Bolger & Headon
[2014] FamCAFC 27
•27 February 2014
FAMILY COURT OF AUSTRALIA
| BOLGER & HEADON | [2014] FamCAFC 27 |
| FAMILY LAW – APPEAL – PROPERTY – ALTERATION OF PROPERTY INTERESTS – where the trial Judge ordered that the parties’ property interests be distributed 51:49 per cent in favour of the appellant husband – where the appellant challenges the trial Judge’s decision on a number of grounds – where the primary ground asserts error due to insufficient reasons – whether the trial Judge failed to provide sufficient reasons – where it is not apparent how the trial Judge reached the final percentage distribution – where the reasons were inadequate to explain the result and the orders emanating from it – appeal allowed. |
| Aleksovski v Aleksovski (1996) FLC 92-705 Allesch v Maunz(2000) 203 CLR 172 Dickons & Dickons [2012] FamCAFC 154 Stanford v Stanford (2012) FLC 93-518 Whistler & Whistler [2012] FamCAFC 97 Willis & Willis [2007] FamCA 819 |
| Family Law Act 1975 (Cth) |
| APPELLANT: | Mr Bolger |
| RESPONDENT: | Ms Headon |
| FILE NUMBER: | BRC | 5795 | of | 2011 |
| APPEAL NUMBER: | NA | 28 | of | 2013 |
| DATE DELIVERED:: | 27 February 2014 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Thackray, Murphy, Kent JJ |
| HEARING DATE: | 19 February 2014 |
| LOWER COURT JURISDICTION: | Federal Circuit Court |
| LOWER COURT JUDGMENT DATE: | 17 May 2013 |
| LOWER COURT MNC: | [2013] FCCA 172 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Hamwood |
| SOLICITOR FOR THE APPELLANT: | Hede Byrne Hall Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Linklater-Steele |
| SOLICITOR FOR THE RESPONDENT: | Best Wilson Buckley Family Law |
Orders
The appeal be allowed.
The orders of Judge Cassidy made on 17 May 2013 be set aside.
The matter be remitted to the Federal Circuit Court for hearing by a judge other than Judge Cassidy.
Pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”), the appellant be granted a certificate that in the opinion of the Full Court it is appropriate for the Attorney-General to authorise a payment under the Costs Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
Pursuant to s 8 of the Costs Act, the appellant be granted a certificate that in the opinion of the Full Court it is appropriate for the Attorney-General to authorise a payment under the Costs Act to the appellant in respect of the costs incurred by the appellant in relation to the new trial ordered by the court.
Pursuant to s 6 of the Costs Act, the respondent be granted a certificate that in the opinion of the Full Court it is appropriate for the Attorney-General to authorise a payment under the Costs Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.
Pursuant to s 8 of the Costs Act, the respondent be granted a certificate that in the opinion of the Full Court it is appropriate for the Attorney-General to authorise a payment under the Costs Act to the respondent in respect of the costs incurred by the respondent in relation to the new trial ordered by the court.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bolger & Headon 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 BRISBANE |
Appeal Number: NA 28 of 2013
File Number: BRC 5795 of 2011
| Mr Bolger |
Appellant
And
| Ms Headon |
Respondent
REASONS FOR JUDGMENT
On 17 May 2013, Judge Cassidy made orders for settlement of property in respect of the property of the parties to a seven and a half year cohabitation. The effect of those orders was to divide that property in the proportion 51 per cent to the appellant husband and 49 per cent to the respondent wife.
The husband appeals those orders. He asserts, centrally, that the result falls outside the generous ambit of discretion within which reasonable disagreement is possible and, in terms of appellate intervention, permissible. That central assertion is informed by a challenge to the weight attributed to what can conveniently be called “initial contributions” by the husband and the weight attributed to an inheritance received by the wife shortly after separation.
In addition, the husband contends that her Honour’s reasons were inadequate to explain the orders made by her.
