Verley & Verley (No 2) - [2008] FamCA 326

FAMILY COURT OF AUSTRALIA

VERLEY & VERLEY (NO. 2)

[2008] FamCA 326

FAMILY LAW – PROPERTY SETTLEMENT

Family Law Act 1975 (Cth)

Bonnici and Bonnici (1992) FLC 92-272, 15 Fam LR 138
Hickey and Hickey and the Attorney-General for the Commonwealth of Australia (2003) FLC 93-143
James and James (1978) FLC 90-487
Pierce and Pierce (1999) FLC 92-844, 24 Fam LR 377

APPLICANT:

Mrs Verley

RESPONDENT:

Mr Verley

FILE NUMBER:

MLF

2366

2006

DATE DELIVERED:

13 May 2008

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

THE HONOURABLE JUSTICE CRONIN

HEARING DATE:

14, 15 16 April; 2 May 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT:

MR DICKSON

SOLICITOR FOR THE APPLICANT:

LANDER & ROGERS

SOLICITOR FOR THE RESPONDENT:

J A MIDDLEMIS

Orders

That by 4.00pm on 27 June 2008 (“the due date”), the husband pay to the wife the sum of $788,000 (“the payment”).
That contemporaneously with the payment on or before the due date:
(a)the husband refinance the Westpac housing loan (“the housing mortgage”) to discharge any liability of the wife therein and provide to the wife evidence of having done so; and
(b)the wife provide to the husband (at the expense of the wife) a withdrawal of caveat number ….
That in the event that the whole of the payment has not been made by the due date, then such of the real properties referred to in paragraphs 35 and 38 of the affidavit of the wife filed 4 April 2008 and collectively known as G property, as are necessary to pay the payment due to the wife be forthwith sold and the proceeds of sale be applied:
(a) first, to pay all costs, commissions and expenses of the sale;
(b)secondly, to discharge any encumbrance affecting the said properties;
(c)thirdly, so much of the payment as is then outstanding together with interest at the rate of 11.75 per centum per annum, adjusted monthly from the due date, to the wife; and
(d) fourthly, the balance to the husband.
That pending the payment or completion of the said sale:
(a)the husband have the sole right to occupy the said real properties provided that during such occupation, the husband pay all instalments pursuant to any mortgage affecting the said properties together with all rates and taxes and other outgoings as they fall due;
(b)the husband hold his interest in the real properties upon trust pursuant to these orders; and
(c)neither party encumber the said real properties without the consent in writing of the other.
That the terms and conditions other than as specified in these orders shall be determined by agreement between the parties and failing agreement by a single expert witness jointly appointed by the parties. Should the parties disagree on a nominated single expert witness for that purpose, the provisions of Rule 15.46(b) to (f) shall apply and a registrar nominated by the co-ordinating registrar shall appoint that single expert witness.
That in the event that there are still disputes between the parties as to the:
(a)       terms and conditions of any sale;
(b)       the costs and expenses associated with any such sale;
(c)       the execution of any documents in relation to any sale,
then the parties shall have liberty to apply for orders determining such dispute.
That each party be otherwise solely entitled to the exclusion of the other to all other property in the possession of such party as at the date of these orders.
That the husband retain and the wife relinquish any interest in, any superannuation entitlement in the name of the husband.
That the wife retain and the husband relinquish any interest in, any superannuation entitlement in the name of the wife.
The application of the wife filed 7 August 2006 and the response of the husband filed 31 August 2006 be otherwise dismissed save as to any application for costs by either party.
That any issue as to costs be determined upon written submission to me and any such application for costs:
(a) be filed with my Associate by 4.00pm on 23 May 2008; and
(b) be served upon the other party by that date.
That in the event that an application is made for costs by either party pursuant to the foregoing order, the other party shall have until 4.00pm on 13 June 2008 to reply.
That unless otherwise impracticable, any application for costs pursuant to these orders be determined in chambers.

IT IS NOTED that publication of this judgment under the pseudonym Verley & Verley is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 2366 of 2006

