BAGBY & BAGBY
[2015] FamCAFC 209
•6 November 2015
FAMILY COURT OF AUSTRALIA
| BAGBY & BAGBY | [2015] FamCAFC 209 |
| FAMILY LAW – APPEAL – PROPERTY – Where the husband appealed on the basis the wife received property of a greater value than asked in the original application and at trial – Where the husband argued the result was unjust and the Magistrate failed to take into account contributions or accord the husband procedural fairness – per Bryant CJ and Thackray J – Where the findings regarding contributions was not challenged and the husband was accorded procedural fairness – Where the orders made by the Magistrate were not as favourable to the wife as the outcome sought by her at trial – Where the result was not outside the range – Appeal dismissed – per MAY J IN DISSENT – Where greater weight should have been afforded to a gift of property to the parties and an investment trust – Where regard must be had to the significant difference in values of property to be divided between the parties – Appeal allowed in part. FAMILY LAW – APPEAL – COSTS – Where wife sought an order for costs if the appeal was dismissed and the husband did not oppose – Appellant husband ordered to pay the respondent wife’s costs to be assessed, if not agreed. |
| Family Law Act 1975 (Cth) ss 75(2), 79, 117 |
| Bevan & Bevan (2013) FLC 93-545 CDJ v VAJ (1998) 197 CLR 172 G and G (1984) FLC 91-582 Gosper & Gosper (1987) FLC 91-818 Gronow v Gronow (1979) 144 CLR 513 Kessey & Kessey (1994) FLC 92-495 Norbis v Norbis (1986) 161 CLR 513 Re F: Litigants in Person Guidelines (2001) FLC 93-072 Stanford v Stanford (2012) FLC 93-518 Steinbrenner and Steinbrenner [2008] FamCAFC 193 |
| APPELLANT: | Mr Bagby |
| RESPONDENT: | Ms Bagby |
| FILE NUMBER: | PTW | 5450 | of | 2010 |
| APPEAL NUMBER: | WA | 14 | of | 2014 |
| DATE DELIVERED: | 6 November 2015 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Bryant CJ, May and Thackray JJ |
| HEARING DATE: | 30 October 2014 |
| LOWER COURT JURISDICTION: | Magistrates Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 14 March 2014 |
| LOWER COURT MNC: | [2014] FCWAM 57 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Page QC |
| SOLICITOR FOR THE APPELLANT: | Merthyr Law |
| COUNSEL FOR THE RESPONDENT: | Mr Walker |
| SOLICITOR FOR THE RESPONDENT: | Tyrone B Grantham |
Orders
The appeal WA 14 of 2014 is dismissed.
The appellant husband pay the respondent wife’s costs of the appeal, if not agreed, to be assessed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bagby & Bagby 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 PERTH |
Appeal Number: WA 14 of 2014
File Number: PTW 5450 of 2010
| Mr Bagby |
Appellant
And
| Ms Bagby |
Respondent
REASONS FOR JUDGMENT
Bryant CJ
I have had the considerable benefit of reading the draft judgments of May J and Thackray J.
Save as to what Thackray J identifies as the complaint raised by Ground 3,
I agree with the conclusions reached by both May J and Thackray J in respect of the complaints raised on appeal.
In relation to Ground 3, I agree with the conclusion reached by Thackray J.
I would simply add to what his Honour says by pointing out that in addition to what his Honour sets out at [126] – [134] of these reasons, in submissions to the trial Magistrate on the first day of hearing, counsel for the wife said (transcript, 25 February 2014, p 16) (emphasis added):
My calculation … we’ve said … that the contribution should be seen has 40 per cent by the wife and 60 per cent by the respondent husband. That’s on the basis that the two properties were given to either the parties jointly, or to the respondent singly by his father …
And this is a very long marriage and we would submit that, taking into account non-financial contributions, and the work of the parties overall … that 40/60 would be approximately an appropriation division by way of contributions and then we say five per cent for section 75(2) factors.
It is clear from that submission and what Thackray J sets out at [132] – [135] of these reasons that it cannot be said that the wife obtained more than she sought at trial.
I therefore agree with Thackray J that the appeal should be dismissed.
May J
Introduction
By way of Notice of Appeal filed 24 July 2014, Mr Bagby (“the husband”) appeals orders 5 and 8 of the orders of Magistrate Moroni made 14 March 2014. The appeal is opposed by Ms Bagby (“the wife”).
On 27 June 2014, further orders were made by Magistrate Moroni pursuant to r 17.02 of the Family Law Rules 2004 (“the Rules”) amending paragraph 5 of the orders of 14 March 2014 and correcting paragraphs [342] and [343] of the written reasons of 14 March 2014, changing the percentage referred to as “35%” to “30%”. The Magistrate also ordered a stay of orders 1 to 10 inclusive, until further order.
The orders appealed are as follows (order 5 as amended):
5.Within 28 days of the date of settlement of the sale of the above property [A Property], the [husband] pay to the [wife], the sum of $560,000.
…
8.A superannuation payment splitting order issue in due course to effect a division of the value of the superannuation entitlements of the parties as determined at trial in proportions of 45% / 55% favouring the [husband].
The notice of appeal identifies six grounds of appeal. Those grounds complain that the Magistrate did not give adequate reasons, made errors in the assessment of the parties’ contributions and that the husband was denied procedural fairness.
Background
The husband was born in 1958 and is presently 57 years of age. The wife was born in 1959 and is presently 56 years of age. The wife, at the time of trial, was unemployed. The husband works in the transport industry.
The wife has one child from a former marriage, who was born in 1979. The parties married in 1982 and have three children, a daughter born in 1984, and two sons born in 1990 and 1992 respectively.
The parties separated in January 2007 and divorced in March 2011. The wife filed an application on 24 September 2010, and the husband filed a response on 26 October 2010 (and amended 9 November 2010) for alteration of the property interests pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”).
It is of some interest to note at this point that the final orders sought by the wife, contained in a minute included in the Papers for the Magistrate, asked that the husband transfer to her all his right, title and interest in Property A, and the husband pay her the sum of $250,000. In the event the husband failed to pay the $250,000, the wife be appointed trustee for sale of Property B and the wife pay herself the sum of $300,000 from the net proceeds of sale. Each party would retain their own exclusive interest in superannuation, motor vehicles, bank accounts and savings.
The husband sought final orders allowing him to exercise his powers as the trustee of Trust D to pay the wife the sum of $49,997 in discharge of her loan account, that Property A be sold and the net proceeds of sale be divided equally, and that orders be made to “equalise” the superannuation interests of each party. The husband resisted any orders affecting Property B.
The Magistrate’s Reasons
After a brief introduction and background the Magistrate commenced his reasons with an analysis of the applicable law. The Magistrate set out the well-known “four step process” and considered this in light of the then recent authorities of Stanford v Stanford (2012) FLC 93-518 (“Stanford”) and Bevan & Bevan (2013) FLC 93-545 (“Bevan”).
The Magistrate summarised the three “fundamental propositions” discussed by the Full Court in Bevan, when summarising the findings of Stanford. He adopted these propositions as the process to follow in determining the dispute and said:
60 …
1.Determination of a just and equitable outcome for an application for property settlement begins with the identification of existing property interests (as determined by common law and equity).
2.The discretion confered [sic] by the statute must be exercised in accordance with legal principles and must not proceed on an assumption that the parties’ interests in the property are or should be different from those determined by common law and equity.
3.A determination that a party has a right to a division of property fixed by reference only to the matters in s 79(4) of the Act, and without separate consideration of s 79(2) of the Act, would “erroneously conflate what are distinct statutory requirements”.
Property of the parties
It was uncontroversial that originally the husband’s father owned a property (“Lot C”), which was subdivided into Property A and Property B.
Property A
Property A was the former family home and occupied by the husband and one or both of the parties’ sons at the time of trial (at [35] – [39]).
The property is registered in the joint names of the parties as joint tenants and was valued at $610,000. It was encumbered by a registered mortgage of $60,467 and was also subject to a caveat.
