Full Court Increases Wife’s Contribution During Marriage as Trial Judge Overstated Her Earning Capacity During Marriage

Keywords:

Property; contributions; contribution assessment; section 75(2) adjustment; adjustment from nil to 7.5 per cent; 

Abstract:

In Wah & Golay [2016] FamCAFC 67 (7 April 2016) the Full Court of the Family Court heard the wife’s appeal against the trial judge’s decision concerning a $3.9 million pool and an 8 year marriage. Importantly, the husband had supported the wife for a further three years after separation through paying outgoings for the former matrimonial home in which the wife continued to reside.

Article:

At first instance, Rees J assessed property contributions for the purposes of the Family Law Act 1975 (the “Act”) as 87.5/ 12.5 in the husband’s favour. According to the court at first instance, the wife’s contributions amounted to “not more than $280,000”, while the husband’s contributions were $2.4 million. Rees J made no adjustment to this percentage split applying section 75(2) of the Act (which lists a number of different factors that the court can take into account in determining both eligibility for spousal maintenance as well as in distribution of property proceedings), holding that the wife’s earning capacity was unaffected by the relationship. In determining contributions to a relationship’s pool of property in order to arrive at a ultimate settlement, section 79(4) allows the Court to take into account the factors in section 75(2) of the Act.

 The trial judge took into account that the husband was a self-funded retiree and 71 years of age; as well as that the wife was 59 years old, her English was very poor, and that she was unlikely to obtain paid employment.

 On appeal, Murphy J (with whom Ryan and Aldridge JJ agreed) commented that:

[26] The wife had, as her Honour found, little if any prospect of gainful employment. The fact that the husband was 71 at trial, and the wife 59, was very important in the consideration of that comparison. As an instance of that, the section requires, in particular, a consideration of the respective ‘commitments of each of the parties … necessary to enable’ … them to support themselves. While, in the context of a broad assessment referrable to s 79(4)(e), that may not require a dollar-for- dollar comparison assessment as might be required, for example, in a spouse maintenance case, I am unable to see where her Honour has given any consideration to this important requirement stipulated by s 75(2)(d).

[27] As a related matter, it was submitted before her Honour, it seems uncontroversially, that the wife was in receipt of sickness benefit at the date of trial, a consideration the specific subject of s 75(2)(f). Again, I am unable to see where her Honour has considered that factor. Separate from the requirement to consider, where relevant, the issue of capacity to earn income, s 75(2)(k) obliged her Honour to consider, if relevant, the ‘duration of the marriage and the extent to which it has affected the earning capacity of the other party’.

Further, at paragraph [30] of the appeal judgment:

“While, of course, the wife was some 10 years older than she was at the commencement of the relationship and while the wife was, as revealed in the medical evidence before her Honour, suffering from health issues, I am respectfully unable to see how her Honour’s finding that the wife’s earning capacity was unaffected by the relationship was open to her on the evidence before her.”[31] In a similar vein, there can be no doubt that the parties enjoyed a very good standard of living during their relationship; much of that, of course, emanated from the husband’s assets with which he entered the relationship, including what was able to be purchased from his substantial cash reserves and the income derived from them and otherwise by the husband. However, the contrast between that standard of living and the comparative standards of living reasonably open to the parties post orders is nevertheless a relevant matter, and one which, in my view, was not at all considered by her Honour.”

Further, in deciding to make an adjustment, applying section 79(4) of the Act, to the contribution made by the wife during the marriage, Murphy J commented that:

“The respective asset positions of the parties consequent upon an 87.5 per cent/12.5 per cent assessment of contributions [results in] a very significant disparity between the parties. The husband funds his retirement from his assets and resources which remain considerable. There is no suggestion that there will be any change to that in the future. They are the assets, resources and income of a man who is now 72. He lives in a $1.2 million home, has available to him a valuable piece of real property that he uses as a holiday home, and owns a unit subject to a debt, from which he receives income.

… I consider that an adjustment of 7.5 per cent is appropriate. That equates to approximately $294,000. That adjustment would see the wife receiving 20 per cent of the parties’ interests in property and superannuation, or in dollar terms, approximately $786,000. The husband will need to source and pay approximately $663,000.

.. The disparity between the parties’ respective positions of 60 per cent represents, in dollar terms, about $2.35 million. The husband will retain his three pieces of real property, his three cars, his $50,000 worth of furniture, and have cash and superannuation – which is effectively cash – of slightly more than $1 million. The wife is currently in receipt of sickness benefit, has not worked remuneratively for some years and, in all likelihood, will not in the future. She has a number of health issues. It is not contended that the husband has any such issues.

… I consider that the relationship has had a detrimental impact on her capacity to earn income. Her current standard of living is markedly poorer than the husband’s and markedly poorer than that enjoyed by the parties during their relationship. All but about $18,000 of the property retained by the wife is in cash. Thus, from an amount of about $750,000 in cash that she will receive, she will need to re-house and otherwise support herself in the absence of remunerative income. In that respect, I note her age by comparison to the husband’s age.

Accordingly, the appeal court made the adjustment to the property settlement, a result advantageous to the wife.