AARON & JENKINS
[2018] FamCAFC 51
•20 March 2018
FAMILY COURT OF AUSTRALIA
| AARON & JENKINS | [2018] FamCAFC 51 |
| FAMILY LAW – APPEAL – PROPERTY – Where the primary judge made final property orders distributing the property of the parties and either of them in the proportions 90 per cent to the wife and 10 per cent to the husband – Where the primary judge found that a debt was owing to the wife’s mother – Where the primary judge determined that the husband was to bear a significant portion of that debt – Where the primary judge ordered that the wife should pay to her mother the full amount of the loan – Where the primary judge deducted the amount owed by the husband from the amount payable to him by the wife pursuant to his ultimate entitlement – Where counsel for the husband on appeal abandoned all but one ground – Where that ground alleged a mathematical error by the primary judge – Where the ground did not demonstrate any error – Where even if the ground was accepted the difference in outcome would be de minimis – Where the overall result was not unjust and inequitable – Appeal dismissed – No order as to costs. |
| Family Law Act 1975 (Cth) s 90SF(3) (r) |
| Rodgers & Rodgers (No 2) (2016) FLC 93-712; [2016] FamCAFC 104 |
| APPELLANT: | Mr Aaron |
| RESPONDENT: | Ms Jenkins |
| FILE NUMBER: | LNC | 653 | of | 2015 |
| APPEAL NUMBER: | SOA | 35 | of | 2017 |
| DATE DELIVERED: | 20 March 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Ainslie-Wallace, Murphy & Kent JJ |
| HEARING DATE: | 7 March 2018 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 4 May 2017 |
| LOWER COURT MNC: | [2017] FamCA 414 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Lewis |
| SOLICITOR FOR THE APPELLANT: | O’Rourke & Kelly |
| FOR THE RESPONDENT: | In person |
Orders
The appeal against the orders made by the Honourable Justice Benjamin on 4 May 2017 be dismissed.
There be no order as to costs of the appeal.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Aaron & Jenkins has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SOA 35 of 2017
File Number: LNC 653 of 2015
| Mr Aaron |
Appellant
and
| Ms Jenkins |
Respondent
REASONS FOR JUDGMENT
On 4 May 2017 Benjamin J made orders for property adjustment consequent upon the breakdown of the de facto relationship between Mr Aaron (“the husband”) and Ms Jenkins (“the wife”).
The husband appeals those orders. His Notice of Appeal contains 12 grounds. Many are, with respect, difficult to understand and, as drafted, do not identify appealable error at all. At the hearing of the appeal, the husband’s counsel abandoned all but Ground 8. That ground is in these terms:
That even if the learned trial Judge’s findings of fact were accepted without challenge he is in error or has misdirected himself in calculating the percentage and final distribution due to each party by failing to deduct from their net positions the debts he found they each owed to Ms Jenkins Snr namely $11,000.00 by the respondent and $16,000.00 by the Applicant where if that calculation had been properly made (on those facts) the amount payable to the appellant from the respondent would have been $22,787.00 not $3,113.00.
Counsel for the husband contended that the challenge was purely to what is contended to be erroneous mathematics. However the ground, and the arguments in respect of the mathematics, necessitates examination of its premise.
It should immediately be observed that what is contended to be the correct cash sum payable to the husband in the ground is different to that contended for in the written Summary of Argument. Despite many attempts to understand the derivation of either figure, we are unable to do so.
Be that as it may, the derivation of the figure proceeds on the assumption that his Honour intended to effect an overall 90 per cent / 10 per cent division of the net value of the parties’ assets after deduction of all liabilities including a debt of $27,000 found to be owing to the wife’s mother.
This contention draws at least some support from the structure of the primary judge’s reasons and the fact that, for reasons further discussed, we consider, respectfully, that the structure of his Honour’s reasons produces some difficulties in interpreting his Honour’s intentions and determination as to dealing separately with the $27,000 debt, on the one hand, and a purported 90 per cent / 10 per cent division of net property interests which excludes it on the other.
