Banks & Minks
[2008] FamCAFC 121
•8 August 2008
FAMILY COURT OF AUSTRALIA
| BANKS & MINKS | [2008] FamCAFC 121 |
| FAMILY LAW - APPEAL FROM ORDERS OF FEDERAL MAGISTRATE – PROPERTY SETTLEMENT – Section 75(2) factors – Justice and Equity – 8 year marriage – Total net matrimonial property valued at $801,732 – Federal Magistrate quarantined various assets on the basis of those being assets acquired after separation and without contribution from the husband and therefore determined that the pool for distribution was $433,776 – Federal Magistrate assessed contributions as 100:0 in favour of the wife, finding that the husband made only minimal contributions which were negated by his conduct throughout the marriage – Federal Magistrate determined that the husband receive a s 75(2) adjustment of 5% in relation to one property only and 50% of trust monies, resulting in an approximate overall percentage division of 4.4/95.6 in favour of the wife – Appeal allowed on the basis that the Federal Magistrate erred in: failing to properly consider all relevant factors under s 75(2); failing to give adequate reasons in relation to the s 75(2) adjustment; and reaching a final result which was manifestly unjust and inequitable – Remitted for rehearing. |
| Family Law Act 1975 (Cth) |
| Bennett & Bennett (1991) FLC 92-191 House v The King (1936) 55 CLR 499 Hickey & Hickey (2003) FLC 93-143 |
| APPELLANT: | Mr Banks |
| RESPONDENT: | Ms Minks |
| FILE NUMBER: | MLM | 10182 | of | 2005 |
| APPEAL NUMBER: | SA | 84 | of | 2007 |
| DATE DELIVERED: | 8 August 2008 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Mushin J |
| HEARING DATE: | 4 February 2008 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 21 August 2007 |
| LOWER COURT MNC: | [2007] FMCAfam 624 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Combes |
| SOLICITOR FOR THE APPELLANT: | R & G Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Smith |
| SOLICITOR FOR THE RESPONDENT: | PWB Lawyers |
ORDERS
It is ordered that
The appeal of Mr Banks filed on 17 December 2007 against the orders of the Federal Magistrate’s Court made on 21 August 2007 be allowed.
The said orders be set aside.
The applications be remitted to the Federal Magistrates Court for rehearing by a Federal Magistrate other than Federal Magistrate Hartnett.
The Court grants to the appellant husband a costs certificate pursuant to the provisions of Section 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorize a payment under the Act to the appellant husband in respect of the costs incurred by the appellant husband in relation to the appeal.
The Court grants to the appellant husband a certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of such part as the Attorney-General considers appropriate of any costs incurred by the appellant husband in relation to the new trial granted by these orders.
Liberty be reserved to the respondent wife to make any application for costs.
IT IS NOTED that publication of this judgment under the pseudonym Banks & Minks is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SA 84 of 2007
File Number: MLM 10182 of 2005
| Mr Banks |
Appellant
And
| Ms Minks |
Respondent
REASONS FOR JUDGMENT
On 21 August 2007, Federal Magistrate Hartnett delivered reasons for judgment ("the judgment") and made orders (“the orders”) determining competing applications for alteration of property interests between the parties. The Husband has appealed against those orders. That appeal was heard by me sitting alone pursuant to a direction of the Chief Justice in accordance with s 94AAA(3) of the Family Law Act 1975 (Cth) ("the Act"). Both the hearing before her Honour and this appeal were conducted on behalf of the appellant husband by his litigation guardian.
The orders essentially provided for the husband to receive 5% of the value of one of the properties (namely $31,250) plus a little over $4,000 which represents an equal share of trust monies. In total, the orders settled on the husband approximately $35,500 or about 4.4% of the net assets of the parties. On appeal the husband seeks orders which would provide for a distribution to him of 25% of the total asset pool, or approximately $200,000.
