Bucknell & Bucknell
[2009] FamCAFC 177
•29 September 2009
FAMILY COURT OF AUSTRALIA
| BUCKNELL & BUCKNELL | [2009] FamCAFC 177 |
| FAMILY LAW - APPEAL – FROM A DECISION OF A FEDERAL MAGISTRATE – PROPERTY AND SPOUSAL MAINTENANCE – Federal Magistrate assessed contributions in the eight year marriage to be equal – Income earning disparity and wife’s ongoing care of the young child led to a 35% adjustment – Orders for spousal maintenance did not contain a cessation date – Husband appealed property orders asserting that assets of a family trust held by a non party third person were included in the property pool, that contributions were not equal, that the adjustment was outside the reasonable range, that the equity of a post separation property ought not have been included as such equity was held on trust – Husband appealed maintenance order asserting that the Federal Magistrate erred in assessing reasonable rent as opposed to actual costs for his residence and ought have included a date for maintenance to cease – Orders left Husband in a negative asset position in relation to realisable assets, though he retained certain superannuation funds FAMILY LAW – APPEAL - PROPERTY ORDERS – Husband included trust assets in his trial documents calculating the marital property pool – Presentation of the case at trial negated arguments of lack of control of assets by the husband – Assessment of contribution as equal falls within the generous ambit within reasonable disagreement is possible – Adjustment in wife’s favour is responsive to the circumstances of this case, falls within reasonable parameters – The fact that the order left the husband in a negative realisable asset position does not of itself indicate error – The Husband retained superannuation funds and as such the order did not exceed property in existence FAMILY LAW – APPEAL - SPOUSAL MAINTENANCE – Federal Magistrate examined the husband’s capacity to maintain the wife, including scrutinising his reasonable expenses – Decisions reached were open on the evidence – Court does not have to include a cessation date for spousal maintenance orders – s 83 provides for variation if circumstances change FAMILY LAW – APPEAL - APPEAL DISMISSED – COSTS – Funds held by agreement as security for costs – Order realising these funds to first be used for wife’s costs |
| Family Law Act 1975 (Cth) s 72; s 75(2); s 83 |
| Clauson & Clauson (1995) FLC 92-595 Coulton & Holcombe (1986) 162 CLR 1 Norbis & Norbis (1986) 161 CLR 513 |
| APPELLANT: | Mr BUCKNELL |
| RESPONDENT: | Ms BUCKNELL |
| APPEAL NUMBER: | NA | 23 | of | 2009 |
| FILE NUMBER: | BRC | 6576 | of | 2007 |
| DATE DELIVERED: | 29 September 2009 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Warnick, Boland & Thackray JJ |
| HEARING DATE: | 21 September 2009 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 3 November 2008 |
| LOWER COURT MNC: | [2008] FMCAfam 1152 |
REPRESENTATION
| SOLICITOR FOR THE APPELLANT: | Mr Cooper |
| SOLICITOR FOR THE APPELLANT: | Barry & Nilsson Lawyers |
| COUNSEL FOR THE RESPONDENT: | Dr Sayers |
| SOLICITOR FOR THE RESPONDENT: | Harrington Family Lawyers |
Orders
That the appeal be dismissed.
That the husband pay the wife’s costs of and incidental to the appeal as agreed and in default of agreement, as assessed.
That the husband cause the sum held by his solicitors as security for costs to be first applied to payment of costs as agreed or assessed.
IT IS NOTED that publication of this judgment under the pseudonym Bucknell & Bucknell is approved pursuant to s 121(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 23 of 2009
File Number: BRC 6576 of 2007
| Mr BUCKNELL |
Appellant
And
| Ms BUCKNELL |
Respondent
REASONS FOR JUDGMENT
On 24 February 2009, Federal Magistrate Purdon-Sully made orders for the purpose of dividing net property, of just $137,250.00, between Mr and Ms Bucknell, by way of alteration of property interests following the breakdown of their marriage. Her Honour had concluded that each party’s contributions to the time of trial were equal but that, because of a disparity in income-earning capacities and the wife’s ongoing care of the child of the marriage – then only three years old - there should be a 35 percent adjustment, leading to an 85 percent division to the wife.
Her Honour also ordered that the husband pay to the wife by way of spouse maintenance, the sum of $530.00 per week.
These reasons relate to the husband’s appeal against all of the orders made by the Federal Magistrate.
Among the items included in the table of net assets for division, were assets of two family trusts. The Federal Magistrate also included $16,655.00 on account of legal fees paid by or on behalf of the husband.
There are eight grounds of appeal, five of which go to the orders by way of adjustment of property interests and three to the spousal maintenance order. However, it is unnecessary to set out the grounds, as the arguments were refined by written outline and at the hearing.
