Bonnett & Bonnett
[2021] FedCFamC1A 95
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Bonnett & Bonnett [2021] FedCFamC1A 95
Appeal from: Bonnett & Bonnett [2021] FamCA 225
Bonnett & Bonnett (No. 2) [2021] FamCA 381
Appeal number(s): EAA 43 of 2021
EAA 70 of 2021File number: NCC 3644 of 2017 Judgment of: MCCLELLAND DCJ, BERMAN & HARPER JJ Date of judgment: 21 December 2021 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Appeal against property settlement, child support, and spousal maintenance orders – Adequacy of reasons – Where parties have residual debt and no significant assets other than superannuation – Primary judge gave adequate reasons for division of superannuation and property settlement – Appeal allowed in part – Remittal for rehearing limited to spousal maintenance and child support – Costs certificates granted to both parties for the appeal – Where related appeal of the primary judge’s orders to dismiss a stay application effectively abandoned. Legislation: Child Support (Assessment) Act 1989 (Cth) s 102, 116, 117
Family Law Act 1975 (Cth) ss 72(1), 74
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 28(3)
Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 9
Cases cited: Babett & Falconer (2015) FLC 98-067; [2015] FamCAFC 124
Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
Biltoft and Biltoft (1995) FLC 92-614; [1995] FamCA 45
Child Support Registrar v Nixon (2007) 36 Fam LR 571; [2007] FamCA 32
Fabron & Fabron [2020] FamCAFC 274
Gyselman and Gyselman (1992) FLC 92-279; [1991] FamCA 93
Hall v Hall (2016) 257 CLR 490; [2016] HCA 23
Hearne v Hearne (2015) 53 Fam LR 454; [2015] FamCAFC 178
Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378
Jones v Bradley [2003] NSWCA 81
Mitchell v Cullingral Pty Ltd [2012] NSWCA 389
Official Trustee in Bankruptcy v Donovan and Donovan and Stevens (1996) FLC 92-703; [1996] FamCA 58
Perrin & Perrin (No 2) [2018] FamCAFC 122
Rigby & Olsen [2021] FedCFamC1A 46
Sagilde & Magee (2018) 59 Fam LR 101; [2018] FamCAFC 143
Sand & Sand (2012) FLC 93-519; [2012] FamCAFC 179
Seymour & Seymour [2011] FamCAFC 97
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
TechnologyOne Ltd v Roohizadegan (2021) 309 IR 262; [2021] FCAFC 137
Wild v Ballard (1997) FLC 92-771; [1997] FamCA 41
Zabarac & Zabarac and Anor [2016] FamCAFC 186
Number of paragraphs: 60 Date of hearing: 1 November 2021 Place: Sydney (via video link) Solicitor for the Appellant: Evans Brandon Family Lawyers Counsel for the Respondent: Mr Rugendyke Solicitor for the Respondent: Gillard Family Lawyers ORDERS
EAA 43 of 2021
EAA 70 of 2021
NCC 3644 of 2017FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR BONNETT
Appellant
AND: MS BONNETT
Respondent
ORDER MADE BY:
MCCLELLAND DCJ, BERMAN & HARPER JJ
DATE OF ORDER:
21 DECEMBER 2021
THE COURT ORDERS THAT:
1.The appeal, EAA 70 of 2021, is dismissed.
2.The appeal, EAA 43 of 2021, is allowed in part with respect to Orders 8–12 of the primary judge made on 27 April 2021, and is otherwise dismissed.
3.The matter is remitted for rehearing, limited to the following two issues:
(a)Whether the husband has capacity to pay spousal maintenance and, if so, to determine what order is proper for the purposes of s 74 of the Family Law Act 1975 (Cth); and
(b)Whether the husband has the capacity to pay child support and, if so, whether an order for child support should be made pursuant to s 117 of the Child Support (Assessment) Act 1989 (Cth).
4.Leave is granted to the husband pursuant to s 28(3)(b)(i) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) to appeal the primary judge’s orders made pursuant to the Child Support (Assessment) Act 1989 (Cth).
