Wales and Wales

[2009] FamCA 706

FAMILY COURT OF AUSTRALIA

WALES & WALES [2009] FamCA 706

FAMILY LAW – PROPERTY SETTLEMENT – Contributions

Family Law Act 1975 (Cth)

Coghlan & Coghlan (2005) FLC 93-220
Crawford & Crawford (1979) FLC 90-647
Pierce & Pierce (1999) FLC 92-844
Waters & Jurek (1995) FLC 92-635

APPLICANT: Ms Wales

RESPONDENT: Mr Wales

FILE NUMBER: MLC 9238 of 2008

DATE DELIVERED: 5 June 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: DESSAU J

HEARING DATE: 22 May 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR PUCKEY

SOLICITOR FOR THE APPLICANT: WESTMINSTER LAWYERS

COUNSEL FOR THE RESPONDENT: MR WOOD

SOLICITOR FOR THE RESPONDENT: ROBERTS BECKWITH PARTNERS

Orders

1. That the husband shall pay to the wife the sum of $223,200 (“the payment”) by 4.00pm on 3 July 2009 (“the date”).

2. That upon the payment the wife shall deliver to the husband a withdrawal of Caveat No. A….

3. That in the event that the whole of the payment has not been made by the date then the husband shall sign all documents and do all things necessary to transfer to the wife the block of land known as Lot 11, M property in the State of Victoria (“the real property”) to be held on trust for sale (“the sale”) and upon completion of the sale, the proceeds of the sale shall be applied:

   (a)First to pay all costs, commissions and expenses of the said trust transfer and the sale;

   (b)Secondly so much of the payment as is then outstanding together with interest thereon at the rate set out in Rule 17.03 of the Family Law Rules 2004 adjusted monthly from the date to the wife; and

   (c)Thirdly the balance to the husband.

4. That pending the payment or completion of the sale the husband shall in no way encumber the real property without first obtaining the written consent of the wife.

5. That unless otherwise specified in these orders each party shall be 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 including all monies standing to the credit of a party in any bank account and any shares in a party’s name.

6. That all applications shall otherwise be dismissed and the case removed from the list of cases awaiting finalisation by the Court.

7. That pursuant to the Family Law Rules this matter reasonably required the attendance of counsel.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 9238  of 2008

MS WALES

Applicant

And

MR WALES

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. Mr and Mrs Wales cannot agree on a property settlement.  She is aged 87 and he is aged 84.  They married in April 1994, aged 73 and 70 respectively.  They separated 14 years’ later in 2008. 

2. The husband lives in the unencumbered home that the parties lived in during the marriage. He supports himself from his Commonwealth Superannuation Scheme pension of $1388 per fortnight, or $36,000 per year.  The wife is living with one of her adult sons.  She supports herself from the age pension of about $17,500 per year, being $565 per fortnight and rent assistance of $110 per fortnight. 

3. The case proceeded by way of legal submissions only.  The identification and value of the parties’ property is agreed.  The areas of dispute relate to how I should treat each party’s contributions, the extent of adjustments I should make for s 75(2) and other considerations, and how to divide the assets to arrive at a just and equitable conclusion. 

MATERIAL RELIED UPON

1. The wife relied upon her Application for Final Orders filed 9 October 2008, her affidavits filed 29 April 2009 and 15 May 2009, and her financial statement filed 29 April 2009.

2. The husband relied upon his response filed 27 November 2008, his affidavits filed 5 May 2009 and 22 May 2009, his financial statement filed 5 May 2009, and the affidavit of a real estate valuer Mr L filed 6 May 2009.

ORDERS SOUGHT

1. For reasons that I shall detail below, the wife sought the equivalent of 45% of the assets, calculated at 35% on the basis of contributions, and 10% in relation to s 75(2) and other factors.  She argued that the husband’s CSS pension should be included in the pool for division, and that there should be a splitting order of 45% in her favour.  Otherwise, in addition to her retaining some monies and a car, the husband would need to transfer to her the garden lot adjacent to the home in which he is living, and pay her a lump sum of money.

2. The husband’s case, again which will be detailed below, was that the wife should receive a 15% share of the assets (not including the superannuation built up entirely by him before the marriage), on the basis of 10% for contributions, and a further adjustment of 5% in relation to the s 75(2) and other factors. 

3. It was his case that the wife’s share should be satisfied by a payment of $100,000 from him, in addition to assets held in her possession.

THE POOL OF ASSETS

1. The assets are agreed as follows:

   ·Lot 10, M property (home)  $   605,000

   ·Lot 11, M property (block of land)        $   250,000

   ·Husband’s savings   $   178,432

   ·Husband’s CBA shares  $     53,172

   ·Wife’s savings  $     98,000

   ·Husband’s car  $     15,000

   ·Wife’s car  $     12,000

   Total  $1,211,604

2. The agreed value of the husband’s CSS pension is $200,366.  There was a dispute as to how I should treat it.  The wife proposed that it be included as part of the above pool.  The husband proposed that it be dealt with as a separate asset.  On any view, it is an asset.  I am satisfied that I am entitled to treat it as constituting a second category of asset as envisaged in Coghlan & Coghlan (2005) FLC 93-220.

