AM & KAO

[2006] FamCA 734

[2006] FamCA 734

JFAMKAO

FAMILY LAW ACT 1975

IN THE FULL COURT OF

THE FAMILY COURT OF AUSTRALIA

AT SYDNEY

Appeal No. EA 97 of 2005
File No. SYF 3979 of 2003

IN THE MATTER OF:

AM

Appellant/Husband

- and -

KAO

Respondent/Wife

REASONS FOR JUDGMENT

BEFORE:  Kay, Coleman & Warnick JJ
DATE OF HEARING:         26^th day of June 2006
DATE OF JUDGMENT:     11^th day of August 2006

APPEARANCES:                Mr Richardson of Senior Counsel, (instructed by Watts McCray Lawyers, Level 15, 370 Pitt Street, Sydney NSW  2000) appeared on behalf of the appellant husband.

Mr Batey of Counsel with Mr Wong of Counsel, (instructed by Newnhams Solicitors, Level 7, 122 Castlereagh Street, Sydney NSW  2000) appeared on behalf of the respondent wife.

Name of Appeal  AM & KAO

Appeal Number  EA 97/2005

Date of Appeal hearing  26^th day of June 2006

Date of Judgment  11^th day of August 2006

Coram  Kay, Coleman, Warnick JJ

Catchwords:   FAMILY LAW – APPEAL FROM DECISION OF FAMILY COURT JUDGE – PROPERTY – Whether the trial Judge’s decision was “plainly unjust” by virtue of either the s 75(2) adjustment being excessive or, in the alternative, the trial Judge’s failure to consider the impact of the s 75(2) adjustment pursuant to s 79(2). Based on the quantum of the adjustment and the nature of the assets comprising it, trial Judge’s conclusion fell beyond the ambit of a reasonable exercise of discretion and was thus “plainly unjust”. Trial Judge’s discretion re-exercised.

FAMILY LAW – APPEAL FROM DECISION OF FAMILY COURT JUDGE – SPOUSAL MAINTENANCE – Whether the trial Judge erred in not including a “sunset clause” in the order for spousal maintenance. Trial Judge gave adequate reasons for declining to include a “sunset clause” in the spousal maintenance order and moreover was in no position to make a finding as to when the wife would cease to be entitled to spousal maintenance pursuant to s 72 of the Family Law Act 1975.

Family Law Act 1975 (Cth)

Miller v Miller & McFarlane v McFarlane [2006] 2 WLR

House v The King (1936) 55 CLR 499

Norbis v Norbis (1986) 161 CLR 513

Appeal allowed in part – trial Judge’s discretion re-exercised.

Costs certificates ordered.

1. By Amended Notice of Appeal filed 30 May 2006 the husband appealed against orders for settlement of property made by Lawrie J on 29 July 2005 in proceedings between the husband and the wife.

2. Her Honour’s orders provided that the wife receive the net proceeds of sale of the parties’ former matrimonial home together with some other personalty, and that the husband receive his superannuation entitlement and other items of personalty in order to give effect to her Honour’s conclusion that the property of the parties should be divided in shares of 73 per cent to the wife and 27 per cent to the husband. Her Honour also made an order for spousal maintenance in favour of the wife in the sum of $300.00 per week.

3. In lieu of the trial Judge’s orders the husband seeks that the net proceeds of sale of the former matrimonial home be divided in shares of 60 per cent to the wife and 40 per cent to the husband, each party otherwise retaining his or her superannuation interest and other items of personalty.  The husband sought that the order for spousal maintenance be expressed to terminate on 31 January 2008.