5.The Court grants to the appellant a costs certificate pursuant to 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 the appellant in relation to the appeal.
6.The Court grants to the respondent a costs certificate pursuant to 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 the respondent in relation to the appeal.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Bonnett & Bonnett has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCCLELLAND DCJ, BERMAN & HARPER JJ:
INTRODUCTION
By Notice of Appeal filed on 6 May 2021, Mr Bonnett (“the husband”) seeks to appeal orders made by the primary judge on 27 April 2021, with respect to a superannuation splitting order, payment of child support, payment of spousal maintenance, and the adjustment of certain assets of the parties. The respondent, Ms Bonnett (“the wife”), opposes the appeal.
In broad summary, the effect of the primary judge’s orders was that the wife received approximately 70 per cent of the parties’ combined superannuation, that the husband was to pay the wife $500 per week by way of spousal maintenance, and that the husband was to pay $1,500 per week in child support to the wife in relation to the parties’ three children. Her Honour also made orders that certain property of the parties in their possession, including vehicles and cash, would remain in their possession.
The essence of the husband’s three grounds of appeal is that the primary judge failed to give adequate reasons for her Honour’s orders affecting property settlement, and payment by the husband of spousal maintenance and child support to the wife. For the reasons which follow, we find ourselves in the unfortunate position of finding error on the part of the learned primary judge with respect to her Honour’s reasons regarding the issues of spousal maintenance and child support.
It is also noted that two appeals in the matter were listed for hearing before us on the same date. The second appeal, as outlined by the husband in his Notice of Appeal on 1 July 2021, concerns the primary judge’s orders of 9 June 2021, dismissing the husband’s Application in a Case (filed on 11 May 2021) seeking to stay the primary judge’s final orders pending the determination of the aforementioned appeal.
In circumstances where the appeals were listed for determination on the same date, the husband conceded, at paragraph 3 of his Summary of Argument filed on 5 October 2021, that “the Appeal Court is not required to determine Appeal EAA70/2021 (appeal against Orders dismissing an Application to stay the operation of The Orders)”. We respectfully agree with that approach.
BACKGROUND
Before turning to the grounds of appeal, it is useful to briefly consider the factual background which gave rise to the primary judgment.
The parties began living together in 2001, were married in 2008, and have three children together. The oldest child is aged 13 years, the second child is aged 10 years, and the youngest child is seven years of age.
In 2017, the parties separated after approximately 16 years together and divorced in 2018. The wife and the three children remained in City G where the parties had lived since 2004. The husband moved to State DD at the time of separation. He has since remarried and has one child with his current wife.
At the commencement of the parties’ cohabitation, the wife was employed as a professional with an annual income of $29,000, and the husband was employed as a professional with an annual income of $110,000. The “stronger financial position” of the husband at the commencement of cohabitation was noted by the primary judge (at [55]).
Over the course of the relationship, the husband remained in employment and gained promotions during that time. By 2011, when the parties’ second child was born, the husband was earning $345,000 per annum (at [86]). The wife did not return to work after the birth of the parties’ first child, who was born with complex special needs, and has since remained out of the paid workforce (at [84]).
In her Honour’s reasons, the primary judge found at [59] that “[i]n the early years the parties were keenly focused on generating wealth. They acquired several investment properties negatively geared against the income of the husband”. At the time of the final hearing, the wife was receiving Centrelink income and child support from the husband with respect to the three children (at [95]), and the husband was recorded as receiving a net weekly income of $3,089 in his role as a manager (at [98]).
In February 2018, the primary judge made orders with respect to child support, requiring the husband to pay $41,444 per annum in child support plus a maximum additional sum of $41,600 per annum for expenses upon provision of receipts or quotes by the wife (at [120]). The primary judge noted that, prior to the final hearing before her Honour, the husband had been paying $858 per week in child support as assessed by the Department of Human Services (“the child support agency”) (at [122]).
