Barnell & Barnell
[2020] FamCAFC 102
•1 May 2020
FAMILY COURT OF AUSTRALIA
| BARNELL & BARNELL | [2020] FamCAFC 102 |
| FAMILY LAW – APPEAL – PROPERTY – Where the parties were married for 21 years – Where the parties’ marriage produced two children – Where the husband was the primary breadwinner and the wife the primary caregiver and homemaker – Where the primary judge found the parties’ contributions based entitlements were 62.5 per cent / 37.5 per cent in favour of the husband – Where that 25 per cent differential was solely referable to the husband having brought a particular property into the relationship – Where the primary judge referred to the value of that property as representing 36 per cent of the total property pool at trial – Where the primary judge’s emphasis of the differential of 25 per cent being less than 36 per cent demonstrated the discrete consideration given to the husband’s contribution of the property in the overall assessment of contributions – Where the primary judge erred in finding a 25 per cent contributions based entitlement differential as a consequence of “quarantining” the relevant property – Where the primary judge gave separate consideration to, and distinguishing effect of, the husband’s financial contribution of the relevant property – Where the primary judge ought to have treated the property as but part of the “myriad of contributions” – Appeal allowed – Matter remitted – Costs certificates granted. |
| Family Law Act 1975 (Cth) s 79 Federal Proceedings (Costs) Act 1981 (Cth) ss 8, 9 |
| Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40 Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154 Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63 House v The King (1936) 55 CLR 499; [1936] HCA 40 Hurst & Hurst (2018) FLC 93-851; [2018] FamCAFC 146 Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78 Lovine & Connor (2012) FLC 93-515; [2012] FamCAFC 168 Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17 Wallis & Manning (2017) FLC 93-759; [2017] FamCAFC 14 |
| APPELLANT: | Ms Barnell |
| RESPONDENT: | Mr Barnell |
| FILE NUMBER: | PTW | 1660 | of | 2017 |
| APPEAL NUMBER: | WEA | 9 | of | 2019 |
| DATE DELIVERED: | 1 May 2020 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Ryan, Aldridge & Kent JJ |
| HEARING DATE: | 18 October 2019 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 22 February 2019 |
| LOWER COURT MNC: | [2019] FCWA 33 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Hedges SC |
| SOLICITOR FOR THE APPELLANT: | Bowen Buchbinder Vilensky |
| THE RESPONDENT: | Self-represented |
Orders
The appeal from Orders 1 to 10 of the Orders made by the primary judge on 22 February 2019 be allowed and those Orders be set aside.
The proceedings be remitted for rehearing by a judge other than the primary judge.
The Court grants to the appellant wife a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) 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 wife in respect of the costs incurred by the appellant wife in relation to the appeal.
The Court grants to each of the parties a costs certificate pursuant to s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) 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 each of the parties in respect of the costs incurred by them in relation to the rehearing ordered.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Barnell & Barnell has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WEA 9 of 2019
File Number: PTW 1660 of 2017
| Ms Barnell |
Appellant
And
| Mr Barnell |
Respondent
REASONS FOR JUDGMENT
By an Amended Notice of Appeal filed on 5 August 2019, Ms Barnell (“the wife”) appeals from Orders 1 to 10 of the property settlement orders made by the primary judge in the Family Court of Western Australia on 22 February 2019, determining property proceedings pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) between the wife and Mr Barnell (“the husband”). The husband opposes the appeal.
The primary judge determined that the combined property interests of the parties, including their respective modest superannuation interests, had a net value of $941,096.
His Honour recorded (at [7]) that an “appropriate assessment of the impact of the husband’s initial financial contribution on the determination of a just and equitable outcome was central to the dispute between the parties”. As will be discussed, that central issue and the manner of the primary judge’s resolution of it, presents as the central issue on appeal.
His Honour determined, by reason of the husband’s initial capital contribution of a property referred to as “the B Property”, that there existed a 25 per cent differential between the parties as to their contributions based entitlements and assessed these at 62.5 per cent to the husband and 37.5 per cent to the wife.
