Bellamy and Gladwell (No. 2)
[2017] FamCAFC 238
•17 November 2017
FAMILY COURT OF AUSTRALIA
| BELLAMY & GLADWELL (NO. 2) | [2017] FamCAFC 238 |
| FAMILY LAW – APPEAL – final property orders – where the trial judge ordered that the parties retain property in their possession – where the trial judge ordered that each party indemnify the other in respect of mortgages attached to those properties – where the effect of those orders was that the wife was left with significantly more debt than the husband – where the trial judge lost sight of the issue of the allocation of debt between the parties – where it was not the intention of the trial judge that either party bear the sole responsibility for that failure – where the orders were unjust and unreasonable – appeal allowed. |
| Family Law Act 1975 (Cth) |
| Australian Coal & Shale Employees’ Federation and Anor v The Commonwealth and Ors (1953) 94 CLR 621 Browne v Green (1999) FLC 92-873 CDJ v VAJ (1998) 197 CLR 172 Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 House v The King (1936) 55 CLR 499 Kowaliw and Kowaliw (1981) FLC 91-092 Metwally v University of Wollongong (1985) 60 ALR 68 Norbis v Norbis (1986) 161 CLR 513 Townsend and Townsend (1995) FLC 92-569 |
| APPELLANT: | Ms Bellamy |
| RESPONDENT: | Mr Gladwell |
| FILE NUMBER: | CAC | 1423 | of | 2014 |
| APPEAL NUMBER: | EA | 106 | of | 2016 |
| DATE DELIVERED: | 17 November 2017 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Murphy, Kent & Watts JJ |
| HEARING DATE: | 21 March 2017; Further written submissions filed on 28 March 2017; and 5 April 2017 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 4 July 2016 |
| LOWER COURT MNC: | [2016] FCCA 1648 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Bevan |
| SOLICITOR FOR THE APPELLANT: | Bevan & Co |
| THE RESPONDENT: | No appearance |
Orders
The appeal be allowed.
The proceedings be remitted for rehearing.
Pursuant to s 117(2) of the Family Law Act 1975 (Cth) there be no order as to costs.
The Court grants to the wife a costs certificate pursuant to the provisions of 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 wife in respect of the costs incurred by the wife in relation to the appeal.
The Court grants to the wife a costs certificate pursuant to the provisions of 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 the wife in respect of the costs incurred by the wife in relation to the rehearing of the application.
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 Bellamy & Gladwell (No. 2) 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 SYDNEY |
Appeal Number: EA 106 of 2016
File Number: CAC 1423 of 2014
| Ms Bellamy |
Appellant
And
| Mr Gladwell |
Respondent
REASONS FOR JUDGMENT
Introduction
On 4 July 2016 Judge Brewster made a property order between Ms Bellamy (“the wife”) and Mr Gladwell (“the husband”) which almost evenly divided their net assets valued at $540,000 between them.
The wife appeals the order made by the trial judge. The wife’s grounds of appeal are directed to complaints that the trial judge applied wrong principle, did not take into account material considerations and that the effect of the property settlement order was unreasonable and plainly unjust (House v The King (1936) 55 CLR 499).
Factual Background
At the time of the hearing before the trial judge, the husband was 55 years of age and the wife was 47 years of age. The parties commenced living together in 2004, married in October 2005 and separated in December 2013. The parties had been together for about nine years. There were no children of the relationship.
At the commencement of the relationship the wife owned Property B and the husband owned Property C and Property E.
We discuss below the evidence (or more accurately the lack of evidence) about what equity each party had in these properties.
The wife worked full-time in a service industry. The husband was the only shareholder and director of Company P which operated his business. The company’s premises were a rented workshop.
The wife gave up paid employment in the last four years of the relationship after which she carried out most of the home making duties.
The parties lived at Property B from the outset and throughout the relationship. The provision of this accommodation to the husband allowed him to rent each of Property E and Property C throughout the relationship.
Both parties jointly incurred debts during the marriage and Property B and Property C were used as security for those debts.
