Budding & Budding
[2009] FamCAFC 165
•11 September 2009
FAMILY COURT OF AUSTRALIA
| BUDDING & BUDDING | [2009] FamCAFC 165 |
| FAMILY LAW – APPEAL – Appeal from a decision of a Federal Magistrate – Spousal Maintenance – Family Law Act 1975 (Cth) s 72, 74 and 75 – Whether to award lump sum or periodic maintenance – Where Federal Magistrate had not considered the relevant statutory provisions – Where Federal Magistrate provided inadequate reasons – Where Federal Magistrate failed to consider the Wife’s need for spouse maintenance, her income or earning capacity – Where the Federal Magistrate failed to give reasons as to how the Husband would meet his own needs, and those of his current family – Where the Federal Magistrate made an order for capitalised spouse maintenance in circumstances where there were no capital assets – Where the Federal Magistrate erred in finding that the Wife and the Court were not in a position to ascertain the Husband’s real financial position in circumstances where there was no evidence of financial non-disclosure on behalf of the Husband FAMILY LAW – PRACTICE AND PROCEDURE – Procedural fairness – Where the Husband was denied procedural fairness when the Federal Magistrate did not allow submissions on the question of the Wife's needs or her ability to maintain herself – Where the Federal Magistrate made an order for capitalised spouse maintenance in circumstances where the formal application of the Wife was for periodic payments FAMILY LAW – APPEAL – Appeal allowed – Appeal remitted for rehearing before another Federal Magistrate |
| Family Law Act 1975 (Cth) |
| Bennett and Bennet (1991) FLC 92-191 Bevan and Bevan (1995) FLC 92-600 Bonnici and Bonnici (1992) FLC 92-272 Brazel and Brazel (1984) FLC 91-568 Brown and Brown [2005] FamCA 1165 Horsley and Horsley (1991) FLC 92-205 Merriman and Merriman (1993) FLC 92-422 Pettitt v Dunkley [1971] NSWLR 376 Power and Power (1988) FLC 91-911 Rollings & Rollings [2009] FamCAFC 87 |
| APPELLANT: | Mr BUDDING |
| RESPONDENT: | Ms BUDDING |
| FILE NUMBER: | MLC | 10714 | of | 2007 |
| APPEAL NUMBER: | SA | 43 | of | 2009 |
| DATE DELIVERED: | 11 September 2009 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | O'Ryan J |
| HEARING DATE: | 27 August 2009 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 8 April 2009 |
| LOWER COURT MNC: | [2009] FMCAfam 327 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Sala |
| SOLICITOR FOR THE APPELLANT: | Issac Brott & Company |
| COUNSEL FOR THE RESPONDENT: | Mr Scriva |
| SOLICITOR FOR THE RESPONDENT: | Chiodo Madafferi |
Orders
The appeal be allowed.
The proceedings for spouse maintenance be remitted to the Federal Magistrates Court for rehearing by a Federal Magistrate other than Federal Magistrate Bender.
IT IS NOTED that publication of this judgment under the pseudonym Budding & Budding is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SA 43 of 2009
File Number: MLC 10714 of 2007
| MR BUDDING |
Appellant
And
| MS BUDDING |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
Before me for hearing is an appeal by Mr Budding (“the Husband”) against an order made by Federal Magistrate Bender that the Husband pay to Ms Budding (“the Wife”) lump sum spousal maintenance of $40,000.00.
BACKGROUND AND REASONS OF THE FEDERAL MAGISTRATE
The Husband was born in August 1947. The Wife was born in June 1947.
The parties were married in June 1990 and in June 1999 they were divorced.
There are no children of the marriage.
The Husband has remarried and has one child.
In about 1999 the parties reached an agreement in relation to property settlement. The Husband gave evidence that he paid the Wife about $150,000.00 in partial property settlement (transcript, 8 April 2009, p 9). The Federal Magistrate found at [3] that the Husband paid the Wife the sum of $100,000.00. It was submitted by the Husband that the Federal Magistrate gave no apparent consideration to the Wife's use of the $100,000.00 partial property settlement in allowing the Wife to meet her needs.
On or about 10 May 1994 the Husband was made bankrupt.
