Bucceri and Pearson
[2014] FamCAFC 46
FAMILY COURT OF AUSTRALIA
| BUCCERI & PEARSON | [2014] FamCAFC 46 |
| FAMILY LAW – APPEAL FROM DECISION OF FEDERAL MAGISTRATE – PROPERTY – Where the respondent is serving a period of imprisonment – Where the Federal Magistrate ordered that the respondent pay to the appellant a lump sum by way of property settlement and ordered the sale of a property if that sum could not be paid – Where the Federal Magistrate dismissed the appellant’s application for maintenance – Where the Federal Magistrate did not expressly consider whether the proposed orders were just and equitable – Where the Federal Magistrate failed to properly consider the application for maintenance by wrongly considering the prospect that child support may be paid by the respondent for the support of the parties’ child if the property was retained – Appeal allowed – Remitted for rehearing. |
| Family Law Act 1975 (Cth) |
| CDJ v VAJ (1998) 197 CLR 172 |
| APPELLANT: | Ms Bucceri |
| RESPONDENT: | Mr Pearson |
| FILE NUMBER: | LEC | 285 | of | 2011 |
| APPEAL NUMBER: | NA | 1 | of | 2013 |
| DATE DELIVERED: | 14 March 2014 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Finn, May & Strickland JJ |
| HEARING DATE: | 6 August 2013 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court of Australia |
| LOWER COURT JUDGMENT DATE: | 6 December 2012 |
| LOWER COURT MNC: | [2012] FMCAfam 1469 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Priestley |
| SOLICITOR FOR THE APPELLANT: | David Hunter Solicitor |
| COUNSEL FOR THE RESPONDENT: | Ms Merkin |
| SOLICITOR FOR THE RESPONDENT: | George Lawyers |
Orders
The appeal is allowed.
The application in an appeal to adduce further evidence on behalf of the respondent filed 22 July 2013 is dismissed.
The orders made 7 December 2012 are set aside and the applications are remitted for rehearing before a judge other than Judge Demack.
Subject to any applications by either party to the Federal Circuit Court, the moneys held by the solicitors pursuant to order 1(d) made on 6 August 2013 be retained by them on trust for the parties until the hearing and final determination of the applications.
There is no order as to costs.
The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 (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.
The Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (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.
The Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of the parties in respect of the costs incurred by the appellant and respondent in relation to the rehearing of the applications.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bucceri & Pearson has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 1 of 2013
File Number: LEC 285 of 2011
| Ms Bucceri |
Appellant
And
| Mr Pearson |
Respondent
REASONS FOR JUDGMENT
Finn J
I agree with the orders proposed by May and Strickland JJ and with their reasons for those orders.
May and Strickland JJ
Introduction
The parties in this appeal, Ms Bucceri and Mr Pearson, lived in a de facto relationship commencing in early 2009. They had one child born in January 2010. Some six weeks after the birth of the child, Mr Pearson was arrested and charged with a crime. He was subsequently convicted. It was the intention of Mr Pearson at the time of the hearing to appeal his conviction.
In the trial before Federal Magistrate Demack (as her Honour then was) there was no issue about the existence of the de facto relationship. The only asset of worth is a property purchased by Mr Pearson in 2003 at L. The property was valued at $500,000. The net value after deduction of the mortgage was approximately $170,000.
In the unusual circumstances of this case, the Federal Magistrate decided that Mr Pearson should pay Ms Bucceri the sum of $51,000 by way of property settlement which would include provision for her future needs. No separate order was made for her maintenance; the application for spouse maintenance was dismissed.
The order provided that should Mr Pearson fail to pay the sum within 60 days then the property be sold and Ms Bucceri be paid $51,000 from the net proceeds.
Ms Bucceri filed a notice of appeal on 20 December 2012, appealing against the orders made on 7 December 2012.
At the commencement of the hearing before us, counsel for Ms Bucceri sought to rely upon an amended notice of appeal, which although never filed, was served upon the representatives of Mr Pearson on or about 8 July 2013. Counsel for Mr Pearson did not object to the reliance upon the amended notice of appeal. The amended notice of appeal sought the following orders, which we set out in full:
A. Appeal allowed.
B. The orders of the primary judge be set aside and in lieu thereof order that pursuant to s90SM the net assets of the parties, including the net proceeds of the [L] property, be divided as to 80% to the Appellant and as to 20% to the Respondent, with the appellant to retain her car ($8000) and superannuation ($5000) and to receive a cash sum of $155,000, such sum to be paid at the appellant’s direction from the net proceeds of sale of the [L] property, presently held on trust.
C. In the alternative to order B, order that the orders of the primary judge be set aside and in lieu thereof order:
C.1. That pursuant to s90SM the net assets of the parties be divided in such proportion as the Court thinks fit; and
C.2. That pursuant to s90SE the appellant be paid such amount of spousal maintenance as results in the appellant receiving overall a cash sum of $150,000 from the net proceeds of sale of the [L] property;
C.3. The balance of the net proceeds of sale of the [L] property then remaining be paid to the respondent.
