Amble & Amble

[2007] FamCA 1247

FAMILY COURT OF AUSTRALIA

AMBLE & AMBLE [2007] FamCA 1247

FAMILY LAW - APPEAL – FROM DECISION OF FAMILY COURT JUDGE – PROPERTY SETTLEMENT – Assets $28,000,000 – Contributions assessed at 70 per cent to the husband; 30 per cent to the wife – Whether a five per cent adjustment according to s 75(2) factors outside the range of reasonable discretion – Potential liabilities were calculated by an expert to be approximately $4 million in relation to realisation costs, capital gains tax and other tax to be incurred on the sale of various parcels of property – Argued by appellant that trial Judge placed too little weight on husband’s obligations to support his children of current partner –That trial Judge placed too little weight upon the capital gains tax, realisation and distribution costs potentially payable by husband –That trial Judge placed too much weight on the apparent disparity in assets after the determination of contributions –That trial Judge failed to place any or any significant weight upon the ability of the wife to realise and invest for income a substantial proportion of her verdict – Trial Judge considered a number of factors – Wife did not engage in employment during marriage whereas husband was consistently engaged in business and investment activities – Finding that husband’s income earning capacity exceeded that of wife – Award not outside range of reasonable discretion

Family Law Act 1975 (Cth) s 75(2)

JEL and DDF (2001) FLC 93-075 at paragraphs 178 and 179
Dickson and Dickson (1999) FLC 92-843

APPELLANT: MR AMBLE

RESPONDENT: MRS AMBLE

FILE NUMBER: SYF 4286 of 2003

APPEAL NUMBER: EA 127 of 2006

DATE DELIVERED: 22 October 2007

PLACE DELIVERED: Brisbane

JUDGMENT OF: WARNICK, THACKRAY & MULLANE JJ

HEARING DATE: 5 October 2007

LOWER COURT JURISDICTION:	Family Court of Australia
LOWER COURT JUDGMENT DATE:	10 November 2006

LOWER COURT MNC: [2006]FamCA 1190

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Richardson SC and Ms Knox

SOLICITOR FOR THE APPELLANT: J.C. Walsh & Sons

COUNSEL FOR THE RESPONDENT: Mr Lloyd

SOLICITOR FOR THE RESPONDENT: Beilby Poulden Costello

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Amble & Amble.

Orders

1. That the appeal be dismissed.

2. That the husband pay the wife’s costs of and incidental to the appeal as agreed and in default of agreement, as assessed.

FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA127 of 2006
File Number: SYF4286 of 2003

MR AMBLE

Appellant

And

MRS AMBLE

Respondent

REASONS FOR JUDGMENT

1. The argument in this appeal is effectively that O’Ryan J, having assessed contributions to property of about $28,000,000 to have been made 70 per cent by the husband, 30 per cent by the wife, then moved outside the range of reasonable discretion when he adjusted by five per cent of those assets in the wife’s favour “…for factors pursuant to s 75(2).”

2. No mistake of fact is asserted, nor any failure to take account of a relevant factor, nor that the trial judge had regard to any irrelevant factor. The challenge is to the weight given to factors. Thus this appeal by the husband involves this court scrutinising the factors identified by the trial judge and coming to its own conclusion as to whether his Honour’s assessment of factors made relevant by s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) was or was not manifestly excessive. As for the decision at first instance, appellate review in these circumstances is an exercise in attributing weight to a number of matters. The distinction is that on appeal, only a “range” need be considered.

3. The husband seeks a re-exercise by the court of the discretion and that he receive an adjustment in his favour of 5 per cent on account of s 75(2) factors.

The trial Judge’s decision

1. As to the facts which provide a context for O’Ryan J’s discussion of s 75(2) factors, each party had been previously married before they commenced cohabitation in the early 1980’s. They married in December 1983 and the one child of the marriage was born in 1984. The parties separated in October 2002. At the time of trial before O’Ryan J in May 2006, the wife was 66 years of age and the husband nearly 59 years of age. The husband had re-partnered with the mother of twin girls born in 1998 of a relationship with the husband. One of the twins suffered serious brain damage in a motor vehicle accident in 2000 apparently giving rise to increased and permanent needs.

