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

Precedent	Rule or Principle Cited For	Application by the Court
Lambert v Lambert [2002] 3 FCR 673, [2003] 1 FLR 139	Presumption of equality of contributions in asset division, especially in long marriages.	The court examined whether the presumption applies to a 12-year marriage, ultimately allowing some departure from equality.
White v White [2001] AC 596	Recognition of pre-marital assets and career earning capacity as non-marital contributions; approach to fairness and equality.	The court treated pre-marital assets and career as contributions warranting departure from equality.
Wells v Wells [2002] 2 FLR 97	Sharing of deferred and risk-laden assets in ancillary relief.	The court ordered specific sharing of deferred assets to avoid valuation disputes.
G v G [2002] 2 FLR 1143	Financial provision and equal division principles in ancillary relief.	Supported the court's approach to equal division adjusted for specific circumstances.
M v M (Financial Provision Party Incurring Excessive Costs) [1995] 3 FCR 321	Impact of non-disclosure on costs and substantive awards.	Court limited adverse inferences on substantive award due to disclosure defaults, restricting impact to costs.
P v P (Financial Relief: Non-Disclosure) [1994] 2 FLR 381	Costs consequences of non-disclosure in ancillary relief.	Guided court's discretion on costs allocation due to disclosure issues.
Tavoulareas v Tavoulareas [1998] 2 FLR 418	Non-disclosure and costs in family law proceedings.	Informed court's assessment of costs related to disclosure failures.
Young v Young [1998] 2 FLR 1131	Disclosure obligations and cost consequences.	Supported court's approach to costs in light of disclosure conduct.
Cowan v Cowan [2002] Fam 97	Treatment of inherited property in asset division.	Court adopted approach treating inherited assets as part of the matrimonial pool for discretionary division.
Foley v Foley (1981) 2 FLR 215	Distinction between years of cohabitation and years of marriage.	Referenced in discussion of whether pre-marital cohabitation counts towards marriage duration.
Figgins v Figgins [2002] FamCA 688	Consideration of marriage duration and inheritance in asset division.	Influenced court's approach to duration and non-marital assets.
Norris v Norris (unreported 28 November 2002)	Valuation of pensions and inclusion of inherited assets.	Supported approach not to discount pension values for tax and to include inherited assets in division.
Reidy v Reidy, 136 A.D.2d 614, 523 N.Y.S.2d 860 (2nd Dept 1988)	US precedent on valuation of tax-deferred pension assets in divorce.	Referenced to support non-discounting of pension assets for tax liabilities.
Suydam v Suydam (1994) 610 NYS 2d 976	Equal division of marital property in long marriages.	Used to discuss the relevance of marriage duration to equality presumptions.
Granade-Bastuck v Bastuck (1998) 671 NYS 2d 512	Reiteration of equal division principle in long marriages.	Supported the court's analysis of duration and asset division.
Meza v Meza (2002) 743 NYS 2d 122	Further affirmation of equal division in long duration marriages.	Referenced in the court's reasoning on duration and equality.
Gojkovic v Gojkovic No 2 [1991] 2 FLR 233	Costs discretion and effect of Calderbank offers in family proceedings.	Guided the court's approach to costs allocation in light of offers and conduct.
A v A (Costs Appeal) [1996] 1 FLR 14	Conduct and costs in ancillary relief proceedings.	Supported the court's emphasis on negotiation and reasonable conduct affecting costs.
Leadbeater v Leadbeater [1985] FLR 789	Inclusion of costs paid and outstanding in asset schedules.	Court questioned the automatic application of this technique in big money cases.

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.