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Singerson v Joans [2014] FamCAFC 238

Large post separation inheritance

In Singerson a relatively wealthy couple separated in February 2009.  At about separation in February 2009 the husband’s father died.  The husband subsequent to separation inherited 50% of his father’s estate which amounted to approximately $3M.

The husband was 47 and the wife was 46 at the time of trial.  There were two children aged 13 and 10 at the date of trial.  The wife as well as being the chief income earner during the marriage was also the primary homemaker and carer for the children.  Her role as primary carer for the children continued from separation until the time of trial (and at the time of appeal) and was likely to continue until the children reached adulthood (8 years at the time of trial in the case of the younger child).

The trial judge awarded the wife 60% of the pool excluding the husband’s inheritance and awarded the wife a 20% share of the husband’s inheritance.  All told the overall distribution was 46% to the wife and 54% to the husband.

Included in the overall division was an adjustment of 2.5% of the total pool in favour of the wife based on s.75(2) factors.

The appeal was upheld on the basis that the trial judge appeared to have “muddled” an asset-by-asset approach with a global approach and had probably taken into account the wife’s contribution to the husband’s inheritance at both the stage of assessing contribution and at the stage of assessing the s.75(2) factors.  Further it appears the trial judge considered contribution to the balance of the matrimonial property (excluding the inheritance) and then considered the s.75(2) factors and then considered contribution to the inheritance.  As such the trial judge’s decision was, it would appear, “flawed”.

The significance of the decision in Singerson v Joans

I suggest the significance is fourfold:

  1. A large post-separation asset introduced from outside the marriage and to which the wife had made no direct financial contribution was taken into account in assessing the parties’ respective contributions.  It was not quarantined from the assessment of contributions and only taken into account for the purposes of s.75(2) factors;
  2. Separate final percentage assessments of contribution before and after separation are not to be encouraged;
  3. The wife’s contribution to the inheritance was assessed on the basis of her contribution to the entirety of the marriage not just her post- separation contributions in shouldering the “lions share” of the parenting of the two children;
  4. The case also might at first blush suggest an affirmation of the global approach rather than the asset-by-asset approach.

 The relevant legislation

It is always productive to re-examine s.79(4) when approaching a property trial or appeal.  In particular, I set out s.79(4)(a), (b), (c) and (e) [with my emphasis]:

(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)    

(e)      the matters referred to in subsection 75(2) so far as they are relevant.”

From this basic analysis of the unequivocal language used in s.79(4) the following propositions are readily apparent:

  1. All the property that the parties have whether being jointly or individually at the time of trial is relevant;
  2. Contributions to property which is no longer held by the parties or either of them is relevant;
  3. Financial contributions can be direct or indirect to particular property;
  4. Direct and indirect non-financial contributions are clearly relevant;
  5. Whilst a contribution as a parent or homemaker may well constitute an indirect non-financial contribution to the assets acquired by the parties there is no need to establish a causative link to any particular asset by virtue of a parenting or homemaking role – so much is clear from s.79(4)(c);
  6. The court is entitled to have regard to all contributions with respect to property that may no longer be held by the parties whether or not that property has effectively been replaced by other property financially linked to the property no longer held; and
  7. There is no requirement for any particular temporal link with contributions to pre-date separation or post-date cohabitation.

An analysis of the judgment in Singerson v Joans

A strong Full Court consisting of Bryant CJ, Ainslie-Wallace and Crisford JJ at [65] and [66] stated:

“65.   We are of the view that his Honour misled himself, and thus fell into error, in identifying only the four years between separation and trial as being the appropriate time upon which to assess contributions to the inheritance rather than across their 15 year relationship.

 66.    Section 79(4) of the Act is clear. There is nothing to suggest that any category of contributions needs to be quarantined and applied solely to particular assets. The court is mandated to look at the totality of what the parties have contributed in a financial and non-financial sense, including contributions to the welfare of the family and to the acquisition, conservation and improvement of assets. The court is required to evaluate the significance of all the various contributions to the property, notwithstanding there may be different categories of that property.”

In re-exercising the discretion the Full Court stated at [94] to [98] as follows:

“94.   We have no difficulty accepting that over a period of approximately 15 years cohabitation and a further four years between separation and the trial that the wife made the significantly greater contribution to the property acquired prior to separation. In particular we refer, as did the trial judge, to her greater contribution both in a financial sense and in terms of her care of the home and for the children.

 95.    The parties’ respective roles remained much the same throughout the entire relationship in every sense. The husband introduced a substantial sum of money late in the marriage and after the parties had separated. This has made a noticeable impact on the property pool.

 96.    Despite the timing of the receipt of the inheritance we consider that over this long marriage a global approach is appropriate. The contributions the parties made to various components of their assets are assessed carefully and then looked at holistically to arrive at an overall assessment.

