Bonacci & Bonacci

[2012] FamCAFC 15

FAMILY COURT OF AUSTRALIA

BONACCI & BONACCI [2012] FamCAFC 15

FAMILY LAW – APPEAL – PROPERTY – where it is claimed that the trial judge gave too little weight to the wife’s “contributions” to her two children of her previous marriage – where it is claimed that the trial judge erred in his assessment of the s 75(2) factors – where the trial judge erred in double counting the amount of $52,000 – where the error is not de minimis – appeal allowed in part.

FAMILY LAW – APPEAL – COSTS – where the wife seeks a costs order in the event that the appeal succeeds on Ground 5, or in the event that there is no order for costs, that a costs certificate under the Federal Proceeedings (Costs) Act 1981 (Cth) issue – where the husband opposes a costs order given that the error of the trial judge was conceded in the written submissions – where neither a costs order nor a costs certificate are warranted – no order as to costs.

Family Law Act 1975 (Cth) s 75(2)(o)
Federal Proceedings (Costs) Act 1981 (Cth)

De Winter and De Winter (1979) FLC 90-605
Gronow v Gronow (1979) 144 CLR 513
Norbis v Norbis (1986) 161 CLR 513
Norman & Norman [2010] FamCAFC 66
Robb and Robb (1995) FLC 92-555
Teal & Teal [2010] FamCAFC 120

APPELLANT: Ms Bonacci

RESPONDENT: Mr Bonacci

FILE NUMBER: NCC 487 of 2008

APPEAL NUMBER: EA 63 of 2010

DATE DELIVERED: 9 February 2012

PLACE DELIVERED: Adelaide

PLACE HEARD: Sydney

JUDGMENT OF: Finn, Strickland and Cleary JJ

HEARING DATE: 14 July 2011

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 30 April 2010

LOWER COURT MNC: [2010] FamCA 331

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Friedlander

SOLICITOR FOR THE APPELLANT: Aubrey Brown Partners

COUNSEL FOR THE RESPONDENT:	Ms Gillies
SOLICITOR FOR THE RESPONDENT:	M.G. O’Callaghan & Associates

Orders

1. The appeal be allowed in part.

2. Order 1 of the orders made by Rose J on 30 April 2010 be varied by deleting the sum of $90,165 and substituting the sum of $123,955.

3. The appeal otherwise be dismissed.

4. There be no order as to costs.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bonacci & Bonacci 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 SYDNEY

Appeal Number: EA 63 of 2010
File Number: NCC 487 of 2008

Ms Bonacci

Appellant

And

Mr Bonacci

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an appeal by the wife against property settlement orders made by Rose J on 30 April 2010.  Save and except in respect of one discrete aspect, the husband opposes the appeal.  We will elaborate on this when addressing Ground 5 of the Notice of Appeal.

2. The orders appealed against provide, inter alia, that the husband pay to the wife the sum of $90,165 and that each party be declared the sole beneficial owner of all property in his or her respective name, possession, power or control.

3. In her Notice of Appeal filed 28 May 2010, the wife seeks that her appeal be allowed and that an order be made for the proceedings to be relisted for hearing before a single judge of the Family Court.

Background

1. At the time of the trial the wife was 56 years of age and the husband was aged 54 years.

2. The parties married in April 1997.

3. The dates of the parties’ periods of cohabitation and final separation were in issue at the trial.  The trial judge ultimately preferred the evidence of the husband, concluding that the parties cohabited from early 1990 and, following various periods of separation, finally separated on in September 2004.  The parties were divorced in December 2009 and this became final in January 2010.

4. There are no children of the relationship.  The wife has two children from her previous marriage, namely M, born in 1975, and S, born in 1979.

5. The husband purchased vacant land at T (“the T property”) in May 1983, and commissioned the construction of a house on the land in 1984.  The construction was funded by a mortgage advance of $40,000. 

