V and U

[2009] FCWA 39

[2009] FCWA 39

JURISDICTION	:	FAMILY COURT OF WESTERN AUSTRALIA
ACT	:	FAMILY LAW ACT 1975
LOCATION	:	PERTH
CITATION	:	V and U [2009] FCWA 39
CORAM	:	PENNY J
HEARD	:	12 AUGUST 2008
DELIVERED	:	24 APRIL 2009
FILE NO/S	:	PT 4143 of 2006
BETWEEN	:	V Applicant/Wife
AND
U Respondent/Husband
Catchwords:

Property settlement - husband's significantly greater financial contributions - wife's greater contributions to the family - effect of husband's inheritances which vested late in the marriage - small s 75(2) apportionment in favour of wife

Legislation:

Family Law Act 1975 - s 75(2), s 79

Category: Not Reportable

Representation:

Counsel:

Applicant	:	Dr A Dickey QC
Respondent	:	Mr P Dowding SC, with Mr W Carr

[2009] FCWA 39

Solicitors:

Applicant	:	W L & K J Everett
Respondent	:	Carr & Co

Case(s) referred to in judgment(s):

Figgins and Figgins (2002) FLC 93-122
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener)
(2003) FLC 93-143
Pierce v Pierce (1999) FLC 92-844

[2009] FCWA 39

1 The parties, [Ms V and Mr U], were married for 15 years. There are two

children of their marriage, [Helen] and [Mark]. At the time they were married [Mr U] was the owner of a number of assets including a property in [the Eastern states], a property in Perth, superannuation and cash. Shortly before they separated [Mr U] inherited $976,000 from his mother’s estate. The issue for determination at trial was what impact these lump sum financial contributions from [Mr U] should have upon the manner in which the parties’ assets should be divided.

2 [Mr U] says these significant contributions by him to the parties’ asset pool,

which now totals approximately $4.6m, should result in an apportionment of the assets
in his favour such that he receives 80% of them and [Ms V] 20%.

3 [Ms V]’s case is that she worked as a [health professional] during most of the

marriage and contributed all that she earned to the household. [Mr U] worked as a [professional] and was away for lengthy periods, particularly in the early 1990s. During this time [Ms V] was the sole homemaker and carer for the children. She says the assets should be divided, taking into account their contributions, in the sum of 65% to [Mr U] and 35% to herself. She says there should be a further distribution of the assets in her favour to take into account s 75(2) factors in the sum of 3%.

Background and history of the parties and the relationship

4 [Mr U] is now aged 58 years and is a self employed [professional]. [Ms V] is now 48 years and a [health professional]. [H Pty Ltd], a company controlled by [Mr U], acquired a unit in [the Perth suburbs].

5 In 1977 [Mr U] purchased a property in [the Eastern states]. In 1984

6 The parties met in 1987 when [Mr U] travelled to [Europe] for a holiday. After

the parties met [Ms V] completed her [degree] in [Europe] and travelled to Australia to meet [Mr U]. The parties were married in August 1989 in Perth. Shortly after the wedding, [Ms V] returned to [Europe]. [Mr U] joined her in December 1989. At this time cohabitation commenced.

7 The parties’ first child, [Helen], was born in January 1990. The parties left [Europe] with [Helen] in October 1990 and returned to Perth to live.

8 In 1991 the [suburban] unit was sold and the parties purchased the former

matrimonial home [in another suburb]. They lived in that property until they separated
in 2005.

9 [Mark] was born in January 1992.

10 From 1993 to 1994 the parties resided in [Europe] with the children for a period

of five months.

11 In January 1996 [Ms V] commenced employment in Australia as a [health professional].

12 In April 2000 [Mr U] repurchased the [suburban] unit.

[2009] FCWA 39

13 [Mr U]’s mother died in October 2001, but her estate was not finalised until June 2004, when he received his share of his mother’s estate amounting to $976,170.

14 The parties separated in February 2005 when [Mr U] left the former matrimonial

home at [Ms V]’s request. [Ms V] has continued to reside in the property since
separation. In June 2005 [Mr U] purchased a property in [a nearby suburb].

15 After separation the children initially resided with [Ms V], although [Helen] travelled [overseas] for 10 months from September 2006 to July 2007.

16 The parties were divorced in October 2006.

17 [Mark] now spends his time with both [Ms V] and [Mr U].

18 [Ms V] lived in a de facto relationship with [Mr W] for approximately two years. He moved into the [matrimonial home]. That relationship has now ceased.

