VAK & AK
[2005] FamCA 803
•12 August 2005
[2005] FamCA 803
FAMILY LAW ACT 1975
IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA
AT MELBOURNE
Appeal No. SA 1 of 2004
File No. MLF 4274 of 2002
IN THE MATTER OF:
VAK
Appellant Wife
- and -
AK
Respondent Husband
REASONS FOR JUDGEMENT OF THE FULL COURT
CORAM: Bryant CJ, Rowlands and May JJ
DATE OF HEARING: 18 October 2004
DATE OF JUDGEMENT: 12 August 2005
APPEARANCES: Mr St John of Senior Counsel with Mr Strum instructed by Lander & Rogers appeared on behalf of the Appellant Wife.
Mr Brown of Senior Counsel with Mr Melilli of counsel instructed by Testart Robinson appeared on behalf of the Respondent Husband.
1. Introduction
This is an appeal by the wife from orders made by Watt J on 18 December 2003 determining competing applications for property settlement.
The essence of the appeal concerns the decision by the trial Judge that the wife’s contributions to the asset pool fell within a range of 10 per cent between 75 per cent and 85 per cent and the approach taken by the trial Judge in assessing contribution and matters relevant to s 75(2).
The trial took place in Melbourne on two days in December 2003. The parties entered into consent parenting orders on the first day of trial, a child support agreement on the second day and partial consent orders for the division of property also on the second day of trial.
The partial consent orders specified the husband was to retain the property known as ‘the M property’ valued at $462,500 and his superannuation valued at $163,050, and the wife was to retain the property known as ‘the E property’ valued at $1,125,000. At the time of trial, it was agreed that the parties’ net asset worth amounted to $3,162,778.
The issue at trial was whether any payment should be made by either party to the other to achieve a just and equitable outcome.
At trial the wife sought 83 per cent of the value of the total property pool, submitting that this reflected the percentage of direct financial contribution made by her parents to the property pool. The husband sought 30 to 35 per cent based on his contributions.
Watt J found that the wife’s contributions to the asset pool were in the range of 75 per cent to 85 per cent and that the appropriate order was to allocate 75 per cent to the wife as anything more would not be a just and equitable result.
The orders made on 18 December 2003 included the parties’ partial consent orders and further orders that the wife pay the husband the sum of $275,000 and that the husband be responsible for all liabilities.
On 21 June 2004, the wife filed a Second Amended Notice of Appeal (SA1 of 2004) against all of the orders made by Watt J on 18 December 2003. In that document the wife seeks that the orders be set aside and that the husband repay her $275,000 within 30 days, plus interest. We note that on 7 October 2004 in the appellant’s Summary of Argument, the orders sought by the wife included an additional payment of $75,000 from the husband. At the appeal before us, a different figure of $70,000 was proposed.
2. Background
10. His Honour’s findings in relation to the facts were not controversial and a summary of the relevant facts are as follows.
11. The wife and husband were born in 1956 and 47 years at the time of trial. They married in 1984 and separated in 2001, a marriage of almost 17 years.
12. There are three children of the marriage. At the time of trial the eldest child aged 17 was living with the husband and the two younger children aged 14 and 11 with the wife.
13. During their marriage, the wife was the primary child carer and homemaker while the husband was the primary income earner. The wife has no formal qualifications and has not worked outside the home to any significant extent since the birth of the parties’ first child in 1986. She has a limited capacity to earn income other than from her current investments.
14. The husband has a science degree and a substantial employment history, commencing in the chemicals industry in 1980. He is currently working as a business manager. At the time of trial, the husband’s superannuation was valued at $163,050.
15. The wife’s mother died in 1994 and her father died in 1997. Each left substantial assets to the wife by way of inheritance. While alive, the wife’s parents also provided benefits to the parties and their children by way of education trusts, several overseas trips, advancements of money, purchasing household items, and funding the purchase and improvements of the parties’ home.
16. Prior to their marriage, the husband held a modest equity in a property. The husband sold this property in 1988 and the net proceeds, estimated at $30,000, were used for the benefit of the family.