The caveat was lodged by the husband’s former solicitors. The husband advised the court he would be in a position to have the caveat discharged (at [72]).
Property B
Property B was occupied by one of the parties’ daughters and her family.
As correctly identified by the Magistrate:
73.The single most important issue in the trial concerns the legal and equitable ownership of [Property B] and whether it should be considered to be the property of the [husband] for the purposes of these proceedings.
This property was registered in the sole name of the husband. It was valued at $1,950,000 and encumbered by a registered mortgage of $170,000.
The husband submitted that he holds Property B as bare trustee for the benefit of the children, and it should not be regarded as his property.
The wife resisted this interpretation, alleging the husband either owned it outright or as trustee of Trust E, and:
…that it should be considered to be the property of the [husband] as he is the trustee, guardian and appointor of [Trust E] and is therefore entitled to settle on himself personally the whole of the capital of the trust, including [Property B], at any time of his choosing prior to the vesting date of [Trust E].
Trust E was created on 11 November 1992. The husband was the sole trustee and his father was both guardian and appointor. Although it is not entirely clear, steps were taken to divide the land held by the husband’s father and new titles were issued for Property A and Property B on 10 August 1993.
The husband submitted that on or around 11 November 1992, his father signed a transfer of land document, transferring the whole of Lot C to him (comprising Property A and Property B), in his capacity as trustee of Trust E (at [91]). Although there was consideration recorded on the transfer of land document, the husband concedes he made no payment. The lack of evidence in relation to the property caused the Magistrate some difficulty; he was unable to finally determine whether Lot C was registered in the sole name of the husband, or as bare trustee.
The husband further argued that it was some time in 1992 or 1993 his father sub-divided Lot C, with Property A registered in the parties’ names and not forming an asset of Trust E. The Magistrate summarised:
97So, implicitly, it appears to be the case of the [husband] that the whole of Lot [C] was settled upon him as trustee of [Trust E] and that subsequently he exercised his powers as trustee to settle upon himself and the [wife], with the consent of the [husband]’s late father as guardian, the 16 acres now comprising [Property A].
98So, the [husband]’s case is that at all material times his ownership of [Property B] has extended only in his capacity as trustee of [Trust E].
The Magistrate recorded that although the transfer of land document showed the husband as transferee in the capacity as trustee for Trust E, the reference to his name as the trustee was “scored through”. The Magistrate accepted that this was normal practice, as it was “not possible to obtain the registration of property in Western Australia naming a registered proprietor in some trustee capacity” (at [101]).
The Magistrate noted that evidence tendered by the husband as Exhibit 4, being a stamped transfer of land document of 22 July 1993, shows the transferees named as the husband and wife as joint tenants, and the consideration as “natural love and affection”. His Honour concluded that it seemed more likely than not that Property A was a gift from the husband’s father, and never formed part of the capital of Trust E. There was no such documentation for Property B.
For reasons given at [120] to [126], the Magistrate accepted that the husband’s father’s interest in Property B was settled upon the husband in his capacity as trustee of Trust E. In particular, his Honour noted at [123] that Property B had been treated as an asset of Trust E in financial statements for several years.
The final question to be determined was whether or not Property B, although an asset of Trust E, should be treated as the husband’s property for the purposes of the proceedings. The Magistrate concluded that Property B should be treated as property of the husband (at [187]), for the following reasons:
a)When initially drawn, the trust deed named the husband as the sole trustee (at [134]);
b)The husband is a member of a class of general beneficiaries (at [137]);
c)The husband has the power under the trust deed as trustee to “settle the whole or any part of the capital of the trust upon any beneficiary” (at [139]);
d)The husband’s power as trustee is subject to the consent of the guardian of Trust E. The Magistrate found that, as per the requirements of the trust deed, the husband is now also the guardian of Trust E as both his father and mother have passed away, and that he has not appointed any new guardian (at [148] – [169]); and
e)The evidence demonstrated the husband treated Property B as his own property, by exercising his powers to borrow $170,000 against the title of B Property (at [171] – [172]). The husband’s evidence accounted for some, but not all, of the transactions related to this borrowing, and the husband did not tender financial statements for the trust after 30 June 2004 “or thereabouts” (at [180]).
It is worth noting that with respect to the appointment of a new guardian, the husband’s mother died sometime in 2011. The wife commenced the proceedings on 24 September 2010, so at that time the husband’s mother was guardian of Trust E. The Magistrate observed:
156From the outset, it was clearly a part of the [wife]’s case that [Property B] was the property of the [husband] and that she was making a claim to a share therein.
157Equally clear is that from the outset the [husband]’s case was that [Property B] was not his property and was not an asset which could be the subject of any claim by the [wife].
158In those circumstances, it was somewhat troubling to hear the [husband] say that he had received advice from the family lawyers formerly representing him regarding the possibility of him appointing someone else to be guardian and appointor. That is to say, the [husband] conceded, as he had to, that the effect of removing himself as appointor and guardian would mean that he could argue that he had no power to settle [Property B] upon himself because that would require the consent of the guardian in circumstances where such consent would be unlikely to be given.
Trust D
On 11 November 1992 the husband was appointed by deed the trustee of Trust D, and his father appointed as both guardian and appointor. It was common ground between the parties that the capital of Trust D had been distributed, with the husband taking no share (at [204]).
Evidence tendered as Exhibit 1 recorded the wife was owed $49,997 from Trust D. The husband offered a cash payment to the wife to extinguish this loan. The Magistrate recorded that the payment had been made on the second day of the trial (at [211]).
Superannuation
The wife had interests in two separate superannuation funds, with a combined value of $27,815.
The husband had interests in four superannuation funds, with a combined value of $110,782.
Conclusion as to property interests
The Magistrate summarised the property interests of the parties in the following table:
224So, as a result of the above findings and determinations, the property interests of the parties may be summarised as per the table below.
ITEM
VALUE ($)
[A Property]
(less mortgage)
net equity
610,000
(60,467)
549,533
[B Property]
(less mortgage)
net equity
1,950,000
(170,000)
1,780,000
Cash paid to [wife] to discharge of loan account with [Trust D]
49,997
[Wife]’s superannuation (two funds)
27,815
[Husband]’s superannuation (four funds)
110,782
Of some significance in this appeal, it is important to observe that the Magistrate did not set out the effect of his orders, as is done in most usual property proceedings. This failure, among other issues, including uncertainty about the percentage applied, forms the basis of the appeal.
Was it just and equitable to make an order?
After determining the property of the parties, the Magistrate turned his mind to deciding whether it would be just and equitable to make an order.
The position of both parties has been set out earlier in these reasons. Both contended it would be just and equitable to make the orders they proposed under s 79 of the Act.
The Magistrate concluded it would be just and equitable to make a property order, as the wife and husband were no longer in a relationship and there would no longer be common use of the property (at [232] – [233]). The Magistrate had regard to the matters set out under s 79(4) so far as they relate to whether there should be a settlement order at all (per Bevan).
It was accepted that the wife had made substantial contributions recognised by ss 79(4)(a), (b) and (c), and given her current financial situation, met the requirements under s 79(4)(e). It was concluded that an adjustment would be required (at [238]).
Respective contributions of each of the parties
The Magistrate set out the approach he would take to the respective contributions of the parties, determining that the superannuation should be determined separately from the other assets (at [239] – [240]). More particularly, the Magistrate found:
241As indicated to the parties during the trial, the reason the Court favours this approach is because the superannuation interests of the parties arise only by virtue of the employment each has held over a long period of time, whereas it is clear that the [husband’s] late father provided the land which now comprises the titles to [Property A] and [Property B] and also provided the investments which generated the income distributed to the [wife] by [Trust D].
242The task of assessing the respective contributions of the parties to the various assets is made difficult by reason of some important deficits in the evidence, about which more will be said below.
