Hurst & Weber [2009] FamCAFC 137; (28 July 2009)

Hurst & Weber [2009] FamCAFC 137 (28 July 2009)

[2009] FamCAFC 137

FAMILY LAW - APPEAL - FROM A DECISION OF A FEDERAL MAGISTRATE - PROPERTY SETTLEMENT - Short marriage - Wife's application for property settlement was dismissed at trial - The wife's litigation and other debts left her in a negative asset position - The husband's net assets exceeded two million dollars in value - Federal Magistrate stated that the order left the wife in substantially the same position as when cohabitation commenced - Debt for litigation loan meant that the Federal Magistrate erred in so concluding - Mere absence of percentage apportionment on the basis of contributions is not an error of approach

FAMILY LAW - APPEAL - FROM A DECISION OF A FEDERAL MAGISTRATE - PROPERTY SETTLEMENT - Federal Magistrate accepted the expert value of the husband's share options - Treated the options as a financial resource, not as property - (per Warnick and Boland JJ) Federal Magistrate did not make a finding that the options were not property - No error in the approach taken, proportion of option value to the asset pool means inclusion as property as against treatment as a financial resource would not make a difference.

(per O'Ryan J) The share options were property and as such it was not open to the Federal Magistrate to treat them as a financial resource - Important distinction is that between property and financial resources, not 'assets' and financial resources - Appeal allowed

Parties sought re-exercise of discretion - wife to receive $100,000 from husband - release of security for costs to the wife

FAMILY LAW - COSTS - certificates in relation to the appeal granted to each party

Family Law Act 1975 (Cth) s 4; s 75(2); s 75(2)(b); s 79(4)(e)

Cook and Langford [2008] FamCAFC 84; (2008) FLC 93-374

Dickson and Dickson [1999] FamCA 278; (1999) FLC 92-843

G and G [2000] FamCA 1075; (2000) FLC 93-043

Hickey and Attorney-General for the Commonwealth of Australia (Intervener) [2003] FamCA 395; (2003) FLC 93,143

Kennon and Kennon (1997) FLC 92-751

Kennon v Spry [2008] HCA 56; (2008) FLC 93-388

Milankov and Milankov [2002] FamCA 195; (2002) FLC 93-095

Whitely and Whitely (1996) FLC 92-684

[2008] FMCAfam 643

(1) That the appeal be allowed.

(2) That, in lieu of Order 2, the following order be substituted:

1. That the husband pay the wife, within 30 days of 30 June 2008, the sum of $100,000.00

(3) That the husband cause his solicitors, Watts McCray Lawyers, to refund the sum of $5,000 paid as security for costs pursuant to orders made 1 December 2008 to the wife within 14 days of these orders

(4) That the court grants to the appellant a costs certificate pursuant to the provisions of section 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.

(5) That the court grants to the respondent a costs certificate pursuant to the provisions of section 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.

IT IS NOTED that publication of this judgment under the pseudonym Hurst and Weber is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

1. On 20 June 2008, Federal Magistrate Baumann made two orders determining property settlement proceedings between Ms Hurst and Ms Weber. Firstly, he ordered that a financial agreement between them be set aside, but secondly, that the wife's application for property settlement be dismissed. Thus, the parties were left with the property each had at trial. This meant that the wife, who was then 47 years of age, retained assets amounting to $14,100.00, but with debts, including legal fees, well exceeding those assets and the husband retained net assets of approximately $2,057,000.00.
2. The parties had commenced cohabitation in December 2003, married in April 2004 but finally separated on 26 February 2006. The gross assets each party had at commencement of cohabitation were close to what each held at trial. At trial, the husband's after tax base salary was $2,177.00 per week; that of the wife $770.00 per week. The wife had the care of an adult daughter who suffered from Asperger's Syndrome.
3. These reasons are in respect of the wife's appeal against the second of the orders described. She seeks an order that the husband pay her $170,000.00. There is no appeal against the order setting aside the financial agreement.