17. The parties first lived together in a flat belonging to the wife’s mother before purchasing their first home (the M property) in 1985 which was funded from joint savings, a mortgage and approximately $40,000 from the wife’s parents. Renovations of this property were organised and supervised by the husband using available funds, including those given by the wife’s parents.
18. In 1990 further renovations to the M property were undertaken, with the husband again participating through organisation and supervision, and the wife’s parents advancing another $40,000. The mortgage at the time of separation was $95,000.
19. In 1994 the wife’s mother died. The wife received jewellery and a parcel of shares in ‘JHI’ which has been entirely preserved and is included in the current asset pool.
20. In 1997 the wife’s father died, leaving his estate to be divided equally between his two children; the wife and her brother. The benefits of the estate were received in 2000, a year before separation.
21. In 2000 the E property was acquired for the sum of $850,000 which was met entirely from the proceeds received by the wife from her father’s estate.
3. The judgment of the trial Judge
22. At the outset of his reasons the trial Judge observed that the primary difficulty for the parties in resolving the division of their ‘substantial asset pool was caused by the fact that a very significant proportion of the assets was clearly traceable to the generosity, both during their lifetimes and by will, of the wife’s parents’.
23. The trial Judge noted the competing applications for property settlement. The wife asked that she be allocated all assets contributed directly or indirectly through her parents, so that the husband would receive about 17 per cent; whereas the husband sought 30 to 35 per cent of the whole property pool.
24. The assets of the parties appear in the schedule below reproduced from the judgment:
SCHEDULE – ASSET POOL
* = Assets that husband conceded he made no direct financial contribution to their acquisition
The M property $462,500
*The E property $1.125 million
*Wife’s car $31,500
*Investment or share parcel$180,000
*Securities $1.125 million
Boat $5,000
*Remnants of wife’s father’s estate $163,000
Bank account $2,305
Bank Account $15,423
Husband’s superannuation $163,050
TOTAL ASSET POOL $3,272,778
LESS LIABILITIES AT SEPARATION $110,000
NET ASSET POOL $3,162,778
*TOTAL ASSETS TO WHICH HUSBAND CONCEDED
HE MADE NO DIRECT FINANCIAL CONTRIBUTION $2,624,500
25. The liability of $110,000 represented a figure based on submissions by the husband’s counsel it being said to represent the mortgage balance, at the date of separation, on the M property together with some other liabilities relating to family expenditure. The trial Judge determined that ‘the balance of the husband’s total liabilities of $275,000 should be taken into account as part of his financial position and indeed given significant weight’.
26. The judge found that the assets valued at $2,624,500 to which the husband had made no financial contribution represents almost 83 per cent of the total property pool. There was no challenge to his Honour’s findings in that respect.
27. The trial Judge set out a brief history of the parties’ relationship and their acquisition of assets. In his consideration of contributions made by the husband, his Honour referred to the ‘significant participation’ of the husband in both the 1985 refurbishment and 1990 renovations of the M property. He particularly noted the indirect contribution made by the husband to the preservation of the wife’s investments through his continuing provision for the family in the form of ‘income from personal exertion’.
28. His Honour drew attention to the contributions of the wife through her role as the primary homemaker and parent during the marriage, particularly as they enabled the husband to pursue his successful career which at times required him to travel interstate and overseas. He also noted that the wife made contributions ‘from funds received from her parents and by the wife’s parents directly’. The judge decided however, that the gifts from the wife’s parents while they were alive were made to benefit the whole family, and were ‘not gifts to the wife that the wife then applied for the benefit of the family’.