4. The wife resisted the husband’s appeal and sought to maintain the trial Judge’s orders.

BACKGROUND

1. The wife was born in 1964 and is thus aged 42 years.

2. The husband was born in 1965 and is now aged 41 years.

3. The parties commenced cohabitation in 1991, married in July 1992, and finally separated in August 2003.

4. There are three children of the marriage who are aged 8 years, 6 years and 4 years.   The children have primarily lived with the mother since the parties separated and have had substantial contact with their father during that period.  The trial Judge made orders permitting the wife to relocate the residence of the children to Melbourne and ordered contact, the husband having indicated that he would also relocate to Melbourne if the wife and children did, for three weekends out of four, one half of school holiday periods, for a period of two hours each fourth Thursday of school term, and on other special occasions as detailed in her Honour’s orders.  No part of the present appeal relates to the trial Judge’s orders with respect to the parties’ children.

5. Her Honour determined the net assets of the parties to be worth $765,106.00.  That finding is not controversial.  The major asset of the parties was the former matrimonial home in which they had equity of approximately $480,000.00.  The husband’s superannuation interest ($118,136.00) constituted a significant proportion of the property of the parties.  There is no suggestion that such sum was presently available to the husband, or that it would be in the foreseeable future.  Paid legal fees of the parties (totalling approximately $168,000.00) represented approximately 22 per cent of their net property.

10.  The trial Judge concluded the contribution entitlements of the parties to be 60 per cent on the part of the husband and 40 per cent on the part of the wife.  That finding has not been challenged in this appeal, either by the husband in his Amended Notice of Appeal, or by the wife, who has not cross appealed, in any notice of contention.

11.  Her Honour concluded that a s 75(2) adjustment of 33 per cent in favour of the wife was appropriate.  Her Honour’s reasons for such conclusion emerged clearly from the following passage of her judgment:

In terms of the section 75(2) factors the most significant of these on the wife’s side are her desire to continue in the role of homemaker and parent;  the fact that she will be providing most of the care for the children;  and that she has been disadvantaged by being out of the workforce whilst caring for the home and the children.  The other significant factor also favours the wife, namely the much greater earning capacity of the husband.

12.  The trial Judge concluded that the wife had established an entitlement to spousal maintenance in the sum of $300.00 per week, which sum she concluded the husband was able to meet.  In reality, the significance of the spousal maintenance order in this appeal is limited to whether the order made by the trial Judge should stand, thereby potentially imposing upon the husband the onus of making an application and establishing a case for the discharge of such order, as Counsel for the wife sought, or, as was sought on behalf of the husband, that the order be expressed to expire in January 2008, thereby imposing upon the wife the onus of establishing an entitlement to a continuation of a spousal maintenance order prior to its expiration at that time.

THE GROUNDS OF APPEAL

13.  A number of grounds of appeal were agitated on behalf of the husband.  The first of such grounds provided:

That her Honour’s discretion miscarried in the property settlement proceeding in that the award in favour of the respondent, in particular the 33% stage 3 adjustment, was plainly unjust.

14.  The effect of the trial Judge’s orders, as shown in the schedules appended to Senior Counsel for the husband’s submissions, was to leave the husband with assets of $208,346.00 inclusive of superannuation worth $118,136.00 and paid legal fees added back of $53,725.00, whilst the wife would, after sale of the matrimonial home, have been left with cash of approximately $455,000.00, paid legal fees notionally added back of $114,492.00 and a liability incurred in order to pay legal fees which had been added back notionally of $45,900.00.  The husband would thus receive $208,346.00 and the wife, after meeting her liability for unpaid legal fees, $556,760.00. 

15.  It was thus submitted on behalf of the husband that:

… the 33% s.75(2) adjustment was grossly excessive particularly in circumstances where the pool of property for division exceeded $700,000.00; the husband has a post tax child support liability exceeding $35,000.00 per annum; the most significant component of the property the husband would retain was superannuation that he will not access for something in the order of 20 years or more and he is otherwise left with a notional asset in the form of legal costs. (Appellant’s Summary of Argument, paragraph 6)

16.  It was thus submitted that the orders providing:

… that the husband receives virtually no net presently realisable property and is left with a need to borrow to meet outstanding legal costs in relation to the proceedings

meant that the husband would be “left without any form of deposit to acquire a home and has little prospect of being able to accumulate such a deposit”, whilst the wife would, after payment of all her expenses, including legal fees, have approximately $400,000.00 in cash, be receiving child support of approximately $700.00 per week and spousal maintenance of $300.00 per week.

