Bishop & Bishop
[2013] FamCAFC 138
•6 September 2013
FAMILY COURT OF AUSTRALIA
| BISHOP & BISHOP | [2013] FamCAFC 138 |
| FAMILY LAW – APPEAL – PROPERTY – Where the appellant husband appealed property settlement orders on the basis that the Federal Magistrate erred in excluding an inheritance received by the wife late in the marriage and a property the wife purchased post-separation from the parties’ property “pool” – Where the appellant husband also alleged the Federal Magistrate erred in his findings regarding the parties’ contributions to their superannuation entitlements and the parties’ contributions to their non-superannuation property “pool” – Where the Full Court found that the Federal Magistrate failed to make findings regarding the parties’ contributions to their superannuation entitlements – Appeal allowed – Remitted for rehearing – No order for costs – Certificates for costs granted. |
| Family Law Act 1975 (Cth) |
Federal Proceedings (Costs) Act 1981 (Cth)
| Bonnici v Bonnici (1992) FLC 92-272 Coghlan and Coghlan (2005) FLC 93-220 Gronow v Gronow (1979) 144 CLR 513 |
| APPELLANT: | Mr Bishop |
| RESPONDENT: | Mrs Bishop |
| FILE NUMBER: | CAC | 142 | of | 2008 |
| APPEAL NUMBER: | EA | 5 | of | 2012 |
| DATE DELIVERED:: | 6 September 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Finn, May and Strickland JJ |
| HEARING DATE: | 26 October 2012 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 11 August 2011 |
| LOWER COURT MNC: | [2011] FMCAfam 790 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr C. Othen |
| SOLICITOR FOR THE APPELLANT: | Garden Montgomerie Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr G. Brzostowski SC |
| SOLICITOR FOR THE RESPONDENT: | Walsh Blair Lawyers |
Orders
The appeal against the orders made by Federal Magistrate Lindsay (as he then was) on 11 August 2011 be allowed.
The orders be set aside.
The proceedings between the parties for property settlement be remitted for re-hearing by a Judge of the Federal Circuit Court (other than Judge Lindsay).
The application filed on behalf of the husband on 23 October 2012 to adduce further evidence be dismissed.
The application made orally on behalf of the wife in Court on 26 October 2012 to adduce further evidence be dismissed.
There be no order for costs in relation to the appeal.
The Court grants to the appellant 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 appellant in respect of the costs incurred by him in relation to the appeal.
The Court grants to the respondent a costs certificate pursuant to the provisions of s 6 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 respondent in respect of the costs incurred by her in relation to the appeal.
The Court grants to each party 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 each party in respect of such part as the Attorney-General considers appropriate of any costs incurred by each party in relation to the new trial granted by these orders.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bishop & Bishop has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT CANBERRA |
Appeal Number: EA 5 of 2012
File Number: CAC 142 of 2008
| Mr Bishop |
Appellant
And
| Mrs Bishop |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an appeal by Mr Bishop (“the husband”) against orders for property settlement made by Lindsay FM (as he then was) on 11 August 2011. Leave was given to the husband on 11 May 2012 to file this appeal outside the prescribed time.
The respondent to the appeal is Mrs Bishop (“the wife”) and she opposes the appeal.
It will be more convenient to explain the orders made by the Federal Magistrate and the issues raised by the appeal after providing some history of the parties’ financial relationship as it is to be found in his Honour’s reasons for judgment in relation to the orders appealed, and also after providing some explanation of those reasons (“Reasons”).
The factual background and the Federal Magistrate’s reasons for judgment
The husband was born in 1956 and the wife in 1957. In November 1982 they commenced living together on a rural property known as T. They married in 1983. Their three children were born in 1988, 1990 and 1993 respectively. The parties separated under the one roof in September 2006 and physically separated in October 2007.
