BRADIE & BRADIE - [2012] FamCAFC 220

FAMILY COURT OF AUSTRALIA

BRADIE & BRADIE

[2012] FamCAFC 220

FAMILY LAW – APPEAL – NOTICE OF APPEAL – PROPERTY – where the husband appeals the order made by the Federal Magistrate that he retain the Queensland property when he sought orders for the sale of that property – where it is alleged that the Federal Magistrate failed to give adequate reasons why this property should be retained by the husband contrary to his submissions and orders sought – where the husband seeks an adjustment pursuant to ss 75(2)(c) and (d) of the Family Law Act 1975 (Cth) in circumstances where he will have the primary care of the children of the marriage and the financial obligation for their upbringing and education – where the wife opposes the appeal – where it is found that the Federal Magistrate failed to give adequate reasons for her decision that the husband retain the Queensland property – where there is merit in the grounds of appeal – where the Federal Magistrate “painstakingly” worked through all of the relevant s 75(2) factors – where the husband has not demonstrated that the Federal Magistrate’s overall finding in relation to the relevant s 75(2) factors was erroneous – where there is no merit in these grounds of appeal – where the appeal is allowed in part – where it is appropriate to re-exercise the discretion – orders made for the sale of the Queensland property with the parties jointly undertaking that task, any capital gains tax liability to be met equally by the parties with the proceeds of sale remaining to be shared between the parties as to 53 per cent to the husband and 47 per cent to the wife.

FAMILY LAW –APPEAL – APPLICATION TO ADDUCE FURTHER EVIDENCE COMPRISING A VALUATION OF THE PROPERTY – where it is now unnecessary to consider the application given the appeal is to be allowed in part and the order made by the Federal Magistrate is to be set aside – application dismissed.

FAMILY LAW – APPEAL – NOTICE OF APPEAL – COSTS – where the husband sought that the wife pay his costs in the event that the appeal was successful – where in the event that the appeal was successful the wife sought a certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) – where there is no suggestion that the wife led the Federal Magistrate into error – where there is no basis on which the wife should pay the husband’s costs –where the appeal has been allowed on a question of law – where there is no order for costs – costs certificates to issue to the parties pursuant to the Federal Proceedings (Costs) Act 1981 (Cth).

Family Law Act 1975 (Cth) ss 75(2)(c)-(d), s 79
Federal Proceedings (Costs) Act 1981 (Cth)

Bennett and Bennett (1991) FLC 92-191
CDJ v VAJ (1998) 197 CLR 172
Gronow v Gronow (1979) 144 CLR 513
House v The King (1936) 55 CLR 499
Norbis v Norbis (1986) 161 CLR 515

APPELLANT:

Mr Bradie

RESPONDENT:

Ms Bradie

FILE NUMBER:

ADC

4376

2008

APPEAL NUMBER:

SOA

2011

DATE DELIVERED:

21 December 2012

PLACE DELIVERED:

Adelaide

PLACE HEARD:

Adelaide

JUDGMENT OF:

Strickland J

HEARING DATE:

4 July 2012

LOWER COURT JURISDICTION:

Federal Magistrates Court

LOWER COURT JUDGMENT DATE:

9 December 2011

LOWER COURT MNC:

[2011] FMCAfam 1355

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Richards

SOLICITOR FOR THE APPELLANT:	Cleland Lawyers
COUNSEL FOR THE RESPONDENT:	Mr Holland

SOLICITOR FOR THE RESPONDENT:

Nelson & Co Solicitors

Orders

The appeal be allowed in part.
Order (1)(f)A(iii) made by Federal Magistrate Mead on 9 December 2011 be varied by deleting the amount of $1,834,329 and substituting the amount of $1,664,329.
Order (1)(f)B made by Federal Magistrate Mead on 9 December 2011 be varied by deleting the amount of $1,027,809 and substituting the amount of $857,809 for the value of the assets in the possession or control of the husband.
Order (1)(g) made by Federal Magistrate Mead on 9 December 2011 be set aside and in lieu thereof the following orders be put in place:
(1)(g)(1)The property situate at and known as [H Street] in the State of Queensland (“the property”) be sold forthwith and the husband and the wife shall do all such acts and things and sign all such documents as may be necessary to achieve that sale on the following terms and conditions:
(i)The property be listed for sale with a real estate agent agreed between the parties.
(ii)In the event that the parties are unable to agree on the real estate agent they shall jointly approach the President of the Real Estate Institute Queensland and appoint the real estate agent nominated by the President to sell the property.
(iii)The listing price from time to time, the manner of sale and the conditions of sale be as agreed between the parties and in default of agreement about any such matter, as shall be recommended by the real estate agent appointed pursuant to paragraphs (1)(g)(1)(i) or (ii) hereof.
(iv)Upon the settlement of the sale of the property the proceeds of the sale shall be applied as follows:
A.     First, to pay all costs, commissions and expenses incurred in respect of the sale.
B.      Secondly, to pay any capital gains tax levied against the husband consequent upon the sale.
C.      Thirdly, to pay 53 per cent of the remaining balance of the proceeds of sale to the husband and 47 per cent to the wife.
(1)(g)(2)Pending settlement of sale of the property the parties:
(i)Open a joint bank account at BankSA.
(ii)Arrange for the payment into that bank account of all rentals received in relation to the property, less any agent or management fees.
(iii)Arrange for the payment out of that account of the rates, taxes, insurances, other like assessments, body corporate levies, and the cost of repairs and maintenance payable in respect of the property.
(iv)In the event that there is insufficient credit at any time in the bank account the parties equally deposit sufficient monies in that account to meet the ongoing liabilities referred to in paragraph (1)(g)(2)(iii) above.
(1)(g)(3)Upon settlement of sale of the property the parties close the joint account at BankSA and distribute the balance thereof equally between themselves.
The application in an appeal filed by the husband on 17 May 2012 be dismissed.
There be no order as to costs.
The court grants to the husband a costs certificate pursuant to the provisions of section 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 husband in respect of the costs incurred by the husband in relation to the appeal.
The court grants to the wife a costs certificate pursuant to the provisions of section 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 wife in respect of the costs incurred by the wife in relation to the appeal.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bradie & Bradie has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE

Appeal Number: SOA 89 of 2011
File Number: ADC 4376 of 2008

Mr Bradie

Appellant

And

Ms Bradie

Respondent

REASONS FOR JUDGMENT

Introduction

By Notice of Appeal filed 22 December 2011 Mr Bradie (“the husband”) appeals against property settlement orders made by Mead FM on 9 December 2011. The respondent in the appeal is Ms Bradie (“the wife”).
The wife opposes the appeal.
On 17 May 2012 the husband filed an application in an appeal seeking leave to adduce further evidence comprising a valuation of the property at [H] Street, Queensland. That application was opposed by the wife.

Background

The husband was born in 1964 and was 47 years of age at the time of trial. The wife was born in 1966 and was 45 years of age at the time of trial.
The parties commenced cohabitation in late 1992 when they moved into a home they built at W.
The parties married in May 1993, separated on 3 July 2008 and were divorced in September 2009.
There are two children of the marriage, A born in 1997 and who was 13 years of age at the time of the trial, and B born in 2005 and who was six years of age at the time of the trial.
Both the husband and the wife are employed by the South Australian police force.
The W property was sold in late 1994 / early 1995 at which time it was mortgage free. With the net proceeds of sale of $125,000 the parties bought land at O and commenced to build a house on that land. While the O property was being built they lived rent-free at the home of

Ms C, a person who had played a significant role in the wife’s life prior to the parties commencing their relationship. The parties lived in the O property from November 1995 until the husband and the child A vacated the property in September 2008.
In or about 2002 the parties built a house on land purchased at LM, by way of an investment property, for a total cost of $188,000. The property was rented out with rent being applied to the repayment of the loan.
In 2003 and 2004 the parties purchased two investment properties in Queensland at M Street and H Street. Both these properties were purchased in the husband’s sole name with the total purchase price of approximately $248,000 being borrowed. The properties were rented out and rent received went to repay the mortgages. Rent received was paid into the parties’ BankSA portfolio primary account.
On 5 September 2008 the husband and A vacated the former matrimonial home at O and moved to live at his father’s parents’ home in R.
In approximately May 2009 the husband moved with the child A to rental accommodation in W with his partner and her two children.
The wife and the child B lived in the former matrimonial home until it was sold in early 2010 and since that time they have lived at a home purchased by the wife in I. Each party received $200,000 from the proceeds of sale of the former matrimonial home by way of partial property settlement.
In late October 2009 the M Street property was sold, and after discharging the mortgage the total net proceeds of sale were approximately $74,300. Each party received the sum of $37,157.82, again by way of partial property settlement.
In November 2009 the LM property was sold. After discharging the mortgage the total net proceeds of sale were approximately $163,000.
In December 2009 the parties opened a joint interest bearing account at BankSA and paid into that account the balance of the net proceeds of sale of the various real estate properties, together with the net proceeds of sale of their boat. As at 15 April 2010 the balance in that account was $304,870.15
On 6 April 2010 the husband, the child A, the husband’s partner and her children moved into a house they purchased at W.
On 28 June 2010 a consent order was made that the parties’ joint loan with BankSA be discharged from the monies in their joint interest bearing account, and the parties also be paid a further amount of $35,000 each by way of partial property settlement.
In January 2011 the husband’s partner and her children moved out of the W property.
The husband initiated proceedings in the Federal Magistrates Court on

6 November 2008 seeking property settlement and parenting orders. He then filed an amended initiating application on 11 August 2009 in which he sought orders that the net matrimonial assets be divided equally between the parties and that “all capital gains tax incurred by both parties as a result of the implementation of these Orders be shared equally”. The husband did not seek specific orders dealing with the retention or sale of properties held by the parties.
The wife filed a response on 11 December 2008 in which she sought, inter alia, orders that she retain the former matrimonial home at O, that all assets of the parties be ascertained and then be divided, including superannuation, as to