The challenges to the orders altering property interests can be summarised as:
that the Federal Magistrate erred:
(i)by including the husband’s paid legal fees in the “asset pool”, because the fees were paid out of assets held by a third party (the trustee of one of the family trusts), not joined in the proceedings.
(ii)in finding that assets held by the family trusts formed part of the property pool.
(iii)in including the husband’s gross “equity” in a residence purchased after separation, because some of that “equity” was held on a resulting and/or constructive trust for the trustee, or was subject to a debt to the trustee.
(iv)in finding that contributions were equal.
(v)in ordering a 35 percent adjustment on account of s 75(2) factors.
The arguments against the spousal maintenance order asserted that the Federal Magistrate erred:
(vi)in assessing the husband’s reasonable outgoings;
(vii)in not fixing a date at which liability for spouse maintenance ceased.
The challenges to the assessment of contributions and s 75(2) factors (points (iv) and (v))
We deal firstly with these arguments, as doing so provides an opportunity to set out facts that provide context to all the arguments.
The date when the parties commenced cohabitation is not set out in Purdon-Sully FM’s reasons, but the cohabitation was said to be for about eight years and the parties separated in December 2006. As to other matters, the learned Magistrate recorded:
4.When they commenced their relationship [the husband] was [an engineer]. [The wife] had a beauty salon business … . Both were then earning a similar income.
5.Like many couples starting a life together they owned few assets. [The husband’s] career became their focus. For most of their relationship they were either travelling abroad or relocating within Australia as [the husband] pursued opportunities and experience in the telecommunications industry. … [The wife] says that it was part of a “joint plan”, [the husband] availing himself of work opportunities overseas and the ability to save for the purchase of their “first house and a car”. …
6.When [the husband and wife] were in Australia, [the wife] continued to work in the beauty industry. This included during the short periods when [the husband] was seeking employment. However in 2002 she suffered a back injury that made it difficult for her to undertake the lifting and loading requirements of beauty work, including lifting in beauty training work.
7.Even after they re-settled in Australia, [the husband’s] work took them to Sydney, Brisbane and then to Melbourne. During this period [the husband] obtained a Masters in Business Administration degree. [The wife] underwent fertility treatment, falling pregnant with [the child] in 2004.
…
9.During their relationship [the husband] set up [C Pty Ltd] as trustee of a family trust. The primary beneficiaries of the trust were [the husband and wife]. From October 2005 onwards [the husband] used [C Pty Ltd] to obtain contracts for consultancy work in the telecommunications industry.
10.When [the husband and wife] separated [the husband] was earning a good income from [C Pty Ltd]. [The wife] was not working outside of the home. She was the full time carer of [the child].
11.Following their separation in December 2006, [C Pty Ltd] ceased trading. In January 2007 [the husband] set up [L Pty Ltd]. He used [L Pty Ltd], rather than [C Pty Ltd], to continue his consultancy work. …
…
13.[The wife] says that she has found it difficult to obtain part time or casual employment. In March 2008 she started a four year university course. She hopes to obtain teaching qualifications. At trial her income consisted of government benefits. [The husband] pays for some of her expenses, including her car. He also pays child support for [the child].
14.[The husband] has remained in [Victoria]. He has re-partnered. He and his partner, [Ms R], were expecting a child in September 2008. [Ms R] has a child from a previous relationship. Until May 2008 she was working … four days a week earning an income of about $90,000 per year. She thereafter intended to cease work to prepare for the birth of their child.
15.In December 2007 [the husband] purchased a property in [Victoria] for about $720,000. The deposit of some $72,000 was paid by [L Pty Ltd]. At trial, [the husband] was residing in this property with [Ms R] and her son.
16.Whilst [the husband] earned a significant income from his consultancy work in the 2007 financial year, in excess of $320,000, he says that [L Pty Ltd] has recently been experiencing cash flow problems. He has concerns about [L Pty Ltd’s] ability to secure future consulting work. [footnotes omitted]
Mr Cooper, appearing for the husband, made two submissions in support of the challenge to the learned Magistrate’s assessment of contributions. Firstly, that it was not open to her Honour to regard the wife’s non-financial contributions as equal to the financial contributions of the husband, particularly since the wife’s parental contribution only commenced late in the period of cohabitation.
Secondly, that as appears particularly from paragraphs 45 to 47 of her reasons (shortly set out), the Federal Magistrate wrongly placed weight on the impact of the parties’ choices in relation to the husband’s career on the wife’s opportunity to make financial contributions. In other words, her Honour effectively compensated the wife for lost earnings, rather than had regard to her contributions. Mr Cooper further argued that, while the impact of a marriage on earning capacity was a factor to which regard might properly be had under s 75(2), it was wrong to take account of that aspect in assessment of contributions.