4. The substantial contentions raised by the eleven remaining grounds of appeal (ground 8 not being pressed), grouped by us into categories, are:

• that the learned Magistrate erred by failing to determine the contribution-based entitlements of the parties, expressed as a percentage of the net value of the property of the parties (ground 1);
• that His Honour, contrary to uncontested expert evidence, erred by treating as a financial resource, and not as an asset, the Share options held by the husband as at the date of hearing. (grounds 4 and 5)

• that His Honour erred in law by finding that "work undertaken before the parties committed to their relationship with cohabitation cannot be regarded as a contribution". (ground 2)

• that His Honour erred by wholly disregarding a series of non disclosures by the husband both before and during the course of the proceedings. (grounds 7, 9 and 10);

• That His Honour erred in the exercise of his discretion by finding that the wife's financial and non financial contributions did not warrant any adjustment of property interests in her favour. (grounds 3 and 6)
• That when assessing what adjustment, if any, ought to be made in favour of the wife pursuant to sec 79(4)(e) of the Act His Honour erred in the exercise of his discretion by failing to give any or any adequate weight to:

1. The wife's obligation to care for her adult disabled daughter; 2. The wife's minimal income earning capacity;

1. The wife's minimal superannuation entitlements;

1. The wife's standard of living both before and after separation; 2. The fact that the wife was left with a litigation loan of $50,000 outstanding as at the date of hearing; (grounds 7 and 11)

• that His Honour erred in the exercise of his discretion in that the overall result was outside the reasonable range of discretion available to him and therefore was not just and equitable as between the parties. (ground 12);

(i) That the learned Magistrate erred by failing to determine the contribution-based entitlements of the parties, expressed as a percentage of the net value of the property of the parties (ground 1)

1. In support of this ground, Mr Maurice, counsel for the wife on appeal, relied upon a statement made by the Full Court in Hickey and Attorney-General for the Commonwealth of Australia (Intervener) [2003] FamCA 395; (2003) FLC 93-143 at paragraph 39, namely:

...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.

1. Baumann FM himself set out that paragraph of the judgment of the Full Court in Hickey containing the above passage. The paragraph commences:

The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provision of s. 79.

1. In other words, the expression of the assessment of contributions as a percentage of net property is preferred, but is not a prescription. Expression of a percentage, where there is to be a division, is highly desirable, to convert qualitative factors into quantified entitlement. It is much less necessary where there is a decision to make no adjustment.
2. Ms Rees, counsel for the husband on the appeal, relies upon statements made by the Full Court of this court in Cook and Langford [2008] FamCAFC 84; (2008) FLC 93-374:

...what her Honour was required to do in the present case was to assess and make findings about the nature of the husband's contributions compared and contrasted with those of the wife, and only in the light of that assessment to adjust the parties' respective assets if necessary to achieve justice and equity between them. It was open to her Honour if she found no or minimal contributions by the husband to make no adjustments to the parties' respective assets (see Bushby & Bushby [1987] FamCA 63; (1988) FLC 91-919).

...In the circumstances of this case, it was well open to find it was inappropriate and/or artificial to attempt to evaluate the actual contributions of the husband as a percentage of the large pool of assets which were sourced exclusively from the wife's sole pre-marriage assets, maintained and improved significantly by her during the marriage, and substantially increased post separation as a result of the sale, engineered by the wife, of AB to another enterprise.

We do not accept that there was an absence of reasoning which makes it impossible to know why Her Honour evaluated his contribution based entitlement...

1. Although the value of assets in question varies greatly between that case and this, the Full Court's remarks are not inappropriate where, as there, the difference between the husband's assets and those of the wife is huge and the period of cohabitation was short.
2. In assessing contributions, Baumann FM said:
   1. ...the initial contributions were virtually entirely made by the Husband. Not only are they overwhelming, the primary asset (the home at [B]) still comprises the principal asset.

1. The Wife's income was, during the relationship, very modest. Her taxable income for the year ended 30 June 2005 was the only full financial year the parties were in the relationship. I would estimate well less than half of the revealed taxable income for the 2005/2006 year accrued during the relationship - the Wife saying that after separation she worked longer hours to support herself. When one considers that the Wife claims she "paid for all expenses for my Children throughout the relationship", clearly there was little if anything left to contribute to the household from the very modest income. The Children were approximately [18, 16 and 13 years old] when cohabitation commenced.