19 In July 2008 [Mr U] sold the [suburban] unit.

The law

20 The approach to be taken in relation to an application for property settlement

pursuant to s 79 of the Family Law Act 1975 is a four step process. Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143. Those steps are:

• identify the value of the assets and liabilities of the parties;

• consider the contributions made by the parties within paragraphs (a) to (c) of s 79(4);

• consider the s 75(2) factors, together with any matters relevant pursuant to s 79(4)(d)-(g); and

• consider whether the order proposed is just and equitable.

Assets and liabilities

21 The parties have agreed the assets and liabilities which should be taken into

account and their value. The only area of dispute relates to funds spent by [Mr U] when he employed private detectives to investigate whether [Ms V] was still in a relationship with [Mr W], after she had stated that this relationship was over. The costs incurred by him in relation to that investigation were $8,953. Dr Dickey, for [Ms V], submitted that these funds should be added back to the asset pool. [Ms V] stated that the de facto relationship with [Mr W] ended in January 2008 and he moved out. The evidence produced by the investigators shows that, at least for the periods of investigation, [Ms V] was spending time at [Mr W]’s premises and [Mr W] was spending time at [Ms V]’s home. Obviously, these continued contacts between [Ms V] and [Mr W] caused [Mr U] to have some suspicions about whether the de facto relationship had ceased only until such time as the proceedings were completed.

[2009] FCWA 39

22 In the schedule of assets and liabilities agreed by the parties they have not

sought to add back the legal fees paid by either of them. The only sums they have
agreed to add back are amounts held in the trust accounts of each of their solicitors.

23 I can understand [Mr U] wanting to investigate the issue of the extent of the

relationship [Ms V] had with [Mr W] given the continued contact between them after the de facto relationship allegedly finished. Given that the parties have agreed not to add back other legal fees, I am not satisfied this sum should be added back to the asset pool.

24 Since the time of trial and this judgment, there has been a significant change in

the value of most people’s superannuation entitlement. I have allowed the parties to update the value of those superannuation funds as at the date of this judgment so that neither would be disadvantaged by the current economic circumstances.

25 The assets and liabilities of the parties are as follows.

Assets $

1	[The former matrimonial home]	[Ms V]	1,275,000
2	[The husband’s new home]	[Mr U]	1,175,000
3	[Eastern states property - inherited]	[Mr U]	200,000
4	[Eastern states property purchased by husband]	[Mr U]	530,000
5	National Australia Bank Chq A/c No. …. 473	[Mr U]	10,616
6	National Australia Bank Chq A/c No. …..038	[Ms V]	7,784
7	Bankwest Gold Cash Management A/c No. …61 7	[Mr U]	8,242
8	ING Savings Maximizer A/c No. ….291	[Ms V]	129,350
9	ING Savings Maximizer A/c No. ….270	[Mr U]	323
10	ING Savings Maximizer A/c No. …..046	[Mr U]	23,120
11	Bank of Queensland A/c No. …..720	[Mr U]	442,547
12	GESB West State Super A/c	[Ms V]	142,326
13	ING Life Policy & Savings A/c …..474	[Ms V]	85,176
14	Zurich Superannuation Policy ……524	[Ms V]	12,301

[2009] FCWA 39

15	Zurich Superannuation Policy …..142	[Mr U]	329,323
16	Zurich Superannuation Policy …..661	[Mr U]	60,807
17	Zurich Superannuation Policy …..129	[Mr U]	87,101
18	BT Superannuation Investment Fund …….586	[Mr U]	80,165
19	[U] Family Trust	[Mr U]	53
20	Postbanken A/C 934	[Ms V]	21
21	DNBNOR A/c	[Ms V]	399
22	ANZ Access Advantage Chq A/c No. …..265	[Ms V]	20
23	[Motor Vehicle]	[Ms V]	11,850
24	[Motor Vehicle]	[Mr U]	4,900
25	Interest in Business (Plant and Equipment)	[Mr U]	4,166
26	Household Contents	[Mr U]	8,810
27	Household Contents	[Ms V]	15,000
28	Credit in Solicitor’s Trust Account	[Ms V]	12,000
29	Credit in Solicitor’s Trust Account	[Mr U]	25,000
30	Other Personal Property [various sporting equipment]	[Mr U]	500

4,681,900

Liabilities

31 National Australia Bank Visa A/c No……060 0

32	Bankwest Mastercard A/c No. ……747	[Mr U]	1,513
33	National Australia Bank Visa A/c No. ………484
34	ANZ First Free Days Visa A/c No…………432	[Ms V]	-11
35	Money held on behalf of children	[Mr U]	1,381

[2009] FCWA 39

36	Payment due to ATO via Income Tax Assessment (payable 15	[Mr U]	20,023
May 2009)
22,906

Net Assets $4,658,994

Contributions

Financial contributions

26 At the time the parties married, [Mr U] was 38 years of age and had been a self

employed [professional] for many years. [Ms V] was 28 years of age and a [student].
She graduated shortly after the marriage.