Explaining her assessment of contributions, Purdon-Sully FM said:
43.This is not a short relationship. It lasted eight years. Both parties made financial and non-financial contributions during the relationship. Both parties made contributions to the best of their ability in the roles that they each assumed during the relationship.
44.In terms of their financial goals the focus of the husband and wife was on the advancement of the husband’s career. By virtue of his professional qualifications his employment prospects were likely to be the more remunerative. Further the parties proposed to start a family at some stage and it was their intention that the wife should assume a primary carer role for [the child], at least in his early years.
45.Whilst the wife worked outside of the home her efforts were directed to supporting the husband’s career goals for their mutual benefit. She travelled overseas with him when the husband sought work to advance his skills and experience. I accept that the wife was unable to pursue her career whilst overseas. The husband conceded during cross examination that there were countries where the wife experienced visa problems which impacted on her employability. Further, his evidence was that when the wife was offered employment [on one occasion] she was unable to take that up as it was a few weeks prior to the completion of his work.
46.Counsel for the husband submitted that the wife did not depose to the impact of that on her. However the impact of that on her was an interrupted work history. She left Australia, lived in countries …, where she says, and I accept, there were some safety issues that precluded her from working in the beauty industry. This [sic] was prepared to do this to further the husband’s career.
47.Whilst she may have left a beauty business that was not at that time profitable that does not mean that had she stayed in Australia from June 1999 to December 2001 she would not have continued the business or otherwise sought work opportunities and advancement. The fact that when she returned to Australia she was able to resume her work … does not alter the fact that the parties’ relocations associated with the husband’s work, often only for short periods of time, and often in countries where English was not a first language, resulted in interruptions to her own work opportunities by reason of her travel abroad.
48.Further, the wife’s evidence is, which I accept, that living abroad was at times challenging and impacted upon her socially.
49.Further, on the parties’ permanent return to Australia the wife continued to support the husband’s career which involved further relocations.
50.I accept the wife’s evidence that whilst the husband was studying and working full time that she made the greater homemaker contribution to the relationship, including during periods when she was also in paid employment.
51.With the birth of [the child] the wife did not pursue paid employment. She devoted her time and energy in the care of [the child] including when the husband was residing elsewhere for work reasons. This was a significant contribution, particularly in circumstances where [the child] was unwell. I accept the wife’s evidence in relation to [the child’s] health and her response to that.
52.I accordingly assess the parties’ contributions to the date of separation as being equal.
53.Following separation the husband made significant contributions. He continued to work long hours. In terms of the value of the husband’s post-separation contributions in the form of his acquisition of his interest in [the Victorian property] this represents about 52% of the net pool. The husband also contributed financially to the support of the wife in the form of the provision of and payments on her car and to [the child] in the form of child support in the sum of $326 a week. He did not seek a reduction in his child support payments for his travel … to spend time with [the child], the cost being about $550 per visit on alternate weekends.
54.Whilst I accept that the husband’s efforts post-separation in conducting and developing [L Pty Ltd] should be accorded appropriate weight the wife also made a significant contribution in caring for [the child]. Whilst the husband has remained a devoted father and is committed to the development of his relationship with [the child], his work commitments and the geographical imperatives at play meant that the wife has had to shoulder the major responsibility for [the child’s] care notwithstanding [the child] spending some time in child care and regular time with his father.
55.To assess the husband’s financial contributions as having a greater weight than that of the wife’s non-financial contributions in caring for [the child] would do an injustice to the wife. …
56.Further, I take into account that the husband’s post-separation contributions in acquiring [the Victorian property] were derived from the principal business initiative of the parties established during their relationship to which the wife made contributions.
57.I assess the parties’ post-separation contributions as being equal.
58.Overall, I find that the parties’ contributions during their relationship pre and post-separation were equal. [footnote omitted]
We reject the submissions on behalf of the husband.
In our view, the learned Magistrate’s findings and observations about the wife’s circumstances during the period of cohabitation were not made for the purposes of compensating her for lost income, or to assess the effect on her capacity to earn income for the purpose of assessing contribution, but were for the purposes of evaluating, in context, the contribution that she made in relation to the parties’ pursuit of advancement at that time.
That this is so can, in our opinion, be seen from the passages from her Honour’s reasons, repeated here:
45.Whilst the wife worked outside of the home her efforts were directed to supporting the husband’s career goals for their mutual benefit. …
46.Counsel for the husband submitted that the wife did not depose to the impact of that on her. However the impact of that on her was an interrupted work history. … This [sic] was prepared to do this to further the husband’s career.
