Just and equitable is in the eye of the beholder

Just and equitable is in the eye of the beholder

Tate & Dunstan [2016] FamCA 38 (2 February 2016)

The following is annotated. For full case: http://www.austlii.edu.au/au/cases/cth/FamCA/2016/38.html

WHAT IS A JUST AND EQUITABLE OUTCOME?

68. In De Winter and De Winter (1979) 4 Fam LR 583, 589, Gibbs J noted that the discretion conferred upon the Family Court to make orders affecting financial interests under s 79 of the Act is “extraordinarily wide”. Notwithstanding the court was referring to the marriage relationship, the legislature has used the same language relating to de facto relationships. I see no reason to think that the same judicial pronouncements would not apply here.
69. In this context, it is worth recalling the comments of the High Court in
    Norbis and Norbis [1986] HCA 17; (1986) 161 CLR 513, where Wilson, Dawson and Brennan JJ cautioned against the strict adoption of judicially formulated guidelines as fetters on the discretionary powers conferred by the Act. Wilson and Dawson JJ said:

…the legislation confers a discretion upon the court which, provided the required matters are taken into account, does not dictate the employment of any particular method in the formulation of an appropriate order for the alteration of property interests. … As Gibbs C.J. pointed out in Mallet:

“It is proper, and indeed often necessary, for the Family Court, in dealing with the circumstances of a particular case, to discuss the weight which it considers should be given, in that case, to one factor rather than another. It is understandable that practitioners, desirous of finding rules, or even formulae, which may assist them in advising their clients as to the possible outcome of litigation, should treat the remarks of the court in such cases as expressing binding principles, and that judges, seeking certainty, or consistency, should sometimes do so. Decisions in particular cases of that kind can, however, 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.”

We think it is not possible to take the question of guidelines further than this. Nor is it desirable to attempt to do so. With all respect to those who think differently, we believe that the sound development of the law, in this area as in others, is served best by following the tradition of the common law. The genius of the common law is to be found in its case-by-case approach. The decision and reasoning of one case contributes its wisdom to the accumulated wisdom of past cases. The authoritative guidance available to aid in the resolution of the next case lies in that accumulated wisdom. It does not lie in the abstract formulation of principles or guidelines designed to constrain judicial discretion within a predetermined framework. There is no reason to think that the traditional approach, when applied in the family law area, leads to arbitrary and capricious decision-making or that it leads to longer and more complex trials.
Brennan J said:

It is one thing to say that principles may be expressed to guide the exercise of a discretion; it is another thing to say that the principles may harden into legal rules which would confine the discretion more narrowly than the Parliament intended. The width of a statutory discretion is determined by the statute; it cannot be narrowed by a legal rule devised by the court to control its exercise: Gardner v. Jay; followed in Huntley v. Alexander. When a statutory discretion is to be exercised within prescribed limits according to what is “just and equitable”, as in the Family Law Act 1975 (Cth) (see s. 79(2)), it is impossible to devise a controlling legal rule which will do justice and be equitable in every case which comes within those limits and falls within the scope of the rule. There will always be an exceptional case. If it were possible to predicate of a legal rule that its application to every case falling within its scope would invariably produce a just and equitable result, there could be no objection to its application. In such a case, however, the limits of the discretion would not be narrowed by judicial decision because the legal rule would be found to be implicit in the text of the statute.