Notwithstanding the parties’ acquisition of several properties over the course of their relationship, by 11 December 2020, when the parties appeared before the primary judge, it had become apparent that “the net asset pool had diminished such that there was little to divide” (at [9]). At the conclusion of the hearing on 11 December 2020, the parties agreed that it was appropriate for all of their real property (consisting of four properties) to be sold, with consent orders being made to that effect (at [11]).
By her Honour’s orders of that date, the balance of proceeds from the sale of the four properties was to be distributed so that the wife would receive a lump sum payment of $30,000 for spousal maintenance, the parties’ mortgage obligations in respect to the properties would be satisfied, and the wife would receive a payment of $200,000 from the remainder of proceeds, amongst other orders.
The outcome of the implementation of the orders made on 11 December 2020 was reported by the parties to the primary judge in a further listing before her Honour on 23 March 2021. By way of summary, the outcome was that save for the parties’ respective private motor vehicles, superannuation and some personal items, the parties essentially had no other assets of value and had a residual debt of $122,128 to the mortgagee bank after the sale of their real estate (at [16]). The balance of those issues were the subject of the primary judgment now under appeal.
THE APPEAL
By the Notice of Appeal filed on 6 May 2021, the husband’s grounds of appeal are as follows:
(1)In making orders for adjustment of the parties’ property interests, the primary judge failed to explain, properly or at all, the reasoning by which her Honour arrived at the said orders;
(2)In making orders for spousal maintenance, the primary judge failed to explain, properly or at all, the reasoning by which she arrived at the said orders; and
(3)In making orders for child support departure, the primary judge failed to explain, properly or at all, the reasoning by which she arrived at the said orders.
ADEQUACY OF REASONS - RELEVANT LEGAL PRINCIPLES
As the essence of the appeal concerns whether the primary judge gave adequate reasons with respect to her Honour’s orders, it is useful to briefly refer to relevant authorities which apply to appeals of this nature.
There was no dispute between the parties regarding the necessity for the primary judge to provide adequate reasons and how that was to be assessed. These principles[1] were recently succinctly set out by the Full Court in Rigby & Olsen [2021] FedCFamC1A 46 at [38] as follows:
The requirement for the giving of reasons is a fundamental requirement of the exercise of the judicial function, as it both demonstrates that justice has been done, and enables the proper challenge of a decision. The content required varies depending upon the circumstances of the case, but is that which makes apparent how the decision was arrived at (see Bennett and Bennett (1991) FLC 92-191 at 78,266). It is not required to give reasons regarding every argument, nor to perform a microscopic analysis "if, in all the circumstances, it is clear that the trial judge has considered and evaluated the relevant evidence, taken into account all relevant factors and, importantly, has considered the ultimate welfare of the child as the paramount consideration" (A v J (1995) FLC 92-619 at 82,230).
[1] Similar principles are applied in other jurisdictions. See TechnologyOne Ltd v Roohizadegan (2021) 309 IR 262 at [108]–[112].
Crucially, the adequacy of the reasons is to be assessed in the context of issues joined in the proceedings, with the primary judge being required to “ʻenter into’ the issues canvassed and explain why one case is preferred over the other”.[2]
[2] Jones v Bradley [2003] NSWCA 81 at [129]. See Bennett and Bennett (1991) FLC 92-191 at 78,266.
While the central controversy between the parties needs to be addressed, as observed by Allsop P (as his Honour then was) in Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [2]:
…The need for coherent and tolerably workable reasons sometimes requires truncation of reference and expression. Judgment writing should not become a process that is oppressive and that produces unnecessary prolixity. Not every piece of evidence must be referred to…
The Full Court in Perrin & Perrin (No 2) [2018] FamCAFC 122 cited at [57]–[58] with approval, the decision in Babett & Falconer (2015) FLC 98-067 at [44]:
Within the family law context, those comments [in respect to the adequacy of reasons] should be seen as reinforced by the fact that the nature of the s 79 inquiry is, in essence, a broad discretionary assessment, which is neither an accounting nor mathematical exercise and which, effectively as a corollary, requires a "broad-brush approach".