MRS VERLEY

Applicant

And

MR VERLEY

Respondent

REASONS FOR JUDGMENT

This is a property dispute. It is a traditional farming case involving a long marriage with arguments about contribution but also the prospect of the farmer having to leave the land to satisfy the order of the court.
Both the husband and the wife are 57 years of age.
The wife is an office employee in a business conducted by her partner.
The husband has been a farmer not only all of his life but also on the land which is the subject of the dispute. There are two children who are both adults financially independent and living away from home. There is no evidence that those children have a particular desire to continue the farming dynasty.
The parties married in May 1977 and separated under one roof in April 2002. The wife vacated the home in June 2005. On any view therefore, the relationship is one of 25 to 28 years.
The wife is a trained teacher with tertiary qualifications. During the marriage, she pursued further academic qualifications and now holds a Masters Degree. She is living with Mr E, who has a professional practice. That is the business to which I have referred. Her employment is appropriately paid.
The husband has farmed the land all of his life. He now farms that in partnership with his mother and brother.
In this case, the substantial asset is the farm. The dilemma is not only that the farm is the husband’s livelihood but also that he had an interest in it when the marriage began and at or about the conclusion of the marriage, he received a greater interest in it. The husband’s family all owned parcels of land and joined together to farm the whole lot in partnership. Little has changed over many years. None of the surviving partners intervened in the proceedings claiming any orders would affect them. Accordingly, the issue for my determination is the entitlement of the wife. Apart from some superannuation, she has negligible assets.
In determining the issue, some disputes arose about just what was the equity in the pool. That problem arose because of a substantial post-separation increase in partnership liabilities and because there is a water right entitlement, the proportional ownership of which, the husband and the other members of the partnership have and have had, the capacity to determine.
In addition, there were issues about add-backs of legal fees and the sale of shares. The pool therefore is not that simple to assess.
Contribution arguments feature highly because of the farm ownership and inheritance issues.
Because of the wife’s current relationship and her qualifications, the husband raised arguments about adjustments under s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).
There is also no doubt that the husband desires to retain the farm. There was consensus that he should be given the opportunity to do that. What is clear however, is that the husband has no borrowing capacity. That makes a sale of some or all of his interests inevitable.
The only witnesses who gave evidence were the husband and wife.
When the case began, the husband was represented by senior counsel. In a separate judgment I gave, I subsequently refused an application for an adjournment by the husband after the case had started when the husband terminated senior counsel’s instructions. I will not repeat those reasons save to say that it was obvious to everyone that senior counsel had other obligations in another case which meant she could not direct her attention to this case.
The refusal of the adjournment meant that the husband’s solicitor had to continue to conduct the case on the basis that he said, and I accept, he could not engage appropriate counsel. I have no hesitation in saying that Mr Middlemis conducted the case with skill and aplomb. The husband was not disadvantaged.
In another separate judgment, I refused the husband’s application put by senior counsel for an adversarial witness to be called. I shall also not repeat those reasons here. The views of the single expert witness which initially were apparently under some scrutiny came to nothing as he was not required for cross-examination.
The husband also sought to call evidence from his brother about the conduct of the wife very early in the marriage. I refused to allow that evidence to be read. I gave reasons for that decision.
Accordingly, the evidence presented was that from the husband and the wife.
The evidence can best be set out as follows. Where I have made no reference to any disputed fact, the statements are the evidence upon which I have relied and which I accept.
The parties did not live together prior to the marriage. They were granted a divorce in April 2007.
When the parties met in or about 1977, the wife was engaged as a school teacher on a full-time basis. She said she had a modest vehicle and about $2500 in savings and she was living in rental accommodation in Melbourne.
The wife said that at that particular time, the husband was working on the family farm with his parents and his brother. She said the husband had nominal savings but he did have a number of allotments of land which he had acquired between 1971 and 1973. Importantly, the husband agreed but said that the land was unencumbered. The wife said that there was debt encumbering the properties but she was unable to say what the debt was. What was clear from the evidence however was that the certificates of titles said, and the husband agreed, mortgages were registered to a bank.
During the first year after marriage, the wife remained working in Melbourne but then moved to a residence on the farm.
The wife asserted that the husband’s parents transferred land to the husband after the marriage as a result of the brother making an ultimatum that if he did not get land upon which he could build a home, he would leave. That land was in fact transferred into the name of the brother and his wife. No similar transfer seems to have occurred as between the husband and the wife.
When the wife moved to the farm, she obtained work as a teacher whilst the husband farmed the land.
The farming operations were conducted in a partnership between the husband, his brother and his parents. Upon the death of the husband’s father in 2004, the husband’s one-quarter share was increased to one-third. Regardless of who owned what land, all members of the partnership farmed the land collectively.
Initially, the husband drew a monthly wage and the wife asserted that it was $300 per month. The wife said that her salary from teaching as well as redundancy payments she ultimately received, sustained the family in a financial sense. Whilst that evidence was challenged by the production by the husband of some figures showing what monies he put into the household, I accept that the wife’s income was a significant part of the family household budget certainly for the majority of the marriage until 1992.
The first child was born in May 1981 and the wife took 18 months maternity leave. She continued to work thereafter until the second child was born and again in 1984, took 18 months maternity leave. Upon return to work, she remained in the teaching profession until approximately 1992 when she took a voluntary departure package of $30,000 in superannuation and $32,000 in accrued leave and other benefits and entitlements. This money was used by the parties over the ensuing years when the wife was not in paid employment. Accordingly, it is clear on the evidence that although the wife’s regular income stopped in 1992, she made a significant financial contribution over the ensuing years thereafter by the lump sums to which I have just referred.
