife’s income could never be expected to exceed 25% of the husband’s current income.

The trial Judge regarded the fact that the wife had at least 23 cumulative parenting years ahead of her as the other significant factor to be considered under s.75(2) notwithstanding the husband’s financial contribution to the welfare of the children. Despite her apparent skills as a teacher, her Honour regarded the wife as handicapped in her career as a result of her devoting herself to the care of the parties’ children.

The trial Judge then had regard to the other relevant factors referred to in s.75(2), including the standard of living and other commitments of the parties, the effect of the duration of the marriage on the parties’ earning capacity and the need to protect the wife’s wishes to continue her parenting role, and concluded (at Appeal Book p.27) that an adjustment of 40% in favour of the wife (25% for the disparity in resources, due to superannuation, and in earning capacity, and 15% to take into account her ongoing care of the children) was appropriate. Her Honour’s overall distribution of assets was, therefore 80% to the wife and 20% to the husband.

Accordingly, on 5 March, 1999 her Honour made orders that the husband do all things necessary to sell the former matrimonial home and, upon its sale, pay to the wife $112,000 plus 80% of the net proceeds of sale. The $112,000 was based upon 80% of the difference, favourable to the husband, between the value of other property retained by the parties. The trial Judge further ordered that, until its sale, the wife have vacant possession of the property and that its contents be divided 80% to the wife and 20% to the husband. These orders are the subject of the husband’s substantive appeal pursuant to a Notice of Appeal which was filed on 31 March, 1999.

THE APPEAL

The Notice of Appeal contains no less than 44 grounds. With respect to the solicitor or counsel who prepared that document, we think that the inclusion of so many grounds, a number of which cover much the same ground as others, gives the whole appeal a sense of “over-kill”. That sense is fortified by the realization that one ground (ground 3) asserts an error of $700 by her Honour in calculating a pool of assets having a net value of approximately $1.8 million, and another (ground 4) asserts an error by her Honour in relation to a date (1984) which clearly arose only by inadvertence (the correct date being 1994) when the date of the particular event is quite immaterial to her Honour’s judgment and orders.

Fortunately, upon the hearing of the appeal neither counsel took us laboriously through each and every ground, but, rather, sought to address certain broad issues identified within the grounds of appeal, with particular reference to some specific grounds, as they thought it necessary to do so.

The three broad issues raised by the grounds of appeal, as identified by senior counsel for the respondent in his written summary of argument, are as follows:-
The identification and evaluation by her Honour of the property and financial resources of the parties (including her calculation of the “net pool for division” – judgment paragraph 10 – at $1,800,937) which encompasses grounds 3, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, and 15;
The determination by her Honour of the parties’ contributions, under paragraphs (a), (b) and (c) of s.79(4) of the Act, encompassing grounds 1, 2, 20-30 and 43; and
The identification by her Honour of the relevant matters arising under s.75(2) of the Act, and her assessment of the impact of those matters upon her ultimate exercise of discretion under s.79, encompassing grounds 16-19, 31-42 and 44.

As will appear below, we think that ground 7 is more aptly included within the second broad issue of contributions, rather than the first, and that grounds 14 and 15 are more aptly included within the third broad issue of s.75(2) factors, rather than the first.

Property and Financial Resources (Grounds 3, 5, 6 and 8-13)

It was common ground between counsel on the hearing of the appeal that her Honour’s determination, in paragraph 10 of her judgment at Appeal Book p.18, that the “net pool [of property] for division” in the proceedings was $1,800,937, was, on her Honour’s own figures, incorrect, containing an apparent mathematical error. It was also common ground that, on her Honour’s figures for the various assets and liabilities, as identified in paragraphs 4-10 of her judgment, the correct figure for the “net pool” would be $1,818,937, as indicated in paragraph 17 hereof. Whether an error of that magnitude by her Honour (less than 1% of the net asset pool) would warrant any interference by this Court on appeal, in the absence of any other relevant error of fact or law (including exercise of discretion) is something which we shall return to later in this judgment only if it becomes necessary to do so.

Counsel for the husband ultimately submitted that her Honour ought to have found that the “net pool for division” between the parties, was $1,701,104, calculated as follows:-

Corrected net pool based on trial Judge’s figures                 :          $1,818,937
Less: Husband’s accrued long
service and annual leave
as found by her Honour
(ground 9)  :          $79,180
Mortgage debt on Cairns
Unit (disregarded by her
Honour) (grounds 5, 6 & 10) :           54,353      133,533
1,685,404

Plus: Wife’s savings (ground 3)        :          $   700
Husband’s costs paid (concession) :     15,000        15,700
Net Balance  :          $1,701,104

Senior counsel for the wife ultimately submitted that her Honour ought to have found that the “net pool for division” was $1,748,937, calculated as follows:-

Corrected net pool based on trial Judge’s figures                 :          $1,818,937
Less: Furniture (included in the
           “pool” by her Honour, but
           subject to an order for sale
           and division)  :          $35,000
           Part of husband’s current
           Credit Union debt applicable
           to purchase of Birkenhead
           Point property  :           35,000         70,000
  Net Balance  :          $1,748,937

The concessions by senior counsel for the wife outlined in the preceding paragraph led to a further concession by him that the figure of $112,000 in order 1 of her Honour’s orders should be $70,174, although we think that figure should be $70,180, calculated as follows:-

Net assets (excluding furniture) as per paragraph 34
hereof : $1,748.937

Less: Agreed value of home as a component of that
figure : 1,610,000

À Value of remaining assets  :              138,937
Wife’s entitlement to remaining assets (80%)  :              111,150
Less assets to be retained by the Wife (judgment
paragraph 10)  :                40,970

À Balance to wife in respect of other assets : $ 70,180

As the figures appearing in paragraphs 32 and 33, above, indicate, the major differences between the parties on this issue are whether her Honour correctly included the husband’s accrued long service and annual leave entitlements of $79,180 as an asset, and whether she correctly disregarded all or part of the husband’s debt to the Qantas Staff Credit Union.

Long Service and Annual Leave

It was common ground before the trial Judge that the husband has accrued long service leave and annual leave entitlements not taken, having after-tax “values” of $55,449 and $23,730, respectively (see husband’s Financial Statement sworn on 2 February, 1999 at Appeal Book p.112, the submissions of counsel for the wife, at Appeal Book p.447 lines 17-26, and those of counsel for the husband, at Appeal Book p.457 lines 11-15). Hence her Honour’s figure of $79,179 for these two items, as found in paragraph 6 of her judgment (at Appeal Book p.17). However, it was not common ground that those entitlements constitute property of the parties or either of them (with respect to which an order might be made under s.79 of the Act), and therefore to be included in the calculation of the “net pool for division” in the proceedings, as distinct from being a financial resource, to be taken into account in assessing the impact of the s.75(2) factors, as required by s.79(4)(e) of the Act.

It is clear, from the inclusion of the particulars relating to those entitlements at p.9 of the husband’s Financial Statement under “Financial Resources”, from their similar inclusion under “Financial Resources” in his Outline of Case document (at Appeal Book p.226) and from his counsel’s submissions (at Appeal Book p.457) that the husband maintained throughout the proceedings that these entitlements were not property but financial resources. The wife’s Outline of Case document (at Appeal Book pp.237-8), on the other hand, seems to include the husband’s gross leave entitlements amongst the property of the parties, confining “Financial Resources” to the parties’ superannuation entitlements, and her counsel clearly submitted to her Honour (at Appeal Book p.448 lines 31-38) that the net leave entitlements were “vested and could be taken at any time”, and therefore should not be regarded as a financial resource but as property. Counsel there cited Gould and Gould (1996) FLC 92-657 as authority in support of that submission (a citation about which we shall say more below).

Her Honour did not address this issue of categorization of the leave entitlements in her judgment, but merely included the net figure of $79,180 amongst the list of the parties’ property recited by her in paragraph 6 of her judgment. Ground 9 of the appeal asserts that her Honour erred in so doing, and the husband’s counsel submitted, in paragraph 7 of the Appellant’s Summary of Argument, that “long service leave and annual leave are not property but may be only financial resources”. Gould’s case (supra) was cited in support of that submission.

Senior counsel for the wife submitted (in paragraph 4.3 of the Respondent Wife’s Summary of Argument) that these entitlements of the husband, being choses in action, are “property in his hands”. Alternatively, it was submitted that “[a]t the very least, they are defined financial resources [Gould and Gould (supra)] and, however regarded, this would make no material difference to the outcome”.