At the commencement of their relationship, the husband was a farmer working (with his parents) on property T. That property comprised about 900 acres. It had been purchased (subject to a mortgage) by the husband and his mother in 1979 for $190,000. A deed of partition in December 1984 resulted in the husband becoming the sole proprietor of 600 acres (which by 1985 was subject to a mortgage of $82,000) and his mother 300 acres. The parties purchased the mother’s 300 acres for $100,000 in 1988 using $25,000 which the wife had received by way of inheritance, and with the balance being borrowed from a bank.
The Federal Magistrate recorded in his reasons for judgment that the maximum amount at which property T could be valued in 1983 was $300,000 (which was presumably the husband’s case), while on the wife’s case it was then valued at approximately $180,000. His Honour found that it was very difficult to find a precise value and that the value lay between the two figures, but he concluded it was “a significant initial contribution” which should be given “real rather than nominal significance” when evaluating the husband’s contributions (Reasons [44] to [59]).
In 1994 the parties sold the 600 acre allotment of property T for $400,000 and purchased from the husband’s parents a new property, “E”, for $415,000 (Reasons [25]). The remaining 300 acres of property T were sold in 2007 for $360,000. Most of the sale proceeds were used to discharge the mortgage on property E (Reasons [61] and [64]). The husband continued to farm property E at the time of the trial before the Federal Magistrate.
At the commencement of the parties’ relationship, the wife was employed as a school teacher. She continued this employment (sometimes on a casual or
part-time basis) throughout the relationship. His Honour found that her income as a teacher was “of vital importance” to the family during the period they farmed property E (Reasons [70] and [71]). The wife continued to work as a teacher at the time of the trial before the Federal Magistrate.
At the time of the trial the wife was living in a house at K on the
New South Walescoast valued at $450,000, which his Honour found had been purchased entirely by funds advanced by an aunt. The wife claimed that those funds had to be repaid when the property settlement proceedings were completed (Reasons [15]).
In August 2005 (which was about a year before the parties separated) the wife had received an inheritance from an aunt in England in the amount of $227,000, with a further amount of $25,000 being received in November 2005. These funds were placed in a trust, known as the A Trust, and his Honour found that they were never “intermingled with joint funds or funds of the husband”. At the time of the trial there remained $207,336 (Reasons [31] to [33]).
His Honour excluded these inherited funds “from the calculation of the asset pool” and from any assessment of contributions pursuant to s 79(4) of the Family Law Act 1975 (Cth) (“the Act”), although he did have regard to them when considering the matters in s 75(2) of the Act (Reasons [11], [41] and [88]).
The remaining items which his Honour found to be the property of each party and which he set out in a schedule at [10] of his reasons (but not including any assets acquired post-separation) were as follows:
Husband
Wife
Real property known as property E
$960,000.00
Proceeds of sale of stock and plant post-separation (partial distribution already made)
$25,000.00
$96,500.00
Farm machinery in husband’s possession
$19,500.00
Half partnership account (husband)
$135.78
Utility motor vehicle in husband’s possession
$14,000.00
Landcruiser vehicle previously in wife’s possession
$3,500.00
Dog trailer in wife’s possession
$3,000.00
Shares (… and … in husband’s possession)
$12,835.00
Total
$1,134,470.78
His Honour concluded that an amount owing by the husband in respect of a loan for a bore in the amount of $15,790 “should be regarded as a joint liability of the parties and taken into account in fixing a total net asset pool.”
His Honour also concluded that two tax debts, one for the husband in the amount of $9,051.00 and one for the wife in the amount of $21,939.00, together totalling $30,990.00, should be “deducted from the gross value of the assets”.
His Honour further concluded at [14] that there should be “a separate superannuation pool constituted by the parties’ superannuation.” The husband’s superannuation had an agreed value of $34,507 and the wife’s superannuation had an agreed value of $96,650. His Honour later observed at [76] that it would be “just and equitable” to deal with the superannuation interests separately. However, he appears only to have referred to the superannuation interests when determining that some adjustment needed to be made in favour of the husband on account of various s 75(2) matters, and not to have otherwise taken them into account. His orders provided for each party to retain his or her own superannuation interest.