243Of course, in assessing the respective contributions of the parties to the acquisition of the current superannuation entitlements, the Court is mindful of the fact that whereas s 79(4)(a) and (b) contributions need to be linked to a particular asset, s 79(4)(c) contributions are to be assessed at large.
The court only had evidence of the value of the superannuation accounts as at the date of trial, and not the date of separation on 1 January 2007. The husband had been in paid employment for the duration of the marriage and after separation, while the wife has struggled with employment. As a consequence, the husband’s post separation superannuation entitlements were more substantial than that of the wife. Doing the best he could with the evidence, the Magistrate found that the total value of the superannuation should be divided 45 per cent to the wife and 55 per cent to the husband. It was noted that:
253Whilst at first blush this assessment may appear to give insufficient weight to the consideration that it has been seven years since the parties separated and the [wife] has not made any contributions which have aided the [husband] to increase his superannuation entitlement post-separation, still, it needs to be borne in mind that the [wife] made very substantial contributions over a period in excess of 25 years prior to the date of separation, including major s 79(4)(c) contributions.
The remainder of the contributions to the assets were assessed on an asset by asset basis.
The Magistrate determined that Property A was “gifted” to both the husband and the wife, and contributions to this asset should be assessed as equal.
It was concluded that it was “highly significant” that Property B was registered in only the husband’s name and only he was named as the trustee of Trust E (at [285]). The Magistrate found it was reasonable to assume that the husband’s father intended, or was at least aware of the likelihood, that the husband would be in complete control of Trust E (at [287]). The Magistrate found:
289So, in the result, it seems to the Court that the acquisition of [Property B] comes about essentially as a result of a windfall enjoyed by the [husband]. That is to say, the evidence would tend to suggest that the [husband]’s late father wanted to put the [husband] alone in sole control of [Trust E] after his own demise and the demise of his wife.
The Magistrate examined the contributions made by both parties to Property B, including direct and indirect contributions – resolving that neither party contributed in a “direct financial sense” (at [293]). A lack of evidence supporting any conservation efforts or improvements the parties might have made to Property B made it difficult for the Magistrate to make any findings pursuant to s 79(4)(a) or (b).
It was concluded that on balance, the contributions to Property B were not equal. The Magistrate resolved to assess the wife should receive 30 per cent of the value of Property B, less the $25,000 previously paid to the wife by the husband through the $170,000 mortgage over that property. This would give the wife $560,000 (at [303]).
The Magistrate found:
304The Court acknowledges that, generally, percentages are normally calculated in this context by reference to the net equity in a property, rather than to the gross value. However, the particular circumstances of this case justify, in the Court’s view, a slightly different approach.
305Perhaps it should be mentioned at this point that had the Court applied the 30% figure to the net equity in [Property B], it would almost certainly have made an adjustment in favour of the [wife] under s 75(2)(o) of the Act to reflect the fact that the [husband] has made what could only be described as a significant premature distribution of capital to himself.
306So, in conclusion, the Court finds that on the score of contributions alone, the parties should share equally in the benefits of the ownership of [Property A] and in the $49,997 paid to the [wife] during the trial, with the superannuation interests of the parties being divided in proportions of 55% / 45% favouring the [husband].
Section 75(2) factors
By reference to s 75(2)(b), the Magistrate concluded the husband was employed at the time of trial, earning approximately $1,000 gross per week and had a reasonable earning capacity. The wife was unemployed, had struggled to make ends meet and had no formal qualifications or training to assist in obtaining well paid employment. The husband was found to be in a far stronger position than the wife (at [328]).
By reference to s 75(2)(d)(i), neither of the parties had any special financial needs. Both parties were found to have the “usual suite of expenses”, with the wife finding her own accommodation and the husband being able to live at either Property A or Property B.
The wife indicated to the Magistrate she would use the money to purchase a home in the Perth metropolitan area for approximately $500,000 to $600,000 (at [332]). The Magistrate determined this was not unreasonable given the median house prices in Perth (at [333]).
The wife was in receipt of Centrelink benefits of about $310 per week, which would likely be reduced or removed once final orders were made (per s 75(2)(f)(i) of the Act).
The Magistrate found there was adequate capital available to provide a reasonable standard of living for both parties pursuant to s 75(2)(g). Although the wife did not make an application for spousal maintenance, the Magistrate regarded her contributions (per s 75(2)(j)) as being relevant and found those contributions enabled the husband to earn and create the lifestyle they had together (at [338]). The Magistrate also regarded the duration of the marriage did affect the wife’s earning capacity (per s 75(2)(k)).
The Magistrate finally turned to the catch-all provision found in s 75(2)(o) of the Act. Paragraphs [342] and [343] will be repeated in full, however as amended by the orders dated 27 June 2014:
342As alluded to above, had the Court found that on the score of contributions alone the [wife] was entitled to a [30]% stake in only the net equity in [Property B], then it would have almost certainly made an adjustment in favour of the [wife] to take into account the fact that the [husband] has reduced the equity in [Property B] by $170,000, all of which has been used at his direction, except for the $25,000 paid to the [wife]. The [husband] has paid his own legal costs. The [wife] is yet to do so.
343However, given that the Court has applied the [30]% figure to the gross value of [Property B], no adjustment will be made to take into account the fact that the [husband] has, in effect, already had a substantial financial benefit from his control of [Property B].
Conclusions and orders made
The Magistrate concluded there was no requirement for the court to make further adjustment from the percentages he found appropriate in relation to each of the properties. The wife would receive the superannuation benefits to the value of 45 per cent of $138,597, half of the loan account with Trust D, half the net proceeds of sale of Property A and a further $560,000 in lieu of any order which would alter the husband’s interest in Property B.
The Appeal
At the outset, it is important to note a number of concessions made during the appeal hearing by counsel for the husband:
a)That the appeal does not challenge the discretion of the Magistrate to treat the assets on an asset by asset basis, rather than a global basis;
b)That it was open to the Magistrate to include the trust property in the pool of assets for division; and
c)That although it was contended the Magistrate awarded the wife more than she asked in her application (counsel asserts the wife was seeking 33.5 per cent of a larger pool including the trust property, whereas she achieved a result of 39 per cent on a global basis) he was not suggesting the Magistrate could not order more than was sought.
Counsel for the husband deviated from the grounds set out in the notice of appeal. The written submissions were framed under the headings of “due process” and “exercise of discretion”. This was, to some extent, further departed from during the appeal hearing. The grounds of appeal contained in the notice of appeal will not be referred to directly, rather the focus of these reasons will be on those issues raised in the appeal hearing.
That the result was unjust
It is the husband’s submission that the wife received an overall percentage of 39 per cent and that such sum was outside the range of orders a proper exercise of discretion would allow. Counsel for the husband acknowledged the contributions of the wife, but argued those of the husband far outweighed hers. In particular, it was submitted that greater weight should be afforded to the gift of the property and Trust D especially considering the relative value of the properties. It was suggested the range of 10 to 15 per cent of the value of Property B would have been more appropriate.
These submissions have validity.
First, the original orders made were unclear and contained errors. They provided the wife receive $510,000 instead of $560,000. Further, having found the wife should receive 30 per cent of Property B, this was later expressed as 35 per cent in [342] and [343]. Both errors were amended by the further orders of the Magistrate on 27 June 2014.
Significantly, although the Magistrate compiled a table of the property interests of the parties at [224], he did not complete the table with the final dollar values. Further, the Magistrate did not explain in his reasons the dollar effect of the wife’s application, or demonstrate in dollar value the effect of the orders he proposed to make.
To demonstrate how this approach led the Magistrate into error ultimately, it is useful to return to consider what each of the parties sought. Having regard to [47] of the reasons, it is clear that the wife originally sought $827,348 in dollar value, comprised in the following manner:
ITEM
VALUE ($)
Property A (net equity)
$549,533
Cash payment
$250,000
Wife’s superannuation (two funds)
$27,815
Total
$827,348
The wife succeeded in having Property B included as an asset, making the total property pool $2,518,127. Therefore, her proposed orders would see the wife retain 32.9 per cent of the pool excluding that asset.