17.  On behalf of the wife, reliance was placed upon the fact that the trial Judge “took account of the size of the asset pool (being over $700,000)”, her “assessment of the contributions” of the parties, that her Honour “had regard to the ‘substantial child support of about $700 per week’ being paid by the Appellant”, and further that her Honour “had regard to the fact that a significant proportion of the Appellant’s assets was to be in the form of superannuation which ‘the Husband is unlikely to access for twenty years’” (Respondent’s Summary of Argument, page 2). 

18.  It was thus submitted that the trial Judge had not “either failed to take these matters into account or attributed little or no weight to all or any” of the matters raised on behalf of the husband.

19.  On behalf of the husband, reliance was placed upon the statement of principle by the High Court in House v The King (1936) 55 CLR 499. It not being suggested that the trial Judge had acted upon an error of principle, allowed extraneous or irrelevant matters to guide or affect her, made a mistake in findings as to the facts, or failed to take into account some material consideration, the husband’s case was necessarily that, without suggesting why it was so, the trial Judge’s decision was “plainly unjust”.

20.  It was thus submitted by Counsel for the wife that “[m]erely because the result is unjust, or ‘plainly unjust’ in the eyes of another is not a sufficient basis to succeed in an appeal” (Respondent’s Summary of Argument, page 3).

21.  On behalf of the wife it was further submitted that the husband having been “in agreement with both the value of, and treatment of, his superannuation as a component of the pool” he could not:

… now be seen to be complaining that her Honour should have dealt with the superannuation, in a different manner or attached different consideration so as to afford him some advantage in the appeal. (Respondent’s Summary of Argument, pages 3-4)

22.  The trial Judge was asserted to have undertaken “appropriately, a consideration and assessment of all the relevant s 75(2) factors”.  Her determination in that regard was submitted to have fallen “perfectly within the ambit of her discretion” and:

That a differently constituted court may find the overall result toward the high end of a permissible range, does not render her Honour’s determination erroneous. (Respondent’s Summary of Argument, page 4)

23.  Counsel for the wife relied upon the fact that the husband “earns $320,000 (including bonuses)”.  He also referred to the decision of the Full Court in Best and Best (1993) FLC 92-418 and argued that the decision in Best:

… puts into perspective the absurdity of adopting short-term view of the parties’ respective financial circumstances, particularly where one party has developed this earning capacity whilst the other has cared for the family. (Respondent’s Summary of Argument, page 5)

24.  It was further contended that the submissions on behalf of the husband “deal simplistically with the issue of his child support liability” as:

… the payment of child support in no way compensates the custodial parent for the loss [of] career opportunity, lack of employment mobility and the restriction on an independent lifestyle which the obligation to care for children usually entails

That submission was said to be supported by the decision of the Full Court in Clauson and Clauson (1995) FLC 92-595. 

25.  On behalf of the wife considerable reliance was placed upon the fact that the trial Judge had been invited to include the husband’s superannuation interest as an asset at “Stage 1” and that the trial Judge had been well aware that the husband could not access his superannuation in the normal course for approximately 20 years and had clearly taken that reality into account.

26.  Finally, it was submitted on behalf of the wife that the trial Judge was not obliged to take into account whether or not either party would be “in a financial position to compile a deposit for a home loan” (Respondent’s Summary of Argument, page 6).

27.  It is apparent that the husband’s case, as suggested by Counsel for the wife, is essentially that, although not having acted upon a wrong principle, allowed extraneous or irrelevant matters to guide or affect her, made a mistake in findings as to the facts or failed to take into account some material consideration, her Honour’s decision was “plainly unjust”, and that such injustice arose, either by virtue of the s 75(2) adjustment determined by her being excessive or, if such assessment was not in itself excessive, her failure to consider its impact pursuant to s 79(2).