 97.    On this basis and utilising the trial judges’ largely unchallenged findings of fact we would assess the parties’ contributions to all their property to the date of trial as 52.5 per cent in favour of the husband.

 98.    This assessment acknowledges the initial contributions of the husband and also his post separation inheritance. However, this is more than matched by, inter alia, the considerable contributions of the wife to the family including her post separation contributions.”

The ultimate split of 47.5% to the wife and 52.5% to the husband would equate to the wife receiving 73% of the balance property if the inheritance had been left out of consideration.

The court considered that no further adjustment pursuant to the s.75(2) factors was required.

Accordingly the Full Court emphasised that there was no need to establish a direct or indirect financial or non-financial contribution to the inheritance.  That is to say to the acquisition, conservation or improvement of the inheritance.  The court considered that the wife’s substantial contribution as homemaker and primary carer over the entirety of the marriage not just the 4 years since separation more than adequately constituted a contribution.  I would add it could well be argued in any event that the wife’s contribution as homemaker and primary carer did constitute an indirect non-financial contribution because without that contribution the financial position of the husband at the date that he received his inheritance may have been considerably more problematic and he may have owed substantial funds and had to settle that debt with a large part of the inheritance he received and as such the impact on the matrimonial pool would have been very considerably reduced.  But in any event such speculation is not necessary.

Post separation assets received from outside the marriage (that is not related to the asset base at the time of separation) are not immune from an argument based on contribution to other assets or contribution based on a homemaking role carried out either before or after separation or both before and after separation.

 The asset-by-asset approach or the global approach

In Singerson the Full Court of the Family Court emphasised “the desirability of adopting a holistic approach to the assessment of the parties’ contribution.[1]  The court also accepted that the discretion under s79 is “a wide discretion, not the performance of a mathematical or accounting exercise”.[2]  Further the court again quoted from the High Court’s judgment in Norbis v Norbis[3] that a trial judge should not give “over-zealous attention to the ascertainment of the parties’ contributions”.

In support of the latter propositions the court drew for its decision from Dickons & Dickons[4].

At [24] the Full Court of the Family Court in Dickons stated:

“There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship.  So much is clear from the terms of s.79 itself and, in particular, s.79(2).  The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.”

In [21] of the judgment in Dickons the Full Court had again emphasised that whilst the assessment of contributions is holistic it is arrived at by analysing the “nature”, “form”, and “extent” of the property as well as analysing the nature, form and extent of contributions such as homemaking and childcaring.

In Dickons the Full Court also noted that the analysis should also be undertaken by reference to the nature and form of the particular marriage partnership:

“Is it, for example, a relationship, as Deane J put it in Mallett at 640-641

          ‘…where the parties have adopted the attitude that their marriage constituted a practical union of both lives and property…’

or is it, for example, a union where parties lived very separate domestic and financial lives?”

Whilst the court in Singerson emphasised that the ultimate discretion was to be applied globally and was critical of ascribing different percentages to different parts of the marriage it was not argued in front of the Full Court that the trial judge was in error in adopting an asset-by-asset approach and further the task of examining the nature, form and extent of the parties’ respective contributions was affirmed in Singerson.

It is further, I respectively suggest, to be borne steadily in mind that in the seminal case of Norbis each of the five judges in that decision found that the error perpetrated by the Full Court of the Family Court was to stipulate that the trial judge was obligated to apply a global approach rather than an asset-by-asset approach.

At [15] in the case of Norbis in the joint judgment of Mason and Deane JJ the judgment of Nygh J in G & G[5] was quoted with approval.  In Singerson the Full Court again reiterated the judgment of Nygh J that had been approved in the High Court.  Nygh J stated whilst Norbis was under consideration by the High Court:

“At the moment the Family Court is divided between those who favour the so-called global approach and those, of whom I am one, who seek to achieve some degree of precision. In my view, despite what was said in Norbis both approaches are legitimate unless the High Court rules otherwise provided that those who take the global approach heed the warning that the origin and nature of the different assets ought to be considered and that those who favour the more precise approach do not mistake the trees for the forest, i.e. add up the individual items without standing back at the end to review the overall result in the light of the needs of the parties.”

I would proffer that in a majority of cases where the pool is relatively small and the assets have in broad terms the same origins and characteristics a one pool approach is probably the most convenient and ought be approached.  In Norbis Mason and Deane JJ at [16] stated:

“For ease of comparison and calculation it will be convenient in assessing the overall contributions of the parties at some stage to place the two types of contribution on the same basis, i.e. on a global or, alternatively, on an “asset-by-asset” basis. Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient. … In saying this we are not to be understood as denying the legitimacy of the trial judge’s ascertainment in the first instance of the financial contributions of the parties by reference to particular assets. It is difficult to conceive how the trial judge in many cases could otherwise take account of such contributions as he is required to by s79(4)(a) of the Act. In this respect we agree with the comment of Nygh J in G and G that, although mathematical precision is certainly not required, there is ordinarily a need to know the circumstances in which assets were acquired and the general extent of each party’s contribution to them.”