1. ... He funded overseas trips, gifts of jewellery, transport and other expenses. The Wife, after meeting the needs of her Children had nothing of significance left to contribute.
2. The Wife did try to convey that her non-financial contributions were significant. Again, the age of her Children meant she had significant responsibilities to them. She was secure in the knowledge that the Husband paid all the household expenses and nearly all the living expenses and provided a home and reliable car for her and her Children. The Wife conceded that the Husband shared the cooking; they would go out for dinner at least weekly and had take-away. I accept the Wife made the superior contribution to the household domestic chores. Certainly the Husband worked long hours.
3. The Wife accompanied the Husband on the overseas trips and I am sure she did play her part in supporting his relationship with both his other Children... (who lived with the couple for a short period) and overseas relatives. On the limited occasions that the Wife was asked to accompany the Husband to work functions or conferences, she did so. Although the Husband, a little bitterly, remarked that "she was ignored" by his colleagues nonetheless I am satisfied that she tried to support him.
4. The Wife organised the wedding celebrations. She helped organise the installation of an ecologically better septic system. Jointly the parties designed and had input into the bathroom renovations. There ran (sic) some documents around arising from a pool dispute.

1. I have tried to ensure, in these reasons, that I do not miss any relevant contributions made by the Wife. However, considering what the Husband introduced, coupled with his income during the period and his contribution as a member of the household non-financially, I regard the Wife's claim for a seven per cent adjustment on a nett pool of approximately two million dollars as unjustified. I have difficulty in accepting any real adjustments to the Wife at all.
2. The appellability of his Honour's assessment of contributions is the subject of another argument. But, in relation to the argument under discussion, we are not satisfied that the mere absence of a percentage apportionment on the basis of contributions, given his Honour's findings, is an error of approach.

(ii) That his Honour, contrary to uncontested expert evidence, erred by treating as a financial resource, and not as an asset, the Share options held by the husband as at the date of hearing. (grounds 4 and 5)

1. The husband is, and was throughout the cohabitation, an employee of W Limited. He held employee share options in that company. The options he held at trial were valued by an accountant, whose report was in evidence before Baumann FM. Relevant passages of the report are:

2.2 As set out in this report, I believe it is important to consider not just the value of the employee share options, but also their nature, form and characteristics. In particular, consideration should be given to the different components of the total "value", being the intrinsic value and the time value. The period over which the employee share options vest and the impact of vesting on the value to the employee should also be considered.

2.3 In summary, the intrinsic value is the value that can be immediately realised by the employee, subject to satisfying vesting conditions. Whereas the time value is an assessment of the benefit to the employee if they continue to hold the option. The options vest over different periods of continued employment. Should the employee cease employment prior to certain options vesting, those options will provide no benefit to the employee.

4.11 When considering the value to the party of the employee share option, it should be recognised that the employee cannot sell the option to another individual, and therefore cannot realise the benefit of the time value by a sale. Should the employee wish to obtain an immediate benefit from the option, they would only be able to exercise the option, and therefore could only realise its intrinsic value. However, the employee may choose to hold onto the option and not exercise the option, until its expiry, thereby receiving the benefit of the time value over the period to expiry.

4.12 It is therefore appropriate to consider both the intrinsic and time value components of the option separately, as each has different characteristics and will provide different benefits to the employee.

4.13 It should also be recognised that in order for the employee to gain the full benefit of the time value of the option, they would need to continue their employment until the expiry date.

4.15 As noted above, an employee share option cannot be sold and therefore the employee can only ever realise the intrinsic value of the option. The benefit of the time value can be obtained by the employee where they continue to hold the option.

4.19 I have applied a discount to both the intrinsic and time values for the risk that the performance hurdles may not be met and therefore some of the options would be forfeited. ...

4.26 As the options do not provide any benefits to the employee until the option is exercised, I believe it is appropriate to reduce the value of the options for the income tax that will be payable at the time the options are exercised. I have therefore reduced the value of the options for income tax. I have assumed that the Husband would pay income tax on the highest marginal tax rate, being 46.5% including Medicare.

