Westgarth and Westgarth - [2008] FMCAfam 967

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WESTGARTH & WESTGARTH

[2008] FMCAfam 967

FAMILY LAW – Property settlement – informal agreement – weight to be given to initial contributions – rent free accommodation – gift of property from wife’s father – post separation contribution – contested debt.

Family Law Act 1975, ss.75(2), 79

DW & GT [2005] FamCA 161
Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Norbis v Norbis (1986) 161 CLR 513
Pellegrino (1997) FLC 92-789
Pierce v Pierce (1998) FLC 92-844
Williams & Williams [2007] FamCA 313

Applicant:

MR WESTGARTH

Respondent:

MS WESTGARTH

File Number:

WOC 530 of 2007

Judgment of:

Altobelli FM

Hearing date:

28 July 2008

Date of Last Submission:

29 July 2008

Delivered at:

Sydney

Delivered on:

9 September 2008

REPRESENTATION

Counsel for the Applicant:

Mr Wong

Solicitors for the Applicant:

Lough Wells Duncan

Counsel for the Respondent:

Ms Christie

Solicitors for the Respondent:

Fox O'Brien

ORDERS

That the parties forthwith do all acts and things necessary to list the property situated at and known as Property N (“the Property N property”), NSW, being the whole of the land described in Folio Identifier [5] by private treaty and following the sale of the Property N property the proceeds shall be disbursed as follows:
(a)in payment of agent’s commission and legal expenses associated with the sale;
(b)discharge the existing mortgage;
(c)the net sale proceeds to the Husband.
That within 42 days from the date hereof, the wife shall pay to the husband the sum of seventy-two thousand, nine hundred and twenty dollars ($72,920.00)
That each party be responsible for all debts and other loans which stand in their sole name. The husband is solely responsible for paying the mortgage on the Property N property pending sale.
That the husband and wife be entitled to have sole right title and interest in:
(a)any chattels, goods, furnishings and other property which are at the date hereof in their possession respectively; and
(b)any real property, moneys, shares, debentures and superannuation entitlements which stand in their sole name respectively as at the date hereof.
In the event the wife fails to comply with Order 2, then the wife shall forthwith do all acts and things necessary to list the property at Property C (“the Property C property”), NSW, being the whole of the land described in Folio Identifier [2] for sale by private treaty for a period of six months at a price to be agreed to between the parties and failing such agreement to be determined by the President of the Real Estate Institute of NSW or his/her Nominee.
That in the event the Property C property fails to be sold by private treaty within a period of six months then the parties at the expiration of the six month period shall forthwith do all acts and things necessary to list the property for sale by public auction with a reserve price to be agreed to by the parties but failing such agreement to be determined by the President of Real Estate Institute of NSW or his/her Nominee.
That following settlement of the sale of the Property C property pursuant to order 5 or 6 the sale proceeds be disbursed as follows:
(a)in payment of agent’s commission and legal expenses associated with the sale;
(b)to discharge the existing mortgage to RAMS;
(c)the balance thereafter to be divided as follows:
(i)the first $72,920.00 plus interest in accordance with the Family Law Act, calculated from the due date for payment in accordance with these Orders to the Husband;
(ii)The balance thereafter to the Wife.
That in the event the wife fails to comply with order 2 then the wife shall consent to the registration of a Caveat on the title of the Property C property, noting the Husband’s interest in the Property C property by way of charge for the amount outstanding pursuant to order 2.
Within 28 days of the date of these Orders, the husband to do all things necessary to effect a transfer to the wife of any interest he has in their IAG shares.
That each party do all necessary acts and things to give effect to these orders.
That in the event that either party refuses or neglects to execute any Deed or Instrument, the Registrar of the Court be appointed pursuant to Section 106A to execute such Deed of Instrument in the name of such party and do all acts and things necessary to give validity to the Deed or Instrument.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
WOLLONGONG

WOC 530 of 2007

MR WESTGARTH

Applicant

And

MS WESTGARTH

Respondent

REASONS FOR JUDGMENT

Introduction

This is an application for alteration of property interests under s.79 of the Family Law Act, commonly known as a property settlement. It is made more complex, however, because the parties had in fact entered into an informal property settlement shortly after they separated, and one of the parties is somewhat keener than the other for the Court to uphold their earlier informal agreement.