THE APPROACH TO THE DIVISION

70. Section 90SM of the Act requires the Court to “take into account” the matters there set out but it does not provide the power to alter interests; that is found in s 90SM(1). The provisions relating to contribution and the like (s 90SM(4))are only relevant if the Court decides that it is just and equitable to make an order. That applies here on not just the respondent’s case but also on any view of what legal interests in property each party currently has.
71. The nature and form of the assessment both as to contribution and the parties’ future circumstances is most commonly undertaken by talk of percentages. In Aleksovski v Aleksovski (1996) FLC 92-705, Baker and Rowlands JJ said at 83,437:

It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment. (my emphasis)

72. Then, in 2003, the Full Court (Nicholson CJ, Ellis & O’Ryan JJ) in Hickey and Hickey & the Attorney-General for the Commonwealth of Australia (Intervenor) [2003] FamCA 395; (2003) FLC 93-143 discussed “a four step approach” saying:

The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. (my emphasis)

73. As Brennan J said in Norbis (supra) at 539-541, guidelines expressed in developing jurisprudence had to be expressed in very general terms. His Honour said:

Detailed guidelines are unsuitable for application to circumstances which are quite diverse. Moreover, any guideline must allow for a permissible difference in the standards and values accepted as reasonable by the community…

…

What appears just and equitable to the eyes of some appears unjust and inequitable to the eyes of others. Guidelines necessarily express standards and values; not legal standards, but standards and values derive from sources which the court thinks appropriate…

74. His Honour went on to talk about the “generous ambit within which reasonable disagreement is possible”. It was not suggested here that other cases of comparable circumstances would provide any guide. No authority was cited to indicate that justice and equity required a specific formula or approach.
75. Thus, consideration of the parties’ contributions in percentage terms may in many cases be helpful (if not the best way) to show how a determination was just and equitable but there are cases such as here, where an emphasis on percentage calculations may ultimately obscure the financial realities facing the parties.
76. Percentage assessments are the preferred methodology but they cannot be the only one. That is because the court must be satisfied that the outcome or order is just and equitable rather than the assessment of the parties’ contributions. (see JEL v DDF [2000] FamCA 1353; (2001) FLC 93-075 at [140]).
77. In Farmer & Bramley [2000] FamCA 1615; (2000) FLC 93-060 at [49], Finn J described the process thus:

…Given that awards under s 79 are virtually never calculated with mathematical precision, no amount of enumeration of, or indeed of evaluation of, contributions, or of the s 75(2) matters, or indeed of any of the matters listed in s 79(4), can ever explain exactly why a particular figure, or more usually a percentage, is eventually arrived at (other than that it is within the recognised “range”). Absent a strict mathematical approach, the reasons for judgment requirement ultimately becomes impossible of total fulfilment in the jurisdiction under s 79. (again, my emphasis).

78. Finally, there is the observation of Coleman J in Steinbrenner & Steinbrenner [2008] FamCAFC 193, where his Honour said:

Given that the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion, whether it be in the assessment of contributions in the matrimonial cause, assessment of damages in a personal injuries case, or determination of compensation in a land resumption case.