(Citations omitted)
Finally, in assessing the adequacy of a trial judge’s reasons, the challenged judgment must be read as a whole.[3]
[3] Zabarac & Zabarac and Anor [2016] FamCAFC 186 at [64] and [66]; Hearne v Hearne (2015) 53 Fam LR 454 at [78].
In the context of these legal principles, it is convenient to deal with each of the grounds of appeal in this matter separately.
GROUNDS OF APPEAL
Ground 1 – Failure to give adequate, or any, reasons in relation to property settlement orders
The husband contends that the primary judge failed to identify the parties’ existing legal and equitable interests in the property. Specifically, the husband contends that, in circumstances where the parties were in dispute, the primary judge failed to provide adequate reasons for her Honour’s findings with respect to the add backs as sought by the husband, the liabilities of the parties, and the division of the parties’ superannuation.
It is to be accepted that the first task of the primary judge in considering whether it is just and equitable to make a property settlement order is to identify “the existing legal and equitable interests of the parties in the property”.[4] That task will, in the absence of explanation, usually require a consideration of the impact of the parties’ liabilities on that property.[5]
[4] Stanford v Stanford (2012) 247 CLR 108 at [37] (emphasis in the original).
[5] Biltoft and Biltoft (1995) FLC 92-614.
As noted by the primary judge, at the hearing on 23 March 2021, her Honour was advised that, after the sale of the parties’ real estate interests pursuant to the consent orders made on 11 December 2020, there remained a debt to the mortgagee, H Bank, in the sum of $122,128. That debt was in respect of three loans identified in Order 12(a) made by the primary judge on 11 December 2020, which comprised of the loan account numbers #..21, #..21 and #..64.
Those debts, as at the date of the hearing, were, according to Exhibit 3 tendered on 11 December 2020 and included at [48] of the primary judgment, outstanding in the following amounts:
(a)#..21: $447,298;
(b)#..21: $45,386; and
(c)#..64: $354,181.
In other words, it can reasonably be inferred that those debts, which then totalled $846,865 on the figures above, as contended by the husband at the hearing, had been reduced from $846,865 to the amount of $122,128 (at [16]), being a reduction of $724,737.
The wife’s contention with respect to those debts, as reflected in a separate column in that same balance sheet, was that the debts were marginally higher than that which was contended by the husband. However, in circumstances where it was agreed by the parties that the debt was reduced to $122,128 after the sale of the properties, it was unnecessary for her Honour to have made a determination as to which of the parties’ contentions, as they existed at the hearing on 11 December 2020, was accurate.
We respectfully agree with the submission of counsel for the wife that, where the Court was advised on 23 March 2021 that the parties had sold all parcels of real property with a resulting debt of $122,218, there was little utility in her Honour considering the issue of add backs or “notional property”. As noted by Coleman J sitting as the Full Court in Sand & Sand (2012) FLC 93-519 at 86,657: “[f]or a Court to have jurisdiction to make orders pursuant to s 79 of the Act property must be in existence when the jurisdiction to do so is sought to be exercised.” As noted, aside from superannuation and property of little value which was to remain in the possession of each party, there were no other assets to apportion. The inclusion of addbacks on the balance sheet would not have changed that situation.
Further, no issue can be taken that the primary judge did not determine the dispute between the parties in respect to the debts asserted by the husband, being those listed in items 43, 44, 45, 46, 48, 49, and 50 of the balance sheet. This is because, pursuant to Order 6 of the primary judge’s orders:
That except as otherwise provided in these orders, each party shall indemnify and keep indemnified the other party for any debt, including any mortgage, credit card or loan account or debt to the Australian Taxation Office in the name of the party[.]
Relevantly, her Honour determined that those debts remain the responsibility of the husband.
At 82,129 of Biltoft and Biltoft (1995) FLC 92-614, the Full Court recognised that the practice of the Courts deducting liabilities from the assets of parties is not an absolute rule, stating that in certain circumstances, a trial judge may not be obliged “to determine the quantum of [the relevant] debt and thus the net value of the property of the parties” having regard to a particular liability or liabilities. No challenge has been made to her Honour’s exercise of discretion in this matter by making Order 6, which confirmed that the husband alone, rather than the parties jointly, were responsible for satisfying debts that were in the husband’s name.