In 1996, the wife obtained part-time employment and earned a modest income. That continued for two years as well until she received a modest redundancy package. All of these funds I find have been used for the purposes of the family. Whilst the husband may not have given the wife credit and I shall return to that subject below, I find that there is no evidence to suggest that the money went on any other purpose than for the benefit of the family.
In her role as the main carer of the children, the wife asserted that the husband worked long days and that was not a subject about which there was much contention. The wife referred to the fact that her days included a 50 kilometre drive to drop the children at day-care or crèche prior to her commencing teaching work and repeated that at the end of the day. The husband gave the wife credit for being the primary carer of the children during much of the period of time that the parties were together because of his “extensive work commitments”. He said however that he was very involved as parent and would often arrive late for work on the basis that he was spending time with the children. He maintained that he was heavily involved in housework. He gave examples of doing washing, chopping wood and modest cooking skills. That evidence was not seriously challenged by the wife but on any view, having regard to the wife’s employment to which I have referred and the husband’s acknowledgement of her as the primary carer of the children, I am quite satisfied that the wife made a significant contribution in both the financial and non-financial senses.
One contentious issue was that the wife asserted that she carried out work on the farm when time permitted. She gave examples of that but when cross-examined, acknowledged that they were modest if not occasional.
In about 1984 the parties built a home on the property on land which is still in the pool of assets today but which was acquired by the husband prior to the commencement of the relationship. The wife described the building and said that much of its construction including the making of mud bricks was carried out by the parties themselves and friends. The husband acknowledged those contributions. The funding of the home came by way of borrowings from the Bank of New South Wales (as it then was) of $86,000. It seems that the mortgage was in the joint names of the partners but did not include the wife. The wife said that she contributed her savings of approximately $3000 and her parents gave the parties the sum of $5000. That evidence was not challenged. Although not in his affidavit of evidence in chief, the husband was permitted to lead evidence that he had done some homework subsequent to the filing of his trial affidavit only six days prior to the commencement of the hearing and had remembered that his family put in $24,600. Whilst the wife may have viewed that late offering in a cynical way, that particular piece of evidence was not really challenged. Importantly, for the purposes of my decision, having regard to the size of the pool and the blending of the various contributions, it makes little difference.
Importantly, the mortgage which had been in the names of the partners was refinanced with Westpac Bank in 1987 and this time, the wife was noted as a debtor.
The husband was unable to really give any evidence to convince me as to what happened between 1984 and 1987 to reduce the initial construction loan. Without some corroboration, I do not accept the husband’s assertion that the debt was paid off prior to the refinancing in 1987.
During the period between the time that the parties separated under one roof and the wife’s departure from the home, the husband’s father died. He left the husband a number of parcels of land which had been used by the partners and hence the husband and wife throughout the marriage. In addition, the husband’s mother received a life interest from her husband which in due course upon her death, will be divided between the husband and his brother.
The question of what was in the pool for division was a matter of some controversy but when I turn to the pool, it will be seen that the parties had between themselves, worked out what land was the subject of the transfer and valuation had been undertaken. The question of the land itself was therefore not in dispute but rather what I should do about it.
As a consequence of the husband’s father’s death, the husband became a one-third interest holder in the partnership. The partnership apparently owned substantial plant and equipment as well as livestock and, the parties reached agreement as to the valuation of that one-third interest.
When the wife moved out in 2005, she soon thereafter, began a relationship with her current partner. In 2006, she and the partner acquired the property at V Street in the same rural town from which her partner now conducts his practice. At that time, the wife sought litigation funding from a company called Impact Capital Limited. Rather than spend those funds on the litigation, she used the borrowed money as a deposit on the purchase of the home in V Street. The purchase price was $360,000. The balance of the money over and above the deposit was borrowed from the National Australia Bank. This evidence was not challenged. I accept that there is no equity in the V Street property and although I have included that house in the pool of assets as property of the parties, there is no equity for division. As it currently stands, the wife’s partner pays $570 per week to the wife by way of rental which is then channelled into the mortgage encumbering that property.
The parties also drew down against the mortgage over the former matrimonial home and the wife received $15,000. I am satisfied on the evidence that she has used those funds for living expenses but I shall return to that subject below.
There are therefore very few factual issues in dispute.
The wife’s position was that she should receive 50 per cent of the total pool. No formal set of orders was filed on her behalf but it was made clear that apart from her superannuation, the only orders that she sought were the payment of a lump sum and appropriate default orders if not paid.
The husband’s position was that the wife should essentially receive about 30 per cent of the pool but that included a splitting order to the extent of $50,000 of the husband’s superannuation. In his final address, Mr Middlemis said that I should take out of the pool, the post-separation inherited parcels of land and then give the wife 30 per cent of the balance. In his words, it would be “grossly unfair to give the wife any of the post-date of separation assets”.
The process that I shall follow is that set out by the Full Court in Hickey and Hickey and the Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 at 78,386. There the Full Court said:
Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.