29. The trial Judge determined that the wife’s contributions to the asset pool were in the range of 75 per cent to 85 per cent rather than a fixed percentage amount. The following passage expresses his Honour’s reason for this:
57.Having regard to the fact that the very large proportion of the parties' joint and separate present wealth is clearly attributable to assets derived from the wife’s parents in the manner I have described, I would assess the parties' contributions in the case of the wife between 75 and 85 per cent of the total pool of 3.1 million. I consider it is not a case where one can speak with more precision about the contributions because there are, as [counsel for the husband] pointed out, statements by the Full Court that suggest that one cannot just look at one class of contributions in isolation and give them very considerable weight without looking at the marriage as a whole. I consider, however, that any assessment of contribution that attributed less than 75 per cent to the wife would be inadequate and I consider also that any assessment that attributed more than 85 per cent (and therefore less than 15% to the husband) would be excessive.
30. The Judge then dealt with relevant s 75(2) factors. His Honour identified the wife’s ongoing care of the two younger children, her good health, her lack of superannuation, her inability to increase her income through ‘personal exertion’, her financial security gained from current investments and modest credit card liabilities.
31. His Honour then considered the relevant factors relating to the husband, being his significant liabilities, his gross income of approximately $127,000 per annum, a superannuation entitlement valued at approximately $163,000 at the date of hearing but which will continue to grow, and the opportunity to increase his capital base through his earning capacity.
32. Turning his mind to the effect of the range, his Honour expressed concern that at the conclusion of a 17 year marriage, a ‘very significant disparity’ would exist between the parties’ financial positions if the husband, considering his level of indebtedness, were to retain his superannuation and the M property (with a gross value of $625,5000), and the wife retained the E property (valued at $1.125 million) plus her car, the shares parcel, securities and remnants of her father’s estate, as identified in the above schedule, totalling $2,624,500.
33. His Honour concluded that an order for 75 per cent to the wife and 25 per cent to the husband would allow the wife to enjoy a reasonable lifestyle in the circumstances and properly give effect to an allowance for the husband under s 75(2) factors. The following passage details his Honour’s approach:
64.I have indicated that I consider an apportionment of 75:25 in favour of the wife is appropriate having regard to the contribution and section 75(2) factors. It is now necessary to consider the effects of this order on the wife's earning capacity because she is dependent on income from her investments for her support. This is the Aleksovski step, looking at the effect of the orders and where it will leave the parties. The wife's position will be that the total amount that will have to change hands in order to discharge the joint liabilities at separation that I have identified and accepted at $110,000 and pay the husband a sum that equates to 25 per cent of the total asset pool, is $275,000. The assets other than the [E] house are in the form of investments - the shares at $180,000, the investment portfolio of $1.125 million plus $163,000, the remnants of the estate, they total $1.4 million. Those are the identifiable sources from which the payment of $275,000 will have to come and that will leave the wife with investments in the amount of $1.193 million. That is not counting her home, her chattels, her jewellery or any other item.
65.… Having regard to the facts that the wife has totally unencumbered accommodation at a reasonably high level, has a house full of furniture, her need for transport met by what appears to be an adequate motor vehicle, it is reasonable to assume that the balance of the funds that she will retain can be applied to the production of income and can of course be dipped into for capital purposes if she so decides.
66.…having regard to the child support that the husband is to pay pursuant to that child support agreement, I consider that her household income situation as a result of the asset transfer that I propose to order will not be left at a level that deprives her of a lifestyle that is reasonable in all the circumstances.
34. His Honour proceeded to allocate the total property so as to reflect the 75:25 contribution assessment and the partial consent orders made by the parties. The precise wording of the orders made by Watt J on 18 December 2003 are as follows:
1.Within 30 days the wife:
(a) pay to the husband the sum of $275,000;
(b) do all things and sign all documents as may be required to transfer to the husband at the husband’s expense all of her right, title and interest in the property at [the M property] and thereafter the husband be responsible for and indemnify the wife in relation to all rates, taxes and other outgoings in respect of the property and all and any liability in respect of any encumbrances affecting the property including any and all liability to [the CC Co-operative].
2.Contemporaneously with the said payment and transfer the husband:
(a) do all things and sign all documents as may be required to transfer to the wife at the expense of the wife all of his right, title and interest in the real property at [the E property] and thereafter the wife be responsible for and indemnify the husband in relation to all rates, taxes and other outgoings in respect of the said property;
(b) procure in favour of the wife a full release of the wife from [the CC Co-operative] in respect of any liability of the wife in respect of any borrowings from [the CC Co-operative] by the husband and the wife or the husband alone.