C.4. Each party otherwise retain to the exclusion of the other all other property in their respective possession custody and control.
D. That the respondent pay the appellant’s costs of this appeal.
There is no suggestion that the parties should not retain all other property in their respective possession.
At the hearing of the appeal we were informed that the moneys had not been paid and the house would be sold. As there was some urgency and a need to determine how the net proceeds should be applied, the parties asked us to make orders in relation to the sale of the house and proceeds. As the respondent did not file a cross appeal and the appellant was seeking a greater sum by way of property settlement and spouse maintenance, we ordered that the sum of $51,000 be paid to Ms Bucceri and the balance be held in a solicitors trust account for the benefit of the parties pending the determination of the appeal and further order.
The grounds of appeal are divided into two categories, being first in relation to the property settlement including complaints about the assessment of contribution, adjustment for the current and future circumstances of the parties and whether the orders are just and equitable (Grounds 1-6), and secondly, the failure of the Federal Magistrate to make an order for spouse maintenance (Grounds 7-9).
It is appropriate that the reasons are first considered, to appreciate the arguments on appeal.
Reasons for judgment
At the conclusion of the hearing the Federal Magistrate gave her reasons, ex tempore.
The Federal Magistrate found that Mr Pearson was arrested and incarcerated in March 2010 but the relationship continued for some time. Ms Bucceri and the child had the benefit of living in the house at L. She paid the mortgage payments until November 2010. The date of separation was uncertain, although it fell before October 2011 when Ms Bucceri re-partnered. The de facto relationship was a short one – about two and a half years in duration.
As to the history of contribution to the property there was no doubt that Mr Pearson had purchased the house six years before the relationship commenced. The source of funds was the sale of another property he had purchased with money from his parents.
The only issue in relation to the assessment of contribution to their assets was whether the moneys earlier provided by Mr Pearson’s parents were a gift or a loan.
The parties otherwise had very little property – Ms Bucceri had a car valued at $8,000 and superannuation of $5,000. Mr Pearson had household contents of $2,000 and superannuation of $26,368. The Federal Magistrate decided they should each retain that property.
In relation to the issue of whether there were moneys owing to Mr Pearson’s parents, conflicting evidence was given in the affidavits before the Federal Magistrate. Mr Pearson’s mother, Ms J, was the only person to give oral evidence and be cross-examined. It was claimed that Mr Pearson owed her money. The Federal Magistrate observed that there is no written loan agreement. There is only an understanding, Ms J said, that moneys would be repaid to her and Mr Pearson’s father.
The other feature of the alleged loan is that it is interest free. In addition, although the house purchased with such moneys was sold, no demand has been made for repayment.
Moneys advanced in more recent times to assist Mr Pearson were not accepted by the Federal Magistrate as loans. Rather the Federal Magistrate said at [27] that they were nothing other than a “mother being supportive of a son who was in custody for an offence which she firmly and completely believes he is not guilty of”.
Her Honour rejected the submission that moneys were owing by Mr Pearson to his parents. At [46], [48] and [49] the Federal Magistrate said:
46.There is no reason for this court to consider that there will be any demand for payment of either of those loans, even upon the former matrimonial home being placed on the market, if necessary. The arrangement is longstanding. It has persisted even when a situation arose where it could have been paid back.
…
48.I do not consider that there are loans between the husband and his mother or his father which form part of this de facto property adjustment proceedings, that need to be considered by this court as being taken into account or that are in any way referrable to the wife in these proceedings or should have any priority as between the wife and the husband.
49.I do not include in the pool, therefore, as a way of diminishing the pool further, the liabilities which the husband’s mother asserts are owing to her or her husband. Those will remain matters solely between the husband and his mother and his father and an order will be made which requires the husband to indemnify the wife against each and every liability said to be owing between his mother and himself and his father and himself.
The Federal Magistrate found that Ms J had paid money to Ms Bucceri to assist her, the source of this money on occasions being from Mr Pearson’s accounts.
The Federal Magistrate accepted that in total the payments by Ms J to Ms Bucceri were $42,046. Of that, $10,000 was borrowed from the bank by way of a further draw on the mortgage over the house. A total of $30,000 was drawn down from the mortgage, Ms Bucceri received $10,000 as already mentioned, and the balance has been used for Mr Pearson’s benefit.
The moneys received by Ms Bucceri were regarded by Mr Pearson and his mother to be for the benefit of the child, not Ms Bucceri.