6. In early 1988 the wife purchased a property at W (“the W property”).

7. In October 1989 the husband received $300,000 in settlement of a personal injury claim.  He used $40,000 of this to discharge the mortgage over the T property, and used the remainder to purchase a truck, a campervan, a motor vehicle, a boat, an investment of $102,000 with GIO, and to meet a variety of business and living expenses.

8. In about 1990 the husband incorporated C Pty Ltd (“the company”) to operate his business.

9. In 1995 the wife received $50,000 in settlement of a personal injury claim.   

10. In 1997 the parties purchased a unit at P (“the Z property”).

11. In April 2001 the husband purchased an onsite caravan at N (“the caravan”).

12. In 2003 the wife sold the W property.

13. In about November 2004 the wife purchased a demountable home (“the demountable home”).     

14. In October 2006 the husband purchased a unit at P (“the Y property”).

15. In 2006 the wife sold the demountable home to her father.

16. In or about 2007 the wife purchased a property at L.

17. On 9 June 2009 the wife filed her Further Amended Application for Final Orders seeking property settlement orders and a superannuation splitting order.

18. The matter came before Rose J for hearing over five days in June and July 2009.  His Honour delivered his reasons for judgment and made final orders on 30 April 2010.

Reasons for judgment of the trial judge

1. The trial judge commenced his reasons for judgment by outlining the applications made by each party. 

2. His Honour then summarised the issues as including “the nature and extent of the contributions made by each of the parties and, so far as the wife’s case is concerned, whether ‘the husband’s various contributions were compromised and minimised by his purchase and excessive consumption of alcohol and the effects thereof’.  In addition, relevant matters were raised pursuant to s 75(2)”.

3. After setting out the historical background as identified above, the trial judge went on to set out the relevant legal principles, namely the four step process in relation to s 79 property proceedings.

4. Turning to the property of the parties and specifically the issue of add-backs, the trial judge firstly determined, on the basis of both parties’ written submissions, that $24,350 of the husband’s personal injury settlement paid towards the Lexus motor vehicle would be included in parties’ net property.  The trial judge also accepted the husband’s submission that the wife’s jewellery, valued at $10,000, be included in the net property.  However, his Honour did not accept the husband’s submission that the payments received by the wife from him in the total amount of $208,574, be included as a notional asset in possession of the wife because she had used $185,000 of this to purchase property included in the parties’ property pool.  The balance of $23,574 fell to be considered under

   
   

   s 75(2)(o).  His Honour did not include $37,450 taken by the wife at separation in late 2004, as the issue was not pressed in written submissions.  His Honour also did not include the approximate net rental received by the husband for the Z property between October 2004 and 30 June 2006, being $13,100, because no submissions were made in relation to that amount, and thus his Honour felt that it should be taken into account under s 75(2)(o).

5. His Honour then found that the monetary value of the net property of the parties (excluding superannuation) was $915,774, that the husband’s superannuation was valued at $718,540, and the wife’s superannuation at $23,404.

6. Turning to contributions, the trial judge considered the wife’s initial financial contributions to consist of the unencumbered W property, a motor vehicle, a savings account and household furnishings.  His Honour found the wife’s contributions during cohabitation to include domestic work (with some domestic assistance paid for by the husband), the wife’s wages from her employment which were applied in part towards household expenses, the wife’s $50,000 personal injury settlement received in 1995 and $150,000 from the sale of the W property in 2000 (although this was withdrawn by the wife from the parties’ joint investment account following final separation).  The trial judge also took into account the wife’s minor assistance in the company, and her assistance with the improvements to the T property, the caravan and the Z property.