The husband sought orders to provide the wife with the following:
ITEM
VALUE ($)
Cash payment to [wife] to discharge of loan account with Trust D
$49,997
Property A (half of proceeds of sale)
$274,766
Superannuation
$69,298
Total
$394,061
The husband sought to exclude Property B as an asset, making the total property pool $738,127. If he had succeeded in this, the wife would have retained 53.4 per cent of the total property pool.
The pool of assets is as follows:
ITEM
VALUE ($)
Property A (net equity)
$549,533
Property B (net equity)
$1,780,000
Cash paid to wife to discharge loan account with Trust D
$49,997
Wife’s superannuation (two funds)
$27,815
Husband’s superannuation (four funds)
$110,782
Total
$2,518,127
As a result of the orders the wife would receive:
ITEM
VALUE ($)
Half of proceeds of sale of Property A (after allowing for the $49,997 already received)
$249,768
Cash paid to wife to discharge loan account with Trust D
$49,997
Cash payment (being 30 per cent of the value of Property B less $25,000 received by the wife from the $170,000 loan secured against Property B)
$560,000
Superannuation (on 45/55 split favouring the husband)
$62,369
Total
$922,134
It is therefore clear the wife would receive 36.6 per cent of the total property pool. To the extent this is of significance, it can be seen to be 3.7 per cent and $94,786 more than her application. Counsel for the husband conceded that it was not part of his case that the Magistrate had an obligation to advise the parties that the result may be different from that sought.
Despite this concession, in assessing the property of the parties on an asset by asset basis, and in making no comparison with the conclusion reached as against the orders sought, the Magistrate may have fallen into error by not alerting the husband to this possible outcome.
Given the errors in the judgment, and that the calculations were not clearly set out, it cannot be known what the Magistrate intended to order the wife should receive. The amounts are not insignificant, in what is a relatively modest property pool, the origins of which are largely from the husband’s father.
In any event, there has been an error; the property orders were not just and equitable. In coming to the conclusions he did, and in making the orders, the Magistrate did not properly consider the parties’ relative contributions.
The balance of the issues raised on appeal must also be considered.
That the Magistrate failed to explain to the husband his enquiry into whether Property B should be regarded as the husband’s property or trust-property
As previously explained, counsel for the husband on appeal categorised his arguments into two main issues, comprising of “due process” and “exercise of discretion”. The gravamen of the husband’s complaint is the Magistrate should have told him he would be deciding whether Property B should be regarded as the husband’s property, and not trust property. More particularly, whether this property would be included in the pool of assets to be divided.
It was submitted the husband was excluded from making specific submissions about the status of Property B and that the decision to assess the contributions on an asset by asset basis was not properly explained to the husband during the proceedings. Counsel for the husband submitted in oral submissions that the Magistrate failed to observe any of the guidelines set out in Re F: Litigants in Person Guidelines (2001) FLC 93-072.
In particular, counsel for the husband submitted on appeal:
MR PAGE:…But there was never any explanation made to the husband that an enquiry – that having accepted that [Property B] was property of the trust, that there was then to be an enquiry as to whether it was, in fact, his alter ego sufficient to include it in the asset pool but leaving it as property of the trust. And it can be seen from the statements the husband made at the end. … He just simply said always, “This is property given to me by my father. I will hold it in trust for my sons. I don’t care what else happens, that will be what I will do. I will not sell it and I will not deal with it other than in the interests of the children.” And indeed when you have a look at the way that he used the monies that he borrowed, you will see that they were primarily spent on the maintenance, advancement and education of the children, and in particular in relation to the illness that was suffered by one of the children who later died. So that there was never an explanation given to him that the manner in which the court was addressing questions to him was intended to notionally add to the pool the property which the judge found was property sorry – which, I’m sorry, the magistrate found was property of the trust. Never was it - - -
(Transcript, 30 October 2014, p 5 l 17 – 34)
MR PAGE:Well, it’s not a problem, your Honour, because it’s a process. It’s due process. It’s not a problem, in my submission. It’s a problem of letting people understand as to what that means. Here’s the words “en globo” and here’s the words “asset-by-asset approach”. He needs to understand firstly why that’s being done or being considered and then what the consequence to him is of that being done. That is, he needs to make separate submissions in relation to each of those categories. And you can see the absolutely [sic] lack of understanding that he had in relation to it when you come to the end. When he’s asked to make his submissions, he just simply says, “I’ve told you half [Property A], half the superannuation and that’s it.”
(Transcript, 30 October 2014, p 9 l 23 – 30)
The husband was a self-represented litigant during the trial. This court appreciates the difficulties for a litigant appearing without representation. However, a review of the transcripts and reasons reveal that this ground of appeal must fail. The husband’s case at all times was that Property B should not be regarded as an asset. The husband knew that the wife’s case at all times was that Property B should be regarded as an asset and included in the property pool.
Counsel for the wife, in written submissions, noted that the husband had the opportunity, through submissions and cross-examination, to adduce evidence and challenge the wife’s position regarding Property B. He chose not to do so, nor did he choose to call any witnesses supporting his position that Property B was only to be held on trust for their children. The Magistrate remarked:
160The [husband] is clearly an intelligent person and it seemed to the Court that he well understood that one of the effects of removing himself as guardian of the trust would be to defeat, or substantially defeat, the claims of the [wife] to a share in [Property B].
There is no basis to this ground of appeal.
That the Magistrate failed to explain to the husband the division of superannuation
Similar to the complaint raised above, the husband further complains that the Magistrate did not explain that he would consider contributions to the superannuation, particularly contributions made after the separation of the parties.
This ground could not possibly be made out. The husband was given the benefit of the contributions he made after separation and the total funds were divided in his favour. He has been unable to establish, had any further explanation been given to the husband, that the result would have been any different. In any event, the Magistrate appreciated the difficulty that there was a paucity of evidence on that issue.
That the Magistrate erred in failing to consider contributions to Property A
The husband argued that the contributions to Property A were not adequately considered, and that instead the Magistrate simply relied on the husband’s case, namely that the wife should have half of Property A.
There is no merit in this ground of appeal. This complaint must be taken in context, and in particular the Magistrate identified he could not hold the husband to his proposals because they excluded Property B:
HIS HONOUR: And there’s a couple of complications. We started with the superannuation: there’s a complication that leaps out immediately, and that’s this. Now, I’m not necessarily going to hold the [husband] to his offer to split the superannuation entitlements equally, because he has made that offer on the assumption that the court is going to find that [Property B] is excluded from the property pool.
…
HIS HONOUR: So it wouldn’t be fair to pick and choose elements of the [husband]’s proposition to the court, and the same, really, with [Property B].
The Magistrate properly assessed the significant contributions of the wife. Although not expressly set out in the reasons, the Magistrate clearly gave weight to the wife’s evidence in her affidavit filed 21 October 2013, where she describes looking after the family and the family home, in addition to assisting on the farm in duties such as fruit picking, pruning, rounding up sheep and classing and preparing wool. The husband conceded these contributions in his affidavit filed 24 February 2014 (at [19], [23] – [24], [28] – [29]).
There is no merit in the submissions in this respect.
That the Magistrate erred in not taking the husband’s evidence into account
Counsel for the husband contended that the Magistrate failed to take into account the husband’s intention to hold his interest in Property B on trust for the children.
This ground has no merit. The Magistrate was aware of the husband’s position:
78The [husband’s] case is that [Property B] should not be considered to be his property and that he holds the same as bare trustee for the benefit of the four children of the marriage. The [husband] described himself as simply the “minder” or “keeper” of [Property B].
The husband, on his own evidence, failed to convince the court of this position, and the Magistrate expressly rejected his argument (at [170]). In any event, the wife was also a beneficiary of Trust E, and the significant proportion of the property still remains for the beneficiaries even if it was the husband’s wish to hold it for the children.
Conclusion
Having regard to the contributions made by both the husband and the wife, in particular the property described as Property B, it is clear that an error has been made and it would be appropriate to re-exercise the discretion of the court.
