GW v RW

Factual and Procedural Background

The parties, referred to as Husband and Wife, were married in Australia in April 1989 after approximately 18 months of cohabitation in England. The Wife first petitioned for divorce in November 1995, which was dismissed following reconciliation in May 1997. They had two children during the marriage. The Wife petitioned for divorce a second time in July 2001, with no reconciliation thereafter. Decree Nisi was pronounced in December 2001, and the Wife returned to Australia with the children in April 2002. This judgment concerns the Wife's application for ancillary relief following the divorce petition.

The parties have net assets of approximately £12 million, all derived from the Husband's remuneration as a City worker. The Wife seeks an order for half of these assets.

The Husband began his career in finance before the marriage, with net assets of about $500,000 at the time of marriage and a high income. The Wife ceased remunerative employment upon marriage by agreement. The Husband later worked for a major international corporation with a complex compensation package and was made redundant in 2002, with salary continuing through 2003 unless he finds alternative employment.

Legal Issues Presented

1. How should the court treat funds accumulated during the parties' period of estrangement in relation to asset division?
2. What is the appropriate valuation and disclosure standard for complex deferred and option assets in ancillary relief proceedings?
3. How should the duration of the marriage, including pre-marital cohabitation and periods of estrangement, be calculated for the purposes of asset division?
4. Does the principle of assumed equality of contributions, as established in Lambert v Lambert, apply to a marriage of approximately 12 years?
5. How should non-marital assets, including pre-marital wealth and career earning capacity, be treated in the division of assets?
6. What role do the parties' respective needs play in departing from equality in asset division?
7. How should costs be allocated between the parties, considering offers to settle and conduct during litigation?
8. What is the appropriate level of child maintenance given the parties' circumstances and relevant statutory frameworks?

Arguments of the Parties

Appellant's Arguments (Wife)

• The Wife seeks an equal division of assets, relying on the principle from Lambert v Lambert that contributions should be presumed equal.
• The Husband's asset disclosures were misleading and unfair, particularly regarding deferred stock and option plans.
• The Wife's accountants incurred substantial costs due to the Husband's misrepresentations and late disclosure of severance agreements.
• The Wife argues for a child maintenance figure aligned with the maximum liability under the new child support regime.
• The Wife contends that the Husband's offers during litigation were unrealistic and that her position was justified based on initial asset valuations.

Respondent's Arguments (Husband)

• The Husband disputes the presumption of equal contributions applying to a marriage of approximately 12 years, arguing it applies only to longer marriages.
• He asserts that his pre-marital assets and developed career represent non-marital contributions warranting departure from equality.
• The Husband requests recognition of his greater needs compared to the Wife, justifying unequal division.
• He defends the presentation of his financial disclosure as approved by his legal advisors and argues that attributing a fair value to deferred assets is inherently problematic.
• The Husband challenges the Wife's cost claims and contends that he made offers close to the final award, seeking costs in his favor.

Table of Precedents Cited

Court's Reasoning and Analysis

The court carefully examined the parties' financial histories, asset valuations, and the nature of contributions during the marriage. It accepted the Husband's pre-marital net worth at $500,000 and included the 18 months of pre-marital cohabitation in the marriage duration, while excluding the 18-month estrangement period, resulting in a 12-year marriage duration for analysis.

The court found the Husband's initial financial disclosure misleading, particularly the valuation and presentation of deferred stock options and loans, which led to costly forensic accounting. Despite this, the court was satisfied that full disclosure was ultimately achieved and that defaults did not justify adverse inferences affecting the substantive award but were relevant to costs.

The court considered the principle from Lambert v Lambert regarding assumed equality of contributions, noting it was primarily established for long marriages (around 20 years). For the 12-year marriage before it, the court allowed some departure from equality based on the Husband's significant pre-marital assets, developed career, and asset growth during estrangement, which were contributions unmatched by the Wife.

The court rejected the argument that the Husband had greater needs than the Wife, finding both parties required similar proportions of the assets to meet their needs, and that the Husband's earning capacity mitigated any claim for greater needs.

To address valuation difficulties of deferred and risk-laden assets, the court applied the Wells v Wells approach of specific sharing rather than discounted cash payments, ensuring fairness and eliminating valuation disputes.

Regarding child maintenance, the court adopted principles aligning maintenance orders with the new statutory child support regime, adjusted for the parties' circumstances, and ordered maintenance payments indexed to the Australian retail price index with additional provisions for educational and travel costs.

On costs, the court critically analyzed the effect of Calderbank offers and the parties' conduct. It concluded that the current costs regime operates akin to a betting system, which is inappropriate in family law. The court adopted a starting point of no order as to costs in big money cases unless unreasonable conduct is demonstrated. Both parties were found to have acted unreasonably to different extents, leading to a net costs liability in favor of the Husband but offset by the lump sum awarded to the Wife.

Holding and Implications

Holding: The court ordered that the Wife receive 40% of the realisable assets and 40% of the deferred and risk-laden assets, reflecting a 60:40 division in favor of the Husband. The Wife is to receive a lump sum payment from the Husband, subject to adjustments for certain debts and liabilities. Child maintenance was ordered at A$40,000 per child per annum, with the Husband responsible for educational and travel costs. Regarding costs, no general order was made; instead, a net costs liability of approximately £29,000 in favor of the Husband was established, offset by the lump sum payment to the Wife, resulting in a residual liability in the Wife's favor.

Implications: The decision illustrates the court's nuanced approach to asset division in marriages of moderate duration, balancing principles of equality with recognition of non-marital contributions and the realities of complex financial arrangements. It underscores the importance of full and frank disclosure and fair presentation of assets. The adoption of specific sharing for deferred assets offers a practical solution to valuation difficulties. The court's reasoning on costs signals a move away from rigid application of Calderbank offers towards a more discretionary, conduct-based approach, aiming to reduce acrimony and satellite litigation. Child maintenance awards are aligned with statutory frameworks and practical considerations for families living abroad. No new legal principles were established; the judgment applies existing authorities to the facts, emphasizing fairness and practicality in ancillary relief proceedings.