With respect to her Honour, we consider that she did err by including these leave entitlements of the husband in her calculation of the “net pool for division” in the proceedings. Although she gave no reasons for taking that course, we think she may have been misled into doing so by what we regard as a very misleading submission which was made to her Honour on this issue by then counsel for the wife (who, we hasten to add, was not the senior counsel who appeared for the wife on this appeal).

In the transcript of proceedings (at Appeal Book p.448 line 35) the wife’s then counsel, after making the submission to which we have referred in paragraph 37 hereof, said this:-

“I rely on the decision of Gould and Gould which was reported 1996 FLC92657 [sic.], your Honour. It was there held that as a matter of principle it was difficult to accept that an entitlement of substantial long service leave may only be regarded as a financial resource.”

In the context which that submission was made it is clear that the wife’s then counsel meant to convey to her Honour that the Full Court (of which one member of this Court was a member) in Gould’s case (supra) said, or at least inferred, that in principle it is difficult to accept that an entitlement to long service leave may only be regarded as a financial resource, but rather that it should be regarded as property. However, that is certainly not what the Full Court said, nor can it be reasonably inferred from what it did say. Indeed, if the wife’s then counsel had bothered to finish the sentence, which appears in the text of the judgment (at 82,774) and is repeated in substance in the headnote (paragraph 4 at 82,759), part only of which she replicated in the submission quoted in paragraph 41 hereof, it would have been obvious that the intent of the Full Court was almost the opposite of what counsel’s submission conveyed.

The relevant statement of the Full Court (at 82,774) was as follows (with our emphasis added):-
“As a matter of principle, we find it difficult to accept that an entitlement to substantial long service leave may only be regarded as a financial resource when the employee spouse is likely to retire and receive a lump sum payment in lieu of leave taken.”
The Full Court then went on to say this:-
“The ability to take a lengthy period off work, but still be paid a normal salary during that period, may constitute a financial resource, in at least some circumstances. In a given case, for example, that ability may enable the relevant party to undertake other temporary employment, pursue a course of further education or retraining, or even commence or develop a business during such paid leave, none of which would otherwise be available to him or her. In such circumstances such a facility would be likely to give that party an economic advantage which can properly be categorised as a financial resource.”
That the wife’s then counsel would seek to rely upon Gould’s case for the proposition that a long service leave entitlement should properly be taken into account as property, rather than as a financial resource, is even more remarkable when it is appreciated that in that case, notwithstanding what it said in the passages quoted in the two immediately preceding paragraphs hereof, the Full Court ultimately rejected the contention of the appellant that the trial Judge erred in law in failing to treat the long service leave entitlement of the party in that case even as a financial resource.

In this case it was not disputed by counsel for the husband before her Honour that the husband’s leave entitlements should be taken into account as a financial resource. The issue was whether her Honour should go further, and treat them as property.

As far as we have been able to ascertain from the material in the Appeal Books, there was no evidence before her Honour as to the terms of the husband’s contract of employment with Qantas, and in particular about how his leave entitlements accrue, or how they may be taken. Although the evidence, as far as we are aware, does not enable a conclusion to be drawn about the proper law of the contract of employment, we note that if the applicable law is the law of New South Wales (where the husband resides and where Qantas undoubtedly has a place of business) then ss.4(3), (5) and (8) of the Long Service Leave Act 1955 (NSW) would preclude the payment to the husband of the cash value of his long service leave entitlement except in the case of the termination of his employment otherwise than by death. In Gould’s case (supra) that was the law that applied to the contract of employment of the husband, and it appears from the Full Court’s judgment (at 82,768) that that was a factor which led the trial Judge to conclude that the leave entitlement was not a financial resource. Whilst the Full Court did not endorse that approach, we think that an inability to enforce payment in lieu of the accrued leave (except in case of retirement) would militate against a conclusion that such an entitlement, held by a person who has not reached retirement age, could constitute “property” as defined in s.4(1) of the Act.

Accordingly, as previously indicated, we think her Honour erred in treating the husband’s leave entitlement as property and in including the notional value of those entitlements in her calculation of the “net pool for division”. Moreover, we do not agree with the alternative submission of senior counsel for the wife that this error by her Honour “would make no material difference to the outcome”. Since her Honour assessed the parties’ proper entitlements under s.79 by reference to percentages of the “net pool for division”, as determined by her, it is impossible to conclude that she would have arrived at the same result if the size of that pool were reduced by almost $80,000, which amounts to about 4.5% of the “net pool” calculated by her Honour.

Accordingly, in our judgment, on this basis alone the appeal must succeed, and this Court is called upon to re-exercise the discretion of the trial Judge which has miscarried. However, before turning to that task, it is appropriate that we deal with the second aspect of this issue (namely her Honour’s disregard of the mortgage debt on the Cairns unit) and with the other issues identified in paragraph 30 hereof.

The Cairns Unit Mortgage

As noted in paragraph 16 hereof, her Honour found (in paragraphs 7, 8 and 9 of her judgment at Appeal Book pp.17-18) that the loan of $680,000 which the husband obtained from Citibank at about the time of separation was applied as follows:-

To the completion of the purchase of Birkenhead Point : $580,813.50
To the refinancing of the balance owing on the Cairns unit : 54,000.00
To the payment of legal costs : 15,000.00
To the payment of miscellaneous family expenses : 30,000.00
Total : $679,813.50

Her Honour then said this (in paragraph 9 of her judgment at Appeal Book p.18):-

“As Cairns and Birkenhead Point are both in the husband’s name and together are worth $680,000 and the loan to City Bank [sic.] is also $680,000, if the husband is allowed $30,000 worth of contribution to the family since separation to take into account, it seems to me that those matters seem really to balance each other out.”

Accordingly, her Honour decided (in paragraph 10 at Appeal Book p.18) that the husband should retain both the Cairns and Birkenhead Point properties, “and the debt associated with them, which balances them out”.

Counsel for the husband submitted that her Honour erred in finding that the secured debt of $54,353 on the Cairns unit was refinanced through the Citibank loan of $680,000, and that in fact that debt incurred in the acquisition of the unit remained on the property at the time of trial. It was therefore submitted that her Honour was wrong in concluding that the value of the Cairns unit and the Birkenhead Point property cancelled out the Citibank debt of $680,000, and that she should have brought the debt secured upon the Cairns unit to account in calculating the “net pool for division” in the proceedings.

In support of those submissions, counsel for the husband pointed, first, to p.8 of the husband’s Financial Statement sworn on 2 February, 1999 (at Appeal Book p.111) where the husband swore (under item 6 “Mortgages”) that there was a debt of $54,353 to the “Qantas Staff Credit Union Limited” secured against the Cairns unit (23 Kamerunga Villas, Carvonica). On the same page of that document the husband also disclosed the existence (under item 7) of an unsecured overdraft of $5,000 to the “QF Credit Union Limited”, and (under item 9) of a “loan” (apparently unsecured) of $65,333 to the “QF Credit Union Limited”. It will be seen that the latter two sums total $70,333.

In further support of those submissions, the husband’s counsel directed our attention to the husband’s evidence in paragraphs 50 and 51 of his affidavit filed on 3 February, 1999 (at Appeal Book pp.58-59) wherein he swore that the only loans from the Qantas Staff Credit Union which were discharged from the Citibank loan, in June, 1997, were “unsecured loans” (our emphasis) which were “in relation to the Cairns property and accumulated personal and family borrowings”. Counsel also pointed out that on p.8 of her Outline of Case document for the trial (at Appeal Book p.238) the wife also showed the husband as owing $54,000 on “Cairns unit (mortgage)”.

Senior counsel for the wife, in reply to those submissions, directed our attention to various pieces of evidence which, he submitted, supported her Honour’s finding that the $54,000 debt to the credit union secured against the Cairns unit was refinanced by the Citibank loan in 1997. Firstly, he took us to paragraph 35 of the husband’s affidavit of 2 February, 1999 (at Appeal Book p.54) where the husband said that he borrowed $88,000 from the Qantas Staff Credit Union in February, 1994, to purchase the Cairns unit, of which $68,000 was secured by a mortgage over the property and $20,000 “borrowed by way of unsecured personal loan”. Next, we were referred to exhibit Q (at Appeal Book pp.495-6) which is the husband’s application to Citibank for the loan which he subsequently obtained. Counsel submitted that this indicated that the husband’s “intention was to pay out the Credit Union debt on Cairns” (Respondent Wife’s Summary of Argument, paragraph 4.5(b) at p.8, with emphasis added).

