ARTHURMAN & ARTHURMAN
[2013] FamCAFC 70
FAMILY COURT OF AUSTRALIA
| ARTHURMAN & ARTHURMAN | [2013] FamCAFC 70 |
| FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Held two appeals against property settlement orders and subsequent costs orders were without merit – Appeals dismissed |
| Family Law Act 1975 (Cth) |
| APPELLANT: | Ms Arthurman |
| RESPONDENT: | Mr Arthurman |
| FIRST APPEAL NUMBER: | EA | 43 | of | 2008 |
| SECOND APPEAL NUMBER: | EA | 120 | of | 2008 |
| FILE NUMBER: | SYF | 2938 | of | 2003 |
| DATE DELIVERED: | 1 May 2013 |
| PLACE DELIVERED: | Brisbane |
| DATE HEARD: | 7 December 2012 |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Coleman, Strickland & Ainslie-Wallace JJ |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE IN RELATION TO THE FIRST APPEAL: | 18 March 2008 |
| LOWER COURT MNC IN RELATION TO THE FIRST APPEAL: | [2008] FamCA 230 |
| LOWER COURT JUDGMENT DATE IN RELATION TO THE SECOND APPEAL: | 16 October 2008 |
| LOWER COURT MNC IN RELATION TO THE SECOND APPEAL: | [2008] FamCA 928 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Bateman |
| COUNSEL FOR THE RESPONDENT: | Ms Knox |
| SOLICITOR FOR THE RESPONDENT: | Dettmann Longworth Lawyers |
Orders
The appellant wife be given leave to file in court an Amended Notice of Appeal in EA 43 of 2008.
Appeal EA 43 of 2008, being the wife’s appeal against the property settlement orders made 18 March 2008, be dismissed.
Appeal EA 120 of 2008, being the wife’s appeal against the costs order made 16 October 2008, be dismissed.
The appellant wife pay the respondent husband’s costs of and incidental to the appeals as agreed or assessed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Arthurman & Arthurman has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
First Appeal Number: EA 43 of 2008
Second Appeal Number: EA 120 of 2008
File Number: SYF 2938 of 2003
| Ms Arthurman |
Appellant
And
| Mr Arthurman |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Arthurman (“the wife”) appeals against orders made by Fowler J on 18 March 2008 in relation to property settlement proceedings with Mr Arthurman (“the husband”). She further appeals against orders of the trial judge made on 16 October 2008 by which she was ordered to pay the husband’s costs of the proceedings. The husband opposes the appeals and seeks to maintain the orders of the trial judge.
The Property Settlement Appeal (EA 43 of 2008)
The background facts are relatively uncontentious and give some context to the appeal. The wife was born in March 1955 and the husband in April 1947. Each had been previously married. The dates of the commencement of cohabitation and separation were disputed, but his Honour found at [52] that the parties separated in December 2001 and accepted the husband’s evidence at [26] that the parties commenced cohabitation in November 1991. There is a child of the relationship, J, who was born in February 1995.
The principal assets available for consideration by the trial judge were a property at C (“the C property”); plant and equipment at that property; the wife’s 50 per cent interest in a property at W (“the W property”); plant and equipment at that property; shares in H Pty Ltd and shares in the husband’s professional practice.
On 18 March 2008 the trial judge made the following orders:
…
(1)Within 30 days from the date of these Orders the following shall occur simultaneously:
[C] Property
(a)the wife is ordered to do all acts and things and sign all documents necessary to transfer to the husband all right, title and interest in the [C] property unencumbered.
(b)the husband and the wife are ordered to do all acts and things and sign all documents necessary to discharge the mortgages, and the husband is ordered to repay the balance of the [C] Mortgages on or before discharge, whether by way of refinance or otherwise.
(c) the wife is ordered to do all acts and things and sign all documents to assign to the husband any interest in any plant and/or equipment associated with or sitting upon the [C] property as at the date of this document.
(d)the husband is ordered to do all acts and things and sign all documents necessary to indemnify and keep indemnified the wife from:
(i)all liabilities and repayments associated with the [C] mortgages;
(ii)all rates and taxes and all other outgoings including utility expenses relating to the [C] property.
[M] Property
(e)the wife is ordered to do all acts and things and sign all documents necessary to transfer to the husband all her right, title and interest in the [M] property subject to any existing mortgage.
(f)the wife is ordered to give vacant possession of the [M] property on the day immediately prior to the date appointed for completion of the sale of […A, W] Street of the [M] property and to ensure the [M] property is left in a good state of repair.
[H] Pty Limited (“[H]”)
(g)the wife is ordered to do all acts and things and sign all documents necessary to transfer to the husband or his nominee all right title or interest she has in any share in [H].
(h)the wife is ordered to do all acts and things and sign all documents necessary to transfer to the husband or his nominee all right title or interest she has in any loan account or other similar benefit or facility in [H].
(i)the wife is ordered to do all acts and things and sign all documents to resign from any office she holds in [H].
