Babington & Livesey
[2023] FedCFamC1A 139
•21 August 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Babington & Livesey [2023] FedCFamC1A 139
Appeal from: Livesey & Babington [2023] FedCFamC2F 257 Appeal number(s): NAA 85 of 2023;
NAA 86 of 2023File number(s): BRC 13625 of 2019 Judgment of: TREE J Date of judgment: 21 August 2023 Catchwords: FAMILY LAW – APPEAL – PROPERTY – COSTS – Where the wife appeals from final property settlement orders and a costs order – Where the trial miscarried in an irremediable way during the course of submissions to the primary judge – Where the primary judge was made aware of a Calderbank offer during submissions and before delivery of judgment of the property settlement orders – Where this matter was not raised on appeal – Where the appeal is resolved on the grounds of appeal in any event – Inadequate reasons challenge – Whether the outcome was unreasonable and plainly unjust – Where the primary judge failed to determine a number of disputes as to values of items in the property pool – Where the necessary and fundamental foundation for embarking upon any division of the property pool was lacking – Where the primary judge did not articulate any conclusion as to the actual outcome of each party’s overall position as a result of the property orders – Where the primary judge transformed notional add-backs into actual payments to the husband from the wife – Where no reasons exist for making such an order – Where the reasoning of the primary judge is manifestly deficient – Where the utterance of a ritual incantation that the result is “just and equitable” is an inadequate exposure of reasoning in this case – Procedural fairness – Where the wife was denied the opportunity to properly present her case as to costs – Appeals allowed – Orders set aside – Matter remitted for rehearing – Where these reasons are suppressed for a period to prevent prejudice to the proper administration of justice – Timetable for costs submissions ordered. Legislation: Family Law Act 1975 (Cth) ss 75, 79, 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 35
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 4.07
Cases cited: Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55
House v The King (1936) 55 CLR 499; [1936] HCA 40
Kioa v West (1985) 159 CLR 550; [1985] HCA 81
Sun Alliance Insurance Ltd v Massoud [1989] VR 8
Number of paragraphs: 101 Date of hearing: 25 July 2023 Place: Cairns (via video link) The Appellant: Self-represented litigant Counsel for the Respondent: Ms Lyons Solicitor for the Respondent: Ferrall & Co Lawyers ORDERS
NAA 85 of 2023;
NAA 86 of 2023
BRC 13625 of 2019FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS BABINGTON
Appellant
AND: MR LIVESEY
Respondent
ORDER MADE BY:
TREE J
DATE OF ORDER:
21 AUGUST 2023
THE COURT ORDERS THAT:
1.Annexures M and P to the appellant’s affidavit filed on 12 July 2023 will be admitted into evidence on both appeals, but save as otherwise previously ordered, her Application in an Appeal filed on 11 July 2023 is dismissed.
2.Appeal NAA 85 of 2023 is allowed.
3.Appeal NAA 86 of 2023 is allowed.
4.Order 2 of the orders of the Federal Circuit and Family Court of Australia (Division 2) made on 10 March 2023 is set aside.
5.The orders of the Federal Circuit and Family Court of Australia (Division 2) made on 31 March 2023 are set aside.
6.The property settlement dispute contained in proceedings BRC 13625 of 2019 is remitted for rehearing by a judge of the Federal Circuit and Family Court of Australia (Division 2) other than the primary judge.
7.No later than 4.00 pm on 4 September 2023 either party who wishes to make an application for costs is to make file and serve any evidence and submissions (not exceeding 10 pages) in support of that application.
8.No later than 4.00 pm on 18 September 2023 either party is to make file and serve any evidence and submissions (not exceeding 10 pages) in response to any application for costs.
9.No later than 4.00 pm on 2 October 2023 either party is to make file and serve any submissions (not exceeding 5 pages) strictly in reply to any response filed under Order 8 above.
10.Upon the filing of the last material under these orders, the decision as to costs is reserved.
11.Other than to the parties and their lawyers, the publication or disclosure of the reasons for judgment of Tree J delivered on 21 August 2023 is prohibited until the later of either 28 days after the delivery of final judgment in the remitted trial, or the conclusion of any appeal therefrom.
NOTATION
A.The reasons for judgment delivered by the primary judge on 10 March 2023 and the parties’ written submissions filed 28 October, 4 November and 7 November 2022 have been removed from the court file.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Babington & Livesey has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
TREE J:
INTRODUCTION
These two appeals are brought by Ms Babington (“the wife”) from final property settlement orders and a costs order made by a judge of the Federal Circuit and Family Court of Australia (Division 2) on 10 March 2023 and 31 March 2023.
The property settlement orders purported to effect an equal division of the parties’ net assets and superannuation. The costs order provides for the wife to pay Mr Livesey (“the husband”) his costs of the proceedings (including parenting) in the sum of $87,369.65.
The husband opposes the appeals, however both appeals will be allowed.
BACKGROUND
At the time of trial, the wife was aged 45 and the husband 47. They met in 2002, married in 2008 and separated in 2019, thereby concluding a relationship spanning approximately 17 years.
The parties have two children together, currently aged 10 and 7, who are cared for by them under an equal shared care arrangement.
Apart from the parties’ superannuation, the only substantial asset of the relationship was the former matrimonial home (“Town B”) which although purchased in the wife’s sole name, was mostly funded by joint borrowings in the names of both parties.