The trial judge notes that each party claims credit for caring for the parties’ children from earlier relationships. The husband claimed that he was involved in the care of the wife’s daughter from a former relationship and the wife claimed that she cared for the husband’s grandchildren.
In 2008 the husband paid $55,000 for a machine to be used in his business. That purchase was financed by way of a business loan which was ultimately repaid out of the proceeds of the sale of Property C. The trial judge found the machine was sold in 2014 by the husband for $18,000 but the evidence at hearing was that it was $20,000. The husband’s oral evidence was that he used those funds to keep up his workshop and pay other accounts and that there was nothing left of that $20,000. The trial judge found that the proceeds went towards paying off debts.
In April 2011 the parties obtained a loan with Bank D for between $324,000 and $327,000 and after the discharge of the Bank F mortgage on Property B, funds of about $175,000 became available.
In 2011 the husband’s company bought a licence for a business called “ABC”. The purchase price was $56,000 including the licence for the business and additional expenditure was required for capital equipment.
By September 2011 the debit balance of the mortgage on Property B was around $320,000 and most of the $175,000 had been expended. In December 2013, at the time of the separation, the Bank D loan was approximately $318,000. It seems agreed that all but $3,700 of the increase in the Bank D loan (after the Bank F mortgage had been discharged) was referrable to expenditure relating to the business, the husband’s wages, credit cards, joint debts and a debt on the husband’s motor vehicle.
The ABC business failed.
As indicated, the parties separated in December 2013.
After the separation the husband ceased to operate the business.
At the time of the trial, all that was left of the business was some freezing equipment which the trial judge valued at $3,000. The husband also retained “fridges and workshop tools”. The fridges would have been part of the ABC business. The fridges and workshop tools combined were worth $7,000. There was also the licence for the business. There was no evidence that it was of any value.
Property C was sold by the husband in June 2015 for $400,000 and the trial judge found that almost all of the proceeds were used to pay debts ($2,000 remains in the wife’s solicitor’s trust account).
Whilst it is not mentioned in the trial judge’s Reasons for Judgment (“Reasons”), the husband’s unchallenged evidence was that the parties during their cohabitation travelled to Indonesia, Malaysia, Fiji, Thailand and the USA for up to one month’s stay at a time. There is no indication in the evidence as to when these trips took place.
Both parties sought property settlement orders. The wife sought that the husband’s Property E be sold and the proceeds be used to reduce the parties’ debts with the husband to otherwise discharge the mortgage on Property B and indemnify her in relation to all other debts.
The husband sought that both properties be sold and all joint debts be paid out and any money that was left over be divided evenly between the parties, otherwise he proposed that each party be responsible for debts in their respective names.
The trial judge adopted what he described as a “four staged approach” (consistent with the “preferred approach” described by the Full Court in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 78,386).
The trial judge in his judgment made findings about the following property and liabilities of the parties at the time of the hearing which we summarise as follows:
Assets
Item no.
Title
Description
Value
1
W
Property B
$610,000
2
H
Property E
$370,000
3
J
Proceeds in Trust (net sale of Property C)
$2,000
4
H
Car
$5,000
5
H
Shares in Company Q Pty Ltd
$7,476
6
H
Some freezing equipment
$3,000
7
H
Equipment - fridge and working tools
$7,000
Total assets
$1,004,476
Liabilities
Item no.
Title
Description
Value
8
W
Property B mortgage
$320,000
9
H
Property E mortgage
$87,000
10
J
Mastercard
$17,000
11
H
NAB credit card
$25,000
12
H
Visa card
$15,000
Total liabilities
$464,000
Total net assets
$540,476
In considering contributions, it is tolerably clear that the trial judge concluded that on an overall basis the parties had made equal contributions. We say more about his Honour’s lack of findings about contributions below.
On 4 July 2016 the trial judge made the following orders:
(1)That the wife be entitled to retain the property owned by her at [Property B] and is to be responsible for the [Bank D] mortgage on that property. In this respect she is to indemnify the husband in relation to any liability with respect to that mortgage.
(2)That the husband be entitled to retain the property owned by him at [Property E] and is to be responsible for the [Bank F] mortgage on that property. In this respect he is to indemnify the wife in relation to any liability with respect to that mortgage.