Background

The husband is the applicant in this case. He is 46 years old. The wife is the respondent, and she is 43 years old. They commenced cohabitation in late 1980 when they were 18 and 15 years respectively. They married in 1988. Their one and only child [X] was born in 1990 and is now 18 years old. Separation took place in May 2004. Thus the parties were together for about 24 years.
In 1979, before the husband commenced cohabitation with the wife, he was involved in a motor vehicle accident. He was hit by a motor vehicle whilst walking along a footpath late at night. As a result of this, in about May 1983 the husband received a net compensation payment of about $83,505.
In 1984 the husband purchased in his own name a house at Property U. There was no mortgage. It was rented out between 1984 to about October 1988 when the parties moved in. The rental income of about $160 weekly was used by both parties for everyday living expenses.
Between 1980 and 1988 the parties lived rent-free in the wife’s mother’s house at [H], in a self-contained flat.
One of the issues in this cases is assessing the weight to be given to the contribution made by the husband as a result of his compensation payment, and the weight to be given to the contribution by the wife, as a result of her mother’s provision of rent-free accommodation for eight years.
In 1989 the parties sold the Property U property for $79,080 and purchased a vacant block of land at Property N for $26,700. They then constructed a home, a process which took several years as they were doing so on an owner-builder basis, with help from the wife’s brother-in-law, Mr T. The evidence of both parties indicates that the construction of the home was financed by the parties themselves, i.e. from the balance of the sale proceeds of Property U, together with their own accumulated savings. They did not borrow against Property N until late 1998. They moved into the house in 1990, shortly before [X] was born, but before the house was fully completed. Between the date of sale of Property U, and moving in to Property N, they lived in a cottage on the wife’s father’s farm at Property C. This was provided rent-free, but the husband asserts that work was undertaken by them on this cottage during this period. Nothing turns on this.
As mentioned briefly above, the parties borrowed $50,000 from the Commonwealth Bank on the security of Property N in 1998, and this loan was discharged by 2002. At about the same time they borrowed $200,000 from Perpetual Trustees, as a line of credit facility. By the time of separation in 2004 only $3,000 had actually been drawn down on this facility, and that was used for joint purposes the details of which are not significant.
In 2003 the wife’s father transferred to her a small acreage at

Property C. It is common ground that it was an early inheritance for the wife. It was argued by the husband, somewhat half-heartedly I thought, that it was intended as a gift to both of them. Having heard the evidence of the wife’s father, Mr B, I am left in no doubt that it was a gift to her exclusively. One of the issues in this case is how I should assess the weight to be given to the contribution made by the wife in the form of the Property C property.
The parties’ relationship appears to have deteriorated from mid to late 2003. By May 2004 they had separated. As a result of their own negotiations, and negotiations through their lawyers, they agreed that in return for the wife transferring to the husband her interest in

