Tuesday, 28 February 2017

How should initial contributions be assessed?

One of the perennial issues facing those whose relationships have ended- and by extension, their lawyers, mediators, arbitrators and family law judges, is what weight should be given to initial contributions as against contributions over the length of a marriage, especially a long marriage? Typically the party with most of the money, usually the husband, will say that initial contributions should attract a lot more weight (and therefore the other party, usually the wife) will get considerably less, while the party who came into the relationship with a lot less (usually the wife) will say- we have been together a long time, and if you don't count my contributions as equal, I am being ripped off.

Into this mix is the ongoing fight between family lawyers- when the lawyer for the party with money follows their client's line, and the one without takes the opposite view. All too often these matters do not resolve by negotiation, or through mediation, but end up at trial, with parties who have stark, polarised opposite world views.

One such case was that of Wallis and Manning. On an asset pool of just under $2 million, when the husband came in with most of the farming property and licences from family gifts, the trial judge after a 27 year marriage assessed the contributions of the parties as 70/30, and with the adjustment for future factors, this meant a division in favour of the husband of 60/40, or a difference between them of about $750,000. A big difference given the size of the pool after such a long marriage.

Not surprisingly, the wife appealed- and she was successful. Not surprisingly, the end result after a 27 year marriage was an equal outcome. The Full Court of the Family Court assessed contributions as 57.5%/42.5% in favour of the husband, with a 7.5% adjustment tot he wife in light of future factors.

Like cases should be decided alike


The first thing that the case stands for is that, even though there is a wide discretion under the Family Law Act as to what is a just and equitable order as to property settlement, judges (and therefore mediators, family lawyers and parties) should be guided by like cases.

The Full Court stated:

  1. A central question which emerges from the appellant’s grounds and arguments is whether that tension or question can and should be answered by reference to the assertion of a “range” of outcomes that mark the boundaries of a proper exercise of discretion in a particular case.
  2. The exercise of wide discretions informed by statutory considerations or well settled common law principles is not, of course, unique to s 79 of the Act. Awards of general damages for non-pecuniary loss in tort, and sentencing in criminal cases are familiar examples where daily tasks of judges include precisely that. Where the exercise of jurisdiction and power involve wide discretions by reference to statutory considerations or well-settled common law principles terms of convenience emerge, as do common practices, designed to facilitate expedition in the running of cases and “shorthand” submissions made within them. The assertion of a “range of outcomes” by the parties to a case is common in all such areas. In cases seeking orders for settlement of property pursuant to the Act, the practice is almost ubiquitous.
and:

Reference to comparable cases serves a principle central to the exercise of a wide discretion, namely, that like cases should be treated alike. That end seeks to avoid “arbitrary and capricious decision-making” which is the antithesis of “consistency in judicial adjudication”.

and:
Realistically there should be a consistency of results ...where genuine comparability exists, to provide “assistance and guidance in determining what is just and appropriate”

and:

  1. While recognising the fact that no two cases are precisely the same, we are of the view that comparable cases can, and perhaps should far more often, be used so as to inform, relevantly, the assessment of contributions within s 79.
  2. The word “comparable” is used advisedly. The search is not for “some sort of tariff let alone an appropriate upper and lower end of the range of orders which may be made”. Nor is it a search for the “right” or “correct” result: the very wide discretion inherent in s 79 is antithetical to both. The search is for comparability – for “what has been done in other (more or less) comparable cases”– with consistency as its aim.
  3. It is nevertheless also important to recognise, as Gibbs CJ did in Mallet that earlier decisions:
... do no more than provide a guide; they cannot put fetters on the discretionary power which the Parliament has left largely unfettered. It is necessary for the court, in each case, after having had regard to the matters which the Act requires it to consider, to do what is just and equitable in all the circumstances of the particular case.

How did the Full Court assess contributions?


The Full Court decided that the contributions of the husband were greater than that of the wife.

The Full Court held:

The parties were married for 27 years. Their marriage occupied virtually the entirety of their adult lives. Judicial debate has surrounded the so-called “erosion principle” but that debate has centred primarily on the question of whether early capital contributions are eroded only by “an imbalance” in later contributions. In our view, talk of “erosion” of the early capital contribution obscures the issue rather than illuminates it. However, it can be taken as well settled that the length of the relationship has a significant impact on how early significant capital contributions should be viewed in assessing the totality of the parties’ contributions. For example, the Full Court has said:
The longer the duration of the marriage, depending on the quality and extent of her contribution, the more the proportionality of the original contribution is reduced.[73]
and
The longer the marriage the more likely it is that there will be later 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.[74]
  1. The length of a marriage is important, then, in assessing the respective contributions of the parties, particularly when it is said that significant capital contributions made early in the marriage are a dominant feature of that assessment. It is, accordingly, an important consideration in seeking decisions that might assist in the assessment of contributions by reason of being “more or less similar” to the present.
  2. The land and water licences gifted by the husband’s father remain, many years later, as the predominant component of “the property of the parties or either of them” to which orders made under s 79 will apply.
  3. One half of the current value of Property N is $125,000. The half share in Property G has a value of $281,420. The Property G water licences have a total current value of about $700,000. The combined current value of the land and water licences gifted by the father represents about 35 per cent of the gross current value of the property and superannuation interests available for distribution and about 56 per cent of the net current value of that property. The wife’s capital contribution of her inheritance represents roughly 1 per cent and 1.75 per cent of the gross and nett respectively.
  4. The gifts made by the husband’s father were made early in a long marriage. The use to which those gifts were put rendered them of fundamental importance to the parties throughout the marriage. They provided the foundation for a farming business, operated as a partnership between the husband and the wife, from which the marriage derived income during its duration. They provided land upon which the parties’ home was situated and, thus, a place to live.
  5. The husband conceded in cross-examination that the current state of the properties and their current value was due to the very significant efforts of both parties in roles that both differed and overlapped throughout the marriage. Her Honour found in that respect that the wife “performed more of the parenting and the husband performed more of the work outside the home”. We adopt that uncontroversial finding.
  6. There can be little doubt on the evidence that each party contributed to the maximum of their respective capacities and abilities within these various roles. There was a genuine mutuality to their relationship and it, and the financial decisions and arrangements within it, were subject to the “unstated assumptions” that devolve from that mutuality. Contributions on this farming property involved hard work outside of what might be described as “normal working hours”, often seven days a week and often without holidays. Life and the derivation of income were subject to factors outside of the efforts of the parties (for example natural disasters, natural climatic conditions and the like). The parties’ roles were performed in an area relatively remote from urban facilities and interests.
  7. We see no reason to attribute to the role of either party any predominance or any greater “value”....
No two marriages are identical and reference to comparable cases is not designed to find either a “perfect match” or a “right answer”. Rather, what is sought is a comparison with more or less similar cases with a view to achieving a measure of consistency of assessments. That search might commence with comparable decisions of the Full Court where the discretion has been re-exercised. Both principle and pragmatics result in that pool of cases being small. That is because any re-exercise by the Full Court must be undertaken by reference to the facts and circumstances existing at the hearing of the appeal, and very frequently, many contested issues emerge between the judgment and the hearing of the appeal which effectively precludes a bench of three from re-exercising.





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