[H] Pty Limited Trust (“the Trust”)
(j)the husband and the wife are ordered to do all acts and things and sign all documents necessary to forthwith dissolve the Trust.
(2) Within 45 days the husband is ordered to do all acts and things and sign all documents necessary to sell the [M] property.
(3) Paragraph 1 of Order 1 made on 22 November 2007 is discharged.
(4)Within seven days of completion of the sale of the last of […A and
…B, W] Street comprising the [M] property the husband shall pay or cause to be paid to the wife the sum of $911,009.00
(5) If required to do so by the husband the wife will, within 14 days of such request:
(a) do all acts and things and sign all documents to assign to the husband any licence or right of use related to any Permissive Occupancy associated with the [C] property.
(b) do all acts and things and sign all documents to assign to the husband any right title or interest in the Building Approval, Building Consent, Development Approval and/or Development Consent associated with the [C] property.
(6) Pending the transfer of title of the [C] property:
(a)the husband shall have the right to occupy the [C] property with [J, the parties’ child] (when he is with him) and shall pay and be responsible for all rates, charges and taxes related to the use and occupation of the [C] property;
(b) neither the husband nor the wife shall mortgage, charge, encumber or assign their interest in the [C] property;
(c) the husband and the wife shall each hold the [C] property in trust for the husband as tenants in common in shares consistent with these Orders.
(7) Pending the date of completion of the sale of the [M] property:
(a)the wife shall have the right to occupy […A, W] Street of the [M] Property with [J, the parties’ child] (when he is with her) and shall pay and be responsible for all rates, charges and taxes related to the use and occupation of […A, W] Street of the [M] property.
(b)the wife shall not mortgage, charge, encumber or assign her interest in the [M] property.
(c) the husband and the wife shall each hold the [M] property in trust for [H] as tenants in common in shares consistent with these Orders.
(d)the wife shall do all things required of her by the husband to facilitate the sale of each lot of the [M] property. In particular the wife shall:
(i)co-operate in all reasonable ways with the husband, real estate agent, solicitors and prospective purchasers in relation to the sale of each lot of the [M] property.
(ii)allow the husband, the real estate agent and any tradesmen engaged by the husband and/or real estate agent access to the [M] property at all reasonable times for the purpose of preparing each lot (including gardens) for sale.
(iii)make available any keys.
(iv)allow access to each lot of the [M] property for inspections at all reasonable times requested by the husband and/or real estate agent.
(v)ensure that the [M] property is in a neat and clean condition at the time of inspection by prospective purchasers.
(8)Within six months the husband sell the Porsche [motor vehicle] Registration […].
(9) The husband shall be solely entitled to the exclusion of the wife to all other property, furniture, contents, plant, equipment, tools, building materials and resources situated at the [C] property.
(10) The wife shall be solely entitled, to the exclusion of the husband, to all other property, furniture, contents and resources situated at the [M] property.
(11) Subject to the provisions of paragraph 10 and Annexure “A” to the Orders made 22 November 2007, the husband and the wife shall each solely be entitled to the exclusion of the other to all other property, furniture, contents and resources not already referred to in these Orders in the possession of that party at this date.
(12) Save and except as these Orders provide to the contrary, each of the parties shall, by this Order, mutually release the other from all debts owing from one to the other.
(13) Within 30 days the wife pay to the husband $3,950 being 50% of Single Expert costs paid by him to [Mr E].
…
(16) The matter may be re-listed within the next seven days or such further time as the court allows for argument on costs failing which there will be no order as to costs.
We observe that the two properties at …A and …B, W Street, M (“the M property”) constituted the property of the H Trust.
On 22 November 2007 consent orders had been made affecting the M property. The wife, who drafted the written submissions presented in support of the appeal herself, placed significant emphasis on these orders in the submissions and we set out those orders relative to the M property, again to provide context to the appeal:
By consent:
1.… (a) The Husband shall within 7 days of receipt of mortgagee’s consent lodge (which the parties shall seek expeditiously) with the Land Titles Office the Linen Plan for the said property and shall do all acts and things to cause the said plan to be registered.
(b) The parties shall list the property for sale by private treaty with [X] Real Estate at [Town M].
(c) The parties shall instruct [Law Firm Y] to act on the sale and prepare a contract.
(d) The parties shall instruct the agent as to a sale price of the property at $725,000. The parties shall follow all reasonable suggestions of the agent in relation to the marketing of the property and offers to purchase.
(e) The contracts shall provide for an 8 week period of settlement and the contracts shall be conditional upon successful registration of the Linen Plan.
(f) The parties shall list the property for sale with the agent within 7 days of the Husband’s compliance with Order 1(a).