In the other joint judgment in Norbis propounded by Wilson and Dawson JJ this approach was emphasised more emphatically.  At [25] and [26] of their joint judgment Wilson and Dawson JJ stated:

“25.   If, as we understand to be the case, the so-called global approach requires no more than that the whole of the assets of the parties be identified and, so far as possible, assessed in value before any alteration of property interests can take place under s.79, then it is a requirement which, as a general rule, is imported by the section itself …

 26.    On the other hand, if the suggested approach goes further and precludes individual assets being treated differently in the division of property by the application of different proportions, then it is, in our view, misconceived. Of course, it may be possible and appropriate in many cases to determine the proportions in which the property is to be divided without treating any of the assets separately, but where the interests of the parties differ, a different approach will be open. Section 79, in particular s.79(4), refers to “any property of the parties to a marriage or either of them” and that expression is sufficient to encompass both the entirety of their property and their individual interests. If the parties’ interests in specific items of property differ or they have made differing contributions, it may be desirable to proceed upon an item by item basis in the division of the property between them. In such a case, justice and equity may best be served by treating the items separately for the purpose of determining the proportions in which they are to be divided, particularly if the overall division is to be effected by the transfer or retention of interests in individual assets … It is true, as Nygh J pointed out, that where this is done, at the end of the exercise a calculation of the overall proportions in which the total property has been divided may serve as a useful check to ensure that the result is not disproportionate as a whole.”

Accordingly in my view Singerson does not impinge upon the legitimacy of trial judges considering as a preliminary to the overall assessment of contribution different assets which have different characteristics separately.  This may particularly be so with respect to assets introduced from outside the marriage such as inheritances or windfalls.

Finally Singerson discourages a scoreboard approach whereby different percentage contributions are advocated to different parts of the marriage such as pre-separation cohabitation and post separation Singerson in no way reduces, I respectfully suggest, the need for a judge to carefully undertake a detailed analysis of the “nature”, “form” and “extent” of the parties’ respective contribution to respective assets where there are clearly different classes of assets in the matrimonial pool.

Eufrosin & Eufrosin [2014] FamCAFC 191

Shifting ground?

It is interesting to compare the approach taken in Singerson v Joans to the approach taken by the Full Court of the Family Court in Eufrosin & Eufrosin.  In that case the husband and wife used funds from a business that had been conducted primarily by the husband prior to separation for the purposes of their post separation lives.  Regular withdrawals of funds were made by each of them from what was formerly a joint asset and those funds were applied by each of the parties individually to purposes wholly unconnected with the former matrimonial relationship.  The wife purchased with such funds some six months after separation a winning lottery ticket.  The trial judge in Eufrosin held that there was no contribution by the husband to the money with which the wife purchased the winning lottery ticket.  The trial judge had stated that it would have been “pure sophistry” to credit the husband with any contribution to the funds used to purchase the ticket.  The husband challenged that contention asserting error on the part of the trial judge in not finding that he contributed to the winnings.

It appears the Full Court disposed of the appeal insofar as it related to the issue of contribution to the lottery ticket on the basis that there could not be said to have been any direct or indirect financial contribution post- separation to the winning lottery ticket.  The argument in front of the Full Court in Eufrosin may have been primarily mounted on a contention that there was a direct contribution to the monies used to purchase the lottery ticket and ultimately it would appear that counsel arguing the appeal conceded that the husband had made no contribution to the purchase of the lottery ticket.[6]

In Eufrosin at [10] the Full Court quoted with approval the judgment of the Full Court in Zyk and Zyk[7].  In Zyk which also dealt with the issue of contribution to a winning lottery ticket the Full Court had stated:

“In the ordinary run of marriages a ticket is purchased by one or other of the parties from money which he or she happens to have at that particular time. That fact should not determine the issue. Where both parties are in receipt of income and where their marriage is predicated upon the basis of each contributing their income towards the joint partnership constituted by their marriage, the purchase of the ticket would be regarded as a purchase from joint funds in the same way as any other purchase within that context and would be treated accordingly … Where one party is working and the other is not the same conclusion would ordinarily apply because that is the mode of partnership selected by the parties … There may be cases where the parties have so conducted their affairs and/or so expressed their intentions that this would not be the appropriate conclusion.”