BACKGROUND
At the time of the trial before the Federal Magistrate the husband was 68 years of age and the wife was 69 years of age. The parties began their relationship in 1988, temporarily separated in or about early 1991 and then married in 1991, this being a second marriage for both parties. They finally separated in 1999 and were divorced in 2006. The husband has one adult child from his first marriage and the wife has three adult children from her first marriage.
At the time of the parties’ marriage, the wife owned a property in Hobart (purchased for $180,000 with an $89,000 loan) (“the former matrimonial home”), a motor vehicle and various chattels. The husband, who was in the process of finalising property proceedings with his former wife, had cash assets of $8,000 and personal loans and other liabilities of approximately $170,000. The wife had ceased her employment as a nurse in Hobart and had moved to Sydney to live with the husband where he was working as a medical specialist.
Her Honour found that following the termination of the husband’s employment in Sydney in 1992 due to his “alcohol dependency and possibly also as a result of his bipolar disorder”, the parties changed their residence many times as the husband searched for work to enable him to earn income to service his debts and expenses. His reputation and aberrant behaviour made it difficult to obtain employment. Her Honour’s findings in relation to the parties’ movements may be summarised as follows:
·in late 1992 or early 1993 the parties moved to Hobart where the husband worked as a locum;
·the husband moved to Saudi Arabia and worked there as a specialist from August 1993 to June 1994, the wife joining him in late 1993;
·the parties returned to Hobart and in 1995 moved to South Australia where the husband again worked as a locum;
·upon completion of the husband’s contract (at some time between mid 1995 and 1996) the parties returned to Hobart where the husband first worked again as a locum and then in 1998 in a private medical practice; and
·in late 1998 the parties moved to Victoria where the husband worked as a locum before finally separating in 1999.
In late 1998 the Medical Boards of Tasmania and Victoria suspended the husband’s registration, only reinstating it on the conditions that the husband abstain from alcohol and attend upon a treating psychiatrist.
Her Honour found that the husband’s alcohol and mental health problems fuelled his mistreatment of the wife. She found:
· an assault in 1994 which resulted in a restraining order and ultimately in the husband being imprisoned;
· the forcible removal of the husband from the former matrimonial home in 1997 after which time the parties did not live together for a period of five months; and
· an assault in 1998.
Her Honour accepted the evidence of the wife’s three adult sons regarding the husband’s “drunken behaviour, angry outbursts, damage to property and perpetration of physical injury upon their mother.” There is no challenge to those findings.
The husband was admitted to various detoxification centres throughout the parties’ relationship including in 1994 and 1998.
I now summarise her Honour’s findings of the history of each party’s financial circumstances throughout the relationship. In relation to the husband such findings may be summarised as follows:
·in 1991 the wife enabled the husband to borrow $70,000 against the former matrimonial home which he applied towards his debts;
·in 1992 he received $99,350 by way of termination package at the conclusion of his employment;
·the totality of the husband’s $US92,000 tax free income for the 1993-1994 financial year earned while working in Saudi Arabia was applied to his debts, loans and drinking and gambling expenses;
·at about this time the husband received $22,000 from his stepmother’s estate;
·in 1994 the husband incurred a judgment debt of $88,353 in respect of which no payment was made;
·in mid 1994 the husband notionally retired, accessed his superannuation benefits and spent them in a manner unknown to the wife;
·as at February 1995 the husband owed approximately $48,323 to the Australian Taxation Office;
·during the 1995-1996 financial year while the husband was working in South Australia his taxable income was $141,443;
·in 1995 the husband contributed $20,000 towards the wife’s superannuation;
·between September 1992 and December 1995 the husband deposited approximately $146,000 into the wife’s bank account which was applied to mortgage payments for the former matrimonial home and living expenses;
·in 1998 the husband received a $78,500 insurance payment in relation to his health from which he paid $40,000 of the first mortgage over the former matrimonial home and the entirety of the second mortgage; and
·the husband ceased to be employed in mid 2000, and has not been in paid employment since. He is unable to undertake employment in the future.