The primary judge made a 7.5 per cent adjustment in favour of the wife for ss 79(4)(d)–(g) factors in arriving at an overall conclusion that the combined property interests of the parties be divided in value as to 55 per cent to the husband and 45 per cent to the wife.
Challenges on appeal
The focus of the wife’s appeal by reference to each of her grounds of appeal is upon the manner in which the primary judge assessed the parties’
contributions based entitlements by reference to the husband’s initial capital contribution of the B Property. The wife contends that his Honour erred by:
a)Failing to correctly apply principles relevant to the assessment of contributions (Ground 1);
b)Making mistakes of fact in findings that his Honour recorded as to the contributions made by the parties over the course of their marriage to the B Property initially contributed by the husband and retained throughout the marriage (Ground 2); and
c)In arriving at a 25 per cent differential between the husband and the wife in the assessment of contributions, giving too much weight to the initial contribution of the husband and too little weight to the myriad of contributions of the wife over the course of the parties’ lengthy relationship (Ground 3).
By Ground 4, the wife contends that the overall outcome of his Honour’s assessment of contributions was unreasonable and plainly unjust.
It can be seen, from a reading of the reasons for judgment of the primary judge as a whole, that his Honour rejected the contentions of each party, other than in respect of the husband’s initial contribution, for distinguishing between the parties as to their contributions based entitlements.
We are mindful that his Honour’s determination is the product of an exercise of discretion and to succeed on an appeal, an error or errors of the type identified in House v The King (1936) 55 CLR 499 at 504-505, must be established (see also, Gronow v Gronow (1979) 144 CLR 513). We are likewise mindful of the principles governing challenges on appeal as to the comparative weight to be attributed to relevant factors, and the ambit marking the area of immunity from appellate interference (Norbis v Norbis (1986) 161 CLR 513 at 540 per Brennan J).
For the reasons which follow, we are persuaded of appealable errors made by the primary judge in his Honour’s assessment of the parties’ contributions based entitlements, and we are thus satisfied that his Honour’s exercise of discretion miscarried.
Background
The wife was born in 1968 and is 51 years of age. The husband was born in 1962 and is 57 years of age.
The parties began their relationship in early 1995 and were married on … 1996. Their relationship produced two children, X born in 1998 and who is now aged 22 years and Y born in 2003 who is now aged 16 years. As at trial, both children were living with the wife. The parties separated under one roof in November 2016 and physically separated in March 2017 when the wife and children vacated the matrimonial home (“the home property”), which the husband continued to occupy, and which remained one of the assets available in the property determination. Thus, the period of cohabitation was about 22 years and the period from the commencement of cohabitation until trial and final orders was about 24 years.
Prior to the parties’ relationship, the husband had been in a relationship for some 13 years with one Ms C, that relationship ending in March 1994. In June 1993, the husband and Ms C fully borrowed the purchase price of $108,000 to jointly acquire the home property. Also during that relationship, the husband received an inheritance which he used to purchase land at Suburb B in November 1988, the subdivision of which was completed over several years.
In December 1995, half of the Suburb B land was sold for $110,000. Taken from the husband’s trial affidavit filed on 29 January 2019, from net proceeds of about $103,000, the husband paid various debts, including an amount to finalise financial arrangements with Ms C, and in terms of capital, applied $50,718.45 in reduction of the mortgage debt secured against the home property. Most of the balance was applied for living expenses including expenses related to the parties’ wedding. The husband also purchased a work vehicle for $8,700. At [55] of the reasons, the primary judge recorded the manner in which the sale proceeds were disbursed leaving a “modest balance” retained by the husband.
The parties agreed at trial that at the commencement of their cohabitation the husband had $58,000 equity in the home property. There was no admissible evidence (or agreement) as to the value of the half of the Suburb B land (“the B Property”) which the husband retained after the sale of the other half referred to. Senior counsel for the wife emphasised on appeal that the sold half included some modest form of a “shack” and that it could not be assumed that the retained half was worth as much as the sold portion. Senior counsel for the wife contended that inferring a value for the B Property at cohabitation of $110,000 would be putting that value at its highest.
It appears there was no issue at trial, nor was there any issue on appeal, that gifts received by the parties during the relationship from the wife’s parents were appropriately to be treated as contributions by or on behalf of the wife.
