Substituted judgment
44Having concluded that the appeal must succeed, and that the judgment cannot be upheld on the basis of the notice of contention, it is highly desirable that the parties be saved the costs of further litigation and that this court, if it can, substitute its own judgment for that of the primary judge, rather than remit the matter for a new hearing. The parties accepted that this was so. In doing so, this Court while paying due deference to the findings of the primary judge is at liberty to make its own findings and draw its own inferences from the evidence.
45Although his Honour correctly stated that the first step in consideration of an application under s 20 was to identify and value the property of the parties, his Honour did not, at least explicitly, make findings as to the pool of property available for division. This "first step" requires identification and valuation of the property of the parties available for division, which exercise is usually undertaken as at the date of hearing, although in some cases another more convenient date, such as the date of separation, may be adopted. That exercise is a necessary precondition to the application to the pool of property of the evaluation of the parties' respective contributions.
46As at the date of the hearing before the primary judge, Ms Ray owned the Blackheath property, worth $230,000 (established by valuation and agreed at the trial); and she also had furniture, fittings and effects worth about $11,000. Mr Jensen had a Holden Rodeo motor vehicle, which he admitted to be worth $5,000; tools of trade worth $5,000; a DVD collection worth $2,000; and a superannuation interest worth about $3,000. Their combined assets therefore totalled $256,000. They were jointly liable in respect of the debt secured by the mortgage on the Blackheath property for about $100,000, and Mr Jensen had credit card liabilities accrued during the relationship of $22,000; he had also incurred additional credit card liabilities after separation, and had not paid rates of $3,590 in respect of the period after separation while he occupied the property.
47Excluding, from the liabilities to be paid out of the pool, Mr Jensen's additional tax debt of $21,000 in respect of income earned after separation, his post-separation credit card debt, and the rates of $3,590 - as they were incurred for his benefit alone after separation, and should be to his sole account - that leaves liabilities of $122,000 to be charged against the pool. The net divisible pool therefore amounts to $134,000.
48Although his Honour found the initial contributions of Ms Ray to be in the order of $106,000, and those of Mr Jensen about $100, this involved two material errors. First, the value of the Blackheath property at the commencement of cohabitation was shown by valuation, and agreed at trial, to be $70,000, not $100,000 as accepted by his Honour. Secondly, his Honour apparently did not accept Mr Jensen's evidence that he had the equivalent of $10,000 invested in a Danish bank account, which had been accumulated from his prior military service there, and which he said he contributed to expenditure in connection with the home and household. Notwithstanding some reservations that the judge had about Mr Jensen giving a 'poor impression' as a witness, and the judge's general conclusion that where there was a difference in their respective recollections he preferred Ms Ray's evidence as being the more reliable, the topic of the money invested in a Danish bank account was not one concerning which they had different recollections. Rather, Ms Ray's affidavit listed Mr Jensen's assets at the commencement of the relationship including as FILLIN * MERGEFORMAT an item 'savings - not known'. Mr Jensen's evidence in this respect was neither contradicted nor challenged, nor inherently incredible, and should have been accepted. Accordingly, the initial contributions were $76,000 as to Ms Ray and $10,100 as to Mr Jensen: in percentage terms, 88:12
49During the relationship, Mr Jensen was the sole income earner, from his sole-trader business as a tiler. His income tax returns disclose gross income for the ten years from FY 1998/99 to FY 2007/08 of $424,000. The last of these years was almost entirely post separation and amounted to some $70,000, so that his gross income over the last nine years of the relationship was in the order of $350,000. While his Honour rejected Mr Jensen's evidence to that effect - on the basis that the figures were "created after the fact" and unsupported by contemporaneous documents - it was based on and corresponded with his tax returns, and it is inherently improbable that Mr Jensen would overstate his income in his tax returns; that evidence should be accepted. While the evidence did not establish the quantum of Mr Jensen's financial contributions in earlier years, there was evidence that he was working throughout, and based on his gross income of about $350,000 for the last nine years of the relationship, it might not unreasonably be supposed that over the 17 years of the relationship his gross income amounted to not less than about $500,000; in net terms, after provision is made for the tax debt, his income contributions over the relationship totalled not less than about $400,000 (in nominal terms, unadjusted for inflation).
50Mr Jensen's income contributions did not directly result in the acquisition of property: because Blackheath was unencumbered at the outset, there was no mortgage to pay off. However, to some extent Mr Jensen contributed to the improvement of property by repairs and renovations; and the income he introduced serviced the outgoings, including rates and utilities and any necessary upkeep and maintenance, as well as providing effectively the whole of the financial support for the couple. Mr Jensen also made some non-financial contributions to the conservation and improvement of the property, through the use and application of his trade skills to effect repairs and renovations. On the other hand, some of his income was dissipated in gambling. Nonetheless, a significant portion also was applied to expenditure connected with the relationship, including household expenses, and outgoings and utilities in respect of the property; the evidence does not enable one to say what proportion was so spent, and it is not in the nature of this type of proceeding to descend into a detailed accounting examination of those issues.
51Ms Ray was the principal and almost exclusive homemaker (although the suggestion that Mr Jensen was entirely uninvolved is denied by her own affidavit evidence that he accompanied her when shopping, and, if she is correct, must have done so on every occasion, because - she says - he paid directly for the shopping, rather than providing her with money to do so). That said, there were only the two partners; there were no children requiring care. While Ms Ray received a pension during the first year or so of the relationship, she otherwise made no direct income contribution. But by providing the Blackheath property as accommodation for the parties, she freed Mr Jensen from having to pay rent, a not insignificant matter. Ms Ray made further non-financial contributions to Mr Jensen's tiling business, by attending to administrative and bookkeeping duties.