28.  As the authorities make clear, and the judgment of Brennan J in Norbis v Norbis (1986) 161 CLR 513 eloquently explains, this Court must resist the temptation to interfere with the decision of the trial Judge simply because, had it been determining the matter for itself, it would have reached a different conclusion.

29.  As the submissions of Counsel for the wife suggest, the essential issue in this case is whether the trial Judge’s decision represented the upper limit of the permissible ambit of discretion or, as Counsel for the husband submitted, exceeded it.  This issue is not without difficulty.

30.  The practical effect of the trial Judge’s orders was that the wife received 46 per cent more of the assets of the parties than did the husband, such percentage disparity translating as $348.414.00.  All but $1,905.00 (the wife’s superannuation interest) was represented by property immediately available to her or previously received by her.  Of his $208,346.00 (which included $13,351.00 which it was asserted on behalf of the husband should not have been included), $118,136.00 plus $53,725.00 respectively represented superannuation interest which would not be available to the husband for another 20 years, and legal fees which he had already paid.  After payment of his credit card debt of $8,391.00, the husband would have no more than $5,000.00 in liquid funds with which to seek to re-house himself.  The wife on the other hand would have had approximately $400,000.00 in cash to utilise for that purpose.

31.  Whilst it does not follow that a substantial imbalance in contribution entitlements cannot be reduced, or completely offset by a disparity in s 75(2) factors favouring the other spouse, the “fourth stage”, enlivening the provisions of s 79(2) requires a “revisiting” of both contribution and s 75(2) factors in order to determine whether the outcome suggested by their independent consideration is “just and equitable”. 

32.  In this case, the unchallenged conclusion of the trial Judge with respect to contributions favoured the husband by 20 per cent, or approximately $140,000.00.  The s 75(2) adjustment determined by her (33 per cent) favoured the wife by 66 per cent or approximately $505,000.

33.  In our view, notwithstanding that the wife was clearly entitled to a substantial s 75(2) adjustment, the trial Judge’s conclusion fell beyond the ambit of a reasonable exercise of discretion and was thus “plainly unjust”.  We so conclude having regard to the quantum of the adjustment and the nature of the assets comprising it.  In so concluding, we are conscious of the caveat emerging from the authorities to which we have earlier referred.

34.  In our view, the effect of the trial Judge’s orders, being to leave one party with $400,000.00 in cash to re-house herself, albeit with three young children, and the other with $5,000.00 only for that purpose was, in the circumstances of this case, not an outcome reasonably open to the trial Judge.  We would thus allow this challenge to her Honour’s conclusion.

35.  It is unnecessary, for reasons which will become apparent, for us to consider ground 2 of the husband’s Amended Notice of Appeal.  Her Honour having determined that the wife should receive the whole of the proceeds of sale of the former matrimonial home, the absence of orders providing for a percentage division of the proceeds of sale of the matrimonial home did not assume the significance which it normally would. 

36.  Although “de minimus” as was submitted on behalf of the wife, it is appropriate to deal with the complaint agitated on behalf of the husband:

That her Honour’s discretion miscarried in the property settlement proceedings in including in the property for division a savings account of the appellant with a balance of $13,351.00 in that she failed to take into account that this account represented the immediate deposit of his salary which would be consumed by ongoing obligations.

37.  On behalf of the husband it was submitted in this regard that:

The primary judge took into account as an asset for division funds in the husband’s savings account in the sum of $13,351.00.  Whilst ordinarily such an item would not invite much debate of discretion [sic].  The unusual circumstance at present is that the credit in the bank account at the date of swearing the appellant’s Financial Statement constituted the deposit of the appellant’s salary (AB7:1035).

In the course of submissions the exchange between her Honour and counsel appearing at the hearing for the appellant demonstrates that her Honour was acutely aware of this issue where she says (AB7: 1001.27) “Yes that’s his pay going in, and it’ll all shortly go out in different directions”.  There was then discussion about his obligations to pay child support, spouse maintenance, mortgage payments and the like.