(3)That the parties take all steps necessary to divide any monies held in trust equally between them.
(4)That as against the other each party be entitled to the chattels in his or her possession and the choses in action in his or her name.
Those orders have been stayed pending the outcome of this appeal.
The trial judge’s conclusions that these orders will leave the parties with roughly property of equal value was not challenged. The effect of the trial judge’s orders is in fact to give the wife slightly more than half of the net assets as the following table demonstrates:
Husband gets – 47.7%
Assets
Item No.
Description
Value
2
Property E
$370,000
3
Proceeds in Trust (net sale of Property C)
$1,000
4
Car
$5,000
5
Shares in Company Q Pty Ltd
$7,476
6
Some freezing equipment
$3,000
7
Equipment - fridge and working tools
$7,000
Liabilities
Item No.
Description
Value
9
Property E mortgage
$87,000
10
Mastercard
$8,500
11
NAB credit card
$25,000
12
Visa card
$15,000
Net Assets
$257,976
Wife gets – 52.3%
Assets
Item No.
Description
Value
1
Property B
$610,000
3
Proceeds in Trust (net sale of Property C)
$1,000
Liabilities
Item No.
Description
Value
8
Property B mortgage
$320,000
10
Mastercard
$8,500
Net Assets
$282,500
The Husband’s Position
The husband did not file any summary of argument in advance of the hearing, despite directions having been made that he do so. Nor did he appear at the hearing. Whilst no adequate reason was given for that failure, we considered he should nevertheless be granted the indulgence of a further opportunity to file written submissions should he so choose. We made directions for the filing of written submissions.
The husband subsequently filed written submissions. He also filed an affidavit. Each had clearly been prepared without legal assistance. No application to adduce further evidence was filed. Notwithstanding that procedural irregularity, we nevertheless determined to consider the terms of the affidavit and treat it as if an application had been made for its receipt.
With all respect to the self-represented husband, the material contained within the affidavit was irrelevant to the issues on the appeal and could not in any sense be seen as meeting the test for the reception of further evidence on an appeal (s 93A(2) of the Family Law Act 1975 (Cth); CDJ v VAJ (1998) 197 CLR 172).
With respect, the husband’s submissions did not address in any relevant way the issues raised on the appeal.
Grounds of Appeal
The wife acknowledges that:
… there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong.
(per Kitto J in Australian Coal & Shale Employees’ Federation and Anor v The Commonwealth and Ors (1953) 94 CLR 621 at 627)
The grounds of appeal set out in the Notice of Appeal are general and generic in nature. In the wife’s summary of argument, the wife more specifically identifies particular errors that the wife asserts were made by the trial judge which the wife argues individually or cumulatively would authorise appellate disturbance.
It is convenient to reframe those complaints into recognisable grounds of appeal.
The trial judge applied a wrong principle or failed to take into account the fact that business losses should be attributed to the husband
The trial judge at [3] of his Reasons says:
The gravamen of the dispute involves the treatment of debts incurred during the relationship. When the parties commenced their relationship the wife was, and still is, the owner of [Property B]. At the commencement of the relationship this property was subject to a mortgage of about $150,000. Additional borrowings have increased this mortgage to some $320,000. There are other debts which were incurred during the relationship. Essentially the wife maintains that the husband should be responsible for the debts incurred during the relationship.
Well accepted guidelines are stated by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 (“Kowaliw”) at 76,644 as follows:
… financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
The Full Court said in Browne v Green (1999) FLC 92-873 at 86,364:
… where there are economic losses incurred in a marriage, those losses should be shared, absent any negligence, recklessness or deliberate dissipation of assets by one party.
The wife relies upon Townsend and Townsend (1995) FLC 92-569 to argue that the trial judge should have concluded that the husband’s expenditure of the debt raised for the ABC business was a premature distribution of matrimonial assets and should have been counted fully against him. By implication, the wife argues that the trial judge should have departed from the Kowaliw guideline. The guideline can be departed from if the trial judge considered that the facts of the case warranted it (Norbis v Norbis (1986) 161 CLR 513; Browne v Green (supra) at 86,361 – 86,364).