55 per cent to her and 45 per cent to the husband
The Federal Magistrate heard the matter from 10 to 14 May 2010, on 24, 25, 28 January 2011, and on 10 June 2011.
Her Honour made orders and delivered her reasons for judgment on parenting issues on 1 July 2011. Those orders provided for the husband to have sole parental responsibility for the children A and B, for A to live solely with the husband and spend time with the wife in accordance with her wishes and for B to live with the husband for nine nights per fortnight and with the wife for five nights per fortnight.
Her Honour made orders and delivered her reasons for judgment on property settlement issues on 9 December 2011. The net assets of the parties were divided as to 53 per cent to the husband and 47 per cent to the wife, with the three per cent adjustment being made in the husband’s favour taking account of his post-separation financial contributions, and each party was to retain their existing superannuation entitlements.

Reasons for judgment of the Federal Magistrate

The Federal Magistrate identified the central issues in this case as first, a dispute as to the H Street property with the husband seeking orders that it be sold and the net proceeds of sale, after payment in equal portions by the parties of any capital gains tax liability, being divided equally between the parties. The wife sought that the husband retain the property and bear any capital gains tax liability. Secondly, a dispute over the items of personalty retained by each of the parties, and allegations that some items were not included in the valuation of the expert. However, neither party’s counsel in closing submissions sought specific orders regarding the division of chattels and the only evidence before the court as to items of personalty was that of the expert, Mr K. Given the lack of specific submissions the Federal Magistrate proceeded to determine the asset pool using the evidence of

Mr K, notwithstanding the allegations made by the parties against each other.
At the time of trial on 10 May 2010 the Federal Magistrate noted that the parties had sold a number of their assets and had paid out some of their liabilities. The parties had agreed the following:
a)The value attributed to their respective superannuation.
b)The amount in the BankSA investment cash account.
c)The sum of $272,157 received by each of them effectively by way of partial property settlement
d)The value of the H Street property.
e)The extent of their share portfolio whether in their names or in the names of the children.
f)The amount in the child B’s portfolio account prior to its closure in October 2008.
g)The value of A’s scholarship fund.
The parties were also in agreement as to the value of the motor vehicle and scooter in the husband’s possession, the amounts received by him for the sale of guns, a trailer and a lawnmower, the value of the wine and jewellery retained by the wife, and the trade in price received by the wife on her motor vehicle.
Her Honour noted that both parties contributed to superannuation with the husband commencing his contributions some time in 1983 and the wife some time in 1986. Taking into account the length of cohabitation, the overall contributions made by each of the parties to the acquisition and conservation of assets, and the general way in which the parties conducted their family and financial affairs, her Honour determined that the parties’ superannuation entitlements be included “as part of a single pool in respect of which the contribution findings are made”.
At paragraph 36 of her reasons for judgment the Federal Magistrate determined the gross assets of the parties to be $2,030,433.77 including the H Street property at $170,000 and the parties’ superannuation entitlements, but excluding A’s scholarship fund and the value of the shares. Her Honour noted that this amount would increase taking account of the value of the shares held by the parties as at 9 December 2011, and the amount of interest accrued in respect of their joint investment account since January 2011, but would then need to be reduced by the amount required to discharge the ANZ Visa card debt.
The Federal Magistrate found that the parties’ contributions during cohabitation should be assessed as equal. Post-separation her Honour was satisfied that the husband’s contributions were greater and an adjustment of three per cent should be made in his favour.
Turning to the relevant s 75(2) factors her Honour concluded that “it (was) not appropriate to adjust the contribution based entitlement of either of the parties pursuant to any of the factors referred to in Section 75(2) of the Act”.
Finally, her Honour found that on the basis of the gross asset pool being approximately $2,030,433.77, and noting that that amount did not take account of the value of the parties’ shares, interest earned on the investment account or the value of A’s scholarship fund, a property settlement division of 53 per cent, or $1,072,460 to the husband, and 47 per cent, or $951,050 in favour of the wife, should be made. Her Honour also noted that the husband’s share would be reduced by $8,315, being the amount he was to pay the wife “in consideration of retaining [A’s] scholarship fund”, and the wife’s share would be reduced by $7,815, which was 50 per cent of the capital gains tax incurred by the husband post-separation on the sale of the M Street property.