Again for reasons later to be examined, his Honour decided that for purposes of dividing the parties’ “non-superannuation assets”, their contributions of all types should be regarded as equal (Reasons [44] to [78]). However, he was prepared to make an adjustment in the husband’s favour pursuant to s 75(2) on account of the wife’s inheritance and her greater superannuation entitlement, and he described the proposed adjustment thus (Reasons [88]):
… [T]here should be an adjustment of 10% of the pool in the husband’s favour i.e. an adjustment of 5% from the wife’s contributions-based entitlement of 50% or in other words, a division of the assets 55/45% in the husband’s favour, after an assessment of contribution-based entitlements and a carrying out of the s.75(2) exercise.
Having explained how he would deal with the two tax debts, his Honour then provided the following calculations for, and explanation of, the property division which he proposed:
90. …
Non-superannuation pool (excluding the wife’s inheritance) …
$1,134,470.78
Less bore loan
$15,790
$1,118,680.78
45% equals
$503,406.35
Wife has assets of value
-$103,000.00
Net payment due to wife by husband if he wishes to retain [property E]
$400,406.35
Add $7,000 tax adjustment …
$7,000
$407,406.35
91.The outcome of these orders would be that the husband would have the assets currently in his possession, the ownership of [property E] (presumably subject to an additional mortgage of the sum to be paid to the wife) and his other debts and his superannuation entitlement. The wife would have the sum paid by the husband to her, her other assets including the monies in the [A Trust], her superannuation and her private indebtedness.
The first order made by his Honour was then to the following effect:
a)The husband pay to the wife within sixty (60) days the sum of $400,406.35;
b)Contemporaneously with such payment the wife transfer to the husband her interest in [property E];
c)The husband indemnify the wife in respect of any monies owing and secured by mortgage over [property E];
d)The husband indemnify the wife in respect of the loan in relation to the bore;
e)The husband be solely entitled to the exclusion of the wife to the possession, ownership and control of:
i.The [E] property;
ii.All farm machinery, motor vehicles, motor bikes, plant and equipment in his possession;
iii.All stock on the [E] property or otherwise in his control;
iv.All shares, debentures and investments in his name or held for his benefit;
v.Any monies standing to his credit in any banking account; and
vi.Any interest in his name or held for his benefit in a superannuation fund.
f)The wife be solely entitled to the exclusion of the husband to:
i.Any monies or other assets in her name or held for her benefit;
ii.All shares, debentures and investments in her name or held for her benefit;
iii.Any motor vehicles or trailers in her possession;
iv.Any monies standing to her credit in any banking account; and
v.Any interest in her name or held for her benefit in a superannuation fund.
A second order provided for a Registrar to execute any necessary document in the event of a default under the orders by either party. The third and fourth orders provided for the sale of the E property in the event that the husband failed to pay the amount required under the first order to the wife.
On or about 27 September 2011, his Honour amended his orders pursuant to “the slip rule” to change the amount which the husband was required to pay to the wife to $421,323.35.
The issues raised by the appeal
The husband’s notice of appeal contained nine grounds of appeal, some of which contained sub-grounds. However, Grounds 7, 8 and 9, and the first
sub-ground of Ground 4 were ultimately not pursued.
Counsel for the appellant husband addressed the remaining grounds under the following six topics:
1.The decision to exclude the wife’s inheritance from the pool of property to be adjusted between the parties (Grounds 2(a), 3, 4(e));
2.The decision to exclude the wife’s property at K and the encumbrance (if any) thereon from the pool of property (Grounds 1(a), 2(b), 4(e), 4(f);
3.Decisions made about the superannuation entitlements of the parties (Grounds 1(b), 4(b), 4(d));
4.The contributions findings in relation to the non-superannuation pool (Grounds 1(c), 5(a), 5(b), 6(a));
5.Matters under s 75(2) (Grounds 1(d), 4(c), 5(c), 6(b)); and
6.The “justice and equity” of the orders (Grounds 1(e), 6(c)).