Proceedings were commenced in the Family Court when an application was filed by the Wife. On 4 May 2007 the proceedings were transferred to the Federal Magistrates Court. I observe that the Federal Magistrate in her reasons at [1] said that the Wife’s application had been before the Federal Magistrates Court since 1999.
On 8 April 2009 the applications for final orders were listed for hearing before the Federal Magistrate. In the circumstances of this case it is relevant to consider what happened at the hearing.
At the commencement of the hearing counsel for the Husband said that the fundamental issue was whether there was “any property to be divided or whether [the Husband] has any income to meet any needs that the wife can establish”. There was discussion about the oral examination of the Husband and his evidence. The Husband was orally examined (transcript, 8 April 2009, pp 5-6) and in evidence in chief he referred to an affidavit he swore on 7 April 2009 and a Financial Statement. The Husband was then cross-examined (transcript, 8 April 2009, pp 6-18).
The Husband gave evidence that he receives a consultancy fee of $10,000.00 per month. However in cross-examination he also gave evidence that “it won’t go more than another two or three months”. He was then asked why the payment of the fee would only be for this period and he said that it was because there was “only $40,000.00 left” of a particular advance. He later said that there is “$40,000 left in the account”. The Husband was also cross-examined about his expenditure.
It was submitted by the Husband that he gave evidence that his income was limited to drawings he was able to make from money he retained in trust for a client (transcript, 8 April 2009, pp 11-12). The amount held in trust was limited to $40,000.00. However, the trust money was not income until such time as the Husband was able to bill the client, upon providing consultancy services in relation to the client's property development project. The Husband's evidence was that not all of that money could be drawn upon for income as some money was required for disbursements towards planning permit applications. It was submitted that the reasons given by the Federal Magistrate do not explain how the entire amount of $40,000.00 could be regarded as disposable income of the Husband. The Husband gave evidence that the portion of the money that could be drawn as income was required to meet his living expenses and that of his current wife and child. It was submitted that the finding of the Federal Magistrate did not allow a conclusion that the Husband would be able to meet his self-support, and that of his new family, if all of the $40,000.00 was awarded to the Wife.
The transcript reveals that after completion of the cross-examination of the Husband the Federal Magistrate said: “What do you want to do now, gentlemen?” and counsel for the Wife said that the Federal Magistrate had the Wife’s Financial Statement and two affidavits. However at no time were these documents identified. At the commencement of the hearing (transcript, 8 April 2009, p 2) the Federal Magistrate had said “I read this matter yesterday”. However at no time did the Federal Magistrate identify what she had read.
I observe that in the written summary of argument of the Husband it was said:
On the question of the wife's need for maintenance, the wife relied on only two of her affidavits “and no more.”This is noted by counsel for the wife at page 7(35) of the transcript. One of those affidavits was dated 15 June 2001. However, there is no indication by the counsel for the wife, and no inquiry by the judicial officer, as to what other affidavit or material the wife relied upon. The affidavit of the wife filed in 2001 could not have given any reliable indication of her current financial circumstances. There is no indication of what other evidence was considered by the judicial officer in finding that the wife had a need for maintenance.
The transcript then reveals (transcript, 8 April 2009, pp 18-19) a discussion between the Federal Magistrate and counsel for the Wife, which I had some difficulty understanding. The following appears (transcript, 8 April 2009, pp 19-20):
HER HONOUR: What I’m conscious of in real terms – I don’t know what your negotiations are, I can’t ask as to them. But I would have thought if there’s a capacity for a capitalised amount of money that would satisfy properly Mr Scriva, in relation to your client – his client being protected from any further claims, that perhaps goes someway to address the debts that your client’s incurred, Mr Sala, in the conduct of this proceedings over so many years. It’s probably about the best that could be achieved for everyone. I can’t order it of course in the circumstances where I – what I can order is periodic payment.
I don’t see how that helps your client. We’ll be back here forever. It doesn’t necessarily help [Mr Budding] either.
MR SALA:May I say that your very proposal was the proposal where it indicated a small amount, periodic payment. But then, as Mr Scriva quite rightly said, “Look, that may go on for a month or two,” which is your Honour’s view and then after that we’ll be back before her Honour. So he’s already alluded to that.