(g) The proceeds of sale of the property shall be applied as follows:-
(a) in payment of agents commission and expenses;
(b) in payment of legal costs on sale;
(c) in payment of adjustments (including land tax) on sale;
(d) in discharge of the registered mortgage and the [H] overdraft debt;
(e) in payment to [Accounting firm Z] of outstanding fees for accounts of [H] Pty Ltd rendered to date;
(f) in payment to each of the parties of the sum of $100,000 by way of partial property settlement to be taken into account by the Trial Judge as a partial property settlement in favour of that party;
(g) the balance to be held in an IBD account in both parties’ name on trust for [H] Pty Ltd and not to be disbursed pending further Order of the Court or agreement of the parties.
2.That the parties shall do all things and sign all documents necessary to effect the provisions of paragraph 1 including but not limited to:
(a) Equally paying all costs associated with obtaining mortgagee’s consent to registration of the Linen Plan at LPI.
(b) Equally paying all costs associated with lodgement of the Linen Plan at LPI.
(c) Equally paying all costs associated with preparing the [M] property for sale including but not limited to:
(i) cleaning unit […B];
(ii) engaging gardeners to prepare, tidy and make good the grounds.
3.That the parties do all things necessary to:
(a) Draw down from the housing loan with Commonwealth Bank of Australia secured on the [M] property the sum of $25,000 and apply it as follows:
(i) in full repayment of the overdraft facility of [H] Pty Ltd with the said bank (estimated at $15,000);
(ii) to pay the balance into the trust account of the solicitor acting on the sale of the [M] property;
(b) to instruct the said solicitor acting on the sale of the [M] property to apply funds held in trust towards costs and expenses described in paragraph 1.
4.That other than described herein, the parties are restrained from drawing any other monies from the said housing loan or the said overdraft facility of [H] Pty Ltd other than by agreement.
…
These orders were clearly made at a time when the final hearing of the property settlement proceedings was contemplated because other orders provided for the preparation of expert evidence as to the value of the properties.
When the matter came on for hearing, the property referred to in those orders had not been sold.
The proceedings before the trial judge
When the hearing commenced before the trial judge, many issues had been agreed between the parties. Negotiations continued between counsel appearing for the husband and wife over the course of the hearing, in particular in relation to the valuation of the properties.
On the first day of the hearing, 17 December 2007, counsel for the wife, Mr Schonell, indicated that the wife’s valuer placed a value of $1.4 million on the C property while the valuer retained by the husband valued it at $1.3 million. Counsel for the husband, Mr Millar, conceded the issue of valuation of that property and agreed that it should be accepted by the trial judge at $1.4 million [AB 389].
When the hearing commenced, counsel for the wife gave a report of a forensic accountant, Mr K to the trial judge indicating that Mr K was a single expert retained to value the parties’ interests and shares in H [AB 388]. After considering his position, counsel for the husband indicated that Mr K would not be required for cross examination [AB 463].
At the conclusion of the evidence in the matter, an updated balance sheet was prepared by the parties reflecting the agreements as to value and admitted into evidence as exhibit 16 [AB 474].
After the evidence concluded on 20 December 2007, the counsel then discussed with the trial judge finding some time in which to make submissions. It was suggested that written submissions might be in order, a suggestion with which the trial judge agreed saying (Transcript 20 December 2007, page 9, lines 31-37) [AB 475]:
HIS HONOUR: Yes. Subject to you gentlemen agreeing to meet with me in Court after 4 pm some day after close of submissions, should I require it, to debate the matters raised in the submissions - - -
…
HIS HONOUR: - - - with you, I’ll agree to that course. …
The matter was further heard on 5 March 2008. His Honour raised questions about the “…valuation within the balance sheet of the shares in the company.” His Honour said, “I’ve been having some difficulty with reconciling that with the evidence of [Mr K]… Can you tell me how the amount of $892,000 is calculated?” (Transcript 5 March 2008, page 1, lines 6-9) [AB 478].
In response, counsel for the wife indicated that there was indeed a difference between the figure in the balance sheet and that which was in Mr K’s report, and said (Transcript 5 March 2008, page 2, lines 19-42) [AB 479]:
MR SCHONELL: …there were some loan accounts in [Mr K’s] report that had arisen as a consequence of the payment of various legal fees and some adjustments were done so that there wasn’t in effect a double counting.
There were some further adjustments that were done that ultimately reached the figure that your Honour has in the balance sheet, which is I think exhibit 14 or something or other.
HIS HONOUR: An amount of $892,098.
MR SCHONELL: That’s right, and that certainly, as far as my recollection goes, was an agreed number that your Honour would be invited to find as to a value. And I accept it is different to [Mr K’s].
…
HIS HONOUR: So that it’s an agreed value rather than a value determined by [Mr K].
MR MILLER: That’s right.
The trial judge turned to the parties’ proposals in relation to the M property [AB 478].
His Honour said (Transcript 5 March 2008, page 1, lines 11-29):
HIS HONOUR: …The second question is, it’s proposed by the husband that the [M] property be transferred to the wife from the company [H]… . That’s given effect to by the husband transferring his interest in the property to the wife. This is the minute of order that was set out in your submissions.