Orders made 9 December 2011

The Federal Magistrate made the following orders:
(1)That in full and final settlement of any claims that either party may have or hereafter have against the other for settlement of property:
(a)That on or before 20 December 2011 the husband do on account of the parties jointly pay and discharge the amount required to extinguish their debt in the husband’s sole name to the ANZ Bank in respect of [the Visa card];
(b)That to effect the payment referred to in paragraph (1)(a) hereof the husband, upon production to BankSA of a sealed copy of this order, withdraw from the funds standing to the joint credit of the parties in the BankSA investment cash account … the amount required to discharge the said debt in full without the necessity of the wife authorising or co-signing any application for the withdrawal of such funds;
(c)That on or before 13 January 2012 the husband’s solicitors provide to the wife a document or documents evidencing the value of the share portfolio in the joint names of the husband and the wife as at 9 December 2011;
(d)That the wife provide to the husband’s solicitors on or before 13 January 2012 a document or documents evidencing the value of the share portfolio in the wife’s and/or the children’s names as at 9 December 2011;
(e)That the parties do all such things and sign all such documents as shall be necessary to effect a closure of the BankSA investment account on 20 January 2012 (the “settlement date”);
(f)That the sum standing to the parties credit in the BankSA joint investment account as at the settlement date be divided between them to effect an overall division of the asset pool as to fifty three percent (53%) thereof to the husband and forty seven percent (47%) thereof to the wife NOTING:
A)That for this purpose the asset pool comprises the total of:
(i)     The amount standing to the credit of the parties in the said BankSA investment cash account as at
20 January 2012;
(ii)    The amount ascribed to the value of the shares referred to in paragraphs (c) and (d) hereof as at
9 December 2011;
(iii)   The sum of ONE MILLION EIGHT HUNDRED AND THIRTY FOUR THOUSAND THREE HUNDRED AND TWENTY NINE DOLLARS ($1,834,329).
B)That the husband will at the time of this distribution have assets in his possession or control to the value of $1,027,809 together with the shares in the joint names of the parties and the wife will at the time of this distribution have assets in her possession or control to the value of $806,520 together with the shares in her name for the children or in the children’s names.
(g)That the husband retain the property situate at and known as [H Street] in the State of Queensland for his sole use and benefit absolutely free of any claim by the wife.
(h)That contemporaneously with the division and distribution of the funds referred to in paragraph (f) hereof:
(i)the wife pay to the husband from her share of those funds the sum of SEVEN THOUSAND EIGHT HUNDRED AND FIFTEEN DOLLARS ($7,815) and in consideration of such payment the husband pay and discharge all liabilities with respect to capital gains tax that have accrued or will accrue in respect of the sale of the property situate at and known as [M Street] in the state of Queensland;
(ii)the husband pay to the wife from his share of those funds the sum of EIGHT THOUSAND THREE HUNDRED AND FIFTEEN DOLLARS ($8,315) and that thereafter the husband retain the monies in [A’s] scholarship fund for his sole use and benefit absolutely free of any claim by the wife;
NOTING that it is intended that such adjustments be effected by a payment of $500 to the wife from the husband’s share of the funds.
(i)That on or before the settlement date the wife do sign all such documents as shall be necessary to effect a transfer of:
(i)The ownership of [A’s] scholarship fund to the husband;
(ii)The jointly held share portfolio into the sole name of the husband;
at the expense in all things of the husband.
(j)That the husband otherwise retain all assets in his possession or control including but not limited to real estate, household chattels and effects, motor vehicles, shares previously in the joint names of the parties, savings, investments, jewellery, superannuation entitlements and the funds in [A’s] scholarship fund for his sole use and benefit absolutely free of any claim by the wife.
(k)That the wife otherwise retain all assets in her possession or control including but not limited to real estate, household chattels and effects, motor vehicles, shares in her name or in her name on account of the children [A] or [B], savings, investments, jewellery, superannuation entitlements [and the funds in [A’s] scholarship fund for his sole use and benefit absolutely free of any claim by the wife] (sic).
2.That each party sign all such documents and do all such things as shall be necessary to give full force and effect to this order and in the event that either party shall neglect or refuse to sign such documents within seven (7) days after receiving a request so to do a Registrar or Deputy Registrar of this Court upon proof by affidavit of such of (sic) refusal or neglect shall execute all such documents and do all such things as shall be necessary on behalf of that party to give full force and effect to this order.
3.That the husband’s solicitors be at liberty to speak to the terms of this order with respect to paragraphs (1)(a) and (1)(b) hereof,
AND the parties shall be at liberty to apply as to consequential orders.

The husband appeals against orders 1(e), 1(f) and 1(g), although it is not apparent why there would be an appeal against order 1(e), and that was not explained at the hearing.
The orders sought by the husband in his Notice of Appeal were as follows:
1.That the appeal be allowed.
2.That the [H] Street, Queensland property be forthwith placed on the market for sale and that the proceeds of sale be applied as follows:
2.1 In payment of all costs, commission and expenses of sale;
2.2In payment of all monies owing to the Australian Taxation Office arising out of capital gains tax levied against the husband consequent upon the sale of the said property;
2.3The remaining net proceeds to stand to the credit of the parties.
3.That there be an adjustment under s.75(2) of the Family Law Act of 7% in favour of the husband to the effect that the property of the parties be apportioned 60% to the husband and 40% to the wife.
4.That the wife do pay the husband’s costs thrown away arising from the wife’s application to have the learned Federal Magistrate disqualify herself, set at $6,775.00 plus GST.