It is submitted that this recognition of the reality, in the ways described in discussion, which already sees the respondent indirectly benefit from those same funds results in it being an unjust exercise of discretion to include the same amount as part of the property for division. (Appellant’s Summary of Argument, paragraphs 15-17)

38.  On behalf of the wife it was submitted that:

Her Honour clearly was aware of the source of the savings and that part of the savings would be applied to satisfy the Respondents’ [sic] ongoing liabilities for child support and Spouse maintenance.  Her Honour took this into account.  The exchange between the Appellants [sic] Counsel and her Honour leave no doubt that she was aware that the Appellants [sic] current savings resulted from a salary payment. (AB Vol 7 Page 1001 Lines 20 – 34) and that some was to be applied on child support and spouse maintenance (Ibid).

It was open to her Honour to accept the Respondent’s submission that the savings should be included in the “pool” to be distributed.  It is open to a trial Judge to include post separation earnings as part of the property pool.

In the event that the Appellants [sic] submissions are accepted, and the Appellants [sic] post separation salary of $13,351 should not have been included in determining the property pool, it is respectfully submitted that in a property pool of approximately $700,000.00 the inclusion or exclusion of a sum of $13,351.00 – representing a trifling 1.9% - would have such a minimal effect upon the overall result as to truly warrant a description, of, “de minimus” to this ground of appeal. (Respondent’s Summary of Argument, pages 8-9)

39.  We prefer the primary submission on behalf of the wife to that of the submissions on behalf of the husband in relation to this issue.  As is clear, the determination of the assets and liabilities of the parties constitutes a “snapshot”, to use the term which both Counsel adopted in oral submissions to us.  It was open to the trial Judge to include the husband’s month’s salary of $13,351.00 given that the husband had taken into account his credit card liability at the same time ($8,391.00) and could have adduced evidence of other debts or outstanding accounts at the same time.  It is to be remembered that the husband was found to have a substantial surplus of income over expenditure, a finding which has not been challenged in this appeal. Nothing to which we have been referred persuades us that this Court should interfere with her Honour’s conclusion in relation to the inclusion of $13,351.00 as an asset on the part of the husband.

THE MAINTENANCE APPEAL

40.  Although ground 5.3 in the husband’s Amended Notice of Appeal was relied upon, it is less than clear whether the essential complaint raised by it was in fact being pursued before us.  Ground 5.3 provided:

That her Honour erred in failing to conclude a determination of the respondent’s entitlement in the property settlement proceedings before determining the claim for spouse maintenance and in doing so:

…

in any event failed to address or provide adequate reasons determining that the wife was unable to adequately support herself and thus satisfy the threshold posed by s.72 Family Law Act.

41. It was submitted in relation to s 72 that the trial Judge had failed to find:

… as by s.72 she must implicitly do so, that the respondent was “unable to support herself…adequately” but rather for reasons that do not even constitute such a finding by necessary implication, she expressed the view that the respondent was “a person for whom spousal maintenance is appropriate” (Judgment para 64). (Appellant’s Summary of Argument, paragraph 24)

42. As noted earlier, Senior Counsel for the husband sought that the trial Judge’s order for spousal maintenance be qualified to expire in January 2008. Such concession is inconsistent with the proposition that the wife does not at present, or will not between now and January 2008, satisfy the threshold requirements of s 72 of the Family Law Act 1975 (Cth) (“the Act”). The absence of any submissions on the hearing of the appeal in relation to the threshold issue re-enforces the conclusion that the husband’s complaint was that the wife could not satisfy s 72 beyond January 2008, at which time the youngest child of the parties would commence to attend school.

43.  The crux of the husband’s complaint in relation to spousal maintenance is really conveyed by ground 6 which provided:

In the alternative, in the event that ground 5 is unsuccessful, that her Honour’s discretion in the maintenance proceedings miscarried in making a maintenance order of open duration in failing to have regard to the respondent’s evidence of her intention to return to employment when all three children of the marriage were at school which fact, together with an observance of s.81 Family Law Act, ought have resulted in any maintenance order being for a closed period.