MR MILLER: I think there’s something wrong with either what we’ve sent or what your Honour has. Does your Honour have a document, our orders, called “Orders Sought By The Husband – Financial”?
HIS HONOUR: I don’t recall seeing that.
MR MILLER: I thought that was with the submissions, your Honour.
HIS HONOUR: The document I have is the outline of the husband’s case which is attached to a minute of order. That minute of order proposes - - -
MR MILLER: Yes, but on the last day of trial we provided an amended version of that, your Honour. It’s not different in some respects, but in other respects it is.
At the trial judge’s invitation, counsel for the husband identified the difference between the document that his Honour had and that on which the husband relied (Transcript 5 March 2008, page 1, lines 34-48) [AB 478]:
MR MILLER: The scheme of it is, your Honour, that the wife didn’t want the [M] property, as I understand it, so we were taking the [M] property. What we need to tell your Honour is that since the case was heard – and there’s orders we sought about giving effect to a subdivision of that [M] property. It was two units but not two titles. The subdivision has now gone through and been registered and title was issued so that we now have two titles, one for each of the two units, which we didn’t have at the time of the trial.
HIS HONOUR: Is it still intended that the title to either of those properties pass to the wife?
MR MILLER: No, I understand she doesn’t want them, your Honour. So we’ve accepted that we’ll take them.
HIS HONOUR: And you will provide money instead.
A little later, his Honour said (Transcript 5 March 2008, page 3, lines 30-38) [AB 480]:
HIS HONOUR: Of course we get to the difficulty, don’t we, that if you’ve done the subdivision does it then change the valuation and so on and so on? I mean, really we’ve got to get to some point where we can make a determination.
MR MILLER: Indeed.
HIS HONOUR: Are you prepared to agree that you retain the value of the property as it presently is?
Counsel for the husband took instructions and told the trial judge that, “[w]e just leave the value position as it is.” (Transcript 5 March 2008, page 4, line 33) [AB 481].
Counsel then appearing for the wife was present during this exchange and indeed for the whole of the proceedings on 5 March 2008.
The reasons for judgment of the trial judge
After determining the disputed issues, the trial judge found the value of assets of the parties to be $2,883,113 which, after deduction of liabilities amounted to $2,831,355. He further found at [20] there to be $50,146 in superannuation available to the parties.
Relevantly to this appeal, his Honour found the C property to have a value of $1.4 million and the shares in H Pty Ltd to have a value of $892,098.
Turning to the contributions of the parties, the trial judge found at [53] that the husband, while practising as a professional had also carried on business in land development.
In relation to the C property, the trial judge found at [54] that the husband sold a property owned by him before cohabitation with the wife and used the funds to acquire property, meet outgoings and reduce debt. He further did physical work on the C property and supervised the construction of town houses at the M property.
The trial judge noted at [54] that the wife conceded that the husband’s financial contributions to the acquisition, conservation and improvement of their property was greater than hers although took issue with the extent of those contributions.
His Honour observed at [59] that while the wife was the major contributor to the care of the parties’ child, the husband contributed “not in an insignificant way” and that the wife worked and earned some income.
His Honour concluded:
62. I conclude that in this marriage, contributions of the husband exceed those of the wife and taking into account both their financial and non financial contributions including those made by the wife’s father, that a division of the net assets and superannuation in the order of 67% to the husband and 33% to the wife would be an appropriate recognition of those contributions.
After discussing the s 75(2) considerations his Honour concluded:
65. It is clear that the husband is multi skilled and can command an income greater than the wife by a significant margin. The wife is not without a good earning capacity and may be able to increase her income from that she presently earns. The husband is older than the wife and will presumably retire at a time earlier than she. I think that an adjustment ought however to be made in favour of the wife given these disparities and the amount I allow is 5 per centum so that the wife will receive 38% of the found assets and superannuation.
As we have indicated, his Honour ordered that the husband pay $911,009 to the wife reflecting her percentage entitlement in the property.
Before turning to a consideration of the appeal, we observe that the trial judge made orders in relation to property at …A and …B, W Street, M but they are not specifically mentioned in his reasons. To repeat, the M property was held by the H Trust.
The wife appealed the trial judge’s orders by notice of appeal filed on 15 April 2008. After the filing of the appeal and after procedural orders were made for the preparation of the appeal, the wife filed an application that the orders of the trial judge be set aside pursuant to the provisions of s 79A of the Family Law Act 1975 (Cth) (“the Act”) and that other, different orders to those made by the trial judge be made.
The parties were in dispute about the order in which the wife’s proceedings should be heard, namely, whether the appeal should be determined before the
s 79A proceedings. The wife contended that the appeals (including the appeal against the costs orders) ought to be adjourned until after the determination of the s 79A proceedings. The Full Court heard submissions on that matter on 27 November 2008 and determined that the s 79A proceedings should be determined before the wife’s appeals were heard.
Thus the appeals were not listed for hearing until December 2012.