The Grounds of Appeal
The husband filed an Amended Notice of Appeal on 19 December 2013. The husband’s application to amend the grounds of appeal was not opposed and leave was granted at the hearing of the appeal to rely upon the Amended Notice of Appeal which contained the following grounds:
1.The learned Trial Judge failed to give proper weight to the value of the husband’s initial contribution in circumstances where she found that the assets brought in by the husband represented 50% of the current asset pool.
2.The learned Trial Judge erred in assessing the value of the wife’s contribution of a property worth $250,000 at trial at 7.5% of the pool in circumstances where she assessed the value of the husband’s initial contribution with a current value of $774,790 as requiring an adjustment of 7%.
3.The learned Trial Judge failed to give any weight to the wife’s depletion of the asset pool post-separation by the amount of $488,148.
4.The learned Trial Judge failed to give adequate reasons for her determination that the property ought to be divided as set out in her orders.
5.The learned Trial Judge’s determination was not just and equitable with regard to the husband.
6.The learned Trial Judge erred in finding as a fact that the Wife was diagnosed in 2009 with having a permanent back injury that resulted from a ruptured disc, such evidence having been specifically excluded.
The Trial Judge’s Approach and Reasons
No challenge is mounted to her Honour’s approach to dealing with the parties’ property and superannuation interests together (see, Coghlan and Coghlan (2005) FLC 93-220). Nor is any challenge mounted to, respectively, the value of the parties’ property or the amount of their superannuation interests as found by her Honour. Together, they total slightly more than $1.5 million net of liabilities.
The parties have no children together. The wife has three children by a previous relationship. They were aged seven and four (twins) at the commencement of the parties’ cohabitation.
Under the heading “Contributions, Discussion and Conclusions”, the trial Judge considered what is required by s 79(4) (having first considered s 79(2) and the decision of the High Court in Stanford v Stanford (2012) FLC 93-518) by dividing her consideration into an assessment of “initial contributions” and “contributions during the relationship and post-separation”. That approach led, in turn, to her Honour concluding “…that it is appropriate to attribute 7% to the husband’s initial contributions” (reasons at [42]).
Subsequently, findings were made as to the parties’ respective contributions during the course of their cohabitation and post-separation (reasons at [44]-[46]). Her Honour concluded that she was:
45.… satisfied as a consequence of [the] factors [there discussed] that the husband should obtain a further 4% by way of contribution, totalling 11% by way of contributions on behalf of the husband.
and, that:
46.The wife brought a very significant asset into the pool quite late, in that she received an inheritance from her aunt at around separation and that property is valued at $250,000.00. I am satisfied and I adopt the submissions of the counsel for the wife, in the written outline, that 7.5% is an appropriate figure for that.
It should be observed that, having concluded her examination of contributions, the only findings made by her Honour as to how determinations regarding contributions find reflection in percentage entitlements (or otherwise in figures) is in the manner just referred to.
Thereafter, her Honour moved to consider s 79(4)(e) – the “relevant s 75(2) factors” – and concluded that as a consequence of the findings there made:
53.… an adjustment of 2.5% in favour of the wife is appropriate under s.75(2) and in the circumstances, that amounts to a sum of approximately $37,800.00 which is quite a small dollar amount when compared with the husband’s potential for income.
Nowhere within her Honour’s discussion of the relevant s 75(2) factors did her Honour express a conclusion as to how her contribution findings might find reflection either in percentage or dollar terms or in terms of orders that might reflect the mooted contributions assessment. That consideration is important. In Willis & Willis [2007] FamCA 819, at [50] this Court found error “…in the trial judge’s treatment of the section 75(2) factors…” because, “…[h]er Honour failed to consider the effect of the findings as to contribution on the respective positions of the parties, before proceeding to determine whether any adjustment was warranted pursuant to section 75(2).”
In addition in so far as the reasons reveal any percentage distribution between the parties by the conclusion of her Honour’s discussion of the relevant parts of s 79, all that can be seen is that the husband is to receive 11 per cent and the wife 10 per cent.
Plainly, that was not her Honour’s intention as [54] of the reasons makes clear. Under the heading, “The Overall Conclusion – Just and Equitable Orders”, her Honour says:
54.The overall distribution of the asset pool will be 49% to the wife and 51% to the husband.