In November 2019, the husband commenced these proceedings, initially only seeking parenting orders, to which property settlement orders were added later.
The hearing before the primary judge was the third attempt at trial for this matter (albeit the first time involving the property settlement aspect).
The primary judge heard the matter over four days in October 2022, with written submissions thereafter, the last of which was filed on 7 November 2022. On the final day of the hearing, the parties agreed on the final parenting arrangements discussed above, and orders were made by consent. That left the property settlement dispute to be determined by the primary judge, who reserved his decision.
In his reasons for judgment delivered on 10 March 2023, the primary judge set out in tabulated form the contended balance sheet at [51] noting the parties’ competing values. Of particular relevance were seven items of claimed add-backs; the husband said three items totalling $128,000 should be added back into the balance sheet as notional assets of the wife (although another contended at a value of $37,000 was asserted by him during submissions before the primary judge as well), whereas the wife contended that four items totalling $22,212 should be added back as notional assets of the husband. It appears as though the ultimate outcome was that the primary judge accepted $140,804 should be “added back” against the wife, and $8,512 as against the husband.
The primary judge determined that the parties’ contribution based entitlements were equal (at [119] and [166]). His Honour then considered the factors enumerated in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) at [167] and determined they warranted no adjustment. Further, the primary judge was satisfied that an equal division of property was just and equitable (at [168]).
However, and a little unusually, rather than crafting orders effecting that outcome himself, the primary judge recited the husband’s draft orders in his reasons, and thereafter made some comments, variously accepting or rejecting the draft orders, but then ordered the husband’s solicitors to “redraft the orders as sought [by him] so that figures are recalculated to reflect the reasons, otherwise accepting the wording used” (Order 1).
Also on 10 March 2023, the primary judge ordered that the wife pay the husband his costs in the sum of $87,369.65 (Order 2; at [201]).
On 31 March 2023, the final property settlement orders were made in chambers, including an order providing that the wife was to pay the husband the amount of the costs order out of her share of the property settlement. No reasons were delivered to support those orders beyond those delivered on 10 March 2023.
THE TRIAL MISCARRIED AND SHOULD HAVE BEEN ABORTED
Although not the subject of any ground of appeal, and only briefly adverted to in the hearing before me but not otherwise argued, in the course of writing these reasons it has become apparent that the trial miscarried in an irremediable way during the course of submissions to the primary judge.
The evidence gathering phase of the trial concluded on 13 October 2022, and there was apparently then no time for submissions, in consequence of which a timetable for written submissions was imposed.
Pursuant to that timetable, the wife led off with written submissions filed on 28 October 2022. Paragraph 5 of that document dealt with “The Issue of Reserved Costs”, being costs reserved to the ultimate trial judge by the judge who adjourned an earlier trial of the proceedings fixed for 17 March 2021, as the parties then agreed it would take four days to conclude, not the one which had been allocated to it. Other than those reserved costs, no submissions were made by the wife as to costs generally.
The husband’s written submissions were filed at 4.58pm on Friday 4 November 2022. Paragraph 8 of that document was simply headed “Costs” and whilst there was a brief reference to the order reserving the parties’ costs of the wasted March 2021 trial fixture, the submissions dealt with the costs of the entire proceedings by reference to the matters enumerated in s 117 of the Act. Those submissions included the following:
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of such offer; and
The Husband has made an offer in writing to settle the property proceedings in the terms of the letter dated 12 January 2022 and marked “[ML-2]” to this document.
…
Document ML-2 was a letter clearly headed in bold “Without prejudice save as to costs”. It thereafter articulated an offer to settle the property proceedings by, in effect, an equal division of the parties’ property.
It is trite to observe that the privilege attaching to such a letter cannot be unilaterally waived by either the author or the recipient prior to argument as to costs, a position emphatically reinforced by r 4.07(2) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). Yet because the husband sought to argue costs in advance of judgment in the substantive property proceedings, the document was annexed to his principal submissions, perhaps in misguided reliance upon r 4.07(4)(b) of the Rules.
The wife responded to the husband’s submissions at 8.47pm on Monday 7 November 2022. I infer therefore that they were prepared in considerable haste. Paragraph 7 of those submissions was relevantly as follows:
7. RESERVED COSTS:
Re costs: each of the parties would like the other to pay costs. This matter has been ongoing for some years & each of the parties has remained entrenched in his/her position. Each party has stated his/her overall position in their previous submissions, we require more time to provide full details.
In summary the considerations why [the wife] is seeking costs to be paid by [the husband] are:
…
7.6 [The wife] offered a Calderbank offer to [the husband] to which he simply replied “rejected”. [The husband] has rejected over 10 mediation attempts from [the wife] and her legal representatives including FDR and [the husband’s] preferred private mediator. [The wife] will submit these offers to the court when requested.
(Emphasis added)
Whilst no objection was then made by the wife to the husband having prematurely put before the primary judge the 12 January 2022 Calderbank offer, paragraph 7.6 of her submissions correctly recognised that the terms of a Calderbank offer ought only be revealed to the Court once the principal proceedings have concluded.
Whilst it is true that, contrary to the heading to paragraph 7 of her submissions, the wife also commenced upon submissions as to costs of the proceedings generally, it was plain that she was reserving further submissions on that issue until a later time.