2. During their relationship, the wife did not engage in paid employment outside the affairs of the parties, whereas the husband was consistently engaged in various business and investment activities.

3. One of the issues that O’Ryan J addressed in determining the net asset pool was whether to include realisation costs, capital gains tax and other tax that might be incurred on the sale of various parcels of real property, trusts, company shares, options and livestock. These potential liabilities were calculated by an expert engaged by the husband to be possibly in excess of $4 million.

4. In his reasons for judgment the trial Judge addressed the arguments about these potential liabilities as they related to each particular asset, dealing with “Livestock” last. In respect of that, but also with reference to the preceding discussion of the arguments in respect to each of the other assets, he said:

   363. This is another example of the insufficiency of evidence to enable a reliable quantification of the incidence of tax.  It assumes that all the stock will be sold in the same tax year.  It assumes that in that tax year the Husband would have no other assessable income.  It makes no allowance for trading expenses.  It assumes that all of the assessable income would be taxed at 48.50%.  I am not going to include the amount contended for by the Husband in the liabilities.  However, I accept that he will continue to buy and sell stock and that the proceeds of sale will be included in his assessable income.

   364. Again for reasons I have already given, I am unable to quantify with precision the amount of realisation costs and tax, if any, the Husband will ultimately bear. I am also unable to resolve a formulaic order. Thus, I will take the liability for such expenses into account pursuant to s 75(2) and in determining the weight to give to this unquantified liability I have no doubt that the Husband will continue to trade in livestock.

1. After determining the “asset pool”, identification of contributions and assessment of contributions, as to which no challenge is made, O’Ryan J turned to “Other Factors”.  He said:

   381. The Husband is aged 59 years and the Wife is aged 66 years.

   382. Both parties are in good health.

   383. The Husband has the capacity and opportunity to continue to derive an income from his various activities and interests.  The Wife has not engaged in paid employment for many years and having regard to her age, lack of experience and capacity I am of the view that her capacity for paid employment is significantly limited.  In my view, the Husband has a significantly greater earning capacity than the Wife.  Senior Counsel for the Husband, in written submissions, conceded that the Wife has “no relevant capacity to earn income from personal exertion.”

   384. The Husband has a greater income than the Wife.  In his Financial Statement of 12 April 2006 he disclosed a total average weekly income of $3,000 or $156,000 per annum from the [Amble] Family Trust.  He disclosed an investment income but did not specify an amount.  As to the investment income he simply attached his income tax return for the year ended 30 June 2005 in which he disclosed for that year a taxable income of $18,039 and that he was entitled to a tax refund of $142,682.39.  The likelihood is that he also derives the benefit of income and benefits, perhaps not taxable, of a value significantly greater than $156,000 per annum. 

   385. By reason of my findings as to the contribution based entitlements of the parties the Husband has significantly greater assets than the Wife.

   386. The Husband does have the responsibility to provide for the maintenance and support of the two young children of his current relationship and he will have this responsibility for some years.  I observe that in that part of his Financial Statement in which he was obliged to disclose the income of each other occupant of his household he said that his current partner has an average weekly income of $450.

   387. From time to time, the Husband will have the obligation to pay realisations costs and tax which may include a taxable capital gain when he sells various assets and may also wind up certain companies.  Given the number and value of his interests the amounts he will have to pay may be significant.  As seen, he submitted that an amount of $4,134,239 should be deducted in arriving at the net assets of the parties.  I was not prepared to do this for the reasons given.  However, as I said, I cannot ignore the nature of the Husband’s assets and business activities.  I have given different weight to the incidence of realisation costs and tax for different assets.  However, in my opinion cumulatively significant weight must be given to these unquantified liabilities.

   388. I am satisfied that during the relationship the parties enjoyed a high standard of living.

   389. I am satisfied that the orders I propose to make will have no effect on the earning capacity of either party.

Conclusion – Other Factors

390. The relevant matters that favour the Wife include the age of the parties, the capacity for gainful employment, the greater income of the Husband and the significantly greater assets of the Husband.

391. The relevant matters that favour the Husband are his responsibility for the support of the twins and the liability for realisations costs and tax on the realisations of assets.

392. In all the circumstances, I am of the view, that there should be an adjustment of 5% or $1,404,320.95 of the net assets of the parties to the contribution based entitlement of the Wife.