1. Of this evidence and his treatment of the share options, Baumann FM said:
   1. The nature and conditions of these options are set out at paragraphs 2.14; 2.18 and 2.22 of the [G] report. In that report, and after consideration of a range of contingencies, the expert opines that the after Tax Value/Benefit of these three holdings amount to $79,976.00. The expert adopted the "Monte Carlo" method of valuation. For the reasons set out at paragraph 4.2, and as the evidence remains unchallenged, I am prepared to accept that valuation.
   2. However my view is that the shares ought be regarded as a financial resource in the future to the Husband, and not be included in the available pool of assets. The entitlements have not vested and there is nothing the Husband can do to make them vest. He must satisfy certain performance hurdles and particularly maintain his employment. These contingencies shape the quantification of the options, but also support a finding that it is proper to regard this interest as a financial resource rather than a current asset.
2. His Honour did not make a finding that the share options were not property. Had his Honour included the share options as property in the one asset pool he might, even should, have recognised their nature. For that reason, he might even have put them in a separate pool and, in either case, made some adjustment on that account. Rather than take that approach, his Honour did not bring the share options into any pool for division, but rather treated them as a financial resource. We are not prepared to say that that course was not open to him.
3. In any event, having regard to the proportion which the share options bore to the other assets and to the claim of the wife, which before us is acknowledged to be of the order of five percent, we are satisfied that the inclusion of the options in a pool, as against treating them as a financial resource, would not have made any difference.

That His Honour erred in law by finding that "work undertaken before the parties committed to their relationship with cohabitation cannot be regarded as a contribution". (ground 2)

1. The submission for the wife is that this proposition conflicts with long established authority. G and G [2000] FamCA 1075; (2000) FLC 93-043 and Whitely and Whitely (1996) FLC 92-684 are cited.
2. The particular circumstances with which his Honour dealt were described by him as follows:
   1. I should at this stage of these reasons say that, although the parties met in 2001 and the Wife commenced working for the Husband's business before cohabitation in December 2003, I disregard any of the Wife's asserted contributions before December 2001, as the parties were not in a marriage like relationship, although it seems sexual intimacy occurred. [The reference to December 2001 was likely meant to be to December 2003]

1. ...
   1. Remembering that the business was sold in February 2004, the Wife says that she worked in that business as a bookkeeper from October 2001 to approximately six weeks prior to marriage. The Wife claims she was paid at a rate of $20per hour. I am not satisfied she was paid less than market rates. The work undertaken before the parties committed to their relationship with cohabitation cannot be regarded as a contribution. She was an employee and paid accordingly.
2. In the summary of argument on behalf of the wife, counsel contended that there had been evidence at trial of other contributions, prior to cohabitation, apart from the wife's work, that benefited the husband. As counsel for the husband pointed out, these were almost all in the nature of social activity.
3. In our view, in the context of what his Honour said, he should not be taken as laying down any statement of principle that work undertaken by a party prior to cohabitation could not be regarded as a contribution in s 79 proceedings. In other words, Baumann FM was merely addressing the facts of the case before him.
4. Since the ground only asserts error in principle, we find no merit in it, but in any event we see no error in his Honour's discretionary treatment of this alleged contribution.

That His Honour erred by wholly disregarding a series of non disclosures by the husband both before and during the course of the proceedings. (grounds 7, 9 and 10)

1. Of the non-disclosures, his Honour said:
   1. The Wife asserts that the Husband, during the course of these proceedings, has failed to make full and frank disclosure - particularly about his interests in shares and options in [W] Limited. There is no doubt that the Husband failed to disclose the entitlements in [W] in the Agreement of 31 March 2004.
   2. When the existence of the interest the Husband had in these employer generated entitlements was conceded, the Husband argued that they "technically" had no value. Options were exercised on 19 September 2006 (and received $319,095) and again on 4 December 2007 (yielding $36,595.00) and the Husband ought to have disclosed these transactions in his Financial Statements sworn 30 May 2007 and

30 January 2008, but did not do so. 3. I am asked by the Wife to regard the Husband's conduct of, if not frank disclosure, then at least less than timely disclosure, so calling for the application of the principles enunciated in decisions such as Weir and Weir (1993) FLC 92-338 and Black and Kellner (1992) FLC 92-287. 4. I do not see how these discussions assist me in this case. Although, as I have noted, the Husband ought to have made a more timely disclosure, I am satisfied to a large degree his position was shaped by the position he held that, until exercise, the options had no value. That may be seen as a convenient contention, however, when the options were exercised they could not be ignored - and they have not been. With the benefit of information secured under subpoena, as well as more fulsome discovery and disclosure, a comprehensive report was prepared by forensic accountant [Mr G] (filed 11 February 2008). 5. The full picture was available at the hearing, of that I am now certain. This is not a case where I have to turn my mind to whether there are other undiscovered interests of the Husband. The Wife does not contend otherwise. Although the Wife asserts she, in effect, had to drag this information out of the Husband my satisfaction that full disclosure has now been made means the need "to be less cautious" about the Husband's evidence of his current assets and liabilities does not arise. 2. We see no error in his Honour's treatment of the issue of non-disclosure, which was not one which left the Federal Magistrate in doubt about the husband's assets. If the issue was to have continuing relevance, it may have sounded in costs. No appeal is brought against Baumann FM's order that each party bear their own costs.