Even if the husband’s apparent assumption is correct, we are respectfully unable to see how the figures said to be produced are derived. It should be accepted, however, that if the apparent assumption is accepted, his Honour’s orders effect the husband receiving approximately 6.5 per cent of the property and not 10 per cent.
However, we do not accept the husband’s assumption. We consider it tolerably clear that his Honour intended the 90 per cent / 10 per cent assessment to apply to a net value of property which takes account of all liabilities of the parties except for the $27,000 owed by the parties to the wife’s mother which his Honour determined should be met as to $16,000 by the husband and as to $11,000 by the wife. That sum was intended to be dealt with separately and after the distribution of the other net property in the assessed 90/10 proportions.
The result is his Honour’s orders correctly reflect the intended result. In light of the husband’s argument as to erroneous calculation and some, with respect, convolution in his Honour’s reasons, it is necessary to explain how that conclusion derives.
The property and the calculation of the respective entitlements
His Honour determined, for reasons detailed at [191] and following, to deal separately with a $27,000 debt owing by the parties to the wife’s mother. His Honour resolved that the husband ought to be responsible for $16,000 of that debt, and the wife $11,000.
His Honour also resolved to leave each party with their respective accumulated superannuation interests in circumstances where these were held respectively by each party prior to the relationship and were not contributed to during the relationship.
Leaving aside the $27,000 debt and superannuation interests, the net value of property interests of the husband was found to be $22,374 and those of the wife $392,495, a combined total of $414,869. His Honour resolved to divide that value as to 90 per cent to the wife and 10 per cent to the husband.
To facilitate the mechanics of the determined shares of the $27,000 debt, the trial judge determined that the husband’s $16,000 share of that debt should be adjusted for out of the cash payment the wife had to make to the husband to achieve his 10 per cent entitlement, with the wife then to be solely responsible for the $27,000 debt to her mother. This resulted in a cash payment to the husband of $3,113 from the wife.
In other words, the debt and the respective liabilities of the parties were dealt with separately from the other liabilities of the parties.
Given that premise, the correct calculation of the parties’ respective entitlements is calculated as follows:
Husband
Entitlement of 10 per cent of $414,869 $41,487
Less $16,000 share of debt $25,487
Husband already has $22,374
Plus cash payment from wife $3,113
Net position $25,487
Wife
Entitlement of 90 per cent of $414,869 $373,382
Less $11,000 share of debt $362,382
Wife already has $392,495
Less cash payment to husband $3,113
$389,382
Less debt to mother $27,000
Net position $362,382
Did the trial judge intend that result?
Having identified relevant property interests (at [99] to [137]), the trial judge then discusses “contributions” (at [138] to [164]). His Honour assessed contributions in the proportion 95 per cent to the wife and 5 per cent to the husband. That assessment is no longer challenged on this appeal. In our respectful view, it was well open on the particular facts of this case.
It is then only subsequently, within the discussion of factors identified in s 90SF(3) of the Family Law Act 1975 (Cth) (“the Act”), and specifically subparagraph (r) (“any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”) that the trial judge returns (at [191]) to discuss post-separation events and specifics as to the $27,000 debt.
It is there, rather than when identifying and valuing the parties’ property and liabilities, that the trial judge identifies reasons why the husband ought to be responsible for $16,000 of that debt and the wife $11,000. We interpolate that, by reason of its inclusion within a discussion of the s 90SF(3) factors, it might thus be interpreted that this topic has been addressed and accounted for, for the purpose of his Honour’s s 90SF adjustment to the husband of 5 per cent. However, we consider that, while perhaps understandable, what follows in his Honour’s reasons dispels any such assumption.
After dealing with s 90SF factors his Honour then turns to the topic of “assessment”, notably under that heading in the reasons. Within that discussion, from [199] and following his Honour records:
201.I have concluded that an adjustment of 10 per cent in favour of the [husband] and 90 per cent in favour of the [wife] is the approach, which I should adopt.