The appeal
The wife raises six challenges to the orders of the trial judge. The first two grounds were argued together and, for convenience we will consider them in the same way.
Ground 1. The trial Judge erred in making orders that altered the rights liabilities and property interests of [H] Pty Ltd (“[H]”) when [H] was not a party to the proceedings, without affording [H] natural justice or procedural fairness and in not giving reasons why he made such orders.
Ground 2. The trial Judge failed to afford the wife procedural fairness.
The thrust of ground 1 is that the orders of the trial judge had the effect of altering H’s interests when H was not a party to the proceedings and that because the husband changed the orders he sought on 5 March 2008, the wife and the company were deprived of a proper opportunity to make submissions on them and thus denied procedural fairness.
We observe again that the written submissions in the appeal were prepared by the wife. Ms Bateman, counsel, appeared for the wife on the appeal and in some respects did not maintain all of the arguments advanced in the written submissions.
Although the written submissions assert that H had intervened in the proceedings on 22 November 2007 (pursuant to leave being given in 2005 for it to intervene) that submission was not adopted by counsel appearing for the wife. However, it was maintained that H’s interests were adversely affected by the orders ultimately made without H being given notice.
As to her position, the wife argued that the orders for which the husband contended at trial were contained in a minute of order attached to his case outline document. In that minute the husband sought a transfer of property to her in addition to a cash payment depending on the retention of other assets. The wife’s proposed orders sought adjustment of the parties’ property interests by transfer of assets to her.
She contended that the amended orders sought by the husband on 5 March 2008 had not been provided to her or the company for their consideration.
In the minute of order attached to his case outline [AB 180] the husband set out the financial orders then sought by him. It is not necessary to set out the orders in full, but in summary, the husband sought a transfer to him of the C property, a transfer of the M property to the wife subject to her indemnifying him in relation to the mortgage and other outgoings on the property, that the wife transfer to him her interest in the shares in H and sign all documents necessary to dissolve the H Trust.
The wife’s case outline contains a minute of the orders she sought [AB 164]. She sought orders that the husband transfer the C property to her and that he discharge the mortgage over that property. She further sought an order that:
4. …the wife shall sign all documents submitted to her by the husband necessary to transfer her interest in [H] pty ltd (“the [H] company”) including transferring her interest in the property situate and known as […A and …B, W Street, M]. …and her shareholding and any interest she may have in any loan account and resign her position as trustee of the [H] Pty Ltd trust.
As we have indicated, on the 5 March 2008 when the matter was before the trial judge, counsel for the husband provided an amended minute of orders he sought. The trial judge made orders essentially in accordance with that minute.
It was argued that the trial judge failed to afford both the wife and H procedural fairness by not giving either an opportunity to address him on the changes in the orders sought by the husband. As to the company, it was argued that the husband’s amended order had the effect of altering H’s interests to its detriment and, as to the wife, by depriving her of the opportunity of retaining the M property.
We reject both contentions.
Before considering the arguments made in respect of the contention that both the wife and H were denied procedural fairness, we observe that, when Mr Millar, in response to the trial judge’s question whether the husband proposed that the M property be transferred to the wife said, “…the wife didn’t want the [M] property, as I understand it, so we were taking the [M] property.” (Transcript 5 March 2008, page 1, lines 34-35). Again, when the trial judge enquired whether it was still proposed that “…the title to either of those properties pass to the wife…”, Mr Millar said, “No, I understand she doesn’t want them, your Honour.” (Transcript 5 March 2008, page 1, lines 42-45).
No objection or contrary position was raised by counsel for the wife. That is in our view, entirely understandable since the orders for which the wife contended sought an order that she transfer her interest in H Pty Ltd to the husband “…including transferring her interest in the property situate and known as […A and …B, W Street, M]… and her shareholding and any interest she may have in any loan account and resign her position as trustee of the [H] Pty Ltd trust…”
We make two observations about this order proposed by the wife. First she asked that her interest in both units be transferred to the husband with no suggestion that she wished to retain one or both of them. Secondly, the order clearly contemplates a circumstance different to that ordered in November 2007 which would have had …B sold and the proceeds, after certain payments, held pending further order. The wife’s proposed orders made no reference to the orders of 22 November 2007.
Turning to the argument that H was not notified of the amended orders sought by the husband and nor was it represented in the proceedings.
There were two shareholders in H Pty Ltd, the husband and wife and each was a director. The orders propounded by both parties do not reflect H having any independent legal identity other than as a creature of both of them. The transcript and evidence before the trial judge reveals that no submission was made to the trial judge by either party of the need to notify H or for it to be represented in the proceedings. So much was conceded by counsel who appeared for the wife on the appeal.
It was argued that counsel who appeared for the wife was not appearing for H because there was “…no finding that… the parties treated this company as their alter ego…” (Transcript on appeal, page 13, line 24). There was no finding to that effect because there was no issue that the parties regarded the company as anything other than their creature.