Re-Exercise of Discretion
The asset by asset approach can be justified in the unusual circumstances of this case. There is no reason to interfere with the decision of the Magistrate for the wife to receive half of the proceeds of Property A (after allowing for the $49,997 already received). There is no reason to depart from the decision of the Magistrate that the superannuation should be divided in proportions, 55/45 in favour of the husband.
It must be recalled that Property B formed part of a parcel of land originally held by the husband’s father. Although the subject of dispute and ultimately found that it should be included as property of the husband, it is clear that Property B was meant to be for the benefit of the family in one way or another. There was no evidence that either party made a direct contribution to Property B, that property should be regarded as a contribution of the husband (Gosper & Gosper (1987) FLC 91-818 and Kessey & Kessey (1994) FLC 92-495, particularly at 81,150).
Additionally, some regard must be had to the significant difference in value between Property B and Property A. It is for these reasons that instead of the wife receiving 30 per cent of the gross value of Property B (after deducting the $25,000 already received), I consider she should receive 20 per cent of the gross value of Property B (less the $25,000), which would provide her with a cash adjustment of $365,000 instead of $560,000 as previously ordered.
It is necessary to then re-consider the matters in s 75(2) for any further adjustment. Notwithstanding the wife’s financial situation, in particular her limited ability to earn income, there should not be any further adjustment in these circumstances for the reasons given by the Magistrate.
As a result of this the wife would receive or retain the assets as set out in the table below:
ITEM
VALUE ($)
Half of net proceeds of sale of Property A after allowing for the $49,997 already received
$249,769
Cash payment (being 20 per cent of the value of Property B after deducting the $25,000 already received)
$365,000
Benefit of superannuation splitting order to bring about 55/45 split of superannuation in favour of the husband
$34,554
Wife’s existing superannuation
$27,815
Cash already paid to the wife
$49,997
Total
$727,135
To bring about this result, paragraph 5 of the orders would require amendment to substitute “$365,000” for “$560,000”. No amendment is required to any of the other orders.
As a result of this re-exercise, the husband would therefore receive the balance of the property pool.
Costs
At the conclusion of the appeal, we asked the parties for submissions on costs. The legislation provides that each party generally bear their own costs in proceedings under the Act subject to other considerations (per s 117(1)).
Counsel for the husband submitted that if the appeal were to succeed, they would seek a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) (the “Costs Act”).
Counsel for the wife submitted that if the appeal were to succeed, they would also seek a costs certificate under the Costs Act. If the appeal were to fail, counsel for the wife sought an order that the husband pay the costs of the wife.
In my view, there has been an error of law, and the appeal should be allowed.
Section 117(2) of the Act allows this court to make such order for costs as considered appropriate, and s 117(2A) sets out a number of factors to which the court must have regard when considered proposed costs orders. In my view neither party should pay the costs of the other.
Thackray J
I have had the advantage of reading the draft judgment of May J, but I respectfully do not agree that the appeal should be allowed.
The grounds of appeal
The appellant’s Summary of Argument failed to comply with r 22.22 of the Family Law Rules 2004 (Cth), in that it failed to “set out each ground of appeal and, for each ground of appeal, a statement of the arguments setting out of the points of law or fact and the authorities relied on”. Instead, the Summary of Argument attacked the Magistrate’s decision on two broad fronts. The first asserted failure to follow “due process”. The second asserted that “the exercise of discretion ... was outside a reasonable range”.
Senior counsel for the husband made no reference to the specific grounds of appeal in his oral submissions, but nevertheless concluded his oral argument by saying “the other grounds really speak for themselves”. In the absence of written submissions and oral argument, the grounds do not “speak for themselves”, and I propose to treat Grounds 1 and 2 (adequacy of reasons) and Ground 6 (failure to have regard to third parties) as having been abandoned.
Grounds 3, 4 and 5 are therefore the only grounds I propose to discuss. It will be convenient to deal with them in reverse order as, in my view, only Ground 3 raises a significant issue.
Ground 5 – Procedural fairness
By this ground it was asserted:
That the Trial Judge erred in failing to provide the Appellant procedural fairness, in that he failed to provide to the Appellant any guidance as to:
(a)the concept of an asset by asset approach to the alteration of property interests; and
(b)the concept of an investigation into the possible inclusion of trust property in assessment of the property and its value and particularly some indication of the evidence necessary to consider such inclusion.
In disposing of Ground 5(a), I agree with the views expressed by May J, but emphasise that the husband was given an opportunity at trial to reply to the wife’s submissions (transcript, 26 February 2014, p 44), including those made after the Magistrate noted that he could adopt either the “asset-by-asset” approach or a “global” approach (transcript, 26 February 2014, p 17 et seq).
Whether a judge elects to adopt an asset-by-asset or global approach is essentially a matter of convenience. The determination of which approach is more convenient will depend on the circumstances of the case: Norbis v Norbis (1986) 161 CLR 513 at 523. In some matters, it will only be after the evidence closes that the judge can decide whether it will be more convenient to adopt one approach in preference to the other, or a combination of both.
Nothing advanced by counsel for the husband persuaded me that there might have been a different outcome had the Magistrate attempted to explain the different approaches to the husband. The evidence to be adduced and the lines of questioning to be pursued would have been the same regardless of which was adopted. Indeed, his Honour only raised the question of the preferable approach after the evidence was completed.
The husband, who was found to be “clearly an intelligent person” (at [160]), did not indicate that he needed any “guidance” about the topic, and chose not to make any submissions on the preferred approach. Instead, his submissions proceeded on the assumption that there should be an asset-by-asset approach.
Further, notwithstanding that Ground 1 complained about the adequacy of the Magistrate’s reasons for adopting the asset-by-asset approach, when we asked counsel for the husband whether we should maintain that approach if we were to re-exercise his Honour’s discretion, counsel responded “we haven’t challenged it” (appeal transcript, p 28). Absent any challenge to the approach adopted by the Magistrate, I have difficulty comprehending how it can be reasonably asserted that his Honour erred in failing to explain that approach.
In agreeing with May J that Ground 5(b) lacks merit, I note that counsel for the husband acknowledged in his Summary of Argument that the husband “does not take issue with the determination by the court that the [trust] was [the husband’s] alter ego”. Once that concession was made, the “procedural fairness” complaint in the second limb of this ground became unsustainable.
Ground 4 – Exercise of discretion regarding superannuation
Ground 4 asserts that the decision to divide the superannuation 55:45 in favour of the husband was “outside the reasonable range of adjustment”. If the appeal is allowed, the husband says that the superannuation should be divided in proportions 75:25 in his favour. The difference amounts to about $28,000 in an asset pool of roughly $2.5 million.
At trial, the husband proposed that the superannuation should be divided equally. Accordingly, the order he now appeals was more favourable to him than what he actually sought. However, the Magistrate did say during the hearing (transcript, 26 February 2014, p 18):
I’m not necessarily going to hold the [husband] to his offer to split the superannuation entitlements equally, because he has made that offer on the assumption that the court is going to find that [Property B] is excluded from the property pool.
His Honour did not “hold” the husband to his offer, and addressed the contributions to the superannuation as a discrete issue in his reasons (at [244] – [254]). His Honour pointed out at [247] that there was no evidence of the value of the superannuation at separation, and said that it was therefore impossible to determine the extent to which the entitlements had increased in the ensuing seven years. His Honour therefore, quite correctly, found at [251] that “in the absence of evidence regarding of the value of the respective superannuation entitlements as at the date of separation, the Court is left to make what must appear to be a fairly non-mathematically precise assessment”.
The husband’s Summary of Argument contained no criticism of the Magistrate’s reasons concerning contributions to superannuation. Furthermore, apart from some oblique remarks, nothing was advanced in the husband’s oral argument to suggest that the decision about the superannuation was anything other than an entirely appropriate exercise of discretion, albeit made on what the Magistrate properly found to be an unsatisfactory evidentiary foundation.