27 [Ms V] says that she was in possession of approximately $18,000 in savings,

which she brought to Australia with her when she married. When cross-examined, [Ms V] was unsure of the exact amount, but stated whatever savings she had were brought into the marriage.

28 [Mr U], through [H Pty Ltd], was the owner of [a suburban unit]. He purchased

that property for $75,000 in 1984. [Mr U] also owned free of debt a unit in [the Eastern states]. The property had been purchased in 1977. Initially, part of the funds to purchase the property had been raised by way of a mortgage. The mortgage balance at the time of the marriage was zero. [Mr U] also had two superannuation policies with Australian Eagle, a policy with Westpac Superannuation Investment and a policy with Legal and General. The total value of these policies at the time of marriage was $41,816. [Mr U] obtained a history of these plans by accountants [BS] who found that the current value of the superannuation entitlements owned by [Mr U] at the time the parties commenced cohabitation is $157,392.

29 In addition to superannuation, [Mr U] had cash savings of $100,728. He also

owned household furniture and contents located in the [suburban] unit, and a
[motor vehicle].

30 In 1990 the parties lived in [Europe] to enable [Ms V] to complete her

[qualification]. In 1994 they again resided there because [Ms V] wanted to work for a period in [Europe]. During the periods in [Europe] [Ms V] was the income earner for the family and [Mr U] looked after the children. Otherwise during the course of the marriage [Mr U] has been in employment [in his profession]. For some time in 2002 and 2003 he was unemployed.

31 From 1996 onwards [Ms V] has been employed [in her profession], sometimes

on a part-time basis and other times, full-time. Since 2002 her income has been
greater than [Mr U]’s.

[2009] FCWA 39

32 There is no dispute that both parties contributed their income towards the benefit of the family and the accumulation of their assets.

33 After separation [Ms V] continued to work [in her profession]. She earns

approximately $140,000 working full-time. She has continued to reside in the [matrimonial home]. This property is unencumbered. Her income has been used to support herself and the children. She has effected some renovations to that property to the cost of $25,000, which has increased the value of the property in around this sum. She has savings from her income of $155,000.

34 Since separation [Ms V] has purchased [a motor vehicle] for approximately

$22,000.

35 Shortly before separation, [Mr U] received the sum of $976,170 from his

mother’s estate. [Mr U]’s interest in the estate amounted to cash and a unit in [the Eastern states]. Some of the cash was used by [Mr U] to purchase the property at [a Perth suburb], in which he has resided since 2005. That property is now valued at $980,000. In paragraph 25 of [Mr U]’s affidavit for trial he estimates that the present value of the inheritance, including [his Perth home] at its current value, is $1,261,990.

36 In 1991 [Mr U] sold the [suburban] unit for $140,000. The funds from the sale

were used to purchase [the former matrimonial home] for $250,000. After the contribution from the sale of the [suburban] unit, the balance of the purchase price was paid by way of the utilisation of the cash savings of [Mr U], which he brought into the marriage.

37 In 2000 the [suburban] unit became available for purchase again and [Mr U]

brought it. The property was purchased for $210,000. This purchase was funded from savings [Mr U] had accumulated during the marriage. The property has been rented since shortly after its purchase and the rent income has been paid into a savings account in [Mr U]’s name.

38 [Mr U] sold the [suburban] unit in May 2008. The net proceeds of sale were

$542,546. Of these funds $100,000 has been contributed to a new superannuation policy with Zurich, and the balance of $442,546 was deposited in a Bank of Queensland term deposit.

Non-financial contributions

39 [Mr U] is a skilled handyman and used those skills to effect a number of

improvements to properties owned by him, particularly in relation to the [matrimonial home]. In paragraph 40 of his affidavit he sets out in some details the work completed by him in relation to that property.

40 I have already stated that [Ms V] paid for and organised some improvements to the property after separation.

[2009] FCWA 39

Contributions to the welfare of the family

41 During the time the parties lived in [Europe], [Mr U] was primarily responsible

for the care of the children. When the parties resided in Perth, [Ms V] was primarily responsible for the care of the children. After marriage, in 1991 [Mr U] was away 43% of the year and in 1992, 45%. During part of that time [Ms V] was in [Europe] with the children but, in any event, was solely liable for their care. In 1993 [Mr U] was away 36% of the year, 1994 28%, 1995 25% and for 1996, 30%. In 1998 and 1999 he was away 40% and 44% respectively. Since 2000 he has not travelled as much.