With respect to counsel, that document does not, at least unequivocally, indicate an intention by the husband to payout the secured loan on the Cairns property, since neither the Cairns property nor the mortgage over it is mentioned in that document. Under the heading “Purpose of the Loan” on the first page of that document (at Appeal Book p.495) there appears the following:-

“Client purchasing investment property in Drummoyne. Not completed until December. Wants to settle beforehand and refinance 80K personal debt.” (Emphasis added.)

Then, on the second page (at Appeal Book p.496), in the table of assets and liabilities, there is a reference to a “rental property” to which is assigned a value of $120,000 (which, presumably, is the Cairns unit), and in the same horizontal column, under “Amount Owing” appears the figure “$80,000”, and beside that three figures, namely “20”, “40” and “20” (which we infer is intended to identify three components of the $80,000 debt, namely two of $20,000 and one of $40,000), and the words:

“To be refinanced from proceeds of this loan. QANT Credit Union.”

The absence of any reference in that document to either the mortgage or to an amount of $54,000, with reference to the debt to the Credit Union in relation to the Cairns property, and the reference to refinancing “80K” ($80,000) of “personal debt”, is more supportive of the husband’s evidence, in paragraphs 50 and 51 of his affidavit (referred to in paragraph 54 hereof) that it was his unsecured debts to the Credit Union which were to be refinanced by the Citibank loan not his secured debt of $54,000.

Senior counsel for the wife next referred us to paragraph 51 of the husband’s affidavit, wherein he referred to having “drawn down” $123,148 from the Citibank loan on 13 June, 1997, with which “he inter alia paid out the Credit Union Loans” (Respondent Wife’s Summary, paragraph 4.5(b) at p.8). That statement overlooks the fact that the husband said it was the unsecured loans which he thus paid out. Counsel then referred us to annexures “L” and “M” to the husband’s affidavit (at Appeal Book pp.93 and 94), which together indicate that as at 13 June, 1997 (the date of the partial settlement or draw down of the Citibank loan facility) the amount owing to the Qantas Staff Credit Union to be paid out on the husband’s behalf was $100,535.22, made up of $18,019.48 on an “L2” account and $82,515.74 on an “L8” account. [There is no explanation in the evidence for the $700 difference between the figures in those annexures and the $99,835.22 referred to by the husband in paragraph 51 of his affidavit as the amount paid to the Credit Union.]

Unfortunately, there are in evidence no copies of the statements of account of the Credit Union in relation to the husband’s accounts for the period covering that transaction (June, 1997). However, there are in evidence, as part of exhibit “W” (at Appeal Book pp.657-684), statements of the husband’s Credit Union accounts covering the period from 1 January, 1998 to 31 October, 1998. Those documents show, consistently throughout that period, the existence of an “L4” account, designated as “Loan A/C Investment Mort”, with a debit balance varying slightly between $57,608.73 as at 1 January, 1998 (at Appeal Book p.674) and $55,062.07, as at 31 October, 1998 (at Appeal Book p.670). We have no doubt that the “Mort” of that designation is short for “Mortgage” and that it relates to the debt secured by mortgage over the Cairns unit.

What those documents also disclose is that, beginning on 27 August, 1998 (see Appeal Book p.661) the Credit Union established a “Loan A/C 8 Line of Credit” facility for the husband against which, between that date and 31 October, 1998 he had drawn a total of $18,292.50 (at Appeal Book p.671), it would seem (from the name of the payee in relation to each debit entry) entirely in respect of legal costs for these proceedings.

We think that the only reasonable inference from all of those documents is that the debts of the husband to the Credit Union which were paid out from the proceeds of the Citibank loan were unsecured debts incurred on accounts styled as “L2” and “L8”, and not the debt secured against the Cairns unit on the account styled as an “L4” account, which has continued to exist to the date of the trial.

Unfortunately, there are, in evidence, no statements of the husband’s various Credit Union accounts showing his current indebtedness at the date of the trial. Senior counsel for the wife submitted (in paragraph 4.5(c) of the Respondent Wife’s Summary of Argument at p.9 thereof) that there was no evidence to support the debt of $70,333 shown in the husband’s Outline of Case document (at Appeal Book p.226) as being separate from the debt of $54,353 which we are quite satisfied represents the then current balance of the L4 account secured on the Cairns unit. However, that submission overlooks the husband’s evidence, in his Financial Statement (at Appeal Book p.111), referred to in paragraph 53 hereof, of two unsecured debts to the “QF Credit Union Limited” totalling precisely $70,333. When it is further observed that the same page of the husband’s Financial Statement discloses an expenditure, to that date (2 February, 1999) of $53,822.25 in “Family law expenses paid” it is not difficult to see how the husband’s L8 account could have grown from $18,292.50 in October, 1998 to $63,313 in February, 1999, and how he may have run up, in the same period, an additional overdraft of $5,000 on his savings account. The documents in exhibit W show that the Credit Union has been prepared to allow the savings account to go into debit quite regularly up to just under $5,000 (see Appeal Book pp.672-682).

Although the husband also said (in paragraph 51 of his affidavit at Appeal Book p.59) that, when it came time to settle on the Birkenhead Point property, in December, 1998, he had to borrow $34,000 (being the “balance of the funds actually required to complete purchase of the unit”) from the Qantas Staff Credit Union, there is no particular reason to suppose that this was borrowed against the security of the Cairns unit, rather than on an unsecured basis, as many of the husband’s borrowings from the Credit Union were. One wonders why he needed to borrow that sum at all for that purpose, since the balance available to him from the Citibank loan at that time ought to have been more than enough to complete the purchase (advance approved $680,000, less draw down in June, 1997 of $123,148.72, leaving a balance of $556,851.28 – and the balance payable for Birkenhead was $555,500, plus or minus adjustments on settlement). However, it appears that the husband must have spent approximately $35,000 of borrowed money (either from the Citibank loan or from a credit union loan) on other than property acquisition, between June, 1997 and December, 1998. Indeed, he confirmed in his oral evidence under cross-examination (at Appeal Book pp.384-5) that he drew against the Citibank loan facility to pay various accounts, including $15,000 to his solicitors, school fees and orthodontist expenses for the children, rent to his father, insurance on the wife’s car, and even a police fine of $1,036.

Despite a cross-examination which spanned the best part of a day’s hearing time (Appeal Book pp.342-409), the husband was not challenged on his evidence, as contained in paragraphs 50 and 51 of his affidavit, that it was unsecured debts to the Credit Union which were cleared from the Citibank loan, or upon his evidence, on p.8 of his Financial Statement (at Appeal Book p.111), that his current debts to the Credit Union consisted of $54,353 secured by mortgage over the Cairns unit and $70,333 unsecured, or that he had paid $53,822.25 in legal costs to that date.

Having regard to all of that evidence, we conclude that it was not open to her Honour, on the evidence, to conclude that the loan of about $54,000 from the Credit Union secured against the Cairns unit was refinanced by the Citibank loan. It was quite open to her Honour not to take into account, in calculating the “net pool for division” the unsecured debts of $70,333 by the husband to the Credit Union (especially since much of that was incurred in paying his legal costs), just as she did not take into account unsecured debts of the wife totalling $72,000 disclosed in her Financial Statement (at Appeal Book p.183). However, it was not open to her Honour to disregard the husband’s debt of $54,353 secured against the Cairns unit, and to then conclude that if the husband were left with that unit plus the Birkenhead unit, and with the Citibank liability, those assets and that liability would “balance each other out”. On the contrary, that left the husband with a net debit balance of $54,353.

Accordingly, grounds 5, 6, 8 and 10 of the Notice of Appeal are also upheld.

Reverting to the competing calculations of the “net pool for division” put forward by counsel for the husband and senior counsel for the wife, as outlined in paragraphs 32 and 33 hereof, respectively: we accept the submission from the husband that the “net pool” as found by her Honour (but corrected, as agreed, for her mathematical errors) should be reduced by $133,533, representing the $79,180 included by her Honour for the husband’s leave entitlements and the $54,353 which her Honour failed to deduct for the mortgage debt on the Cairns unit.

