WHAT SHOULD THIS COURT DO?
29 The question then is, was the result materially affected by this error, and would I come to a different conclusion anyway?
30 I find it helpful to take a broad view, having regard to initial contributions of the parties, contributions arising from inheritances and gifts, and the asset situation at the time of the separation and the time of the hearing.
31 As set out above, the respondent's initial contribution was of the order of $340,000.00, and he also contributed about $346,000.00 by way of inheritances and gifts from his family. The appellant's initial contribution was minimal, but she contributed $200,000.00 from an inheritance. Accordingly, the starting figure is about $886,000.00.
32 The assets at the time of separation totalled about $1.56 million, so the increase in assets during the relationship was about $674,000.00.
33 In a relationship of 13 years, producing three children, and having regard to the activities of the parties as described in evidence, this is a case where approximate equality of benefit from the increase in value would seem appropriate, as a starting point. The appellant's contributions to the relationship through income-earning, home-making and care of the children could fairly be considered as at least equalling the respondent's contributions through income-earning and use of his greater capital contributions, particularly where the cost to her of her contributions included a delay of many years in qualifying as a psychiatrist, so as to be able to earn at specialist rates: see Howlett v. Neilson [2005] NSWCA 149 at [36]. On the basis of equality of contributions, each would get $337,000.00 of the increase; and if one then adds back the appellant's $200,000.00, the result would be $537,000.00 for the appellant. This would represent about 34.4% of the total assets on separation.
34 If the question before the Court were the division of assets at the date of separation, I think this figure of $537,000.00 to the appellant would be towards the bottom of the appropriate range, both because I assess the appellant's contributions as at least equalling those of the respondent, and because of the so-called "erosion principle" discussed in Howlett at [30]-[34]. This principle tends to reduce the effect of discrepancies in initial contributions, and thus would tend to increase the share going to the appellant; although, for reasons given in Howlett, it does not apply as strongly in cases under the Property (Relationships) Act as cases under the Family Law Act.
35 However, by the date of the hearing, the total assets had increased by a further sum of about $270,000.00 to about $1.83 million. The Foss Street property had increased in value by about $400,000.00, and the respondent's assets had otherwise decreased. The decrease could possibly be connected with the respondent's second wife being entitled to superannuation benefits of about $845,000.00, although the evidence does not appear to justify a finding to that effect. In any event, for reasons given earlier, I do not think the respondent's own $940,000.00 in superannuation entitlements should be treated differently from other assets.
36 In my opinion, the appellant's share should be increased above the figure of at least $537,000.00 referred to earlier, by reason of this increase of $270,000.00. One possibility would be to apply the same percentage of 34.4% to that increase, so as to raise the appellant's share to about $630,000.00.
37 However, I do not think this would adequately respond to the contributions made by the appellant since separation. Two of the parties' children have required a greater degree of care than usual, because of behavioural problems, and the burden of this has fallen primarily on the respondent. This onerous responsibility has been even more burdensome to the appellant because from August 1996 she has suffered from depression requiring treatment. Further, the increase of the assets has come about through an increase in value of a house purchased in equal shares. For those reasons, in my opinion the appellant's share of the further increase should be at least half, so that (as a minimum) $135,000.00 should be added to the $537,000.00, giving $672,000.00.
38 Apart from her interest in the house at Hunters Hill, the appellant's assets at the date of hearing were about $145,000.00, so that to give her $672,000.00 of the assets at the date of hearing would require that she receive about $527,000.00 in respect of her interest in the house. If the respondent were to be left responsible for so much of any mortgage on the house as now exceeds the sum of $501,553.00 mentioned in the Master's order, the appellant would receive about $500,000.00 in respect of her interest in the house, if she were given the house subject to a mortgage of that amount. My view is that that provision would be below the bottom of a range that I might adopt in deciding the matter; and even that is about $100,000.00 more than provided by the Master's order.
39 Having regard to that consideration and the error I have identified, I do think it appropriate for this Court to consider for itself what the appropriate result would be.