79. Despite the fact that each of the parties proposed their orders in dollar sum terms, the applicant also took the mathematical path and used percentages. The respondent’s approach was based upon her capacity to pay without destabilising any of her financial position whilst pointing to the applicant’s absence of need for money.
80. In my view, this is a case where the justice and equity can only be determined by a consideration of the reach or consequences for each party of any order but it cannot be simply done as an exercise in assessing needs. To do that would ignore all of the emphasis in s 90SM(4) on the efforts that the parties had put into their relationship over the years.
81. It is also necessary to consider whether this assessment should be undertaken on either a “global” basis or on an “asset by asset” basis because each of those produces different results for different assets both in respect of contribution but also as to how an alteration of those assets would affect each party. In respect of the respondent, I consider the asset by asset examination must be done in assessing what further adjustment should be made after a finding of equality of contribution. That is because there are different results for her depending upon which asset provides the payment to the applicant. That is the “reach” of the proposed order.
82. I have taken into account the original sources of the real properties, the superannuation of the respondent and the respective savings have all come from the joint endeavours of the parties. The fact that accounts and titles were set up in specific ways could be seen as the parties keeping their finances distinctly separate but in this case, the evidence does not permit such a view. If it did, an asset by asset approach would be fairer. Here, the sale of property earlier in the relationship which culminated in an abandonment of the tenancy in common situation remains unexplained. It would not be safe to speculate. Even if there was such speculation, it would not necessarily enable a conclusion to be drawn that the person who did not hold the legal title did not have some equitable entitlement by virtue of either a resulting or constructive trust. In those circumstances, the only fair way is to approach the contribution assessment globally.
83. Thus, contributions should be assessed holistically but each party’s future should be examined (at least from the respondent’s position) on how any order would affect the financial position of the respondent because of the alteration of specific assets. That is effectively an asset by asset basis.
84. In my view, the evidence supports a conclusion that the parties’ various contributions throughout the entire relationship have been equal.
85. As I have already indicated, s 90SF(3)(e) requires the Court to contemplate (insofar as they are relevant) the variety of factors there set out.
86. The parties’ ages and states of health are relevant only in respect of the financial consequences arising from any order. There is little (if any) relevance in the factors mentioned in s 90SF(3)(c), (d), (e), (h), (i), (j), (k), (l) and (m). The focus must be on s 90SF(3)(a), (b), (f), (g), (n) and (r).
87. The main financial differences between the parties can be starkly seen when the various proposals are contemplated. The three sources of the respondent’s capital are all potential areas available to satisfy any order favouring the applicant. The respondent wants to keep the home and any change of that environment has obvious consequences whereas there is little or no prospect of the applicant changing his environment. Putting off the sale of the home for the purposes of satisfying any entitlement of the applicant may also be pointless on the assumption of the applicant’s life longevity as contemplated by the respondent. For the respondent to move to another residence would be seen as difficult because of her recent health problems but in any event, there is no evidence of what alternative accommodation is available.
88. The absence of detail as to what the respondent requires for living expenses along with her health issues leads to an inference that she has no need for capital. To use the $115,000 for the purposes of paying the applicant would not seem to prejudice her interests. On the other hand, the applicant has no need for money.
89. The resistance to touching the respondent’s superannuation is understandable but on the evidence, it is simply superannuation in a phase where the respondent could draw against it and whilst that would prejudice her income stream, there is no evidence as to why that could not be made up in some way from a Centrelink pension entitlement increase. On the other hand, the applicant would presumably (because there is no evidence as to what would happen to his capital) just increase his income stream if he received a cash sum in circumstances where he has little need for that on the basis of his current financial statement.
90. There are two features that stand out most. First, it is probable that the respondent will live longer than the applicant but again, she has no specific financial needs not currently being met and there is little evidence to indicate what she will need in the future. That still justifies giving the respondent more than the applicant. The second feature is that any payment to the applicant will increase his income and reduce that of the respondent. The respondent is less able to continue a reasonable and comfortable lifestyle (s 90SF(3)(g) than is the applicant because his physical capacity is unlikely to change and his financial position can only improve. In respect of the latter, the applicant has less need for protection than does the respondent. Those two factors justify an adjustment in favour of the respondent and that was a concession made by the applicant’s counsel. The degree of any adjustment is the difficulty. As indicated a percentage adjustment may not reflect the reality. In my view a lump sum is fairer.
91. The applicant already has assets of about $311,000. That does not reflect a fair outcome having regard to the duration of the relationship and his contributions. If $150,000 was paid to him, he would have that sum to increase his income stream and he would have more capital even if less than the respondent.
92. $150,000 from the respondent could come from any of the three sources. If most, if not all, of her cash was used, it would have some but not much, apparent immediate impact. Any shortfall to make up the $150,000 could come from the superannuation with minimal impact to her income stream. Importantly such a course would enable her to remain in the home and live on a similar income stream to that which she currently has.
93. A payment of $150,000 to the applicant would then mean that he would have 38 per cent of the parties’ assets and the respondent 62 per cent. The percentages are meaningless but the underlying value of what each has means each is receiving recognition for what they did and there will be little to alter their financial comfort for their remaining years. In my view, an adjustment of $150 is a just and equitable result for both parties.