At trial the wife asserted that because the husband two and a half years prior to the separation alone had initiated “the business ventures” and had the sole and total control over them, the husband should be responsible for the loss of assets and income and those losses, particularly the business losses, should be notionally added back into the asset pool against the husband.
The husband in his oral evidence asserted that the business failed, inter alia, because he no longer had the capital to buy product to continue to operate the business.
In support of the assertion that the business losses should be entirely attributed to the husband, the lawyer for the wife submitted to the trial judge that the wife had not agreed to an extension of the borrowings in 2011 by an additional $100,000. It was the wife’s submission that although she authorised a borrowing of $152,000 to discharge the existing mortgage and an additional borrowing of $75,000 for the new business (totalling $227,000) she did not authorise a further borrowing of an additional $100,000. The evidence seems to indicate that the husband signed bank documents after the full amount of the borrowing of $327,000 (or in some of the evidence and in some of the submissions it was referred to as $324,000) had been approved. The trial judge did not deal with the issue of whether or not the wife specifically agreed to the extension of borrowing an additional $100,000. The trial judge without engaging in that controversy said:
33.This is a most unfortunate case. There is no doubt that the financial history of the parties’ relationship was a disaster. Essentially this was a result of the failure of a business purchased during the marriage called “[ABC]” … It failed. I do not ascribe the responsibility for this failure to either party.
The finding that the trial judge made at [33] of his Reasons was open to him on the evidence and the trial judge did not apply a wrong principle or fail to take into account a material consideration.
This ground cannot succeed.
The trial judge failed to take into account that the wife made superior initial contributions by way of the introduction of real property
The trial judge’s order which left the wife with the responsibility for the whole of the current mortgage on Property B was unreasonable or plainly unjust
We shall deal with these two grounds together.
The wife’s fundamental complaint was that she came into the cohabitation with a property which had a mortgage on it of $150,000 and has been left at the end of the hearing with the same property but now with a mortgage of $320,000. In amplifying that complaint, the wife submits that in April 2011 in order to purchase the ABC business, the equity in Property B was used as security to borrow $175,000. The trial judge left all of the debt raised for the ABC business and secured over the Property B with the wife. The wife asserts that upon the facts that was unreasonable and plainly unjust.
The wife’s central assertion is that the trial judge failed to take into account that the wife had made a superior initial contribution by way of introduction of real property. The trial judge was not assisted in his task by the way the wife presented her case at trial. Importantly, the wife provided the trial judge with no evidence as to the value of Property B as at the date of cohabitation. There was evidence that the wife had acquired Property B in 1999 as a result of a property settlement in respect of a previous relationship. At the date the parties commenced living together in 2004 Property B had a mortgage of $150,000.
In respect of the husband’s two pieces of real estate, there was neither evidence about their value nor evidence about their encumbrances as at the date of cohabitation.
At [26] of the Reasons, the trial judge finds Property C was purchased in 1999 for $120,000 with a mortgage of $114,000. We are unable to discern in any evidence or other document forming the record before us, as to where the trial judge obtained that information.
At [27] of the Reasons, the trial judge found that Property E was purchased in 2000/2001 for $125,000 with a mortgage of $118,750. Again we are unable to discern in any evidence or other document in the record where the trial judge obtained that information.
In the appeal the wife asserted that Property E was acquired by the husband in September 2005. That assertion was contrary to the evidence at the hearing.
At the hearing:
a)The wife in both her written and oral evidence said the husband had Property E at the time they got together;
b)The husband in both his written and oral evidence said he had Property E at the time they got together;
c)The wife’s lawyer in his case outline said that the husband had Property E at the commencement of cohabitation; and
d)The wife’s lawyer made no submission that was different from that at any time during the trial.
The wife’s lawyer however during the hearing tendered what became Exhibit W14. That exhibit contains a letter written by the wife’s lawyer which the trial judge describes as “…just a summary of documents which were annexed” (Transcript 13 November 2015 page 15, line 43). The letter contains the statement:
4. On 25 September 2005 the Husband purchased [Property E]. Finance was through a mortgage with [Bank G]. Again we cannot assist with the mortgage amount.
