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Multiple "Initial" Contributions, case decisions marriage of 7 yrs

Attached document has been updated with corrections. Also came back in an edited the post for corrections and formatting.

Initial contributions, case decisions marriage of 7 yrs

I was hoping someone could give some guidance and FL case decisions that would be useful to know about regarding the following.

I am helping someone involved. I have read the relevant parts of 10 Family law textbooks and taken copious notes.

  • Marriage of 7 yrs.
    No children from the marriage.

    Party A had substantial assets at the time of cohabitation/marriage.
    Party B had negative net worth and no assets of any significance.

    Party B has 2 children from a previous relationship that lived with them.

    Prenup was suggested by party B's (the party with negative net worth) family lawyer as he noticed the vast difference in assets/net worth.
    Prenup was executed. Each party had their own solicitor.

    Party A and Party B looked after the children.
    Have been advised that Robb case is very relevant to Party A's financial and non-financial contributions to the family unit.

Party A has made multiple 'initial' contributions from her own personal funds along the way.
All of these payments were from moneys/assets that Party B had contributed nothing towards.

For example:

Deposit for first matrimonial house.
Had to use a property owned as security for first matrimonial house.
Paid 4K for child care of Party B's children.
Advanced 2K for Party B to buy a vehicle so he could earn money from personal exertions as a self employed ..

From approx. 18 months into the marriage had to start transferring significant amounts from their own personal moneys to meet family expenses.
At approx. 18 mths into the marriage the family moved to a new location to take up a business opportunity introduced by Party A.

Party A and Party B were required to give personal guarantees related to the business (with the company providing the distributorship).
Agreement was that there were would be no credit from the main supplier to the business.

At approx. 18 mths into the marriage Party A paid for rental accommodation bond and initial rent for housing in the new location.
At approx. 24 mths into the marriage Party A paid for a valuation fee for the original matrimonial home which was rented out.
At approx. 24 mths into the marriage Party A transferred 2.5K to the business account as there were insufficient funds in the business account.
At approx 45 mths into the marriage Party A had to sell the property that was the major asset she had (covered in the prenup) in order to fund shortfalls and living expenses of the family.

As a result the institution holding the mortgage over the matrimonial home demanded 40K in order to release the second mortgage security.
Hence the mortgage was reduced by 40K from Party A's own personal funds.

Approx 52 mths into the marriage they needed to sell the business.
Company providing the distributorship advised that more than 40K in debt had been run up and was owed to them for materials.
Company providing the distributorship advised that they would not allow the transfer/sale of the distributorship/business unless the debt was paid.

Party A had paid the debt from their own personal funds otherwise the sale/transfer would not have gone ahead. Had Party A not paid for the debt then both would have been personally liable for the debt.

Had Party A not paid for the debt then the sale of the business for approx. 50K would not have occurred.
Party A was paid back for most of the amount transferred to pay yhe business debt.

Approx 56 mths into the marriage the family moved to another location.
Party A paid for rent and bond at the new location as the family account did not have sufficient funds to meet those payments.
Approx 58 mths into the marriage Party A had to transfer 2.5K from their own personal funds to the business account as the other family accounts could not be used.
Approx 70 mths into the marriage Party A paid the deposit (approx. 26K) from their own personal moneys for the purchase of a house (at the new location) for the family.
Approx 84 mths into the marriage Party A paid approx. 4K from their own personal moneys for an improvement to the home at the new location.

Approx 84 mths into the marriage party A and Party B separated.

During the approx. 84 mths of cohabitation/marriage: Party A contributed over 100K from their own personal moneys.
Applied to deposits to real property purchases, everyday family expenses, childcare for Party B's children, holidays for the family, numerous expenses such as rates, insurance for the original matrimonial home, property maintenance expenses.

a) Of the over 100K Party A contributed from their own personal moneys aprox. 60K was applied for the benefit of the original family home.
b) Of the over 100K Party A contributed from their own personal moneys aprox. 26K was applied for the family home at the time of separation.
c) Of the over 100K Party A contributed from their own personal moneys the moneys not applied to a) or b) were applied for the family expenses etc as the family accounts did not have sufficient funds to pay the expenses.

Party B had no personal moneys to contribute during the approx. 84 mths of cohabitation/marriage.

Party A and Party B contributed equally with respect to earnings from personal exertion as well as non-financial contributions during the approx. 84 mths of cohabitation/marriage.

All the textbooks and case decisions referenced in the textbooks talk about initial contributions but I have not found any reference to multiple "initial" contributions.

How would the over 100K of Party A's contribution be considered? Is there a definition for Initial contributions?

Any relevant cases for the above scenarios (know of the commonly quoted cases for single contributions). Would appreciate any comments on the above scenario.