I do not read the wife’s 7 November 2022 submissions as comprising a waiver of privilege in respect of the 12 January 2022 Calderbank offer.
Although I would like to be able to say that the primary judge explicitly disregarded the Calderbank letter in his subsequent reasons, regrettably he did not, nor did he defer the consideration of costs to a date after the principal judgment had been delivered. Rather, and somewhat perplexingly, he dealt with both the property settlement proceedings, and the costs of the entire property and parenting proceedings, in the one set of reasons.
Worse, indeed unfortunately much worse, the primary judge specifically referred to the 12 January 2022 Calderbank offer in the course of that part of the reasons that dealt with costs, as follows:
191.The court considers offers in writing. On 12 January 2022 the husband offered that the house be sold and once costs paid, an equal division of property, the parties also keeping their vehicles, the wife the furniture and anything else in their possession.
192. That was obviously rejected.
193.Given that the wife has been unsuccessful, the offer was not only within range but in fact what I found to be the contributions.
Although the primary judge uses the past tense “found’ in [193], it simply cannot be ignored that the costs decision was in the very same judgment as that finding was made. It is idle to think that the primary judge only considered the Calderbank offer after he had settled his reasons as to the s 79 property division, at the very least because his Honour did not say that he had done so.
Had the primary judge adverted to the fact that the Calderbank offer had been improperly disclosed by the husband, unfortunately he was only faced with two difficult choices. Those were either to bring the matter back on to seek submissions as to what should occur, or alternatively without receiving such submissions, to recognise that the trial had miscarried and abort it. To blindly carry on to judgment was not an option.
It follows that the primary judge’s orders in all respects are fatally flawed. However as I have indicated, this was not a matter which either party raised in the appeal (although the wife mentioned it in passing), nor did the Court otherwise raise it with the parties beyond my saying that I did not understand how an offer of settlement had been disclosed to the primary judge. Orthodoxy would ordinarily therefore require me to relist the appeal for submissions on this point. However the parties have spent a lot of money litigating over a very modest property pool. To require them to incur further costs to consider and argue the above would border on being harsh, especially given that allowing the appeal on such a basis must inevitably lead to remitter for retrial.
Fortunately however, both appeals would otherwise succeed, and therefore I have determined not to resolve the appeal on the basis of any miscarriage, but on other grounds, to which I shall shortly turn.
THE APPLICATIONS IN AN APPEAL
By Application in an Appeal filed on 11 July 2023, the wife sought firstly, that she be permitted to rely upon an Amended Summary of Argument later filed on 12 July 2023, and secondly, that further evidence be admitted in both appeals. Both limbs of that application were opposed by the husband, who also sought to rely upon an affidavit of his filed on 24 July 2023. On 25 July 2023, for reasons to be published later, I gave the wife leave to rely on her Amended Summary of Argument and leave to rely upon Annexures A–K annexed to her 12 July 2023 affidavit as further evidence in the appeals, those annexures not being opposed to by the husband. I reserved my decision in relation to her further material, notably Annexures L–Q of her affidavit. I also permitted the husband to rely upon his 24 July 2023 affidavit, for reasons to be given subsequently.
I now set out my relevant reasons and ruling upon the wife’s further material.
Turning firstly to the issue regarding the Amended Summary of Argument, by order of an Appeals Judicial Registrar dated 16 May 2023, the wife’s Summary of Argument was initially due on 16 June 2023, although by later order of 19 June 2023, that time was extended to 23 June 2023. A Summary of Argument was in fact filed by the wife on that date, however an Amended Summary of Argument was thereafter filed by her on 7 July 2023, although it did not identify what were the new or deleted aspects of it. By a further document filed on 12 July 2023, the wife complied with the requirement to mark up new or deleted material. It is this document she sought to rely upon.
The husband opposed leave on the basis that he was unable to properly respond to the later Summary of Arguments as they arrived too close to the time for the filing of his Summary of Argument, which was due to be filed (and was filed) on 14 July 2023.
The time between 7 and 14 July 2023 did not preclude the husband’s Summary of Argument from being able to be prepared so as to respond to the 7 July 2023 Amended Summary of Argument, nor did the fact that it was not filed in a properly marked up way sensibly impede him responding to it. In any event, he had two days’ notice of the 12 July 2023 document.
Therefore on 25 July 2023 I permitted the wife to rely upon her Amended Summary of Argument filed 12 July 2023.
I permitted the husband to rely upon his affidavit of 24 July 2023, in part because it was largely updating the Court on recent events, but also because it set out the basis of the husband’s opposition to the wife’s Application in an Appeal filed on 11 July 2023. It was therefore relevant, and I am not persuaded that the wife was disadvantaged in any material way by the close proximity of its filing to the hearing of the appeal.
Turning then to the wife’s application to adduce further evidence, the new material which she annexed to her 12 July 2023 affidavit and upon which she seeks to rely, falls into two categories, being firstly material which was before the primary judge but which was not included in the appeal book by the Appeal Judicial Registrar who settled the index to it, and secondly, material which was not before the primary judge. Ultimately the husband did not oppose the first category of material being admitted as evidence on the appeal, but maintained his objection to the second.
Section 35 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) gives this Court an unfettered discretion to admit further evidence on appeal. That said, case law (albeit relating to the predecessor of s 35) has developed some well-known considerations which a court will analyse as part of deciding whether to receive further evidence.