Grounds of appeal

The husband set out his grounds of appeal in his Notice of Appeal filed on

22 December 2011 as follows:
1.That the learned Federal Magistrate erred in ordering that the property situate at [H] Street, Queensland be retained by the husband in circumstances wherein the husband specifically sought orders for the sale of the said property.
2.That if in all the circumstances it was proper for the learned Federal Magistrate to order that the property situate at [H] Street be retained by the husband, the learned Federal Magistrate erred in failing to bring to account the capital gains tax calculated in the sum of $13,279.58 or such other calculation of CGT consequent upon the sale of the said property.
3.That the learned Federal Magistrate erred in failing to give reasons as to why the [H] Street, Queensland property should be retained by the husband contrary to his submissions and orders sought.
4.That the learned Federal Magistrate erred in failing to make any adjustment in favour of the husband pursuant to s.75(2)(c) and (d) of the Family Law Act 1975.
5.That the learned Federal Magistrate erred in failing to give any reasons as to why there should not be an adjustment in favour of the husband pursuant to s.75(2)(c) and (d) of the Family Law Act 1975 in circumstances where the learned Federal Magistrate found that the husband would have the primary care of the infant children and the consequent financial obligation for their upbringing and education.
6.That the learned Federal Magistrate erred in finding that child support as may be assessed from time to time was a proper set off to the application of s.75(2)(c) and (d).
7.That the learned Federal Magistrate erred in failing to order that the wife pay the husband’s costs thrown away as a result of the wife’s application on 13 August 2010 for the learned Federal Magistrate to disqualify herself.
At the commencement of the hearing the husband’s counsel indicated that Ground 7 was no longer pursued, and thus order 4 in the orders sought was also no longer pursued.
Although there were six remaining grounds of appeal, in reality they only addressed two issues. First, the fate of the property at [H] Street, and secondly whether there should have been an adjustment in the husband’s favour pursuant to ss 75(2)(c) and (d) of the Act.
Grounds 1, 2 and 3 addressed the first issue and Grounds 4, 5 and 6 addressed the second. Thus I propose to discuss the grounds of appeal in these groupings.

Discussion – Grounds of appeal

Grounds 1, 2 and 3

With Ground 1, the immediate response is that the Federal Magistrate had a wide discretion under s 79 of the Act to make the order that she did. However, in exercising that discretion the question is did she provide adequate reasons, and that highlights the complaint in Ground 3.
The law with respect to the need to provide adequate reasons is well-settled. In Bennett & Bennett (1991) FLC 92-191 the Full Court said at 78,266:
In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal. Gray J, who delivered the principal judgment, said, at 18:
“The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if: —
(a) the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b) justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.”
We think that the test propounded by Gray J is a particularly useful one, and one which also applies to discretionary judgments.
Further, at 78,267:
It is unnecessary to decide, in this case, whether the inadequacy of her Honour’s reasons was itself an error of law requiring her decision to be set aside, in that we have already determined that the appeal should succeed on the merits. The weight of judicial authority, however, suggests that it might well amount to such an error. At the very least the failure to give adequate reasons places a duty on an appellate court to scrutinise the decision with particular care.
In the absence of adequate reasons, the Full Court is not obliged to uphold a judgment merely because the result may be said to fall within the wide ambit of the Judge’s discretion. In general, the appellate Court should be able to discern either expressly or by implication the path by which the result has been reached.
We stress that we are not suggesting that reasons must be extensive. Their adequacy must frequently be judged by reference to the issues raised by the parties at trial. …
…
The important thing is that the appellate court must be placed in the position of being able to follow the trial Judge’s line of reasoning, as must the parties, if they are to be satisfied that justice has been done.
The issue of what was to happen to the H Street property did not appear to be controversial until the closing address of the wife’s counsel.
Although the husband’s initiating application, the wife’s response, and the husband’s amended initiating application were silent as to the retention or sale of the property of the parties, in the outlines of argument filed by the parties, they each sought an order that the subject property be sold. The only difference was whether the sale was to be under the control of the husband or the parties jointly.
It is apparent that the trial was conducted on this basis although I observe that in her affidavit of evidence-in-chief the wife sought instead an order that in effect she have the conduct of the sale.
In the husband’s written closing submissions he maintained his position in relation to the sale of the property. However, in her counsel’s oral closing submissions, although there was some confusion about it, the wife seems to have sought an order that the husband retain the property. I note that there was no reason given, and no submission made as to why the wife had changed her position, or indeed why the husband should retain the property rather than it be sold.
In her Honour’s reasons for judgment there are only two specific references to this issue. In paragraph 32 her Honour addressed the topic of capital gains tax. Her Honour referred to the evidence of the tax that would be payable by the husband as a result of the sale of the property, and then said this:
… As I intend to order that the husband retain the [H] Street property, the value of which is agreed at $170,000, it is appropriate that the husband bear that liability as and when it falls due.
Then, in paragraph 84 and 85 her Honour said this:
84.As at the date of this judgment the [H] Street property remains unsold. The husband sought that he be able to sell the [H] Street Queensland property providing he kept the wife fully informed of all offers submitted, and that the capital gains tax accruing in respect of that sale be paid equally by the parties. The wife proposed he retain [H] Street and the capital gains liability.
85.In the circumstances of this case I find that it is in the parties interests to finally determine matters of property settlement as between them, and I have already referred in paragraph 32 of this judgment to my intention to order that the husband that [sic] retain the [H] Street property and bear any capital gains tax liability that accrues with respect to the sale of that property as and when it falls due.
Apart from the finding “that it is in the parties’ interests to finally determine matters of property settlement as between them” her Honour does not provide any reason or reasons for determining that the husband should retain the property and bear any capital gains tax liability resulting from a sale. This finding plainly fails to satisfy the obligation on her Honour to provide adequate reasons. Thus, the parties and the court are left with no idea why her Honour determined this issue as she did, yet given the background that I have just outlined, it was a result that called out for an explanation. It is also concerning that with that background her Honour failed to alert the parties to what she had in mind and seek submissions.
The wife’s counsel valiantly attempted to persuade this court that when