In Eufrosin at [11] the Full Court of the Family Court stated:

“As this Court in Zyk made clear, the source of funds should not “determine the issue” of how a lottery win should be treated for s.79 purposes.  What is relevant, in our view, is the nature of the parties’ relationship at the time the lottery ticket was purchased.  In our view, the authorities just cited, together with what was said by the High Court in Stanford regarding the “common use” of property, is sufficient to dispose of the husband’s contention that her Honour erred in failing to find that he contributed to the wife’s lottery win.  At the time the wife purchased the ticket, regardless of the source of the funds, the “joint endeavour” that had been the parties’ marriage had dissolved; there was no longer a “common use” of property.  Rather, the parties were applying funds for their respective individual purposes.”

It seems to me with great respect that whilst the husband might not have been able to run a s.79(4)(c) homemaking or childcaring argument to assert contribution the fact that he apparently was continuing to run a business that he had primarily conducted during the marriage and which was still producing income for both parties post-separation as well as other contributions would have justified a contribution in his favour and it would appear the court in Eufrosin has adopted a quite narrow direct financial contribution test.

I respectfully would suggest until the assets are separated after a property trial or consensual property orders the fact of the matter is that the parties are still intimately linked in common to the matrimonial pool of assets.

The approach in Eufrosin does not appear entirely consistent with the approach in Singerson.

Special contributions

“Dead, buried and cremated”

If special contributions were thought to still survive in the rarefied atmosphere of “big money cases” the relatively recent decision of the Full Court in Fields & Smith[8] appears to have comprehensively rejected such a lingering view that special contributions have survived in cases involving very large matrimonial pools – particularly pools based on substantial business assets.

The facts in Fields were that the parties had been married for some 29 years from 1979 to the date of separation in April 2008 and the parties were divorced in June 2009.  The property trial was heard by Justice Murphy on 6th July 2012 and the appeal was decided in April 2015.  At marriage the husband was 21 and the wife was 18.  At the time of trial their ages were 54 and 51 respectively.  There were three adult children of the marriage some of whom were working in the family business at the time of trial.  The parties not unsurprisingly given their age started with practically nothing apart from a block of land which the husband owned.  At trial the ages of the children were 31, 30 and 25 respectively.  The wife’s primary focus during the marriage was to dedicate herself to homemaking and parenting, although she played a not insignificant role in the development of an extremely successful building and construction business.  She was a director at all material times and she attended director’s meetings.  In addition the parties, as is not uncommon for builders in building up a successful building business, had turned over their matrimonial home every two years for a significant period of the marriage and this obviously put considerable pressure on the wife as it is no small thing to sell and re-establish a new family home on a regular basis.

Undoubtedly the husband had some special commercial acumen.  He was the driving force behind the design and marketing of the construction firm that was established by the parties but it was to be borne in mind that in building the business both the husband and wife who were at all material times equal shareholders in the building business consisting of two companies and they had introduced capital and as an equal shareholder the wife would have been perfectly entitled to have said that she wanted to otherwise deploy her capital and the parties had continuously introduced profit earnt in the business into the continued expansion of the business.

Further, the parties had sold a share of the business (16%) to four key employees for the purposes of “handcuffing” these employees to the business and in the latter years of the marriage and particularly post-separation it appears that these key employees were playing a very substantial role in the continued successful operation of the construction companies.  With respect to the reinvestment of the profit into the business, again the wife would have been entitled to have required her share of the profit to be used for personal expenditure.

The court also drew attention to the proposition that in reality a directorship by virtue of the provisions in the Corporations Act carries onerous responsibilities and those responsibilities are inconsistent with the proposition that one or other of the parties to the marriage should be considered as a token director.

All that being said it is clear that the husband had some brilliance in the way in which he predominantly drove the business and oversaw the continuing profitable functioning of the business.

Importantly contrary to the proposition advanced by the husband that the discrepancy between the respective contributions of the husband and wife was even more marked post-separation by reason of the fact that the children had become adults and left home and also the wife’s role in the running of the company had even further diminished the court found that there was little evidence to negate the proposition that the husband’s role, particularly his hands on role in relation to the management and running of the company had considerably declined since separation and he had spent considerable time overseas with his new wife.  This proposition blunted to a large extent the assertion by the husband that the wife’s homemaking and parenting role had substantially diminished as the children grew up and left home.

The pool was between $32M and $40M and between $22M and $30M of that pool was represented by the value in the construction companies.

The appeal point

The trial judge had awarded 60% of the pool to the husband and 40% to the wife.