40 On the whole, I think the appropriate result would be about $50,000.00 more favourable to the appellant than the figure of $672,000.00, say about $725,000.00. That is, she should receive about $580,000.00 in respect of her interest in the house. The order I would propose is that the respondent should be required to reduce the mortgage on the house to $420,000.00 within 28 days; and that thereafter, if the appellant can re-finance the mortgage within six months or such longer period as the respondent may agree, she to pay interest in the meantime, then the respondent is to transfer the property to her absolutely. If the appellant cannot re-finance the mortgage within such time, then the property should be sold, and the appellant should receive all the net proceeds of sale, after repayment of the mortgage reduced to $420,000.00.
41 On that basis, the appeal should be allowed, and, at least unless there have been any relevant offers, the respondent should pay the appellant's costs of the appeal and have a certificate under the Suitors' Fund Act if otherwise eligible.
42 The costs at first instance would need to be dealt with having regard to offers made before the first instance hearing, and I would direct that, unless the parties agree, submissions as to those costs be provided by the appellant within 7 days and the respondent within a further 7 days.
43 I propose the following orders:
1. Appeal allowed.
2. Orders 3, 4, 8, 9 and 10 made on 2 December 2004 set aside.
3. Order that the respondent reduce the balance of the mortgage to the Westpac Bank over the property 3 Foss Street, Hunters Hill being Certificate of Title reference C/32783 (Foss Street) to $420,000.00 within 28 days, and not thereafter increase money owing on the security of that mortgage, and that the appellant be entitled to the whole of that property subject to the mortgage as thus reduced and liable to pay all money due under the mortgage as thus reduced and other outgoings on the property.
4. Order that, provided the appellant pays all interest and other money accruing on the balance of $420,000.00 and arranges for the discharge of the said mortgage, the respondent upon such discharge transfer his interest in Foss Street to the appellant.
5. Order that, if the said mortgage is not discharged within 6 months or such further time as the respondent agrees, the appellant must, at the request of the respondent, take such steps as are required to discharge the said mortgage, if necessary joining in the sale of Foss Street on the basis set out in pars.(a) to (e) of order 4 made on 2 December 2004, and in the event of such sale the whole of the net proceeds after discharge of the mortgage are to go to the appellant.
6. Respondent to pay the appellant's costs of the appeal and to have a certificate under the Suitors' Fund Act if otherwise eligible.
7. Appellant within 7 days to submit either agreed orders as to costs at first instance or submissions as to such costs, and in the latter event respondent to proved submissions within a further 7 days.
44 BRYSON JA: The appellant, plaintiff in the Equity Division, appeals against the decision of Master Macready of 19 November 2004 on her claim for adjustment pursuant to s 20 of the Property (Relationships) Act 1984 (NSW) of the property interests of the parties after their de facto relationship which existed from 22 March 1984 until late April 1997. There are three children of the relationship, Alexander born on 12 July 1986, Nicola born on 25 December 1988 and Luke born on 6 April 1995. The proceedings relate to the interests of the parties and not of their children. The parties entered into a Cohabitation Agreement on 13 August 1985 and a Separation Agreement on 18 April 1997. The appellant claimed orders setting aside the Separation Agreement, and before the hearing it became undisputed that it should be set aside and that the Court should deal with adjustments of interests in property under s 20 of the Act.
45 Counsel for the appellant pointed to two avenues which he contended open up reconsideration of the Master's discretionary decision. One related to what were said to be errors in the Master's determination that the appellant had made a contribution to the respondent's superannuation. The further ground of attack was to the effect that the adjustment ordered by the Master was unreasonable overall in view of the size and burden of the appellant's contributions, including their effect on her deferral of obtaining specialist qualifications and the increased income which goes with them, and also in view of the unsatisfactory nature of the respondent's evidence about his income, his many competing activities and their enhancement of the domestic burden on the appellant.
46 The respondent was born on 12 April 1940. When the relationship began he was a general surgeon in private practice; he met the appellant in 1983 when she was a final year medical student and he was her surgical tutor. The respondent was then married and he had three children, who are now adults. His first marriage was dissolved and property questions between him and his first wife were resolved over the next few years. The appellant was born on 24 July 1954 and when the relationship began she was a medical practitioner working as an intern at Concord Hospital. She worked part-time as a medical practitioner during the relationship, in the order of half the time, except for periods totalling twenty-two months during which she did not work because she was caring for very young infants.