Thus in CDJ v VAJ (1998) 197 CLR 172, McHugh, Gummow and Callinan JJ observed:
114. No doubt the Full Court will readily admit further evidence which is not in dispute and which the Court is able to evaluate and take into account in considering the appeal without the necessity to have the proceedings re-heard. Further evidence of this kind is particularly likely to be admitted where the evidence relates to events occurring after trial. In the case of undisputed evidence which the Full Court can evaluate as part of the evidence in the appeal, the discretion to admit the evidence may even be properly exercised without the Full Court considering what effect it would have had on the trial judge's decision. In that context, the likely effect of the further evidence on the Full Court's view of the evidence before the trial judge is the important consideration. Where there is no need for a new trial or extensive taking of evidence, other discretionary factors such as the availability of the evidence at the trial and the need for finality of litigation are likely to be more relevant in the exercise of the discretion than the effect that the evidence would have had at the trial.
…
116. The failure to have adduced the evidence before the primary judge will be a variable factor, the weight of which will depend upon all the other factors pertinent to the case. Where the evidence has been deliberately withheld, the failure to call it will ordinarily weigh heavily in the exercise of the discretion. In other cases, the failure to call the evidence even if it could have been discovered by the exercise of reasonable diligence may be of little significance. No invariable rule concerning the failure to call the evidence can or should be laid down in view of the wide discretion conferred on the court by the section.
It is convenient to deal with each document sought to be included in evidence individually.
The first is annexure “L”, which ultimately was not pressed, as it was already in evidence. I reject its admission.
Next is annexure “M”, which is a letter dated 17 May 2022 from the wife’s then solicitors to the husband, containing an offer to settle the property proceedings. It is marked “[w]ithout prejudice save as to costs” and is material which, had the costs argument proceeded in an orthodox way, such that it was heard after the principal judgment, would have been relevant. It will be admitted into evidence.
Annexure “N” is a letter dated 5 July 2023 from an actuary to the wife, purporting to value the husband’s UK pension at $15,726, which is significantly more than he contended it was worth at trial. This evidence was, obviously given its date, not available at trial, and yet it does not demonstrate error by the primary judge. It may be relevant if I were minded to re-exercise the s 79 discretion, but unless and until that stage is reached, its admission is rejected.
Annexure “O” is a letter from the husband’s solicitors to the wife dated 30 June 2023 seeking, amongst other things, that the wife vacate Town B by 10 July 2023. It is not relevant to any ground of appeal, and does not otherwise illuminate any error by the primary judge. It will be rejected.
Annexure “P” comprises a number of messages between the parties concerning, amongst other things, the husband’s health, and particularly his post-trial treatment for cancer. One such communication is dated 7 February 2023, but the balance appears to bear various dates in June 2023. It is arguably relevant to Ground 6 of the property appeal, and therefore will be admitted into evidence.
Annexure “Q” is a tender bundle, the admission into evidence of which was either not pressed by the wife’s counsel at trial, or perhaps was rejected by the primary judge. It was only produced by the wife to the husband’s solicitors on the day its tender was discussed, and indeed although purportedly annexed to the wife’s affidavit filed 12 July 2023, was in fact not annexed, and only provided by the wife to the Court and the husband’s solicitors on 24 July 2023. It is a significant amount of various material, and its admission into evidence now would be quite prejudicial to the husband, as his counsel asserted, since she had not had any opportunity to consider it. Its admission is rejected.
THE APPEALS
At the outset, it is useful to restate the relevant principles which govern appeals from discretionary judgments. Particularly, it is well settled that error of the type identified in House v The King (1936) 55 CLR 499 at 504–505 (“House v The King”) must be established. There, the majority of the High Court said:
…The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred…
Whilst there are two appeals, they overlap as to costs. Conceptually however there are, as I have indicated, two components to them, an appeal against the property settlement orders and an appeal against the costs order. I propose to deal with them by reference to those matters rather than individually.
THE PROPERTY APPEAL – NAA 86 OF 2023
Ground 6
This ground provides:
6.That the Honourable Judge erred in failing to relist the matter in respect of the Application in a Proceeding filed 10 February 2023 in respect of the husband's health diagnosis, as it could well have an impact on the parties future financial needs, particularly if the [wife] is to assume sole responsibility for the parties' minor children. The [wife] was not given an opportunity to respond to this Application in a Proceeding as it was not factored in by the Honourable Judge.
As argued, this ground included a complaint of a want of procedural fairness. Such grounds should be dealt with first (Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at 581 611-612 and 674).
Some further factual background is necessary to understand this ground. On 10 February 2023, the husband filed an Application in a Proceeding supported by an affidavit of his filed the same day. The affidavit disclosed that the husband had received a cancer diagnosis on 4 January 2023, although the specific type of his cancer still remained unknown. He was then undergoing “the strongest [medical treatment]” and, “[w]hilst it is too early for my medical team to provide a definitive prognosis, they have recommended that I make early provisions in anticipation of a possible terminal prognosis” (paragraphs 9 and 10). In consequence, the husband said that “I am therefore respectfully seeking that the matter be listed urgently for [m]ention in order to consider my request for judgment of this matter to be considered with some priority” (paragraph 13).
That reflected the relief which his application sought being:
1. That the matter be listed for mention on an urgent basis.
…
3.That the judgment in respect of property proceedings reserved by the Court at Trial on 13 October 2022 be considered with priority.