The Federal Magistrate noted that the net value of the major asset, being the house, was approximately $170,000. At the time the parties commenced living together in 2009, Mr Pearson owned the house subject to a much lesser mortgage. Not long after they began living together the mortgage was increased by $182,000. Documents from the Commonwealth Bank reveal that Mr Pearson thought the house was worth about $450,000 when he borrowed that money. Ms Bucceri had no assets of any significance.
The Federal Magistrate found that the initial contribution was entirely that of Mr Pearson.
Her Honour found that the increase in the loan during the relationship was for the parties’ mutual benefit including renovations of the house, living expenses and travel.
During the relationship neither party was employed until they began their cleaning business late in the relationship. The Federal Magistrate found that the contribution of each party during their relationship was equal and no adjustment was warranted.
As the Federal Magistrate observed, the date of separation is unclear. Mr Pearson was in gaol. Ms Bucceri continued the cleaning business until September 2011, and re-partnered the following month.
The Federal Magistrate recognised the significance of Ms Bucceri parenting the young child on her own.
As mentioned earlier, the Federal Magistrate also took into account the various payments to Ms Bucceri, in total $42,000, but also recognised that in part this sum came from a drawing on the mortgage.
In conclusion, the Federal Magistrate decided that the contributions of the parties from separation to the date of trial should be regarded as equal. However, her Honour added that although the contributions during the relationship and post separation could be regarded as equal there had been:
63.…[N]o amelioration of the husband’s contribution during the shortness of that relationship. I consider, then, when I am considering contributions, that the husband has made 100 per cent of the contributions to the property of the parties, being the former matrimonial home.
Before concluding her consideration of what orders in relation to property settlement were proper, the Federal Magistrate considered s 90SF(3) of the Family Law Act 1975 (Cth) (“the Act”) being the matters required to be taken into account by reason of the provisions of s 90SM(4)(e).
After referring to the ages of the parties the Federal Magistrate said the child would be two next month. This was an error, the child would be three.
It was accepted by the Federal Magistrate that Ms Bucceri would be a sole parent. The Federal Magistrate also accepted that the relationship Ms Bucceri has with another person does not provide her with financial support. She plans to re-train. Mr Pearson pays no child support and apart from the capital sum remaining from the sale of the home has no capacity to do so.
The Federal Magistrate accepted that subject to his appeal being successful, Mr Pearson will serve a long prison sentence and would have little working life ahead of him.
The Federal Magistrate assessed Ms Bucceri’s future needs as significant and required an adjustment of 30 per cent of the pool. An adjustment to Ms Bucceri of 30 per cent represents the sum of $51,000 as ordered by the trial judge.
The Federal Magistrate then considered and rejected the application for lump sum spouse maintenance. First, her Honour correctly observed that Ms Bucceri is entirely reliant on government benefits but then her Honour provided the following reasons for rejecting the application:
· Ms Bucceri’s future needs are appropriately reflected in a 30 per cent adjustment in her favour [76];
· The lack of capacity in Mr Pearson to support himself in the future [77]; and
· The lack of capacity in Mr Pearson to pay spouse maintenance without Ms Bucceri receiving the entire net proceeds of sale of the house and that such an order would not be just and equitable [78].
Application by Mr Pearson to adduce further evidence
The evidence sought to be adduced was contained in the affidavit by Ms J.
The affidavit states that a contract for the sale of the house has been signed with a purchase price of $500,000. As this fact is common ground, it is not necessary to admit the affidavit for that purpose.
The balance of the affidavit contains inadmissible and irrelevant material.
Thus, leave should not be given to adduce this further evidence (CDJ v VAJ (1998) 197 CLR 172).
Principles
It is as well in a case such as this to be reminded of the well-known principles governing appeals from discretionary judgments. Although these words are oft repeated it is impossible to describe the appellate process with any more accuracy. The High Court in House v The King (1936) 55 CLR 499 (at 504-505) said:
… It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the course of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
The property settlement appeal – Grounds 1-6
We will address the grounds in the same groupings as did counsel.
Ground 1
It is submitted that the trial judge erred in assessing the contribution of Ms Bucceri during the relationship as being equal to that of Mr Pearson.
It was submitted that the increase in the mortgage in relation to the home was borne equally by the parties and Ms Bucceri should have been given credit for that factor in addition to her contribution as homemaker and parent.
As the finding that the parties used the money borrowed for their mutual benefit was not challenged, it is difficult to understand how the Federal Magistrate erred in not giving Ms Bucceri credit for this factor.
Her Honour was correct, that aside from the introduction of the house by Mr Pearson, their contributions including that of Ms Bucceri as homemaker and parent during the short relationship, were equal.
To the extent that this ground complains about the Federal Magistrate’s calculation of the value of the house, the whole of the mortgage debt was correctly deducted from the value of the house in her Honour’s assessment of the parties’ net worth.
Ground 2
This ground complains that proper consideration was not given to the source of the moneys provided to Ms Bucceri after Mr Pearson was imprisoned.