The title search to which the lawyer for the wife refers does not bear the date “25 September 2005” but rather “23 September 2005”. Importantly however the statement by the wife’s lawyer in Exhibit W14, in our view is a clear misstatement of what the document annexed says. The title search in Annexure B to Exhibit W14 is not a historical title search and does not show the date of acquisition of the property by the husband. The date to which the lawyer for the wife meant to refer is in fact the date of the last dealing on the title of the property (the mortgage to Bank G) and not the date of the dealing by which the husband gained title to the property. That dealing was a transfer which was not in evidence.
Paragraphs 28 and 29 of the wife’s summary of argument deals with the issue of initial contributions in the following way:
28.His Honour made no comment about the value of each party’s contribution at the commencement of the relationship. It was not a matter of introducing property of equal value into the relationship as when the relationship commenced the Appellant had significantly [sic] equity in [Property B] and the Respondent had no real equity in [Property C]. An assessment of initial contributions of 80% to the Appellant and 20% to the Respondent, should have been made.
29.The Appellants equity in [Property B] at the time the relationship commenced, although a relevant consideration, was not considered.
No such submission was put to the trial judge nor, by reference to the record could it have been; to repeat, there was no evidence of the amount (or proportion) of any equity in any property.
The trial judge does not actually say what adjustments (if any) he makes based upon the limited findings he did make in relation to contributions. As we have said, it is tolerably clear that the trial judge concluded that on an overall basis the parties had made equal contributions. This is for two reasons:
a)The trial judge finds that no adjustment should be made for s 75(2) factors at [32] and concludes at [35] that “each party will retain a property of roughly equal value”;
b)There is nothing in the trial judge’s discussions of the parties’ contributions that would indicate that one party’s contributions should be seen as greater than the other.
There was some evidence before the trial judge which made it important for him to focus on whether or not there was a significant disparity in initial contributions between the parties, namely:
a)At the date of hearing Property B was worth $610,000; Property E was worth $370,000 and Property C had been sold in 2015 for $400,000. There is no indication that any increase in the value of these properties during the cohabitation was due to anything other than market forces. These facts gave some clue as to how the gross values of the properties might have compared at the date of cohabitation with the inference being that the husband’s two properties might have been worth slightly more than the wife’s property;
b)However, and most significantly, there is no information as to what level of debt existed in respect of the husband’s two properties. Exhibit W14 discloses that as at the date of the application for the Bank F refinance in December 2006, the state of the loans on the properties were as follows:
Property B $127,000
Property C $307,963
Property E $49,220
These mortgage balances are about two years after the cohabitation but raise significant questions about the level of debt that each party brought into the cohabitation with the implication being that the husband had significantly more debt than the wife at the commencement of the cohabitation.
Property E, retained by the husband, suffered no substantial increase to its mortgage debt over the period of the relationship, and it was used to produce rental income facilitated by the wife’s provision of Property B as accommodation by the parties.
We are mindful that these are adversarial proceedings and that generally an appellant is not permitted to raise an argument when it has not been properly prosecuted at trial (Metwally v University of Wollongong (1985) 60 ALR 68).
The wife could not be seen to have adequately agitated at trial any question of initial capital disparity, nor did she adduce adequate evidence including, as an important example, evidence of the historical value of her Property B at the outset. However, the wife clearly did agitate a case concerning the allocation of those debts accumulated during the relationship, mostly the debts in relation to the failed business “ABC”. Indeed, at [3] the trial judge identified this as being “[t]he gravamen of the dispute”.
The trial judge’s orders have the result that the wife is left solely responsible for slightly more than 70 per cent of the total debts of the parties or either of them. That includes, as a major component, the entirety of the accumulated debt attributable to funding, relatively late in the relationship (April/May 2011 onwards), the failed ABC business; that debt was added to, and remains as part of, the mortgage debt upon the wife’s Property B. Thus, aside from any inferences that might have been drawn from evidence concerning the debt level each party had at the outset of the relationship referable to initial capital disparity, issue was squarely joined between the parties as to the allocation of debt accumulated during the relationship and, specifically, the debt accumulated by reference to the failed business.