HER HONOUR: So I don’t know if there’s any capacity there. I’m going to give you a chance to have a chat about it. If not, I will make a ruling.
MR SALA:Thank you.
HER HONOUR: Mr Scriva, does that accord with…
MR SCRIVA: Yes, your Honour, that accords with both my instructions and I think the only way this matter can be dealt with.
HER HONOUR: It’s not ideal. I think it’s the only one though, to be frank, having heard the evidence. Thank you, gentlemen. Let me know.
Thus the Federal Magistrate introduced the idea of a “capitalised amount” which appears to have been adopted by counsel for the Wife but it is not entirely clear if it was understood by counsel for the Husband.
In my view, when consideration is given to what I have set out above, the Federal Magistrate made clear that she could not order a capitalised amount and could only order a periodic payment but was urging the parties to have discussions to see if they could agree on a capitalised amount. The parties had discussions for about ten minutes and could not reach an agreement. When the hearing resumed counsel for the Wife said “I beg you to make the order” and the Federal Magistrate then gave some very short ex-tempore reasons and made an order. The Federal Magistrate proceeded to do what a short time before she had said she could not do.
In her reasons the Federal Magistrate said:
1. I have before me the wife's application in relation to property matters and spousal maintenance that has been before this court since 1999, so for some 10 years. It is extraordinary.
2. When the parties separated there was negotiation between them to resolve property matters and there was some discussions whereby the matter was to be resolved on the basis [Mr Budding] pay [Ms Budding] a sum of approximately $100,000.00 and that he otherwise make all arrangements necessary for her to have a house up to a value of $250,000.00.
3. Subsequent to those discussions I am satisfied that [Mr Budding] did pay the $100,000.00 and that he made provision for her to have a motor vehicle, but the house never eventuated. Because of that, [Ms Budding] commenced these proceedings, having obtained the leave of the court to bring the application out of time pursuant to section 43 of the Family Law Act 1975.
4. Since that time the matter has limped on, the difficulty being, in real terms, that those representing [Ms Budding], and to some level this court, were never in a position to ascertain the real financial circumstances of [Mr Budding]. The matter comes before the court today and nothing has changed.
5. [Mr Budding] filed today an affidavit and financial statement in which he deposes that he has no assets and that as at today he is in receipt of some $10,000.00 per month from a corporate structure called the [FPG] in which he is a director. It was his evidence that that income stream that is paid to him has a limited life and that some time in the next two, three or four months the funds available to [FPG], which currently stand at approximately $40,000.00, will run out and he is not sure as to what his financial circumstances will be thereafter. However he will, to quote him:
“Make something happen”
as this has been his employment history all his life.
6. In relation to property matters the reality is that whatever assets [Mr Budding] may or may not have had, they are long gone, or wherever they are they definitely will not be in his name. In those circumstances there is very little point in me making property orders because I cannot be satisfied that there is any assets against which they can be made.
7. However I am satisfied that I should make an order in relation to spousal maintenance. I am satisfied that the wife has an ongoing need for support and that the husband does have the capacity to pay such maintenance.
8. In relation to his current expenses, I am not satisfied that the husband is not in a position to pay the wife some periodic payments, however I am satisfied that any order that I was to make in those terms would involve the parties being back here before I had had an opportunity probably to get back upstairs.
9. In all the circumstances therefore the order I make in relation to spousal maintenance is that such payment should be made by way of a lump sum payment in the sum of $40,000.00 and I so order.
In summary, the Federal Magistrate made no order for property settlement because she was satisfied that there were no assets. However the Federal Magistrate made an order for lump sum spouse maintenance and the totality of her reasons for this order appear in [4], [5], [7], [8] and [9] of the reasons.
On 5 May 2009 the Husband filed a Notice of Appeal.
On 19 May 2009 the Chief Justice made an order pursuant to s 94AAA of the Family Law Act 1975 (Cth) (“the Act”) that the appeal be heard by a single Judge of the Full Court.
On 15 July 2009 I made the following orders:
1. The Appellant by 4:00 pm on 24 July 2009 serve on the Respondent a sealed copy of his Notice of Appeal filed on 5 May 2009 together with a sealed copy of the orders made today.