Property N, he would take over the mortgage on the property that then secured a debt of $30,000, and pay to the wife $185,000. He would, of course, relinquish any claim to Property C. Over a period of time that agreement was in fact implemented, but it was never formalised by way of orders. They seem to have based their calculations at the time on an assumption that Property N was worth $400,000. The husband of course borrowed against Property N to pay the wife. An issue I need to determine is the relevance of this informal agreement in the context of the exercise of my discretion under s.79 of the Act. I do not regard it as relevant to understand why the parties’ informal agreement was not implemented properly. I daresay they both now regret it, for various reasons. They both blame each other. The fact is that their agreement was and is an informal one, not a legal one. The wife constructed a home on the Property C land using the $185,000 provided by the husband, and $50,000 borrowed from RAMS, as well as some personal loans from her own father. As a result of his care for [X], the husband argues that he has made a significant post-separation contribution. This is an issue for me to determine. If I find that such contribution was made, I must assess what weight is to be given to it. The wife asserts that she still owes her brother-in-law, Mr T, $55,639 for work undertaken in relation to Property C. One of the issues I need to decide in this case is how this debt, if it exists at all, should be apportioned as between the husband and the wife. The husband wants Property N sold because, he asserts, he is having difficulty meeting the mortgage repayments, even after receiving rental on the property.
There are no issues about valuation in this case. The current market value of Property N is agreed to be $340,000. The current market value of Property C is agreed to be $720,000 and its value on 1 June 2003 was $450,000. In each case these figures are based on valuations provided by a single joint expert.
In relation to issues of contribution, apart from the specific issues I have already identified, I find that the parties contributed equally up until separation. They both worked to the best of their capacity during a relatively long relationship and made financial and non-financial, direct and non-direct contributions as well as contributions as homemaker and parent. Once I have made orders altering property interests based on contribution, there are no s.75(2) factors that apply.

Orders Sought by the parties

The husband seeks an order for sale of the Property N property with him retaining all of the sale proceeds. In addition he seeks an order for payment by the wife to him of $300,000 to be paid out of the sale proceeds of Property C if necessary. The wife merely seeks an order that she transfer to the husband her interest in Property N subject to him discharging the mortgage in the property. Alternatively, that the property be sold and the husband receive all of the net sale proceeds. For all practical purposes the wife seeks a final order which is in substance the same as their informal agreement.

The Issues

Accordingly, the issues that emerge for determination in this case are as follows:
a)What weight is to be given to the contributions made by the husband as a result of his compensation payment of $83,505 received in May 1983, and later applied in part towards the purchase of property?
b)What weight is to be given to the contribution made by the wife as a result of the provision by her mother of free accommodation to the parties for a period of about eight years?
c)What weight is to be given to the contribution made by the wife as a result of the gifting to her by her father of the land at Property C?
d)What is the significance and/or relevance of the informal agreement reached between the parties about their property settlement shortly after separation?
e)What weight is to be given to the post-separation contribution asserted by the husband in caring for their daughter [X] after separation?
f)What weight should be given to the post-separation contribution asserted by the wife as regards the construction after separation of a home at Property C?
g)How should I treat the debt that the wife asserts she owes to her brother-in-law arising out of work undertaken after separation to the home at Property C?
h)What is the just and equitable order to make in the circumstances of this case?

Table of Assets and Liabilities

I reproduce below the agreed table of assets and liabilities. As is apparent, the only contentious issue is the debt to the wife’s brother-in-law, who appears to trade as [Omitted] Homes.

Assets	Holder	Husband's Value	Wife's Value
Property C	Wife	$720,000.00	$720,000.00	Agreed
Property N	Joint	$340,000.00	$340,000.00	Agreed
Ford Futura	Wife	$5,000.00	$5,000.00	Agreed
Toyota Hilux	Husband	$1,000.00	$1,000.00	Agreed
IAG Shares ($3.91 x 485)	Joint	$1,896.35	$1,896.35	Agreed
Commonwealth Bank	Wife	$2,344.00	$2,344.00	Agreed
Commonwealth Bank	Husband	$600.00	$600.00	Agreed
Household contents	Husband	$4,000.00	$4,000.00	Agreed
Household contents	Wife	$4,000.00	$4,000.00	Agreed
Total Assets (Excluding Superannuation)		$1,078,840.35	$1,078,840.35
Assets	Holder	Husband's Value	Wife's Value
Superselect- Commonwealth	Wife	$25,386.60	$25,386.60	Agreed
MLC Superannuation	Husband	$12,842.25	$12,842.25	Agreed
CBUS Super	Husband	$1,562.84	$1,562.84	Agreed
Total Superannuation		$39,791.69	$39,791.69
Total Assets (Including Superannuation)		$1,118,632.04	$1,118,632.04
Liabilities	Debtor(s)	Husband's Value	Wife's Value
Mortgage over Property N	Joint	-$224,166	-$224,166
Mortgage	Wife	-$47,766	-$47,766	Agreed
Mr B	Wife	-$10,000.00	-$10,000.00	Agreed
[Omitted] Homes	Wife	-$55,639	Dispute
Total Liabilities		-$281,932.00	-$337,571.00
Net Assets (Excluding Superannuation)		$796,908.35	$741,269.35
Net Assets (Including Superannuation)		$836,700.04	$781,061.04