At [58] of the reasons, the primary judge recorded the husband’s concession that apart from “regular Christmas gifts of $1,000.00” (in a total amount unspecified over the 22 years of cohabitation), the wife’s parents gifted funds totalling appropriately $70,000 during the marriage. Of those sums, a lump sum of approximately $29,500 was paid in 2004 to reduce the mortgage debt on the home property; $10,880 was used to purchase a suitable family car; and $5,000 was applied to the acquisition of appliances for the household in 2002. At [60], the primary judge recorded a “tacit” concession by the husband that the financial assistance provided by the wife’s parents “to a significant degree offset his initial financial contribution of equity in the home, and his ownership of chattels”. We note in passing that given the amounts involved, albeit that the amount of “regular Christmas gifts of $1,000.00” is not specified as to a total, the contributions of the wife’s parents likely did more than simply “offset” the husband’s initial contribution of equity in the home property and his chattels.
The primary judge’s discussion at [53]-[69] of the parties’ contributions up until, and after, their separation, need not be recounted in full. Suffice to note that within that discussion, his Honour recorded findings reflecting equality of assessment as between the husband’s contribution as primary breadwinner throughout the relationship and the wife’s primary responsibility for homemaking and parenting (at [59]). The primary judge rejected the husband’s attempt to distinguish his contributions by the significant renovations he, as a registered builder, undertook to the home property, with his Honour finding that the circumstances of the renovations “made the wife’s contributions as homemaker and parent more arduous” and referred to each party contributing “in accordance with their particular skills” (at [61]-[63]).
To similar effect, the primary judge rejected the wife’s contention that payments by the husband of child support for a child he had outside of the relationship; or the benefit the husband had of post-separation occupation of the home property (whilst servicing the mortgage debt and outgoings) were distinguishing factors favouring the wife in the assessment of contributions (at [65]-[66]).
In summary, it can be seen that the primary judge treated the husband’s introduction of the B Property as the sole factor distinguishing the husband’s contributions from those of the wife, resulting in the 25 per cent disparity between the parties on the assessment of contributions his Honour determined.
Central findings of the primary judge challenged on appeal
As already noted, there was no formal valuation of the B Property as at the commencement of the parties’ cohabitation nor was there any agreement at trial as to its historical value. As to its current value at trial, the parties agreed that the B Property was worth $340,000.
At [57], the primary judge recorded:
57.Similarly, there was no admissible evidence as to the value of the retained [Suburb B] block at the commencement of cohabitation. That said, the current value of that property, which remains unimproved, was agreed. It was also common ground that the only contribution made by either party to the conservation of that property over the course of their relationship was the regular payment of fairly modest council rates.
(Emphasis added)
By Ground 2, the wife agitates the complaint that the expressed finding of the primary judge as to “common ground” reflects error in two respects. First, that it was not “common ground” that the only contribution to the conservation of the B Property over the course of the parties’ marriage, which endured for some 21 years, plus the post-separation period, was the regular payment of fairly modest council rates. Second, and as a corollary, that the wife’s contributions via wage earning, homemaking and parenting, mutual support and her capital contributions via significant gifts from her parents, were each substantial indirect contributions to the conservation of the B Property.
In argument on the appeal, senior counsel for the wife acknowledged that the focus of the primary judge at [57] may well have been limited to consideration of direct financial contributions. However, senior counsel advanced arguments to the effect that such a focus reflects that the primary judge wrongly “quarantined” the B Property and wrongly elevated “financial contributions” in the holistic assessment of contributions of all kinds, and thus gave undue emphasis to the husband’s initial financial contribution of that property and insufficient emphasis to the wife’s “myriad” of contributions, including her primary homemaking and parenting role. We will return to this aspect in our discussion of applicable principles.
The primary judge recorded these central findings:
60.The husband also tacitly conceded that the financial assistance given to the parties by the wife’s parents to a significant degree offset his initial financial contribution of equity in the home, and his ownership of chattels. I regarded that as sensible. He pointed primarily to his ownership of the [Suburb B] block as the critical point of difference in an assessment of the parties’ overall contributions.
…
64.By the same token, I do not accept the argument advanced on behalf of the wife that the contributions of the parties overall should be assessed as equal. In my view, that argument, if accepted, would give insufficient weight to the facts that the [Suburb B] block was unimproved and unencumbered at the commencement of the relationship, is still unimproved, and represents by value some 36 per cent of the net property and superannuation available to the parties at the date of trial.
…
67.In my view, the husband’s contribution of the [Suburb B] block must be accorded significant weight in that assessment. I regard an overall assessment of contributions in the proportions of 62.5 per cent to the husband and 37.5 per cent to the wife as appropriate in all the circumstances.
68.I recognise that the 25 per cent differential reflected in that assessment is less than the proportion of the overall present value of property represented by the [Suburb B] block. That, in my view, appropriately recognises in a holistic way the various contributions made by both parties both over the course of what was a long marriage, and in the period between separation and trial.
It is readily apparent that having found at [57] that the “only contribution” made by either party to the conservation of the B Property was the payment of “fairly modest council rates”, the primary judge focused upon the current value of the B Property as representing “some 36 per cent of the net property and superannuation available to the parties at the date of trial” (at [64]). This carries the necessary inference that the husband alone ought be treated as having directly contributed 36 per cent of the available property as a starting point. His Honour’s expression of recognition at [68] that the differential of 25 per cent is less than 36 per cent demonstrates the discrete emphasis and consideration the primary judge gave to the husband’s contribution of the B Property in the assessment of contributions.
The gravamen of the wife’s complaints on appeal is that whilst the primary judge was obliged to, as his Honour himself observed at [68], “[recognise] in a holistic way the various contributions made by both parties both over the course of what was a long marriage, and in the period between separation and trial”, his Honour led himself into error in that task by giving such discrete emphasis to the B Property rather than treating it as but part of the “myriad of contributions” by both parties in a long marriage which produced two children.
There was no evidence or contention at trial, or finding by the primary judge, that any increase in value of the B Property over the lengthy course of the marriage was other than the product of market forces. Whilst we have already made reference to the feature that there was no particular value ascribed to the B Property at the commencement of cohabitation, senior counsel for the wife emphasised that to the extent any inference was available from the fact that half the original B land was sold for $110,000, that inference was to the effect that by effluxion of time, market forces and the contributions of both parties, it could be seen as producing the value of the B Property as $340,000 at trial.
Put another way, the wife contends that the B Property forms part of the parties’ interests at trial at a value of $340,000, not only by reason of the husband’s direct financial contribution of it, but also the parties’ indirect contributions of all kinds to its conservation over a lengthy marriage and post-separation period. The wife contends that his Honour’s approach gave undue emphasis to the husband’s initial contribution and no sufficient emphasis to the wife’s direct and indirect contributions otherwise, including the capital that she introduced via gifts from her family but primarily her homemaking and parenting role.
Applicable principles
It is well-settled by authority that the assessment of contributions under s 79 of the Act is not a mathematical exercise. For example, in Lovine & Connor and Anor (2012) FLC 93-515, the Full Court observed of the s 79 assessment process:
40.Contribution, either direct or indirect and financial or non-financial, to any of acquisition and/or conservation and/or improvement to property (whether or not such property has ceased to be held) or to the welfare of the family or children, falls for consideration. No order of priority is attached to individual elements. The evaluation occurs often, as in this case, with respect to such disparate kinds of contribution made over a substantial period. Such evaluation, having regard to its subject matter, inevitably involves value judgments and matters of impression.
41.It follows that the assessment involves matters of estimation and is not, and cannot be, a mathematical exercise. No amount of devotion to mathematics is capable of transforming a discretionary exercise involving many component parts, each mostly unamenable to precise computation, into one of aggregating separately finely calculated components to reach an overall outcome.
42.As part of the process of ultimately determining just and equitable orders under s 79 there is included a complex of discretionary assessments and judgments of many components of contribution, only some of which are capable of measurement in money terms and then often only in historical, rather than present, money terms. Any dictate to the effect that in the course of assessment each disparate component part or kind of contribution must be assigned a discrete and identifiable value or percentage is antithetical to the nature of the discretion involved.
In Dickons v Dickons (2012) 50 Fam LR 244, the Full Court rejected the proposition that there must be a causal relationship between contributions and a financial product of contributions. The Full Court observed:
[14]As is plain from earlier decisions of this court, regard must be had to the use made of contributions of various types so as to compare the contributions made by each of the parties during the course of, and over the length of, their relationship (see, for example, In the Marriage of Pierce (1998) 24 Fam LR 377; (1998) FLC 92-844; [1998] FamCA 74) But that is an entirely different proposition to, as it were, causally linking contributions with their asserted financial “product” or “value”. The former recognises that the nature, form and extent of contributions made by each of the parties might differ; the latter suggests that the absence of a causal link counts as no contribution at all.
[15]The search for a causal link might be seen to come instinctively to the necessary inquiry and all the more so when regard is had to s 79(4)(a) which refers to financial contributions made “directly or indirectly” “to the acquisition, conservation or improvement of any of the property” and goes on to also refer to the financial contribution made “otherwise in relation to any of that last-mentioned property”. The terms of that subparagraph might, naturally enough, be seen to suggest a causal link between those contributions and the “financial product” which those contributions of that type are said to have produced. That same requirement might also be seen to suggest that relevant contributions of that type can be seen to be quantifiable — or, at least, conceptualised — in monetary terms, in contradistinction to contributions made pursuant to s 79(4)(c).
[16]While that apparent “causal connection” might be seen in s 79(4)(a) (and (b)), no such connection is apparent from the terms of s 79(4)(c); contributions of that latter type are not linked by the words of the subparagraph to the “acquisition, conservation or improvement of any of the property” or, indeed, to “property” at all. This is not a legislative oversight; the 1983 amendments to the Act which inserted the current s 79(4)(c) were specifically intended, relevantly, to remove any suggestion that there needed to be a causal link between contributions of that type and any particular asset or property. The explanatory memorandum to the Family Law Act Amendment Bill 1983 provides, at cl 36, that a specific purpose of the re-casting of s 79(4) was, relevantly, to:
… revise sub-section 79(4) to remove the possibility of an interpretation of the sub-section requiring that there be a nexus between a spouse’s contribution and a specific item of property in section 79 proceedings …
[17]Within that context, then, it is self-evident that financial contributions (whether direct or indirect) can be made to a relationship that have an effect on the property of the parties without those financial contributions finding their way directly into, or being directly linked to, specific property or, indeed, directly to the totality of the property available for distribution at the time of trial. Financial contributions can be made to the “acquisition, conservation or improvement” of property “directly or indirectly” (s 79(4)(a), emphasis added). A financial contribution can be made indirectly by, for example, the use by parties of income or assets for purpose A freeing up the use of other income or assets for purpose B. Moreover, a particular financial contribution might have been used wholly in discretionary expenditure which, but for that contribution, would not have been available to the parties or would have required borrowings or a diminution of capital. Such a contribution can also, in that way, be seen, for example, as an indirect contribution to the conservation of property. Indeed, the principles discussed for example in In the Marriage of Kowaliw (1981) FLC 91-092 and In the Marriage of Townsend (1994) 18 Fam LR 505; (1995) FLC 92-569, can be seen as an exception to that general proposition.
[18]Any and all such contributions, whether or not they sound in, or are directly linked to, the property available for distribution, should be considered and assessed together with the nature, form and extent of all other contributions of all types contemplated otherwise by s 79(4).
[19]That is true of assets or income generated within the relationship and it is equally true of assets or income coming from outside of the relationship (for example, as here, in the form of inheritances). In the same way, s 79(4) specifically requires the court to take into account contributions made to the welfare of the family (and substantively and “not in any merely token way”; see, Mallett v Mallett (1984) 156 CLR 605 at 636; 52 ALR 193 at 218; 9 Fam LR 449 at 470; [1984] HCA 21 per Wilson J) notwithstanding that those contributions may not be, or cannot be seen to be, directly linked to the available property at trial, or any increase or decrease in the value of the property.
[20]Put another way, consistent with authority, the s 79 discretion involves as a necessary requirement that “trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such an assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment”. (In the Marriage of Aleksovski (1996) 20 Fam LR 894 at 903; (1996) FLC 92-705 at 83,437). In Aleksovski, Kay J outlined the well-known “gold bar” analogy and said “[w]hat is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship” (at 83,443).
[21]Those same principles can be expressed as saying that the requirements of the section are met by approaching the assessment of contributions holistically and by analysing the nature, form, characteristics and origin of the property currently comprising that to which s 79 applies, and, in turn, analysing the nature, form and extent of the contributions (of all types) contemplated by s 79). That task is also undertaken by reference to the nature and form of the particular marriage partnership manifested by the particular circumstances of this particular marriage. Is it, for example, a relationship, as Deane J put it in Mallett at 640–1 “where the parties have adopted the attitude that their marriage constituted a practical union of both lives and property” or is it, for example, a union where parties lived very separate domestic and financial lives?
(As per the original)
It is readily apparent from the central findings of the primary judge, read with the reasons for judgment as a whole, that his Honour equated the parties’ respective contributions of all kinds to all other property but gave separate consideration to, and distinguishing effect of, the husband’s financial contribution of the B Property. A number of authorities have emphasised that the adoption of such an approach must not involve any failure to ensure that proper recognition is given to “the myriad of other contributions” made, particularly in a long marriage as here. Thus, in Wallis & Manning (2017) FLC 93-759 the Full Court observed of such an approach:
20.Yet, that approach must also ensure that the “myriad of other contributions” and the duration over which, and circumstances in which, the miscellany of other s 79(4) contributions were made is not accorded a subsidiary role. The essential s 79(4) task is for “trial Judges [to] weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation”.
…
110.The approach adopted by the parties before her Honour is repeated in the supplementary submissions filed on behalf of the respondent husband; it is there asserted that “the contributions of the parties would be equal aside from gifting by the Husband’s father of significant parcels of land which remain in existence at the present point in time”. Counsel for the wife, in his further submissions, makes no such specific assertion but implicitly does so by relying upon the trial judge’s findings and manner of assessment. For the reasons given earlier, we reject that approach; the gifts by the husband’s father should be taken into account as a contribution together with the miscellany of other contributions made by each of the parties over the course of their marriage.
(As per the original) (Footnotes omitted)
In two relatively recent decisions in Hurst & Hurst (2018) FLC 93-851 (“Hurst”) and Jabour & Jabour (2019) FLC 93-898 (“Jabour”), the Full Court has considered the proper approach to the assessment of contributions in a long marriage where property or capital is introduced by one party.
In Hurst (at [14]), the Full Court quoted what the primary judge had recorded in the following finding as to a property inherited by the husband, described as “the Suburb C property”:
14.…
16. Each party received inheritances throughout the marriage which were in large part used for the benefit of the family (other than the [Suburb C] property). The husband also received gifts from his family which were used for the benefit of the family. The most significant inheritance was received by the husband in 2003 in the form of the [Suburb C] property. Apart from paying the rates and regular slashing the land has remained untouched. It cannot be said that the wife has made any contribution to this property other than indirectly by the rates and slashing costs being paid. The [Suburb C] property has appreciated in value over the years and even after separation. This property is now the most valuable asset of the parties.
(Emphasis in original)
On appeal, the Full Court observed of that finding:
15.It can be seen that those reasons, taken together with [6] earlier quoted, evidence a “global approach” to the assessment of contributions. Within the context of such an approach, a broad assessment is made of the contributions of all types made by both parties across the whole of the period of a very long marriage. Yet, the reasons also evidence one exception to that approach, namely the identified indirect (financial) contributions made to the Suburb C property.
16.There is no error of itself in her Honour considering separately any such contributions: subparagraphs (a) and (b) of s 79(4) each refer to, relevantly, indirect contributions made to “any of the property of the parties to the marriage or either of them, or otherwise in relation to any of” that property (emphasis added).
17.However, there is a danger in doing so. Isolating indirect contributions to but one part of the property interests of the parties in the context of a global assessment of contributions risks ignoring significant contributions made by both parties that do not have a nexus with that particular property. We consider, with respect, that her Honour did not heed that risk. The finding that the wife has not made any contributions to the Suburb C property other than the specific indirect contribution to slashing and rates is, in our respectful view, not open to her Honour on the evidence before her.
…
22.The corollary of seeking a nexus within a global assessment is, relevantly, the quarantining of other indirect contributions made by each of the parties across all the property during the entirety of the approximately 39 year period between cohabitation and trial. We respectfully consider that here, by isolating the Suburb C property, her Honour did in fact quarantine those contributions from having any application to it in the finding earlier highlighted. In our respectful view, that is an error.
…
24.The evidence before her Honour was plainly to the effect that both parties made indirect contributions to the conservation of the parties’ interests in property available at trial, including the Suburb C property, by proceeding upon the “stated and unstated assumptions” upon which their very lengthy marriage operated and the roles within that marriage which those assumptions directed and which they each performed.
25.The contributions made to the conservation of the Suburb C property were of precisely the same nature and extent as the contributions that each made in their respective agreed roles and spheres for the 25 years prior to the contribution of the Suburb C property and for the 13 years subsequent to it. The evidence before her Honour was plainly to that effect and no evidence before her Honour suggests otherwise.
(Emphasis in original) (Footnotes omitted)
It is to be noted that in Hurst, the Full Court undertook a “dollar terms” assessment of each party being treated as having contributed equally to the increase in value of “the Suburb C property” as compared with the ordered outcome. In doing so, the Full Court was at pains to emphasise (at [32]) that such an exercise was illustrative only, rather than being any dictate to the effect as to any necessary use of mathematics.
In this case, senior counsel for the wife adopted the same illustrative approach in attempting to demonstrate the effect of his Honour’s “quarantining” of the B Property separately in the assessment process as a means of demonstrating how the 25 per cent differential between the parties arrived at by the primary judge was unsupportable.
Senior counsel’s illustration assumes a starting value of $110,000 for the B Property and thus an increase of $230,000 in value over the period of the parties’ (equal) contributions. On this basis, the wife would be credited with half the increase, $115,000, being approximately 34 per cent of the value of the B Property at $340,000. If, on the basis that the wife’s contributions entitlement to the balance of the parties’ property interests totalling $601,096 is taken to be 50 per cent, then the contributions entitlement of the wife would total $415,548. However, on the primary judge’s assessment of the wife’s contributions based entitlements to the total property of $941,096 at 37.5 per cent, that outcome represents $352,911, a substantial difference, relative to the pool, of $62,637. That amount equates to more than 6 per cent of the value of the total property pool.
It bears emphasis that, as in Hurst, senior counsel for the wife’s illustration was to attempt to demonstrate, in dollar terms, the practical outcome of the primary judge having quarantined and given discrete consideration to, the husband’s contribution of the B Property, rather than treating that contribution as one of the “myriad of contributions” to be considered in the overall assessment process.
In Jabour, the Full Court undertook a comprehensive review of authority, including Hurst, concerning both the principles to be applied in assessing contributions generally but also with specific emphasis upon cases involving a disparity between the parties of introduced capital. It is unnecessary to recount the facts in Jabour beyond noting that the primary judge in Jabour gave separate consideration to a property, described as “Property A” introduced by the husband, which increased in value by reason of a rezoning. The Full Court referred, at [70], to the primary judge’s conclusions about the husband’s contribution of the property and observed at [73]:
73.As can be seen the primary judge weighed the myriad of contributions made by the parties against the contribution made by the husband by bringing in Property A rather than treating Property A as one of the myriad of the contributions made.
Moreover, the Full Court observed of the discrete consideration of Property A and what had been done to obtain a rezoning of it, that the primary judge’s approach had the effect of relevant considerations being overlooked. Commencing at [83] of the reasons, the Full Court in Jabour observed:
83.Importantly, it also had the effect of minimising the myriad of other contributions that were made in the course of a long marriage during which both parties worked very hard and raised a family. In this case, those contributions were made over a very long period and the parties regarded them as being equal.
84.Finally, in relation to a sudden increase in the value of an asset unrelated to the efforts of the parties, such as a rezoning by the council or a lottery win, the authorities point to that increase being a contribution by both parties (or neither – it matters not which it is) (Zappacosta at 75,421; Wells at 76,529–76,530; Zyk at 82,515–82,516; and Hurst at [26]).
85.It is difficult to see adequate recognition of this principle in the reasons. Indeed, the husband appears to have been given credit for the serendipitous revaluation of Property A by her Honour’s recognition of the husband’s contribution by having regard to its value at the time of the hearing, rather than it being merely the springboard for its later value.
86.Further, we consider that by quarantining Property A from the “myriad of other contributions made by both parties throughout the course of the relationship” (Williams at [26]) her Honour fell into the difficulty set out in Hurst, as described earlier. This is because those contributions were isolated from and weighed against the contribution of that property, rather than it being one of the myriad of contributions taken into account. The evidence established that, throughout the relationship, the parties’ contributions to Property A “were of precisely the same nature and extent that each made in their respective agreed roles and spheres” (Hurst at [25]).
87.It follows that her Honour misdirected herself as to the principles to be applied. This has led to a material error and the orders must be set aside.
We are persuaded that by isolating the B Property in the manner in which his Honour did and by adopting a differential of as much as 25 per cent between the parties as to their contributions based entitlements as a consequence of “quarantining” the B Property, and giving discrete consideration to that contribution, the primary judge fell into the same error as was made at trial in each of Hurst and Jabour, as discussed in the appeals in those cases. We consider that his Honour’s approach had the overall effect of according a subsidiary role to the wife’s contributions.
It follows from this conclusion that we are satisfied of merit in each of the wife’s grounds of appeal including that the primary judge acted on wrong principle, with the consequence of a miscarriage in the exercise of discretion. It follows that the appeal must be allowed and the subject orders set aside.
Re-exercise of discretion or remitter?
Initially, in submissions senior counsel for the wife urged the position that in the event the appeal were to succeed, this Court ought re-exercise the discretion so as to avoid, for the parties, the costs, delays and inconveniences associated with a further trial.
The wife sought to rely upon further affidavit evidence for the purpose of this Court re-exercising the discretion.
For his part, the husband, who was self-represented on appeal, disputed the wife’s further affidavit evidence. In that event, senior counsel for the wife submitted that if the affidavit evidence was all that stood in the way of this Court re-exercising the discretion, the wife would withdraw her reliance upon her further affidavit evidence.
However, after adjournments of the appeal hearing to enable the husband to consider his position, the husband identified the evidence that he would seek to advance to the Court for the purpose of any re-exercise of discretion. The wife disputed the evidence that the husband proposed to advance and, on that basis, withdrew her contention that the Court could in the circumstances re-exercise the discretion and the wife ultimately sought that the proceedings be remitted for rehearing. The husband likewise sought remitter.
Thus it was that both parties ultimately sought that, in the event the appeal was allowed, the proceedings ought be remitted to enable each party to advance evidence of relevant circumstances since the subject orders were made and of their current circumstances. Obviously, the parties must be afforded that opportunity and evidence of current circumstances is necessary to any legitimate exercise of discretion (Allesch v Maunz (2000) 203 CLR 172).
Costs
In the event the appeal were to be allowed, the wife did not seek any order for costs against the husband, but sought the grant of costs certificates pursuant to the relevant provisions of the Federal Proceedings (Costs) Act 1981 (Cth) for the appeal and the rehearing.
For his part, the husband, who as we have noted was self-represented on appeal, submitted that whilst he had incurred some legal costs in respect of the appeal, these were minor and he would not seek a costs certificate in respect of them. Obviously though, the husband may incur legal costs with respect to the remitter and rehearing of the proceedings.
We are satisfied that the appeal has succeeded by reason of errors of law, justifying the grant of costs certificates.
We will therefore grant a costs certificate to the wife for her costs of the appeal and for the rehearing and in respect of the husband will grant a costs certificate for the rehearing.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ryan, Aldridge & Kent JJ) delivered on 1 May 2020.
Associate:
Date: 1 May 2020
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