The husband’s failure to adduce evidence of the value of the superannuation at separation was, in my view, fatal to the argument that the Magistrate failed to place sufficient weight on the husband’s post-separation contributions to superannuation. While counsel for the husband, in a throwaway line, also asserted failure by the Magistrate to take into account superannuation contributions made by the husband prior to the marriage, we were not taken to any part of the record to establish that such contributions had been made. I note, in any event, that the parties were married more than 30 years before trial, when the husband was just 24 years of age.
I therefore agree with May J that there is no merit in this ground.
Ground 3 – Exercise of discretion regarding Property B
As has been explained in the reasons of May J, the Magistrate found that the wife should receive 30 per cent of the value of Property B (less a sum of $25,000 that the wife had already received). Ground 3 asserts that this was “outside a reasonable range of adjustment”.
Importantly, no complaint has been made in this appeal about the finding that the parties’ contributions to Property A were equal. Apart from his superannuation complaint, the husband challenges only Order 5, which requires him to pay the wife $560,000 on account of what the Magistrate found to be her 30 per cent interest in Property B.
The Notice of Appeal proposes that Order 5 simply be discharged, leaving the wife with nothing on account of Property B. Notwithstanding this was the relief sought, counsel for the husband accepted that the wife had made contributions to Property B, although he vacillated in the course of argument about the appropriate quantification of those contributions.
Counsel for the husband initially submitted that the Magistrate should have assessed the wife’s contributions to Property B at “around 10 or 15 per cent” (appeal transcript, p 20). However, later in his argument he twice submitted that “15 to 20 per cent” was “more appropriate” (appeal transcript, pp 23 and 26), before then agreeing with a proposition from the bench that his proposal was that the wife would receive 10 to 15 per cent of the gross value of Property B (appeal transcript, pp 26 and 28).
The issue we must now decide is whether an order giving the wife 30 per cent of the value of Property B (which was worth $1,950,000) was outside the range in circumstances where it is conceded that 15 per cent (and possibly as much as 20 per cent) was within the range. Although the difference does not appear great in percentage terms, in dollar terms the differential between receiving 15 per cent as opposed to 30 per cent of the value of Property B is $292,500.
Did the wife receive more than she sought?
I will firstly address the submission that the wife received more than she sought at trial. In advancing this argument, counsel for the husband claimed that the relief outlined in the wife’s Papers for the Judge constituted a claim for 33.5 per cent of an asset pool of $2,688,000, whereas the wife ended up receiving 39 per cent of the pool as found by the Magistrate. Counsel for the husband calculated that the wife received $147,846 more than she had sought. (We were not provided with the Papers for the Judge, so our knowledge of their contents is restricted to the Magistrate’s recitation of the orders proposed.)
Counsel for the husband conceded that it was open to the Magistrate to award the wife more than she sought, and accepted that there was no obligation on the Magistrate to give any notice of his intention to do so. However, he argued that the fact the wife had received more than she had sought provided support for his claim that the outcome was “outside the range”.
Counsel for the wife disputed that the wife had received “considerably more” than she had sought. He calculated that the relief outlined in the wife’s Papers for the Judge would have resulted in her receiving assets to a value of approximately $828,000 (whereas she ended up with $912,134, after allowing for her half share of the $20,000 which the Magistrate estimated would be the costs of selling Property A (at [349])).
In fact, examination of the orders sought by the wife reveals that she proposed that if the husband failed to pay the monetary sum which she sought, then Property B be sold and she receive $50,000 more from the proceeds than the monetary sum which was her primary claim. On that scenario, the wife would have ended up with a settlement worth $877,348.
Furthermore, counsel for the wife submitted that when the wife formulated the proposed orders, she did not know the value of the husband’s superannuation (ultimately found to be $110,782) and she was unaware of the $49,997 loan account mentioned in the decision of May J. These propositions are borne out by reference to the Appeal Books, which reveal that:
d)In her trial affidavit sworn 21 October 2013, the wife did not disclose the loan account as an asset, and complained that she did not know the value of the husband’s superannuation entitlements, although she estimated them to be worth $63,000 (AB 103, 104).
e)The husband did not file and serve his trial affidavit until the day before the trial, and did not file a Financial Statement (AB 284; transcript, 25 February 2015, p 3).
f)The husband’s trial affidavit revealed that: “There is about $49,000 owing to [the wife] in the accounts of the trust. That money is held by me in a bank account on trust for [the wife]” (AB 291).
g)The husband’s trial affidavit disclosed three superannuation policies worth $82,115 (AB 295), whereas the trial judge found that the husband had four superannuation policies worth a total of $110,782.
Although the wife’s Papers for the Judge were handed up at the start of the trial (after the wife’s solicitors had received the husband’s trial affidavit), there is no reason to doubt counsel’s submission that the relief sought in the Papers had been formulated in ignorance of the information contained in the affidavit.
Although the Magistrate did not mention it in his reasons, and although we were not taken to it during argument, the transcript reveals that counsel for the wife made this submission in his opening address (transcript, 25 February 2014, p 17; emphasis added):
...And 40 per cent of the net – the net value of the pool, as we see it, is – I may have given you this figure, but is – well, it’s the – it’s in the asset and liability schedule. So a little over 2.6 million. And 40 per cent of that would be $1,055,182 all up and 45 per cent would be 1,187,079.75. That then is an indication of the sort of division that we’re going to be submitting would be appropriate.
In my view, this extract puts to rest the assertion that the wife obtained more than she sought. Although counsel for the wife’s opening address proceeded on a different basis than that foreshadowed in the Papers for the Judge, it was not surprising that the wife’s case was formulated “on the run”, given the very late filing of the husband’s trial affidavit. Indeed, as his Honour pointed out to the husband, “You might consider yourself a little fortunate that the court is going to allow [the affidavit] in and allow you to participate in the trial to the fullest extent” (transcript, 25 February 2014, p 8). His Honour went on to say that if the wife sought an adjournment to allow her to properly prepare for trial, an adjournment was likely to be granted, with costs. The matter ultimately only proceeded because the wife elected not to seek an adjournment.
For these reasons, I conclude that the orders made by the Magistrate were not as favourable to the wife as the outcome sought by her at trial.
Imperfections in the reasons and original orders
I turn next to consider some imperfections in the Magistrate’s reasons, to which attention was drawn by the bench during argument. Counsel for the wife properly conceded these as appears in this extract (appeal transcript, p 49):
MR WALKER: No. No, I accept that. Your Honour, what I was going to submit is that the judgment as a whole is comprehensive, well-structured and well written and yet it is imperfect. It contains the anomalies or errors to which attention has just been drawn. They have to be those anomalies and errors, in my submission, put into the context of the length and breadth of the matters covered in the judgment and the fair degree of complexity within the case.
THACKRAY J: And the expedition with which the reasons were delivered ‑ ‑ ‑
MR WALKER: Absolutely.
THACKRAY J: ‑ ‑ ‑ compared to some other matters before the court this week.
Although not raised by counsel for the husband as a basis for allowing the appeal, the imperfections in the otherwise thorough, thoughtful and prompt reasons give rise to the question whether his Honour may have overlooked the warning given by Nygh J in G and G (1984) FLC 91-582 (and cited in the High Court in Norbis) that in adopting an asset-by-asset approach, a judge should be careful not to “mistake the trees for the forest, i.e. add up their individual items without standing back at the end to review the overall result” (at 79,697).
Indeed, as May J has demonstrated, the imperfections in the reasons (and the orders originally made by the Magistrate) give rise to some concern as to whether his Honour appreciated the total amount the wife was receiving as a result of his findings concerning the individual assets.
It should be acknowledged at the outset that the Magistrate later rectified two paragraphs of his reasons and also corrected his orders pursuant to the “slip rule”. However, I accept that the nature of the errors was such that the original reasons and orders should still be examined, along with all the other material, in deciding whether his Honour’s discretion miscarried.