To focus, as the trial judge did, only upon an approximately equal division of the net assets now remaining, was to lose sight of that issue.
At [33] to [35] the trial judge expressed the following by way of a “conclusion”:
33.This is a most unfortunate case. There is no doubt that the financial history of the parties’ relationship was a disaster. Essentially this was a result of the failure of a business purchased during the marriage called “[ABC]” … It failed. I do not ascribe the responsibility for this failure to either party.
34.There is no satisfactory solution to this case. In the end I have decided to, in effect, leave things as they lie. If she can afford to meet the mortgage on her [Property B] the wife may retain it. If he can afford to retain his [Property E] the husband may retain it. The wife is to be responsible for monies secured on [Property B] and the husband on [Property E]. Otherwise I propose to make no order in relation to the other debts. That is I will not make any order that either party indemnify the other against any liability with respect to those debts.
35.The end result is that each party will retain a property of roughly equal value when the mortgage debts on those properties is taken into account.
(Emphasis added)
It is clear enough that the trial judge determined that responsibility for the business failure should not be ascribed (solely) to either party. Implicit in that conclusion is that the loss should be shared equally. Yet, the trial judge completely failed to recognise that by leaving the entirety of the current mortgage debt on Property B as the wife’s responsibility his Honour was, in practical terms, ascribing to the wife sole financial responsibility for the business failure. That is, it does not logically follow, as it would seem the trial judge has assumed, that by apportioning the value of the net assets now more or less equally, this results in the parties more or less equally sharing financial responsibility for the business failure. It bears repeating that the wife introduced Property B with a mortgage debt of only $150,000. The effect of the orders is that she retains the Property B mortgage but now with a debt of $320,000, an increase attributable to the money lost because of the failed business venture.
On that basis we conclude that the order which left the wife with the responsibility for the whole of the current mortgage on Property B is unjust and unreasonable.
It is not possible to discern from the trial judge’s reasons how the result embodied in the final orders is a just and equitable outcome when it would seem clear enough that the trial judge intended that debts accumulated during the relationship should be shared equally between the parties.
These grounds have merit.
The trial judge failed to take into account as a material consideration, the failure of the husband to attempt to sell the ABC business
The evidence the husband gave at trial was that given the currency of these proceedings, he did not believe he could offer the licence for sale without the wife’s consent. The licence had been purchased as part of the acquisition of the business for which the husband paid $56,000 in 2011. There was no evidence led by either party as to what the value of the licence might or might not be worth at the date of trial. The husband said he did not know what the parties might be able to resell the licence for. The business had failed and was no longer trading. The trial judge discussed what the business was worth at [22] of the Reasons. It can be inferred the trial judge was unable to give any value to the licence.
This ground fails.
The wife claims that the trial judge erred in accepting the husband’s assertions over the wife’s where the trial judge made no finding in relation to credit and where the wife asserts parts of the husband’s evidence was unsatisfactory
During oral submissions, counsel for the wife abandoned any complaint based upon an assertion that the trial judge should have made credit findings. In the wife’s reply to the husband’s argument filed 5 April 2017, the wife re-agitates the complaint the trial judge failed to make credit findings on the basis that it was relevant to the issue of whether or not the wife had agreed to an additional borrowing of $100,000 in April 2011. That issue is disposed of above.