44.  On behalf of the husband it was “contended that making an open ended maintenance order was manifestly unjust”.  That conclusion was said to be:

… fortified in circumstances where as a result of the property settlement proceeding the husband would be left with a debt for his legal fees, no fund to re-establish himself on the move to Melbourne, an obligation to pay child support of $36,400.00 per annum (post tax), an obligation to pay spouse maintenance of $15,600.00 per annum and an obligation to pay tax of about $113,568.00 per anum (AB7 page 1032). (Appellant’s Summary of Argument, paragraph 27)

45.  It was thus submitted that:

These amounts in aggregate total $165,568.00 which he is required to meet from a gross salary of about $268,000.00 per annum (AB:1031).

By the time he pays rent, exercises regular contact with his children and contributes additionally to their support in that way, he is left with very little economic opportunity, in circumstances where her Honour’s property settlement orders deprived him of any funds from the sale of the home, to reconstitute his life. (Appellant’s Summary of Argument, paragraphs 28 & 29)

46.  Ultimately it was asserted on behalf of the husband that:

… particularly in the light of the wife’s concession of an increased opportunity for employment when the children are each at school, that it would have been appropriate for her Honour’s order for maintenance to stop at that time. (Appellant’s Summary of Argument, paragraph 31)

47.  On behalf of the wife it was submitted that the husband:

… has a high and continuing earning capacity whereas the Respondent has relatively meager [sic] earning capacity.  That this may significantly change is speculative, other than to observe that her Honour was cognitive of the fact that they [sic] Wife may obtain employment when all three children were in full time schooling.  Given her Honour’s inference that the Respondents [sic] income earning capacity even when exercised was substantially below that of the Appellants [sic], there was no miscarriage of justice by her Honour. (Respondent’s Summary of Argument, page 13)

48.  It was submitted that:

… the “open duration” as contemplated by her Honour’s order is not outside the realm of her Honour’s legitimate discretion, particularly given the capacity of the parties to seek a variation or discharge of the order where there has been a significant change of circumstances for either party. (Respondent’s Summary of Argument, page 13)

49.  Nothing emerging from the case outline documents relied upon by the parties at trial sheds helpful light on this issue.

50.  At trial it was submitted on behalf of the husband that:

… the wife has an income-earning capacity and it’s not affected whether she lives in either Sydney or Melbourne.  She has an earning capacity which she chooses not to exercise whilst the children are young.  The evidence of her sister, was that she plans to do a financial course in the future. (Transcript of 22 July, page 15)

51.  It is less than entirely clear whether that submission was made with respect to the spousal maintenance claim, occurring during the course of submissions which appear to have been mainly directed to s 75(2) adjustment appropriate to be made in the wife’s favour. 

52.  Later it was submitted on behalf of the husband that:

… it is clear that the mother could survive without spousal maintenance and child support to the degree which she has received the same because she has used a substantial part of those moneys in payment of legal fees. (Transcript of 22 July 2005, page 20)

53.  It was then submitted that:

In the event that your Honour finds that the mother is in need of spouse maintenance because of a desire to care for her infant children, then any such order, in my respectful submissions, should expire when the youngest child commences school. The mother has a good income-earning capacity should she seek to exercise it. Her sister gave evidence that the mother is contemplating a financial course for the purpose of re-entering the workforce. (Transcript of 22 July 2005, page 21)

54.  Nothing more was submitted in relation to spousal maintenance by Counsel then appearing for the husband. 

55.  On behalf of the wife it was submitted at trial:

And your Honour would make the spouse maintenance order as I have outlined in the sum of $500 per week.

Your Honour, I would have to concede that the mother’s own evidence is that the youngest child is due to start school in 2008 and the mother’s capacities at that time would have to be somewhat different. But I’m not suggesting for one moment, your Honour, there being a sum set in relation to it. (Transcript of 22 July 2005, page 42) 

56.  Nothing to which we have been referred establishes that it was not reasonably open to the trial Judge to conclude that the wife’s reasonable weekly needs approximated $300.00.  To the extent that it is suggested, which it does not appear to be, that the husband lacked the capacity to pay such sum, nothing to which we have been referred persuades us that it was not open to the trial Judge to find that the husband had such capacity.