If it stood alone as a ground of appeal, we would not (for the reasons set out in paragraph 4.4 of the Respondent Wife’s Summary of Argument) uphold ground 3, which relates to her Honour’s omission (accepted by the wife’s senior counsel) of $700 in savings held by the wife. However, as we are upholding this aspect of the appeal on other grounds, and this involves our recalculating the “net pool” for division, we can hardly leave this asset, small and all as it may be, out of our revamped calculations. We therefore accept this item of the calculation of the husband’s counsel also.

The item appearing in the calculation of the husband’s counsel as “Husband’s costs paid $15,000” requires further consideration. Its inclusion as an “add back” or “notional asset” (no doubt then to be taken into account as part of the divisible pool already taken or retained by the husband, in accordance with Townsend and Townsend (1995) FLC92-569) no doubt arises from the fact, already noted in paragraph 63 hereof, that the husband said he spent $15,000 of the Citibank advance on his legal costs. Since the whole of that debt is being brought to account in the calculation of the “net pool for division” it follows that the notional asset obtained with that portion of the advance should also be brought to account. In any event, its inclusion as an “add back” in the calculations of counsel for the husband constitutes a concession or admission by him upon which the Court should act. Accordingly, we accept that item of counsel's calculation also.

Accordingly, we conclude that her Honour erred, for a number of reasons which we have identified, in concluding (as she did in paragraph 10 of her judgment) that the “net pool for division” was $1,800,937, and ought to have concluded that the “net pool” was $1,701,104 (including $35,000 for the furniture) as submitted by counsel for the husband. Ground 8 of the appeal is therefore also upheld.

Financial Resources

Grounds 11 to 15 challenge her Honour’s findings, in paragraph 12 of her judgment (at Appeal Book p.19) that the husband had loss of income and income indemnity insurance which “ would give him security in the event of ill health before [his] superannuation was available”, and that the husband “therefore is comfortably provided for, both by the scale of his income ... and by the superannuation scheme of which he is a member”.

As previously indicated, grounds 14 and 15 really relate more to the s.75(2) exercise carried out by her Honour, and the same could be said of grounds 11 to 13, although there is a connection with ground 9, with which we have already dealt. These grounds, however, are more concerned with her Honour’s identification of financial resources than with the weight which she gave them in the s.75(2) exercise. The only submissions addressed to us by counsel for the husband, either in his written Summary of Argument or in his oral submissions, was in relation to ground 12, which asserts that her Honour “misdirected herself as to the effect of the evidence concerning the husband’s loss of licence insurance and income protection scheme”. That submission focused on the part of the statement by her Honour, in paragraph 12 of her judgment, which we have underlined in the following quotation:-

“Fortunately there is a loss of licence insurance scheme and an income indemnity insurance scheme, the details of which are not before the Court, but which I infer in effect, would give him security in the event of ill health before the superannuation was available.”

Counsel for the husband submitted that her Honour was in error in saying that the details of those schemes were not before the Court, because the details of the benefits available under the loss of licence insurance scheme were before the Court in the form of an exhibit (exhibit N) which is reproduced in the Appeal Books (at pp.488-491). That document shows that if the husband, at age 52, were to suffer loss of his licence due to a “schedule A” defined illness (the only examples of which given in the document are “Heart Attack, Loss of Limb etc”) he would be entitled to a payment of $300,464 (at Appeal Book p.490). The document further shows that if the husband, at age 52, were to suffer loss of his licence due to a “schedule B” “classified illness” (the only examples of which given in the document are “Psychological Problems that lead to loss of Licence”) he would be entitled to a payment of $103,315 (at Appeal Book p.491).

Senior counsel for the wife responded to that submission by submitting that, in the sentence quoted in paragraph 72 hereof, the phrase “details of which are not before the Court” governs the words “an income indemnity scheme”, which immediately precede it, and not the words “a loss of licence insurance scheme”. He then directed our attention to the evidence of the husband under cross-examination (at Appeal Book pp.362-363) where the only evidence is to be found about the income indemnity insurance. Counsel correctly asserted that details of the benefits available under that scheme were not before the Court, and that her Honour’s overall conclusions that these two schemes, combined, provided the husband with security in the event of ill health before his superannuation becomes available, and that the husband was “comfortably provided for” by the scale of income and his superannuation, were open to her on the evidence.

We accept the submissions of senior counsel for the wife on this issue, as outlined in the immediately preceding paragraph. These grounds of appeal are therefore rejected.

Contributions (Grounds 1, 2, 7, 20-30, and 43)

These grounds of appeal and the submissions of counsel on this issue focused mainly on two aspects of the parties’ contributions, under s.79(4)(a), (b) and (c) of the Act. The first aspect was the husband’s financial contributions (in the form of his contributions of capital, as distinct from the income which he earned during the marriage). The second aspect was the parties’ non-financial contributions (including those in the form of renovations carried out to the former matrimonial home and those in the capacity of homemaker and parent). A third, relatively minor aspect, was the husband’s post-superannuation financial contribution to welfare of the family. The thrust of the grounds and the supporting submissions for the husband was that her Honour grossly undervalued those contributions of the husband and (perhaps as a corollary of that) grossly overvalued those of the wife in arriving at her ultimate conclusion that the parties’ total contributions should be assessed as 60% by the husband and 40% by the wife.

Financial Contributions (Grounds 1, 2, 7 and 21-24)

In paragraph 4 of her judgment (at Appeal Book p.17) her Honour found that the husband “introduced capital of $195,000 to the purchase price” of the parties’ former matrimonial home, in April, 1983. She also found, in paragraph 16 (at Appeal Book p.20) that the husband introduced $97,000 in the form of “capital gifts of [sic.] legacies” which came from his family. Putting those two findings together, her Honour said (in the same paragraph): “All up, some $292,000 ‘non-salary’ was contributed in direct financial contribution on the husband’s side of the ledger”.

Counsel for the husband submitted that the evidence before her Honour established that the husband’s “non-salary” direct financial contributions amounted to $315,095 (not $292,000), made up as follows:-

(a)$200,000 (rather $195,000) towards the purchase price of the former matrimonial home;
(b)$115,095 in “capital gifts and legacies” from the husband’s family, constituted by:
(i)gifts of $70,000 from his father in 1989;
(ii)a legacy of $25,095 from his grandfather in 1990;
(iii)a legacy of $12,000 from his grandmother in 1994; and
(iv)a payment by his father of $8,000 towards school fees in 1997.

In addition, counsel for the husband submitted that her Honour failed to have regard to the fact that, quite apart from real property which the husband had at the commencement of cohabitation (from the sale of which came the bulk of the $195,000 or $200,000 which he contributed to the purchase of the former matrimonial home), he introduced to the relationship other assets to the value of $37,500 (as per paragraph 23 of his affidavit at Appeal Book pp.50-51).

In support of the submission referred to in paragraph 78(a), above, counsel referred us to the evidence of the husband in paragraphs 23 and 31 of his affidavit (at Appeal Book pp.50 and 52-53), the effect of which was that he sold the property at Rowntree Street, Balmain which he owned at the time of the marriage, for $110,000, and transferred the townhouse which he owned at 1 Hosking Street, Balmain, to his father, for a net $90,000. However, his evidence in the same paragraph 31 was that he bought the Drummoyne property for $280,000, of which he borrowed $85,000 from the St George Building Society. As a matter of arithmetic, $280,000 less $85,000 equals $195,000, although $110,000 plus $90,000 equals $200,000. No doubt the difference of $5,000 was eaten up in the costs of disposition and or acquisition. In any event, her Honour’s finding that the husband contributed $195,000 to the purchase price of the Drummoyne property was clearly open to her, on the evidence, which included a concession by the husband (at Appeal Book pp.459-60) that that was the figure, and even if the correct figure were $200,000, such a small error (2.5%) would, in our opinion, make no appreciable difference to her Honour’s ultimate assessment of the parties’ total contributions to a net asset pool of over $1.7 million.

In relation to the submission referred to in paragraph 78(b), above, senior counsel for the wife conceded the receipt of the gifts and the legacies itemised in sub-paragraphs (i), (ii) and (iii) thereof, totalling $107,095, rather than the $97,000 referred to by her Honour in paragraph 16 of her judgment. The amount of $8,000 paid by the husband’s father for school fees was conceded as to fact, but not as to its being a capital contribution by or on behalf of the husband, on the basis that this was a maintenance expense which ought to have been paid by the husband in any event. We accept that submission.