Relevant Law

The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole.

My discretion in this regard should be exercised having regard to the facts of this case.
Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by the husband and later contribution of the wife, in bringing property into the marriage at different times. In this regard, I need to consider the decision of the Full Court in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties. Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship…
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.

Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
These applications are governed by s.79 of the Act which provides, relevantly:
(1) In property settlement proceedings, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e) the matters referred to in subsection 75(2) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.
In relation to informal agreements between parties that do not comply with s.79 of the Act, the Full Court in DW & GT [2005] FamCA 161 has made the following comments at paragraphs 39-40:
39. Where parties enter into an agreement concerning property, other than an agreement approved under the provisions of the Act or embodied in consent orders, and one party subsequently commences proceedings under s 79 for an alteration of property interests, the Court must determine the application on its merits having regard to the factors as set out in s 79(4) as they exist at the time of the hearing of the application under s 79 and according to the law in force at that time and not, as to either of those two matters, at the time the agreement was made. There is no threshold test, before embarking upon the s 79 exercise, to determine whether the earlier agreement was just and equitable at the time it was made according to the facts as they then existed and the law then in force. The earlier agreement should be considered (as an indication of what the parties may have regarded as just and equitable at the time), but its provisions only given effect if they coincide with an order which is just and equitable according to s 79 at the time of the hearing.
40. In determining s 79 applications in circumstances where there has been an earlier agreement, it will often be necessary to consider what was the value of the parties’ assets at the time of the agreement, what their various contributions were to that time, and what might have been an appropriate s 75(2) adjustment. A consideration of these matters might well be necessary in order to provide a background to the parties’ understanding of what was a just and equitable settlement at the time. However, and perhaps more significantly, it would generally be necessary for the Court to acquaint itself with changes in the composition and value of the property pool, so that post-separation contributions can be assessed.

Husband’s Compensation Payment

Whilst the husband received $83,505 in May 1983, only $61,000 was applied towards the purchase of a property at Property U. There was no mortgage on this property. It was rented out between 1984 and 1988 at which time the parties moved in. The husband’s direct financial contribution towards the acquisition, conservation and improvement of this property was overwhelming.
It was then sold for $79,000 and the sale proceeds used to purchase the Property N land in 1989 again without mortgage. The construction costs of the home in Property N were also funded by the sale proceeds as well as the parties’ savings. In 1998, nine years later, the parties borrowed to effect renovations to the property, and possibly for other joint uses, and by separation in 2004 I am satisfied there was a debt of $30,000 secured against the property. As at separation therefore, it is still the case that the husband’s contribution is significantly greater than that of the wife, though certainly no longer as overwhelming as it was when it was purchased. By 2004 it is clear that the wife had contributed to the construction costs, and repayment of the 1998 loan, as well as made the myriad other contributions referred to by the Full Court in Williams at paragraph 18 of the judgment. Whether one approaches the assessment exercise by having regards to the actual dollar contribution made by the husband, or by reference to a contribution in equity terms, or by reference to values at separation and at trial, it still remains after the end of a long relationship as a greater contribution by him. It was the cornerstone of their wealth prior to the Property C property. I assess his contribution at 65 percent.