The arguments on appeal

1. In the Amended Notice of Appeal the particulars of the argument, that a five per cent award for s 75(2) factors was manifestly excessive, were that the trial Judge:

   1.1Placed too little weight upon the husband’s obligations to support his current partner and their children;

   1.2Placed too little weight upon the CGT, realisation and distribution costs potentially payable by the husband;

   1.3Especially having regard to the husband’s potential liabilities of $4,134,239 placed too much weight on the apparent disparity in assets after the determination of contributions;

   1.4Failed to place any or any significant weight upon the ability of the wife to realise and invest for income a substantial proportion of her verdict.

2. Ground Two read as follows:

   “2. That His Honour’s discretionary decision miscarried in that the result in His Honour’s orders as a consequence of the adjustment made pursuant to s 75(2) on the facts as he found them resulted in the orders he made being plainly wrong and manifestly unjust.”

3. This ground added nothing to the argument arising from Ground One.

4. The first particular, relating to the husband’s obligation to his current partner and her children, was not abandoned but was only lightly touched upon.

5. In the written submissions (signed by Ms Knox of Counsel) relied upon by Mr Richardson, Senior Counsel for the husband, it was said:

   The child, [L], suffers serious brain damage, which in all likelihood will make the Husband’s obligation more onerous.  While the husband gave evidence that at present GIO gave her help regarding the expenses of the child arising from the brain damage, but that he makes donations to her school and beyond that he had the normal costs of bringing up children. (Appeal Book 4 at 909).

   Considering the assets of the parties and the way in which the child of the marriage, [S], has been brought up and educated, these costs are likely to be considerable.  The Husband also has financial obligations to support his present partner, particularly in view of the fact that she has a disabled child. The evidence was that she was only earning $450 per week. …

6. In oral submissions, Mr Richardson SC stated that he did not suggest that the trial Judge need have said any more than he did about the position of the husband’s current partner and he conceded that the evidence about the net cost of child rearing was scant.

7. In any event we consider this factor the one of least significance of those referred to by O’Ryan J.

8. In oral submissions, Mr Richardson SC focused on the weight that he said the trial Judge should have given to the CGT and other taxes and realisation costs that were potentially payable on assets to be retained by the husband.

9. He submitted that, though the trial Judge had stated that he would give significant weight to those liabilities, he must not have because of the monetarily large sum for which he adjusted in the wife’s favour.  A premise from which this argument moved was that the trial Judge could or should not have made any adjustment to the wife purely on account of the disparity of assets, when the assets she was to receive on a contributions assessment amounted to $8,500,000 approximately.

10. Mr Richardson SC referred to statements by the majority in JEL and DDF (2001) FLC 93-075 at paragraphs 178 and 179. However, they related to the re-exercise of discretion in that case. They were not statements of principle about matters that should or should not be taken into account in particular situations.

11. As the Full Court (Lindenmayer, Kay and Warnick JJ) in Dickson and Dickson (1999) FLC 92-843 said:

    47.Moss J observed that the primary function of s.75 is to enumerate factors, which must be taken into account when the Court exercises jurisdiction under s.74 in proceedings with respect to spousal maintenance.  It is, by express incorporation into s.79, also a repository of matters to be taken into account in s.79 proceedings, in so far as the matters therein set out are relevant.  Whilst it may, as a matter of individual circumstance, be correct to say that the mere existence of disparity of wealth ought not of itself justify a settlement of property to one party at the expense of the other, it may often, in the overall circumstances of a case, call for further adjustment beyond that assessed on contributions alone, so that the final order is just and equitable.  In this case, after the contribution issues were determined, not only was there a huge disparity in respect of capital, and a significant disparity in respect of income, but this was a marriage that had lasted 26 years and, in the circumstances, the reasonable standard of living that might be expected by each of the spouses at the end of a very long marriage, and towards the end of their working lives, might be said to be one where each could enjoy a not dissimilar standard.

12. While we think it is undoubtedly open to a trial Judge not to make an adjustment on account purely of a disparity of assets when each party will receive considerable wealth as a result of the decision based on other considerations, we do not think it can be said that no adjustment may be made on account of a disparity in such circumstances.