7. In relation to the husband, the trial judge determined his initial contributions to be the unencumbered T property, the $102,000 investment with GIO, his business, a VW Combi wagon, a campervan, a boat and savings of $45,000.  As to the husband’s contributions during cohabitation, the trial judge found the husband’s income to consist of income from his business, his pension and the interest on his investments, which were applied to the parties’ liabilities and living expenses, including those of the wife’s two children.  The husband also funded the purchase of the Z property and a motor vehicle for the wife, as well as carrying out improvements and paying expenses in relation to the T and Z properties.  The trial judge determined that those improvements, along with the husband’s contribution to the living expenses of the wife’s two children, constituted his contribution in the role of homemaker.  His Honour also noted that the husband made further financial contributions in relation to the wife’s children, including the payment of school and college fees.  Post final separation, the husband purchased the Y property for $410,000, but that was fully financed.

8. The trial judge then set out his assessment of the contributions applying the global approach, but using the asset by asset approach in relation to the value of the superannuation entitlements.  His Honour determined that “the contributions of the husband taken globally will exceed those of the wife in the proportions of eighty per cent in favour of the husband and the remaining twenty per cent in favour of the wife”.

9. His Honour noted that both parties had significantly adjusted their financial circumstances following final separation.  The wife had withdrawn $52,000 from the parties’ Viridian Account, and had transferred to the husband her interest in the Z property.  The husband had then purchased the Y property and invested in shares. 

10. The trial judge went on to consider the evidence of the wife, her son and the husband in relation to the husband’s consumption of alcohol, as it was submitted by the wife that “the husband’s purchase and consumption of alcohol during the relationship did in fact deleteriously impact on the husband’s various financial contributions”.  His Honour found that the evidence was insufficient to establish the “approximate expenditure on alcohol throughout all or any of the periods of cohabitation between the parties” and thus concluded that “the husband’s financial contributions have not been diluted or lessened due to his expenditure on alcohol”.

11. Lastly, the trial judge considered the husband’s superannuation entitlements which were in the form of a periodic police pension.  The husband was discharged from the police force due to health reasons prior to the commencement of cohabitation between the parties.  Thus his Honour concluded that the contributions made to the husband’s superannuation were made solely by the husband.

12. Turning to the relevant s 75(2) matters, the trial judge firstly considered the evidence as to the wife’s poor health.  In particular, his Honour recorded the evidence in relation to the wife’s memory problems given by Dr R, the wife’s general practitioner, Dr E, a consultant neurologist and geriatrician, and

    
    

    Dr K, a clinical neuropsychologist.  His Honour subsequently determined that the wife “has had and continues to suffer from health issues…save and except that she does not have a dementing illness and that her memory, based on testing, is normal although affected by her other health issues including pain and sleeplessness”.

13. After accepting the evidence as to the wife’s income, which consisted of a disability Centrelink pension and various allowances, his Honour determined that despite the wife’s qualifications and experience as a pharmacy dispenser and nurse, she no longer had the physical and mental capacity for appropriate gainful employment.  His Honour found that the husband did have the physical and mental capacity to continue his self-employment in his business. 

14. His Honour also determined that each party had financial commitments, although neither had responsibility to support other persons, and that each party was eligible for superannuation benefits, as described in the parties’ property schedule.   

15. The trial judge then proceeded to consider the issue of the wife’s withdrawal of $52,000 from the Viridian Account in October 2004 and the subsequent transfer by the wife to the husband of her interest in the Z property.  Each party gave a differing account as to their understanding of the effect of each transaction. 

    
    

    His Honour accepted the husband’s submission that the transactions taken together represented “an informal settlement of the property”.  His Honour also accepted the husband’s evidence that his acquisition of the Y property and shares was on the basis of information given at a professional seminar, and thus

    
    

    his Honour was satisfied on the balance of probabilities that the husband had “not engaged in financial reckless or irresponsible conduct”.   His Honour then outlined the husband’s taxable and gross income for various financial years during the marriage.   

16. The trial judge determined that there should be a 15 per cent adjustment of the net property (excluding superannuation) in favour of the wife as a result of the husband’s overall superior financial position, namely his higher income, greater net property and superannuation, his proven capacity to continue to earn an income, his significantly higher standard of living, and the poor health of the wife.