It does not appear that the application was ever given a listing date.
On 23 February 2023, the wife filed an Application in a Proceeding which sought the following orders:
1.That leave is granted from the court for the [wife] to issue a subpoena to the Husband’s treating medical practitioners and specialist (Queensland Health, […] Clinic and other)
2.That the Husband provide the details of his treating specialists […] to the [wife] and the Court.
3.That judgement in property matters is reserved until after production and inspection of the subpoena of medical records and we are aware of the Husband’s medical condition and future prognosis.
In support of that application she filed an affidavit which set out her unsuccessful requests of the husband and his solicitors for further information relating to his diagnosis and prognosis. Again, it does not appear that this application was ever given a listing date.
Rather, the matter was eventually listed for the delivery of judgment on 10 March 2023. On that occasion prior to delivering judgment, the primary judge said:
… There are two applications in a proceeding. Unless there’s a submission, these are irrelevant to anything, unless anyone wants to – either you, [counsel for the husband], or you, [counsel for the wife], want to tell me that they are not irrelevant.
(Transcript 10 March 2023, p.2 lines 18-20)
Then counsel for the husband contended that the applications were now irrelevant, which led to the husband’s application then being dismissed.
There then occurred the following exchange:
HIS HONOUR: [Counsel for the wife], do you want to – have you got any submission that the ‑ ‑ ‑
[COUNSEL FOR THE WIFE]: Your Honour, I’m ‑ ‑ ‑
HIS HONOUR: ‑ ‑ ‑ wife’s application is relevant to anything?
[COUNSEL FOR THE WIFE]: Your Honour, relevant only from this point of view that – I mean, there has been information floating around that the husband is very, very ill, that it could be terminal. My client has asked time and again of his solicitor, what’s the illness? What’s the prognosis? What’s going on here? We need to know, and no information whatsoever, other than that he’s receiving – you know, I think it’s – it’s not [medical treatment]. I think it must be – what’s the other therapy, your Honour? The – I’ve got a mental block at the moment.
HIS HONOUR: I don’t know, but it – what’s – the relevance is to the trial. What is the relevance of it?
[COUNSEL FOR THE WIFE]: Well, your Honour, if the husband’s prognosis is terminal, it makes a huge difference to the 75(2) factors.
[COUNSEL FOR THE HUSBAND]: No, it doesn’t. I object to that.
[COUNSEL FOR THE WIFE]: Because the mother will be left as a single mother to raise the children without any assistance whatsoever from the father. I mean, I – granted, the rest of the submissions made on behalf of the mother are irrelevant, but that one is the relevant one.
HIS HONOUR: [Counsel for the wife] it’s up to the husband to make application to reopen proceedings if he felt he needed to do. He hasn’t done so. The – this is not an application by the wife to actually reopen. It’s an application seeking information which she’s not entitled to pursuant to the proceedings which have been heard, because ‑ ‑ ‑
[COUNSEL FOR THE WIFE]: Your Honour, I ‑ ‑ ‑
HIS HONOUR: ‑ ‑ ‑ apart from delivering judgment, there’s nothing else on foot.
[COUNSEL FOR THE WIFE]: Your Honour, I would have thought that knowing exactly what the husband’s prognosis is would have been very relevant in this matter because of the – as I said, the 75(2) factors. It – the – fair enough. Whatever’s wrong with the husband may well be his business, but your Honour, if his prognosis is as – is what could be expected, then your Honour, these children need to be prepared. They need to know what’s going to happen.
HIS HONOUR: But it is irrelevant to the decision on the property, which I am now in a position to deliver based on the evidence presented at the trial, surely.
[COUNSEL FOR THE WIFE]: Well, your Honour, as we both know, sometimes, once a trial’s finished, and that’s why 79A is in the Act – sometimes, once a trial is finished, things change.
HIS HONOUR: You can’t go ‑ ‑ ‑
[COUNSEL FOR THE WIFE]: People find out further things.
HIS HONOUR: But you cannot go fishing for the information by seeking subpoenas. There’s another way of doing it. Anyway ‑ ‑ ‑
[COUNSEL FOR THE WIFE]: Yes, your Honour.
HIS HONOUR: Well, it’s up – you’ve given me your submissions. So thank you. Anything to say, [counsel for the husband]?
[COUNSEL FOR THE HUSBAND]: Your Honour has already pre-empted my submissions. Frankly, your Honour, this is nothing short of a predatory application to try and capitalise on an unfortunate event. It is the wrong application at law and, frankly, probably morally, but it is the wrong application. It has no bearing in respect of the evidence heard before the trial. If there is another application to be made, then it should be made in its proper form, and it will be resisted. This is just fishing. Thank you, your Honour.
HIS HONOUR: All right.
JUDGMENT DELIVERED
(Emphasis added)
There does not appear to have been any specific disposal of the wife’s application, although implicitly it was dismissed.
In the judgment then delivered, the primary judge said this:
167.There seems to be no circumstances under which they should receive a higher distribution under any of the considerations stated in s.75(2), which takes into account their ages, income earning ability, standard of living, child care and any circumstance which would distinguish one partner from the other.
Given that by 10 March 2023, it was not in dispute that the husband had a serious medical condition which might be terminal, the suggestion that there was no distinguishing circumstance between the parties is, to say the least, difficult to understand.