In so far as this complaint relates to the trial judge accepting the husband’s estimate of value over the wife’s in respect of particular assets, none of those matters go to issues of credibility but rather to the best evidence upon which a value could be ascribed to a particular asset in circumstances where neither party obtained any expert evidence as to the value of an asset. Specifically:
a)Neither party obtained a valuation of the husband’s vintage car. The wife asserted that the motor vehicle was worth $25,000. The husband said he sold it in 2014 for $2,000. The trial judge rejected the wife’s assessment of the value of the vintage car. That finding was open to the trial judge. The wife additionally asserted that the trial judge mistakenly accepted the husband’s evidence that he had in fact sold the motor vehicle when the wife had provided the husband’s Facebook “post” (Exhibit W14) from which the wife asserted that it could be directly inferred that the husband still owned the motor vehicle. Even if that was so, the amount involved is de minimus.
b)In this appeal the wife claimed the husband’s evidence was unsatisfactory when he claimed that the van was sold for $5,000 and then stated it was “busted” and was sitting at the front of his workshop. When pressed about it being able to be moved, notwithstanding it being “busted”, he claimed it moves around but can’t do distance, it parks there and is moved for a clothes line. When pressed further, he claimed that he had sold it to his son the previous year. The wife made no submission before the trial judge in relation to the van, and the trial judge does not mention the van in his Reasons. The van does not rate a mention in the wife’s summary of asset and liability table in her outline of case or in final submissions. The claims about the van were not established beyond controversy.
The wife abandoned any complaint about the trial judge’s finding at [28] of the Reasons where the trial judge accepted the husband’s evidence in preference to the wife’s as to why she stopped work.
There is no substance to this ground.
The trial judge failed to take into account how the husband disposed of the $20,000 he received from the sale of the machine in 2014
Again this complaint was not made in final submissions before the trial judge. At [19] of the Reasons, the trial judge found that “[t]he proceeds went towards paying off debts”. That finding was open to the trial judge.
There is no substance to this ground.
The trial judge did not take into account the husband’s “waste” by leaving Property C vacant prior to its sale
Again, this point was not made before the trial judge.
The rent that had been previously received in respect of that property was at a rate of $400 per week. In the wife’s outline of case document, the wife dated the period of vacancy as being between April 2015 and June 2015. In oral evidence, the husband indicated that the property had been vacant since August 2014. The husband’s evidence was that he was going to put the property on the market and he took the view that he could not take up an agreement with a new tenant for 12 months if he was going to sell the house. In those circumstances, it was not an error for the trial judge to fail to take into account rent the husband “lost” by leaving Property C vacant prior to the purchaser entering Property C under a licence agreement after the exchange of contracts.
This ground fails.
The trial judge erred by not making a costs order in the wife’s favour in respect of 13 November 2015 as he said he would
The complaint under this ground is that the trial judge failed to make an order for the wife’s costs of 13 November 2015, 21 December 2015 and 12 April 2016 in circumstances where the trial judge indicated that he would do so.
We set out some relevant history.
On 31 July 2015 the trial judge heard the competing applications for a final property settlement order. Both the husband and wife gave their oral evidence and made short submissions.
On his own motion, the trial judge relisted the matter on 13 November 2015. The trial judge having considered the written evidence more closely had formed the view that there were certain omissions in the evidence particularly in relation to the mortgages on the respective properties. The trial judge raised the issue of the valuation of Property B. The husband indicated that he had never agreed to any value on Property B. There was a discussion as to the state of the valuation evidence in relation to Property B.
Counsel for the wife then made the following submission to the trial judge:
MR BEVAN: …I … raise with your Honour that when the matter proceeded through the case management thing, Hughes J directed that he [referring to the husband] was to obtain a valuation by a certain date and he didn’t do that.
HIS HONOUR: Yes.
MR BEVAN: And he’s now saying he suffered prejudice.
(Transcript 13 May 2015, page 6, lines 22 – 28)
However Judge Hughes’ order of 5 February 2015 was:
7.The parties shall forthwith take all steps necessary to arrange for a valuation of the wife’s property [Property B] by a valuer to be agreed between the parties or failing agreement to be nominated by the Director of the Real Estate Institution of NSW with the valuation to be completed by 1 May 2015.
Accordingly it seems that the statement made by counsel for the wife to the trial judge on 13 November 2015 that Judge Hughes ordered the husband alone to do something is not accurate as Judge Hughes ordered both parties appoint a single expert.
After counsel for the wife had made this incorrect representation to the trial judge, the trial judge went on to indicate that the husband would have the opportunity to obtain a valuation of Property B on the basis that “Mr Bevan’s costs”, presumably of 13 November 2015, would be paid by the husband. The matter was to be adjourned to 21 December 2015 for mention only.