Section 79 of the Act is the statutory basis upon which I am required to divide the parties’ assets. Section 79(2) requires that I must not make an order unless I am satisfied that it is just and equitable to do so. In that regard, I am required to “take into account” the matters in s 79(4). The challenge in s 79 is the discretionary nature of the process. It is clearly not just a mathematical exercise. In assessing contribution, it is dangerous to use the yardstick of the dollar to assess non-financial contributions such as that of homemaker and parent. In a long marriage such as this, I am mindful that parenting by both parties was only a part and that the conclusion of that role does not necessarily mean that the other contributor who “soldiered on”, is therefore making a much greater contribution. In a long marriage on a farm, comparison of farm and non-farm income is also difficult because in the former, there are often highs and lows whilst in the latter, more likely there will be consistency. The taxable income of the parties in a case such as this is blurred by not only the discretionary distribution of funds by the partnership members despite equality of work but also the use of farm resources for private purposes. In other words, comparing apples and oranges when it comes to financial contribution is difficult. In the same way, comparing non-financial contributions is difficult. Occasional help on a farm by an otherwise normally-occupied homemaker and parent, cannot be measured easily at the best of times but when that occasional help is given at particular times such as shearing and crop harvesting, it may sound minimal in annual time but it must still be seen to be a very important part of the farm production. Each party in a marriage and in particular a long marriage, has a part to play. Like the farming partnership where the partners do disparate work but equally share joint profits, so with a marriage, each contribution is significant in its own peculiar way. Accordingly, the only way I can subjectively make the assessment in this case is on the basis of a broad-brush approach. What will stand out are the unusual things that make one say that the parties could not have today what they have but for the peculiar contribution. I shall endeavour to deal with those matters.
I thus turn to the pool.
What is agreed between the parties is that V Street which the wife bought after separation, has no equity. The farming land is in the name of the husband and valued at $1,146,500. The husband has a partnership interest in livestock, plant and equipment worth $146,748, an AMP life policy worth $17,765, and superannuation of $55,180. For her part, as I have already said, the wife’s only asset of substance is her superannuation worth $63,663.
The wife’s balance sheet suggested that the husband had AMP shares worth $5,200 and when the husband provided a similar sheet towards the end of the hearing, he agreed with that value. However, I was told at the commencement of the hearing, without demur, that those shares were worth $6,006. That is the figure that I have used, there being no specific evidence otherwise.
The same balance sheets had the husband’s AXA shares worth $7500 on the one hand and $5885 on the other. There was no direct evidence of that but the husband’s balance sheet shows the individual value at $5.85 per share or $5885 in total. That is the figure I propose to use, there being no specific evidence to the contrary.
The respective balance sheets also differed in respect of some AWB and ABB shares. The wife used an estimate and the husband quite precise figures. Neither party addressed the issue of value with any specific detail and again, I have accepted the husband’s assertions because of the preciseness of his detail. Those shares amount to $9748.
A similar problem arose with the husband’s Graincorp shares. The wife gave no detail as to numbers but seemed to accept in opening that the husband’s assertion was close to correct. I have therefore accepted the husband’s figure of $2,124.
There is a significant partnership debt which was contentious. Apart from that, the only other liability is the mortgage on the home worth $12,432.
Turning to the inherited land received in 2004, there was agreement between the parties that it was valued at $345,000.
The parties worked this land as part of an overall farm for the entire marriage notwithstanding that it remained in the father’s name until his death. I have already indicated the husband’s position about its exclusion. The wife points to the evidence that it was always farmed by the partnership and that the husband had an expectation of receiving it. When cross-examined about this expectation, the husband did not answer that he had not expected it but rather that there was no discussion about it. When asked whether he was surprised about getting it, he replied that he was not. The earlier question about expectation was put to him again and this time, he said that he could not say it was expected because he had not seen his father’s will prior to his father’s death.
As the Full Court said in Bonnici (1992) FLC 92-272, 15 Fam LR 138 a property does not fall into any protected category merely because it is received in an inheritance. The Full Court said that the person who was not the recipient of the inheritance could not be regarded as contributing significantly to an inheritance received very late in the relationship except in very unusual circumstances. They highlighted the circumstances including the care of the particular testator prior to that person’s death or particular services to protect a property. That was the situation in James and James (1978) FLC 90-487. In my view, this situation is akin to the James situation where I find that there was not only an expectation on the part of the husband but also that the wife expected that the husband would receive the land and the parties diligently maintained the partnership and worked all of the land as a consequence of that expectation. Unlike the Bonnici case, this inheritance although received very late in the marriage if not after separation under the one roof, the parties had always treated the land as their own at least for income purposes. I find on the evidence that the parties did not discern between one partner’s ownership of the land and another. Accordingly, all of that land must be included in the pool and becomes a matter for the purposes of assessment, a contribution issue.
For the reasons that I have already set out, I propose to also add to the pool of assets the partnership interest of the husband which was increased as a result of the death of his father.
In his financial statement filed 31 August 2006, the husband made no reference to any INCITEC shares. He swore his trial affidavit on 10 April 2008, just days before the hearing began. The shares were not mentioned in opening discussion. When the husband gave evidence, he said he got shares from his father’s estate but he had not disclosed them. He said they were sold in June 2007 for $45,000 and that he sold them because he needed the money. He was specifically asked by Mr Middlemis how he acquired them and he replied that it was from his father’s estate. Mr Dickson cross-examined the husband about the sale. In a blunt question, Mr Dickson put to the husband that these were not the shares from his father’s will. He responded that that was correct. He said of the $45,000, $30,000 was left because $15,000 went to legal fees and a holiday with his daughter. The contradiction must be apparent about the acquisition of the shares. The probate and estate distribution documents were not provided. Without that corroboration, I see no reason to accept the husband’s first evidence. There can be little argument about the add-back of legal fees paid from parties’ resources other than income. This was clearly capital to which both parties had made direct and indirect contributions. I do not have evidence as to where the shares came from and I propose to add-back the legal fees of $12,457 which was the sum acknowledged at the commencement of the proceedings as having been paid by the husband and the sum of $30,000 to which I have just referred. I propose to add to the pool therefore $42,457.
