Family Court: statement of principles as to contributions

Monday, December 06, 2010

The Full Court of the Family Court in a recent case has again emphasised that in long term relationships particularly, it is a question of weight that is given to different contributions during the course of a relationship.It did so in the recent case of Sindel and Milton. Mr Sindel was a very smart man. The holder of an MBA, on his own case, he had out earned Ms Milton 3:1 during the course of a 26 year relationship. Unemployed at the time of the trial, Mr Sindel gave evidence that it was only a matter of months before he would be earning big bucks again.The trialJustice Fowler acknowledged the higher income of Mr Sindel during the marriage, but ultimately divided the $5.5 million property pool 50:50. His Honour stated:

The husband spent a lot of time analysing his superior earning capacity and investment and other business acumen. He put strongly before the Court his superior financial contributions, the esteem in which his services were held and the approbation of his business associates and others in his industry and decision making. It is that which is reflected in the significant disparity in the income earning capacities of each of the husband and the wife. The husband has historically out-earned the wife by an amount of up to 3:1. The husband says that employment would be available to him which would mean he was at least out-earning the wife in the order of 2:1. He is presently unemployed but his evidence is that in but a few months he will again be employed. That development of his earning capacity was in part due to his innate intelligence but also due to the opportunities afforded to him by the wife because of the work that she did and the contributions she made to the family.

His Honour then assessed the weightage given for this superior contribution should be 53/47 in favour of Mr Sindel, but when assessing future factors under s.75(2) of the Family Law Act, there should be an equal division:

The wife has a […] degree and the husband has engineering and a Masters in Business Administration degree available to him. He is in sense more flexibly qualified than the wife. He has a shorter life expectancy than the wife. He has as demonstrated in this case a confident manner and a lively intelligence. I have no doubt he will continue to demonstrate those skills for some time.

Mr Sindel did not like the outcome, and appealed- unsuccessfully.The appealMr Sindel said how hard it would be for him to earn big bucks given his age and unemployment. Unfortunately for him, he was stuck with his evidence:

It is very difficult for someone at my age to simply walk into a job at 320K or thereabouts, or even 200K if, you know, I am in a position as I am, unemployed at the moment. If you were working and were in a senior job and had been there three years, it gives you a greater prospect, your Honour. I hope you appreciate that.

However, the difficulty with the husband’s submissions is one which was pointed out by the trial judge during the trial. His Honour said:-

But you are bound by your own evidence, aren’t you, in that? You have said that you thought it would be a matter of months before you got a job.

We do not accept the central proposition asserted by Senior Counsel for the husband as to the husband’s concessions. In fact, as the transcript reveals, the husband’s evidence was clear and unequivocal. Examples from the evidence before his Honour include:-

An acknowledgement, put forward by the husband to the Child Support Agency, that “not withstanding the current market”, the husband’s “experience and skills, employment history” were such that he could “have employment in months”;

The husband confirmed clearly in his evidence that this was in fact his expectation;

The husband conceded that any expected employment would “be in a similar position to the one that [he] occupied recently”;

The husband conceded that his “total remuneration, including bonuses, might be something in the order of about $300,000 per annum” if “he was lucky”;

The husband conceded that, if he was “unlucky”, his remuneration “might be about $200,000”;

The husband conceded that someone with his experience and skill would be looking at remuneration in terms of a base salary of about $200,000 or thereabouts.

It should be pointed out that the wife’s income at the date of the trial was about $107,000 per annum.

Based upon the evidence just referred to, the trial judge put directly to the husband the proposition that, ultimately, was included in his Honour’s reasons:-

His Honour: Well I think it is pretty clear that you can out earn the wife by an order of something of 3 to 1. [Mr Sindel]: I am sorry, I beg your pardon your Honour? I missed thatHis Honour: It seem pretty clear that you can out earn the wife by an order of 3 and something to 1.[Mr Sindel]: RightHis Honour: Yes

Restatement of contributionsMr Sindel argued that his contributions were “special” and therefore he should get more. The Full Court rejected this and restated the law as to contributions, particularly after a long marriage, such as this one. Their Honours stated:

The husband argued before the trial judge that these contributions were “special” – a proposition rejected by his Honour.

Given the approach adopted by the husband at trial, to which the trial judge refers, and the presentation of this aspect of the appeal, we consider it important to emphasise relevant principles applicable to the assessment of contributions.

The High Court in Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 said (per Mason and Deane JJ at 524):-

The Family Court has rightly criticised the practice of giving over-zealous attention to the ascertainment of the parties’ contributions, and we take this opportunity of expressing our unqualified agreement with that criticism, noting at the same time that the ascertainment of the parties’ financial contributions necessarily entails reference to particular assets in the manner already indicated.

In Aleksovski & Aleksovski (1996) FLC 92-705 Kay J held:-

…What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship. Just as early capital contribution is diminished by subsequent events during the marriage, late capital contribution which leads to an accelerated improvement in the value of the assets of the parties may also be given something less than directly proportional weight because of those other elements.

Calculations that might be seen to have a “mathematical” or “accounting” emphasis can, particularly in the context of a lengthy marriage, be prone to mislead

An assessment of contributions is not a mathematical or accounting exercise because the assessment required by the Act is “a matter of judgment and not a computation”. (In the Marriage of Garrett (1984) FLC 91-539 at 79,372; see also Norbis.) It is important not to “overvalue” direct financial contributions merely because they can be measured in money just as it is important not to “undervalue” indirect contributions or contributions to the family because they cannot be (commensurately) measured in money.

So, too, it is important to give recognition to the fact that the wife’s homemaker and parent contributions have themselves contributed to the direct financial contributions made by the husband resulting from his remunerative employment. The income produced from that employment is itself referable to a number of factors, some related to the individual talents and abilities of the husband, some to plain good luck and others societal.

A marriage partner can arrive at a particular point (or points) in time at which they earn remuneration (or, not as the case may be) by reason of the contributions made by each of the parties across the length of a marriage partnership. So it is here, in respect of the husband’s remuneration, significant though it was.

In this particular marriage partnership the roles of each of the parties led them to a point where the husband received and made a substantial financial contribution from his employment effort, and the wife made significant contributions by way of income from her employment, albeit less than the husband, but greater contributions as homemaker and parent.

We also refer to what was said by this Court in Kennon v Kennon at 84,299:

Marriage involves a myriad of matters, large and small, which go to make up that union and differentiate it from more casual, transitory relationships. It involves sharing the minutiae of daily life, support during good and bad times, care and intimacy. These and other matters are intended to be encompassed by the matters in s.79, the actual balance of those components varying from marriage to marriage. Essentially it is an intimate sharing of mutual but diverse talents for their joint benefit… [citations omitted]

The Full Court there also cited with approval what was said by an earlier Full Court in Waters and Jurek at 83,379, namely:

In most marriages, there is a division of 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, comes 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. Homemaker contributions, for example, are no longer financially equal to those of the breadwinner. Post-separation, the party who had 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.

The Full Court continued – in a passage which resonates with the husband’s submissions in the appeal with respect to s 75(2)(b) of the Act:

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. In some cases, an adjustment is called for because it would be unjust for the roles and activities of a party, which were recognized until separation, and which largely determined or influenced the personal development of that party and the arrangements between the parties, to suddenly count for little, while those of the other party, which were of equal significance during the marriage, to now have a far greater financial impact outside the home – in circumstances where it was the joint decision of the parties that that be the way in which they would conduct their affairs, and where that decision was made in the expectation of the relationship continuing.
(emphasis added)

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