57.  In the context of the spousal maintenance claim, the trial Judge made a number of findings, none of which has been challenged in this appeal.  Those findings included that the wife has “been a full-time homemaker and parent since 1997”, that whilst the wife has the:

… physical and mental capacity for appropriate gainful employment her past work experience indicates that without major retraining such as obtaining a degree, she is unlikely to ever be able to earn sufficient to match the standard of living she had during the marriage.

However, her Honour found that the wife was “caring for three young children”, the youngest of which “only turned three in June [2005]” and that:

Even when the children are older the burden of running a household where she is looking after three children would make it inappropriate for her to be expected to undertake more than part-time work. (Judgment, paragraph 64)

58. To the extent that the husband has complained in this appeal in relation to the trial Judge’s s 72 threshold conclusion, the reasons for which cannot be doubted, we are not persuaded that such challenge has substance.

59.  The only issue requiring consideration is whether, as the husband contended at trial and in this Court, there should have been a “sunset clause” with respect to the spousal maintenance order made by the trial Judge.

60. The passages in her Honour’s judgment, to which we have referred, make reasonably clear why her Honour declined to limit the potential duration of the wife’s order for spousal maintenance. We are not persuaded that those factors did not provide a reasonable foundation for declining to include a “sunset clause” in the spousal maintenance order. Moreover, on the evidence before her, it could be suggested that the trial Judge was in no position to make a finding as to when the wife would cease to be entitled to spousal maintenance pursuant to s 72 of the Act.

61.  In our view, no error was involved in the order for spousal maintenance made by the trial Judge.  We are fortified in that conclusion by the recent decision of the House of Lords in Miller v Miller & McFarlane v McFarlane [2006] 2 WLR in which it was said by Lord Nicholls of Birkenhead at paragraphs 96 and 97:

This leads me to the point where I fundamentally disagree with the Court of Appeal: the replacement of a joint lives order with a five-year order. I agree with the Court of Appeal that when the husband has repaid the mortgage on his new home, and the wife's earning capacity has revived, the time may be ripe for a reassessment of the parties' position to see if a deferred clean break is practicable. A clean break might then be achievable by the court exercising its power to order the husband to make a lump sum payment to the wife as consideration for discharging his liability to make further periodical payments. The court has this power under section 31(7A) and (7B) inserted into the 1973 Act by section 66 of the Family Law Act 1996.

That is something which will merit careful consideration at a suitably early date. But I do not see how this leads to the conclusion that the district judge's joint lives order should be set aside in favour of an extendable five years' order. The practice in the family courts seems to be that on an application for extension of a periodical payments order made for a finite period the applicant must surmount a high threshold: Fleming v Fleming [2003] EWCA Civ 1841; [2004] 1FLR 667, 670, paras 12-14. In the present case it would be altogether inappropriate, indeed unjust, to make a five-year order and place the wife in that position when five years has elapsed. In the present case a five-year order is most unlikely to be sufficient to achieve a fair outcome. Further financial provision of some sort will be needed. So, far from compelling the wife to apply for an extension of a five-year order, and requiring her to shoulder the heavy burden accompanying such an application, it is more appropriate for the husband to have to take the initiative in applying for a variation of a joint lives order when he considers circumstances make that appropriate. Certainly the district judge cannot be said to have erred in principle in making a joint lives order, especially when this was common ground between the parties. I would allow this appeal and restore the order of District Judge Redgrave.