her Honour’s reasons are viewed as a whole her Honour’s reasoning process for making the decision that she did becomes apparent.
Mr Holland took me to every reference to this property in her Honour’s reasons, namely:
a)Paragraph 7 where her Honour noted that the husband was receiving the rental.
b)Paragraph 15 where the agreed value of the property is mentioned.
c)Paragraph 32 where her Honour indicated that the husband should retain the property and bear the capital gains tax liability as and when it falls due.
d)Paragraph 36 where the agreed value is again mentioned.
e)Paragraphs 62 and 63 where the details of the purchase of the property are recorded.
f)Paragraph 65 where her Honour referred to the husband’s evidence that he had been the one to arrange the purchase of the property and manage it subsequent to its purchase.
g)Paragraph 74 where her Honour referred to the fact that there was a dispute between the parties as to the sale of another property.
h)Paragraph 77 where it is recorded that the mortgage had been discharged.
i)Paragraph 81 where her Honour set out that the property was rented and unencumbered, and in the sole name of the husband.
j)Paragraphs 83 to 85 where initially her Honour made a distinction between the parties sharing the liability for the capital gains tax paid in respect of properties that had been sold and where capital gains tax may or may not be levied on the proceeds of sale of the H Street property.
k)Paragraph 109 where her Honour referred to the difficulties between the parties in previously marketing the H Street property.
l)Paragraph 152 and 72 where her Honour acknowledged that the relationship between the parties was acrimonious.
Mr Holland also took the court to the evidence of the husband which indicated that the property was not then on the market and that there was a real issue as to whether a buyer could be found.
Mr Holland then submitted that this was a case where there was a “war” between the parties and the Federal Magistrate was obliged to do something about the H Street property, and what her Honour did was a sensible and logical outcome to address the issues that her Honour had identified in her reasons. Further, it is said that her Honour made the orders that she did to alleviate the uncertainty for the parties of achieving a sale, and those orders also gave the husband full control over the property which was part of his application, and avoided further arguments as to any capital gains tax liability.
At first blush this is an attractive argument, but nowhere in her Honour’s reasons does she promote the scenario painted by Mr Holland as her reasoning process for reaching the decision that she did. It takes a good deal of imagination and inference to arrive at that position, and in my view it is a bridge too far. Thus, I am not persuaded that her Honour has provided adequate reasons for her decision. Nor is it as simple as suggesting as

Mr Holland does that the Federal Magistrate had a wide discretion “to make orders that in the overall scheme of things she deemed to be just and equitable”. That does not absolve the Federal Magistrate from the obligation to provide adequate reasons.
Accordingly there is merit in Grounds 1 and 3. On this basis it is unnecessary to address Ground 2 given that the premise there is that the order her Honour made remains in place.

Grounds 4, 5 and 6

The complaint here is that her Honour failed to make an adjustment pursuant to s 75(2) of the Act in favour of the husband despite the circumstance that he has the sole parental responsibility for the two children of the marriage, that A lives solely with him and only sees the wife when she wishes to, and that B lives with the husband spending five days each fortnight and one half of the school holidays with the wife, and that her Honour failed to provide adequate reasons for her decision.
It is said that before the Federal Magistrate the husband ultimately sought a