That His Honour erred in the exercise of his discretion by finding that the wife's financial and non financial contributions did not warrant any adjustment of property interests in her favour. (grounds 3 and 6)

1. The argument here is not that the learned Federal Magistrate failed to have regard to relevant factors, or had regard to irrelevant factors, but that the way in which he treated what the wife received from the marriage as against what she gave to it, devalued her contributions.
2. Baumann FM's consideration of contributions has been substantially set out earlier, when considering the first argument.
3. In support of his argument now under discussion, Mr Maurice relies upon several passages from the judgment of Fogarty and Lindenmayer JJ in Kennon and Kennon [1997] FamCA 27; (1997) FLC 92-757, including:

His Honour, in his concluding paragraph, referred to above, placed great emphasis as his explanation for the figure of $200,000 upon "the off-setting impact of the very substantial benefits" which the wife received during the marriage and "the benefits previously received and/or retained" as representing "an appropriate recognition" of the wife's efforts. However, as we pointed out earlier, there is no suggestion that the wife received property from the husband during the marriage (other than a contribution to her present motor car). This is really an issue of standard of living within s.75(2)(g) rather than contributions. The standard of living which one party provides to the other is not to be seen as a down-payment on a subsequent property settlement. As his Honour expressed it, it suggests that the wealthy husband would get a discount for the wife's substantial contributions because during their marriage together they lived at a substantial, even lavish, lifestyle.

The second aspect of this is the passage quoted above immediately before his final conclusion, where reference is made to the wife's lifestyle during the marriage, comparing it with what had been her standard of living and lifestyle prior to the marriage. In the first passage his Honour said that during the marriage the wife was "provided for in a manner which the evidence suggests to be more comfortable than anything which she had experienced in her adult working life prior to this time". Later in the same paragraph he referred to the wife having "reaped at least the equal of what she sowed during the five years of cohabitation", the latter reference not being to property but to lifestyle.

It would, in our view, be a surprising circumstance if these matters were to result in a wife's otherwise proper contributions during the marriage being reduced to a very modest sum. In our view, it is contrary to principle and to present thinking to approach the matter in this way. The circumstance that the parties during the marriage lived to a very high standard largely due to the wealth of one of them does not mean that at the end of that period that circumstance cancels out or largely diminishes the contributions which were expected of the other party and which that person provided.

1. We are concerned that his Honour may have devalued the wife's contributions as, or in a way similar to that which Mr Maurice asserts, when, as seen, his Honour concluded as to contributions:
   1. ...considering what the Husband introduced, coupled with his income during the period and his contribution as a member of the household non-financially, I regard the Wife's claim for a seven per cent adjustment on a nett pool of approximately two million dollars as unjustified. I have difficulty in accepting any real adjustments to the Wife at all.
2. However, in view of the conclusions we have come to in relation to his Honour's treatment of s 75(2) factors and the justice and equity of his order overall, we think it unnecessary to reach a final view.

That when assessing what adjustment, if any, ought to be made in favour of the wife pursuant to sec 79(4)(e) of the Act His Honour erred in the exercise of his discretion by failing to give any or any adequate weight to:

a. The wife's obligation to care for her adult disabled daughter;

d. The wife's standard of living both before and after separation;

e. The fact that the wife was left a with litigation loan of $50,000 outstanding as at the date of hearing; (grounds 7 and 11)

That His Honour erred in the exercise of his discretion in that the overall result was outside the reasonable range of discretion available to him and therefore was not just and equitable as between the parties (ground 12).