3. Subject to the order for partial property settlement made by consent on 4 December 2003 and except as otherwise provided in these orders each party is declared to have no further interest in the items of property (including superannuation) in the possession or name of the other.
4. The parties’ application are otherwise dismissed and the matter removed from the list of matters awaiting determination.
4. The grounds of appeal
35. The Second Amended Notice of Appeal contains ten separate grounds with many sub-grounds. As summarised in Ground 1, the grounds generally relate to the trial Judge:
a. erring in the exercise of his discretion;
b. acting upon wrong principles;
c. allowing extraneous and/or irrelevant matters to guide and/or affect him;
d. making errors of fact;
e. failing to take into account material considerations;
f. making orders that are unreasonable and plainly unjust; and
g. failing to give sufficient reasons.
36. Ground 2 criticises the finding that the contributions made by the wife’s parents while they were still alive were not considered as indirect or direct contributions by the wife.
37. Ground 3 criticises the determination that the wife’s contributions fell within a percentage range of 10 percent without fixing a precise percentage and that the trial Judge should have assessed the wife’s contributions at either 83 or 85 per cent.
38. Grounds 4 and 5 challenge the findings about relevant s 75(2) factors including treatment of the mortgage over the former matrimonial home and the weight apportioned to particular factors.
39. Grounds 6 to 10 criticise the overall assessment of contributions made by the trial Judge and apportionment of the wife’s contributions and s 75(2) factors together with a failure to give sufficient reasons.
40. Counsel for the wife submitted that the fundamental error was the approach taken by the trial Judge to the contribution assessment and adjustment exercise pursuant to s 79(4), which resulted in unreasonable and unjust orders being made.
41. We find it appropriate and convenient to address the grounds of appeal under two broad areas, namely, the approach of the trial Judge in arriving at a 10 per cent range and the assessment of the wife’s contributions.
5. Appellate principles
42. It is appropriate at this stage to identify the principles governing an appeal such as this from a discretionary judgment. The law in this respect is not in doubt.
43. In Australian Coal and Shale Employees Federation v The Commonwealth (1953) 94 CLR 621 at 627, Kitto J describes the appropriate level of restraint that an appellate court should exercise in respect of discretionary matters as follows:
There is a strong presumption in favour of the correctness of the decision appealed from and that that decision should therefore be affirmed unless the Court of Appeal is satisfied that it is clearly wrong.
44. It was clearly enunciated in House v The King (1936) 55 CLR 499, at 504-505 that:
It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.
45. In Gronow v Gronow (1979) 144 CLR 513 Stephen J said at 519:
The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion.
46. Thus, as a matter of firmly established appellate process it is necessary first to establish whether there is any recognised ground for reviewing Watt J’s discretionary decision consistent with these principles. If there is then, unless the result is plainly right notwithstanding an appellable error, per Gibbs J (as he then was) in De Winter v De Winter (1979) FLC 90-605 at 78,091, we are obliged to allow the appeal, set the orders aside and, if possible, substitute our own decision after considering the matter afresh, as was explained by Kirby J in AMS v AIF (1999) FLC 92-852, who said at 86-043:
[A]n appellate court, invited to review the exercise of discretion at first instance will avoid an overly critical, or pernickety, analysis of the primary judge’s reasons, given the large element of judgment, discretion and intuition which is involved. Only if a material error of the kind warranting disturbance of a discretionary decision is established is the appellate court authorised to set aside the primary decision, to substitute its own exercise of discretion or to require that it be re-exercised on a retrial.
47. The original decision and orders will stand unless they are manifestly wrong or unjust even though no obvious legal or factual error can be identified. In Mallett v Mallett (1984) FLC 91-507 at 79,111 the Full Court said:
It is necessary for the Court, in each case, after having had regard to the matters which the Act requires it to consider, to do what is just and equitable in all the circumstances of the particular case.