42 During these periods the parties employed nannies to assist in the care of the

children, but the ultimate responsibility for the care of the children rested with [Ms V],
who was also working. Their emotional stability was her responsibility.

43 After separation the children initially resided with [Ms V]. [Helen] was away on

an exchange program [overseas] for a year. [Mark] has recently spent his time
between the two households.

44 Since separation [Mr U] has not paid child support, but has continued to pay the

council rates, the gas and electricity accounts and the house insurance on the [matrimonial home]. He also maintains medical health cover for the children. [Ms V] has otherwise been responsible for [Helen]’s expenses when at home and [Mark]’s expenses when living with her.

Conclusions on contributions

45 [Mr U] submits that his contributions should be assessed on “a category of asset

approach” rather than globally or an asset by asset approach. He says that the assets of
the parties fall into three categories:

(a)	those assets which were owned by [Mr U] pre-marriage and which have substantially remained intact;
(b)	the assets which were acquired during the parties’ relationship and which were acquired on account of, or in part, their joint efforts; and
(c)	those assets which are directly traceable to the inheritance which [Mr U] received from his late mother.

46 In fact, what [Mr U] seems to be seeking is an arithmetical approach. He says

the assets which are directly traceable to his inheritance have a current value of $1,447,226 and represent 31.3% of the net assets, and those assets which are directly traceable to his pre-marital assets have a current value of $1,962,393 and represent 41.7% of the net assets. These figures were calculated on the values of assets at trial. There has been a slight change in the value of the superannuation assets since that time.

47 On top of these financial contributions [Mr U] says he made greater non-

financial contributions to the conservation and improvement of the parties’ assets than did [Ms V]. He acknowledges that [Ms V], in his view, made a slightly greater contribution to the welfare of the family.

[2009] FCWA 39

48 Counsel for [Ms V] submits that the “so-called principle of diminishing

significance of introduced property” should apply to the initial contributions of
[Mr U], particularly in respect of the [suburban] unit.

49 The Full Court (Ellis, Baker and O’Ryan JJ) in Pierce v Pierce (1999) FLC 92- 844 at p 85,881 stated in relation to the issue of the weight to be given to initial financial contribution:

28. In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to the attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: See also Campo and Campo (unreported, Full Court (Ellis, Lindenmayer and Finn JJ), Sydney, delivered 19 May 1995 at pages 21 and 22 of the joint judgment) and Zahra and Zahra (unreported, Full Court Sydney, delivered 3 October 12996, per Ellis J at page 10).

50 In this case the initial contributions of [Mr U] were not only significant, but resulted in the parties using the funds from the sale of [the suburban unit] in 1991, together with savings accrued by [Mr U] before the marriage, to purchase the [matrimonial home]. That property is now valued at $1,275,000. In addition, the superannuation entitlements brought in by [Mr U] at the commencement of cohabitation now have a value in excess of $157,000. One of the new [Eastern states] properties was also brought in by him. These are very significant contributions to an asset pool of around $4.65m.

51 During the course of the marriage [Mr U] and [Ms V] both made financial

contributions to the accumulation and maintenance of their assets. In the latter four years of the marriage the income earned by [Ms V] was greater than [Mr U]. [Mr U] made significant non-financial contributions, greater than that of [Ms V]. However, [Ms V] made greater contributions to the welfare of the family than did [Mr U], particularly in the years when the children were younger. In my view, [Mr U] has underestimated the significance of this contribution by [Ms V]. I have set out in some detail the percentages of the years that [Mr U] was absent. For some of that time [Ms V] was not only looking after the children and the household, but working as well.

52 In addition to these contributions I have to consider the significance of [Mr U]’s

inheritances. In Figgins and Figgins (2002) FLC 93-122, Nicolson CJ and Buckley J discussed the way in which an inheritance should be treated when assessing contributions made by a party. At page 89,295 they stated:

62. A useful recent discussion of inheritance is to be found in the decision of the House of Lords in White in the judgment of Lord Nicholls (at 13-14).

[2009] FCWA 39

63. His Lordship refers to a view that inherited property, whenever acquired, should stand on a different footing from other matrimonial property. According to this view, the spouse to whom it was given should be allowed to keep it. Conversely, as a consequence of such a view, the other spouse has a weaker claim to it.

64. Lord Nicholls entirely rejects the above proposition. The substance of what his Lordship said after referring to that view, is as follows:

• When present, the factor of an inheritance is one of the circumstances of the case;

• It represents a contribution by one of the parties;

• The Judge should take it into account and decide how important it is in the particular case;

• The nature and value of the property and the time that it was acquired are among the relevant matters to be considered;

• However, in the ordinary course, this factor carries little weight, if any, in a case where the claimant’s financial needs cannot be met without recourse to the property.