17. His Honour then discussed the s 79(2) requirement of making just and equitable orders, noting that the making of such orders in this matter was “more complicated than the usual run of cases” because the proceeds of sale of the principal property were retained by the wife and both parties had significantly adjusted their financial circumstances as a result of the transactions that took place between them after their final separation.

18. The trial judge took into account the rent the husband received from the Z property subsequent to the final separation of the parties, and the fact that “he solely bore the responsibility for meeting the liabilities and expenses associated with that property.”

19. The trial judge accepted the wife’s evidence as to her use of the $208,000 to purchase a relocatable home, a motor vehicle and other household furniture and items.  His Honour considered the wife’s expenditure was reasonable and therefore did not require the sum to be included as a notional add-back beyond the value of the assets purchased.  However, the trial judge did consider that the wife’s withdrawal of $52,000 from the Viridian Account represented a distribution of property in her favour and should be added back to the net property pool, increasing it to $967,774. 

20. His Honour concluded that it was “just and equitable for the wife to receive thirty-five per cent of the net property of the parties”, namely $967,774 excluding superannuation.  Thirty-five percent is $338,721, and that was to be satisfied by the wife retaining property to the value of $196,556 together with the amount of $52,000 withdrawn from the Viridian Account, and the husband paying her $90,165.

21. Lastly, the trial judge determined that the wife’s application for a superannuation splitting order should be dismissed because the parties’ period of cohabitation was relatively short at approximately six and half years, the superannuation contributions were solely that of the husband, and the wife had access to her own superannuation entitlements following final separation.  His Honour also noted that the valuation of the husband’s superannuation entitlements is an amount struck by applying the relevant legislation and regulations, and the husband does not have an option to convert the pension to a lump sum.

Grounds of appeal

1. By way of her Notice of Appeal filed on 28 May 2010 the wife appeals against all orders made by Rose J on 30 April 2010.

2. The wife’s grounds of appeal are as follows:

   1.That His Honour erred in his application of In The Marriage of Robb [1994] 18 FamLR 489 to the facts of the instant case and as a consequence thereof gave weight to eh [sic] wife’s ‘contributions’ to the wife’s two children of a previous marriage.

   2.That His Honour erred in finding that the husband and the wife had effected in late 2004 an ‘informal property settlement’.

   3.That His Honour erred in excluding from the divisible pool the husband’s superannuation entitlement (valued at $683,540.00).

   4.That His Honour erred in assessing the wife’s Section 75(2) factors adjustment including applying such assessment to a pool that excluded the husband’s superannuation entitlements (valued at $683,540.00). 

   5.That His Honour erred in adding to the found pool, excluding superannuation, of $915,744.00 the amount of $52,000.00 which amount was already included in the wife’s received property, applying the found percentage of 35% to that total and thereafter deducting from that total the amount of $52,000.00.

   6.That His Honour erred in failing to arrive at orders that were pursuant to Section 79(2) of the Family Law Act “just and equitable”.

   7.That the resulting orders were ‘manifestly unjust’.

   8.That His Honour erred and His Honour’s reasons were ‘infected by heavy delay’ as the oral trial completed on 17 July 2009, final submissions were dated 25 September 2009 and His Honour delivered his Orders and Reasons on 30 April, 2010.

3. At the hearing of the appeal Grounds 2, 3 and 8 were not pursued. With Ground 7, it was put that it in effect raised the same issue as Ground 6, and thus the same argument applied. In any event, Ground 7 lacks sufficient specificity to allow us to address it discretely. To an extent Ground 6 also suffers from this same failing, but at least s 79(2) is identified.

Discussion

Ground 1

1. In the written summary of argument of the wife, and confirmed at the hearing of the appeal, the wording of this ground was changed by the wife’s counsel such that it reads as follows:

   That his Honour erred in his application of In the marriage of Robb (1994) 18 FamLR 489 to the facts of the instant case and as a consequence thereof gave too little weight to the Wife’s “contributions” to the Wife’s two children of a previous marriage.