The wife received $15,000 by way of a distribution for what she described as living expenses. This money was drawn from the mortgage. It was at a time when the wife was not earning income and the husband had control of the substantial pool of assets. The wife was not challenged about its use. It will therefore be added back on the basis that it was used for living expenses at a time when the husband was earning an income and had the capital and resources of the farm at his disposal. It must be borne in mind that the husband and wife physically separated in 2005 and during the ensuing three years, the husband has had access to all of the funds that I propose to now order as the entitlement of the wife.
An interesting and contentious issue related to the water rights attached to the farming property. It is agreed that the value of the partnership entitlement to water rights was $490,000. The question in dispute was what was the husband’s portion.
The evidence about the water entitlement arose as an issue notwithstanding neither party addressed it in their affidavits in any detail. The husband said that the partnership owned the water right. That would, by inference, have meant that he had a one-third interest notionally in the water rights. In cross-examination, the wife was asked about her belief and she was only to say that subsequent to the death of the husband’s father, the issue had been confusing. In the evidence in chief of the husband, he said that the ownership of the water rights went with the land, that is, to determine his water right entitlement, I would only need to look at the titles to the land. He said he owned a quarter. The other three-quarters were owned as to one-quarter by his mother and one-half by his brother. He said that before his father died, there were four partners each holding one-quarter and on his father’s death, his brother took the father’s one-quarter entitling him therefore to one half. However, in cross-examination, the husband said that he wanted to correct that. Notwithstanding he had sworn his affidavit only six days before, he said he hadn’t remembered “correctly”. His equivocation made the position more confusing.
The position became clear when the water right allocation application was produced. The husband said it was not his writing although he signed it. An amendment to the document which had been very recent, showed the husband’s true position. He said he had discussed the allocation with his brother and his mother. The allocation of one half, one-quarter and one-quarter remained unexplained. He said this document was only prepared because an earlier one had been lost. He maintained the earlier one had sought the current allocation. When asked why the brother received one-half instead of one-third, he said the brother had land where the water right was used. However, when cross-examined about the various land ownership, he was unsure of who owned what. He became more confident when I resumed the hearing on 2 May. His evidence was unconvincing and had a remarkable ring of recent invention about it. More importantly, the husband conceded he could have participated in a request to the water authority to make the entitlement one-third each.
I find there is a strong probability that the document that the husband produced was prepared to reduce the asset pool. The husband could have produced evidence from his brother and his mother to convince me otherwise but did not. He could have produced evidence to show the precise size of the various parcels of land to justify his initial argument. He did not. In the circumstances, I find it is just and equitable to put the water right into the pool at one-third.
I then turn to the question of liabilities. The major liability to affects the pool is the partnership overdraft. The wife said I should use the figure of $100,000. The husband said $192,000.
In cross-examination, the husband agreed that the current indebtedness of the partnership was $587,486. When divided between the three partners, he said his debt was one-third that is about $195,000. Much of that indebtedness arises from the overdraft. In 2002, the partnership liabilities were about $168,000 and one-third (or one-quarter depending on the death of the husband’s father) would have been between $42,000 and $56,000. The wife conceded it could have been about $100,000. The husband’s evidence in relation to partnership profits and loss show that there was a net loss when averaged over the last five years. Drawings during that period were not unusually high or variable. There was no evidence of unusual capital expenditure. When asked to explain the huge increase, the best the husband could do was to say that these were figures of the accountant. The accountant was not called to give evidence. Counsel for the wife took the husband through the partnership and personal tax returns. Depreciation was nominal. The husband said he had not paid legal fees through the partnership. The distributions of losses were not extraordinary. There appeared to be partnership decisions to ensure tax effectiveness. There was no evidence therefore to explain the significant discrepancy. By inference, it could not be explained by drawings increasing the overdraft.
The authorities make clear that I am to determine what is to be put into the pool for division and whilst it is usual to take the values as at the date of trial, I should only do that where it is just and equitable to do so. In this case, it is clear that the husband’s notional debt to the partnership at the time of separation was a debt that the wife should be made to contribute towards on the basis that she shared in the fruits of the partnership at that point. Since then, however, the husband has had control of the assets and to that extent, the liabilities. The wife has not directly shared in the benefits. In the absence of evidence as to why it was increased significantly, it would not be fair to the wife to use the current notional debt of the husband in the defined indebtedness balance of the partnership. What is the correct figure, is difficult to say. However, the only evidence I have upon which I can say there is some certainty is the 2002 figure because the husband conceded that that was the case back then. The wife in her Assets and Liabilities Statement put it at $100,000. I find it is fair to use that figure.
The husband also raised the prospect of capital gains tax being triggered as a consequence of any orders that I may make because he will have to sell the farm. However, on the evidence, I could not find that such a taxation prospect was a reality having regard to the period of time that the farming land has been in the husband’s hands and there is evidence that the recent inherited land was valued by a single expert witness at much less than the recently valued figure used for probate. It is not appropriate therefore that I guess at what, if any, tax there may be and I propose to ignore that issue. Similarly, I have no evidence about potential sale costs and expenses. The husband asked that I give him the change to buy out the wife notwithstanding the absence of borrowing power. He cannot have it both ways.
The wife’s counsel told me at the commencement of the hearing that the husband’s superannuation was $55,180 as an agreed figure. In the later balance sheet of the husband, he put in $59,000 but I suspect that was just adopted from the wife’s first balance sheet. I have used the figure that I was told was agreed.
The husband also made reference in his balance sheet and there was evidence about a motor car taken by the wife. I have no evidence about its value. It was not a subject of cross-examination or address. When the case commenced, I did not have a balance sheet for the husband and the car was not on the sheet of the wife. I therefore ignored it. Without valuation evidence, I do not propose to add any sum to the pool for that car if it still exists.
Accordingly, I find the pool of assets is as follows:
V Street  $370,000
Less debt  374,000 (proposed)          nil
Farming land before receiving
the father’s estate  $1,146,500
Farming land from the father’s
Estate  345,000
The water right (one-third)  163,000
Husband’s partnership interest  146,748
AMP shares  6,006
AMP policy of the husband  17,765
AXA shares  5,885
ABB and AWB shares  9,748
Incitec share balance and legal fees
added-back  42,457
Graincorp shares  2,124
Total:  $1,885,233
Husband’s super  $55,180
Wife’s super  63,663
Sub-total:  $2,004,076
Less liabilities:
Husband’s partnership debt  100,000
Mortgage  12,432
Sub-total:  $112,432
Net:  $1,891,644