Disagreement only on matters of weight or a preference for a different result do not usually justify the reversal of a first instance discretionary judgment.
48. In the case of discretionary decisions, it is only where the effect of the orders exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere, per Brennan J in Norbis v Norbis (1986) FLC 91-712 at 75,178.
49. As some of the grounds of appeal attack the adequacy of his Honour’s reasons, it is appropriate that we refer to the following passage from the decision of the Full Court in Bennett and Bennett (1991) FLC 92-191 at 78,266-267:
Counsel for the wife urged that there was a failure by her Honour to give adequate reasons for judgment, and that this, of itself, amounted to an error of law. In this regard he relied upon the line of New South Wales Court of Appeal decisions commencing with Pettitt v Dunkley (1971) 1 NSWLR 376, and including Housing Commission of NSW v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378, and Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247. In the latter case, McHugh JA said that without the articulation of reasons, a judicial decision could not be distinguished from an arbitrary decision. His Honour took the view that the requirement for reasons serves at least three purposes, namely, to enable the parties to see which of their arguments had been understood and accepted as forming the basis of a Judge's decision; secondly, to further judicial accountability; and thirdly, to enable interested persons to ascertain the basis upon which like cases will probably be decided in the future.
In Public Service Board of NSW v Osmond (1985-1986) 159 CLR 656, Gibbs CJ gave qualified support to the principles established by Pettitt v Dunkley. In Palmer & Ors v Clarke & Ors (1989) 19 NSWLR 158, the New South Wales Court of Appeal, consisting of Kirby P, Samuels and Priestley JJA, again held that a failure to give adequate reasons was an appellable error of law which, of itself, was sufficient to require a judgment to be set aside.”
6. The finding of a contribution range under s 79(4)
50. It was uncontested that the wife’s parents had contributed funds to create the bulk of the parties’ asset pool in addition to the contributions made by the parents to various other expenses of the family.
51. However, his Honour assessed the wife’s contributions as being between 75 and 85 per cent of the total pool. By way of explaining this decision, his Honour said:
57. … that any assessment of contribution that attributed less than 75
per cent to the wife would be inadequate and … more than 85 per cent
(and therefore less than 15% to the husband) would be excessive.
52. Counsel for the husband submitted that the trial Judge applied unusual reasoning in arriving at a range, but that it did not amount to an error of law as it fell within his Honour’s ‘generous ambit’ of discretion, as outlined in Norbis v Norbis (supra) at 75,178. Counsel for the husband urged the Court to avoid engaging in the search for perfection, as a precise percentage could not be readily identified.
53. Conversely, counsel for the wife submitted his Honour’s reasons for finding a percentage range were not legitimate because the Court bore a duty to evaluate contributions, as held in Mallett v Mallett (supra) at 79,120:
The requirement that the Court “shall take into account” these factors [79(4)(a) to (e)] imposes a duty on the Court to evaluate them. Thus, the Court must in a given case evaluate the respective contributions of husband and wife under para. (a) and (b) of subsec. (4), difficult though that may be in some cases.
54. Further, Counsel for the wife submitted that a finding of a fixed percentage contribution could, and should, have been made based on the detailed and conceded evidence of direct financial contribution of the wife’s parents to the presently existing assets (and indirect contributions of the wife as parent and homemaker). While recognising that it is not a scientific approach, the task of assessing the respective contributions of the husband and wife does fall to the trial Judge.
55. Counsel also drew our attention to the implications of a range spanning 10 per cent in light of the size of the pool in this case. With a property pool exceeding $3 million, each percentage point has a financial consequence of $30,000. Therefore, where such an approach is taken it would be necessary for the trial Judge to provide sufficient reasoning that no fixed percentage is required. We recognise that there may be cases where this is acceptable. Such a case was Figgins v Figgins (2002) FLC 93-122, which involved a relatively short marriage, a huge disparity of assets resulting from assets inherited early in the marriage, and an application for a specific amount, rather than apportionment.