2. We find this ground to be without merit.  Indeed, we consider that his Honour’s statement in paragraph 75 of his reasons, namely that:

   Whist [sic] the wife gave evidence of her support of her two children I am unable to give any weight to such contribution due to the Full Court’s judgment in Robb.

   to be entirely accurate, and in accordance with authority.  The principle emanating from the Full Court decision in Robb and Robb (1995) FLC 92-555 is that the meeting by a parent of legal obligations to children not of the marriage is not to be taken into account under s 75(2)(o) of the Act. That principle says nothing though about the contributions of the husband to the children of the wife being taken into account, and plainly that is what

   
   

   his Honour did here.

3. Despite the amended wording of this ground of appeal, counsel for the wife’s submission at the hearing of the appeal became that, in taking the husband’s contributions into account his Honour was obliged to take into account the wife’s contributions under s 75(2)(o).  Again though, that is precisely the point addressed in Robb, and in respect of which the Full Court said that the contributions of the parent of the children not of the marriage could not be taken into account.

Ground 4

1. Although the particular issue referred to in this ground is his Honour’s alleged error in applying his “assessment” to a pool that excluded the husband’s superannuation, that issue was not pursued in the wife’s written argument or at the hearing of the appeal.  That had to be the case of course once Ground 3 was not pursued.

2. In any event, the complaint became a weight argument, namely, his Honour allegedly failed to make an adequate adjustment in favour of the wife taking into account all of the relevant factors under s 75(2) of the Act.  At the hearing of the appeal it was submitted that instead of 15 per cent it should have been

   
   

   30 per cent.

3. The difficulties confronting the wife in succeeding in a weight challenge are well known.

4. In Norbis v Norbis (1986) 161 CLR 513, Brennan J said at 539:

   The difficulties in the way of developing guidelines beset an appellate review of the exercise of discretion under s.79.  Unless the primary judge reveals an error in his reasoning, the Full Court can intervene only if the order made is not just and equitable.  How does the Full Court arrive at that conclusion?  In Bellenden (formerly Satterthwaite) v Satterthwaite [1948]
   1 All ER 343 at p. 345 Asquith L.J. stated the rationale of an appellate court’s approach:

   “It is, of course, not enough for the wife to establish that this court might, or would, have made a different order.  We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable.  It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.”

   The “generous ambit within which reasonable disagreement is possible” is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community.  The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.

5. In Gronow v Gronow (1979) 144 CLR 513, Stephen J said at 519-20:

   The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion.  While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion.  When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight:  it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge.  Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight.

6. In this case his Honour carefully and painstakingly addressed the evidence before him as to the relevant s 75(2) factors.  He then made his finding and provided the following reasons for the adjustment he proposed to make:

   118.The husband’s overall financial position is much superior to that of the wife.  That is borne out by the level of his income, his greater net property and his superannuation entitlements represented by his police pension.  In addition, he has the proven capacity to continue to earn income generated by the business activity of the company which he controls.  His standard of living is significantly higher than that of the wife.

   119.The wife’s health is poor.  The husband enjoys good health.  The wife does not have a capacity to earn income that can be exercised.  Her income is limited to principally the disability pension.  The wife has very modest superannuation entitlements.

   120.The wife does own her own home unencumbered, utilising principally the proceeds of sale of the [W] property.

7. Apart from his Honour not being entirely correct in what he said about the wife’s home, the husband does not suggest that his Honour in these paragraphs omitted any relevant factor or included any irrelevant factors.  The submission of the wife’s counsel is simply that a consideration of the relevant factors “would lead to an objective adjustment to the wife well above 15%”.  However, the wife has not demonstrated to us that his Honour in exercising his discretion has exceeded the “generous ambit in which reasonable disagreement is possible and is, in fact, plainly wrong.”

8. Whilst others may have reached a different conclusion to the trial judge without there being an error, that is not the test, as the authorities confirm.  To repeat, we are not persuaded that his Honour went outside the reasonable range of possible results, although it could be said that the adjustment made was at the lower end of that range.