The history of the wife’s finances, as found by her Honour, may be summarised as follows:
·until late 1993 when the wife joined the husband in Saudi Arabia, she took in a boarder at the former matrimonial home and sold chattels to meet mortgage payments and living expenses;
·the wife left her employment in order to join the husband in Saudi Arabia in late 1993 and was thereafter unable to obtain paid employment in Saudi Arabia;
·she worked as a practice manager and bookkeeper in South Australia and in the 1995-1996 financial year had a taxable income of $33,241;
·following the parties’ residence in South Australia the wife renovated the former matrimonial home, performing much of the physical labour herself and with her son, spending approximately $25,000;
·in 1998 she realised the $20,000 superannuation which the husband had paid into her account and bought an interest in a medical surgery where the husband worked before being asked to leave and where she assisted in the running of the surgery without remuneration;
·following the parties’ separation, she paid for the husband’s separate rental accommodation; and
·in 2003 she purchased the investment property with no contribution by the husband.
Following the parties’ separation the wife continued in paid employment. As already noted, the husband ceased employment in mid 2000 and was admitted to hospital on numerous occasions with a decline in his mental functioning, gait disorder and bipolar disorder. In 2001 the husband told the wife that the former matrimonial home represented her superannuation and the wife proceeded to renovate the property which she funded by increasing the mortgage. In 2002 the husband acquired a further debt of approximately $80,000 as a result of a judgment against him.
Her Honour found that the wife contributed all her income to the joint benefit of the parties in addition to making significant non-financial contributions by way of support of the husband. Her Honour held:
49.When the wife has been in receipt of income she has applied it throughout to the benefit of the parties and to their marriage. Following separation I accept that she has from time to time provided financial support to the husband. I accept that the husband had not wanted her to work and that she gave up secure and remunerative employment - remunerative in the sense that it sustained her living conditions, which were comfortable - and directed her efforts to the support of the husband in whatever location it was that the husband was able to obtain work.
50. … [The wife] provided solace and support … to [the husband] throughout their marriage and as observed in the witness box, the compassion she afforded him prevails. Without her valued support throughout the years of their marriage and at times subsequently thereafter, he would have been in far greater dire straits. He would have been lost many years earlier.
…
61.The wife had been extraordinarily supportive of her husband despite the difficult circumstances that she found herself in. Throughout the marriage she maintained the home. She performed nearly all the homemaking tasks. She worked and applied her income for the benefit of the family when she was able. She was increasingly the husband’s carer and nurse. She endeavoured to curtail the husband's drinking and spent a large part of her time dealing with the consequences of his behaviour when he had been drinking. This became an increasing feature of the marriage.
62.The husband damaged property; required the attendance of the police at their home and caused them to live an existence that was invariably financially precarious … Throughout all this period the wife supported the husband; accompanied him in his search for employment and remained loyal to him, even though at times this caused her alienation from her friends and family.
63.Even in the witness box the wife’s ongoing compassion for her husband was palpable and her loyalty to him remains. It was with enormous sadness she observed him and his current physical condition and inability to conduct the proceedings on his own behalf. There appeared an exasperation only rarely and incredulity that they had come to this and were litigating in this arena …
At the time of the trial, the husband was living in a Ministry home in Melbourne where he received assisted care. He was receiving a disability pension of about $339 per fortnight. At trial, the wife was employed as a nurse and earned about $2,040 gross per fortnight.