As to the sum of $30,000 further borrowed from the bank after separation, Ms Bucceri had the benefit of $10,000. In addition it seems there was no challenge to the evidence of Mr Pearson’s mother, Ms J, contained in her affidavit filed 6 September 2012 that in total Ms Bucceri had received $42,046. The Federal Magistrate appreciated the evidence in this respect as can be seen from the following parts of the reasons for judgment:
59.…So the husband continued to make financial contributions to the wife, some of which caused the property pool to otherwise be diminished by an increase in the mortgage through the use of a redraw facility.
60.The wife has made the substantial contribution to the role of parent of the child of the relationship, as well as operating the cleaning business for her own benefit for a period of time.
…
62.I am satisfied when I look at all of those matters of what has happened since separation, that again since separation their contributions have been equal.
Again, it can be seen that the Federal Magistrate was correct in assessing the parties’ contributions to the date of the trial as equal.
Ground 3
Ground 3 complains that because the Federal Magistrate thought the child would be two years old shortly after the trial this demonstrated a misunderstanding of the length of time the mother solely cared for the child. It does seem that the Federal Magistrate was wrong about the child’s age however, this error on its own could not be regarded as sufficient to allow the appeal; it can be treated as de minimus.
Grounds 4 and 5
Ground 4 asserts that the adjustment by reference to s 90SF(3), of 30 per cent, was manifestly inadequate and failed to appreciate the effect of the order in dollar terms. Ground 5 asserts an error in considering the possibility that Mr Pearson might pay child support.
Reference was made to Clauson & Clauson (1995) FLC 92-595. It cannot be said that her Honour did not appreciate the dollar value as the mathematical exercise was performed by her and an order was made in those terms. The real question is whether the decision was so outside the range of discretion that the appeal should be allowed.
Having found that the future needs were significant, it must be said that the decision to allow 30 per cent overall was at the lower end of the scale. However, the total assets to be divided were relatively small in dollar value, the principal asset, being the house had been entirely contributed by the respondent to this appeal and it was a short relationship. It cannot be said that the decision is plainly wrong.
However, it will be seen in relation to ground 6 that the appeal in relation to the property orders should be allowed for a different reason.
Ground 6
This ground asserts that the Federal Magistrate failed to consider whether the orders were just and equitable. Her Honour did use the phrase “just and equitable” in [78] of her reasons, but that was in the context of her consideration of spouse maintenance. In determining that Ms Bucceri should receive 30 per cent of the pool there was no consideration by her Honour as is required by the legislation as to whether the orders are just and equitable. As this is a mandatory consideration (s 90SM(3) of the Act) the appeal must be allowed in this respect.
Spouse Maintenance – Grounds 7-9
Ground 7
In ground 7 it is contended that the Federal Magistrate wrongly considered that if the L property were not sold some child support could be provided from rental income [72].
While there may have been no doubt about the need for spouse maintenance the suggestion that the house might be retained was entirely speculative and should not have been a reason for the refusal to make the order. In reality, there was no prospect of the receipt of child support. It was plain that that property had to be sold.
Ground 8
In ground 8 it is correctly submitted that the Federal Magistrate wrongly relied on her findings in relation to property settlement to support a decision that there be no further order for spouse maintenance. The legislation requires a separate determination of this issue although one factor to be taken into account would be the proposed order for property settlement.
As already stated, it should be remembered that pursuant to s 90SM(3) of the Act orders for property settlement must be just and equitable (whereas orders for maintenance must be proper, pursuant to s 90SE(1)).
Ground 9
In ground 9 it is submitted that in all the circumstances the Federal Magistrate erred in not making an order for lump sum spouse maintenance. We accept that her Honour failed to properly consider the application for spouse maintenance, and thus, depending on the orders in relation to property settlement made at the further hearing of the matter spouse maintenance orders may need to be addressed. The order dismissing the application for spouse maintenance should be set aside.
Conclusion
In the amended notice of appeal and at the hearing it was urged upon us that this court might re-exercise the discretion. It is known that the house is sold and thus there will be no income from tenants. However, we do not know the current financial circumstances of either party, and thus we are not in a position to re-exercise the discretion. All applications should be remitted for rehearing by a judge of the Federal Circuit Court other than Judge Demack.
As the appeal will be allowed it is necessary to set aside the orders made on 7 December 2012. The order made by us on 6 August 2013 remains and being interlocutory in nature might be varied at the final hearing.
Costs
As has been explained the appeal should be allowed.
There are no circumstances justifying either party paying the costs of the other. However, in view of our decision that her Honour erred each party should have a certificate pursuant to the Federal Proceedings (Costs) Act1981 (Cth) for the appeal and rehearing in that respect.
I certify that the preceding sixty-six (66) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 14 March 2014.
Associate:
Date: 14 March 2014
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