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Property Law – Full Court upholds appeal as to assessment of post-separation contributions

Property Law Dispute
Full Court upholds appeal as to assessment of post-separation contributions where parties had been separated for 10 years – Disparity between wife’s Newstart allowance (and child’s board) and husband’s income of $13,000 per week

In Marsh [2014] FamCAFC 24 (25 February 2014) the Full Court (Ainslie-Wallace, Murphy & Le Poer Trench JJ) considered the wife’s appeal against a property order. It was a 21 year marriage that produced 3 children and net assets of $3.5m. An unusual feature was that separation lasted 10 years before proceedings were brought in 2010 by which time the net pool had grown by $1.3m to $4.8m. The wife had not been in paid employment since 1983, when the eldest children was born. The husband had worked for the same company since 1981.

The court below found (at [28]) that the parties’ contributions until separation were equal; that (at [24]) in the 10 years since separation $1.3m of the $4.8 million pool had been contributed by the husband who had in that time paid a further $2.6m “for the benefit of the wife and the children”; and (at [28]) that it was “satisfied that the evidence support[ed] a further … 20 per cent”.

A 10 per cent adjustment was made in the wife’s favour under s 75(2) after considering “that the wife has some health problems … that the husband will continue to be employed … that the wife has not worked in paid employment for many years and although she had undertaken courses, they had not been intended to provide her with employment capacity” (at [30]).

Each member of the Full Court found error but delivered separate reasons.

Ainslie-Wallace J said (from para 55):

“In this case the contributions of the parties after they separated were different in kind and nature to those made during the relationship. Those of the husband were almost entirely made under s 79(4)(a) and those of the wife made pursuant to s 79(4)(c). Obviously the husband’s contributions were of significant amounts of money. His ability to make the contributions was largely as a result of being able to build a career during the 21 years of the marriage during which the wife, by mutual agreement did not work outside the home but took on the role of homemaker and parent, a role in which, the husband said she had been and continued to be after separation ‘absolutely marvellous’ [68].

[56] To a degree, counsel for the husband accepted that in this case the parties’ contributions continued after their physical separation however argued that during the same period, the husband was working and acquiring property and assets and these ought to be sequestrated in the sense that the wife made no contribution to their acquisition.

[57] That argument must be rejected. It does not give account to the wife’s continuing indirect financial contributions to the husband’s income (albeit in a different way from that during the relationship with the husband).

[61] In this case, the Federal Magistrate’s acceptance that the husband had made ‘the overwhelming contribution’ to the investment properties, acquired after 2000, fails to give proper weight to that to which he referred in [68] namely the wife’s contributions as a homemaker and parent fails to give account to her indirect contribution to the husband’s career and thus his ability to make financial contributions.

[65] Clearly then the husband’s submissions that the increase in property after separation should be regarded as being referrable to a contribution made only by him is to be rejected. It not only ignores the ongoing contribution of the wife to his income but further seeks, impermissibly, to confine contributions to a particular class or list of assets.

[66] The effect of the Federal Magistrate’s orders was to accept the husband’s argument that he had made the overwhelming financial contribution since 2000 but in which he failed to give effect to his findings that after separation the wife continued to make significant contributions both as to the home and children and also indirectly to the husband’s present earning capacity.

[67] Given the findings as to the wife’s contributions both up to and after the date of separation to which reference has been made, his Honour’s determination is ‘plainly wrong’ so as to, in itself, justify appellate intervention.”

As to s 75(2), Ainslie-Wallace J said (from para 75):

“Although the Federal Magistrate referred to the wife’s income as being derived from a Centrelink Newstart Allowance and board paid by the youngest, $467 per week, and apparently took it into account in his determination, the huge disparity in the incomes of the husband and the wife, of itself, should have led to a significant adjustment in the wife’s favour.

[76] The evidence before the Federal Magistrate was that the husband’s income was in the order of $640,000 together with bonuses and incentives which provided him with significant sums in addition to that income. His financial statement before the Federal Magistrate indicated a weekly income of some $13,000. Thus, even without taking into account the value to the husband of his share entitlements, the income disparity between the parties was immense.