What comprises procedural fairness will depend upon the circumstances of each individual case, but as a general proposition it requires each party to be given an adequate opportunity to be heard and to present their cases (Kioa v West (1985) 159 CLR 550 at 582).
Here it cannot be said that the wife was denied an opportunity to put on extant material, although she was denied the opportunity to seek it by way of subpoena. However the primary judge was well aware of the cancer diagnosis by 10 March 2023 and the possibility of it being terminal, so to that extent the wife’s case in broad terms was before the primary judge. That his Honour thereafter apparently disregarded it does not speak to procedural unfairness. Hence that aspect of this ground is not established.
Otherwise the somewhat vague challenges made by this ground likewise fail. I should particularly observe that this ground does not challenge the perplexing finding that the s 75(2) factors warranted no adjustment to the parties’ contribution based entitlements, nor indeed, does any other ground of appeal.
Ground 7
It is convenient to next consider Ground 7, which provides:
7.The consequences of these Orders are that the [wife] receives a very limited division of the assets available for distribution to the parties and the Honourable Court failed to take into account the future needs of the [wife] as opposed to the Respondent Husband in making the Orders, which amounts to insufficient reasons for judgement and a failure to exercise discretion appropriately.
Although it also comprises a reasons challenge, in terms of House v The King, this is principally a complaint that the outcome was unreasonable and plainly unjust, because, leaving aside superannuation, the overall outcome saw the wife with few assets and considerable debt, whereas the husband received, in the context of this case, considerable assets.
Unusually, the primary judge did not include in his reasons a balance sheet listing all assets and liabilities at the values as found by him, and each parties’ entitlement thereto. Moreover, at no time did the primary judge articulate any conclusion as to the actual outcome, in the sense of what the ultimate and overall position of each party would be as a result of the property settlement orders.
Ordinarily it would be convenient to undertake that task in this appeal, however that is simply not possible here, as the primary judge failed to determine a number of disputes which need to be resolved before the balance sheet could be determined.
Particularly, whilst the primary judge did resolve the dispute as to the value of Town B (preferring the wife’s value of $770,000 at [67]) and the contended add-backs, by reference to the items in the balance sheet at [51] he did not determine:
(a)item 3, being the value of the wife’s car, with the husband contending it was worth $20,000 and the wife $13,000;
(b)item 4, being the husband’s bank accounts, with the wife contending they were worth $2,000, which was not conceded by the wife;
(c)item 5, being the wife’s bank accounts, with the husband contending they were worth $31,500 and the wife $4,676;
(d)item 12, being sale proceeds of the husband’s previous car, with he contending them to be nil, and the wife contending for $1,600;
(e)item 14, being the current amount due on the mortgage over Town B, with the husband contending the balance was $600,000 and the wife contending it was $602,214;
(f)item 15, being an alleged loan in respect of the husband’s car, with the husband contending the balance owing was $20,000 and the wife contending it was nil;
(g)item 18, being the amount owing on the husband’s Bank R credit card, with the husband contending it was $4,500, which was not conceded by the wife;
(h)item 19, being the amount owing on the wife’s Bank P credit card, which (rather oddly) the husband said was $9.13 and the wife said was nil;
(i)item 20, being a joint ATO tax debt, which the husband said had a nil balance, and the wife contending it was $2,279;
(j)item 21, being the parties’ joint debt for rates in respect of Town B, which the husband said was nil, and the wife said was $5,117;
(k)item 22, being an alleged loan which the wife owed to her parents, with the husband contending a nil value, and the wife contending an amount of $20,990;
(l)item 23, being the husband’s Super Fund 1, which he said had a balance of $163,693, which was not conceded by the wife;
(m)item 24, being the husband’s UK pension fund balance which he said was worth $1,387, which was not conceded by the wife;
(n)item 25, being the wife’s Super Fund 2, which the husband contended was worth $509,877, and the wife $501,000;
(o)item 26, being the wife’s Super Fund 3, which the husband said was worth $10,692, and the wife $10,101;
(p)item 27, being an alleged financial resource of the husband, which he said had nil value, and the wife said was worth $126,000.
At [53] the primary judge correctly said “[a]s to the disagreements of values in the above schedule, the court has to make factual decisions”, however apart from determining the value of Town B and the contended add-backs, the primary judge wholly failed to do that which he identified was required. Now of course some of those disputes were minor, but others clearly were not.
True it is that later the primary judge did say, in the context of discussing contributions:
154.The schedule agreed to was that the husband had, at time of trial $163,693 with the [Super Fund 1], and $1,387 in a UK [...] pension fund, those figures being different from the wife’s post-trial submissions that he had $62,525 to $100,000 from that fund.
155.There were no questions about the UK [...] pension. The wife was guessing.
156.The wife had, at time of trial, $501,000 with [Super Fund 2] and $10,101 with [Super Fund 3].
but that misstates what the joint balance sheet in fact recorded. It might also be that at [163] the primary judge rejected item 22, but it is not clear.
Therefore the necessary and fundamental foundation for embarking upon any division of the property pool was lacking.