Moreover, at least some of the findings by the learned Federal Magistrate about the effect on the wife’s ability to work, of living with the husband in foreign countries for the sake of his employment can, we are satisfied, also be seen as provoked by a case put forward on the husband’s behalf in cross-examination of the wife, to the effect that while overseas she had not availed herself of employment when it was available.
As to the argument that it was simply not reasonably open to the learned Magistrate to treat contributions as equal, we simply say that, having regard to the “generous ambit within which reasonable disagreement is possible” (Norbis & Norbis (1986) 161 CLR 513 at 540, per Brennan J) we are not satisfied that her Honour’s assessment was beyond reasonable parameters. The husband’s financial contributions produced only a very modest asset pool. The wife’s non-financial contributions were largely made in support of the husband’s career, which of course he carried with him upon the marriage breakdown.
Moreover, the wife’s contributions were made in a context which tended to add to their significance; the child had ill-health and Purdon-Sully FM accepted that “living abroad was at times challenging and impacted upon her [the wife] socially”.
Accordingly, as indicated, we find no merit in the challenge to the assessment of contributions.
The attack on the learned Magistrate’s assessment of s 75(2) factors is effectively that an adjustment of 35 percent in the wife’s favour was manifestly excessive. However, to demonstrate this, Mr Cooper pointed to the result, that the husband retained superannuation of $28,497.00 but was placed in a negative position with regard to presently realisable assets, to the extent of nearly $8,000.00. That submission requires consideration not just of the learned Magistrate’s reasons for her assessment of s 75(2) factors, but also of her reasons with regard to the justice and equity of the proposed orders.
In relation to her consideration of s 75(2) factors, significant parts of her Honour’s reasons are:
60.The husband is aged 35 years. He enjoys good health. The wife is aged 35 years. She enjoys good health.
61.[The child] is aged 3 years and he resides full time with the wife. He suffers from allergies…
62.The husband has a history of employment. Any break in his employment history has not been lengthy. He has tertiary qualifications, including a Masters in Business Administration degree which he acquired during the relationship. His taxable income in the financial year ended 30 June 2007 was $323,000 (rounded). His income in the 2006 previous financial year was $162,000 (rounded).
63.Notwithstanding his concerns about recent business difficulties he was sufficiently confident in February 2008 to prepare a budget that showed a projected personal income of about $220,000 gross or $132,000 net for the year. This budget was prepared at a time when his evidence was that he then had only one contract in place. He also was confident enough to undertake a significant mortgage commitment on the purchase of [the Victorian property] in December 2007 and for him and his partner to make a decision to start a family. He has continued to meet his financial commitments to [the child] throughout this period and also his financial contributions to the wife including up to trial. He presented during the course of his evidence as an intelligent and capable person.
64.I am satisfied on the evidence and from my observations of him under cross examination, including his attention to and recall of financial detail, that notwithstanding his lack of confidence in April 2008 about the future and the difficulties that he outlined in his evidence that his qualifications and experience are such that he has the capacity to continue to earn a significantly greater income than that of the wife even if the wife obtains her further qualifications.
…
66.The wife has not been in paid employment since May 2005. She has qualifications as a beauty therapist and trainer. She is also a qualified hairdresser however views herself as not being a good hairdresser. She suffered a back injury during the relationship which impacts upon her ability to undertake work in the beauty industry. Any training work may also involve her in travel away from home.
67.The wife is presently a full time undergraduate student …undertaking Bachelor of Education studies. I find on the evidence that it is reasonable for her to retrain and secure teaching qualifications. She is in the first year of a four year course. By the time she completes her degree [the child] will be about 6 years of age. The qualifications she proposes to obtain will likely place her in a stronger financial position and provide her with employment conducive to her role as [the child’s] primary carer, particularly when [the child] commences primary school.
68.At present the wife has the assistance of day care and her parents in her care of [the child]. I otherwise accept her evidence in paragraphs 74 to 97 of her Affidavit of Evidence in Chief relating to her attempts to obtain work and the reasons for her undertaking her present course of study.
69.The wife is reliant on financial support from the husband in the form of the provision of a car and child support. She is also in receipt of government benefits from which she supports herself.
70.…[The husband] has a partner in Melbourne. It was her [the husband’s partner] intention to cease work pending the birth of their child. The husband will have future commitments, financially and otherwise to their child.
71.The wife wishes to obtain her own independent accommodation close to her parents. She is paying her parents the sum of $100 per week for board. She outlines in her evidence the quantum of her likely commitments should she obtained rented accommodation.
72.The husband and his partner are residing in the [Victorian] property. The husband has been meeting the outgoings on that property. He says that if his cash flow does not improve he may have to sell the property and or limit his travels …to spend time with [the child].
73.The net pool to be divided between the parties is small.