The trial judge it would appear made the following significant errors:

  1. During the course of his assessment of contribution pre-separation he made a number of findings to the extent that the contributions of the husband could not be elevated above the contributions of the wife.  However when he came to assess the post-separation contributions he proceeded on the basis that there was a significant discrepancy and implied he had contrary to his earlier findings already arrived at the conclusion that there was a discrepancy in the extent of their contributions during the pre-separation period of the marriage thus there was inconsistency and a lack of explanation as to how the judge had come to these apparently inconsistent positions.  In addition there was precious little evidence to suggest that the husband’s involvement in the business post-separation had increased and rather the evidence suggested that it had decreased.
  2. Further, the trial judge appeared to have accepted a table of cases put forward by senior counsel for the husband of a number of big money cases where on the basis of the husband’s business acumen the wife had received between 25% and 40% of the pool.  On the one hand the trial judge appeared to reject the proposition of special contribution in big money cases but on the other hand he appeared to have accepted the proposition that if the jurisprudence surrounding the s.79 discretion was to have any “real meaning” then he was obligated to pay attention to this table of cases.  Accordingly further inconsistency was established and in any event as anybody who has ever argued a manifestly excessive sentence in the Court of Criminal Appeal will know tables count for very little and indeed are probably dangerous.  A so called trend will only have any real integrity if each case is carefully identified, any particular distinguishing facts or circumstances surrounding each case are clearly identified and it is established to the satisfaction of the appeal court that there has been no movement in the law or in the approach taken by the appeal courts during the currency of any period covered by the table and indeed these same propositions in various degrees were advanced by the Full Court of the Family Court in Fields in finding error by the trial judge arising out of his reliance on the table.

The reasoning of the Court

The members of the court consisted of Bryant CJ, May and Ainslie-Wallace JJ.  The plurality consisted of Bryant CJ and Ainslie-Wallace J.  A short judgment which was in agreement effectively with the plurality was produced by May J.  I will confine my analysis to the main judgment, that is the judgment of the plurality.

Special skills or special talent

At [42] and [43] the plurality stated:

“42.   It will be clear from the passages that we have referred to that his Honour rejected an argument that there was a particular type of contribution that related to “special skills” or “special talents”, with the result that such a finding “is productive of a particular finding, or range of findings in respect of contribution”.  Full Court decisions have supported that view (see Kane & Kane [2013] FamCAFC 205, Hoffman & Hoffman [2014] FamCAFC 92) and the jurisprudence can be fairly said to be settled. In particular, the Full Court in Hoffman said:

‘52.   In each case, we consider that the point being made is that there is no principle or guideline (or indeed anything else emerging from s.79), that renders the direct contribution of income or capital more important – or “special” – when compared against indirect contributions and, in particular, contributions to the home or the welfare of the family…’.

 43.    If it is necessary to make the point again, and to highlight it for the purpose of this appeal, we add our endorsement to what has been made clear in the authorities referred and to the Full Court’s comments in [52] of Hoffman, that the words of s.79 do not provide endorsement for any category of contribution related to any class of property (for example, high wealth) being, by virtue of that category or class, more valuable or important than another.  In each case the contributions made by the parties must be evaluated in the context of the facts particular to that case.”

The parenting contribution

I suggest Fields is particularly significant for its powerful reaffirmation of the potency of a claim to have been the primary homemaker and child carer over a long marriage.

The Full Court again emphasised that the contribution under s.79(4)(c), the homemaking contribution, does not require a nexus to any particular property but the court noted that there was in any event a clear nexus on the part of the wife’s contribution to the construction company by reason of her directorships and investments in the company.

Section 79(4)(c) states:

“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”.

The court emphasised a point all too often overlooked that the contribution under s.79(4)(c) does not necessarily cease when the children become adults.  You will see that on a close study of the words of s.49(4)(c) it is a contribution to the welfare of the family constituted by the parties and any children of the marriage.  Such contribution could include contribution made in the capacity of homemaker or parent.  The reader will immediately note that there is no limitation to underage children and contributions made in the capacity of homemaker or parent are but examples of contributions to “the welfare of the family”.

At [97] the court stated:

“Notwithstanding those factors, it is inevitable in some cases that a very significant contribution to the welfare of the family will be of a different kind when parties have separated and the family is no longer constituted by the husband, wife and children. That does not mean that the role completely ceases – in some cases it might take another form such as where a wife became a significant carer for a grandchild. It is also to be noted that s.79(4)(c) requires the court to consider “the contribution made by a party to the marriage to the welfare of the family … including any contribution made in the capacity of homemaker or parent”. Thus, in our view, the wording of the section itself contemplates a contribution to the welfare of the family as being something more than a contribution in the capacity of homemaker and/or parent. The section has been given wide interpretation and there is no reason to read it down (see Nemeth & Nemeth [1987] FamCA 12; (1987) FLC 91-844 and W & W (1997) FLC 92-723).”