Error?
Counsel for the respondent on this appeal, properly with respect, effectively conceded that only two conclusions were reasonably open by reference to the approach and reasons just described.
First, the attribution of specific percentages to components of contribution and the adjustment in respect of the s 75(2) factors can only be seen to result in the overall conclusion if the premise is a 50/50 starting point – what counsel for the husband described as “a suppressed assumption that you start from equality”.
If that be the explanation – and we think that it is – it is, as is properly conceded, erroneous as was clearly established by the decision of the High Court in Mallet v Mallet (1984) 156 CLR 605.
If that is not the explanation, then the only other conclusion reasonably open is that it is not possible to discern from her Honour’s reasons how the ultimate conclusion expressed at [54] is arrived at by reference to the findings – including the specific findings as to the attribution of percentages – made by her Honour.
Conclusion as to Error
It follows that we consider there is merit in the challenge embraced by ground 4; we consider that her Honour’s reasons were inadequate to explain the result and the orders emanating from it.
We would set aside her Honour’s orders on that basis.
As a result of that conclusion our reasons in respect of the remaining grounds will be brief. In saying that, we should echo what was said by this Court in Whistler & Whistler [2012] FamCAFC 97:
79.We are, of course, aware of what has been said by the High Court in cases such as Kuru v New South Wales (2008) 236 CLR 1 at 6 (“Kuru”) and more recently in Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (Receivers & Managers Appointed) (2011) 244 CLR 1 at [56] (“Lanepoint”) as to the necessity for an intermediate court of appeal to deal with all grounds of appeal and not just those which are decisive.
80.However, specific considerations can be seen to apply to this Court (see, for example, ss 94(2A); 96AA and 97(3) of the Act). That more general issue aside, in this case reference to the other grounds in this appeal reveal what are essentially challenges to the exercise of discretion and to the weight attached to various specific parts of the evidence. The principles relating to the difficulties confronting appellants relying upon such grounds have frequently been referred to and do not bear repetition. In terms of the principles discussed in decisions such as Kuru and Lanepoint, those same considerations can be seen to apply a fortiori to an application for special leave to appeal to the High Court from a decision of this Court where grounds of that type are relied upon.
Here, too, the remaining grounds challenge, in substance, the exercise of a wide discretion.
Before moving to that brief consideration of the remaining grounds, it is necessary to say something about her Honour’s approach in attributing percentage figures to identified components of contribution. In that respect, it should be noted that her Honour adopted a course urged upon her by those representing the wife at the trial relying, in turn, upon the wife’s case outline.
A Flawed Approach
This Court said some 20 years ago in Aleksovski v Aleksovski (1996) FLC 92-705, per Baker and Rowlands JJ at 83,437:
It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.
It really comes down to questions of weight. Whilst weight would and must be given to a contribution which a party makes shortly before the separation, less weight may be given to a contribution made by one of the parties to a marriage early in the cohabitation period of a long marriage, particularly in circumstances where the contribution has gone into the parties' assets or been used up in the payment of family expenses.
Kay J held at 83,443:
What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship. Just as early capital contribution is diminished by subsequent events during the marriage, late capital contribution which leads to an accelerated improvement in the value of the assets of the parties may also be given something less than directly proportional weight because of those other elements.
Of considerable significance to the approach of the trial Judge, this Court said in Dickons & Dickons [2012] FamCAFC 154:
23.We wish also to refer to the approach of the Federal Magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
24.There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
In passages which resonate with the arguments in this appeal and the trial Judge’s reasons to which they relate, this Court went on to say:
25.Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “…giving over-zealous attention to the ascertainment of the parties’ contributions…” (Norbis v Norbis (1986) 161 CLR 513 at 524) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26.The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
In the same year, in Lovine & Connor and Anor (2012) FLC 93-515, this Court said:
42.As part of the process of ultimately determining just and equitable orders under s 79 there is included a complex of discretionary assessments and judgments of many components of contribution, only some of which are capable of measurement in money terms and then often only in historical, rather than present, money terms. Any dictate to the effect that in the course of assessment each disparate component part or kind of contribution must be assigned a discrete and identifiable value or percentage is antithetical to the nature of the discretion involved.