10 per cent adjustment in his favour as a result of having the responsibility for, and the care and control of the children to the extent referred to above.
However, that was not in fact the case, and it is plain from the husband’s written closing submissions that the 10 per cent adjustment was sought on the basis of a consideration of all relevant s 75(2) factors including the education costs of the children and their care arrangements. I will return to this issue shortly.
The wife ultimately sought that there be no adjustment pursuant to s 75(2) for any reason.
Her Honour addressed the issue of the s 75(2) factors at paragraphs 125 to 141 of her reasons for judgment. In doing so her Honour extensively canvassed all of the relevant factors in this case, ranging from the ages of the parties, to the income and earning capacity of each of them, to their respective use of the partial property settlements, to their assets, liabilities, and superannuation entitlements, to the care arrangements for and the education of the children, to the payment of child support, and to the respective standards of living of the parties, and came to the conclusion that it was “not appropriate to adjust the contribution based entitlement of either of the parties pursuant to any of the factors referred to in Section 75(2) of the Act”.
Significantly, her Honour said this in relation to the children:
130.The parties two children [A] and [B] are aged 14 years and six and a half years respectively. [A] has lived with the husband at all times since separation and from approximately late 2009 has spent no time with her mother. [B] lived primarily with her mother from the time of separation until orders were made on 1 July 2011 providing for her to live with her father and spend time with her mother. At the time of judgment in respect of children’s issues on 1 July 2011 it appeared unlikely that [A] would spend any significant time in the care of her mother in the foreseeable future.
131.Both parties are able to meet the commitments necessary to enable them to support themselves and the children, with the wife having capacity to pay child support as assessed to contribute to the children’s living expenses. Both parties earn significantly more than an average income. Both children attend [Grammar School]. The wife was opposed to [B] attending at that school both because of her perception that the school administration would exclude her from appropriate parental involvement and also because she did not consider that either she or the husband could afford to maintain the children at private schools.
However, in paragraph 132 of her reasons for judgment her Honour suggested that the husband’s claim for an adjustment pursuant to ss 75(2)(c) and (d) of the Act was “based on an assertion that the costs of educating both [A] and [B] will be significant and will fall entirely to him”, and that that was more a matter for the Child Support Agency. Further, her Honour, in paragraph 133, said that she did not consider “in the circumstances of this case that it is appropriate to make an adjustment as sought by the husband effectively on the basis of anticipated school fees”.
It is apparent from the submissions before her Honour that what her Honour set out in paragraphs 132 and 133 did not entirely accord with the husband’s case; his claim for an adjustment was not limited to the costs of educating the children.
However, although her Honour may have misunderstood the husband’s case, it is not apparent that her Honour has failed to take into account the care arrangements for the children in the process of considering all of the competing factors arising under s 75(2). There is the content of paragraph 130 of

her Honour’s reasons which says otherwise, and it is plain that her Honour was well aware of the ongoing care arrangements. Her Honour put them in place herself, and her Honour referred to this in paragraph 2 of her reasons for judgment.
Further, in her reasons for judgment the Federal Magistrate did not address the education costs of the children and nothing else. Her Honour painstakingly worked through all of the relevant s 75(2) factors and concluded that there should be no adjustment. It seems to me that for the husband to be successful in his challenge, it would have to be demonstrated that her Honour’s overall finding was erroneous, and the husband has not done that.
This was undoubtedly an exercise by her Honour of a broad discretion, and as the authorities establish, unless the decision “exceeds the generous ambit within which reasonable disagreement is possible” and is “plainly wrong” then such a challenge as has been made must fail (Norbis v Norbis (1986) 161 CLR 515 per Brennan J at 539-540; CDJ v VAJ (1998) 197 CLR 172, per Kirby J at 230-231; Gronow v Gronow (1979) 144 CLR 513 per Stephen J at 519-520; House v The King (1936) 55 CLR 499, at 504-505). Here the court is not persuaded that her Honour has erred in the exercise of her discretion such as to warrant appellate interference.
Nor is the court persuaded that her Honour’s reasons for judgment are inadequate. Her Honour comprehensively considered and weighed each relevant factor and she has disclosed her reasoning upon which her overall assessment is based. Again, the flaw in the husband’s argument is to concentrate on just one of the many factors that it was necessary for

her Honour to consider, and overlooks that the assessment under s 75(2) of the Act is an holistic one.
Accordingly, I am not persuaded that there is any merit in Grounds 4, 5 or 6.

The application to adduce further evidence

It remains to consider the husband’s application in an appeal seeking leave to adduce further evidence in the form of an updated valuation of the H Street property. However, as explained by the counsel for the husband, the purpose of adducing this evidence was to indicate the prejudicial effect on the husband of the order made by her Honour that he retain the property rather than it being sold. Thus, given that I propose to allow the appeal and set aside the order made by the Federal Magistrate it is unnecessary to consider the application, and I propose to dismiss the same.