Further at [98] the plurality stated:

“In this case, the wife did continue to make contributions to the welfare of the family, which his Honour seems to have noted at [72]. Whilst s.79(4)(c) does not require a nexus between the contributions to the welfare of the family and the property itself, s.79(4)(b) does. The wife’s contributions, as director of the business, and arguably indirectly to the welfare of the family by enabling the business to continue, which fall within s.79(4)(b) then require a consideration of those contributions in the context of the acquisition, conservation or improvement of the property of the parties.”

The court noted that the parties had a partially constructed matrimonial home at the time of separation and that the wife stayed after separation to supervise and oversee the completion of the matrimonial home.

It would appear that ongoing assistance to adult children by assisting with grandchildren and psychological and emotional support comes within the ambit of s.79(4)(c).

The plurality further quoted with approval from Cronin J at [170] in Bulleen & Bulleen[9] where his Honour said:

“Whilst parenting as an occupation might stop or become less burdensome once children become adults, the ongoing role of both parents and later grandparent is no less an on-going contribution. Section 79(4)(c) refers to the contribution to the welfare of the family constituted by the parties and any children. … For one party to then say such a previously agreed role was no longer a contribution to the welfare of the family cannot be right. Importantly, I do not accept that society would see it that way.”

Measurement of post-separation contribution compared to pre-separation contribution

The plurality in Fields at [75] again cautioned against “attributing different percentages to different periods in the relationship”.  The court stated in that paragraph:

“However, that does not mean that the appeal must necessarily be allowed for that reason. As we have already said, there is no requirement to attribute different percentages to different periods in the relationship. Indeed the Full Court has cautioned against it: see Dickons & Dickons …, Lovine & Connor … and Bolger & Headon … where the Full Court said at [28], “doing so … is not consistent with a holistic assessment of the parties’ contributions which is what s.79(4) requires.” It is only if error can be demonstrated in the overall result that the appeal would succeed.”

The economic burden and prejudice implicit in a lengthy dedication to the role of homemaking and parenting

Very significantly the Full Court embraced the proposition that it would be quite unfair if a wife dedicated herself to the homemaking and child rearing for a very long period of time and then when the children grew up was faced with the proposition that she was no longer making a contribution.  The wife would be left with the manifestly unfair position of a life dedicated to homemaking and parenting to the complete financial prejudice of herself and with little chance of forging a remunerative employment based career and harvesting the rightfully earnt rewards accruing from spending her productive years in establishing herself in business or in employment.  At [100] and [101] the plurality strongly affirmed the injustice of such a proposition and forcefully reaffirmed the judgment of Fogarty J in Waters & Jurek[10]:

“100. In her grounds of appeal, the wife pointed to the “implicit prejudice” to the party performing the long-term homemaker and parent role if the court failed to acknowledge the intrinsic changes to that role as the children grow older. Such an approach, it was submitted, would leave women with an unfair burden and economic consequences of role division during marriage. We acknowledge the potential for prejudice to a party whose role, accepted and agreed throughout the marriage, changes as the marriage comes to an end and the children leave home and become independent. It is important, however, for two things to be said. First, s 75(2) enables the court to take account of matters other than contributions where appropriate. The final result, in other words, does not depend solely on contributions.

101.  This point was made eloquently by Fogarty J in Waters & Jurek (1995) FLC 92-635 at p 82,379:

In most marriages, there is a division or roles, duties and responsibilities between the parties. As part of their union, the parties choose to live in a way which will advance their interests – as individuals and as a partnership. The parties make different contributions to the marriage, which the law recognizes cannot simply be assessed in monetary terms or to the extent that they have financial consequences. Homemaker contributions are to be given as much weight as those of the primary breadwinner.  On separation, the partnership, and the division of roles and responsibilities which it produced, come to an end. Individually, the parties are left largely in the personal situations that the marriage has assigned to them. However, the world outside the marriage does not recognize some of the activities that within the marriage used to be regarded as valuable contributions. Home-maker contributions, for example, are no longer financially equal to those of the breadwinner. Post-separation, the party who assumed the less financially rewarded responsibilities of the marriage is at an immediate disadvantage. Yet that party often cannot simply turn to more financially rewarding activities. Often, opportunities to do so are no longer open or, if they are, time is required before they can be accessed and acted upon.  When the marriage ends, especially where that marriage has been a long one, one cannot separate the parties as individuals from the people they became in the context of the marriage relationship, and the allocation of roles, duties and responsibilities which it entailed. …

An order under s.79 would be unjust and inequitable in its operation if it failed to address the manner in which the value of the parties’ roles, adopted in the course of, and for the purposes of the marriage, can be altered by the fact of separation. Those roles can be instantaneously converted into liabilities. The equality of the parties’ positions is terminated.  This Court values different kinds of contributions of the parties’ equally while the marriage subsists. It would be inconsistent with the equality which that position recognizes not to take into account the transformation which the termination of the relationship results in, at least in terms of the capacity for present and future income generation.”