Accordingly, for these reasons we do not find error in respect to the adequacy of the primary judge’s reasons in determining the balance sheet setting out the property available for distribution between the parties.
The second aspect of Ground 1 of the Notice of Appeal is that the primary judge failed to provide adequate reasons explaining the basis upon which her Honour adjusted the parties’ interests in their superannuation, such that it favoured the wife by approximately 70 per cent and allocated the remaining 30 per cent to the husband.
There did not appear to be any challenge to the adequacy of the reasons provided by the primary judge in relation to the parties’ initial contributions and contributions made during the course of their relationship.[6] The submissions by the husband focussed on a subheading in her Honour’s judgment which reads at [89], as presented in the judgment:
[6] Husband’s Summary of Argument filed 5 October 2021, paragraph 7.
Since separation in April 2017 contributions have been made as follows:
Relevant factors under section 75(2)
(As per the original)
It is the case that the primary judge did not set out, immediately under the first line of that subheading, those matters relating to contributions made by the parties in the period subsequent to their separation in April 2017. Nonetheless, a complete reading of the primary judgment establishes that relevant facts relating to this aspect of the parties’ contributions were considered and addressed by the primary judge. In that respect her Honour found:
· The wife continues to be the primary carer of the parties’ eldest child, who continues to have complex special needs (at [21], [84], and [100]);
· The demands of caring for the parties’ children, including, most relevantly, the eldest child, together with the psychological disorder of the middle child, “have placed demands on the wife which she has willingly met with unfailing care” (at [116]);
· That care has been provided in circumstances where “the stress of caring for the three children without close family support is having a detrimental effect on the physical and mental health of the wife” (at [93]);
· The fact that the wife has continued her full time care of the children has “enabled the husband to work full time to support both parties and the children” (at [112]); and
· Due to her responsibilities as the children’s primary carer, including attending to the significant needs of the parties’ eldest child, the wife has not been in paid employment and is a homemaker and student (at [28]).
Comparatively, her Honour notes, in various paragraphs of her judgment, the income earned by the husband during the course of his employment, for example at [56], [60], [66], and [72], including during the period subsequent to the termination of the parties’ relationship (at [98]). The primary judge also noted the contributions the husband made to support the wife and the parties’ children throughout the parties’ relationship, and subsequent to their separation.
Additionally, from [129]–[132] of the primary judgment, under the subheading “…Analysis of Whether the Adjustment Contemplated is Just and Equitable” (emphasis altered), her Honour provided reasons for dividing the parties’ superannuation such that the wife would receive approximately 70 per cent and the husband, approximately 30 per cent of the total, as follows:
129.In the first seven years of their relationship the parties both worked exceedingly hard to accumulate wealth, mainly through application of their respective incomes to investment in property and the establishment of a family home.
130.After the birth of the first child in 2008 a point of difference emerged between the parties. The wife wanted to sell all investment properties. The husband did not.
131.The wife was unable to return to paid employment due to her commitment to meeting the very different needs of the parties' three children. She has been primarily responsible for the care of the children since their birth. She is now living in rented accommodation without the contingency fund of $200,000 which both parties contemplated she would have after the sale of the four pieces of real estate. Other than government support she is impecunious.
132.The husband has in the past opposed ongoing support of the wife, but the wife has obvious need for support in the circumstances and the husband has the capacity to provide that support.
That summary is, in our view, soundly based on her Honour’s analysis of the evidence as set out in various paragraphs of the judgment, including those to which we have referred. In our opinion, this provides adequate reasons for the adjustment her Honour made to the parties’ superannuation interests, being the sole remaining asset held by the parties aside from personal items of little value and their respective motor vehicles.
Accordingly, Ground 1 of the appeal has not been established and we do not propose to disturb Orders 1, 2, or 3 of the orders made by the primary judge on 27 April 2021.