Attachment
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Last edit: by Secretary SPCA

wed said
Party A has made multiple 'initial' contributions from her own personal funds along the way.
These are to be taken into account. IMPORTANT - I also add that property requires a lot of thought around FOUR key steps. What frustrates us is the lack of preparation and time people put into looking at what is required. You can grossly underestimate the amount of time required to get into all of what I will list below.  I have seen affidavits in excess of costing 45k for these sorts of works.

The secret to any reasonable outcome is planning and your detail to all the issues raised in the following.

Step one - Identify and value
What is the nature of all of the property
Identify all
Valuations

Step two - Consider the contributions of the parties
Asses the contributions of the parties 79(4) or 90SM(4)
Direct financial contribution
Direct financial contributions along the way to acquisitions (There are guidelines set out in the act)
Direct financial contributions to conservation and or improvement of the pool
Indirect financial contributions
Financial contributions by children
Non Financial contributions
Contributions made to the welfare of the family
Assessing and balancing the contributions


Step Three - Consider the s 75(2) factors (a) to (q)
Look carefully at s75(2) and  90SF(3)
other sections 79(4)(d) (f) and (g)

Step four
the JUST and EQUITABLE requirement 79(2) and s90(2) or 90SM(3)


In MAYNE & MAYNE (2011) FLC
Family Court citation: [2011] FamCAFC 192 In the Full Court of the Family Court of Australia at Canberra - Judgment delivered 23 September 2011

The Full Court has said on multiple occasions, the fourth step is not an opportunity to make a further adjustment; it is an opportunity for the judicial officer to determine finally how, in reality, a just and equitable order might be achieved based on the circumstances of the case before her or him (see in this regard Norman & Norman21 and Teal & Teal22).

66. In Teal & Teal, the Full Court of the Family Court of Australia (Finn, Boland & Dawe JJ) stated:

70. [The fourth step] requires consideration of the actual assets to be retained by each party, and may include consideration of the effect when one party is to retain the greater proportion of his or her entitlement in superannuation of the nature, form and characteristics of the superannuation. It is also relevant when assets included for division are notional assets or add backs, including paid legal fees, or when a business which requires retention of business premises or re-financing is to be retained as part of one partys entitlement. (Footnotes omitted)

Matters to be addressed are:

    History of the relationship;
    personal history;
    litigation history;
    initial financial contributions of each party;
    inheritances and gifts received by each party during the relationship and marriage;
    property, liabilities and financial resources of the parties;
    direct financial contribution by or on behalf of the party;
    indirect financial contribution by or on behalf of the party;
    non-financial contribution by or on behalf of the party either directly or indirectly;
    outline the accumulation or disposal of all property by the parties and source of funding;
    parent and homemaker contribution;
    outline of matters relevant pursuant to sec 75(2);
    child support that is paid/received;
    effect of any order from the earning capacity of either of the parties; and
    plans for the future.

Matters to be taken into account  s 75(2) and s 90SF(3)

We have published quite a lot of material about property matters over the years.

A long list of matters which the court can consider in determining what maintenance order should be made is set out in s 75(2) and s 90SF(3). Sections 75(1) and 90SF(2) require the court to take into account only those matters.

The matters in s 75(2) and s 90SF(3) affect the quantum of the order. They may even affect whether an order is made at all.

For example, in Berta and Berta (1988) FLC, the husband was found not to have the ability to support himself adequately. However, his claim for spousal maintenance was rejected as he had resources within s 75(2)(b) which could be utilised to meet his needs. He had spent his personal injury claim to improve his capital position thus creating his own incapacity of self-support.

The individual matters set out in s 75(2) and s 90SF(3) are discussed in detail. A major problem with s 75(2) and s 90SF(3) is that no guidance is given as to whether any of the matters are to be given higher priority than others. This difficulty was described by Richard Chisholm J (formerly Chisholm J) in Spousal Maintenance (5th National Family Law Conference Papers, Perth 1992) as incoherent. By this he meant:

more than vague or unpredictable in result: it refers to the fact that the Act directs the court to have regard to a bundle of often inconsistent factors and policies, and gives no basis for preferring some over others… Incoherence is regrettable, however, since it is likely to produce confusion, lack of predictability, and capricious variations among different judges and different registries of the court. The apparent arbitrariness associated with maintenance awards may make it difficult for litigants to perceive the results of cases as just. Further, it may inhibit the making of fair settlements of cases.

Section 75(2) (and s 90SF(3) is relevant to both s 79 (and s 90SM) and maintenance applications. For example, s79(4)(e) requires that in s 79 applications the matters in s 75(2) be taken into account so far as they are relevant. Section 75(2) is considered in the context of s 79 applications at 37-500 and following in the Property tab.

The court has made it clear in relation to s 75(2) (and s 90SF(3)):

 It is not doubling up to take s 75(2) factors into account in a property settlement and then again in relation to maintenance. The s 75(2) factors [in a property settlement] relate to totally different considerations than those on which an application on s 74 is based, Jacobson and Jacobson (1989) FLC (at p 77,178).