The decision to exclude the wife’s inheritance from the pool of property to be adjusted between the parties (Grounds 2(a), 3, 4(e))
The errors asserted in relation to this topic are that his Honour, in excluding the wife’s inheritance from the pool of property available for division (Ground 2(a)), “[failed] to ensure both procedural and substantive fairness and otherwise denied natural justice”, and that his “discretion miscarried” in failing to include that inheritance in the property available for division (Ground 4(e)).
It is also asserted that his Honour “erred at law in finding that he was constrained by authority in leaving the inheritance received late in the marriage … out of the calculation of the pool” (Ground 3).
It would seem that the last mentioned asserted error of law relates to the following observation by his Honour (at [36]):
I think I am constrained by authority to leave the inheritance received late in the marriage by the wife out of the calculation of the pool. Bonnici v Bonnici (1992) FLC 92-272 [(“Bonnici”)] was a decision of the Full Court of Australia relied upon by both parties before me.
As his Honour went on to explain, Bonnici was a case where the husband received late in the marriage an inheritance of approximately $430,000 in circumstances where the value of the parties’ other assets was approximately $585,000. The Full Court made the following observations in relation to the treatment of the inherited monies (which, it should be noted, was just one of a number of issues in the case) (at 79,019-79,020):
However, the problem that presently faces the Court is as to whether a finding that the parties had contributed equally can be justified given the very substantial assets that came into the husband’s hands shortly prior to the end of the marriage.
We have no doubt that his Honour was correct in rejecting the submission that these assets were a “resource” and not property…
The more difficult issue in this case is as to whether the same should be treated differently from other types of property in which the parties clearly have an interest.
The answer, we consider, must depend upon the circumstances of individual cases. If, for example, in the present case, there had been no other assets than the husband’s inheritance, but the wife had, as his Honour found, clearly carried the main financial burden in the support of a family and also performed a more substantial role as a homemaker and parent than the husband, then it would clearly be open and indeed incumbent upon a Court to make a property settlement in her favour from such an inheritance.
A property does not fall into a protected category merely because it is an inheritance. On the other hand, if there are ample funds from which an appropriate property settlement can be made and a just result arrived at, then the fact of a recently acquired inheritance would normally be treated as an entitlement of the party in question.
The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances. Such circumstances might include the care of the testator prior to death by the husband or wife as the case may be or other particular services to protect a property.
See James and James (1978) FLC 90-487. But there was no evidence of this in the present case despite submissions by counsel for the wife to the contrary. Accordingly, we think that in the present case the moneys received by the husband from the sale of the freehold and from his uncle’s estate should not be brought into account.In the present case the Federal Magistrate set out the fourth, fifth, and part of the sixth paragraphs of the above passage from Bonnici. Although his Honour expressed a reservation as to whether the Full Court had really clarified or answered the question as to whether an inheritance received late in a marriage should be included “in the calculation of the asset pool”, he went on to say:
41.Despite the reservations I expressed about one aspect of the Bonnici (supra) decision, I think on the facts of this case I am bound to exclude the inheritance from the calculation of the asset pool. It was received in the twenty-first year of a twenty-three year marriage and it has been entirely quarantined by the wife (without the objection of the husband) from their dealings since the date of its receipt. The husband’s contributions to the asset should be regarded as nil. Moreover, it is difficult to see how the wife either made any contribution to the asset in a way that would bring it within the scope of the contributions-based elements of the s.79 of the Act exercise.
We agree with the assertion in Ground 3 that his Honour was not constrained by what the Full Court said in Bonnici about the treatment of inheritances.
As the Full Court emphasised in that decision, and as we cannot emphasise too strongly, each case in this jurisdiction will depend on its own facts or circumstances.
However, we would not interfere with his Honour’s decision because of his view that he was bound by authority to exclude the inheritance from the calculation of “the asset pool”. This is because his findings or conclusions in the last three sentences of [41] would support the approach which he took of excluding the wife’s inheritance from the “asset pool” and regarding the husband’s contributions to it as “nil”. His Honour did, however, have regard to the inheritance in the context of his consideration as to whether any adjustment was required to be made to the division of the property to which the parties had contributed, on account of the matters contained of s 75(2) of the Act. This, in our view, was an approach open to him.