I propose to reduce that equity by $7000 on the basis of the husband’s evidence (albeit late) that one small parcel of land is used by a neighbour and could not be accessed or sold.
The pool therefore is $1,884,644.
The second step is to assess and give weight to contributions. Contributions of various types are referred to in ss 79(4)(a), (b) and (c).
The husband came into the marriage with farming land. The titles show the land was encumbered and remained so. Initially, the husband said it was his belief that there were “no loans, no mortgages” on the titles. When shown the titles however, he conceded he was not right. When it was put to him that he could not say what was owing in 1978, he agreed. That was not really surprising having regard to the duration of the marriage. However, the husband was able to tell me that he had searched cheque butts to detail what contributions he had made to the family and household. It was odd that the more significant issue had not been covered. The husband said that he had looked for bank statements and only found those from the 1980s. No bank information or accounting records were produced and no evidence was led from the other partners. This is of some significance having regard to the two week break that the husband had in between the issue being raised and his subsequent cross-examination.
The existence of the encumbrance on the titles would certainly suggest indebtedness. When also asked in cross-examination on the final day of the hearing why the mortgages have been left on the titles if there was no debt, the husband said that it was because the bank held the titles as security. I can only infer that there was some indebtedness if they were held as security. The onus is on the husband to establish that point and I find that he failed to do so.
Just what equity the husband had therefore and how it can now be given weight after all of these years, is a task of some difficulty and very subjective.
In Pierce and Pierce (1999) FLC 92-844, 24 Fam LR 377 the Full Court examined the question of contributions under various authorities to that point in time. The Full Court looked at the views of Fogarty J in Money and Money (1994) FLC 92-485. Fogarty J said an initial substantial contribution by one party may be eroded to a greater or lesser extent by the later contributions of the other party even though those later contributions did not necessarily outstrip those of the other party. Fogarty J cautioned the use of the term “off-setting contribution”. His Honour said that that did not necessarily mean “greater contribution”. His Honour pointed out that later contributions can offset the significance of the initial contribution.
In this case, not only do I have a long marriage where the farming land which was part of the initial contribution supporting the family but I have the evidence of the wife in which she financially supported the family at a significant level not only in terms of income but also in respect of her redundancy packages. Added to that is the evidence of the wife which was unchallenged by the husband that the land was improved by the building of the home using borrowed funds for which ultimately, the wife became directly and indirectly responsible. The picture becomes blurred by the husband’s late evidence about his family’s gift. I propose to treat that as a contribution by the husband but a modest one. The wife too made such contributions. Those subsequent contributions place an enormous onus upon the person who wishes to rely upon the initial contribution to establish that the subsequent contributions cannot offset the significance of the earlier ones. The starting point obviously is to establish what equity was brought into the relationship. In this case, I do not have that evidence. Accordingly, the subsequent contributions of the wife in their varying degrees blur the significance of the initial contribution to a very large degree.