53 In this matter the inheritance is of some import. The final instalment of the

inheritance was received by [Mr U] some five months before the parties separated. At that time he says the marriage was unhappy and he “quarantined” those assets. The value of those assets has increased, mainly as a result of the increase in the value of the property purchased by [Mr U] at [the suburb] so that they now are valued at $1,474,226. This makes up 31.3% of the net assets and is a very significant contribution.

54 In my view, the parties’ assets should be divided to take into account their

contributions so that [Mr U] receives 70% of the assets and [Ms V] 30%. I say this for
the following reasons:

•  [Mr U] made significant initial contributions which have been reflected in the former matrimonial home, superannuation assets and one of the properties in [the Eastern states].

•  [Mr U]’s inheritance, which came late in the marriage, and to which [Ms V] made no contribution, has grown in value as a result of [Mr U]’s investment strategy.

•  [Mr U] has made a significant non-financial contribution to the maintenance and acquisition of the parties’ assets.

•  [Ms V] has made a greater contribution to the welfare of the family than has [Mr U]. This was a 15 years marriage. She was primary care-giver for the children for most of it, and for some years without any physical support from [Mr U], as he was working away.

[2009] FCWA 39

• [Ms V] has earned more than [Mr U] since 2000 and all her income has been contributed to either family expenses during the course of the relationship, improvements on the former matrimonial home after separation and in savings accrued since separation which are now reflected in the asset schedule.

55 A division of the parties’ assets in these proportions will mean that [Mr U] will retain assets valued at $3,261,296 and [Ms V] will retain assets valued at $1,397,698.

Section 75(2) factors

56 [Ms V] is 48 years old and is a qualified [health professional]. She has the

capacity to earn at least $140,000 per year. She has generous payment conditions in that she is able to bundle some of her expenses and her superannuation payments in a package known as “smart salary”. This allows her to quarantine almost $1,600 per fortnight upon which there is a tax benefit. In addition to her income [Ms V] earns approximately $144 per week from her investment in ING.

57 [Ms V] supports [Helen] and [Mark] when he resides with her. She has no obligation to care for any other person.

58 [Mr U] has the capacity to earn between $90,000 and $100,000 per year by way

of income as a [professional]. In addition, he retains two rental properties in [the Eastern states]. These each provide him with an income. As a result of the sale of the [suburban] unit, he has been able to significantly increase his superannuation entitlements and have a cash resource of $442,547.

59 The assets he will retain by way of his contributions are significantly larger than the assets which will be retained by [Ms V].

60 In my view, there should be a modest apportionment of the assets in favour of [Ms V] taking into account s 75(2) factors for the following reasons:

• Not only does [Mr U] retain significant and greater assets than [Ms V], he also has properties and savings which will provide him with a larger income than [Ms V].

• [Ms V] will be mostly reliant on income from employment to maintain herself in the future, whereas [Mr U] will, even when he reduces his work, have significant income derived from property, cash and superannuation entitlements.

• Even though [Helen] is over the age of 18, it seems likely that she will be supported by [Ms V] until such time as she has finished her tertiary education. The parties will jointly be responsible for [Mark]’s expenses.

61 Taking into account these factors under s 75(2), in my view, there should be an

apportionment of the assets in the sum of 2.5%. A distribution in these terms will
mean that [Mr U] will retain assets totalling $3,144,821 and [Ms V] 1,514,173.

62 The effect of a distribution of the assets in these terms means that [Ms V] will retain the following assets:

[2009] FCWA 39

[The former matrimonial home]	$1,275,000
National Bank cheque account`	7,784
ING Savings Maximizer A/c	129,350
GESB west State Super A/c	142,326
ING Life Policy & Savings A/c	85,176
Zurich Superannuation Policy	12,301
Postbanken A/c	21
DNBNOR A/c	399
ANZ Access Advantage Chq A/c	20
[Her motor vehicle]	11,850
Household Contents	15,000
Credit in solicitor’s Trust Account	12,000

$1,691,227

63 [Ms V] will then have to pay to [Mr U] the sum of $177,054. [Ms V] has a

savings account and an ING Life Policy & Savings A/c with sums in them exceeding the amount she would require to pay out [Mr U]. Her other alternative would be to raise a mortgage for that sum over the former matrimonial home.

64 In my view, a distribution of the assets in this manner would be just and equitable in all the circumstances.

I certify that the preceding [64] paragraphs are a true copy of the reasons for

judgment delivered by this Honourable Court

Associate