It was therefore conceded that her Honour undervalued the husband’s capital contribution from gifts and legacies by about $10,000. However, senior counsel for the wife submitted that such a small error by her Honour is immaterial, having regard to the broad discretionary nature of the exercise in which she was engaged when assessing the relative weight to be attributed to the parties’ total contributions to a net pool of $1,701,104. In percentage terms, an error of $10,000 in a pool of that size represents less than .6%. We accept this submission. Even if her Honour undervalued the husband’s capital contribution by a further $5,000, on account of the matters discussed in paragraph 80 hereof, her total “error” here is less than 1% of the net pool for division, and the same submission remains good.

As to the other assets (personal property and savings) brought into the marriage by the husband, which he said to be worth $37,500 (see paragraph 79 above), it is true that in making her findings about the parties’ contributions, her Honour did not mention these assets. However, she did not mention the wife’s initial contribution of personal property and savings either.

In paragraph 8 of her affidavit (at Appeal Book p.188) the wife said that she brought into the marriage a motor vehicle “worth approximately $4,000”, other personal property “valued at about $2,000”, and “about $2,000”, being the proceeds of a “cashed in” insurance policy. Those items total about $8,000. Although the husband said, in paragraph 22 of his affidavit (at Appeal Book p.50) that the wife’s vehicle was worth only $1,500 at the commencement of cohabitation and traded in for $1,800 shortly afterwards, the wife was not cross-examined on her estimate of the value of her pre-marital assets, nor was the husband cross-examined on his estimate of the value of his pre-marital assets.

More importantly, neither counsel mentioned these relatively small initial contributions by their respective clients in their final submissions to her Honour. In particular, the husband’s then counsel made no reference to the $37,500 in personal property and savings allegedly introduced into the marriage by the husband, but confined his submissions about the husband’s initial contribution to his introduction of the Balmain properties, which provided the bulk of the funds for the acquisition of the Drummoyne property.

In those circumstances, and as the figures deposed to by the husband for the values of these items in 1982 were clearly, at best, estimates with no supporting material or documentation, we do not regard her Honour’s failure to mention this relatively small initial contribution as an error or omission of sufficient magnitude to undermine her Honour’s exercise of discretion in evaluating the parties’ total contributions to their existing property in 1999.

Accordingly, we are not satisfied that her Honour erred in fact or in the exercise of her discretion in weighing the husband’s capital contributions, as asserted in grounds 1, 2, 21, 22, 23 and 24 of the Notice of Appeal.

Ground 7 asserts that her Honour erred in “failing to bring into account the $30,000 spent by the husband on family purposes since separation”. This ground picks up and relies upon a statement made by her Honour in paragraph 9 of her judgment (at Appeal Book p.18) where, after concluding that the husband spent “about $30,000 on family purposes” after the Citibank loan was taken out, she said this:-

“As Cairns and Birkenhead Point are both in the husband’s name and together are worth $680,000 and the loan from City Bank [sic.] is also $680,000, if the husband is allowed $30,000 worth of contribution to the family since separation to take into account, it seems to me that those matters really seem to balance each other out.” (Emphasis added.)

It was submitted that despite there indicating that in assessing the parties’ contributions the husband should be given credit for $30,000 spent on “family purposes” after separation from the Citibank loan funds, her Honour did not refer to this (and therefore did not take it into account) when she came to assess the parties’ contributions, in paragraphs 16 to 27 of her judgment.

Whilst it is true that her Honour did not mention the $30,000 expenditure of the husband again in paragraphs 16 to 27 of her judgment, we are not prepared to conclude that she did not take that into account in her overall assessment of the parties’ contributions when she had said, quite specifically, only a few pages earlier in her judgment, that she proposed to do so. We therefore reject this ground of appeal.

Non-financial Contributions

Grounds 25 to 30 are concerned with her Honour’s assessment of the parties’ non-financial contributions, in particular the husband’s contribution in the form of extensive renovation work carried out to the former matrimonial home, and the wife’s contribution to the welfare of the family, particularly her contribution as homemaker and parent. It will be recalled (see paragraph 23, above) that her Honour found (in paragraph 27 of her judgment) that the parties’ non-financial contributions were equal. That finding is challenged, on various bases, by these grounds.

It was common ground that very extensive renovations were carried out to the former matrimonial home between its acquisition, in 1983, and 1994, and that those renovations had greatly enhanced the value of the property. Her Honour referred to the evidence of the quantity surveyor called by the husband, to the effect that the labour component of the present day cost of that work would be of the order of $424,000. Counsel for the husband referred to the evidence of the wife (at Appeal Book p.278 lines 30-45) wherein she conceded that the husband did 90% of that work himself, with the balance, in the main, being paid for (as distinct from being done by the wife or her father, who were the two other possible performers of it identified by her Honour in paragraph 19 of her judgment). It was therefore submitted on the husband’s behalf that in finding the parties’ non-financial contributions were equal, her Honour “must have failed to give adequate weight” to that contribution of the husband.

It is clear that her Honour’s conclusion of equality of non-financial contributions, in the face of this very substantial contribution by the husband, in the form of work done to improve the home, was based very much upon her assessment of the weight to be given to the wife’s contribution to the welfare of the family, including her contribution as homemaker and parent.

In assessing the weight to be given to that contribution of the wife, her Honour clearly paid particular regard to three matters which she considered increased the relative quality of that contribution, vis-a-vis the husband’s contribution through home renovation. Those three matters were:-

(a)The fact that the husband was absent from the home (i.e. overseas), in the course of his employment, for, on average, half of each year, leaving the wife “to shoulder the entire burden of the four children alone” effectively as “a single parent during those periods” (judgment paragraph 22 at Appeal Book p.22);
(b)The fact that, during the other half of each year, when he was home, the husband “almost exclusively devoted [his leisure time] to the renovation project”, so that “during the months when he wasn’t flying, he was building” (judgment paragraphs 22 and 23 at Appeal Book p.22); and
(c)The fact that the wife’s parenting and homemaking was carried out “not only under the difficulties of being alone for periods when the husband was overseas but also living in a house that was almost perpetually being improved or renovated in some direction during the entire marriage, which would also impose a strain on the person doing the bulk of the parenting” (judgment paragraph 26 at Appeal Book p.23).

Counsel for the husband submitted (and ground 28 asserts) that the finding referred to in paragraph 94(c), above, about the home “almost perpetually being improved or renovated in some direction during the entire marriage” was not open to her Honour, on the evidence, and that this erroneous finding coloured her Honour’s assessment of the weight to be given to the wife’s homemaker and parent contribution. In support of this submission, counsel referred to paragraph 33 of the husband’s affidavit (at Appeal Book pp.53-54) and to pp.4 and 5 of the report, dated July, 1998, of the quantity surveyor (John Meredith of Rider Hunt) (at Appeal Book pp.124-5). It was submitted that on this evidence “there were no renovations to the home undertaken at all between 1986 and 1991, nor from 1991 to the time of the hearing”. (Appellant’s Summary of Argument paragraph 9.)

In our view, that submission is not supported by an objective review of all the evidence on this topic. Firstly, even the summary of the work done, as prepared by the quantity surveyor (at Appeal Book pp.124-5) does not fully support the submission, since it refers to substantial work having been done in the period 1992 to 1994, and to some work being done on the property (albeit not on the home itself) in 1988. Moreover, it is clear that the author of this report had no personal knowledge of the timetable for the carrying out the work, but relied, for the preparation of this summary, upon information provided by the husband. Equally inconsistent with the submission is this statement, on the first page of that report (Appeal Book p.121):-

“This report has been prepared to examine the alterations and additions to the existing residence that have been completed by Mr Tomasetti over a period of 14 years commencing in 1984 and completed recently.” (Emphasis added.)

In paragraph 33 of his affidavit (at Appeal Book p.53) to which counsel for the husband referred, the husband speaks (twice in the one paragraph) of carrying out the work “during the period 1983 to 1994”. In his oral evidence-in-chief (at Appeal Book p.273 line 36) the husband responded affirmatively to this question by his then counsel:-

“And during the period 1983 through to 1994 would you accept that that’s the period when the substantial amount of the building work was carried out; the renovations, improvements to the home.”