It was submitted that the effect of the orders sought by the husband operated to “discharge” the orders of 22 November 2007. The orders of November 2007 had not been fulfilled because the property had not been sold. The final orders made by the trial judge caused the properties in M to be sold and from the proceeds the wife to receive a sum certain. Whether they operated to discharge the previous, unfulfilled order of November 2007, is not to the point. The trial was conducted by both parties on the clear basis that H had no independent identity.
On 5 March 2008 the wife was represented by counsel who had appeared for her in the trial. He was present when counsel for the husband indicated that the husband sought different orders from those he relied on during the trial and when he outlined what the changed position was. True it is that the minute of those modified orders was not then handed to the trial judge, and it was later sent by email. However, in a somewhat curious argument, it was contended on the appeal that, since the email to the trial judge did not specifically appear to have also been sent to counsel for the wife, then he did not receive it. We reject this argument. There is no basis to suggest that, nor, potently was there any evidence sought to be adduced in the appeal from counsel who appeared to the effect that the minute of orders was not provided to him.
We further observe that while the argument of the wife seems to place significance on the fact that the trial judge made orders in terms of the minute proposed by the husband, it ignores the undeniable proposition that the findings of fact and the orders made by the trial judge were entirely within his discretion.
Neither of the first two grounds is made out and each must fail.
The amended notice of appeal contains three further grounds of appeal to be relied on “[i]f Grounds 1 and 2 are not found”.
Ground 3. The trial Judge erred in making orders which altered the rights, liabilities and property interests of a third party in relation to the marriage and in not comply (sic) with the provisions of Section 90AE of the Family Law Act, 1975.
Section 90AE of the Act concerns the court’s capacity to make orders against third parties and the circumstances in which that may occur.
It was fairly conceded by counsel who appeared for the wife that at no point in the trial did any party raise an issue about H being a third party. In those circumstances and taken with the clearest indication by both parties to the trial judge that the company was their alter ego, we see no error in the trial judge not having any regard to s 90AE.
This ground is not made out.
Ground 4. The trial Judge erred in finding that the wife had any right title and interest in the [M] property that could be transferred to the husband and in failing to have regard to the evidence of the single expert.
In the written submissions on this ground it is argued that the trial judge ought to have accepted Mr K’s opinion in his report that neither party had any interest in the M property capable of being transferred and, in making a finding that the wife has such an interest, erred.
The orders sought by the wife were that she transfer her interest in H and in the M property to the husband. The trial judge made the orders she sought. In asserting error, counsel for the wife argued that to seek that order was wrong and to make it amounted to appealable error. However during argument on the appeal, counsel for the wife sensibly did not press that submission further; saying, “[Mr K] is not a lawyer, I accept that, and both the husband and the wife held a bare legal interest in the M property and they had that interest capable of being transferred. So I certainly don’t stand by that submission.” (Transcript on appeal, page 33, line 36).
Although during the appeal there was some discussion as to whether Mr K’s report was before the trial judge, in the sense of being attached to a filed affidavit or tendered, for the purposes of the argument nothing turns on this because it is, as we have said, clear that the trial judge had a copy of that document given to him at a time before the agreement as to valuation had been reached. The trial judge was told by counsel then appearing for the parties that the value of the parties’ shares in H was agreed at the figure appearing in the balance sheet and it was conceded that this figure was different from that arrived at by Mr K.
Nevertheless it was argued that the trial judge erred in not taking into account other matters contained within Mr K’s report in determining issues such as, for example, in relation to the loan accounts of the parties in H Pty Ltd. Counsel for the wife though properly conceded that no submission was made to the trial judge that any other part of the report was to be taken into account past the agreed figure as to the value of the shares being different from that asserted by Mr K.
Whatever might have been argued on other matters, such as the parties’ loan accounts, nothing was put to the trial judge from the report of Mr K, and error cannot be now said to have occurred because he did not do that which neither of the most experienced counsel then appearing urged him to do.
We do not find that his Honour erred in respect of the opinions of the single expert and this ground is not made out.
Ground 5. The trial Judge erred in the exercise of his discretion in determining that the parties’ contributions should favour the husband in the proportion of 67% to the wife’s 33%.
It was argued that the trial judge had “undervalued” the wife’s initial contributions and “overvalued” those of the husband. Under this ground, the wife also argues that the trial judge’s assessment of other contributions of the parties was erroneous.
As to the assertion that the trial judge “undervalued” the wife’s contributions, it was argued that the wife brought assets of $382,000 and debts of $16,000 into the relationship and although she first asserted the debts were in the order of $27,000, she later amended that to $16,000. The wife argued that the trial judge in taking the debts into account at $27,000 and not $16,000 as she said, undervalued her initial contribution.
Further, it was argued that the trial judge did not take into account the fact that a property of the husband’s was encumbered by a mortgage and his practice overdraft was secured over the property and thus did not properly take into account the husband’s liabilities in assessing the parties’ initial contributions.