CONTRIBUTIONS

1. It was conceded that the husband made far greater initial contributions than the wife.  He brought in the M property, formally valued at $540,000 at the date of the marriage.  That valuation was conceded.  He brought in cash.  The wife believed it was $50,000.  He reckoned it was up to $88,000, although he could only find proof of $50,000.  In the circumstances I shall treat it as likely that the sum was $50,000.  He also had his CSS pension, built up from 1940 to 1982 during his 42 years’ employment with the Public Service. 

2. For her part, the wife brought in a property.  Although she said she “thought” it was worth $100,000, it was sold very soon after the marriage, netting $82,000, and I am satisfied that is the appropriate value to attribute to it.  She also had savings of about $10,000.

3. It was submitted for the wife that I cannot tally the initial contributions on a mathematical basis.  I need give due weight to other forms of contribution in the course of the marriage, rather than being “dazzled” by the initial contributions of the husband.  It was submitted that, although the real estate brought into the relationship by the husband has been formally valued at $540,000 at the time of the marriage, he disposed of it in a transaction in 1999 for only $500,000, and I should consider that lower sum when looking at his initial contributions.

4. Mr Puckey had to concede that the wife had made no direct financial contribution to the husband’s pension but argued that her contributions to it “in other ways”, as well as to the other assets, should still be taken into account. 

5. As to the “other ways” of contribution, Mr Puckey argued that the wife “sacrificed” her home by selling it in the course of the marriage, and that she “sacrificed” her single pension when she married the husband.  The husband has remained in the home since separation, whereas the wife has had to live with and be reliant on her son.   

6. Mr Puckey submitted that based on the raw figures, the wife’s initial contributions were about 16% overall, but when adjusted for the other factors referred to above, it brought it to a 35% contribution. 

7. Mr Wood for the husband emphasised that the unencumbered real estate brought into the marriage by the husband was purchased by him in 1960, that is, 34 years’ before this marriage.  He had deliberately purchased this larger property so that it could be developed as part of his “retirement plan”.  In about 2000, it was transferred to his daughter and son-in-law.  They paid him $500,000 by transferring to him Lots 10 and 11 (to which $150,000 was the attributed value), constructing the new home on Lot 10 (valued at $200,000) and making a cash payment of $150,000 (the final payment of which was made, with interest, quite recently).

8. Mr Wood emphasised not only the far more substantial contribution of the husband at the start of the marriage, but that given the age and stage at which these parties married, this was not a household in a “growth phase”.  The husband’s superannuation is the perfect example of that.  It was built up very many years before these parties met.  It did not increase in value in the course of the marriage.  The wife enjoyed the benefits of it.  But it cannot be suggested that she made any contribution to it. 

9. Mr Wood also submitted that the parties made no endeavour to merge their assets.  The wife was able to sell her home and retain the proceeds in her own investment account.  There was no suggestion that the husband had prevailed upon her to sell the home.  She controlled that asset and income, just as he controlled his major asset, being the M property, and his other modest investments.  There is no basis for the argument run by Mr Puckey, under this or later considerations, that somehow the wife needed to be “compensated” for “sacrificing” a home. 

10. Mr Wood argued that even when you look at the growth of the assets during the marriage, it was overwhelmingly because of the husband’s contributions.  Putting the superannuation to one side, of an existing pool of more than $1.2 million only $110,000 is now attributable to assets originally brought in by the wife. 

11. I am entitled to consider the pool on an asset by asset basis.  I propose treating the husband’s superannuation separately from the rest of the asset pool.  It is an asset that is clearly relevant to the s 75(2) factors below, but it was built up over the husband’s working life that commenced 54 years’ before this marriage.  He had been in receipt of his pension for 12 years’ before the marriage.  The superannuation did not grow during the marriage. The wife made no contribution to it.

12. As to the other assets, it is clear that initial contributions cannot simply be carried forward as a mathematical proportion of the pool (see Crawford & Crawford (1979) FLC 90-647). In Pierce & Pierce (1999) FLC 92-844, upon considering the weight to be attached to the more substantial initial contribution made by a husband, the Full Court said (at para 28) that it is necessary to weigh the initial contributions by one party, with “all other relevant contributions” by both of them. It noted that in considering the weight to be attached to the initial contribution:

    …regard must be had to the use made by the parties of that contribution.  In the present case that use was a substantial contribution to the purchase price of the matrimonial home…

13. Throughout this marriage the parties kept their assets separate.  The wife sold her property, invested the proceeds, controlled that investment, and retained the income for her own purposes. The husband controlled the transfer and development of the real estate brought in by him. 

14. Depending on the value ascribed to the M property, the husband’s initial contribution represented between 85% and 88% of the non-superannuation assets brought into the marriage, the wife’s between 12% and 15%.  The assets controlled by him now amount to a little more than 90% of the pool, the wife’s just under 10%.  That reflects the strict mathematical approach.

15. However, I must take into account that there has been a 14 year marriage in which both parties have contributed their day today labour and commitment in various ways.  The assets have increased in value with the effluxion of time.  The husband has had the greater use of the assets in the 12 months’ since separation.