Again, under cross-examination by then counsel for the wife (at Appeal Book p.390 line 25 to p.391 line 6) the husband gave the following evidence:-

“Now, would it be right to say, Mr Tomasetti, that the renovations to the Drummoyne property commenced in about 1983 and continued through to sometime in 1993?---1995 they finished.
Okay, 1995 was the swimming pool, is that correct?---No, 1992 was the swimming pool.
What was completed in 1995?---The parents’ retreat downstairs was completed in ’94.
I’m sorry?---It was completed in 1994/95. Mostly in ’94 because we were in Byron Bay in ’93.
You see, in 1993, at a time when the majority of the renovations had been completed, you moved to Byron Bay?---Yes, that’s correct.
And it would be right to say that between 1983 and 1993, when you moved to Byron Bay, that there had been progressive and ongoing renovation and rebuilding work of the house?---Yes.
And it would be right to say that during that same period of time, 1983 to 1993, the wife lived in the house with one or all of the children of the marriage?---Yes.”

Finally, on this point, the husband’s then counsel, in his closing submissions to the trial Judge, said this (at Appeal Book p.466 line 21):-

“Now, in the scheme of things when you’re talking about construction work which is spread over about 11 years ...”

In the result, we consider that her Honour’s finding referred to in paragraph 94(c) hereof was open to her on the evidence and that ground 28 is not made out.

Ground 30 is the general ground which challenges her Honour’s conclusion that the parties’ non-financial contributions were equal and “not ... really different in any significant degree”. It adds nothing to the other grounds which, as we have said, seek to contend that the husband’s contribution, in the form of his renovation work (coupled with his “limited” contribution to the parenting of the children) (judgment paragraph 26) must be seen as exceeding the wife’s contribution to the welfare of the family (coupled with her “limited” contribution to the renovations) (judgment paragraph 26). We do not agree with that contention. In our view it was reasonably open to her Honour, taking a broad view, to conclude that these non-financial contributions of the parties were equal.

In coming to that conclusion we have regard to her Honour’s findings about the extent of the husband’s absences from the home for the purposes of his employment, and the extent of his involvement in the renovation work at other times. We also accept as valid her Honour’s finding that the wife’s performance of her housekeeping and parenting role was rendered more exacting by the almost perpetual state of renovation which the home was undergoing. No doubt the level of her contribution in this respect was also increased by the disabilities suffered by the eldest child. Whilst another judge may validly have taken a different view of the relative merits of these non-financial contributions of the parties, we consider that a conclusion of equality was well within the range of a reasonable assessment, on all of the evidence.

Grounds 20 and 43 are general grounds which challenge her Honour’s ultimate conclusion that the parties’ total contributions should be assessed as being 60% by the husband and 40% by the wife, on the basis that it was unreasonable, and outside the range of a reasonable exercise of discretion. Given our rejection of grounds 1, 2, 7 and 21-30, these grounds can only succeed if we conclude that her Honour’s 60/40 apportionment of contributions in the husband’s favour gives manifestly inadequate recognition to the husband’s financial contributions.

This was the thrust of the argument for the husband, as set out in paragraph 8 of the Appellant’s Summary of Argument. It was there submitted that for her Honour to allow to the husband (as she did in paragraph 27 of her judgment) “an extra 10%” for the “additional introduction of capital” by him, whether that was the $292,000 found by her Honour or the $315,095 contended for by the husband, was manifestly inadequate, since 10% of the net assets found by her amounts to only $180,000. The argument is perhaps slightly enhanced by our conclusion that the correct net asset figure is $1,701,104, rather than the $1,800,937 arrived at by the trial Judge.

However, notwithstanding her Honour’s statement, in paragraph 27 of her judgment, that she was allowing the husband “an extra 10%” for his capital contributions, we think, with respect to her Honour and to counsel for the husband, that this is not the best or most accurate way of looking at an apportionment between the parties of 60% to one and 40% to the other. The disparity between the two arising from such an apportionment is 20%, not 10%. The effect of such an apportionment is that the first 20% (or one-fifth) of the net asset pool is treated as having been contributed by the husband, whilst the parties have contributed equally to the remaining 80% of that pool. Since the net asset pool (as found by us) is approximately $1,700,000, the 20% advantage given to the husband for his capital contribution is about $340,000. On her Honour’s figures for the asset pool the advantage to the husband was about $360,000 not $180,000. Such an allowance, in our view, was by no means inadequate, so far as the husband was concerned, but was indeed quite generous to him. It was certainly well within the range of a reasonable exercise of discretion by the trial Judge. Accordingly, these grounds of appeal are also rejected.

In summary, we reject the appeal in so far as it challenges her Honour’s findings about the parties’ contributions, and her ultimate conclusion that the husband’s contributions should be seen as being 60% of the parties’ total contributions, and the wife’s 40% thereof.

The s.75(2) Adjustment (Grounds 14 to 19, 31 to 42 and 44)

We have already summarised, in paragraphs 24 to 26 hereof, the process by which her Honour concluded that consideration of the relevant s.75(2) factors called for an adjustment, in the wife’s favour, of 40% of the parties’ net property, bringing her ultimate entitlement to 80%, and reducing the husband’s to 20%. These grounds of appeal, and the submissions in support of them, challenge both the process and the result of it.

In relation to the process, counsel for the husband submitted (Appellant’s Summary of Argument, paragraph 11) that although, in identifying the relevant factors to be taken into account, her Honour noted “a number of matters which would weigh in favour of the husband, such as his health, its effect upon his future earning capacity, his age and his payment of significant child support ... none of these factors receive[d] any weight when her Honour was considering the adjustment to be made”. Counsel supported this submission by reference to the fact that, in paragraph 40 of her judgment (at Appeal Book p.27, her Honour “selected the factors of superannuation, disparity of earning capacity and care of the children and assigned specific percentages to those factors only, without regard to the other factors”.

It was further submitted (Appellant’s Summary of Argument, paragraph 12) that the correct approach for her Honour to take would have been to consider all relevant factors, and then make a judgment as to whether, on balance, any adjustment was required, and if so the size of that adjustment.

As to the result of the process, counsel for the husband submitted that a 40% adjustment in the wife’s favour (which represents, on our adjusted figure for the net asset pool, a transfer of about $680,000 from the husband to the wife, and a differential shift in the wife’s favour of twice that amount) is manifestly excessive, and produces an overall result (80% to the wife and 20% to the husband) which is plainly wrong and manifestly unjust to the husband. In support of this submission it was pointed out that, in addition to paying child support of $573 per week for the children, the husband was also paying $484 per week in school expenses (Appeal Book p.109), giving a total of $1,057 per week or almost $55,000 per year out of his after tax income (not including superannuation) of $2,432 per week or $126,464 per annum (Appeal Book pp.106 and 108).

In relation to the process by which her Honour arrived at her 40% adjustment, and in answer to the submissions for the husband referred to in paragraphs 108 and 109 hereof, senior counsel for the wife submitted that it would be artificial to suggest that her Honour ought to have put down and added up a series of pluses and minuses for each party, and that what she really did was to say that, taking everything but the wife’s child care into account, on balance an adjustment of 25% of the net assets was called for in the wife’s favour, and that a further 15% should be allowed for the child care component. Essentially, it was submitted, her Honour concluded that all the other relevant factors balanced each other out.

As to the result, senior counsel for the wife submitted (Respondent Wife’s Summary of Argument, paragraph 6.10):-

“An overall adjustment of 40%, in the context of the Wife’s ongoing responsibility for four children, including one with special needs for the rest of her life, the Husband’s vastly superior earning capacity, and his very substantial superannuation resource, was well within the legitimate range. In the context of a 15 year marriage with four school age children – one with special needs – all in the care of the wife, separate contributions by the Husband of about $300,000, a pool of approximately $1.8 million, and superannuation of $1.2 million which will vest within about five years, half of which has accumulated during cohabitation, the result that the Wife receives $1.44 million is plainly a just and equitable one.”

In relation to this issue, we accept the submissions of counsel for the husband. We consider that the process by which her Honour arrived at her adjustment of 40% in the wife’s favour was flawed in principle, firstly because, as counsel for the husband submitted, she apparently gave no weight in the assessment process to factors which she identified which favoured the husband, but only to those which favoured the wife. Secondly, we consider that it is wrong in principle to determine, separately, the percentage adjustment called for by each of a series of factors favouring one party, and then to arrive at the overall adjustment by just adding up the components thus arrived at. To do that has at least the potential for double counting, since some of these factors overlap (eg. reduced earning capacity and responsibility for the care of the children, in the case of a parent who is the main child care provider).