Conclusion

Having found merit in Grounds 1 and 3 the appeal will be allowed. The question then becomes whether the court should re-exercise the discretion or whether the matter should be remitted to the Federal Magistrates Court. During the hearing each party indicated that if the appeal was successful then they sought that the discretion be re-exercised, and importantly neither party indicated that if that occurred any further evidence would be sought to be adduced.
Given that the appeal is to be allowed on one discrete issue, I consider it is appropriate to re-exercise the discretion.
The issue to consider is whether the H Street property should be sold or whether it should be retained by the husband.
As referred to above, the husband’s consistent position has been that the property be sold, and that was the position of the wife until the oral closing submissions of her counsel.
As Mr Holland submitted, it is not unusual for a party to change their position during the course of a trial, but that is not the point here. Nothing was put to the Federal Magistrate or to this court as to why, over the objections of the husband, this property should be retained by him rather than be sold. Thus, the facts are that there is a property in Queensland originally purchased by the parties in the sole name of the husband as an investment, and which is rented out and unencumbered. Neither the husband nor the wife wish to retain this property as part of their respective property settlement entitlements. Thus it seems to me that in these circumstances the appropriate outcome is that the property be sold.
There is evidence to which I have been taken that the property was on the market but it was subsequently taken off because there were difficulties in achieving a sale. However, for my part that supports rather than militates against an order for sale. Just because there may be difficulties in achieving a sale should not result in a party who does not want the property being required to retain it.
It was also the husband’s case, unchallenged by the wife, that the husband has been the one to manage the property. Further, there was clear evidence before the Federal Magistrate that the relationship between the parties was acrimonious and that the husband complained about the wife’s conduct in causing delays with the previous marketing of the property.
However, again, these are not reasons why the property should not now be sold particularly where neither party wishes to retain it. They are issues which go more to whether the husband should control the sale or whether it should be undertaken jointly.
In relation to the latter issue, given that both parties would be vitally interested in achieving the best result possible from a sale, and despite their acrimonious relationship, I consider that they should jointly undertake that task.
The next issue is the payment of any capital gains tax liability upon the sale of the property. The husband seeks that any such liability be paid out of the proceeds of sale before any distribution of those proceeds to the parties. The wife has not put a position in the event of a sale, but as part of her final submission to the Federal Magistrate, if the husband retained the property then he should pay any capital gains tax liability. Clearly though, that does not apply any more.
I consider that given the proceeds of sale will be shared between the parties they should be equally liable for any capital gains tax that may be assessed. Although the circumstances were different, I note that with the other investment property in Queensland the parties equally met the capital gains tax liability assessed against the husband as the sole registered proprietor.
Next, an issue on which neither party made any submissions, namely, what should happen to the rent received pending the sale of the property. Up until now the husband has been receiving the rent, but he has been responsible for the rates, taxes, insurance and other like assessments, and he would have paid income tax on the rental received, but clearly, given the property is to be sold and the proceeds of sale distributed between them, pending that sale the parties should both receive one half of the rent and pay one half of the rates, taxes, insurances, and other like assessments.
Having determined these issues the next step is to adjust each party’s entitlement under her Honour’s orders to the net assets by removing the

H Street
property from the pool of assets and then making specific orders in relation to that property.
In paragraph 144 of her reasons her Honour arrived at a figure of $2,023,510 for the value of the parties’ net assets as at January 2011 (save as to the shares, the further interest earned, and A’s scholarship fund).
By removing the property that figure becomes $1,853,510. Applying

her Honour’s percentage division to that figure results in 53 per cent (the husband’s entitlement) being $982,360.30, and 47 per cent (the wife’s entitlement) being $871,149.70.
I observe that there is no adjustment required to her Honour’s offsetting exercise contained in paragraph 146 of her reasons, and the only change to the list of assets that each party is to retain as set out in paragraphs 148 and 149 of her Honour’s reasons is that the husband will not retain the property

(at $170,000). Thus the husband will retain assets to the value of $857,809, and the wife will still retain assets to the value of $806,520, in other words, a total of $1,664,329.
Turning then to her Honour’s orders, the changes required at this point would be as follows:
a)In paragraph 1(f) A)(iii) substitute the figure of $1,664,329.
b)In paragraph 1(f) B) substitute the figure $857,809 for the value of the assets in the husband’s possession or control.
c)Paragraph 1(g) should be deleted.
Following those changes, there should be additional orders providing for the sale of the property, the distribution of the proceeds, and the setting up of a joint bank account into which pending sale the rental should be paid, and from which rates, taxes, insurances and other like assessments should be paid.
Of course, consistent with the decision that I have made, after payment of the costs of sale, and the capital gains tax the proceeds of sale should be distributed 53 per cent to the husband and 47 per cent to the wife.

Costs

At the conclusion of the hearing each counsel made submissions as to the question of costs depending upon the result of the appeal.
In the event the appeal was successful the husband sought that the wife pay his costs. However, it was not suggested that the wife for example led the Federal Magistrate into error and thus there can be no basis for the wife to pay the husband’s costs, and there should be no order as to costs. In that event, the husband sought that a certificate issue pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”).
For the wife’s part, if the appeal was successful, she sought a certificate under the Costs Act.
In the circumstances of there being no order for costs and the appeal being allowed on a question of law it is appropriate that each party should be issued with a certificate pursuant to the Costs Act.

I certify that the preceding ninety-two (92) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on

21 December 2012.

Associate:

Date: 21 December 2012