THE TRIAL JUDGMENT
Her Honour’s findings as to the asset pool were as follows:
Former matrimonial home $625,000
Investment property $310,000
Chattels $7,322
Trust monies $8,503
Wife’s motor vehicle $5,000
Shares $5,576
Wife’s superannuation $50,000
Mortgage over former matrimonial home ($199,728)
Wife’s credit card liability ($5,000)
Husband’s liability to a financial institution ($4,942)
Total $801,731
Her Honour concluded that the husband’s debts, wastage and negative conduct during the relationship created a negative contribution on his part as compared to the wife’s significant contribution in terms of initial assets and her direct and indirect financial contributions and care of the husband throughout the relationship. Her Honour held:
76.At the commencement of cohabitation the husband had substantial debt. He had no assets. The wife had significant equity in her home; a motor vehicle; chattels, including a grand piano; and an inheritance from her father’s estate. The parties’ period of cohabitation was a period of some nearly eight years. The husband’s contribution during that time must been seen [sic] as a negative one. The wife fulfilled almost single-handedly the homemaker contribution. The husband applied almost all of his income in the servicing of pre-marriage debts. Those pre-marriage debts included ongoing liabilities which he undertook to his former wife for some of the period of the marriage.
77.The husband’s alcohol dependency saw him shortly after the marriage lose the job which he had held for 17 years. Thereafter his behaviour throughout placed the parties in an extremely precarious financial position save for the period of time that the husband worked in Saudi Arabia. The husband’s need to work out of the country because work was available to him there meant that the wife was required to give up her work and likewise give up her work for the short period of time that the husband was able to obtain work in Sydney.
78.The husband wasted income. His conduct necessitated the expense on a number of occasions of additional accommodation. In addition, the husband’s conduct created wasted legal costs in the wife’s need to obtain various family violence orders; in the acquisition and finalisation of a surgery project; in the husband’s representation and negotiations with the Hospital upon his termination; and in the husband’s insolvency advice.
79.The wife urges upon the court that the husband’s drinking, gambling and pre-marriage debts should justify a very small contribution assessment, even in a long marriage …
80.It is clear on the facts of this case that but for the wife’s behaviour, her organisational ability and her ability to preserve what it was that could be preserved together with the application of her labours there would be no property for the parties to divide. The wife’s contribution at the commencement of the cohabitation period was significant. It greatly exceeded that of the husband’s; the husband’s being a negative contribution. Throughout the marriage the husband’s behaviour caused financial chaos for the parties and the wife strove to preserve the asset which she bought into the marriage, even with the husband requiring her to advance a second mortgage in respect of that home.
81.The husband did make a financial contribution in the sum of $40,000 in the reduction of the wife’s first mortgage on the [former matrimonial home] and also the husband made a direct financial contribution in the application of his income toward mortgage payments over a period of time on that same property.
82.The wife’s contribution throughout the marriage in her care of the husband was an extraordinary one, being a significant contribution to the welfare of the family constituted by herself and the husband. She nursed him. She thought about their need to obtain a living and she supported him throughout all of his trials and tribulations …
…
84.In this case the assets are almost solely contributed to by the wife. They are solely preserved and improved by the wife …
After making those general findings as to contributions, her Honour proceeded to apply an asset by asset approach. She concluded:
86.The husband has made no contribution to the wife’s purchase of the [investment property] nor to its improvement or maintenance. Its purchase was some years after separation. Likewise he has made no contribution to the accumulation of her superannuation fund monies nor [sic] her shareholding. The parties separated in 1999. It is just and equitable that the husband receive a share of the trust monies in form sought by the wife they being insurance proceeds funds relating to a fund paid by the wife which related to the husband’s health and an adjustment of 5% of the value of the [former matrimonial home]. Although he made a direct financial contribution to that property his overall negative contribution exceeds that contribution …
Her Honour’s conclusions leave the husband with no net contribution based entitlement in relation to the former matrimonial home, the investment property or the wife’s shares and superannuation. In relation to the trust monies, her Honour settled on the husband half of the sum of $8,503.76 on the basis that it was just and equitable to do so having regard to the fact that the monies originated from the husband’s insurance claim.
Her Honour then considered whether any adjustment was required pursuant to s 75(2) and whether the final result was just and equitable. Her Honour held:
85.The husband’s entitlement to a pension is a “continuing and permanent financial resource under s 75(2)” (Perrett v Perrett (1990) FLC 92-101). His needs are met by his pension and his access to other services, including health services. I accept the wife’s argument that to require her at her age, given her initial contribution, her contribution during the period of the marriage, her contribution for a limited time thereafter and her own future needs as against the negative contribution of the husband save for his limited direct financial contribution, to make a substantial payment to the husband would be unjust and inequitable.