74.Taking into account all of these factors, in my view the wife deserves some adjustment in her favour for income earning disparity and her ongoing care of [the child].
75.In Clauson and Clauson (1995) FLC 92-595 the Full Court observed that the application of percentages does not necessarily result in a just and equitable result, when it said, at page 81,911, that there is “at times a tendency to assess s.75 (2) factors in percentage terms without considering its real impact, and we think there is legitimacy in the views expressed in more recent times that the Court has tended to operate in this area within artificially delineated boundaries. That is, it appears almost to be inevitable that the s.75 (2) factors will be assessed in a range between 10% and 20%. A number of cases will justify an assessment outside those parameters and in any event it is the real impact in money terms which is ultimately the critical issue.''
76.I assess the adjustment in the wife’s favour at 35%. Translated into financial terms this equates to $47,950 of a net pool of $137,000 (rounded). In my view this is an appropriate adjustment.
77.Accordingly an increase in the wife’s total contribution based entitlement of 50% to 85% of the pool of $137,000 (rounded) is justified in my view. [footnotes omitted]
In our view, the foregoing reasons of the Federal Magistrate clearly and cogently explain and support her Honour’s assessment of s 75(2) factors, subject to any issues arising from consideration of the result produced by her Honour’s assessments, namely the actual division of property between the parties. As indicated, her Honour dealt with this when she turned to consider “Is the order just and equitable?”. Relevant parts of her Honour’s discussion under this heading include:
80.I propose that the wife retain her superannuation, her [Bank] account, the overseas joint bank accounts and the …motor vehicle, unencumbered. The value of these assets totals about $35,129.
81.I propose that the wife receive a cash adjustment of $55,000 such sum to be paid as follows:
a) $16,000 within 7 days of the making of these orders; and
b) the balance to be paid within a further 28 days thereafter.
82.I propose to effect a superannuation split from either the husband’s superannuation interest in [A fund] or from [A and B Funds] on the basis that the wife receive a splittable payment to a total value of $26,321.
83.On the assessment proposed by me:
The wife will receive:
Non-superannuation assets $82,902
Superannuation assets $33,548
The husband will receive:
Non-superannuation assets $(7,947)
Superannuation assets $28,497
84.I believe this to be a just and equitable result.
85.It provides the wife with an unencumbered and a mix of cash and superannuation. She should have some cash as a buffer against the exigencies of life. There is a pool of assets from which cash can be sourced. The cash component can be funded by the husband from the [C Pty Ltd] account and/or the equity in [the Victorian property] or from the sale proceeds of [the Victorian property].
86.I propose that the wife also retain the balance in the [F] bank account in her sole name which I did not include in the pool but which involves a small amount of money.
87.The effect of my order will be that the husband will either discharge the loan on the car or continue the repayments on that vehicle pending the discharge of the liability. He has of course been making these payments to date, including between February and April 2008 when he said [L Pty Ltd] was experiencing cash flow problems. He also appears to have been able to slightly reduce the mortgage liability on
[the Victorian property] over the same period of time.
88.The adjustment I propose will provide the wife with a mixture of cash and superannuation. It is a modest settlement on any view. It will leave the husband with little in the way of property. However as Counsel for the husband observed, there is little in the pool.
89.The husband will exit the relationship with professional skills and a work history that will enable him to continue to earn a good income into the future. He is intelligent, capable and healthy. There was nothing in his demeanour or presentation at trial that led me to believe that he was not capable of earning his way out of his current financial position and re-establishing himself.
As seen from Purdon-Sully FM’s reasons, this is not a case in which, notwithstanding that the husband ends with a deficit in “non-superannuation assets”, the orders go beyond property in existence, given that he retains superannuation. However, an order in which one party receives no immediately realisable funds is uncommon. But of itself, that does not indicate any error. In our view, the result is responsive to the circumstances of the case which, as seen, involve a period of contributions to trial of about ten years, a very young child in the primary care of the wife, a small asset pool and a significant disparity in earning capacities, favouring the husband.
As the Full Court of this Court said in Clauson & Clauson (1995) FLC 92-595, at 81,911:
It has long been recognised that in most cases the most valuable “asset” which a party can take out of the marriage is a substantial, reliable, income-earning capacity.
Having regard to the generous ambit of the discretion earlier referred to, we are not satisfied that the learned Magistrate’s consideration of s 75(2) factors and the orders that she put in place by way of property division were beyond reasonable parameters.
Points (i) – (iii), alleged errors in inclusions in the “asset pool”
As earlier seen, in respect of the family trusts, the learned Magistrate said:
9.During their relationship [the husband] set up [C Pty Ltd] as trustee of a family trust. The primary beneficiaries of the trust were [the husband and wife]. From October 2005 onwards [the husband] used [C Pty Ltd] to obtain contracts for consultancy work in the telecommunications industry.