56. This Court is mindful that it should ‘avoid an overly critical, or pernickety, analysis of the primary judge’s reasons’ as per AMS v AIF (supra). We refer to the schedule of assets produced by Watt J (above) and note the ability of his Honour to identify those assets and the impact of them on the overall asset worth which the wife’s parents contributed.
57. We are of the opinion that a trial Judge should generally determine the contribution by each party as a percentage. This duty is compatible with that stated in Mallett v Mallett (supra). An ability on the part of the trial Judge to arrive at a percentage contribution to the property pool by each party was present in this case in view of the clearly established facts. We are of the opinion that his Honour has erred in his approach and that in this case there is an error of principle.
58. Counsel for the wife also argued that to find contributions within a range of 10 per cent was an error of the trial Judge as it deviated from the ‘three step’ process as identified in Ferraro v Ferraro (1993) FLC 92-335, Clauson v Clauson (1995) FLC 92-595, and Aleksovski v Aleksovski (1996) FLC 92-705.
59. At the outset of his judgment, his Honour correctly noted the law to be applied in property settlement proceedings was that stated in ss 79(1), (2), (4) and 75(2) and the ‘three step’ process per Ferraro v Ferraro (supra) and Clauson v Clauson (supra). In relation to the proposition by the husband that the apportionment sought by the wife would not produce a just and equitable outcome, his Honour also considered Aleksovski v Aleksovski (supra) which hinted a fourth step (which is now an accepted principle: Hickey v Hickey (2003) FLC 93-143) of looking at the effect of the orders to see whether they would produce a just and equitable outcome.
60. Counsel for the wife argued a further fundamental difficulty in the allocation of a contribution range, is in discerning whether the trial Judge notionally regarded the wife’s contributions at 75 per cent and made no adjustment for s 75(2) factors for the husband, or whether his Honour notionally regarded the wife’s contributions at 85 per cent and made an adjustment of 10 per cent in the husband’s favour for s 75(2) factors.
61. Counsel also contended his Honour could be said to have ‘plucked a figure out of the air’, an error which the House of Lords in White v White [2001] 1 All ER 1 and the Full Court of the Family Court in Figgins v Figgins (supra) at 89,803 warn against, namely:
[I]t is a major error to approach these cases upon the basis that one arrives at a figure that is thought to satisfy the needs of the wife and give the balance to the husband.
A reading of the judgment, at least gives the impression of a ‘needs’ approach.
62. His Honour considered Collins v Collins (1990) FLC 92-149, and Figgins v Figgins (supra), of which the trial Judge said provided
a clear answer to the proposition that the relative positions of the parties at the end of the marriage (and, at the time of trial), recent inheritances included, call for consideration under section 75(2), and may lead to an adjustment being made to the contribution based assessment.
63. It would seem that his Honour did consider whether he was able to readily identify direct and indirect contributions, as he said that this case is not one
where one can speak with more precision about the contributions because [there are … statements by the Full Court that suggest that]… one cannot just look at one class of contributions in isolation and give them very considerable weight without looking at the marriage as a whole.
64. However, by considering the just and equitable outcome of possible orders before determining with precision the s 79(4) contributions, the approach of the trial Judge was not in keeping with the ‘three step’ (or four step) process. Counsel for the wife asserted that his Honour’s findings set a novel and dangerous precedent, and we are of the same view.
65. Thus we consider there to be an error of law in the trial Judge’s approach to the determination of contributions under s 79(4).
66. We do of course accept that there does remain open to a trial Judge the opportunity, under the Act, not to adopt the step process in the generally accepted manner. While an alternate process has dangers and normally is avoided it exists subject to there being reasons provided for such a departure.
67. However, in this case the trial Judge only partly adopted the preferred structure and should have made percentage or proportion findings in relation to contributions before moving on to the final two steps of the process (see Davut & Raif [1994] FLC 92-503 at 81,237 and Whitely [1996] FLC 92-684 at 83,104). No reasons were advanced by his Honour as to why this case did not enable him to make a more precise determination on contribution having regard to s 79(4) (a), (b) and (c). Although his Honour observed that ‘one cannot just look at one class of contributions in isolation and give them very considerable weight without looking at the marriage as a whole’, that is in fact a task commonly faced by a trial judge and we can see nothing in this case, without further explanation, that would put it into a different category.