9. The issue in relation to the wife’s home is that although the wife owns the demountable home, she is renting or leasing the land on which it is placed.  However, to the extent that this is a factual error on the part of the trial judge it could not, of itself, vitiate the exercise of the trial judge’s discretion (see De Winter and De Winter (1979) FLC 90-605). It is really de minimis.

10. Thus we are not persuaded that his Honour erred and this ground must also fail.

Ground 5

1. The husband concedes that his Honour erred in the way complained of, but suggests that it was still appropriate to add back part of the $52,000, namely $25,574, and thus it is said that the error is de minimis.  However, we cannot agree.  Although the wife received a total of $208,574.29, and his Honour identified the specific use of $185,000 of that in purchasing a demountable home and a motor vehicle, his Honour determined not to notionally add-back the balance on the basis that it was used to meet reasonable needs.  We consider that that finding was open to his Honour and his Honour did not err in this regard.  It was an error by his Honour though to then notionally add-back the whole of the $52,000.  Clearly this was double-counting.

2. The effect of the error is instead of the husband being required to pay the wife $90,165.00, the amount should have been $123,955.  This difference is certainly not de minimis and needs to be corrected by us.  However, we also reject the submission by the wife that this error “vitiates the totality of the learned trial judge’s reasons”.  That submission is simply not supported by

   
   De Winter and De Winter

   .

Ground 6

1. We struggle to understand what specific complaint the wife is making here. For example, albeit the wife did not pursue Ground 3, when we consider the wife’s written submissions in relation to Ground 6, it seems that one aspect of this ground is that the orders are not just and equitable when the “value” of the husband’s superannuation is included. Then, in oral submissions during the hearing, the wife’s counsel submitted that if Ground 4 did not succeed it is a legitimate claim when considering s 79(2) of the Act that the wife’s overall entitlement should be increased by 15 per cent. However, as the Full Court has said on a number of occasions the so-called fourth step is not an opportunity to make a further adjustment; it is an opportunity for the judicial officer to determine finally how, in reality, a just and equitable order might be achieved based on the circumstances of the case before him or her (see in this regard Norman & Norman [2010] FamCAFC 66 and Teal & Teal [2010] FamCAFC 120).

2. We discern that one aspect of this ground is a further weight challenge. We have said all that we need to above in relation to such a challenge, and we are not persuaded that his Honour erred in his consideration of s 79(2) of the Act. Thus, there is no merit in this ground of appeal.

Ground 7

1. This ground must also fail given firstly that it lacks sufficient specificity to allow for any worthwhile consideration, but secondly, as was conceded by the wife’s counsel, it is in effect the same complaint as is made in Ground 6, and therefore it must suffer the same fate.

Conclusion

1. The only ground of appeal that has any merit is Ground 5, and thus the appeal should be allowed in part.  The error identified in Ground 5 can be remedied by us and we propose to do so by substituting the correct amount.

Costs

1. At the conclusion of the hearing of the appeal we sought submissions as to costs.

2. In the event that the only ground to succeed was Ground 5, the wife’s counsel submitted that the wife should have a costs order because of the position taken by the husband and the financial circumstances of the wife.  However, if there is no order for costs then the wife seeks a costs certificate under the Federal Proceedings (Costs) Act 1981 (Cth).

3. The husband opposed a costs order given that the error of the trial judge was conceded in the written submissions.  It was also put that because the amount to be paid to the wife would be increased under that concession by approximately $25,000, for the wife to pursue the appeal seeking a further $8,000, namely $33,000, was unreasonable.

4. Given the limited basis on which we are allowing the appeal, and the concession made by the husband, we do not consider that an order for costs is justified in the wife’s favour.  For the same reasons we do not consider that a costs certificate is warranted.

I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, Strickland and Cleary JJ) delivered on 9 February 2012.

Associate:     

Date:              9 February 2012