It is relevant to mention in this context that counsel for the husband endeavoured to persuade us that it was in some way inconsistent, or even unjust, that the wife’s inheritance had been effectively quarantined, while the rural property which could be traced to an initial contribution by the husband was included in the so-called “asset pool”, and that the husband’s contribution of that property was ultimately given no greater weight than the wife’s contributions to the parties’ property (being property other than her inheritance and both parties’ superannuation interests).
The difficulty with such an argument is that although the husband brought some rural property (subject to a mortgage) into the marriage, over the years of the marriage, that property, and the property subsequently acquired with the proceeds of sale of the first property, were used for the benefit of the family
(as a home and a source of income), with the wife having made significant financial and non-financial contributions to both properties. On the other hand, the husband was found to have made no contribution to the wife’s inheritance.
His Honour cannot be said to have been wrong in having treated, in what can be termed, separate categories, property to which both parties had contributed and property to which only one (or perhaps neither) had contributed. Whether each party’s contributions to the property to which they had contributed were adequately recognised by his Honour is a different consideration, and is one to which we will return.
Our conclusions reached so far in relation to his Honour’s treatment of the wife’s inheritance dispose not only of Ground 3, but also of the complaint in Ground 4(e) that his Honour’s discretion miscarried because of the manner in which he dealt with the wife’s inheritance.
The procedural fairness and/or natural justice complaint contained in
Ground 2(a) was never adequately explained to us. But in any event, we have difficulty in understanding how it can have substance given the husband’s position at trial, which was recorded by his Honour in the following terms:
34.The husband urges me to regard the funds in the [A] Trust as constituting a discrete pool. That is, he urges a “two asset pool” approach even before we deal with the issue of superannuation. He says this should be done because the husband made no contribution to the inheritance, that it had never been used other than for the wife’s purposes and that it cannot be characterised as a financial contribution whether direct or indirect by either party to the acquisition, conservation or improvement of their assets.
The accuracy of what his Honour said in that paragraph was not challenged before us.
The grounds directed to the exclusion of the wife’s inheritance from the property to be divided between the parties have therefore not been established.
The decision to exclude the wife’s property at K and the encumbrance (if any) thereon from the pool of property (Grounds 1(a), 2(b), 4(e), 4(f))
The only references which his Honour made in his reasons to the wife’s K property and the funds used for its purchase were:
15.The wife currently lives in [K] in a home that is valued at $450,000 and which was purchased entirely by funds advanced by her aunt. She says those funds are to be repaid to her aunt at the time of the settlement of these proceedings.
…
81.The husband has had since separation and will continue to have the sole use and occupancy of the [E property]. Such significance as this might have had is diluted by the circumstance that the wife has had the benefit of having a home purchased for her through the beneficence of an aunt. The property at [K] was purchased by a $430,000 interest free mortgage. The money is due to be repaid in 2013. The aunt is aged in her 80s and has no children although the wife is not the only niece or nephew. Neither party called the aunt. It is difficult to know whether the wife will be called upon to repay this sum of money when it falls due or whether she will be required to repay the amount in full. There must be some uncertainty about that. I do not think I need to make a specific finding about that issue. I am considering what significance if any to the husband’s occupancy of [property E]. In terms of a s.75(2) of the Act consideration I do not propose to take into account the circumstances of the husband’s occupancy of the farm
post-separation. The wife’s present circumstances would make it inequitable to do so.It will be recalled that the K property was not included in the schedule of the parties’ property contained in [10] of his Honour’s reasons.
The husband now complains:
·that his Honour erred in law in failing to give adequate reasons for excluding the “post separation property” (which, it can be assumed, includes the K property) from the “pool to be adjusted between the parties” (Ground 1(a));
·that his Honour’s discretion miscarried, in that he failed to “include in the pool … [of] property available for distribution between the parties”, the wife’s interest in the K property (Ground 4(e)); and
·that his Honour failed “to make any finding of fact as to the likelihood of the loan in favour of the Aunt being called up to be repaid in part or in full at any time” (Ground 4(f)).