The argument as to the husband’s practice overdraft is demonstrably wrong as a reading of his Honour’s reasons show. At [27] the trial judge set out the provisions of the husband’s separation agreement entered into with his former wife. Paragraph (a) refers to a property at EE against which was secured two mortgages, one of which secured the husband’s practice overdraft. Thus it is apparent that his Honour took this into account. Then it was argued that another property of the husband at BB Street, which he estimated to have a value of $70,000 was subject to a $15,000 mortgage which was not mentioned by the trial judge. It was contended that the trial judge failed to deduct this $15,000 from the husband’s assets brought into the relationship.
Even accepting that the $15,000 mortgage over BB Street was not taken into account, the wife has failed to demonstrate that this omission sounded in appealable error.
This ground challenges the weight attributed by the trial judge to different aspects of the parties’ contributions. The assessment of contributions and how those contributions are reflected in final orders is a matter quintessentially for the trial judge. Simply submitting, as the wife does, that the quantum or percentage assessment determined by the trial judge was insufficient provides no proper basis for finding that his Honour erred in the exercise of his wide discretion.
This ground is not made out.
Ground 6. That His Honour failed to make orders that were just and equitable and failed to give proper reasons for his orders.
While the written submissions seemed to suggest the wife wished to retain a property in specie, the oral argument focussed instead on the form of the orders. It was accepted that the wife, in her proposed orders, only sought a transfer to her of the C property and, in the event that it was not transferred to her that it be sold.
Counsel for the wife submitted under this ground, that the trial judge erred in making an order which required the husband to pay her a fixed sum rather than a percentage of the assets available for distribution between them. It was argued that because there had not been a recent valuation of the M property, the trial judge was in error in ordering the wife to receive a sum certain from the sale of the properties.
While conceding that so far as the M property was concerned, that “underlying asset” had an agreed value, being the value of the shares in H Pty Ltd as trustee for the Trust which held the land, counsel for the wife argued that there should have been an updated valuation of the M property because the plan of subdivision of that property had been approved after the close of the evidence.
This issue was squarely raised by the trial judge on 5 March 2008 to both counsel. His Honour said (Transcript 5 March 2008, page 3, lines 30-33) [AB 480]:
HIS HONOUR: Of course we get to the difficulty, don’t we, that if you’ve done the subdivision does it then change the valuation and so on and so on? I mean, really we’ve got to get to some point where we can make a determination.
At this point, counsel for the wife made no application for an updated valuation nor argued that some value other than that which had been previously agreed should be taken into account.
It was argued for the wife that in the knowledge that the plan of subdivision had been registered, the trial judge ought not to have then made an order for the wife to receive money but should have ordered she receive a percentage of the assets. The effect of this submission is that in the absence of any objection or application from the parties, the trial judge was obliged to make that order of his own motion.
Even if we accepted that proposition, which we do not, counsel was unable to point to any error said to flow from the form of the orders other than an argument that, depending on how long it took to finally sell the properties to which the orders referred, the wife might be disadvantaged. In the absence of any application to adduce further evidence in the appeal supporting the contention that the wife was disadvantaged, the submission amounts to no more than speculation.
This ground fails.
The Costs Appeal (EA 120 of 2008)
After the trial judge made orders and delivered his reasons in the property settlement proceedings, the husband sought an order that the wife pay his costs of and incidental to those proceedings. The basis on which the husband sought that order was that he had made an offer to settle on 6 December 2007. The husband’s application was limited to the payment of his costs from the date of the offer.
The wife resisted the husband’s application and sought leave to bring an application seeking that he pay her costs based on an offer to settle made by her on 10 September 2007.
The trial judge ordered that the wife pay one half of the husband’s costs of the hearing before him.
The trial judge considered at [21] the provisions of s 117(2)(f) and referred to the husband’s offer, the effect of which was that the wife would receive 37.5 per cent of the assets with the husband to retain the C property.
The trial judge observed that the wife argued that the husband’s offer left unresolved the issue of the value of the C property, an issue that was only resolved on 18 December 2007 and that the question of the value of the H shares was also only concluded on that date.
His Honour said:
34. In my view, it is not to be drawn from Browne and Green that an offer should not operate to put a party at risk as to costs only at a time when all issues are resolved, but a party must have adequate knowledge to enable them to make an informed decision.
35. It is pointed out by the husband that the offer that he made required the wife to pay certain monies because at that time it was her expressed wish to retain the [M] property. It is submitted the terms of the offers were consistent with what the wife at that time wanted, subject to the [C] property being otherwise dealt with. It is, in any event, an offer which gave to the wife a certain value of the assets. It is further submitted by the husband and is the fact that the parties at trial agreed to a valuation of the [H] interests different to that proposed by the independent expert. Her calculation, therefore, of her values and as to the effect of her offer do not take that into account. (Original emphasis)
His Honour considered that the wife’s offer to the husband, involving a sale of the C property, something that he had resisted from the outset did not benefit the husband in the same way that the orders do. In any event, that offer had been withdrawn by the wife prior to acceptance.