1. His Honour dealt with s 75 matters as follows:
   1. Ms Rees for the Husband says, that if there was to be any adjustment at all for section 75(2) factors in the Wife's favour (which she submitted there should not), then any minimal adjustment would be matched by an adjustment in favour of the Husband under section 75(2)(o) for what is commonly called the Robb factor of support by the Husband of the Wife's Children during the short relationship (see Robb & Robb (1995) FLC92/555).
   2. The evidence does not support a finding that the marriage had any effect on the Wife's asset position, working opportunities or career advancement. Clearly a matter of some understandable regret for her (in particular) is that her hopes of achieving financial security through the marriage did not come to pass. She is really in the same position financially now (perhaps with a higher paying job), then [sic] she was when cohabitation commenced.
   3. The Husband, as he was at the commencement of the relationship in the same superior asset position - mostly due to the principal asset of his home. He of course, during the relationship made contributions to his superannuation and to the extent that there was some forced saving the Wife made an indirect contribution. However again it was very minimal.
   4. Understandably the Wife is anxious about the medical needs of her oldest Child. The Husband disputes whether [the child] needs to actually remain at home with the Wife. No probative medical evidence was offered, but in any even this adult Child was an adult when the parties cohabited, and the Husband has no legal duty to support her.
   5. The Wife perhaps subtly seeks to rely heavily upon the factor described at s.75(2)(g) namely:-

"(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable"

There is no doubt that for the twenty-six (26) months of the parties' relationship the Wife, and through her, her Children enjoyed a standard of living much higher then they previously enjoyed or she enjoys now. It was for the Wife a lifestyle which included regular travel within Australia and at least two overseas trips. A beautiful home was occupied. Weekly eating out and take-away meals occurred. The Wife had a new and reliable car for her use, with personalised number plates. It's repossession in June 2006 (when the Husband chose not to maintain payments) caused much distress to the Wife and she says, resulted in her loss of employment.

1. However where the Wife is able to maintain, with her improved, yet modest income, a reasonable standard of living (and it seems to me not substantially different than that experienced prior to cohabitation), I would not construe s75(2)(g) as requiring an adjustment so as to allow the Wife to enjoy a lifestyle as she did for the brief period of their relationship into the future.
2. The facts would support some recognition of the improved lifestyle the Wife's Children enjoyed during the relationship, but again this would be nominal. I do not ignore that financial resource available to the Husband that represents his future exercisable [W] options, otherwise excluded from the pool as earlier noted.
3. Mr Maurice suggests that his Honour offset the husband's contributions to the support of the wife's children twice. He offset that against contributions made by the wife but then again, offset the husband's contributions to the support of the wife's children when considering a s 75(2) adjustment in the wife's favour. We do not see that his Honour in fact did so. All he did in the relevant paragraph, namely 37, was record the argument on behalf of the husband.
4. As to the Federal Magistrate's consideration of the justice and equity of his proposed order, he said:
   1. Trying to assess in percentage terms what might be a fair adjustment to the Wife on a pool of over two million dollars in funds distorts the assessment. That is why I noted earlier in these reasons that a qualification (sic) of the pool does not have the analytical significance it normally would.
   2. I have struggled to accept, in the exercise of my discretion, whether it could be just and equitable, as the Husband contends, for a party to a marriage to apply herself, to the best of her ability, to a relationship for 26 months and to leave it in the same financial position as she started.
   3. However a long line of authority has maintained that the exercise I have to undertake under section 79, is not an assessment of compensation for effort or a reward valuation approach. Nor is it a proper approach to consider the loss of a future expectation; a feverantly [sic] held hope for a better and more secure financial and emotional future - cut short when the relationship survives, as in this case, for only a short period.

"That His Honour erred by finding, when considering whether his orders were just and equitable, that by making no order for property adjustment in favour of the wife she would "leave this marriage in the same position she was in when she entered it". [paragraph 48 judgment]"

picks up some of the argument in support of ground 7, that the wife in fact was worse off leaving the marriage than entering it, in particular because of the legal costs.

1. We accept, because of the wife's debt to a litigation lender, that Baumann FM was wrong in concluding that the wife was:
   1. ...really in the same position financially now (perhaps with a higher paying job), then (sic) she was when cohabitation commenced.