Ground 2(b) asserts an error of law by his Honour in that he failed “to ensure both procedural and substantive fairness and otherwise denied natural justice in excluding from the pool of property available for adjustment”, the wife’s property at K and the encumbrance, if any, thereon. This ground was not further explained to us, and in the absence of any explanation, we cannot consider it further. Thus, in relation to this topic, we will concern ourselves only with the grounds described in the last paragraph.
Before setting out the schedule of the parties’ property in [10] of his reasons, his Honour made it clear, in the opening words of that paragraph, that he was “excluding assets that [had] been acquired post-separation”. He then not only excluded the wife’s K property, but he also excluded a combine harvester/header worth $166,000 and a motor bike, both of which had been acquired by the husband since separation, and the debts in relation to which exceeded their value (Reasons [16]).
We consider that his Honour was entitled to adopt this approach to items acquired post separation, at least in circumstances where he was satisfied that the amount of any enforceable debt on such items equalled, or exceeded, the value of such items. Thus, it is the debt on the K property that is the real issue to be considered in relation to the grounds of appeal currently under consideration.
It will be seen from [81] of his reasons, that his Honour concluded both that there was “uncertainty” about whether the wife would be required to repay the debt in relation to the K property, and that he did not “need to make a specific finding about that issue”. When his Honour considered the application of the s 75(2) matters to this case, he simply set off the benefit to the wife of the
K property against the husband’s sole use and occupancy since separation of the E property.
We have not been persuaded that his Honour’s conclusions regarding the debt, and his approach to the K property were not open to him given the state of the evidence before him and the manner in which the parties conducted their cases before him. We thus find no substance in the grounds directed to those matters.
Decisions made about the superannuation entitlements of the parties (Grounds 1(b), 4(b), 4(d))
The grounds directed to his Honour’s treatment of the parties’ superannuation entitlements assert that he erred in failing to give adequate reasons for any “contribution findings or adjustments thereto in relation to the super [sic] pool” (Ground 1(b)), and that his discretion miscarried in that he failed “to make any contribution findings regarding the super [sic] pool” (Ground 4(b)), and “to consider the super [sic] pool as part of the Section 79(2) exercise”
(Ground 4(d)).
As we explained much earlier in these reasons, his Honour decided at [14] that there should be “a separate superannuation pool” constituted by the husband’s superannuation, which had an agreed value of $34,507, and the wife’s superannuation, which had an agreed value of $96,650. Such a “separate pool” approach is certainly permissible under the Full Court decision in Coghlan and Coghlan (2005) FLC 93-220 (“Coghlan”), as his Honour recognised at [76].
However, it was also held in Coghlan (at [65]) that where the “separate pool” approach is adopted, and even if a superannuation splitting order is not sought, it will be extremely prudent (in the interests of achieving just and equitable orders) to consider the contributions which have been made under ss 79(4)(a), (b) and (c) by both parties to both their superannuation interests and then to consider whether an adjustment (or further adjustment) to the interests is required on account of the other factors in s 79(4) (notably the s 75(2) matters).
In the present case his Honour did not, in his reasons, give any consideration to the parties’ contributions to their respective superannuation interests, although in the context of his consideration of the parties’ contributions to their other property, he said:
76.I have indicated (at [14] above) that I am regarding the superannuation assets of the parties as constituting a separate pool. This is consistent with authority (see Coghlan v Coghlan (2005) FLC 93-220) and is appropriate because neither party will be realising the benefit of that asset for some years yet. It is not available for distribution between the parties with the same degree of flexibility as the non-superannuation assets. It is just and equitable to deal with the superannuation assets separately.