His Honour concluded that it was just and fair for the wife to pay a proportion of the husband’s costs of the trial. He found at [38] that the offer of 6 December 2007 was “so close to the outcome of the trial as to be almost identical.” He found that the wife’s offer current during the trial did not bear that same proximity to the result in quantum or in the form as ultimately ordered.
His Honour then concluded as follows:
39. It was not however until the trial commenced that the wife was able to be fully informed on matters which would enable her to make an informed decision on the offer. Accordingly, I believe that an appropriate contribution to the husband’s costs is that the wife should pay one half of the costs of the husband of the days of hearing before me …
The appeal
The wife asserts two grounds of appeal in relation to the costs order. No oral submissions were made in the appeal hearing, both parties being content to rely on their written submissions.
Ground 1. That his Honour did not determine all of the relevant facts of the case and accordingly erred in the exercise of his discretion in the determination of the issue of costs.
The submissions (page 5) assert that the husband’s offer, or parts of it were neither clear nor unambiguous and:
It is submitted that His Honour did not recognise the ambiguity of the husband’s offer and erred in attaching weight to the offer when there was such lack of clarity and ambiguity which resulted in the order for costs being manifestly unjust to the wife.
In relation to the proposed transfer to the husband of the C property, the wife argues that while the offer is clear that the wife is to transfer her interest to the husband unencumbered, “…the offer was unclear and ambiguous as to what ‘encumbrances’ the wife would need to pay to render the property ‘unencumbered’ and was silent in regard to the $90,000 Bank Guarantee given by the husband to [PP] Council which was an encumbrance on, and secured against, the [C] property.” (Submissions, page 3).
Although the offer does not refer in terms to the Bank Guarantee, neither does it specify any other encumbrances other than in general terms in sub paragraph (b) which requires the husband to discharge the C mortgages. However, that is consistent with the terms of the order made by his Honour.
It was further argued that in relation to the part of the offer relating to the M property that the terms of the offer were ambiguous. It was said that:
It is submitted that the wording and phrases used by the husband in his offer of “the [M] property” and “If they still own the [M] property” and were unclear and ambiguous. For the husband to offer the wife the whole of the [M] property comprising both units [A and B], the offer should have contained a proposal that the Consent Order be set aside, varied or discharged.
In other words the wife argued that in order to make this offer, it should have contained a clause setting aside the consent orders of November 2007 and in the absence of such a clause, all the husband had to transfer to the wife was the title to Unit A of the M property. We consider that argument untenable, and a far too critical interpretation of the offer. Indeed, we observe that in his orders his Honour did not provide for a discharge of all of the consent orders made on 18 November 2007.
The offer also provided that the wife, if she remained in occupation of the M property would pay “all liabilities and repayments associated with the [M] mortgage” and all “rates, taxes, and other outgoings including utility expenses related to… the [M] property”. The wife argues that this part of the offer was unclear because it did not “…specify what ‘charges’ the wife was to pay, to whom they were to be paid and for what period.” (Submissions, page 3). We consider that it was unnecessary for the husband to specify the precise charges the wife was to pay. A general description was sufficient.
The wife further argues under this ground that the husband’s offer was not clear and unambiguous because it did not present the offer as a percentage of the parties’ assets. It was asserted that:
Whilst the offer clearly and unambiguously provides that the husband is to receive 62.5% of the parties’ net assets and liabilities it does not offer the wife any percentage or value of the net assets she is to retain nor does it differentiate what were the parties’ assets and liabilities and what were [H’s].
Again we consider that in making this submission the wife is requiring detail that it was unnecessary for the husband to provide given the thrust of the offer.
We are unpersuaded that the terms of the offer render it in any way ambiguous. In our view the offer and its effect is plain on its face and we reject the wife’s submissions that it was otherwise to any material degree.
Ground 2. In considering the terms of offers of settlements, His Honour failed to have regard to the interests of [H] Pty Ltd.
The proposition underlying this ground is the fallacious conclusion that Mr K’s evidence established that neither party had any interest in the M property that could be transferred.
Counsel for the wife on the appeal sensibly conceded that, as a statement of fact, this was simply not correct.
This ground can not be made out and must fail.
Conclusion
We have found that none of the grounds of appeal in the two appeals has merit, and accordingly both appeals must be dismissed.
Costs
As is customary, we sought submissions from the parties as to costs on the appeals.
In the event the appeals were unsuccessful the husband sought an order for costs. The wife submitted that should the appeals fail, costs would follow the event.
We agree and find that this is an appropriate matter in which the wife should pay the husband’s costs of both appeals, we having found no merit in any of the grounds of appeal.
We will order the wife to pay the husband’s costs of and incidental to both appeals, such costs to be as agreed or as assessed.
I certify that the preceding one hundred and seven (107) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Coleman, Strickland & Ainslie-Wallace JJ) delivered on 1 May 2013.
Associate:
Date: 1 May 2013
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