Order 2 made by the trial judge on 13 November 2015 was in the following terms:
2.THAT in the event the husband does seek to have the matter re opened an order will be made that he pay the cost thrown away by his failure to have such a valuation in place by the final hearing date of 31 July 2015.
When the matter came back for the directions hearing on 21 December 2015 the husband relied upon a valuation he had obtained in relation to Property B which he served on the wife’s lawyer. The trial judge set the matter down for the hearing to continue and conclude on 12 April 2016. At the end of that mention the following exchange took place between the trial judge and Mr Bevan:
MR BEVAN: Can I ask costs of today be reserved, your Honour?
HIS HONOUR: Yes. So that doesn’t – that’s noted. But I think I have a – in order (2) of the orders of November - - -
MR BEVAN: There’s no - - -
HIS HONOUR: - - - I said that the costs thrown away will be met by Mr Gladwell.
MR BEVAN: Thank you, your Honour.
HIS HONOUR: And that will occur. That may be either the costs thrown away because of the fact that it wasn’t dealt with last time or the whole costs of the hearing if your client is successful on valuation issues.
MR BEVAN: Yes, your Honour.
HIS HONOUR: In which there will be a compelling argument that you should get all your costs, the costs of bringing your valuers and the costs of your attending. We shall see. Adjourn the court.
(Transcript 21 December 2015, page 5, line 46 to page 6, lines 1 – 18)
When the hearing concluded on 12 April 2016 the following exchange took place between counsel for the wife and the trial judge:
MR BEVAN: Sorry. Can we confirm the costs order today, your Honour?
HIS HONOUR: I’m sorry?
MR BEVAN: Confirm the costs order for today?
HIS HONOUR: The costs – you’re asking for costs?
MR BEVAN: You said on the last occasion, because, yes, you made an order on the last occasion, because Mr Gladwell sought the extra hearing in relation to the valuation he would pay those costs.
HIS HONOUR: Yes. Right. Okay. Thank you for reminding me about that. I will just make a note about that. Excuse me. You’re quite correct. And I’ve made a note about that. No, I will be able to make an assessment of those on the scale, I imagine.
MR BEVAN: Yes. Thank you, your Honour.
(Transcript 12 April 2016 page 38, lines 8 – 24)
The wife has made no other costs application in this case.
The trial judge did not make any costs order.
The husband’s valuation evidence was ultimately accepted by the trial judge in preference to the valuation evidence adduced by the wife. In those circumstances the wife’s complaint can only be that the trial judge failed to make a costs order in the wife’s favour for the costs thrown away by the adjournment on 13 November 2015 to enable the husband to get a valuation and assess the wife’s costs according to the court’s scale.
Given that the assurances given by the trial judge that he would make a cost order were seemingly, at least in part, induced by the incorrect representation made to the trial judge about what Judge Hughes had ordered, this ground should not succeed.
Conclusion
The wife has established appellate error and the appeal must succeed.
Unfortunately the matter must be remitted for rehearing consequent upon the allowing of the appeal. The new trial judge would be assisted if clear evidence was led as to the value of the initial capital contribution by each party including as to the level of debt each party had at the commencement of cohabitation and evidence in relation to how increased borrowings between the date of the cohabitation and the time of the refinance with Bank D in 2011 were used. We note that the trial judge has now retired and there is no question of the matter being remitted to him for rehearing.
Costs
In the event that the appeal was successful, the wife sought an order that the husband pay her costs. We consider however that the circumstances of this case and particularly having in mind the comments we have made about presentation of this case to the trial judge, an order for costs against the husband should not be made.
Given the basis upon which the appeal is to be allowed, we consider it appropriate that each party bear their own costs but would grant the wife a costs certificate in respect of the appeal and a costs certificate in respect of the rehearing.
The husband made no application for a costs certificate in relation to the appeal or the rehearing.
I certify that the preceding ninety-eight (98) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Murphy, Kent & Watts JJ) delivered on 17 November 2017.
Associate:
Date: 17 November 2017
6
1