…
11.Following their separation in December 2006, [C Pty Ltd] ceased trading. In January 2007 [the husband] set up [L Pty Ltd]. He used [L Pty Ltd], rather than [C Pty Ltd], to continue his consultancy work. By July 2007 [L Pty Ltd] was also engaging a sub-contractor to provide services to the telecommunications industry.
Later, her Honour included in the asset pool:
40. …
Family Trust Business Account
·[C Pty Ltd] 15,964
·[L Pty Ltd] trading 6,513
·[L Pty Ltd] term deposit 5,111 27,588
Family Trust Assets
·[Motor vehicle] 26,600
·[L Pty Ltd] share portfolio 7,973 34,573
…
Husband’s real property interests 72,150
Add Back
·Husband’s legal bills paid 16,665
…
Mr Cooper argues:
·that the evidence before the Federal Magistrate was that the husband’s father was the trustee of the two family trusts;
·however, the husband’s father was not a party nor were the trust deeds in evidence before the court;
·while the husband acknowledged that he was the appointor of the Family Trust, there was no evidence of the powers he held as appointor;
·Purdon-Sully FM did not find that the husband was in control of the trusts and thus it was an error of law for the Federal Magistrate to include trust assets.
Similarly, Mr Cooper says the evidence was that the $72,150.00 deposit which the husband put down on the Victorian property purchased after separation came from the trust; $36,453.99 was by way of repayment of a loan account by [L Pty Ltd] to the husband, but the balance was a drawing giving rise to a debit loan account of the husband with [L Pty Ltd] in the sum of $35,696.01. Thus, Mr Cooper argues there was either a resulting trust arising from provision of the latter amount in favour of the family trust, or there was a debt by the husband to that trust, which debt ought have been brought into account.
Mr Cooper argues that, though these points had not been taken at trial, they are questions of law and thus could be entertained on appeal. He cites Coulton and Hollcombe (1986) 162 CLR 1, where the High Court cited O’Brien v Komesaroff (1982) 150 CLR 310, at page 8:
In some cases when a question of law is raised for the first time in an ultimate court of appeal, as for example the construction of a document, or upon facts either admitted or proved beyond controversy, it is expedient in the interests of justice that the question should be argued and decided…
We reject these arguments.
Firstly, in our view the conduct of the husband’s case before the Federal Magistrate carried an implicit concession that the husband was in control of the assets of the trusts. The husband himself (Mr Cooper concedes) included trust property in the calculations of the property pool which he presented to the Federal Magistrate. No issue was raised by the husband in relation to the non-joinder of his father.
The husband’s presentation of a case that negated any issue of an absence of control by the husband of the trusts denied the wife the opportunity of challenging the assertion that the husband now seeks to make.
This is not a case in which there were admitted facts, or facts proved beyond controversy, to which a question of law can now be applied. While the fact of the trusteeship went unchallenged, that fact cannot be seen as standing alone in the face of the husband’s own proposition that trust assets be included in the calculation of assets for division.
Secondly, as to the husband’s equity in the Victorian property, Purdon-Sully FM said:
31.Counsel for the husband submitted that the factual basis of this case required me to adopt a “two-pools” approach when assessing the parties’ contributions. She says, firstly, that I would exclude the interest in [the Victorian property] on the basis that the wife had made no contribution to that property. … She says that the husband’s acquisition of post-separation assets arose from his post-separation efforts and that it was the same “as if he had acquired a new job in a new government department in Melbourne”.
32.I do not accept those submissions. [L Pty Ltd] was not an entirely new initiative established by the husband post-separation. [L Pty Ltd] was the source of the deposit on [the Victorian property], the husband’s evidence being that $72,150 was paid from the [L Pty Ltd]account to his personal savings account being a repayment of a loan by [L Pty Ltd] of $36,453.99 and then a further drawing from [L Pty Ltd] of $35,696.01. I am accordingly not prepared to exclude [the Victorian property] from the pool. [footnotes omitted]
As seen from these paragraphs, though the husband did contend at trial that his interest in the real property purchased post-separation should not be brought to account, that argument was based upon the circumstances of its purchase post-separation, rather than any suggestion that the family trust was the beneficiary of a resulting trust and he, the husband, had no control over the trust. Similarly, he did not argue that the debt in his loan account to the trust ought be offset against his equity in the real property, because the trust was at arm’s length from him.