Provision of Rent-Free Accommodation

The wife’s contribution through the provision of rent-free accommodation for eight years by her mother, and later one year by her father, is significant, though difficult to assess. It is significant that the wife gives no evidence of what she asserts to be the consequences and/or benefits to them of this rent-free accommodation. She does not say, for example, that it enabled them to save money to then use as a deposit on a purchase (see paragraph 6 of wife’s affidavit). Indeed the evidence indicates that they were receiving rentals from the Property U property for about half the period they were living in the granny flat. She does assert at paragraph 11, however, that when they moved into a rent-free property provided by her father at Property C they “intended to stay there for several years to save money to enable us to become financially able to build” but as it turned out they were only there for a relatively short time. Accordingly, unlike the decision of Chisholm J in Pellegrino (1997) FLC 92-789 the wife’s case is poorly articulated and is left to inference. Nonetheless I accept that the contribution in question was a valuable one. As at the date of separation I assess this as 5 percent.

Gift of the Property C

In 2003, the year before separation, the wife’s father gifted to her land at Property C as an early inheritance. The agreed evidence is that the value of this at that time was $450,000. There is no evidence to indicate that the husband made any contribution to this. Accordingly as at the date of separation the wife made an overwhelmingly greater contribution to this property as compared to the husband.

Relevance of the Informal Agreement

In DW & GT the Full Court at paragraphs 39 and 40 indicated that I should consider the informal agreement as an indication of what the parties regarded as just and equitable at the time, but this is only significant if it coincides with what I determine is just and equitable as at the date of the trial. Obviously I must have regard to what happened afterwards.
It should be noted that at the date of separation the child [X] was living with her mother. [X] was 14 at the time. Both parents were working. I have assessed the wife’s contribution to Property N at 35 percent. Her further contribution by way of provision of rent-free accommodation I assess at 5 percent. I would also have assessed the s.75(2) adjustment to her favour at a further 10 percent except that she had been given the Property C land by her father, thus potentially putting her in a stronger asset situation as compared to the husband. There would still have been a s.75(2) adjustment in her favour at 5 percent. This means that had I undertaken the s.79 assessment exercise at the date of separation, the wife would have received 45 percent of Property N and all of Property C. The parties in effect agreed at 50 percent of Property N, based on an estimated value of $400,000. That is what they considered just and equitable at the time. It was certainly within the range of possible outcomes at the time, and I doubt if there would have been any hesitation in making a consent order to this effect.
But as the Full Court in DW & GT states, I am also required to examine the change in the composition and value of the asset pool, and assess post-separation contributions.
With the benefit of hindsight, there are a number of significant changes in the composition and value of the asset pool, and possible post-separation contributions that will need to be examined below. However I note:
a)In their affidavits both parties annexe a copy of the transfer of Property C from the wife’s father to her. That transfer is stamped having regard to a dutiable amount of $155,000, even though the consideration was a nominal $1.00. There is no evidence before me to indicate what the parties themselves believed to be the value of Property C at the date of separation. However, exhibit W6, an Application for Consent Orders that the wife asserts she completed and sent to the husband, indicates that on or about October 2006 she believed it to be valued at $500,000 though it is likely she had either commenced or substantially completed construction of the home by that date. The expert evidence indicates, however, that Property C had a value of $450,000 at separation. It is possible, therefore, that Property C was worth more at separation than either party believed. Whatever may, in fact, have been the case, I cannot ignore today the evidence about what it was worth back then.
b)If it is the case that the parties believed Property N to have a value of $400,000 at separation, the fact is that is has a value of $340,000 today. It has thus decreased in value significantly.
c)The value of Property C has increased to $720,000. Indeed the agreed valuation evidence apportions this as to $500,000 for the land and $220,000 for the improvements. It follows that the major increase in value since the informal agreement between the parties is attributable to the construction of improvements on the land.
d)As indicated above, whereas [X] was in the care of her mother at separation, one year later she came into her father’s care.
So what is the relevance of the informal agreement? I believe the answer to be: not much. It is interesting background and helps me to appreciate why the parties entered into their informal agreement, but it certainly does not fetter me in any way in determining what is a just and equitable alteration of property interests as at the date of trial. In reaching this conclusion I acknowledge the thoughtful submissions made by Ms Christie, counsel for the wife. I accept that the agreement reached by the parties was documented after each had received independent legal advice, and that such agreement was implemented and acted upon by each party. But it was and still remains an informal agreement that does not oust this Court’s jurisdiction under s.79 of the Act. The informality of this agreement was a matter that either or both of these parties could have addressed at any time after separation. Either party could have commenced proceedings under s.79 at any time after separation but are taken to have made a conscious choice not to do so until the husband filed on 2 May 2007. The parties must bear the consequences of their own actions in this regard.