1. ...in the same position she was in when she entered it...
2. As corollary of that view, we accept that the comparison of the wife's position at trial with that at commencement of cohabitation may be sound, if the wife's debt for legal fees is disregarded. That approach may be behind his Honour's conclusion and is an approach which Ms Rees urges as correct. As she put it, why should the husband, who had paid his legal costs at trial, be penalised in respect of the wife's costs of an application which failed.
3. It might be thought that the common approaches of excluding legal fees due, from a table of net assets for division, or of adding back fees paid from property that would otherwise have been included in an asset pool, support Ms Rees' argument. But the common treatment of legal fees in respect of an asset pool for division, is designed to avoid one party effectively bearing a proportion of the other party's legal costs, as a matter of mathematics. In contrast, the recognition of a debt for legal fees, when the court is considering s 75(2) factors and the justice and equity of orders, is consistent with the terms of s 75(2)(b) and is part of the discretionary (as distinct from mathematical) exercise.
4. The costs of disentangling the financial affairs of formerly married persons is a common consequence of marital breakdown, even if the parties behave reasonably. Though the wife's application, after she succeeded in having the financial agreement set aside, was dismissed by Baumann FM, we see nothing frivolous or ill-considered about it. It was not suggested at trial, or before us, that costs were in any way inappropriately incurred by the wife (save that her application failed).
5. It is for these reasons that we think Baumann FM's conclusion that his order left the wife in the same financial position as she started, was wrong.
6. Moreover, as to the exercise of discretion in respect to s 75(2) factors, because of the massive disparity in assets, the impact on the wife of the costs of proceedings was radically greater than the impact of costs on the husband. We consider that real weight should have been accorded to that position.

1. Both parties ask that, if we find merit in a ground, we re-exercise the discretion. Neither wishes to put any further evidence before us.
2. In our view, the wife should receive from the husband $100,000.00 (plus interest from the date of due payment).
3. This is a case where the s 75(2) factors, (the detail and discussion of which we have already substantially set out) loom large, mainly because of the massive disparity in assets taking into account the husband's options, and the debt carried out of the marriage by the wife.
4. We think that the idea of the wife emerging from the short relationship in much the same position as she entered it is a sound starting point, but for that to be so, she should be debt free and have modest personalty. That, within that spare frame, she have a small margin of comfort, is consistent with a standard of living which we think reasonable in the circumstances.
5. Notwithstanding the predominance of s 75(2) factors, in the exercise of discretion under s 79, we also see the wife's contributions during cohabitation as deserving of some apportionment to her. Mathematically, this would be in the order of 2 per cent or $41,136.00 by way of contribution and the balance by way of adjustment under s 75(2) factors.

1. Mr Maurice sought only a certificate in the event of success. We consider both parties ought receive certificates.

1. Pursuant to orders made on 1 December 2008, the wife paid $5,000 to be held by the husband's solicitors as security for costs. In light of the outcome of this appeal, it is appropriate that an order be made for the release of these funds back to the wife.

1. I have had the opportunity to consider the reasons of Warnick and Boland JJ and I agree with what their Honours have said in relation to the treatment by the Federal Magistrate of the matters in s 75(2) of the Family Law Act 1975 (Cth) ("the Act") and the justice and equity of his order. In the result I agree that the appeal should be upheld. I also agree with the order their Honours propose in consequence of a re-exercise of the discretion and the reasons given. I also agree with what their Honours propose in relation to the costs of the appeal.
2. In relation to grounds 4 and 5 of the Notice of Appeal I have reached a different conclusion in relation to the treatment by the Federal Magistrate of the Husband's employee share options in W Ltd.
3. In his Financial Statement of 30 January 2008 the Husband disclosed as an item of property 8,200 shares in W Ltd which he valued at $238,866. He also disclosed as a financial resource "[W] Options" of a value "not known". In his affidavit of evidence in chief the Husband testified that at the time of preparation of a financial agreement he forgot to instruct his solicitor that he had share options with W Ltd. He also testified that at the date of marriage he had three parcels of such share options being a total of 55,900. The Husband gave evidence about the vesting of 33,900 share options and the purchase and sale of the shares. He purchased the shares for $369,171.00 and sold them for $690,926.00. He also gave evidence as to the receipt of a further 6,600 share options. He gave no other evidence about the share options.
4. In an outline of case document filed on behalf of the Husband for the purposes of the trial it was contended that the Husband had shares in W Ltd of a value of $238,866.00 and superannuation of a value of $207,121.00. There was no mention of the share options.
5. On behalf of the Wife evidence was given by Mr G, Accountant, and he provided a very comprehensive valuation of the Husband's employee share options in W Ltd. Mr G was not cross examined. Mr G said that he adopted what he described as the method of valuation and stated that he did not apply what he identified as the method of valuation.

I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.