86.The husband has made no contribution to the wife’s purchase of the [investment property] nor to its improvement or maintenance. Its purchase was some years after separation. Likewise he has made no contribution to the accumulation of her superannuation fund monies nor her shareholding. The parties separated in 1999. It is just and equitable that the husband receive a share of the trust monies in form sought by the wife they being insurance proceeds funds relating to a fund paid by the wife which related to the husband’s health and an adjustment of 5% of the value of the [former matrimonial home]. Although he made a direct financial contribution to that property his overall negative contribution exceeds that contribution. The reality is there would be nothing but for the wife’s endeavours. After considering those matters as set out in subs 75(2) of the Act an adjustment of 5% should be made in favour of the husband. Any greater amount which would be required to be borrowed by the wife would not be just and equitable in the circumstances of this case.
The 5% referred to by her Honour is 5% of the former matrimonial home only.
THE APPEAL
The husband’s Notice of Appeal filed on 17 September 2007 relies on the following grounds of appeal:
1.The learned Federal Magistrate erred in law in failing to give proper weight to the direct financial contributions made by the Husband during the course of the relationship;
2.The learned Federal Magistrate erred in law in failing to include the wife’s [investment property], motor vehicle, shares and superannuation together with chattels in determining the asset pool;
3.The learned Federal Magistrate erred in law by failing to give proper weight to the net effect of the tax minimisation scheme entered into by the husband to maximise the income of the parties;
4.The learned Federal Magistrate erred in law by failing to give appropriate consideration to the S 75(2) factors in relation to the husband;
5.The learned Federal Magistrate erred in law by placing too much weight on the husband’s receipt of Disability Pension entitlements as a financial resource;
6.The learned Federal Magistrate erred in law by failing to take into consideration relevant matters;
7.The learned Federal Magistrate erred in law by taking into consideration irrelevant matters; and
8.The learned Federal Magistrate erred in law in failing to take into proper consideration that the disparate financial positions of the parties is not just and equitable.
During the hearing of the appeal I granted the husband leave to amend his grounds of appeal to include the following:
9.The learned Federal Magistrate erred in law in:
(a)failing to provided any reasons; or
(b)[failing to provide] any adequate reasons
as to the manner in which the learned Federal Magistrate addressed all relevant issues pursuant to each and every provision of s 75(2); and
10.The learned Federal Magistrate erred in law in reaching a determination the effect of which was manifestly unjust to the [husband] generally and specifically on the face of the record in regard to paragraph 2 of the orders dated 21 August 2007 and in so doing failed to provide any overall explanation or understanding of the position of the husband at the end of the proceedings.
THE PARTIES’ PROPOSALS
Both counsel submitted that were I to allow this appeal, I should re-exercise the discretion rather than remit the applications for re-hearing. In that event, counsel for the husband sought orders that his client receive 25% of the total asset pool of $801,731 which equates to approximately $200,000.
Counsel for the wife did not seek to make a specific proposal as to what would be a just and equitable result in the event that I did re-exercise the discretion. He submitted that the wife would abide the orders of the Court.
DISCUSSION
It is important to note the relevant appellate principles in relation to discretionary appeals. In House v The King (1936) 55 CLR 499 Dixon, Evatt and McTiernan JJ said at 504 – 505:
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 discretion is reviewed on the ground that a substantial wrong has in fact occurred.
I now turn to a consideration of the husband's grounds of appeal.
Grounds 4, 8 and 9
Grounds 4, 8 and 9 of the appellant’s Grounds of Appeal relate to her Honour's consideration of the various factors in s 75(2) of the Act. It is convenient to consider them first and together. In doing so, I note the difficulty which an appellate court faces in circumstances where the reasoning process of the trial Judge has not been adequately explained. In Bennett& Bennett (1991) FLC 92-191, the Full Court held (at p 78,267):
In the absence of adequate reasons, the Full Court is not obliged to uphold a judgment merely because the result may be said to fall within the wide ambit of the Judge's discretion. In general, the appellate Court should be able to discern either expressly or by implication the path by which the result has been reached.