52Thus during the relationship, each made contributions in their more or less discrete fields of responsibility according to the division of responsibility between them. Mr Jensen was "freed" to generate income by the domestic contributions of Ms Ray. In this case, Ms Ray's indirect contribution is accentuated by her non-financial contributions to his business, and by her provision of accommodation for him. In my judgment, Ms Ray's ongoing contributions during the relationship outweighed those of Mr Jensen, mainly because of her provision of accommodation over and above her homemaking contribution, and this justifies a 60/40 apportionment in her favour of the ongoing contributions during the relationship.
53It remains to balance and weigh the initial contributions with the ongoing contributions. As is typical of these cases, one is required to satisfy out of a pool of property diverse contributions not readily comparable in monetary terms, some financial and others non-financial, the sum of which inevitably exceeds the available property. Contributions to the welfare of the partners under s 20(1)(b), including financial support as well as homemaking, are not inherently inferior to contributions to the acquisition, conservation and improvement of property under s 20(1)(a). A comparison of the inflows shows that in raw monetary terms, the net income contributions (of $400,000) reflecting the joint endeavours of the parties during the relationship considerably exceed the value of the initial contributions (which produced $236,000 on Ms Ray's part - giving full weight to her introduction of the Blackheath property at its present day value - and $10,100 on the part of Mr Jensen). However, the significance of the income contributions is diminished by the circumstance that a significant portion of Mr Jensen's income would, but for the relationship, have been spent on his own living expenses, including rent, in any event; and similarly, Ms Ray would have had to undertake some domestic and homemaking functions including cooking, cleaning and laundry quite apart from the relationship, although for one person rather than for two.
54Moreover, Ms Ray's initial contribution of the Blackheath property is no doubt primarily responsible for the existence today of any divisible property. Its appreciation in value during the relationship, from $70,000 to $230,000, was not attributable in any large way to ongoing contributions to its improvement during the relationship, but almost entirely to its initial introduction, although some - albeit a very small part - of it must have been attributable to the improvements carried out by Mr Jensen, and in addition, payment of rates, other outgoings, utilities and upkeep and maintenance were funded through the income generated by Mr Jensen, which constitutes a contribution to its "conservation" within s 20(1)(a). The particular use to which Ms Ray's initial contribution of Blackheath was put, its persistent existence to the end of the relationship, and the fact that it provided the home for the parties, accentuates its ongoing significance.
55In my view, the initial contribution of Blackheath is entitled to very significant relative weight. An apportionment of the totality of the contributions 60:40 in favour of Ms Ray would so insufficiently recognise the significance of her initial contribution as to be beyond the range of a reasonable exercise of discretion. Having regard to the initial contributions which very heavily (88:12) favour Ms Ray, and the on-going contributions during the relationship which also favour her but not nearly so markedly (60:40), a just and equitable overall apportionment of the totality of the contributions under s 20(1)(a) and (b), initial and ongoing during the relationship, would be 80:20 in favour of Ms Ray.
56It follows that Mr Jensen is entitled, on the basis of his initial and on-going contributions, to 20% of the net divisible pool, which equates to $26,800. Having regard to the assets that he already retains (which total $15,000), that would require that he receive a further $11,800 from the net proceeds of Blackheath (after discharge of the mortgage and his credit card debt), from which he must pay Ms Ray $3,590 for the outstanding rates.
57However, to avoid any risk that any increase in his credit card debts since separation be visited on the divisible pool, it is preferable to provide for him also to receive from the proceeds the amount requisite to discharge the credit card debt, namely $22,000, and to leave him to repay that debt. In practical terms, this means that from the net proceeds of the Blackheath property after discharge of the mortgage (assumed to be $130,000), (1) Mr Jensen should receive $22,000 by way of repayment of his credit card debt; (2) of the balance he should he should receive $11,800 (which is 9%), from which he must pay Ms Ray $3,590; and (3) Ms Ray should receive the other 91% (plus the $3,590).
58That would result in the following distribution, reflective of a 20:80 overall apportionment:
Mr Jensen retaining his motor vehicle ($5,000), his tools of trade ($5,000), his DVD collection ($2,000) and his superannuation interest ($3,000), and receiving from the net proceeds of sale a total of $33,800; and he would remain liable for his credit card debt of $22,000 - so that in all he would have notionally received net $26,800 from the divisible pool, less the $3,590 payable to Ms Ray;
Ms Ray retaining her furniture fittings and effects ($11,000) and the balance net proceeds of Blackheath ($96,200), a total of $107,200, plus $3,590 for the rates.
59As a crosscheck, this returns to each their initial contribution (of $10,000 and $76,000 respectively), and apportions the increment in the value of their property over the relationship (from $86,000 at cohabitation to $134,000 at hearing), 33% (or $16,000) to Mr Jensen and 67% (or $32,000) to Ms Ray. Consistent with the view expressed above, this neither shares the increment in value of an asset introduced exclusively by Ms Ray proportionately to the ongoing contributions made during the relationship, nor attributes it wholly to Ms Ray who introduced it, the result lying appropriately between those positions.