Thus, as I say, it is simply not possible to construct a table setting out the values of the assets and liabilities which the parties would be left with under the 31 March 2023 orders. Nonetheless, it is useful to compile such a balance sheet using the figures as found by the primary judge, or otherwise most favourable to the husband:
Description Wife Husband ASSETS 1 Town B $385,000 $385,000 2 motor vehicle 2 $20,000 3 motor vehicle 3 $20,000 4 Bank accounts $2,000 5 Bank accounts $31,500 6 Rental Bond – Ms F Nil Total $436,500 $407,000 ADDBACKS 7 Withdrawal of joint savings from Bank H and Bank J bank accounts between July and October 2019 $20,000 8 Lump sum withdrawals from Bank K accounts on 12.02.21 and 15.03.21 $74,000 8A Add-back found at [101]–[106] $36,804 9 Joint marital credit card payments post separation (s75(2)(o)) – Bank L $8,512 10 Joint marital credit card payments post separation (s75(2)(o)) – Bank M Nil 11 G School payout from during the 12 years of marriage Nil 12 Motor vehicle 1 Disposal Nil 13 Withdrawal of superannuation post separation $10,000 Total $140,804 $8,512 LIABILITIES 14 Bank N home loan for Town B $300,000 $300,000 15 motor vehicle 2 finance $20,000 16 Bank M credit card $14,728 17 Bank L credit card (now debt) – to be paid out from Town B sale proceeds $5,217.50 $5,217.50 18 Bank R credit card $4,500 19 Bank P credit card $9.13 20 ATO debt Nil Nil 21 Region C Council rates Nil Nil 22 Personal Loan – living-expenses – [the wife’s parents] Nil Nil Total $319,954.63 $329,717.50 SUPERANNUATION Member Name of Fund Type of Interest Wife Husband 23 Split Super Fund 1 Accumulation $81,846.50 $81,846.50 24 Husband UK Pension Accumulation $1,387 25 Split Super Fund 2 Accumulation $254,938.50 $254,938.50 26 Wife Super fund 3 Accumulation $10,692 Total $347,477 $338,172 FINANCIAL RESOURCES Ownership Description Wife Husband 27 Husband [The husband’s parents] Nil Total Net Total $604,826.37 $423,966.50
Two notes to that table are appropriate. Firstly, of course, Town B is to be sold under the primary judge’s orders, however in the first instance, I have included it at the value found by the primary judge, and as equally shared, both as to value and as to the mortgage.
Secondly, I have split the Super Fund 1 and the Super Fund 2 as the primary judge’s orders effected.
From that table it emerges that, using the husband’s contended figures to fill in the values of items not determined by the primary judge, the value of the net pool, including superannuation and add-backs, was $1,028,792.80, which was intended to be split equally between the parties (i.e. each is entitled to $514,396.40), using the sale proceeds of Town B as the final levelling process, after the two superannuation splits had been taken into account. But because the wife would be treated as already having notional assets (in the form of add-backs) at a value of $140,804, at face value her entitlement comprises the following:
Assets (excluding Town B) $51,500
Add-backs $140,804
Liabilities (excluding the Town B mortgage) $19,954.63
Superannuation $347,477
Net $519,826.37
On the other hand the husband’s entitlements are:
Assets (excluding Town B) $22,000
Add-backs $8,512
Liabilities (excluding the Town B mortgage) $29,717.50
Superannuation $338,172
Net $338,966.50
I have excluded Town B, which on the values as found by the primary judge has a net equity of $170,000. If one adds that sum to the wife’s net entitlement, and the husband’s net entitlement, one arrives at the net pool figure of $1,028,792.80.
The point of illustrating the outcome of the case in this way is that if Town B sells for $770,000, the wife will not have any claim to the equity in it, as her net assets exceed her net entitlement from the orders. Moreover, the primary judge also required that the husband’s costs of $87,369.65 be paid from the wife’s share of the proceeds of sale of Town B as well.
Thus in order for the husband to achieve an entitlement of $514,396.40, he would need to receive the entire amount of $170,000 from the equity in Town B, plus payment from the wife of $5,429.90.
Therefore by virtue of add-backs being treated as part of the wife’s property entitlement, even though they are only notional assets, to achieve an equal division of the parties’ property sees her with no entitlement to any part of the proceeds of Town B. However the only actual assets in her name are a car and some (disputed as to amount) money in a bank account, together with inaccessible superannuation. Moreover, many of the add-backs were made because the primary judge was satisfied that the wife had not properly made disclosure relating to them. It was not suggested that there were hidden, actual assets.
The actual assets which the wife is left with only exceed her liabilities by some $30,000. In reality therefore, excluding superannuation, the only substantial assets she takes under the orders are notional ones. Little wonder then, that in her oral submissions before me, she said:
… And yet these net results of these orders allow for the husband to control all the financial assets of the mother, leave me with no assets, no cash, severe debt and high risk of homelessness. … They’re not just and equitable.
(Transcript 25 July 2023, p.32 line 47 to p.33 line 3)
What she contends is nothing more than the raw, unvarnished truth. And it should be remembered that all of the above discussion is on the most favourable basis to the husband.
Nowhere does the primary judge advert to this outcome in the reasons. Indeed, one rather suspects that, because his Honour likely failed to actually ever ascertain, much less articulate, the outcome which those reasons mandated, it would be rather a surprise to him.