7. Substance of the contributions and s 75(2) considerations
68. Two issues of significance can be identified here. Firstly, the substance of the parties’ financial and non-financial contributions to the property pool pursuant to s 79(4), and secondly, the adjustment if any, in light of s 75(2) considerations.
69. In relation to the first issue, counsel for the wife asserted it was unclear why the trial Judge did not construe the contributions by the wife’s parents as contributions by the wife. A primary contention both at trial and on appeal was that the inter vivos gifts and inheritances from the wife’s late parents, to the acquisition, conservation and improvement of property were financial contributions made by and on behalf of the wife.
70. Counsel relied upon the test within Kessey v Kessey (1994) FLC 92-495 at 81,150 per Fogarty J; that
a contribution by a parent of a party to a marriage to the property of the marriage will be taken to be a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child.
71. His Honour found that the financial benefits from the wife’s parents while they were alive,
25. … were provided for the whole family… not gifts to the wife that the wife then applied for the benefit of the family.
This seems to be based on the evidence of a good relationship between the husband and his father-in-law, the husband’s support of the wife during the parents’ illnesses and the way the wife described the benefits.
72. His Honour continues:
25. …Her [the wife’s] own description of the receipt of these benefits is that they were benefits for the family, and indeed they were: see, for example paragraph 14 of the wife’s affidavit sworn 30 September 2003 where the wife states: “Throughout the marriage my parents were particularly generous towards the Husband and I. They advanced us moneys, purchased items for our home, assisted the children in their education costs and paid for overseas holidays.”
73. It was submitted to us by counsel for the wife, and we agree, that there was no evidence adduced by the husband which identifies that the gifts were for the benefit of the whole family. It was the wife’s case at trial that she be given credit for all payments made by her parents. The husband did not, in his practice direction documents, nor in his evidence by affidavit or orally, or through his counsel in opening, assert the inter vivos contributions of the wife’s parents were intended or should be regarded as a family benefit and/or were payments for which the wife alone should not be given credit when determining contribution. Such a suggestion was not put to the wife during cross-examination, or during final submissions. Neither did the trial Judge give notice that such a finding was open to him on the evidence or was otherwise being considered by him. In the circumstances, the finding constitutes a mistake of law and fact.
74. It was conceded by the parties that approximately 83 per cent of the presently existing assets emanated from gifts and inheritances from the wife’s parents and had not been financially contributed to by the husband. We refer to the above schedule of the parties’ assets.
75. Counsel for the wife submitted that without sufficient reasons for his Honour’s finding of a range, the contribution of the wife could not be regarded as being as little as 75 per cent as it erroneously disregards the conceded financial contribution by the wife’s parents. It was submitted, correctly we think, that even if the wife’s contributions are taken as being 85 per cent, the trial Judge failed to give proper recognition and weight to the wife’s direct and indirect contributions to the totality of the asset pool and as home-maker and parent (including the assets acquired other than from the wife’s parents’ funds).
76. It was submitted that whilst finding the wife’s contribution as home maker and parent ‘very significant’, the effect of the failure of the trial Judge to assess the totality of the wife’s contributions was to effectively consign the contribution of the wife throughout the marriage as only being one of recipient of funds from her family. As a final percentage figure should take into account contributions from both parties we agree that this submission must be correct. For example, it appears the contribution of the parties to the M property should have been assessed as equal.
77. His Honour gave insufficient weight to the wife’s contributions, and has undervalued those contributions.
78. It is submitted to us, and we think correctly, that the assessment of contributions of the wife is essentially flawed, particularly in relation to her contribution as a home-maker and parent and to the other assets not marked as solely emanating from the wife’s parents funds.