The reasons that were rectified were [342] and [343], which were inconsistent with the finding at [300] that “on the score of contributions alone, the [wife] is entitled to a payment the equivalent of 30% of the value of [Property B]”. At [342] and [343], when discussing whether there should be an adjustment for the factors in s 75(2) of the Act, his Honour said (emphasis added):
342 As alluded to above, had the Court found that on the score of contributions alone the [wife] was entitled to a 35% stake in only the net equity in [Property B], then it would have almost certainly made an adjustment in favour of the [wife] to take into account the fact that the [husband] has reduced the equity in [Property B] by $170,000, all of which has been used at his discretion, except for the $25,000 paid to the [wife]. The [husband] has paid his own legal costs. The [wife] is yet to do so.
343 However, given that the Court has applied the 35% figure to the gross value of [Property B], no adjustment will be made to take into account the fact that the [husband] has, in effect, already had a substantial financial benefit from his control of [Property B].
The rectification of these paragraphs was made by an order on 24 June 2014, which substituted “30%” for “35%”. I note that this occurred after the husband had filed an application for leave to appeal out of time, which explains why the Magistrate, at the same time, stayed the operation of his orders.
These two mistakes were either typographical/transcription errors or some indication that the Magistrate, at one point, proposed to award the wife 35 per cent of Property B. Whatever the origin of the error, it could only have been the wife who was disadvantaged, since the fact she was receiving a large payment for her interest in Property B formed part of his Honour’s reasoning in determining that there should be no s 75(2) adjustment in her favour, notwithstanding his Honour’s finding at [345] that “the majority of the individual s 75(2) considerations favour the case of the [wife]”.
The orders of 24 June 2014 also rectified an error in Order 5. I have set out below the terms of Order 5 in its original form, and I have also replicated Order 1, to which reference was made in the original Order 5. The words that I have bolded were deleted by the orders made on 24 June 2014:
1. The parties sell the property situated at [Property A], for the best price reasonably obtainable and the net proceeds of sale thereof be disbursed in the following manner:-
(a) in payment to the [husband] of the sum of $49,997; and then
(b) in equal division of the balance.
5. Within 28 days of the date of settlement of the sale of the above property, the [husband] pay to the [wife] the sum of money calculated to be $560,000 less the sum payable to the [husband] pursuant to the provisions of paragraph 1 of these orders.
The property at Property A was found to have a net value of $549,533, and the Magistrate estimated the costs of sale at around $20,000. On this basis:
a)The effect of Order 1 was that from the sale of Property A, the husband would receive $289,765 and the wife would receive $239,768.
b)The arguable effect of the original Order 5 was that the wife would receive a further $270,235 (i.e. $560,000 - $289,765), since the expression “the sum payable to the [husband] pursuant to the provisions of paragraph 1 of these orders” could be seen as including all of the money payable to the husband pursuant to Order 1. (An alternative interpretation is that his Honour was referring only to the amount payable pursuant to Order 1(a), in which case the wife would have received $510,003 (i.e. $560,000 - $49,997)).
The first of the two possible interpretations of Order 5 is consistent with the reasons at [377], which appears under the heading “Concluding observations”:
377The [husband] will then have to make a payment to the [wife] calculated to be $560,000, less the sum representing the [husband’s] stake in the net proceeds of sale of [Property A], as adjusted.
However, the original Order 5 was inconsistent with [349] – [351], where his Honour said this in discussing the s 75(2) adjustment:
349 The [wife] will receive half of the net proceeds of sale of [Property A]. Allowing, say, $20,000 for selling expenses, each of the parties should receive about $265,000 from the sale of [Property A], before the necessary adjustment for the loan account.
350 Then there is [Property B] to consider and the [wife] is due to receive a further $560,000 in lieu of any order altering the [husband’s] interest in [Property B].
351 Thus, the [wife] should have sufficient capital to acquire her own home on an unencumbered basis. She should still have some cash available to her, even after payment of her legal costs.
In appreciating the effect of what the Magistrate said at [351], it is crucial to understand that his Honour had earlier recorded:
332 The [wife] told the Court that once the proceedings are finalised and the Court’s orders are implemented she would like to buy her own home. She said that she would like to live in the [Perth Metropolitan] area and that she would expect to spend somewhere between $500,000 and $600,000 to acquire her own home in that suburb.
Accordingly, notwithstanding what was said at [377], it is clear that his Honour did not intend that the payment to the wife pursuant to the original Order 5 would be reduced by the full amount of the husband’s share of the proceeds of Property A, since otherwise the wife would not have sufficient funds to buy a home at a cost of “somewhere between $500,000 and $600,000”, as well as having money to pay her legal costs, while still having “some cash”. (His Honour found at [355] that the wife “looks like being liable to pay something like another $70,000 or so” in legal fees.)
With respect, the doubts about his Honour’s reasoning and his intentions in making his orders would have been less likely to have arisen had he:
a)identified in percentage and/or dollar terms the overall effect of the relief sought by each party;
b)provided a total of the net value of the entire asset pool;
c)crosschecked his asset-by-asset approach by identifying the overall effect of his proposed orders in percentage and dollar terms; and
d)set out in table form the distribution of assets pursuant to his orders.
Had these steps been taken, it is also possible his Honour would have identified the inconsistency between parts of his reasons and the original orders. Ultimately, however, the inconsistency was resolved in a manner provided for by the Rules, and no issue is taken in this appeal about how this was achieved.
In my view, there is no doubt that the Magistrate appreciated the full magnitude of the settlement the wife was to receive under his amended orders, and I also consider that those orders were consistent with, and supported by, the reasons read as a whole. The fact that the Magistrate fully appreciated how much the wife was to receive in total can be most clearly seen at [351], where his Honour recorded that the wife would be receiving enough to acquire an unencumbered home, discharge her legal fees and have cash to spare.
I am therefore not persuaded that there is a basis for interfering with the orders merely because of some infelicity of expression in a few paragraphs of his Honour’s reasons and because of the errors in the orders originally pronounced.
One of the major challenges facing judges in this jurisdiction is to provide a result in a timely fashion, so as to allow the parties to get on with their lives. Regrettably, due to the workload of the Full Court, we have not risen to that challenge ourselves. The Magistrate is to be commended for the speed with which he provided a comprehensive (largely unchallenged) judgment in a quite difficult matter. Some latitude is afforded to judges who deliver judgments ex tempore, and I consider not dissimilar latitude should be given to those who produce their judgments with expedition.
Was the result “outside the range”?
I now turn to what was the gravamen of the husband’s argument on appeal, namely that the overall result was “outside the range”.
It was not suggested that the Magistrate acted on a wrong principle, permitted irrelevant matters to affect his decision, mistook the facts, or failed to take into account a mandatory relevant consideration. Instead, it was primarily argued that “the 30 per cent assessment of contributions by the wife ... was too high” (appeal transcript, p 20).
The principles concerning the restraint required by an appellate court in dealing with complaints about the exercise of judicial discretion are so well known as to not require restatement. They were, however, neatly explained by Stephen J in Gronow v Gronow (1979) 144 CLR 513 at 519:
The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge.
In determining whether the order was “plainly wrong”, it is also useful to recall the views expressed by Kirby J in CDJ v VAJ (1998) 197 CLR 172 at 231:
The reference to “plainly wrong” is designed to remind the appellate court of the need to approach an appeal with much caution in a case where an error of principle cannot be clearly identified.
Such reasons for appellate restraint … have particular relevance to appeals within, and from, the Family Court of Australia. This is because of the functions and purposes of that Court and the difficult and evaluative decisions which it often has to make. The peculiar nature of decisions relating to the intensely personal questions of the division of the property of parties to a failed marriage and the welfare of their children makes it essential that those who decide appeals respect the onerous responsibilities of those whose decisions they review. They need to recognise that it is of the very nature of such decisions, including those relating to the residence of children, that any two decision-makers may, with complete integrity and upon the same material, often come to differing conclusions.