Then, when considering the s 75(2) matters after his determination that the parties’ contributions to their property (other than to their superannuation interests and the wife’s inheritance) should be assessed as equal, his Honour said:
83.Manifestly, the fact that the wife has a superannuation entitlement almost three times as large as the husband must be taken into account but in the context of neither of them being able to access their superannuation for some years to come. I accept the evidence of the wife that the decision the parties made to invest approximately $66,000 from the clearing sale at [property E] in 2007 in the wife’s superannuation fund was done to avoid capital gains tax being levied on the sale and obtaining benefit from that rollover relief. Ultimately though, at the s.75(2) stage I am concerned about the existence of the resource rather than the reason she came into possession of it.
Earlier in his reasons, his Honour had made the following observations in relation to the clearing sale proceeds which had been placed in the wife’s superannuation account:
65.The parties conducted a sale described as a “Clearing Sale” in respect of certain plant and equipment at [property E] and an amount of $121,500 was obtained as a result of that sale. That was provided, as to $96,500 to the wife and $25,000 to the husband, and this partial distribution of the property of the parties is reflected in the schedule of assets set forth in paragraph [10] above.
66.As the husband’s counsel points out in his written submission, the amount contributed towards the superannuation account of the wife accounts for approximately two thirds of its current value.
In his conclusion in relation to the s 75(2) adjustment, his Honour explained at [88] that he considered that he was “obliged in the context of an asset pool of approximately $1.134 million to give significant weight” to the wife’s inheritance which was “outside of that pool” and “also to her greater entitlement within the superannuation pool.” On account of these matters, his Honour adjusted the equal division of the assets (other than the wife’s inheritance and the superannuation interests) to a 55 per cent/45 per cent division in favour of the husband.
We can only say that given his Honour’s acknowledgement of the decision in Coghlan and also given the matters relating to the proceeds of the clearing sale and the wife’s superannuation account referred to in [65], [66] and [83] of his reasons, we find it extremely surprising that his Honour failed to make any findings concerning the parties’ contributions to their superannuation interests. Those interests had a relatively significant value in the overall context of the parties’ assets.
Accordingly, we must find that his Honour’s discretion has miscarried in relation to his treatment of the parties’ superannuation interests and that the ground of appeal which so asserts, has substance. Nothing put to us on behalf of the wife persuaded us to a contrary view.
The contributions findings in relation to the non-superannuation pool (Grounds 1(c), 5(a), 5(b), 6(a))
The grounds directed to his Honour’s assessment of the equality of contributions in relation to the assets (other than the superannuation assets and the wife’s inheritance asset) assert that he failed to give adequate reasons for his “contribution finding of the non-super [sic] pool of equality” (Ground 1(c)), and to give adequate or sufficient weight to the initial contribution and the contribution made by the husband’s parents to that (Ground 5(a)), and to the “value of the non-super [sic] property held by the wife that he had excluded from the pool determined to be available for adjustment” (Ground 5(b)); and that the orders made are “manifestly unjust and plainly wrong” as to the finding of equality of contribution (Ground 6(a)).
The emphasis in the submissions made in support of these grounds was on the initial contribution which the husband made of his interest in the rural property T, which, as we earlier recorded, his Honour described as being of “real rather than nominal significance”. The essential submission made to us on behalf of the husband was that that significant contribution was ultimately accorded insufficient weight in his Honour’s assessment of an equality of contribution by the parties to their assets, other than their superannuation assets and the wife’s inheritance.
We have earlier disposed of the argument (which would seem to be again raised by Ground 5(b)) put on behalf of the husband that the wife’s inheritance should in some way have been balanced against the husband’s initial contribution of the rural property. The sole question for our determination now, is whether that initial contribution by the husband was given sufficient weight by his Honour.
In addition to tracing the history of the parties’ acquisition of the rural properties from the initial contribution by the husband (at [47] to [64]),
his Honour carried out (at [67] to [75]) what appears to be a comprehensive survey of the evidence of:
·the income produced from the husband’s farming activities and from the wife’s work as a teacher;
·the wife’s financial and non-financial contributions to the rural properties;
·both parties’ contributions to the welfare of the family; and
·the wife’s post-separation contributions to the child, S.