2. The matter be listed for mention before me at 9:30 am on Friday 31 July 2009 by telephone conference facility.
3. It be noted that there was no appearance by or on behalf of the Respondent today.
4. It be noted that the purpose of orders 1 and 2 hereof is to ascertain whether or not the Respondent wishes to participate in the appeal proceedings.
5. The costs of today’s proceedings be reserved.
On 31 July 2009 I made the following procedural orders:
1. The appeal be listed for hearing at 12:00 pm on Thursday 27 August 2009.
2. On or before 4:00 pm on Friday 14 August 2009 the Appellant file and serve an amended Notice of Appeal.
3. On or before 4:00 pm on Friday 14 August 2009 the Appellant file and serve a list of the documents that were before the Federal Magistrate upon which the Appellant seeks to rely.
4. On or before 4:00 pm on Friday 14 August 2009 the Appellant obtain those parts of the transcript of evidence of the hearing before the Federal Magistrate which may be relevant to the appeal and provide copies of such transcript to the Court and to the Respondent.
5. On or before 4:00 pm on Friday 14 August 2009 the Appellant file and serve a written summary of argument and list of authorities (if any).
6. On or before 4:00 pm on Friday 14 August 2009 the Appellant file and serve any application to lead further evidence and any material in support thereof.
7. On or before 4:00 pm on Friday 21 August 2009 the Respondent file and serve a list of any further documents that were before the Federal Magistrate, not included in the Appellant’s list, upon which he/she seeks to rely, together with a written summary of argument and a list of authorities (if any).
8. On or before 4:00 pm on Friday 21 August 2009 the Respondent file and serve any application to lead further evidence and any material in support thereof.
9. The costs of today’s proceedings be reserved.
10. Liberty be granted to both parties to apply in relation to these directions.
11. It be noted that given the imminence of the hearing the Respondent may make an application for an amendment to these orders if she is not able to retain counsel.
On 17 August 2009 the Husband filed an amended Notice of Appeal. The Husband sought the following orders if his appeal was successful:
1. That the husband be granted leave to adduce further evidence as to his
inability to support himselforand his current familyin the event he is required to pay the wife capitalized spouse maintenance.2. That the orders of 8 April 2009 be discharged in so far as they require the husband to pay the wife spouse maintenance.
3. That the wife pay the costs of the Appeal or alternatively that the husband be granted a costs certificate.
Also on 17 August 2009 the Husband filed an Application in an Appeal seeking the following orders:
1. That leave be granted to the Appellant husband to adduce further evidence, in the event that the appeal succeeds, as to:
a.his current financial circumstances and;
b.his ability to meet any of the financial needs of the respondent wife which she has not the capacity to meet.
The Husband swore an affidavit in support of the application.
On 17 August 2009 the Husband filed a list of documents being an affidavit he swore on 7 April 2009 and a Financial Statement sworn on the same date. On 17 August 2009 the Husband also filed a written summary of argument.
The Wife did not comply with the orders I made on 31 July 2009 in that she did not file and serve a list of any further documents that were before the Federal Magistrate, not included in the Husband’s list, upon which she sought to rely. The Wife also did not file a written summary of argument and a list of authorities. The Wife made no attempt to put before me any of the documents that were referred to by her counsel during the hearing before the Federal Magistrate.
RELEVANT PRINCIPLES
As to spouse maintenance applications the relevant provisions of the Act are ss 72, 74 and 75. In Brown and Brown [2005] FamCA 1165 I said:
275.Section 74 of the Family Law Act, which has been described as the basal provision in the Act in relation to spouse maintenance, provides:
In proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part.
See Mitchell and Mitchell (1995) FLC 92,601 at 81,994.
276.Section 72 of the Act provides:
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 whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c)for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
277.Section 75(1) of the Act provides:
In exercising jurisdiction under section 74, the court shall take into account only the matters referred to in sub-section (2).
Section 75(2) sets out sixteen matters which the Court should take into account.
278.There is then s 80 of the Act which sets out a number of types of orders the Court may make in exercising its powers under Part VIII.
279The expression party to a marriage in s 72 is defined in s 4(2) of the Act to include a reference to a person who was a party to a marriage that has been dissolved or annulled, in Australia or elsewhere, or that has been terminated by the death of one party to the marriage. The potential liability for spousal maintenance lasts for the joint lives of the parties. This potential liability is of course subject to s 44(3) of the Act which, as happened in this case, is not insurmountable.