202.Therefore I had considered an overall adjustment of 90 per cent to the [wife] and 10 per cent to the [husband]...
The husband’s challenge, not without some justification for the reasons we have referred to it must be said, is that his Honour intended an overall 90 per cent / 10 per cent division after allowing for the fact that the husband should be responsible for $16,000 of the $27,000 debt.
Whilst the trial judge could have, with respect to him, avoided the degree of confusion his reasons for judgment produced we are, on balance, satisfied that the proper interpretation of his Honour’s reasons and determination is as we have earlier recorded it.
That is so because his Honour identifies at [191] and following his Honour’s determination to deal separately with the $27,000 debt. It was within his Honour’s discretion to do so (Rodgers & Rodgers (No 2) (2016) FLC 93-712). When regard is had to the property dealt with by the trial judge under the heading “assessment” it becomes apparent that the $27,000 debt is not included or accounted for. What appears at [201] and [202] quoted above is stated in that context.
That this is his Honour’s intention becomes more evident when, after setting out at [203] and [204] the respective property interests of each party (not including the subject debt) the trial judge records:
205.The effect of a 90 per cent /10 per cent split is that the wife respondent would retain $373,382 and the [husband] is entitled to $41,486. Given the current assets of the parties the [wife] would need to pay $19,113 to the [husband].
206.As the [husband] owes the [wife’s] mother $16,000, as I discussed above, the [wife’s] payment to him would be reduced by a further $16,000 and the [wife] would then be liable to pay her mother that sum and indemnify the [husband].
207.This would leave an amount outstanding to the [husband] of $3,113 to be paid by the [wife].
208.Accordingly, to give effect to these orders the [wife] will need to pay to the [husband] the sum of $3,113.
Counsel for the husband argued on appeal that, taking into account the $27,000 debt, the husband actually received only some 4 per cent as an overall outcome. We do not accept, on any view, that it was 4 per cent, nor do we accept the correctness of the figures contended for in either Ground 8 itself or the (different) figures in the husband’s Summary of Argument.
As the above calculation demonstrates, if the $27,000 is accounted for by deducting it, the value of the net assets of the parties reduces to a combined total of $387,869. The husband’s actual net position as ordered of $25,487 equates to 6.6 per cent of that amount.
Even if the husband’s premises are accepted, the difference between the amount ordered to be paid and the entitlement pursuant to those premises calculated, we are of the view that any such difference is de minimis and, more importantly, that a result which would see the husband receiving 6.6 per cent of the overall pool is well within the exercise of discretion in this particular case. We will briefly explain why.
The de facto relationship between the parties subsisted for about 11 years. It produced no children. It was entered into when the husband was aged about 40 years and the wife about 38 years. The extent of disparity between the parties of capital introduced at the outset, and the use made of that capital during the relationship, was of fundamental significance to the determination of just and equitable orders at the conclusion.
On the unchallenged findings of the trial judge the husband contributed little or no net capital at the outset of the relationship. Counsel for the husband did not dispute during argument of the appeal that, putting it at its highest, the husband’s capital contribution was only about $1,000 net. In stark contrast, leaving aside superannuation, the wife contributed, without necessarily being exhaustive:
·her Queensland property purchased for $215,000 prior to cohabitation with a mortgage debt as at cohabitation of only $35,000 – equity of $180,000 (at [71] and [99]);
·the loan of $20,000 owing to her by her mother repaid during the relationship (at [72]);
·furniture and effects and motor vehicles of unspecified value (at [150]) but those of these items which remained at the conclusion were worth $14,600 (at [203]); and
·investment funds and investment loan and other bank accounts totalling about $109,000 (at [150] and paragraph 6.4 of the wife’s trial affidavit).
In summary, the trial judge recorded findings and his acceptance of evidence, the effect of which was that the wife had no less than about $325,000 in capital at the outset of the relationship, aside from her then accumulated superannuation.