Ground 2 – Failure to give adequate, or any, reasons for the spousal maintenance order
The husband acknowledged that the wife has a need for spousal maintenance and, accordingly, there was no need for her Honour to consider what has been described as the “gateway”, or threshold issue set out in s 72(1) of the Family Law Act 1975 (Cth).[7] It is conceded that the real issue which required the primary judge’s determination with respect to a potential order for spousal maintenance, was the husband's capacity to pay.
[7] Hall v Hall (2016) 257 CLR 490 at [3]–[5].
In supporting the primary judge’s reasons in respect to this issue, the wife submitted, by way of her Summary of Argument filed on 25 October 2021, as follows:
30.It is submitted that an analysis of the husband's Financial Statement made open Her Honour's finding as to his capacity.
31.The husband disclosed a total income of $4,695 per week, but that "income" included a nett rental loss estimated at $497 per week. That loss would disappear on the sale of the investment properties, leaving him with a total income of $5,192.
32.The husband had total claimed weekly expenses of $6,538, but those expenses included the amounts at Items 21 - 26 of his Financial Statement, totalling $956 per week, which would all go on the sale of the three properties.
33.The husband's expenses included the items shown at Part N of his Financial Statement. The husband claimed $240 per week as a reasonable expense for food just for himself, but conceded in evidence that he only paid $80 of this amount and that the other $160 was paid by his current wife (although at Part F of his Financial Statement, this amount was put at $150 per week).
34.The final 2 entries in Part N were child related expenses totalling $726 per week, but it was clear from Part F of the husband's Financial Statement that his current wife paid $565 of those expenses. The combined analysis of those 3 items alone reduces the husband's claimed expenses by a minimum of $715 per week.
35.In fact, the total amount that the husband's current wife was paying on account of his expenses, as set out in Part F of his Financial Statement, was $1255 per week. The first of the items referred to in Part F does not appear to have been shown as an expense elsewhere in the husband's Financial Statement and it is unclear whether the second item in Part F was an expense shown elsewhere in his Financial Statement.
35.Taking into account the reduction in expenses referred to in paragraphs 32 and 34 above, the appellant's claimed expenses would fall from $6,538 per week to $4,867 per week. The analysis flows from the husband's own evidence - it is submitted that it was not necessary for Her Honour to give detailed reasons in order for the husband, or this court, to understand the basis of her conclusion as to his capacity to pay spouse maintenance as ordered.
36.Further, at Part H of his Financial Statement, the husband sets out that he was paying $599 per week by way of spouse maintenance for the respondent wife. How that amount is reflected in the amount of $1,099 per week set out at Item 31 is unclear, as is the connection between that amount and the 2 amounts of $797 and $800 shown in the inset box at Item 31. What is clear is that the final order reduced the husband's spouse maintenance expense pursuant by $99 per week.
36.The analysis of the husband's own evidence shows that, after completion of the sales of the three properties, the husband's income would exceed his other expenses, even before consideration of whether motor vehicle lease payments of $570 per week and a combined total expense of $200 per week for entertainment & hobbies and the husband's own share of holidays were reasonable expenses necessary for his self-support.
36.Counsel for the appellant made submissions concerning the husband's capacity to pay spouse maintenance commencing at page 74 of the transcript at 27 and continuing through to page 78 at 5. Much of those submissions were directed to the situation at the time of hearing, even though it had been agreed that the 3 properties were to be sold. There was no submission that all of the husband's claimed expenses were necessary for his self support, even though he had been cross-examined about some of them and it had been submitted by the wife that some of them were excessive.
37.At page 77 of the transcript at 45, counsel for the appellant submitted "…we're in a period of quite a bit of change in terms of finances that occurs by reason of the real estate orders being implemented, so eventually there will no longer be - well, there probably will still be some net loss of investments into the future if he's still paying interest only payments on the H loans. He will just have no income to offset against – [no] investment income to offset against it."