62.  In the same case Baroness Hale of Richmond said at paragraph 155:

She does, of course, have to consider what she will do in the future. The children will eventually take up much less of her time and energy. She could either return to work as a solicitor or retrain for other satisfying and gainful activity. She cannot therefore rely upon the present level of provision for the rest of her life. But the Court of Appeal was wrong to set a limit to it on the basis that she would save the whole surplus above her requirements with a view to providing for herself once the time limit was up. They were wrong to place the burden upon her of justifying continuing payments, especially now that they have set a high threshold for doing so: see Fleming v Fleming [2003] EWCA Civ 1841; [2004] 1 FLR 667. On any view she will continue to be entitled to some continuing compensation, even if the needs generated by the relationship diminish or eventually vanish (although that cannot be guaranteed, despite her best endeavours, given the length of time she has been out of the labour market and the difficulties of repairing her pension position). The burden should be upon the husband to justify a reduction. At that stage, the court will again have to consider whether a clean break is practicable, as it could be if the husband has generated enough capital to make it realistic.

63.  Both parties requested that this Court re-exercise the trial Judge’s discretion with respect to settlement of property in the event that the husband’s appeal against the trial Judge’s orders was successful.  Neither party sought to adduce any further evidence pursuant to Allesch v Maunz (2000) 203 CLR 172. 

64.  For reasons to which we have earlier referred, the critical issue in re-exercising the trial Judge’s discretion is the s 75(2) adjustment appropriate to be made in the wife’s favour. As we have earlier noted, the trial Judge relied upon all relevant factors for that purpose and did not fail to rely upon any relevant factor.  In our view, a s 75(2) adjustment of 22.5 per cent in favour of the wife would in all the circumstances be appropriate and, resulting in an overall division of 62.5 per cent to the wife and 37.5 per cent to the husband, would produce a just and equitable outcome. 

65.  The effect of such overall distribution is that the wife will receive in total $478,191.25 and the husband will receive $286,914.75. The impact of our conclusion is that the husband will have in excess of $80,000 in cash for the purpose of re-housing himself, whilst the wife will still have in excess of $300,000 for that purpose. The difference in the respective entitlements of the parties, approximately $190,000, in our view fairly reflects the contribution and s 75(2) entitlements of the parties, particularly when regard is had to the nature of a substantial portion of the husband’s overall entitlement, as we have earlier discussed.  The orders to be made to give effect to our conclusion will provide for a percentage division of the proceeds of sale of the former matrimonial home. 

66.  On the basis that the wife retains her car ($7,000), the furniture and personalty in the matrimonial home ($12,347), her cash ($915), her superannuation ($1,905), her jewellery ($11,115), her paid legal fees ($114, 492) and the parties’ jointly owned IAG shares ($1,570), and be liable for monies borrowed from her parents for legal fees ($45,900) and her tax liability ($16,480), the wife would be entitled to receive a further $391,227.25.  That sum represents 81.6 per cent of the equity in the former matrimonial home.

67.  The husband would retain his motor vehicle ($27,000), his furniture and personalty ($1,385), his cash ($13,351), his shares ($1,570), his superannuation ($118,136) and paid legal fees ($53,725) and be liable for his Master Card ($8,391) and tax liability ($8,086). A further sum of $88,224.75 would thus be receivable by him. That sum represents 18.4 per cent of the equity in the former matrimonial home.

COSTS

68.  In our view, having regard to the basis upon which the appeal has been allowed, a costs, or partial costs, order in favour of either party against the other could not be justified.  Our reasons for allowing the appeal however satisfy us that it is appropriate that each party receive a costs certificate and we will so order.

ORDERS

1.   That the appeal against Order 11.e of Orders made 29 July 2005 be allowed.

2.   That Order 11.e be varied by deleting the words “in payment of the balance to the wife” from such order and inserting in lieu thereof “in payment of 81.6 per cent of the proceeds of sale then remaining to the wife and 18.4 per cent of such proceeds of sale to the husband”.

3. That the Court grants to the appellant husband a costs certificate pursuant to the provisions of s 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 husband in respect of the costs incurred by the appellant husband in relation to the appeal.

4. That the Court grants to the respondent wife a costs certificate pursuant to the provisions of s 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 wife in respect of the costs incurred by the respondent wife in relation to the appeal.

I certify that the preceding
68 paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Court.
A.C.
Associate
Date: 09/08/2006