79. The weight to be given to disparate contributions is well documented in Mallet v Mallet (supra) and Ferrero and Ferraro (supra). In Ferraro the Full Court at 79,572 noted the difficulty in comparing parties’ respective contributions, albeit not having regard to, as in this case, significant external injection of funds, as we recently said in MVB and SDB [2005] FamCA 389:
The task of evaluating and comparing the parties’ respective contributions where one party has exclusively been the breadwinner and the other exclusively the homemaker, is a most difficult one to perform because the evaluation and comparison cannot be conducted on a “level playing field”. Firstly, it involves making a crucial comparison between fundamentally different activities, and a comparison between contributions to property and contributions to the welfare of the family. Secondly, whilst a breadwinner contribution can be objectively assessed by reference to such things as that party’s employment record, income and the value of the assets acquired, an assessment of the quality of a homemaker contribution to the family is vulnerable to subjective value judgments as to what constitutes a competent homemaker and parent and can not be readily equated to the value of assets acquired. This leads to a tendency to undervalue the homemaker role.
80. Turning now to the s 75(2) issue. It is submitted on behalf of the wife that the trial Judge gave excessive weight to the disparity in the parties’ assets, and insufficient weight to other relevant s 75(2) factors. The trial Judge found the wife has the ongoing care of the younger two children, no significant present or prospective capacity for employment, no superannuation, and no capacity to increase her assets beyond this point other than by the careful management of what she currently has. In contrast, the husband has the short-term care of the eldest child (who is due to cease school in 2005 or 2006), a senior management position with an earning capacity of approximately $127,000 (gross) per year, a growing superannuation fund, and the capacity from his earnings to add to his capital. It is submitted that a nil adjustment in the husband’s favour in respect of these factors would be appropriate. Although this submission has substance it is not necessary or appropriate to make any further comment as we have determined that the appeal should be allowed and that a re-hearing is necessary.
81. No doubt, there will be some substantial changes in the parties’ circumstances since the trial. We note that on appeal before us, the wife expressed concern that the husband would soon be ceasing his employment which would alter the course of a retrial. We consequently ordered the husband to file an affidavit (within 14 days of the conclusion of the appeal) in relation to any changes in his employment and the effect of these changes, if any. The husband complied, filing an affidavit on 21 October 2004 and a further affidavit on 9 November 2004. The husband asserts that if he was able to obtain alternative employment “it would be in the same industry possibly with a competitor of my present organisation and hopefully on similar terms and conditions which I now enjoy”. Further, he is presently entitled to a pro-rata long service leave allowance of up to three months if he were to resign prior to July 2005.
8. Conclusion
82. We conclude that there has been an error of law in the approach of the trial Judge and an error in the assessment of contributions and of the s 75(2) factors. The appeal is to be allowed and the matter must be remitted for rehearing.
83. In the Notice of Appeal it is asked that the husband repay the sum ordered to be paid by the wife. An application for a stay of that order was refused on 27 February 2004. As we have concluded that there must be a rehearing no order will be made in respect of that payment. No doubt it will be taken into account at the rehearing of the matter together, if necessary with an interest component.
9. Costs
84. Counsel for the husband indicated that at the conclusion of this appeal it was intended that submissions relating to the costs of the appeal would be made in writing. Counsel for the wife requested a costs certificate.
85. In the circumstances a certificate should be granted to both parties for both the costs of the appeal and rehearing.
10. Orders
86. The orders will be that:
1.The appeal be allowed.
2.Paragraph 1(a) of the orders of Watt J made on 18 December 2003 be set aside.
3.The wife’s application seeking orders for the settlement of property be remitted for rehearing before a judge of the Melbourne Registry.
4.The Court grants to the appellant wife a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney General to authorise a payment under that Act to the appellant wife in respect of the costs incurred by the appellant wife in relation to the appeal.
5.The Court grants to the respondent husband a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney General to authorise a payment under that Act to the respondent husband in respect of the costs incurred by the respondent husband in relation to the appeal.
6.The Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney General to authorise a payment under that Act to each of the parties in respect of the costs incurred by them in relation to the new trial ordered.
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