Post-Separation Care of [X]

[X] remained in the mother’s care on separation, through to

3 September 2005
. During this period the husband paid child support. After [X] went into her father’s care, the mother paid child support. It seems as if [X] and her mother argued, and have not spent much time with each other over the last few years. [X] turned 18 in March this year. I accept that [X] was not in full-time education for the entire period she was in her father’s care and in particular was working for a number of years, at the very least on a part-time basis. Nonetheless she was not independent of her father who still bore the primary responsibility for parenting her. This post-separation contribution is significant. I assess it at 5 percent in favour of the husband. It would have been more were it not for the first year when she was in her mother’s care.

Post-Separation Contribution to Property C

As indicated above, after separation the wife used the $185,000 paid to her by the husband to construct the home on the Property C property.

I accept that it was not the only source of funds used for that purpose, and that she borrowed from RAMS, and her father, to further assist in construction costs. The expert agreed evidence indicates that the value of Property C appreciated from $450,000 to $720,000, partly because of an increase in the value of the land, but principally because of the improvements effected on the land.
It is very difficult, if not impossible, for the husband to assert he has made a contribution to the Property C land on separation. There is no evidence to support this. But it is also very difficult, if not impossible for the wife to assert (as she did) that the husband made no contribution to the construction costs after separation. The fact is that he provided, pursuant to the informal agreement, the $185,000 that was the main source of construction costs. His contribution needs to be assessed in that light. Likewise the parties’ 2004 informal agreement is not a barrier that prevents this court from looking at events before that date. As the Full Court has stated in DW & GT I must assess justice and equity as at the date of the hearing. And yet I do not possess the surgeon’s razor-sharp scalpel with which to make fine dissections about contribution. All I can do is to attempt to assess contribution as at today’s date notwithstanding the passage of time and the occurrence of events (such as market increases and decreases in the value of property) only some of which are caused or contributed to by either party.
Doing the best I can under circumstances created by the parties themselves, I assess the wife’s contribution to Property C at 85 percent and the husband’s at 15 percent. In very broad and unspecific terms, I am satisfied that 15 percent of the current value reflects the contribution that the husband himself made to the construction costs, particularly having regard to the fact that, on the approach I have adopted in this case, all events need to be reconsidered from today’s date, and thus the $185,000 he paid was not solely his money, but the wife’s too.