It is also important to say that the initial contribution cannot simply be carried forward in some mathematical way and as I earlier mentioned, it is difficult in making comparisons between entirely different types of contributions. As Fogarty J said, the longer the marriage, the more likely it is that there will be later factors of significance which reduce the original contribution and in my view, that is what has happened here.
The Full Court revisited that position in Pierce and made it clear that it was not so much a matter of erosion of contribution but a question of what weight should be attached. The weight that I have to give and the assessment I have to make relates to not only the initial contribution but also the subsequent ones. As the Full Court pointed out in Pierce, regard must be had to the use made by the parties of that initial contribution. In this case, it was clearly the catalyst for a significant portion of the parties’ income and lifestyle as well as the current asset pool. In Pierce, the Full Court noted that the initial contribution was so identifiable that it was clear that the parties would not have been able to acquire the home that they did had it not been for that initial contribution.
In this case, the initial contribution is clearly identifiable but its value then and the subsequent impact upon it by the wife’s contributions, are not. I am not prepared to guess at values of the land or the equity even if I knew what the values of the land were at that time.
The evidence leaves me in a position where I find that the only discernable distinction between the parties’ contributions in respect of that farming land at the commencement of the marriage is that the husband had it and the wife did not. I find that the property became the springboard for the parties’ lifestyle over the long marriage. Putting all of those factors together, there is a justification for giving the husband a greater entitlement by virtue of contribution only in respect of that land. The fundamental reason why that is so is that notwithstanding all of the contributions of the wife which I find to be of significance, I still feel that the original land in one form or another is identifiable but not anywhere near to the extent claimed by the husband.
Although it is not a precise science, I find that the contribution of the husband was greater than that of the wife and I determine that as to 55 per cent to the husband and 45 per cent to the wife in respect of that farming land only.
I distinguish the farming land from the partnership assets that the husband had at the commencement of the marriage on the basis that I have no evidence about values, equity or even use to which those assets were put. Clearly, partnership assets such as livestock and crops would have become income and I have inferred that plant was used, traded and acquired because I was given evidence of the continued depreciation claim after all of these years in the partnership. I therefore propose not to distinguish between the parties’ contributions in respect of those assets.
The husband tried unconvincingly to say that his contributions during the marriage were greater than those of the wife. When asked a series of questions about his view of the wife’s contributions, his jaundiced view became apparent. He said his efforts were “more worthy”. In explaining that, he said his drawings and his physical contribution including to the maintenance of the house and garden should be given greater weight. As for the wife, the husband’s view was that she had not applied herself assiduously. When asked why he held that view, he said she was “distracted” by outside interests. I reject the husband’s evidence on that issue. The farm income was variable. The wife worked outside of the home. The wife was the main carer of the children. The evidence even descended to who drove children to and from school. The parties enjoyed the benefit of a life on the farm where expenses were tax deductible. On the evidence much of which I have already set out above, I am unable to discern any distinction between contributions from the commencement of the marriage until separation under the one roof in 2002. I find them to be equal.
The wife said that from 2002 until she vacated and even thereafter, contributions of a domestic nature were made by her. The husband disputed that. In my view, it matters little because the husband had the benefit of the use of the assets to which the wife had been excluded and to which she had an entitlement. I do not however propose to make any adjustment for the period subsequent to separation. However, for the sake of making it abundantly clear, on that issue, I accept the evidence of the wife. I do so having regard to general matters of credit. As I have pointed out, the husband had a jaundiced view about the wife’s contribution and it seemed to me, only produced evidence that suited him.
In March 2004, that is before the wife vacated the home, the husband’s father died at the age of 82 years. He owned an estate which included the partnership interest, shares and land. Some of those are now directly traceable to the pool I have set out above. The husband went from owning one-quarter to one-third of the partnership and an increase that is not all that significant in the scheme of things. I do not intend to distinguish the contributions in relation to the partnership interest. What has made a very real difference to the pool is the land worth $345,000. I have already placed the land in the pool on the basis of it being an asset of a party but also something to which I accept the wife strived during the long marriage based upon a realistic expectation that the husband would receive it. That still does not ameliorate entirely the fact that the husband received it. It is an interesting philosophical challenge to discern the difference between a late acquisition through inheritance to which no contribution is made and one on which by direct or indirect contribution, a party strives to conserve, improve and use it before the inheritance is received. In this case, I find that the wife has made a considerable contribution over the long years of the marriage but there is still some justification for attributing the windfall to the husband. The disparity in my mind is still modest because of the length of the marriage and the contributions made by the wife to which I have referred.
Whilst the weighting of such disparities is traditionally done by way of percentage, it must be the underlying value of the contribution that must be assessed. This is a case in which the asset by asset approach achieves a much more equitable outcome in respect of the contribution. Having determined that there is some modest disparity, I am conscious that the asset I am dealing with is valued at $345,000 less the $7000 to which I earlier referred making a total of $338,000. Twenty per cent one way is a disparity of 40 per cent between the parties. I still think that is modest in respect of an asset of $338,000 but one that is fair in all of the circumstances.
Thus in respect of contributions, I find that other than the initial farming land and the inherited land from 2004, the parties have otherwise contributed equally. In respect of the land which the husband inherited in 2004, I find the contributions favour the husband as to 60 per cent and the wife 40 per cent.
In respect of the initial land, I have already determined that that should be as to 55 per cent to the husband and 45 per cent to the wife.
The husband also sought that I split his superannuation interest in favour of the wife as to $50,000 and that that sum be included in the wife’s entitlement. I declined to do that on the basis that each party is in a similar position. The distribution that I am obliged to make must be meaningful as well as just and equitable. For the wife, superannuation is not of immediate use notwithstanding its longer term value. The husband will, by all accounts, have to sell the farm and as such, each party will then be in a similar position of either being employed, pursuing employment or living off the interests from the proceeds of the division. In my view, there should not be a division of the superannuation as sought by the husband.
I then turn to the future of each party and the factors set out in s 75(2) of the Act. The provisions of s 79(4) require that all of these matters be considered as part of the process of determining what is just and equitable as between the parties. Both parties are aged 57 years and seem to enjoy good health.
The parties’ employment situation is a vexed one. The wife has chosen to work in a field other than that for which she seems to have been highly qualified. I do not have any evidence however that she could make significantly more money (and I emphasise significantly) by taking up that field nor that even if she did or alternatively returned to teaching, her longevity of employment life would make any significant difference to her economic future. On the other hand, the husband knows only farming as an occupation. This particular farm and not only his land, has been a significant part of his life for many years. He made very clear that he had no borrowing capacity and as a result, he will have to sell. The sale of the land may have to occur regardless of what figure I determine as the wife’s entitlement having regard to his borrowing capacity. He said that he had no capacity through his family to pay out the wife. The husband therefore will be in a position where he may have to embark upon a different way of life but as Mr Middlemis said, older people are well sought after because of their skills. However, as with the wife, the husband is in the twilight years of his working life and therefore sooner or later, would have to face the fact that employment would have to cease. The sale of the land will mean a significant amount of cash with investment potential and without any other financial commitments the husband should be in a position to live reasonably well.
In addition, for the reasons that I have just set out, each party will have some superannuation, albeit modest, and that can be added to their respective retirement packages. Neither party has any commitments and as such, is able to regulate their financial future based upon what they have.
The wife has her partner and for the purposes of s 75(2), he is clearly a significant resource in the hands of the wife because of the financial arrangement they have between them. Notwithstanding the wife’s protestations that her partner’s income was not accurately reflected in a tax assessment because of changes in his practice and a child support issue, I find that his income is comfortable and the wife benefits from that security. The husband’s insistence that the partner of the wife is wealthy is not a matter about which I could make any such finding. In any event, the issue of the wife’s partner is not one that I should isolate out from the other factors in s 75(2). This is simply one of the several factors to be taken into consideration.
Amongst the other considerations are the fact that each party has a potential inheritance. The husband has an entitlement by virtue of the remainderman interest. The husband asserted that the wife’s parents are elderly and comfortable financially. That evidence was vague but not challenged. I have no idea whether the demise of the wife’s parents would make any significant financial difference to the wife. On the other hand, the husband has the most likely prospect of the continuation of the benefits of receiving something from his mother. However, also, there is no evidence from either party other than an inference which would give me confidence to single out that issue as a significant adjustment factor. In addition, I am mindful that the husband will have some extra capital more than the wife as a result of the orders I propose to make. In the circumstances, it would not be fair or reasonable for me to make any further adjustments having regard to all of the factors to which I have just referred.
Under the orders that I propose to make, I need to be satisfied that they are just and equitable. To determine that issue, I need to look at the underlying value. As I have already pointed out, the only asset that the wife is receiving other than cash is her superannuation. Thus, what she will be receiving is $787,534. I propose to round that up to $788,000.
The husband retains the land and his superannuation and otherwise has to find the funds to pay the wife out.
The husband’s proposal was that he should have 120 days in which to find the funds failing which the properties could be sold. In my view, he has had ample time in which to ascertain whether he can do that. His evidence was quite clear that he had no borrowing capacity so it seems to me that he is only putting off the inevitable. However, having regard to his attachment to the land and the complications of having to deal with his partners, it is my view that he should have 42 days in which to pay the sum failing which, all of the land should be sold and the wife be paid her funds. Interest will run pursuant to the Family Law Rules from about the 42 day mark or more particularly, the date I set out in the orders, at the rate of 11.75% as it is presently under the rules having regard to the fact that the husband has had ample time to make some contribution towards the wife because of his opening offer in the Court.
As indicated to the parties I will make the usual procedural orders for any issue of costs that may arise out of these reasons.

I certify that the preceding Ninety Nine (99) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:

Date: 13 May 2008