We stress that we are not suggesting that reasons must be extensive. Their adequacy must frequently be judged by reference to the issues raised by the parties at trial.
…
The important thing is that the appellate court must be placed in the position of being able to follow the trial Judge's line of reasoning, as must the parties, if they are to be satisfied that justice has been done.
Counsel for the appellant submitted that her Honour had not given appropriate consideration to the s 75(2) factors in so far as they related to the appellant husband. Further, it was submitted that insufficient reason was given for the conclusion that there should be an adjustment of 5% in favour of the husband, and then only of the former matrimonial home.
It was submitted on behalf of the appellant that several of the provisions of sub-s 75(2) of the Act were not considered by her Honour. In particular, the question of the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment was not addressed. While her Honour considered the husband's entitlement to a pension, she did not consider the quantum of that pension, particularly as it related to the wife's income. As was found at paragraph 11 of the judgment, the wife was employed as a nurse and was in receipt of a gross income of $2,040 per fortnight from that employment. By contrast, the husband was in receipt of a pension amounting to $339 per fortnight. Accordingly, there was a very large disparity in earning capacity between the parties which was not considered by her Honour.
Further, while it was common ground that the wife's employment would not continue indefinitely by virtue of her age, the fact that there was no evidence that the wife was about to cease that employment was not considered. The possibility of the wife obtaining part-time employment following any retirement from her present occupation was also not considered. By contrast with the wife's potential earning capacity, her Honour found that "the husband ceased to be employed in July 2000" and "… will never work again."
The litigation guardian also swore that the husband's cost of these proceedings must be met from any payment which he received as a result of orders made in the proceedings.
There was further unchallenged evidence by the litigation guardian as to the husband's indebtedness as a result of other court orders. The litigation guardian was unable to find evidence of enforcement of judgment debts against the husband amounting to in excess of $160,000 in respect of judgments entered some years ago. That issue was not considered by her Honour.
In considering the provisions of the subsection, it is also necessary to have regard to "the commitments of each of the parties that are necessary to enable the party to support himself or herself." Prior to her consideration of the subsection, her Honour found: "His needs are met by his pension and his access to other services, including health services." Counsel for the husband submitted that in making that finding, her Honour did not consider unchallenged evidence on behalf of the husband by his litigation guardian with regard to the husband's living expenses. The litigation guardian swore:
My observations of [the husband's] situation is that he is living in poor and uncomfortable premises, and has no means to continue any real quality of life. He requires assistance as set out above in relation to his hygiene, his transportation and everyday living. In addition, he is living with significant health issues that require constant monitoring. There is no evidence from my observation that [the husband] has any capacity to provide himself with anything but life at a mere subsistence level.
As noted above, the adjustment of a further 5% in favour of the husband in respect of the s 75(2) factors was only in respect of the former matrimonial home. Her Honour took that course on the basis of the husband "has made no contribution to the wife's purchase of assets after the parties' separation." There is no reason given for that decision and no authority has been submitted to support it. As a result, I am unable to discern the reasoning process by which her Honour arrived at that decision.
Further, her Honour failed to consider all the relevant factors under s 75(2) in so far as they were relevant to the husband's case. In particular, the failure to consider the very significant issue of the husband's health, the very large disparity in income earning capacity between the parties and the degree to which the husband's health impacts on that disparity and the consequential effects on their respective lifestyles and ability to sustain themselves are, in my view, of substantial significance in the context of these proceedings.