But equally unsatisfactory is what the primary judge did in respect of the add-backs in the orders finally pronounced, as follows:
6.That following completion of the sale of [Town B], the proceeds of the sale shall be paid in the following manner and priority:
…
e.The remainder of funds to be divided so as there is a cash sum to the [husband] to affect [sic] an overall property settlement of 50 percent to the [husband] and 50 percent to the [wife] taking into account the other assets which the parties are to retain pursuant to these Orders;
i.From the [wife’s] share, the following are to be paid to the [husband] as follows:
1.Payment of $10,000.00 to the [husband] to equalise the addback for the [wife’s] withdrawals from the [Bank H] and [Bank J] joint savings accounts between July and October 2019;
2.Payment of $37,000.00 to the [husband] to equalise the addback for the [wife’s] lump sum withdrawals from the [Bank K] bank accounts on 12 February 2021 and 15 March 2021;
3.Payment of $5,000.00 to the [husband] to equalise the addback for the [wife’s] withdrawal of superannuation;
4.Payment of $18,402.00 to the [husband] to equalise the addback for the [wife’s] withdrawals from the Westpac [...] Account; and
5.Payment of $87,369.65 to the [husband] in costs.
That is to say, rather than treating the add-backs as notional property in the wife’s hands, they have been transformed into actual payments to the husband by the wife, sourced from the proceeds of sale of Town B. Unfortunately no reasons exist as to why the primary judge made an order in those terms, the kindest description of which would be bizarre. Of course, on the value of Town B as found, such that the parties’ equity in it was only $170,000, there is simply insufficient funds to pay all of those sums totalling $157,771 “from the [wife’s] share”, but that appears not to have been realised by the primary judge.
Moreover, the husband’s draft orders recited by the primary judge in his reasons did not contain anything like Order 6(e)(i), nor did his Honour’s commentary on those draft orders suggest any such thing. Thus the order as pronounced went far beyond redrafting “[t]he orders as sought [by the husband] so that figures are recalculated to reflect the reasons, otherwise accepting the wording used”.
Of course, it goes without saying that until the value of the net pool was determined by the primary judge, and the value of the assets and liabilities which the parties were to take ascertained – patently, neither of which were done – Order 6(e) is meaningless in any event.
The obligation to provide reasons is well established. In Bennett and Bennett (1991) FLC 92-191 at 78,266, the Full Court adopted the following test articulated by Gray J in Sun Alliance Insurance Ltd v Massoud [1989] VR 8 at 18:
The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if:
(a)the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b)justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.
It is simply not possible to adequately discern the reasoning behind what the primary judge did – including ascertaining even what value the property pool had – such that the reasons challenge in Ground 7 must succeed. But worse, there was an inadequate explanation for how the actuality of the outcome – namely, that even on the husband’s figures, the orders saw the wife with few actual assets and significant liabilities, and the husband with significant actual assets – was just and equitable, and hence again the reasoning for so concluding is manifestly deficient. The utterance of a ritual incantation that the result is “just and equitable” is an inadequate exposure of reasoning in this case. Moreover, justice is incapable of being seen to have been done.
It would not be a large leap to go on to conclude that the outcome of the primary judge’s orders itself is patently unjust and unreasonable (especially since Order 6 is meaningless absent the pool being determined) however given, as shall be seen, the only possible outcome of the success of the property appeal is remitter for rehearing before another judge, I will refrain from making any conclusion as to that.
Ground 7 succeeds.
The remaining grounds
It is unnecessary to consider the remaining grounds in order to determine the property appeal. That is not to say they were without merit, as indeed some appeared likely to succeed.
THE COSTS APPEAL
Given that the property orders must all be set aside, it follows that the costs order, insofar as it was founded on those property orders, would naturally fall away. However I should briefly explain why the costs appeal is, in any event, meritorious.
The arguments pressed by the wife under the costs appeal were wide and varied, and often misconceived, however what simply cannot be ignored is that costs would not ordinarily be argued prior to judgment in the principal proceedings being delivered, as the wife’s written submissions to the primary judge clearly assumed, and in which she foreshadowed reliance upon a Calderbank offer. She was therefore denied the opportunity to properly present her case as to costs, which was procedurally unfair.
The costs appeal must be allowed.
CONCLUSION
Both appeals succeed. Given the agreed fact of the husband’s cancer, and the other events which have occurred since 13 October 2022, including, it seems, the sale of Town B, the only option is to remit the matter for rehearing before another judge.
Given that outcome, the primary judge’s reference to the Calderbank offer in his reasons, and what I have said about it in these reasons, mandates that in order to prevent prejudice to the proper administration of justice, these reasons be suppressed (other than for publication to the parties and their lawyers) until the expiry of the appeal period from the final judgment delivered consequent upon the rehearing, or the conclusion of any appeal therefrom. I will so order.
COSTS
In the event the appeals succeeded, the parties foreshadowed putting further material before me, in the form of at least one Calderbank offer, as well as written submissions and responses, and agreed a timetable for provision of such material.
I will order in the terms of that agreement.
I certify that the preceding one hundred and one (101) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Tree. Associate:
Dated: 21 August 2023
ADDENDUM
TREE J:
On 18 October 2023, the parties agreed to the publication of these reasons to the judge undertaking the rehearing, and accordingly the suppression order was discharged by an order made in chambers.
I certify that the preceding one (1) numbered paragraph is a true copy of the Addendum to the Reasons for Judgment herein of the Honourable Justice Tree. Associate:
Dated: 18 October 2023
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