Finally, in relation to the inclusion in the pool of the husband’s paid legal fees, we are not satisfied that the evidence established that legal fees were met by the transfer of a trust asset, as opposed to the husband receiving funds from the trust, to which he was lawfully entitled. This is because of what Purdon-Sully FM said in the following paragraphs of her reasons:
25.The husband says that the legal fees paid by him from [L Pty Ltd] should not be added back as notional property as they represent payments out of a post-separation income stream. …
…
28.Whilst the funds used by the husband to pay his legal fees were generated post-separation from a post-separation business entity established by the husband, that entity assumed the nature and characteristics in all relevant particulars of a pre-separation business entity which ceased trading as a consequence of the unilateral action of the husband, that entity having been the significant business objective of the marriage to which the wife had made contributions.
Mr Cooper acknowledged that he could not point to evidence which showed the characterisation of the monies used by the husband to pay legal fees.
In any event, even if the evidence showed that a trust asset was used to make that payment, for the reasons already discussed we are not satisfied that it was not open to the Federal Magistrate to “add-back” that payment to the asset pool.
There is no merit in the arguments that the Federal Magistrate erred in including certain assets in the asset pool.
The challenges to the spousal maintenance order (points (vi) and (vii))
As seen, these two challenges were that the Federal Magistrate erred:
·in assessing the husband’s reasonable outgoings and
·in not fixing a date at which liability for spouse maintenance ceased.
In her judgment, the learned Magistrate said:
102.The wife says that her failure to challenge the reasonableness of husband’s expenses at trial does not silence her from making submissions on the reasonableness of those expenses provided that the submissions are contained within the compass of the evidence. However the expenses were not challenged and whilst some of the husband’s expenses may be higher than those of the wife the mere fact that they are higher does not mean they are unreasonable. Further, in my view, the husband should have been afforded an opportunity to respond if there was a challenge to his expenses on the basis of reasonableness.
103.The husband is considering selling [the Victorian property]. His evidence was that before he purchased [the Victorian property], his rental commitment was about $800 per week. I assess his likely future rental commitment, if he did sell [the Victorian property], at about that figure.
104.He will have the responsibility to contribute towards the support of his child with [Ms R]. No evidence was adduced in that regard however it is a factor that I am entitled to take into account in considering his expenses.
105.[Ms R] is capable of earning an income of about $90,000 per annum however the husband’s evidence is that she does not propose to work during their child’s infancy. She has one child from a previous relationship whom she supports and before she ceased work she was contributing to the husband’s household budget by way of food and car expenses in the sum of $80 per week.
106.The husband claims as reasonable expenses the mortgage payments, rates and contents and mortgage accident insurance on [the Victorian property] in the sum of $1,208 per week. He claims payments to [L Pty Ltd] of $138 per week in respect of the loan to purchase [the Victorian property]. These expenses total $1,346 per week.
107.In purchasing [the Victorian property] the husband acted unilaterally in a way that increased his financial commitments. He did so without regard to the impact of that on the wife. He reduced available cash resources which were then applied to fund mortgage payments and the purchase costs of [the Victorian property]. He also drew a sum of $13,000 in cash and deposited this to a mortgage offset account as a contribution to the transaction costs of sale. The source of these funds was $12,000 in cash drawn from his ...Visa card and $1,000 from his savings account. Between February 2008 and April 2008 he managed to reduce the balance on this Visa card to $60.
108.I propose to ignore the payments in respect of [the Victorian property] and assume the husband to be in the position that he was in December 2007 at which time he had a rental commitment of about $800 per week, albeit paid by way of a packaging arrangement…
109.I propose to ignore the Visa card weekly expense in the sum of $215 as the Visa debt is now nominal whereas in February 2008 it was $12,297.
110.I find that the husband’s income is $4,964 per week. I find that the husband’s reasonable weekly expenses to be $4,051 per week as follows:
$ $
Fixed Personal expenditure
Income Tax 1,593
Superannuation 433
Notional Rent 800
Health Insurance 37
[Mastercard] 50
Child Support 316
3,229
Average Weekly Expenses 822
Total expenses $4,051
111.I propose to make an allowance of a further sum of $300 per week being expenses of the husband’s second child based on the Lee “Expenditure Survey” tables. I propose to include as an expense $80 per week previously paid by [Ms R] for the benefit of the husband when she was working and I do not propose to disallow or reduce the benefit to [Ms R] in residing in the husband’s home.
112.I accordingly assess the husband’s reasonable weekly expenses to be about $4,431. This leaves a surplus of income over expenditure of $533 per week. I propose to round that figure out to $530 as I did not include in the husband’s expenses the cost of contents insurance as the husband’s evidence is that that expense included mortgage accident insurance.