We seek to respectfully repeat and emphasise the reference in Lovine to such an approach being “antithetical to the nature of the discretion involved” and the reference in Dickons to such an approach being avoided in the usual course of events. Doing so, we repeat, is not consistent with a holistic assessment of the parties’ contributions which is what s 79(4) requires.
In our respectful view, the adoption of that course in this case led her Honour into error.
The Remaining Grounds of Appeal
The “Initial Contribution” Grounds
Counsel for the husband agreed that ground 2 can be seen to illuminate the central challenge to her Honour’s judgment expressed in ground 1. That ground challenges the weight given to the “initial contribution”.
As is evident from the terms of grounds 1 and 2 themselves, the argument in support of the challenge makes reference to various calculations which are said to illuminate the alleged error in the weight attributed to the husband’s initial contribution. In that context, it should be observed that the materials before this Court reveals a contest between the parties as to the value of the real property owned by the husband at the outset of the relationship and, in particular, whether it was unencumbered. Her Honour left those issues, which may have had relevance to an assessment of contributions, unresolved. It is not discernible from the reasons how her Honour resolved to attribute the specific percentage of 7 per cent to the husband for “initial contribution” without resolving the contest referred to.
Again, however, we consider that the difficulty with her Honour’s judgment lies more in the absence or inadequacy of reasons than it does in any demonstrable error in the attribution of weight. Her Honour’s approach does not permit of an examination of the relativities applicable to a contribution or contributions that might be described as “initial” (or other contributions emanating from it such as providing a home for the wife’s then young children or being used as security for the purchase of an investment property) when compared to other contributions of all types made by each party.
The Depletion of the Asset Pool by the Wife – Ground 3
It was common ground before her Honour that the wife had received, some three months post-separation, an amount of about $500,000 as a result of an acceptance of her inability to work through depression. We will cite her Honour’s finding at [7] as it is also relevant to ground 6:
It is not in dispute that the wife suffered from depression. She was diagnosed with depression in or around July of 2007. In April 2008, the wife took leave from her employment …, and she commenced receiving 75% of her income from an income protection insurance policy. The leave continued until April 2010. The wife was diagnosed with suffering from a major depressive disorder during the time in 2009 and 2010, and the wife was also diagnosed in 2009 with having a permanent back injury that resulted from a ruptured disk. The wife retired formally, because of ill-health, from the Queensland [Government Department] on 13 July 2010. In December of 2010, the wife received $510,712.69 net, from Q Super, which represented a superannuation payout of $104,895.00 net and a permanent disability insurance payout of approximately $402,599.69. The wife invested the majority of these funds in the purchase of the [N] General store. There is very little of that payout remaining today.
The findings there contained are not the subject of challenge on this appeal.
While the challenge is based on an assertion that her Honour did not accord the (admitted) dissipation of the funds sufficient weight, counsel for the husband was unable to point to any submissions made at trial regarding how the dissipation should be treated. In the written submissions on behalf of the husband at trial, it was asserted ultimately:
30.Bearing in mind her extremely modest contribution to the assets which the husband brought in and improved during the course of the marriage, it is submitted that a Court would be extremely cautious in making a further adjustment in her favour.
We remain unclear what that submission was intended to suggest to her Honour the manner in which her Honour should deal with the dissipation. In attempting to elucidate the submission before us, counsel referred to the contention that the wife had accumulated the vast bulk of the superannuation component of the payout during the relationship and the husband had thus contributed to it and the wife had used funds which would otherwise have formed part of the property potentially available for distribution.