In this context, the whole is not necessarily the sum of its component parts, and at the very least one has to stand back, at the end, and look at the final result, to ensure that the cumulative process has not produced a manifestly unjust result. With respect to her Honour, she does not seem to have done that in this case, but rather, having arrived mathematically at an adjustment figure of 40%, has simply converted that into an 80/20 result in favour of the wife, overall, notwithstanding that on contributions alone the parties’ entitlements were 60/40 in the husband’s favour. In our respectful opinion, on all of the evidence, and her Honour’s findings in this case, an adjustment of 40% of the net assets ($680,000 on our figures) is manifestly excessive, and produces a final result which is outside the range of a reasonable exercise of the wide discretion vested in her Honour. These grounds of appeal are therefore upheld.

In summary, we conclude that the trial Judge erred significantly in her calculation of the “net pool for division”, that her findings on contributions were well within the range of a reasonable exercise of discretion, but that her assessment of the appropriate adjustment for the relevant s.75(2) factors, and (through a combination of that and her error in calculating the size of the pool) the final result embodied in her orders, fell outside that range and were manifestly unjust to the husband. Accordingly, the appeal of the husband must be allowed.

It was not submitted by either counsel that if we should come to that conclusion the matter should be remitted for rehearing. Rather, it was accepted that in that event we should re-exercise the discretion of the trial Judge which we have concluded miscarried, and we have all the necessary materials to enable us to do that without injustice to either party and without subjecting them to the additional cost or the delay and stress of a new trial.

THE RE-EXERCISE OF DISCRETION

In re-exercising the discretion of the trial Judge, we start from the position that, for the reasons given earlier in this judgment, the net value of the parties’ property available for division between them in these proceedings is $1,701,104, made up of the following:-

Former matrimonial home at Drummoyne                 :          $1,610,000
Birkenhead Point unit  :               580,000
Cairns unit  :               100,000
Husband’s car  :                20,000
Wife’s car  :                25,000
Husband’s tools, paintings, dinghy etc  :                20,000
Wife’s jewels  :                10,000
Husband’s shares  :                  7,787
Wife’s shares  :                  5,070
Husband’s expected tax refund  :                  6,000
Wife’s expected tax refund  :  900
Furniture (husband’s and wife’s)  :                35,000
Wife’s savings  :  700
Husband’s costs paid from Citibank Loan                :                  15,000
   2,435,457
Less Liabilities:
Citibank Loan            :          $680,000
Cairns Mortgage        :              54,353      734,353
  Net Assets  :          $1,701,104

In relation to contributions, we adopt her Honour’s finding that the parties’ total contributions, as identified by her, should be assessed as being 60% by the husband and 40% by the wife. A division of the net property of the parties in those proportions would leave the husband with net property of $1,020,662, and the wife with net property of $680,442, a differential of $340,220 in the husband’s favour.

Consideration of the s.75(2) factors identified by her Honour, in paragraphs 11, 12, 13, 14, 15, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38 and 39 of her judgment, to which must now be added the husband’s financial resource in the form of his accrued long service and annual leave having a notional value of $79,180 (which we have removed from the pool of assets), clearly calls for a very significant adjustment in the wife’s favour from the position arrived at on the basis of contributions alone.

In paragraph 13 of her judgment, her Honour calculated (using the so called “West and Green formula”, derived from the judgment of Kay J in West and Green (1993) FLC92-395) that the wife “could lay claim to a proportion somewhere in the area of $300,000 if the husband were notionally to receive his superannuation today. Although such calculations tend to be artificial, they are of some value in the context of considering an appropriate s.75(2) adjustment since they help to focus attention on what the non-member spouse is effectively loosing by being excluded from enjoyment of the benefits of the superannuation entitlements of the other spouse built up during the marriage. If a similar calculation were done in respect of the husband’s accrued leave entitlements, the wife might be seen as being reasonably able to “lay claim to a proportion somewhere in the vicinity of” $20,000, if the husband were notionally to retire and receive his entitlements now. To give the wife an additional $320,000, in respect of these financial resources of the husband to which she has undoubtedly contributed significantly, would require an adjustment in her favour of just under 19% of the current net asset pool. However, an adjustment of that magnitude would be somewhat excessive, since it contains no discounting for her early receipt of her notional share of those entitlements which may not vest in possession for anything between three and eight years.

The other major factors favouring the wife are the great disparity in the parties’ earning capacities, and the fact that she will have the ongoing principal responsibility for the care, housing and supervision of the children for many years yet, although that burden will gradually lighten over the next ten years as the three younger children, in turn, mature and become largely self-sufficient. As her Honour pointed out, however, the wife’s responsibility for the oldest child, Emily, will probably be ongoing, at least in some measure, indefinitely.

As against those matters, however, there must be weighed the fact that the husband will undoubtedly be called upon to continue to provide child support for the children at something like the current rate of nearly $55,000 per year, out of his after tax income, whilst ever he continues to earn at the high level which he currently enjoys. That very substantial commitment goes some significant way towards levelling out the disparity in the parties’ earning capacities, although it certainly falls well short of eliminating it altogether.

Other factors to be weighed in the balance are the husband’s relatively poor state of health, which may involve him in considerable expense over the coming years, and which may also curtail his working life. In the latter respect, however, it is a two edged sword, because any curtailment of his earning capacity will also rebound upon the wife, leading to a reduction in the husband’s child support liability.

Having regard to all of those matters, and standing back to look at the overall picture, we consider that an adjustment of 30% of the parties’ net property in the wife’s favour is called for on account of the relevant s.75(2) factors. In a net asset pool of $1,701,104, such an adjustment effectively transfers $510,330 to the wife out of the husband’s contribution based property entitlement. On any view, half a million dollars is a very considerable amount of money. Such an adjustment leaves the wife with 70% of the parties’ existing property, having a net value of $1,190,773, whilst the husband will have 30%, having a net value of $510,331. Given that he was the significantly greater contributor to that property, we think that is a just and equitable result, overall.

PROPERTY DISTRIBUTION

Following, essentially, her Honour’s asset and liability distribution plan, which we understand was not the subject of any significant dispute between the parties, the parties’ entitlements as determined by us should be satisfied as follows:-

Wife to Receive:
Wife’s car  :               $25,000
Wife’s jewels  :                10,000
Wife’s shares  :                  5,070
Wife’s expected tax refund  :  900
Wife’s savings  :  700
Share of proceeds of sale of former
matrimonial home and furniture                  :          $1,149,103
           Total  :          $1,190,773

Husband to Receive:
Birkenhead Point unit  :              $580,000
Cairns unit  :               100,000
Husband’s car  :                20,000
Husband’s tools, paintings, dinghy etc          :                20,000
Husband’s shares  :                  7,787
Husband’s expected tax refund  :                  6,000
Husband’s costs paid  :                15,000
Share of net proceeds of sale of former
matrimonial home and furniture                  :               495,897
  Total  :          $1,244,684
Less Liabilities:
Citibank loan   :          $680,000
Cairns Mortgage :         54,353      734,353
           Balance  :             $510,331

Since the wife’s entitlement from the sale of the former matrimonial home and the furniture represents 69.85% of the agreed value of those assets, the orders should provide for the wife to receive a sum representing 69.85% of the net sale proceeds of those assets, defined as the gross selling price, plus or minus rates or other adjustments made on the settlement, minus the costs of and incidental to the sale, including real estate agents commission and advertising expenses (if any) and legal expenses (if any). No deduction should be made in calculating the wife’s entitlement in respect of any portion of the Citibank debt, to the extent that it is secured against that property, as the husband is to retain sole liability for that debt and will have to provide alternative security either for that debt or for any borrowing necessary for him to undertake in order to pay out the wife’s entitlement.

COSTS OF THE APPEAL

At the conclusion of the hearing of the appeal, when we invited counsel’s submissions on costs, we were advised that a s.117C offer in relation to the proceedings remains outstanding, and that it was therefore inappropriate for us to deal with the costs issue until after the determination of the substantive appeal. We indicated that we would therefore include in our orders, directions for the filing and service of written submissions on costs, following the receipt of which we would deal with the issue of costs in a separate supplementary judgment, and without any further oral argument.