When the submissions of the husband are boiled down, they amount to little more than an assertion that the Magistrate placed insufficient weight on the fact that the parties received both Property A and Property B because of the generosity of the husband’s father. However, there can be no doubt that the Magistrate accepted and placed weight on the fact that the parties (or the trust controlled by husband) received the property from the husband’s father. This can be seen in the following paragraphs of his Honour’s reasons:
241 As indicated to the parties during the trial, the reason the Court favours this approach is because the superannuation interests of the parties arise only by virtue of the employment each has held over a long period of time, whereas it is clear that the [husband’s] late father provided the land which now comprises the titles to [Property A] and [Property B] and also provided the investments which generated the income distributed to the [wife] by [Trust D].
...
257 But for the fact that the land the subject of the titles to [Property A] and [Property B] was, in effect, gifted to the [husband], or more likely, in part, gifted to both the [wife] and the [husband] ([Property A]) by the [husband’s] late father, and but for the fact that the [husband’s] late father provided the investments which generated the income the subject of the [wife’s] loan account with [Trust D], the Court would likely have found the various contributions of the parties overall to have carried equal weight.
258 The complicating factor in this case is the involvement of the [husband’s] late father in the creation of these three assets. His involvement is slightly different in each respect and that is why the Court is proposing to take an asset by asset approach, acknowledging that there is an overarching consideration to keep in mind and that is that the [wife’s] very substantial s 79(4)(c) contributions are to be assessed at large across the three different assets.
It is important to recognise that there is no challenge to the finding that it was reasonable to infer that the husband’s father intended to benefit both the wife and the husband, either by transferring Property A to them jointly or consenting to the husband vesting that property in the joint names of the husband and the wife. This appears from the following paragraphs of the reasons:
260 Whilst on the one hand, during the trial the [husband] said that the whole of the 150 acres owned by his late father was transferred to him as trustee of [Trust E], still, at paragraph 14 of his trial affidavit the [husband] says that his late father actually gifted the property the subject of the title to [Property A] to the parties jointly, with the balance then being settled on [Trust E].
261 However, as noted above, the second transfer of land document comprising part of exhibit 4 tends to support the conclusion that the land the subject of the title to [Property A] was never an asset of [Trust E].
262 On reflection, it seems to the Court that it probably matters little whether the [husband’s] late father gifted the land the subject of the title to [Property A] to the parties jointly or whether he settled such land upon the trust with the [husband] then exercising his powers as trustee to settle such land upon the parties jointly.
263 That is to say, if the [husband’s] late father gifted the 16 acres in question to the parties jointly, then it is difficult to see why the [wife’s] contribution to its acquisition should be assessed at a lower level to that of the [husband]. If the [husband’s] late father intended to make a gift to both the [wife] and the [husband] then he would have had his reasons for doing so, and, absent any evidence to the contrary, it is reasonable to infer that he wanted to benefit his daughter-in-law as much as benefit his son.
264 Again, whilst this was not an issue explored to any great depth in the trial, it may well be that the [husband’s] late father felt that both the [wife] and the [husband], by virtue of their work on the relevant property and perhaps by virtue of other matters, were deserving of the gift.
265 In the alternative, if as the [husband] suggested in the trial, the whole of the 150 acres in question was settled upon [Trust E] with the [husband] then settling 16 acres thereof on himself and the [wife] jointly, then likely he did so with the consent of his late father.
266 As noted above, the [husband’s] late father was the first guardian of [Trust E] and so any settlement of its capital upon any beneficiary would had to have occurred with his consent. So, in essence, it is reasonable to conclude that, again, it was the intention of the [husband’s] late father to benefit the [wife] herself when the sub-division was proceeding.
Similarly, there was no challenge to the finding that the contributions to the loan account were of equal value. His Honour’s reasons for so concluding are set out at [273] – [282], but I emphasise that at [275], his Honour took into account the fact that it was the husband’s father who had “alone contributed to [Trust D] the various assets which produced the income which ultimately was in part distributed to the [wife]”.
His Honour’s unchallenged findings relating to Property A and the loan account leave for consideration only his treatment of Property B. His Honour carefully considered the contributions to that property at [282] – [301], and concluded that “on the score of contributions alone”, the wife was entitled to 30 per cent of the value of the property, which he quantified at $585,000.
In arriving at his decision, his Honour took fully into account the fact that the property came under the control of the husband as a result of the “generosity” of the husband’s father (at [293]). However, his Honour also took into account, as he was required to, all of the other contributions made by the parties, including the wife’s “very significant s 79(4)(c) contributions made over a very long period of time” (at [291]).
Counsel for the husband was critical of the “conjunct between the quantitative and qualitative analysis” in the reasons (appeal transcript, p 17). My response to that argument could not improve on that delivered by Coleman J in his often cited judgment in Steinbrenner and Steinbrenner [2008] FamCAFC 193:
234Given that the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion, whether it be in the assessment of contributions in the matrimonial cause, assessment of damages in a personal injuries case, or determination of compensation in a land resumption case. In some cases, the “leap” is so great, and so unheralded by the discussion which precedes it as to render the reasoning process defective. In this Court’s view this is not such a case.
235Essentially, for the reasons which he carefully and accurately detailed by reference to the facts found by him, that, overall, the husband’s contributions vastly outweighed those of the wife, the learned Federal Magistrate grappled with the difficult question of “by how much”.
236With respect to learned Counsel for the husband, what more his Honour could constructively have added to his Reasons for Judgment is difficult to imagine. Whether or not such conclusion was reasonably open to him, the learned Federal Magistrate adequately “spelt out” why he concluded as he did. The reader is not in any real doubt as to why the wife’s contributions were assessed as they were. The Court is not persuaded that the learned Federal Magistrate’s Reasons for Judgment were inadequate.
Although it would have been open to his Honour to have concluded that greater weight should have been given to the fact that Property B came into the “pool” as a result of the generosity of the husband’s father, I am by no means persuaded that his Honour’s conclusions in relation to the overall contributions to that property were outside the range of his very wide discretion.
It should also be noted that his Honour found that the majority of the s 75(2) factors favoured the wife, but decided not to make any adjustment in her favour on account of that fact, “mainly because of the reasonably substantial size of the asset pool under consideration and to the practical results of the Court’s determinations on the subject of contributions” (at [346]).
Importantly, having held at [358] that there would be no s 75(2) adjustment in favour of the wife, his Honour went on to say:
359 However, it does need to be said that had the Court been persuaded to the view that, on the score of contributions alone, the [wife] should take a lesser stake in [Property B] and the other assets by virtue of the issue of contributions alone, then it is likely that the Court would have exercised its discretion to adjust in favour of the [wife] by virtue of the relevant [s 75(2)] matters in such a way as to have increased her entitlement to that which will be the subject of the Court’s proposed final orders.
In effect, the Magistrate was saying that whatever the wife might have lost on the contributions’ swings, she would have made up on the s 75(2) merry-go-round. Given the length of the marriage, and the parties’ ages, health and employment prospects, I consider that view was well open to his Honour.
For these reasons, I find no merit in this ground. In arriving at my decision, I have not overlooked the argument of the husband that the Magistrate placed insufficient weight on the fact that Property B was “trust property” and that the husband was under an obligation in relation to that property which he said he would honour. That proposition cannot stand with the unqualified concession of counsel for the husband that the trust was the husband’s “alter ego”.
Disposition of the appeal
For the reasons above, I consider the appeal should be dismissed. Had I been persuaded that error was established, on the re-exercise of the discretion, I would have arrived at much the same result as the Magistrate in relation to contributions; or arrived at much the same overall result by making an adjustment on account of the s 75(2) factors, which manifestly favour the wife.
Costs
The wife sought costs if the appeal was dismissed. This was not opposed. The husband should therefore pay the wife’s costs to be assessed, if not agreed.
I certify that the preceding one hundred and sixty-nine (169) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, May & Thackray JJ) delivered on 6 November 2015.
Associate:
Date: 6 November 2015
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