16. For these reasons, an assessment of 10% contribution by the wife, as urged by the husband, is quite inadequate. 

17. However, in the unusual circumstances of this case, given the advanced age of the parties at the time that they married, and that their assets had largely been built up in their long former lives, the adjustment proposed for the wife, so that her contributions would be recognised at 35% of the pool, is grossly inflated.

18. I am satisfied that balancing all of the factors, the wife should be credited with 22.5% by way of contributions to the pool of assets. 

SECTION 75(2) AND OTHER FACTORS

1. It was argued for the wife that the wife’s need for appropriate accommodation and financial security must be the focus of my decision.  Counsel referred me to Waters & Jurek (1995) FLC 92-635, at page 82,376 where it was said that the “centre of gravity” in the determination of property cases had moved to the evaluation of the s 75(2) factors, and the recognition that they should be given “real rather than token weight”.

2. I note that what preceded that statement was the Court’s observation that “in the general run of cases” contributions were likely to be equal or thereabouts.  This is not such a case.  Still, I must give real weight to the factors set out in s 75(2) and s 79(4) of the Act.

3. Mr Puckey for the wife sought an adjustment of 10% in the wife’s favour (or more if I adjusted contributions significantly differently from how he contended).  He urged that the wife must receive monies sufficient to house herself, (the wife swore that she wanted to buy a home in a retirement village, valued between $405,000 and $535,000), and that I should take into account that otherwise she would continue to live with her son.  In addition, I should take into account that she was now disqualified from the reversionary interest in the husband’s CSS pension (two-thirds of his pension) that she would have received if they had remained married and he had predeceased her. 

4. Mr Wood for the husband submitted there should be a 5% adjustment in the wife’s favour.  He emphasised the age of the parties and their similar life expectancy, according to life tables, of about 5½ years.  He emphasised that it is not simply a case of the wife saying I want to buy a home for between $400,000 and $535,000.  He was correct that the evidence did not contain any suggestion that she cannot continue to live with her son, or that she cannot otherwise re-house herself with a lesser sum.  In any event she is entitled to choose to live alone, but it does not mean that she can simply set her sights on a property that may well be beyond reason in terms of what she can afford. 

5. I am satisfied that there should be an adjustment in the wife’s favour of 5%.  Given the size of the pool, that is a reasonable amount to recognize that the husband is housed and has the security of his superannuation which reaps a higher income for him than the wife shall receive by way of her pension.  It is important to take a realistic approach to the parties’ future needs.  Whilst one hopes they will live for many years, at their ages, the life expectancy tables emphasise the reality of a shorter than longer period in which their needs are likely to be required to be met.

CONCLUSION

1. The final step for me is to arrive at a decision that is just and equitable in all the circumstances.  Although I have assessed the wife’s entitlement as 27.5% of the non-superannuation assets, the authorities are clear that it is not the end of the matter. 

2. The wife would have me make a significant adjustment to her to ensure that she can purchase the property she has in mind.  Conversely, the husband is very keen for a result that would enable him to retain the garden lot adjacent to his home, not only because he takes great pride in what he has achieved in his garden, but because it is his perspective that the value in the property is the view from the home to the garden. 

3. Although they are important considerations, if the justice and equity of the case demands either that the wife buys a different property or makes other living arrangements, or the husband needs to sell his garden allotment, then that is the course I must adopt. 

4. I am satisfied that a 27.5% adjustment to the wife is a just outcome in the circumstances of this case.  She will have $333,200 (rounded up) that she can decide to use in whatever way she chooses, including her own accommodation.  It will mean that the husband must pay her the sum of $223,200 from the funds he has available to him.  She shall retain her savings and a car, together valued at $110,000. 

THE ORDERS

1. The orders I propose, subject to submissions as to form, are as follows:

   1.That the husband shall pay to the wife the sum of $223,200 (“the payment”) by 4.00pm on 19 June 2009 (“the date”).

   2.That in the event that the whole of the payment has not been made by the date then the husband shall sign all documents and do all things necessary to transfer to the wife the block of land known as Lot 11, M property in the State of Victoria (“the real property”) to be held on trust for sale (“the sale”) and upon completion of the sale, the proceeds of the sale shall be applied:

   (a)    First to pay all costs, commissions and expenses of the said trust transfer and the sale;

   (b) Secondly so much of the payment as is then outstanding together with interest thereon at the rate set out in Rule 17.03 of the Family Law Rules 2004 adjusted monthly from the date to the wife;

   (c)    Thirdly the balance to the husband.

   3.That pending the payment of completion of the sale the husband shall in no way encumber the real property without first obtaining the written consent of the wife.

   4.That unless otherwise specified in these orders each party shall be 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 including all monies standing to the credit of a party in any bank account and any shares in a party’s name.

   5.That all applications shall otherwise be dismissed and the case removed from the list of cases awaiting finalisation by the Court.

   6.That pursuant to the Family Law Rules this matter reasonably required the attendance of counsel.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dessau  

Associate: 

Date:  5 June 2009