ORDERS

For the foregoing reasons, the orders of the Court are:-
That the appeal from the orders of 5 March, 1999 be allowed.
That orders 1, 2, 3 and 4 of the orders made herein on 5 March, 1999, be set aside.
That the husband do all such acts and things and execute all such documents as may be necessary to cause the property situated at St Georges Crescent, Drummoyne, in the State of New South Wales, being the former matrimonial home of the parties, to be sold, as soon as possible, for the best obtainable price, and that the parties do all such acts and things and execute all such documents as may be necessary to cause all furniture, other than the usual contents of the children’s rooms, being the furniture in the former matrimonial home and in the husband’s possession to be sold as soon as practicable for the best obtainable price, and to cause the net proceeds of such sales (being the gross selling prices plus or minus any proper adjustments on settlement, minus the costs of and incidental to sale – including real estate agents or auctioneers commission and charges, if any, and legal expenses, if any) to be paid as to 69.85% thereof to the wife, and as to the balance to the husband, or as he may direct.
That the wife have exclusive occupancy of the said property pending its sale, subject to her allowing reasonable access thereto by agents of the husband and/or prospective purchasers, at all reasonable times, upon reasonable notice to her, for the purpose of inspecting, assessing and/or preparing the said property for or in connection with its proposed sale, and that she deliver up vacant possession thereof to any purchaser upon settlement of the sale.
That each party have liberty to apply to a Judge or Judicial Registrar at the Sydney Registry of this Court, upon seven days notice in writing to the other, for any further directions as to the conduct of the said sales and/or in relation to the mechanics of the calculation and distribution of the net proceeds of such sale pursuant to order 3 hereof.
That the appellant/husband file, and serve upon the wife, written submissions as to costs of the appeal, within twentyone days of the date of these orders.
That the respondent/wife file, and serve upon the husband, written submissions as to costs in answer to those of the husband, within fourteen days of receipt of the husband’s submissions.
That the appellant/husband have liberty to file, and to serve upon the wife, written submissions in reply to those of the wife within seven days of the receipt thereof.
That each party endorse upon the cover sheet of any submissions filed pursuant to orders 6, 7 and 8 hereof, the date upon which the same were served upon the other party.
That the appeal from the order of Lawrie J of 3 March, 1999, dismissing the husband’s application that she disqualify herself from further hearing the proceedings, be dismissed.

PROPERTY – What constitutes – Leave entitlements of a party to be treated as a financial resource and not property - Gould and Gould (1996) FLC 92-657 considered.

PROPERTY SETTLEMENT – Just and equitable – Section 75(2) adjustment – how arrived at - adjustment should be determined globally after considering all relevant factors, rather than by determining a percentage adjustment to be made in respect of each of several factors and then adding these together to arrive at the ultimate adjustment – potential for double counting due to overlap between relevant factors.

This was an appeal by the husband against property orders which effectively divided the parties’ property 80/20 in favour of the wife.

The husband, aged 51, and the wife, aged 39, commenced cohabitation in March, 1982 and were married in January, 1983. There were four children of the marriage aged between 8 and 15.

The husband initially left the former matrimonial home in May, 1997, but returned in December of the same year. The parties attempted reconciliation but separated under one roof on 10 January, 1998, with the husband finally leaving the home on 3 August, 1998. Since separation all four children continued to reside with the wife in the former matrimonial home.

In December, 1967, the husband completed his commercial pilot cadetship and was employed by Qantas. Since that time the husband undertook a number of training courses and after a series of promotions, in 1998, attained his current position of captain flying B747 400s. The nature of the husband’s employment with Qantas enabled him work as a builder during the periods he was not flying from 1976 to 1996. The husband obtained a builder’s licence in 1989.

At the time of marriage the husband had assets valued at approximately $247,500, including a house and two townhouses in Balmain. At the same time the wife was studying at Teachers College and had comparatively little in the way of personal assets.

The wife was the children’s primary caregiver and homemaker throughout the marriage, although the husband’s limited work hours afforded him the opportunity to spend time with the children during the six months of the year he was in Australia. In addition, from about 1994, the parties employed domestic help.

The former matrimonial home was purchased in the husband’s sole name in April 1983. Over half of the purchase price of $280,000 was funded from the sale of one of the Balmain properties and a loan from St George Building Society. The parties carried out extensive work on the property between 1983 and 1994. The mortgage on the property was paid out in mid-1993 after the husband secured a $45,000 loan from Qantas Staff Credit Union Limited.

In February, 1994, a property at Cairns was purchased in the husband’s sole name for $85,000. The purchase price, in conjunction with $3,000 for legal expenses and stamp duty, was borrowed from the Qantas Staff Credit Union Limited with $68,000 secured against the Cairns property and the remainder advanced by way of unsecured personal loan. At the time of the hearing that property was being let to the husband’s friend for less than the market rate.

In April, 1997, the husband purchased a unit at Birkenhead Point for $557,500. To enable the purchase of that property and to discharge his unsecured loans from Qantas Staff Credit Union Limited, the husband obtained a loan facility from Citibank in the sum of $680,000. At the time of the hearing the husband was required to repay $4,108 per month towards that loan. After separation the husband placed the unoccupied unit on the market, but at trial it remained unsold.

Since 1996 the husband had experienced problems in his knees. In December, 1997, he underwent orthopaedic surgery and he anticipated that he would be forced to resign from Qantas if the symptoms prevented him from passing the airlines annual medical examination.

The trial Judge found the parties to have net assets totalling $1 800 937. Notwithstanding her Honour’s finding that the husband’s direct financial contributions were greater than the wife’s, when this was compared with the wife’s significant contributions as parent and homemaker, the trial Judge concluded that an initial 60/40 division, in favour of the husband, was appropriate.

Turning her attention then to s. 75(2) considerations, the trial Judge concluded that given the respective ages and health of the parties, the husband’s superior earning capacity and significant superannuation entitlements, and the fact that the wife had the care of four young children, including one with learning difficulties, an adjustment of 40% in favour of the wife was appropriate.

The overall distribution ordered by the trial Judge was 80/20 in favour of the wife.

On Appeal, the husband essentially submitted that her Honour had erred in all three stages of the process when determining an appropriate property settlement.

Held, in allowing the appeal:

The trial Judge erred in treating the husband’s leave entitlement as property through including the notional value of those entitlements in the calculation of the net pool of property available for division.
On the facts of the case it was not open to the trial Judge to disregard the husband’s debt against the Cairns unit when determining the property available for division between the parties.
The trial Judge erred in calculating the pool of property to amount to $1 8 00 937, as opposed to $1 701 104.
On the facts of the case it was open to the trial Judge to find that the husband’s income indemnity insurance, in conjunction with his loss of income indemnity insurance, would provide him with security in the event that he took ill before his superannuation entitlement became available.
The trial Judge was acting within the range of reasonable assessment in not only determining that the parties’ respective non-financial contributions were equal, but also in finding that their overall contributions were 60/40 in favour of the husband.
The trial Judge erred through failing to give any weight to identified s.75(2) factors which favoured the husband, but only to those which favoured the wife. Furthermore, the approach of the trial Judge in separately evaluating each s.75(2) factor in favour of the wife and determining an appropriate percentage adjustment in respect of it, and then adding those together to reach the ultimate adjustment, was flawed in principle. The preferred approach is to consider the factors collectively, as a cumulative process, in order to avoid both a manifestly unjust result and the potential for double counting, since some of the factors overlap.
A 40 percent adjustment in favour of the wife, pursuant to s. 75(2) considerations, was outside the range of a reasonable exercise of discretion and a 30 per cent adjustment was more appropriate.

REPORTABLE

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Citations

Tomasetti & Tomasetti [2000] FamCA 314

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MACEY & MACEY [2013] FamCA 187

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ASSET	$
Husband’s car	20,000
Wife’s car	25,000
Husband’s tools, paintings dinghy etc	20,000
Wife’s jewels	10,000
Husband’s shares	7,787
Wife’s shares	5,070
Husband’s expected tax refund	6,000
Wife’s expected tax refund	900
Husband’s net long service and annual leave	79,180
Furniture (with both husband and wife)	35,000

[2000] FamCA 314

13 April 2000

Key Legal Topics

Areas of Law

Civil Procedure

Administrative Law

Legal Concepts

Appeal

Judicial Review

Jurisdiction

Procedural Fairness

Standing