Equality of contribution

In the re-exercising of the discretion after upholding the appeal the plurality noted again that the proposition that a pool of $32M to $39M which arose from neither inheritance nor windfall and had been created from virtually nothing did not in any way point to some special contribution or provide a basis to measure the contributions of each of the parties.[11]  The plurality rejected the proposition that the creation of a very successful business constituted “the very signpost” to unequal contributions.  The court stated that broad statements such as that were inconsistent with the obligations of the court to weigh the respective contributions to the acquisition, conservation and improvement of the parties’ assets required in this case over a very lengthy marriage and to give appropriate weight to the contributions of each party.

At [134] the plurality stated:

“… the notion, if there ever was one, that for some reason the wealth of parties itself, particularly in relation to business interests, should axiomatically mean that the party involved in the business is entitled to more, and according to senior counsel for the husband in this case, significantly more, has been put to rest. It should also be said that it significantly devalues the role of homemaker and parent that the High Court said in Mallet v Mallet … per Mason J should be given “substantial and not merely token weight”. …”

In short the court held that the wife had made a major contribution over 29 years in her role as homemaker and parent and had contributed significantly to the business and that the husband had made a major contribution to the business and, although the Full Court did not expressly comment on this particular consequence, it would seem implicit that the financial affluence generated from the business must have provided substantial opportunity for the children and the family and thus it would seem to me implicit that therefore the husband had made significant contributions to the family.

Accordingly the brilliant result achieved by the parties in Fields was the result of the contribution of both and the result could not have been achieved by one without the other.  Accordingly not surprisingly the court reassessed contributions as equal.

In short over 29 years of productive marriage as Fogarty J said in Waters:

“When the marriage ends, especially where that marriage has been a long one, one cannot separate the parties as individuals from the people they became in the context of the marriage relationship, and the allocation of roles, duties and responsibilities which it entailed.”

Hide and seek or show and tell

Failure to disclose assets

Full disclosure is fundamental to the property jurisdiction.

The Full Court in Oriolo & Oriolo[12] approved the observation of the House of Lords in Livesey v Jenkins[13] to the effect that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts.  In that House of Lords case it was made clear that full and frank disclosure was required as a matter of principle in light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of discretion. The House of Lords noted that that position was quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations for disclosure only exist insofar as statute or court rules require.  The Full Court in Oriolo affirmed the remarks of Smithers J in Briese & Briese[14] to the effect that:

“it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature (referred to in Livesey).”

I would respectfully add that given the oft occurring scenario where the financial documentation is in the control of one party either solely or dominantly (usually the husband) patent injustice would occur if the obligation for full discovery was not vigorously enforced by the Family Court and the Federal Circuit Court of Australia.

The consequence of failing to make full discovery so far as assets, financial resources and annual financial statements in my view are primarily able to be summarised as twofold.

In Weir & Weir[15] the Full Court stated:

“It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.”[16]

I have little real doubt that a reckless disregard to the obligation would be treated in the same way as a deliberate strategy to secret evidence and assets from the reach of the court.  A failure to disclose motivated by “obfuscation and evasion” will be treated in the same manner as a deliberate secretion.  A failure to participate in the discovery and disclosure process would be treated in the same way.

In Gould & Gould[17] the Full Court highlighted the absolute nature of the duty to disclose:

“Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour.”

Accordingly a failure to disclose important financial documentation and/or assets will not be easily explained away.  In relation to parties litigating over a large pool it is likely to be the case that both parties fully apprehend the importance of financial disclosure.

Accordingly a party failing to make full disclosure or secreting assets incurs the very real risk that adverse inferences will be drawn against such party more robustly and with more confidence than would otherwise be the case.  Such a failure will be treated harshly because it is a fundamental breach of obligation and goes to the heart of the jurisdiction.

The second consequence of a failure to disclose important financial information and a failure to disclose asset or financial resource is that it is likely a more generous order will be made in favour of the innocent party.

The issue which has bedevilled a court in circumstances where it reaches a view that there has been a secretion of asset or financial resource is the dilemma that s.79 deals with a division of the property of the parties at the time of trial.  Often a court will not be able to make a specific or detailed finding of an asset which has been secreted.  All the court will know is that it is probable that part of the asset base has been kept from it.

How can a court in those circumstances include the secreted asset in the asset base to be divided?

In my view the first answer is to observe that finding that asset has been secreted from the court is a relevant preliminary issue that is entirely appropriate to be taken into account when the division is made.  In other words, an innocent party’s share could legitimately be inflated.  The difficulty is that without a finding as to the worth of the asset that has been secreted it is difficult to know by how much that share should be inflated.