 The proper approach is firstly to determine what factors should be taken into account pursuant to s 75(2), without any consideration at all at that stage of the amount (if any) that should be ordered. When all of these factors have been determined it is then appropriate to determine what weight should be given to each of them, including the financial circumstances of the respondent, and make an assessment, per the full court in Beck and Beck (No 2) (1983) FLC (at p 78,167).

 It is the financial consequences of all of the relevant matters that are to be taken into account and the section is so drafted to effect this purpose while excluding matters of conduct in a moral or non-financial sense, Beck and Beck (No 2) (at pp 78,16778,168).

 Section 75(2) should not be interpreted in any restrictive manner and its intention is not only to enable the Court to take into account all relevant financial matters but to ensure that it in fact does so, Beck and Beck (No 2) (at p 78,168).

 The s 75(2)(b) process is not and, of necessity cannot be in the nature of a precise mathematical calculation. It is not, however, unfettered. It must be exercised judicially and within the parameters of the case at hand and is subject to review on appeal within established principles, Collins and Collins (1990) FLC 92-149 (at p 78,0438).

 Consideration can be limited to the most relevant matters rather than all which have some relevance, Collins and Collins (1990) FLC 92-149.

 Many of the provisions in s 75(2) are worded extremely vaguely, Mee and Ferguson (1986) FLC 91-716 (at p 75,195).

 The interpretation of the expression unable to support herself or himself adequately is subject to the words having regard to any relevant matter referred to in s 75(2). N v N (1997) FLC 92-782 (at p 86,643). See also Mitchell and Mitchell (1995) FLC at p 81,998.

 Although the court is given a wide discretion to make such order as it thinks proper under s 74 this discretion is limited by the requirement under s 75(1) to only consider the matters set out in s 75(2), Plut and Plut (1987) FLC (at p 76,275).

 The question of the weight to be so attached [to each of the matters referred to in s 75(2)] is peculiarly a matter for the discretion of the Court in each particular case, Plut and Plut (1987) FLC 91-834.

 Section 75(2) must be looked at in globo and all the various components of it weighed up in the proper exercise of a discretion under s 79, Williams and Williams (1984) FLC (at p 79,388).

 The test for taking into account a matter set out in s 75(2) is its relevance to a just and equitable order, Waters and Jurek (1995) FLC 92-635 (at pp 82,37582,376).

 It is wrong in principle to determine, separately, the percentage adjustment called for by each of a series of factors favouring one party, and then to arrive at the overall adjustment by just adding up the components thus arrived at. To do that has at least the potential for double counting…, Tomasetti and Tomasetti (2000) FLC (at p 87,391).

Important
 In Saxena and Saxena (2006)FLC, Coleman J set out the four steps that the court at first instance should have followed:
  1. To what extent was the wife able to support herself?
  2. What were the wifes reasonable needs?
  3. What capacity did the husband have to meet an order, if one were made?
  4. If steps 13 favoured the wife, what order would be reasonable having regard to s 75(2) of the Family Law Act 1975.

In considering the s 75(2) factors, there are many helpful reported decisions by the Family Court which are of assistance

To help navigate these cases and extract the relevant principles, the schedule below lists cases in which s 75(2) factors have played some part in the overall decision.

Relevant authorities and the s 75(2) factors considered:

Gould and Gould (2007) FLC
  Non disclosure of assets by a party

Bassi and KD Sales Force Specialists Pty Ltd v Maas (1999) FLC
 Contribution to post-separation redundancy package

Dickson and Dickson (1999) FLC
 inheritances
 correct approach to s 75(2) factors

Campbell v Kuskey (1998) FLC
 superannuation entitlements
 disparity in earning capacities
 loan accounts

Rosati v Rosati (1998) FLC
 allowance for capital gains tax
 care of three young children
 health problems with children

DJM v JLM (1998) FLC
 care of four children of the marriage
 large disparity in earning capacity and financial resources
 change of employment  reduction of income of party

W v W (1997) FLC
 state of health of party and special needs
 care of young child
 disparity in income

Elsey v Elsey (1997) FLC
 effect of orders on earning capacity

Ramsay v Ramsay (1997) FLC
 lack of realisability of assets
 care of young children and financial support for the children
 large disparity in earning capacities
 large disparity in asset position

NK v LR (1997) FLC
 greater superannuation entitlement
 greater earning capacity
 continuing care of children

Stay v Stay (1997) FLC 1
 health of parties
 significant disparity in incomes and earning capacities

Foda v Foda (1997) FLC
 party's deliberate non-disclosure of a significant asset

Kennon v Kennon (1997) FLC
 short marriage
 wealthy party
 large disparity in income and property
 impact of relationship on earning capacity
 violence