38.It is submitted that Her Honour was not ever provided with a clear picture of what would be the appellant's income and expense position following sale of the 3 properties, either at the completion of the hearing in December, 2020 or after it had become clear by March 2021 that there would be a net amount still owing to [H Bank]. It is submitted that it fell to the appellant to provide Her Honour with such a clear picture, particularly when his Minute of Orders contemplated the possibility of a surplus of at least $230,000 from the sale of the properties, whereas the submissions quoted in the preceding paragraph contemplated the possibility of a shortfall between the proceeds of sale and the [H Bank] loan accounts.
37. In the absence of being provided with such clarity and being left to do the best that she could with the appellant's own evidence as analysed above, it is submitted that Her Honour's finding that the husband had the capacity to pay spouse maintenance in the amount ordered was open and, being based on the husband's own evidence, did not require further explanation.
(As per the original)
In Babett & Falconer (2015) FLC 98-067 at [43], the Full Court, referring with approval to the judgment of Mahoney JA in Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at [386], observed that the provision of adequate reasons for judgment does not require a primary judge “to make an explicit finding on each disputed piece of evidence. It will be sufficient, if the inference as to what is found is appropriately clear...”.
The path of reasoning in the above paragraphs of the wife’s Summary of Argument, with respect, sets out a logical analysis by which the primary judge could have reached the conclusion that, based on the evidence presented in the hearing, the husband has the capacity to pay spousal maintenance. However, in applying the relevant criteria as to what constitutes adequate reasons to the circumstances of this case, that reasoning process or a similar pattern of reasoning, as set out in the wife's Summary, is not revealed in the primary judge’s reasons for judgment.
Accordingly, Ground 2 of the appeal is upheld.
Ground 3 – Failure to give adequate, or any, reasons for the child support departure order
The husband’s third ground of appeal concerns the adequacy of the reasons the primary judge gave in ordering, pursuant to s 117 of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”), that the husband pay $1,500 to the wife in child support per week for the three children.
It was common ground that, at the time that the appeal was filed, pursuant s 102(1)(a) of the Assessment Act (the section being now repealed), leave to appeal was required from her Honour’s determination in respect to child support.
We respectfully agree with the submissions of counsel for the wife that the husband’s submissions with respect to the issue of child support were unsatisfactorily ambiguous and of little assistance to her Honour.
In that respect, for instance, at paragraph 11 of the husband’s Case Outline document (marked Exhibit 2 on 11 December 2020), the following concession was made by the husband:
Child Support
11.The husband accepts that there is a ground for departure given [the eldest child’s] special medical needs being high costs of caring for [the eldest child]. The amount of child support however needs to be determined by reference to the husband's real disposable income given the reality of his financial commitments.
Given this submission, her Honour was, in our view, entitled to assume that there was no dispute between the parties in respect to the following:
(1)That the child support agency had been served with the wife's application for a departure order;[8]
(2)That the prerequisites to the Court considering an application for a child support departure order, as set out in s 116 of the Assessment Act, had been established;[9] and
(3)That the special circumstances requirement as set out in s 117 of the Assessment Act had been established.[10]
[8] Child Support Registrar v Nixon (2007) 36 Fam LR 571 at [47]–[48]. See also Official Trustee in Bankruptcy v Donovan and Donovan and Stevens (1996) FLC 92-703.
[9] Seymour & Seymour [2011] FamCAFC 97 at [84].
[10] Gyselman and Gyselman (1992) FLC 92-279 at 79,064.
However, in submissions before her Honour on 11 December 2020, counsel for the husband submitted that, before the primary judge could make a child support departure order, it was necessary for her Honour to be satisfied of the requirements of s 117 of the Assessment Act.[11] In circumstances where the husband’s concession, as set out in his Case Outline document referred to above, does not rise to the status of pleadings and, in circumstances where, at paragraph 11 of his Amended Response filed on 13 August 2018, the husband sought a specific order for the wife’s application for a child support departure order to be dismissed pursuant to s 117 of the Assessment Act, it cannot be taken that the husband consented to a child support departure order being made subject only to quantum.
[11] Transcript 11 December 2020, p.79 lines 25–27.