Debt to Brother-in-Law

The wife asserts that she owes her brother-in-law, Mr T, trading as [Omitted] Homes the sum of $55,649 (inclusive of GST) for works done to the Property C property. She wants this included in the pool of assets and liabilities. The husband opposes this. I agree the debt should not be included as a joint debt. The evidence about this debt is most unsatisfactory. Mr Wong’s skilful cross-examination of Mr T convinced me that, at the very least, he had been capricious in the preparation of the invoice and, at worst, he and the wife conspired in some way to create this liability after the proceedings had commenced. I list some of the “irregularities” in the evidence that leads me to this conclusion:
a)The wife gave evidence that Mr T did not give an estimate of costs before the work, but Mr T said that he had, verbally, before commencing the work.
b)Mr T could not tell the Court how much of the $250,000 had in fact been paid.
c)There was no contract, despite the size of the project.
d)Doubt was cast on the date of the invoice and there was an inference that it was prepared much later than the date it bears.
e)The invoices produced to support the account in fact did not relate to the wife’s property.
f)Inexplicably the account refers to items that were supposedly supplied at periods of time well before the date of the account itself.
g)Items referred to in the account were not delivered to the wife’s property, and some indeed appear to have been used by Mr T himself.
h)The account refers to items that Mr T acknowledged had in fact been paid for by the wife.
The wife at all times bore the onus of proof to establish this debt on the balance of probabilities. She has failed to do so.

Just and Equitable Order Under All the Circumstances

This is one of the comparatively rare cases where an asset by asset approach to contribution is justified, and thus I need to be very specific in apportioning percentages. For all practical purposes there are three pools of assets as follows:
a)The superannuation pool;
b)The Property C property;
c)The remaining non-superannuation pool of assets.
To approach this exercise in any other way runs the risk of unfairness to one of both parties. Having regard to the value of Property C, and the fact that it came in after separation, it must be treated separately. Thus:
a)I assess the husband’s contribution to Property C to be 15 percent and the wife’s to be 85 percent.
b)I assess the husband’s contribution to the superannuation pool to be 55 percent representing an equal contribution at separation plus an extra 5 percent for post-separation contribution to the care of [X]. The wife’s contribution will therefore be 45 percent.
c)I assess the husband’s contribution to the remaining non-superannuation pool to be 65 percent at separation, plus 5 percent for post-separation contribution to the care of [X], less 5 percent to reflect the wife’s contribution by way of rent-free accommodation. Thus the husband gets 65 percent of this pool, and the wife 35 percent.
Thus:
a)Property C property: $720,000 less $47,766 mortgage to RAMS (agreed) and $10,000 debt to Mr B (agreed) = $662, 234
Husband: $99, 335 (15 percent)                Wife: $562,898 (85 percent)
b)Superannuation pool: $39,791 (agreed)
Husband: $21,885 (55 percent)                 Wife: $17,905 (45 percent)
c)Remaining non-superannuation pool: $358,840 (agreed) less mortgage $224,166 = $134,674
Husband: $87,538 (65 percent)                 Wife: $47,135 (35 percent)
Total entitlements of parties:
Husband: $208,758  Wife: $627,938
Less what they have:
a)Property C (equity)
Husband: $0  Wife: $662,234
b)Property N (equity)
Husband: $115,834  Wife: $0
c)Ford Futura
Husband: $0  Wife: $5,000
d)Toyota Hilux
Husband: $1,000  Wife:$0
e)IAG Shares (to be retained by wife)
Husband: $0  Wife:$1,896
f)CBA savings
Husband: $600  Wife: $2,344
g)Household contents
Husband: $4,000  Wife: $4,000
h)Superannuation
Husband: $14,404  Wife: $25,306
Husband: $72,920 (shortfall)  Wife: $72,842 (excess)

Having regard to the above calculations, if Property N is sold and the net sale proceeds paid to the husband, and if the wife retains

Property C subject to the RAMS mortgage and debt to her father, and otherwise each party retain what is in their possession, the wife would need to pay to the husband $72,920 in order to implement the alteration of property interests.
The husband’s net total entitlement of $208,758 represents just under 25 percent of the combined net pool of assets, and the wife’s net entitlement about 75 percent. Having regard to the disproportionate value of Property C and its receipt after separation, I believe it is just and equitable under the circumstances.
I note no splitting order was sought, so the superannuation will remain where it is. The IAG shares are of negligible value, and I will order the husband to transfer them solely to the wife.
Even if the parties considered that their informal agreement in 2004 was just and equitable at that time, I do not believe that it is today having regard to all the matters that I have referred to above.

I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Associate:

Date: