Basara & Wasen
[2021] FedCFamC1A 83
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Basara & Wasen [2021] FedCFamC1A 83
Appeal from: Wasen & Basara [2021] FCCA 1022 Appeal number(s): EAA 62 of 2021 File number(s): SYC 2067 of 2018 Judgment of: TREE, REES & RIETHMULLER JJ Date of judgment: 14 December 2021 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Contributions assessment – Marriage of 38 years – Challenge to finding that contributions were equal – Adjustments under s 75(2) of the Family Law Act 1975 (Cth) – Challenge to five per cent adjustment where unilateral use of funds by each spouse – No matters of principle – Appeal dismissed – Appellant to pay the respondent’s costs in a fixed sum. Legislation: Family Law Act 1975 (Cth) ss 75(2), 79, 117 Cases cited: AMS v AIF (1999) 199 CLR 160; [1999] HCA 26
House v The King (1936) 55 CLR 499; [1936] HCA 40
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Number of paragraphs: 46 Date of hearing: 4 November 2021 Place: Sydney (via video-link), delivered in Cairns Counsel for the Appellant: Mr Batey Solicitor for the Appellant: Thurlow Fisher Lawyers Counsel for the Respondent: Mr Stapleton Solicitor for the Respondent: Sattouts Legal ORDERS
EAA 62 of 2021
SYC 2067 of 2018FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR BASARA
Appellant
AND: MS WASEN
Respondent
ORDER MADE BY:
TREE, REES & RIETHMULLER JJ
DATE OF ORDER:
14 DECEMBER 2021
THE COURT ORDERS THAT:
1.The appellant’s oral application to amend his Notice of Appeal filed 11 June 2021 is dismissed.
2.The appeal is dismissed.
3.The appellant pay the respondent’s costs in the sum of $21,599.48.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Basara & Wasen has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
TREE, REES & RIETHMULLER JJ:
INTRODUCTION
The appellant husband (“the husband”) appeals from property settlement orders made by a judge of the Federal Circuit Court (as it was then known) on 14 May 2021, the effect of which was to settle 55 per cent of the parties’ property to the wife following a marriage of 38 years. The appeal is opposed by the respondent wife (“the wife”) (collectively, “the parties”).
BACKGROUND
In 1979 the parties married and commenced cohabiting in Country N when the husband was 24 years of age and the wife 19 years of age.
In 1981 the parties’ first child, who is now 40 years of age, was born. The parties had a second child in 1985, who is now 36 years of age.
In July 1989 the husband came to Australia. The wife and children followed later that year.
In early 1990 the husband obtained employment in Australia. The wife undertook training as a carer, later starting her own business in 1993. In 1994 their third child was born, who is now 27 years of age.
In 2008 the husband purchased a property in Country N, in which his mother now resides.
The parties separated in early 2017, but remained living under the one roof. Following separation, two events took place that were significant in the trial. First, in April 2018 the wife withdrew $234,200 from the parties’ home loan account, placing the money into a term deposit account that had a value of $238,900 at the time of trial. The effect of that withdrawal was that interest then accrued on the home loan debt and repayments were subsequently required by the bank, which the husband paid. Secondly, in December 2019 the husband dealt with his superannuation in various ways, reducing his superannuation interests from $872,397 to $106,327 by the time of trial.
In arriving at the final property settlement the primary judge assessed the parties’ contributions as equal, but determined that a five per cent adjustment in favour of the wife was warranted under s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) as a result of the husband’s dealings with his superannuation, after having regard to the wife’s dealings with the home loan account. This adjustment resulted in the wife retaining around $215,785.39 more than the husband from an asset pool (inclusive of superannuation) of $2,157,853.91.
THE APPEAL
At the commencement of the hearing of the appeal the husband abandoned Grounds 2(iii) and 3 of his Notice of Appeal filed 11 June 2021.
At the outset it is useful to restate the well-known principles applicable to appeals from discretionary judgments such as that which is under consideration here, as articulated in
House v The King(1936) 55 CLR 499 (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 the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
The Assessment of Contributions - Ground 1
This ground provides:
1.That the learned trial Judge erred in the exercise of his discretion in finding that the contributions of the parties were equal.
The primary judge adopted a global approach involving one pool of assets as sought by the parties. His Honour considered the course of the parties’ relationship and the various contributions they each made both financially and otherwise. Notably, the parties commenced their marriage with few to no assets and, aside from relatively small personal injury payments received during the relationship, accumulated their property entirely through their efforts during the marriage. Whilst there were considerable disputes as to the husband’s dealings with his superannuation (and money he sent overseas) and the wife’s drawing upon the home loan account, as discussed below, these matters were considered by the primary judge under s 75(2) of the Act rather than as add-backs to the pool of assets. The appeal does not challenge this approach.
The husband developed his argument in support of this ground on three bases in an attempt to show that the primary judge erred in the consideration of factors relevant to the exercise of the discretion. First, the husband argued that the primary judge failed to take into account that the husband cared for the children when the wife was undertaking part-time study. The role of the husband in assisting with the care of the children during this period was analysed in detail at [67]–[68]. It is clear from this passage that the primary judge had regard to the husband’s contributions to homemaking and child care whilst the wife studied. This argument in support of Ground 1 cannot succeed.
Secondly, the husband argued that the extent to which his direct financial contributions exceeded those of the wife, was greater than the extent to which the wife’s non-financial contributions exceeded those of the husband, and that the primary judge had failed to make findings quantifying this difference. To analyse contributions in such a manner would depart from the required holistic approach (Jabour & Jabour (2019) FLC 93-898) and effectively result in a ‘taking of accounts’ of all of the things that each party did in a long marriage, many of which cannot easily be compared. The approach proposed by the husband would also risk greater weight being given to his direct financial contributions without appropriate account being taken of the importance of the wife’s indirect contributions in supporting the husband and family whilst he obtained his qualifications and pursued his career. It would also fail to account for the inevitable impact of the wife’s role as primary carer of the children and homemaker on the wife’s earning capacity, over 38 years of marriage.
Correctly, the primary judge considered the contributions of the parties holistically, rather than attempting to assign values to different forms of contributions under ss 79(4)(b) and (c) of the Act so as to directly compare them in monetary values to contributions under s 79(4)(a). No error in doing so is established.
Thirdly, the husband argues that the primary judge ought to have found that he contributed more than the wife as a result of the findings that:
(a)
during cohabitation the parties’ contributions should be considered equal, although the husband’s financial contributions exceeded those of the wife and the wife’s
non-financial contributions exceeded those of the husband (at [71]); and
(b)after separation the husband contributed more than the wife in direct financial contributions (at [72]–[74]).
The husband argued that this ought to lead to an overall finding of greater contribution by him than the wife. However such an argument overlooks the importance of contributions under s 79(4)(c) of the Act to the welfare of the family which must also be taken into account, and which the primary judge addressed at [75]–[77]. His Honour went on to consider the contributions under s 79(4)(c), noting that:
77.… The Court accepts that it is likely that while the wife was the main contributor to the welfare of the family in the capacity of homemaker and parent, the husband did, in fact, contribute to the extent he could, given the Court notes that it is likely that the husband’s full-time employment and his working hours also impacted on his ability to contribute, in any event.
In response to this, the husband points to the fact that the children had left home long before the separation of the parties, in order to argue that the wife’s s 79(4)(c) contributions would have been minimal in that period. However, this would inappropriately restrict the considerations under s 79(4)(c) to that of child rearing and ignore the valuable contributions to family that are made even after children are living independently. More, it continues to ignore the contribution which the wife made during the marriage to the husband’s superior earning capacity. It was only after considering the very wide range of facts and circumstances in this case that his Honour concluded that “[w]eighing all of the factors relating to contributions, both financial and non-financial, the Court assesses the parties’ contribution entitlement as being, in the overall circumstances, equal” (at [80]).
The husband also pointed to the primary judge’s acknowledgment that the husband “contribute[d] to the extent he could, given … that it is likely that the husband’s full-time employment and his working hours also impacted on his ability to contribute” (at [77]), and noted that his Honour did not use the phrase “to the greatest extent that she could” with respect to the wife’s contributions. On this basis the husband argued that an inference should be drawn that the wife contributed to a lesser extent.
A fair reading of the reasons does not lead to the inferences that the husband seeks to draw, not only because such a close or pernickety reading is inappropriate (AMS v AIF (1999) 199 CLR 160 at [150]), but also because to read the reasons in this fashion is to analyse them from a perspective where every contribution is to be given a value or score for the purpose of an accounting exercise, rather than approaching the assessment of contributions on a holistic basis.
When read as a whole it is apparent that his Honour had regard to the significant matters relevant to an assessment of the parties’ contributions. We are not persuaded that his Honour acted on wrong principle. The finding, that overall the parties’ contributions were equal, was well open to the primary judge.
This ground of appeal fails.
The Husband’s Superannuation - Grounds 2(i) and (ii)
These grounds provide:
2.That the learned trial Judge erred in the exercise of his discretion in finding that there ought to be an adjustment in favour of the [wife] pursuant to section 75(2) for the following reasons:-
i.how the [husband] had dealt with his superannuation and the [wife] not having any superannuation;
ii.an incorrect finding that there was a disparity in the amount of funds withdrawn by the [husband] from his superannuation and the amount available on the Balance Sheet as at the date of the trial.
Whilst the issues concerning the husband’s superannuation were a matter of significant dispute, the primary judge received remarkably little assistance from the parties in their final submissions. It was uncontroversial that after separation, on 19 December 2019, the husband had superannuation entitlements of $872,397.15. It was also uncontroversial that by the time of trial the husband had superannuation entitlements of only $106,326.68. At the time of the trial, the husband then also held the following property valued at around $731,000 (at [48]):
(a)Country N property $ 95,000.00;
(b)City W property $ 165,500.00;
(c)funds in various ANZ bank accounts $ 369,675.18; and
(d)funds in M Credit Union accounts $ 100,532.85.
The husband’s case was that those assets, together with a loss in value of his superannuation of about $45,000 due to COVID-19, explain a total of around $776,000, a sum greater than the $766,000 the husband withdrew from his superannuation (at [92]), although the husband would have received further superannuation contributions from his employment between 2019 and the trial. However, such a simple analysis ignores important unchallenged findings by the primary judge that:
(a)the husband had sent some $237,454.23 overseas between 2005 and 2018 (at [33] and [106]).
(b)the husband had purchased the Country N property in 2008, 11 years before he drew on his superannuation (at [15(t)]); and
(c)the husband purchased the City W property in November 2018, some one year and six weeks before he drew on his superannuation (at [15(bb)] and [15(cc)]).
The effect of the findings was that the total of the money sent overseas during the marriage and the superannuation drawings came to around $1,003,000 compared to the assets and
COVID-19 loss which totalled only around $776,000. Thus a significant shortfall remained without explanation.
Counsel for the husband also attempted to rely upon the husband’s claims that he had repaid $80,000 in debts with his superannuation monies, (husband’s affidavit filed 15 October 2020, paragraph 82) and that some further $50,000 of his superannuation monies was used to repay a bank loan he took out to purchase the Country N property (husband’s affidavit filed 15 October 2020, paragraph 49). However, the loan document produced by the husband with respect to a $50,000 personal loan is dated 8 November 2018, some 10 years after the purchase of the property in County N. The husband does not appear to have produced documents showing the movement of the monies from account to account to enable his use of funds to be traced, but relied only upon general claims. This evidence did little to assist in explaining the actual use to which the entirety of the funds were put, nor, as we have said, was the primary judge materially assisted in submissions.
The husband also argued that it was incumbent upon the primary judge to identify which “parts of the husband’s withdrawals should attract an adjustment”. The precise details of the use of the funds was uniquely within the husband’s knowledge, but not addressed in detail in his evidence. Nor was any evidence given as to the amount of any loss of return on investment of the funds over the period from when the husband dealt with them (save for the reduction in superannuation value due to the COVID-19 economic downturn). The husband, in oral submissions on the appeal, argued that the money sent overseas before separation should be ignored on the basis that it was sent to family members, however that is contrary to the findings of the primary judge at [106] that the monies were applied (based at least in part, on the husband’s case) to the purchase of real estate in two different countries which has been taken up in the pool of assets of the parties in these proceedings.
In making these submissions the husband attempts to place the burden upon the primary judge to provide an explanation for the husband’s use of funds, when he had not given the evidence necessary to support such detailed findings. The wife had established that funds were used by the husband and that he had (throughout the marriage and following separation) utilised more funds than was explained by the assets included in the pool at trial. The husband had not established where all of the funds were applied.
Hence in the circumstances of the present proceedings, it is not open to the husband to complain that the primary judge’s approach to this factor was at a greater level of generality than may have been the case had the husband provided the evidence necessary for detailed findings tracing the use he had made of the various funds. The primary judge’s findings, to the effect that significant drawings from the husband’s superannuation account were not adequately explained, were well open to him on the evidence, and hence formed a proper basis for making an adjustment in favour of the wife.
His Honour found that the unexplained shortfall was relevant under both ss 75(2)(f) and (o) of the Act. When identifying the relevance of these circumstances in the context of s 75(2)(f) his Honour said:
92.The wife submitted that given that the husband had withdrawn a substantial amount of his superannuation of, approximately, $766,000.00 and utilised those monies for his own benefit, there should be some adjustment in her favour. The Court accepts that while the husband has explained a substantial part of the utilisation of these funds, including towards the acquisition of the City W property and payment of loans nevertheless they are not, currently, available by way of a superannuation split to the wife and that sounds in an adjustment in her favour.
93.The Court accepts that the husband is, subject to any means test, eligible for the aged pension as he has turned 66 years of age. The wife would not be entitled to the aged pension for another 6 years. She would, however, be entitled to the receipt of Newstart allowance if she was not earning an income.
94.The wife has no superannuation. This weighs in favour of an adjustment to the wife in terms of the one pool consisting of property and superannuation.
Later, in the context of s 75(2)(o) his Honour also noted:
106.The wife maintained that it was not until the commencement of these proceedings that she found out about the husband’s interest in the City W property. The Court notes, however, that the City W property was acquired some 4 months after the proceedings had been commenced by the wife. While the wife claimed that the husband had sent monies overseas in the order of $237,000.00 which, she said, had been paid to support various women, family members and to purchase property, the Court notes that both the Country N property and the City W property purchased by the husband in his sole name are included in the balance sheet at a combined value of $260,500.00. The Court also notes that the husband’s funds (together with those of the wife) were utilised to reduce mortgage liabilities on the B Street, Suburb C property. The Court does not accept that the evidence supports the husband’s transfer of monies overseas as waste.
107.While the husband withdrew money from his superannuation and placed funds into various accounts under his control which are also on the balance sheet, there appears to the Court to be a disparity between what the husband withdrew from his superannuation and the funds now standing to his credit on the balance sheet and this disparity, particularly in terms of the nature of the funds available, weighs in favour of an adjustment to the wife.
The husband argues that the passage in the primary judgment at [92] indicated the primary judge had overlooked the fact that the husband’s superannuation was included in the pool of assets and therefore accounted for in any percentage split. Thus, it was argued, the fact that the wife had no superannuation was not a relevant factor as she would be sharing (notionally at least) in the superannuation of the husband which was included in the pool. However, the passages must be read in the context of a case that concerned the use the husband had made of his superannuation interests. It is therefore apparent that his Honour was referring to the monies the husband had withdrawn from his superannuation account and which could no longer be the subject of a superannuation splitting order or property settlement order.
The husband also argued that the reference to [107] of the primary judgment as to “the nature of the funds available” was an irrelevant consideration, as there was nothing about the nature of the parties’ assets (in the sense that they were inaccessible or inalienable or similar) which would lead to a basis for an adjustment under s 75(2) of the Act. It appears to us that a fair reading of this phrase in the context of the judgment should not be so technical: taken in context it is apparent that his Honour was referring simply to the finding that only part of the drawn superannuation funds were still available to be divided: the nature of the unexplained part of the superannuation drawings was that it was now inaccessible.
Although the issues concerning the husband’s dealings with his superannuation might more conveniently fall within the ambit of s 75(2)(o) rather than s 75(2)(f) of the Act, it matters little in the context of this case, as there is no doubt that the use made of the funds was a relevant consideration to which his Honour was required to have regard. That the primary judge identified that these facts and circumstances fall within the ambit of s 79(4)(e) through more than one subsection of s 75(2) does not, of itself, show appealable error.
Although outside the ambit of this ground of appeal, the husband also complains that the primary judge failed to attach sufficient weight to the expenses caused by the wife withdrawing money from the home loan account (husband’s Summary of Argument filed 12 October 2021, paragraph 17). His Honour made findings that the result of the wife’s re-drawing upon the home loan account caused interest charges to be incurred and that the husband made repayments on the debt created, saying:
50.The only item in the above schedule, which was originally contentious, was the initially asserted “add back” as against the wife of $57,800.00 referred to in item 16 which related to the monies redrawn by the wife from the parties’ home loan account and the payments and interest costs met by the husband in respect of that. The parties’ agreed position, however, was that this item would not be considered as an add back. The husband’s position was that the Court could have regard to this item in terms of its assessment of a negative contribution by the wife or under s.75(2)(o) of the Act with care not to “double dip”.
Around half this amount was found by the primary judge to be interest payments and half capital repayments (at [51]). To the extent that the repayments were interest this was an expense caused by the wife’s action, although her conduct must be seen in light of it being an attempt to preserve assets rather than apply them to her own use that was known to the husband and that neither party sought injunctive relief with respect to this issue. To the extent that the husband made capital repayments, those monies are not a loss caused by the wife as the capital repayments are not lost to the bank but stand to the credit of the parties. As the wife held the funds in a savings account there would also have been some interest earned on them. The primary judge had regard to these circumstances at [108].
There was no requirement upon the primary judge to attempt to factor this circumstance into the outcome in a mathematical way: that a mathematical approach was not suitable was a strong factor in favour of considering this issue as an adjustment under s 75(2) rather than an
‘add-back’ to the pool. We find no error in his Honour’s assessment of this factor as warranting “a small adjustment” in favour of the husband, having regard to the circumstances of the wife’s conduct and the overall size of the pool (over $2 million).
Whether the Result is Just and Equitable – Proposed Ground 4
The husband seeks leave to add a fourth ground of appeal alleging “[t]hat the result of [h]is Honour’s Orders were not just and equitable when considering the whole of the circumstances of the parties”. In support of the proposed amendment the husband makes three arguments in his Summary of Argument and pursued a more general argument at the appeal hearing.
First, the husband argues that the primary judge misconceived the real effect of the
five per cent adjustment in the context of this case, pointing to [113] of the reasons where
his Honour identifies that five per cent of the total pool equated to “approximately $107,892.69”. However, the differential between amounts that each the husband and wife would receive was then set out by the primary judge in identifying how much each would actually receive, in total value (at [114]–[115] and [122]) in a table identifying the assets each would retain and the payment adjustment necessary to effect the property settlement ordered. It cannot reasonably be argued that the primary judge had misconceived that the real effect of the proposed property settlement findings resulted in the husband receiving around $216,000 less than the wife.
Secondly, the husband argues that the primary judge failed to consider that the husband’s age meant that he would have less time in which to “recoup” the adjustment amount, presumably through future earnings. Such an argument misconceives the reason for the adjustment. The adjustment was not to account for differences in earning capacity between the parties, as
his Honour concluded that no adjustment was warranted as a result of this factor. Rather, the adjustment was to account for the husband’s unilateral use of funds (including his superannuation funds) and the losses caused by the wife’s re-draw from the home loan account. As a result, this argument has no merit.
Thirdly, the husband argues that his superannuation is not available to him until retirement, and thus the primary judge failed to have regard to this incident of the nature of the husband’s superannuation interest. Such a claim appears unsustainable given that the only evidence on this issue was that the husband had already been permitted to withdraw almost all of his superannuation prior to trial. In any event, given his age, the time until his retirement is likely short, and hence any error lacks materiality.
Finally, counsel for the husband argued that the five per cent adjustment under s 75(2) of the Act was such that it demonstrated that the primary judge’s discretion generally had miscarried. In the circumstances of this case, an adjustment was open under s 75(2) for the reasons that the primary judge identified. The amount of the adjustment was within the reasonable ambit of the primary judge’s discretion having regard the circumstances.
As none of the arguments in support of the proposed further ground have merit, the application to amend the Notice of Appeal will be dismissed.
Conclusion
For the reasons set out above we are not persuaded that the husband has demonstrated an appealable error on the part of the primary judge and therefore the appeal will be dismissed.
COSTS
In the event that the appeal failed, the wife sought costs in the sum of $21,599.48. The husband accepted that he could not sensibly oppose a finding that the quantum of costs sought was reasonable (notably, the wife’s costs are far less than the amount claimed by the husband as his reasonable costs of the appeal, some $33,881.96).
The husband sought orders that he only pay part of the wife’s costs, having regard to s 117 of the Act and the financial circumstances of the parties. In this matter the proceedings on appeal concern only financial issues, following a detailed judgment at first instance. The husband enjoys a substantial income and the parties will each retain assets valued at well over $900,000. The husband has been entirely unsuccessful on the two grounds of appeal that he pursued (having abandoned two other grounds at the outset of the appeal hearing).
We are persuaded that the husband should pay the wife’s reasonable costs of the appeal fixed in the sum sought by the wife.
I certify that the preceding forty-seven (47) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Tree, Rees and Riethmuller. Associate:
Dated: 14 December 2021
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