Having identified all these contributions, his Honour concluded:
77.Were it not for the wife’s contributions to the welfare of the family in the form of her financial support of [S] post-separation, and the capital contributions made by her and referred to at [72] above. I consider that the contributions of the husband in the form of the value of [property T] at the time the parties married and the Gosper contributions made by the husband’s parents (see [62] – [63] hereof) would have required some small weighting in the husband’s favour (something of the order of ten percentum i.e. 55/45% in the husband’s favour). But I think that those matters leave me in a position where I should regard their contributions-based entitlements as being equal. In the context of a 23 year marriage it is not appropriate for me to pretend that I am undertaking something analogous to an accounting or auditing exercise. The evaluation of contributions under s.79 of the Act is an exercise involving a broad exercise of discretion. I accept that the evaluation of the contributions-based entitlements is an exercise more amenable to mathematical precision than the final step in the process – the just and equitable requirement – but it is a discretionary exercise nevertheless. It is to be borne in mind that I do not consider that there was sufficient evidence before me to enable me to find that the acquisition of [property T] in its final form or the acquisition of [property E] were made by the parties upon the basis of the purchase prices being discounted by the husband’s parents.
78.Significant for me in the decision I have come to as to the contributions-based entitlements of the parties is the view I have taken that both parties worked extremely hard throughout the marriage. At the end of such a marriage to give additional weighting to an asset introduced at the commencement of the marriage in a way that ultimately discriminates between all of the contributions the parties made over such a long period would be inappropriate.
Before us, counsel for the husband acknowledged that the challenge to this finding of equality of contributions must ultimately be one of weight only. While we acknowledge that another judge may have made a more generous contribution finding to the husband on the basis of his initial contribution to the rural property, we are not persuaded, having regard to the limitations on appellate interference with discretionary judgments on the basis only of weight (as expressed in cases such as Gronow v Gronow (1979) 144 CLR 513), that our interference with his Honour’s assessment of an equality of contribution to the assets (other than the superannuation interests and the wife’s inheritance) would be justified. Accordingly, the grounds directed to his Honour’s contributions assessment cannot succeed.
The remaining two matters: the s 75(2) orders and the challenge to the justice and equity of the orders
The remaining two matters to be considered are the challenge to the adequacy of the s 75(2) adjustment in the husband’s favour made by his Honour (Grounds 1(d), 4(c), 5(c) and 6(b)) and the general challenge to the justice and equity of the orders which asserted that his Honour’s orders were “manifestly unjust and plainly wrong”.
Because of the error which we have found in relation to his Honour’s treatment of the parties’ superannuation interests, the correctness or otherwise of
his Honour’s s 75(2) adjustment in favour of the husband and the overall justice and equity of his orders cannot be assessed, and thus it is unnecessary that we say more concerning these two remaining matters and the grounds directed to them.
Future course of this matter
Because the parties have already had two trials in this matter and an earlier appeal and cross-appeal (which were allowed by consent), we would have preferred to re-determine the matter ourselves to correct the error in relation to the treatment of their superannuation interests. However, that course would have required further submissions from the parties and also involve the risk that, in light of those submissions, we would find ourselves unable to
re-determine the matter and would then have to remit it for a retrial.
In addition, both parties sought to put before us updating further evidence which appeared to be controversial. We cannot therefore receive the further evidence and will dismiss those applications. The parties will, of course, be able to seek to rely on such updating evidence at the further trial which must be conducted unless they are able to negotiate a settlement of this matter.
Costs
At the conclusion of the hearing of the appeal, we invited and received submissions in relation to the costs of the appeal in the event that it either succeeded or it failed.
In light of those submissions, and of the fact that the appeal has succeeded, we propose to order that there should be no order for costs and that each party should receive certificates under the Federal Proceedings (Costs) Act 1981 (Cth) in respect of the costs of the appeal and of the new trial.
I certify that the preceding sixty-five (65) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, May and Strickland) delivered on 6 September 2013.
Associate:
Date: 6 September 2013
18
2
1