13. Even deducting the full estimate of potential liabilities from the assets to be retained by the husband, the comparative positions of the parties would stand at $14,121,934 to the husband and $9,830,247 to the wife; still a significant disparity.

14. In the development of his submissions for the husband, Mr Richardson SC points to the entire impost of potential liabilities falling on the husband and suggests that to overcome that factor, which must have weighed heavily in the husband’s favour, and to find that the wife should receive an additional $1.4 million dollars, the trial Judge must have given excessive weight to the factors favouring the wife.

15. To some extent, this premise is flawed.

16. Had O’Ryan J deducted the potential liabilities as estimated, from the gross assets, because of the division based on contributions, the wife would only, in effect, have met 30 per cent of them and the husband 70 per cent. What O’Ryan J was adjusting for in the s 75(2) exercise was that the wife would not be contributing $1.2 million of the liabilities attached to assets in the husband’s hands. In deciding what in weight to give to that circumstance, it was appropriate for O’Ryan J to bear in mind that the potential liabilities might not amount to $4,000,000 but be something significantly less. As well, until the liabilities fall in, the gross value of assets to which they might attach was to be retained by the husband.

17. As to the matter of the wife’s ability to invest assets, although the written submissions for the husband stated:

    It is submitted that the Trial Judge has not taken into account the ability of the Wife to realise and invest, for income purposes, a substantial proportion of her entitlement based upon contributions alone.

    it is not argued as a ground of appeal that a relevant factor was ignored.  Rather as already stated and as the submission also set out:

    The essence of the Appeal is that in his evaluation of section 75(2) factors, the Trial Judge in making an adjustment of 5% in the Wife’s favour, thereby increasing her entitlement by an amount of $1,404,320.95, was in error in the exercise of his discretion in that it is so far outside the appropriate range that the result embodied in his orders is plainly unreasonable and manifestly unjust.

18. As seen, the findings by O’Ryan J included discussion of earning capacities (focusing on personal exertion) in paragraph 383, where he said:

    383.The Husband has the capacity and opportunity to continue to derive an income from his various activities and interests.  The Wife has not engaged in paid employment for many years and having regard to her age, lack of experience and capacity I am of the view that her capacity for paid employment is significantly limited.  In my view, the Husband has a significantly greater earning capacity than the Wife.  Senior Counsel for the Husband, in written submissions, conceded that the Wife has “no relevant capacity to earn income from personal exertion.”

19. He then turned to a discussion directed to earnings from assets, saying:

    384.The Husband has a greater income than the Wife.  In his Financial Statement of 12 April 2006 he disclosed a total average weekly income of $3,000 or $156,000 per annum from the [Amble] Family Trust.  He disclosed an investment income but did not specify an amount.  As to the investment income he simply attached his income tax return for the year ended 30 June 2005 in which he disclosed for that year a taxable income of $18,039 and that he was entitled to a tax refund of $142,682.39.  The likelihood is that he also derives the benefit of income and benefits, perhaps not taxable, of a value significantly greater than $156,000 per annum.

    385.By reason of my findings as to the contribution based entitlements of the parties the Husband has significantly greater assets than the Wife.

20. Immediately following his discussion of “Other factors”, O’Ryan J listed the assets that the wife would retain.  He clearly had in mind that she would retain two items of real property respectively worth $3,000,000 and $4,750,000.

21. Taken together, and particularly in view of his Honour’s use of the comparative word “greater” in paragraph 384, we do not accept that O’Ryan J failed to give any weight to “the ability of the wife to realise and invest for income a substantial proportion of her verdict”.

22. We return to O’Ryan J’s summary of relevant factors:

    390.The relevant matters that favour the Wife include the age of the parties, the capacity for gainful employment, the greater income of the Husband and the significantly greater assets of the Husband.

    391.The relevant matters that favour the Husband are his responsibility for the support of the twins and the liability for realisations costs and tax on the realisations of assets.

1. In the light of these factors we are not satisfied that his Honour failed to give proper weight to the wife’s capacity to invest for income purposes.  Further, we are not satisfied that the adjustment that his Honour made was beyond a reasonable range.

Conclusion

1. It follows that the appeal should be dismissed.

Costs

1. Both Counsel accepted that costs follow the event.

I certify that the preceding thirty-three [33] paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.

Associate: 

Date:  22 October 2007