Pellegrino v Pellegrino (1997) FLC
 greater earning capacity
 care of children

Doherty and Doherty (1996) FLC
 care of children
 disparity in earnings and earning capacity of the parties

Gould and Gould (1996) FLC
 discussion of treatment of long service leave entitlements of a party

Way and Way (1996) FLC
 proposed orders to be made with one party assuming significant liabilities

Aleksovski v Aleksovski (1996) FLC
 party with care of children but greater property and earning capacity than other party

MacGregor v MacGregor (1996) FLC
 health of party
 financial resources of party (superannuation and interest in a trust)

Robb and Robb (1995) FLC
 any other fact or circumstance  husband's care of wife's children from a previous relationship

Townsend and Townsend (1995) FLC
 issue of children
 disparity in income/earning capacity

Clauson and Clauson (1995) FLC
 discussion of distinction between spousal maintenance and s 75(2) factors
 large disparity in income and income earning capacity of parties
 care of four children
 discussion of assessment of s 75(2) factors in real (dollar) terms rather percentage terms

Mitchell and Mitchell (1995) FLC
 modest sized estate compared to substantial disparity in income earning capacities of parties
 100% of estate to one party

Zubcic and Zubcic (1995) FLC
 example of relevant s 75(2) factors operating in the favour of each party so as to warrant no adjustment to either party, including age, income, earning capacity, standard of living and duration of marriage and support of other party's child from a previous relationship

Georgeson and Georgeson (1995) FLC
 wife's ongoing care of the children
 greater financial resources and income earning capacity of the husband
 greater property of the wife

Waters and Jurek (1995) FLC
 both parties qualified professionals and capable of earning a good income yet one party's income is considerably higher than the other's
 adjustment in favour of one party

White and Tulloch v White (1995) FLC
 prospect of inheritance
 Section 75(2)(o)

Guthrie and Guthrie (1995) FLC
 modest net matrimonial estate
 care of three young children
 disparity in income earning capacities
 farming property

Homsy v Yassa and Yassa; The Public Trustee (1994) FLC
 discussion of operation of s 75(2) when one party killed the other party

Burke and Burke (1993) FLC
 unemployment of one party
 uncertain prospects of employment for other party
 gender neutral nature of s 75(2) factors

Best and Best (1993) FLC
 small net matrimonial estate
 one party's very high and continuing earning capacity and ongoing responsibility for the support of children

Black and Kellner (1992) FLC
 party's failure to make full and frank disclosure of financial affairs
 no income and lack of employment prospects, coupled with poor health of one party

Goodwin and Goodwin Alpe (1991) FLC
 treatment of party's interest in a trust (property v resource)

Horsley and Horsley (1991) FLC
 disparity in earning capacity
 care of children

Neale and Neale (1991) FLC
 large disparity in property and income

Collins and Collins (1990) FLC
 large post-separation windfall to one party
 Full Court discussion of treatment of s 75(2) factors

Tasmanian Trustees Ltd (administrators of estate of Gleeson) and Gleeson (1990) FLC
 consideration of s 75(2) factors where death of one party before proceedings completed

Abdo and Abdo (1989) FLC
 large number of children in the care of one party
 property of parties

Mallet v Mallet (1984) FLC
 includes High Court discussion of approach to be taken to s 75(2) factors

Beck and Beck (No 2) (1983) FLC
 meaning of earning capacity

Lawrie and Lawrie (1981) FLC
 health of one party  short life expectancy

Wayne & Wayne [2010] FamCAFC
 shared care of children.

Davida & Davida [2011] FamCAFC 38
 shared care of children.

Executive Secretary - Shared Parenting Council of Australia
 Was my post helpful? If so, please let others know about the FamilyLawWebGuide whenever you see the opportunity
 

Thank you. Will print and read.

Very much appreciate the quick and detailed response.



I will print and read over it.
Enjoy the reading... You will need to be selective as some of the cases are extensive.

Executive Secretary - Shared Parenting Council of Australia
 Was my post helpful? If so, please let others know about the FamilyLawWebGuide whenever you see the opportunity
 

Asset pool size etc



"During the approx. 84 mths of cohabitation/marriage: Party A contributed over 100K from their own personal moneys.
Applied to deposits to real property purchases, everyday family expenses, childcare for Party B's children, holidays for the family, numerous expenses such as rates, insurance for the original matrimonial home, property maintenance expenses".

Unfortunately the asset pool is only approx. $140,000 (including both parties Super).

So Party A has contributed say 100K of their own moneys along the way (actual figure is higher).

The bulk of the asset pool (apart from Super) is in the last matrimonial home equity and Party B resides there. He refuses to have a proper valuation done or a real estate agent appraisal or to sell.

What is the most cost effective way to move forward?
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