An early use of the wife’s initial capital was to repay $9,000 of the husband’s pre-relationship debts (at [26]). Another was the accommodation the wife’s Queensland property provided to the parties for about the first year of their cohabitation prior to their move to Tasmania where they were accommodated in a home owned by the wife’s mother (at [100]), and thus properly viewed as a contribution by or on behalf of the wife.
It must be observed that in circumstances where the wife retained the Queensland property throughout the relationship, and still does, and it was worth $525,000 at trial. It potentially grossly understates the real worth of the capital contributed by the wife to focus only upon the initial value of the Queensland property at $215,000 at the outset when regard is had to the use made of that asset during the relationship.
On the trial judge’s unchallenged findings, the rental income from that property received during the relationship was significant and was applied for the joint benefit of the parties (at [75]). Most significantly, drawdowns on the mortgage of that property, taking the mortgage balance from $35,000 to $213,520 – something in the order of about $180,000, was used to fund the parties’ lifestyle and sole source of income during the relationship from their joint business (at [74], [75] and [98]).
Importantly it is to be observed that this accumulated debt, used for the benefit of both parties during their relationship, was serviced solely by the wife in the two and a half year period subsequent to their separation and prior to trial (at [77]).
Further, insurance payments received in respect of flood damage to the Queensland property, totalling about $120,000, were only partially used for repairs but otherwise serviced the debt accumulated by the parties during the relationship (at [63] and [76]).
Of central importance to assessing the use made of the wife’s initial capital, the trial judge rejected an argument by the husband at trial that the parties’ business supported the Queensland property during the relationship. The finding of the trial judge, unchallenged on this appeal, was to opposite effect. His Honour found that the Queensland property “was a constant and regular source of capital support and income to the parties for their business from 2004 [the commencement of cohabitation] until January 2014 [separation]” (at [156]).
As was emphasised to the husband’s counsel during the appeal hearing, the effect of the orders made by the trial judge is to leave the husband free of debt. In stark comparison, the wife bears sole responsibility for her $213,520 mortgage debt which includes $180,000 of debts the parties accumulated during the relationship. The wife was earning $345 per week at trial [172] or less than $20,000 per annum. After allowing for meagre living expenses, her income will scarcely cover interest payments at prevailing mortgage rates, let alone actually reduce the mortgage debt inclusive of the joint debts accumulated by the parties, into the future.
Aside from disparity of initial capital contributed, and the use made of the wife’s capital during the relationship, the findings of the trial judge reflect that the wife’s contributions in every respect were greater than those of the husband. For example:
·after their relocation to Tasmania in 2003, the wife undertook the majority of the homemaker chores, while the husband did some garden and yard maintenance (see [153]);
·the wife worked harder at the parties’ business than the husband (see [46], [54] and [154]); and
·the wife made the superior financial and non-financial contributions throughout the relationship (see [159] and [161]).
Conclusion
As argued, the sole ground of appeal is that there was miscalculation or mathematical error on the part of the trial judge. For the reasons discussed we are not satisfied that this is so.
To the extent that the challenge extends to a complaint that the overall result is unjust and inequitable we reject that challenge. The trial judge’s reasons include ample findings to support the ultimate outcome to each party. The husband is left, albeit with a modest sum, in a far superior position than that when he embarked on the relationship. In stark contrast, allowing for the time value of money and present values, the wife’s financial position now by reason of the orders is vastly inferior to her financial position at the outset of the relationship.
Whilst, as demonstrated, the reasons for judgment must be traversed as a whole in order to locate the central findings informing his Honour’s determination, those central findings support the conclusion that the result embodied in the trial judge’s orders cannot be characterised as unjust or inequitable. Nor can it be concluded the orders are the product of error, either of fact or application of principle, in the exercise of discretion.
The appeal is to be dismissed. In circumstances where the wife acknowledged that she had incurred no legal costs for the appeal there will be no order as to costs.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Murphy & Kent JJ) delivered on 20 March 2018.
Associate:
Date: 20 March 2018
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