Ground 10
It was submitted on behalf of the appellant husband, correctly to my mind, that the process of determining competing applications for alteration of property interests requires the Court to finally consider whether the proposed orders are just and equitable to both parties. In Hickey & Hickey (2003) FLC 93-143, the Full Court drew upon the case law surrounding the approach to be taken in determining s 79 proceedings and held (at p 76,386):
The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s 79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), ('the other factors') including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC ¶91-626; Ferraro and Ferraro (1993) FLC ¶92-335; Davut and Raif (1994) FLC ¶92-503; Prpic and Prpic (1995) FLC ¶92-574; Clauson and Clauson (1995) FLC ¶92-595; Townsend and Townsend (1995) FLC ¶92-569; Biltoft and Biltoft (1995) FLC ¶92-614; McLay and McLay (1996) FLC ¶92-667; JEL and DDF (2001) FLC ¶93-075 and Phillips and Phillips (2002) FLC ¶93-104.
In that context, it was submitted that the ultimate result of these proceedings was "manifestly unjust" to the husband. It was further submitted that her Honour had failed to undertake a consideration of whether the proposed orders were just and equitable to both parties and not just the wife.
The references in the judgment to her Honour's consideration of whether the ultimate orders were just and equitable are as follows:
·paragraph 85, quoted above, with regard to the consequences on the wife of requiring her "to make a substantial payment to the husband"; and
·paragraph 86, also quoted above, referring to the requirement of the wife borrowing money to pay the husband.
As found by her Honour, the parties’ marriage was of a little more than 7 years together with a short period of cohabitation prior to marriage. At the time of the trial, the wife was in substantial employment and the husband was dependent on a small pension. The total net assets available for distribution amounted to slightly more than $800,000, most of which were constituted by two pieces of real estate to be retained by the wife, of which the husband received approximately $30,000. The payment to the husband represented less than 5% of the total net assets. From that amount the husband had a credit card debt of nearly $5,000. In addition, the husband had to pay substantial legal costs of these proceedings. The wife owned two properties, one of which had been the matrimonial home and the other a property bought by her after the parties' separation.
I am satisfied that her Honour's consideration of whether the orders constituted justice and equity to both sides did not sufficiently consider those factors as they related to the husband.
Accordingly, I have determined that the appeal must be allowed for the following reasons:
·in considering the various factors pursuant to s 75(2), her Honour failed to give sufficient reasons for her decision and did not take into account all the relevant factors in so far as they related to the husband; and
·the result is manifestly unjust and inequitable to the husband.
The Other Grounds of Appeal
Having determined that the appeal should be allowed on Grounds 4, 8, 9 and 10, it is not necessary for me to consider the other Grounds of Appeal.
REMIT OR RE-EXERCISE OF DISCRETION
Both Counsel submitted that in the event that I allowed the appeal, as I have determined, I should substitute my discretion for that of her Honour. Save for an agreement between Counsel that I could infer from the evidence that the wife’s future employment would not continue for a lengthy period by virtue of her age, neither Counsel sought to adduce fresh evidence.
I am only able to re-exercise the discretion if I am satisfied that there are sufficient findings to enable me to do so. Regrettably, while it would be highly desirable for me to avoid a further trial for the parties, I have determined that it is not possible to re-exercise the discretion. In particular, my determination regarding the s 75(2) factors makes that course impossible. Accordingly, the applications will be remitted to the Federal Magistrates Court for rehearing before a Federal Magistrate other than Federal Magistrate Hartnett.
COSTS
At the conclusion of the hearing of this appeal, I sought submissions from counsel with respect to costs. Counsel for the husband submitted that in the event that I were to remit the matter for rehearing, as I have decided to do, certificates were sought on behalf of the husband pursuant to ss 6 and 8 of the Federal Court (Costs) Act 1981. It is appropriate that those certificates be granted.
Counsel for the wife submitted that the wife did not seek costs from the husband. No other submission was made on behalf of the wife with respect to costs. In view of the strong submissions on behalf of the wife that in the event that I allowed the appeal I should re-exercise the discretion rather than remit the matter for rehearing, which I have decided not to do, it is appropriate that I reserve liberty to the wife to apply for costs.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 8 August 2008
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