That is, the submission called in aid the decisions of this Court in Townsend and Townsend (1995) FLC 92-569.Yet, that decision speaks of a “premature distribution” resulting in a so-called add-back of the distributed funds. That result was specifically eschewed by counsel when her Honour enquired as to what was submitted ought be made of the wife’s expenditure of the moneys (see, transcript of proceedings, 21 March 2013, p 173). Having done so, her Honour specifically enquires that, if it was not contended that the money (or some of the money) was to be added back “…where would I … take that into account” counsel referred to “section 75(2)(a)[1] and section 79(4)(d)” (transcript of proceedings, 21 March 2013, p 174, lines 14-24). It is again unclear what counsel’s reply was intended to convey and counsel was unable to elucidate the gravamen of the submission before us. Further, as has been seen, the written outline on behalf of the wife contended that it was an issue in respect of contributions rather than s 75(2).
[1]It is accepted that the reference to “section 75(2)(a)” is erroneous and should read “section 75(2)(o).”
In oral argument before us, counsel appeared to contend that her Honour’s reasons were inadequate because the $500,000 amount was not considered adequately. Yet, reference to [20]-[22] of the reasons does not bear this out. There, having not had articulated to her a principled basis for treatment of the money (either as to its receipt or expenditure), her Honour concludes that neither the introduction of the money by the wife nor its expenditure should be taken into account.
We can discern no error.
Permanent Back Injury – Ground 6
The amended ground refers to a fact found by her Honour which is conceded to be erroneous. Reference to it can be found in [7] of the Reasons earlier quoted. It can be seen that the reference occurs as part of a discussion of the payout received by the wife earlier referred to and mention of the wife’s depressive illness.
It is important to note that the reference is not repeated in her Honour’s discussion of the relevant s 75(2) factors and equally important to note that her Honour there discusses the opinions of a psychiatrist reporting to a superannuation fund in respect of the then prospective disability payout. There can be no doubt that it is the doctor’s report as to the wife’s psychiatric disability that is the central determinant in her Honour’s conclusion at [53] that the wife “will have difficulty in obtaining employment”.
Her Honour’s adjustment for s 75(2) factors was 2.5% or approximately $37,800 in circumstances where the net property and superannuation interests of the parties or either of them was found to be valued at about $1.15 million.
Nothing to which we have been taken nor any argument advanced on behalf of the husband persuades us that the admitted factual error impacted upon her Honour’s decision.
This ground should fail.
Just and Equitable
Ground 5 does not need to be specifically considered in light of the findings earlier outlined.
Re-Exercise or Remitter?
This Court is acutely aware of the potential financial and emotional burdens cast upon parties in the event that an appeal is allowed and the case remitted to the court below for rehearing (not to mention the burdens on the relevant trial courts).
Yet, that issue is to be determined by reference to principle and, in particular, by reference to what was said by the High Court in Allesch v Maunz (2000) 203 CLR 172.
Here, as is effectively properly accepted by both counsel, the nature and ambit of the matters remaining controversial between the parties and the absence of adequate reasons make remitter inevitable and it will be so ordered.
Costs
The husband does not seek an order that the wife pay his costs. We consider it appropriate that each party should bear their own costs.
The husband applies for a certificate pursuant to s 9 of the Federal Proceedings (Costs) Act1981 (Cth) (“the Costs Act”). There is no doubt that the appeal has succeeded on a question of law and it is not suggested that any conduct by the husband or any other factor should militate against the granting of a certificate. We consider it appropriate to order that a certificate be granted for the costs of the appeal pursuant to s 9 of the Costs Act.
For the same reasons, we also consider it appropriate to grant to the husband, pursuant to s 8 of the Costs Act, a certificate in respect of the remitted new trial.
Notwithstanding the matters earlier referred to in respect of the submissions made to her Honour as to the approach to be adopted, it is not contended, and nor do we consider that this, or any other, consideration should prevent the grant of a certificate to the respondent pursuant to s 6 of the Costs Act. For those reasons, we consider it appropriate to grant the respondent such a certificate, together with a certificate pursuant to s 8 for the remitted new trial.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Thackray, Murphy and Kent JJ) delivered on 27 February 2014.
Associate:
Date: 27 February 2014
39
8
10