113.I accordingly order that the husband pay to the wife the sum of $530 per week by way of spouse maintenance. [footnotes omitted]
The husband seeks that we receive further evidence of his post-trial income. Mr Cooper states that the sole purpose of the further evidence is to establish with precision the husband’s true income, not to establish any appellable error on the part of the learned Federal Magistrate. Thus the further evidence will only be pertinent if we find merit in any of the grounds.
Dr Sayers, counsel for the wife also put forward some further evidence, bearing on any consideration of re-exercise of discretion or remission, which again, will only arise if we find merit in any of the grounds.
Mr Cooper argues that, in setting the reasonable expenses of the husband for accommodation at a notional rent of $800.00, rather than accepting the outgoings on the husband’s Victorian property at $1,208.00 per week, Purdon-Sully FM erred. He submits that the Federal Magistrate did not and could not have found that the latter payments were unreasonable. Rather, her Honour seemed to have rejected the payments because they were unilaterally incurred.
We do not accept these submissions.
Though, as seen in paragraph 102 of her reasons, the Federal Magistrate noted that there had been no challenge to the reasonableness of the husband’s expenses in cross-examination, in our view her Honour was there referring to the quantum of those expenses, of itself. In our opinion her Honour correctly saw that the argument about whether the accommodation expenses had been reasonably incurred post-separation, remained open in submissions. Further, in our view, when the learned Magistrate referred to the expenses as being unilaterally incurred, that was an observation forming part of her consideration of the reasonableness of incurring of the expense, as against the loss of the capacity which the husband had before it to support the wife. (There is ultimately no challenge before us to Purdon-Sully FM’s findings as to the wife’s need.) Had the wife acquiesced in the husband taking on additional commitments, that may have affected the “reasonableness” of the husband so doing.
Mr Cooper also argues that there was no evidence before the Federal Magistrate that the husband was intending to or could sell the Victorian property and find a rental property for $800.00. However, Mr Cooper does not argue that the Federal Magistrate’s finding in paragraph 103, that “[t]he husband is considering selling [the Victorian property]” was unfounded, nor does he argue that her Honour’s finding that the husband’s evidence was that, before purchasing the Victorian property, he rented for about $800.00 a week, was unsupported.
In any event, Dr Sayers placed before us a copy of an order made by consent on 15 July 2009, Order 2 of which provides for the sale of the Victorian home.
Mr Cooper also contended that it was inconsistent of the Federal Magistrate to “disallow” expenses relating to the Victorian property yet include the husband’s equity in it in the table of assets for division. There is no inconsistency. The husband’s equity in the Victorian property would remain an asset, even if converted to cash.
The opening words of s 72 of the Family Law Act 1975 (Cth) (“the Act”) are:
A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately…
In our view, it was part of her Honour’s task to subject the husband’s capacity to maintain the wife to scrutiny. That involved an examination of the reasonableness of his expenditure. This, her Honour carried out and she came to a conclusion which, in our view, was well open to her.
Mr Cooper’s second contention is that the Federal Magistrate erred in not fixing a date at which spousal maintenance would cease. Mr Cooper argues that the Federal Magistrate, having found that the wife was engaged in university education, hoped to complete that course at the end of 2012 and thereafter obtain employment as a teacher and that the child would then be at school:
3.3.…should have contemplated on the evidence that the Respondent would have been adequately able to support herself (and was making creditable and determined efforts to that effect) by the beginning of 2013.
3.4Spousal maintenance should therefore have been ordered to cease then. [outline of argument filed 26 June 2009]
In our view, there is no merit in this argument.
A court making a spousal maintenance order often has a choice between, on the one hand, leaving the order to operate for an indefinite period, knowing that s 83 of the Act provides for variation if circumstances so change that variation is justified or, on the other hand, fixing a date of cessation, which often involves a prediction, albeit on the balance of probabilities, about future events. Even if the latter course is chosen, an application to vary by way of removing or extending the date fixed for cessation, is possible. The major difference between the choices is simply that in the first instance either party may be as likely as the other to wish to apply for variation, whereas in the second instance, only the payee is likely to want a variation and if so, must seek it.
In this case, where the wife was some years away from completing her university course, where that completion was not necessarily a certainty, when the child in her primary care would at the time of anticipated completion still only be in early years of schooling, and where availability of employment was not assured, we are not satisfied that matters affecting the period for which spousal maintenance ought be paid were so predictable that the only option reasonably open was to fix a date for cessation.
Conclusion
As we have not found merit in any of the submissions for the husband, the appeal fails.
Costs
Pursuant to an agreement between the parties, $20,000.00 has been paid into the husband’s solicitors’ trust account by way of security for the costs of these proceedings. Mr Cooper concedes that an order for costs is appropriate in the event the appeal fails. We consider that the nature of the proceedings and the result justify an order that the husband pay the wife’s costs of the appeal.
I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date: 29 September 2009
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