In that respect, we note that the husband’s capacity to pay is in itself a relevant consideration pursuant to s 117 of the Assessment Act. As noted in the submission by the solicitor-advocate for the husband in this appeal, in Fabron & Fabron [2020] FamCAFC 274, Aldridge J (with whom Austin and Strickland JJ agreed) observed the following in relation to the consideration of a liable parent's ability to meet a departure order:
8.His Honour therefore did not embark on a discussion of any of the other matters to be considered under s 117 of the Act because, having regard to the difficulties with the respondent's ability and capacity to comply with any order, it could not be just and equitable to make one, even assuming all the other considerations were resolved in favour of the applicant. It is clear that the income, property and financial resources (s 117(4)(d)), and the earning capacity of each parent who is a party to the proceeding (s 117(4)(da)) is a relevant consideration to be taken into account and thus the primary judge was obliged to take the respondent's financial position into account.
(Emphasis added)
Applying the reasons which we have set out in respect to Ground 2 of the appeal, the primary judge has not provided adequate reasons explaining the extent to which her Honour has taken the husband's financial position into account and, specifically, his capacity to meet not only an order for spousal maintenance, but also to comply with a child support departure order.
Having found such error, we are satisfied that the appellant husband has had his substantive rights significantly affected by an error of principle,[12] such that leave should be given to appeal this aspect of the primary judge’s decision.
[12] Wild v Ballard (1997) FLC 92-771 at 84,488.
In summary, therefore, we have found merit in Grounds 2 and 3 of the appeal and uphold those aspects of the appeal.
REMITTAL FOR REHEARING
Having regard to the circumstances of this matter including, most relevantly, the extensive history of litigation referred to by the primary judge, the dire financial circumstances of the wife, and the additional financial and emotional strain of further litigation upon both of the parties, we are of the opinion that it is appropriate for this matter to be remitted for a limited rehearing on the following two issues:
(1)Does the husband have capacity to pay spousal maintenance and, if so, to determine what order is proper for the purposes of s 74 of the Family Law Act 1975 (Cth); and
(2)Does the husband have the capacity to pay child support and, if so, should there be a child support departure order made pursuant to s 117 of the Assessment Act?
In Sagilde & Magee (2018) 59 Fam LR 101, the Full Court stated at [71]:
Whilst we are satisfied that the mother establishes procedural unfairness in the respects identified, such that her appeal is to be allowed, it does not follow that all of the orders made by the trial judge are to be set aside, nor that the proceedings must be remitted as a whole for the purpose of re-determining parenting orders. In Ruscoe and Walker, the majority held that the power in s 94(2) of the Act is wide enough for the Full Court to order "a limited rehearing of some issue or issues, or of some aspect of the exercise of discretion, which this Court considers appropriate in all of the circumstances of the case, including the history of the litigation to date and the grounds upon which the appeal has been upheld".
(As per the original) (Footnotes omitted)
In remitting the matter for determination of these issues, we note that this decision has not set aside Orders 1, 2, 3, 4, 5, 6, and 7 of the orders made by the primary judge on 27 April 2021. That is because we have rejected Ground 1 of the appeal, which relates to the first three orders, and there was no challenge to Orders 4, 5, 6, or 7 made by her Honour. This means that the husband will be required to take all necessary steps to effect the superannuation adjustment as determined by her Honour and the husband will also maintain the responsibility of satisfying debts that are in his name. The husband will also indemnify the wife against all claims made against her with respect to the debt jointly owed by the parties to H Bank, arising from the mortgage H Portfolio Loan ..41 (loan numbers ending #..21, #..21 and #..64) pursuant to Order 7 made by the primary judge. The parties will otherwise retain the property in their possession as referred to in Orders 4 and 5 of the orders made by the primary judge.
COSTS
As a result of the Court's findings of error on the part of the primary judge, the Court grants to both the husband and the wife a costs certificate pursuant to ss 9 and 6 of the Federal Proceedings (Costs) Act 1981 (Cth) with respect to the appeal hearing.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland, and Justices Berman & Harper. Associate:
Dated: 21 December 2021
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