The second observation I would make is that a court is not obligated to make a specific finding as to the particular and detailed characteristic of the asset that has been secreted.  There may well be sufficient in the evidence to make a general finding or a conservative finding as to the worth of the asset secreted.  For example, it might be that a wealthy man five years prior to trial has an identifiable estate of $5M.  The evidence points strongly to this husband secreting assets overseas.  The style of life lived by the husband post-separation has been maintained at all material times since that point in time notwithstanding the added impost on the income of the parties brought about by separation.  If the husband in these circumstances were to assert that the asset base of the parties at the time of trial was $2.5M a court in those circumstances, I would suggest, would be entitled to make the finding that the asset base of the parties was at least $5M and that the husband had undisclosed assets of $2.5M.

The alternative may be for a court to be conservative.  For example, in a recent case I conducted in front of Judge Baker I suggested that the undisclosed asset was $90,000 and there were good grounds to support that suggestion in that at the time of swearing the trial affidavit there was an extra $90,000 available which appeared to have disappeared by the time the parties conducted the trial and further, the husband had deliberately breached a freezing order for about the amount of $90,000.  Judge Baker was however in a position to actually identify at least $30,000 of that $90,000 and accordingly increased the pool by this amount as well as being more robust in finding against the husband.  In the alternative a court may invoke the provisions of s.75(2)(o) as a means of recognising the secreted asset or financial resources.

The difficult again is that there would appear to be a need to identify with some degree of particularity the amount secreted in order to quantify the extent of any adjustment based on s.75(2)(o).

In Chang & Su[18] the Full Court quoted with approval from Weir & Weir[19] at 79‑593 as follows:

 “It is true that in the case of Monte and Monte [1986] FamCA 1, the Full Court said that to found jurisdiction under s.79 in relation to property other than that which had been identified, the trial judge was obliged to make a finding as to the existence and value of other undisclosed property, even though the unsatisfactory nature of the evidence made it necessary to express that finding in the most general terms both as to identity and value. We confess to some difficulty with this proposition. We should have thought that the Court’s jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets. The difficulty then arises as to what order should be made. However, we are troubled by the proposition which seems to arise from Monte and Monte that if a party is either cunning enough or vague enough to cover his or her tracks sufficiently to prevent a Court making a finding as to the amount that has not been disclosed, then the other party fails. We do not believe this to be the law and insofar as the decision in Monte and Monte supports such a proposition, we do not believe that it should be followed.”

The Full Court then in Chang & Su stated at [71] that:

“It was clearly open to Moore J to apply these principles to the matter before her. Her Honour concluded that the extent of the husband’s wealth, whatever it might have been, was sufficient to justify the order she was proposing to make.”

The Court then went on in [72] to say:

“For reasons which we have explained, we conclude that her Honour made findings sufficient to indicate that the husband was a man of substantial wealth and well able in the circumstances to meet the order made and still retain for himself adequate assets so as to make the outcome in the proceedings just and equitable, having regard to the matters highlighted by her Honour that she was obliged to give consideration to under s.79. … She was extremely hampered in the exercise of that discretion by the non-disclosure by the husband of his financial position and in those circumstances was entitled to take the more robust view that she did. …”

As indicated Judge Baker recently applied the above principle in the decision of Padfield & Padgett[20] between [38] – [41] and Judge McGuire discussed these principles and their guiding effect quite recently in Cross & Hagan[21].

Overlooked asset

I wanted by way of conclusion to comment on some various assets which I think are often overlooked and in cases with larger pools it would in my opinion be worthwhile to pay more attention to them whether you are acting for a husband or wife.  I list these asset classes as follows:

  1. Undistributed dividend;
  2. Taxation imputation credits;
  3. Constructive Trusts;
  4. Resulting Trusts;
  5. Undervalued assets in superannuation funds, particularly self-managed superannuation funds;
  6. Crystallised beneficial interests that have not yet vested in possession;
  7. Power of appointment and discretionary trusts.
W.A. AYLIFFE SC
BARRISTER
DERWENT & TAMAR CHAMBERS

[1] See [63] of the judgment.

[2] See [62] of the judgment.

[4] [2012] FamCAFC 154.

[6] See [14] of the decision.

[7] (1997) FLC 92-644.

[8] [2015] FamCAFC 57 (17th April 2015).

[9] [2010] FamCA 187.

[10] (1995) FLC 92-635

[11] [130] of the decision.

[12]  [1985] FLC 91-653.

[13]  [1985] All ER 106.

[14]  (1986) FLC 91-713.

[15]  (1992) 110 FLR 403

[16]  At page 407-408.

[17]  [2007] FamCA 609.

[18]  [2002] FamCA 156.

[19]  Supra

[20]  [2015] FCCA 2225.

[21]  [2016] FCCA 136.

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