[77] Further, the husband left the relationship with an earning capacity contributed to in no small way by the wife and to which she had continued to make an indirect contribution. In Clauson & Clauson (1995) FLC 92-595 it was said at 81,911:

‘It has long been recognised that in most cases the most valuable ‘asset’ which a party can take out of the marriage is a substantial, reliable, income-earning capacity: see Best and Best [1993] FamCA 107; (1993) FLC 92-418 at 80,295.’
[86] The Federal Magistrate’s orders fall outside the ‘generous ambit within which reasonable disagreement is possible’. …”

Murphy J said (from para 104):

“ … I consider that [78] of the reasons in particular is redolent of his Honour having misled himself by, in effect, posing the question of what adjustment should be made to an equal division at separation to take account of contributions in the ten years or so post-separation. The question to be addressed was what did an analysis and weighing of all contributions of all types prescribed by s 79(4) made by both parties across 31 years (the approximate 21 years of the cohabitation and the approximate 10 years after their separation) suggest was a just assessment of contributions. …

[105] For that same reason, it is not a matter … of ‘competing’ contributions by the wife ‘erod[ing] the significance of the husband’s on-going financial and non-financial contributions’ (see, for example, In the Marriage of Pierce [1998] FamCA 74; (1998) 24 Fam LR 377, particularly at 385-6).

[106] Inherent in the finding at [78] is the proposition that the contributions of all types recognised by s 79(4) made by both parties over 21 years in their ‘own spheres’ (see Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605 at 636, per Wilson J) results in contributions being assessed as equal, but the contributions of all types made by both parties in their own spheres over 31 years justifies a disparity between them of 40 per cent or, in dollar terms over both assets and superannuation, of about $1.91 million. In my view, that conclusion pays no, or no sufficient, regard to the significance of the wife’s contributions over 21 years, the impact of those 21 years of contributions on the property and income earning by the husband, and the fact that those significant contributions … undoubtedly continued in the 10 years after separation.

[107] The expression ‘post-separation contributions’ has, of course, been used widely in many authorities within the context of discussions about the assessment of contributions. But, importantly, it is not the fact of separation or when contributions are made that is the delineator. It remains crucial to analyse and weigh the nature, form and characteristics of all contributions across the whole of the period under consideration.

[120] While his Honour makes reference to the contributions of both parties ‘throughout the entirety of their relationship’ his Honour describes it as ‘noteworthy’ that ‘ … the asset pool increased significantly in the post-separation period’. His Honour underscores, it seems, the importance of the husband’s financial contributions and, it appears, attributes some form of causal connection, between those ‘financial contributions’ and the increase in the assets and the value of them during the post-separation period. Yet, the foundation for the property transactions which occurred subsequent to separation was the property acquired during the marriage and the husband’s income acquired through advancement in his employment. The wife contributed significantly to each.”

Le Poer Trench J found error in the Court’s finding that “ss 75(2)(j), 75(2)(k) and 75(2)(n) were not applicable and/or relevant to the case” (para 162) and also said (from para 174):

“There is nothing in any of the ss 79(4)(d) to (g), or elsewhere in s 79 which requires a judge to calculate in dollar terms the differential achieved between the parties if the judge has apportioned assessment of contribution in percentage terms. Nevertheless, it is a matter of common practice developed by judges exercising jurisdiction under section 79 of the Act, to carry out such an exercise, at least at the time matters relevant to section 79(4)(e) are considered. Section 75(2)(n), on one level at least, invites such an exercise. Had the Federal Magistrate carried out such an exercise, in this case, he may have reached a different determination as to the amount of adjustment which was required under section 75(2).

[175] The determination reached by the Federal Magistrate, in assessing contribution, produced a result which saw the husband receive $1,912,086 more than the wife in a net pool of assets and superannuation of $4,780,215, as determined by his Honour.”

The matter was remitted.

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