280.Section 72 thus establishes a threshold question before the power in s 74 may be exercised: Mitchell at 81,995.
281.The liability of one spouse to maintain the other, and thus the corresponding right of a spouse to be maintained by his or her partner depends upon two conditions being satisfied. The first is that one spouse is unable to support himself or herself adequately for one of the stated reasons having regard to any relevant matters in s 75(2) of the Act. The second is that the other spouse be reasonably able to maintain the former spouse. Unless both of these conditions are satisfied there is no maintenance liability between spouses.
282.A feature of s 72 is that the two conditions upon which the liability for spouse maintenance rests are in essence economic. For example, neither condition concerns matrimonial fault or misconduct; see Anthony Dickey, Family Law, 4th Ed, 2002 at 470.
283.Section 72 provides that the applicant for maintenance must establish that he or she is unable to support him or herself adequately. The word adequately is not to be determined according to any fixed or absolute standard, but by reference to the matters referred to in s 75(2), and especially paragraphs (a), (b), (g), (j), (k) and (n) of s 75(2): Mitchell at 81,995.
284.The meaning of adequately in s 72 has been considered in many cases. In Nutting v Nutting (1978) FLC 90-410 Lindenmayer J said adequately imports a standard of living which is reasonable in the circumstances. The idea that it means a subsistence level has been firmly rejected: Evans v Evans (1978) FLC 90-435; Bevan v Bevan (1995) FLC 92-600 and Mitchell and Mitchell (supra).
285.The question then arises as to what is a standard of living which is reasonable. The answer obviously depends on the circumstances of each case. However, some general matters are well established. Where possible both spouses should continue to live after separation at the level which they had previously enjoyed if this is reasonable: Patterson and Patterson (1979) FLC 90-705 at 78,759. However, this may be unreasonable. It may be that the term adequately requires a lower standard of living than that enjoyed during cohabitation because after separation the financial resources are not sufficient to enable the parties to each maintain the same standard of living they enjoyed when they lived together: Nutting and Nutting (supra). In such a situation it is not reasonable that one party should enjoy a higher standard of living than the other. On the other hand there may be circumstances where the term adequately imports that it is reasonable that the parties live at a higher standard of living than previously enjoyed: Groutsch and Groutsch (1978) FLC 90-461 at 77,360. However, there is no general rule that the pre-separation standard of living should be maintained simply because the other spouse can afford to do so: Bevan and Bevan (supra).
286.An applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy: In the Marriage of McMahon (1977) 3 Fam LN 12; Gardiner v Gardiner (1925) 25 SR (NSW) 274, 289; Evans v Evans (supra); Brady and Brady (1978) FLC 90–513 and Malcolm and Malcolm (1977) FLC 90–220.
287.It is also important to remember as the Full Court said in Mitchell at 81,995:
The days are long gone when it is necessary for an applicant for maintenance to use up all of her assets and capital in order to satisfy the requirement that she is unable to support herself “adequately”. Where the line is to be drawn will depend upon the circumstances of individual cases.
288.The second condition is that the other party is liable to maintain the party who is unable to support him or herself adequately only if the other party is reasonably able to do so. This requires consideration of the financial circumstances of the other party.
289.In determining the first condition of s 72 the court is to have regard to any relevant matter in s 75(2). The phrase having regard to any relevant matter referred to in sub-section 75(2) governs all that precedes it.
290.Once the threshold is satisfied the jurisdiction of the court to make a maintenance order is enlivened. The broad discretion conferred by s 74 is invoked. Again the considerations in s 75(2) are to be taken into account when this power is exercised. The terms of s 75(1) are mandatory and the considerations in s 75(2) are exclusive. The court has a very wide discretion as to both whether to make a maintenance order, and if so, what order to make.
291.However, consistently with s 74, an order for maintenance should be proper. The word proper is defined in the Macquarie Dictionary 2nd Edition to mean appropriate to the…circumstances and this definition was adopted in Wilson and Wilson (1989) FLC 92-033. The maintenance should be at a level sufficient to enable the applicant to support him or herself adequately, since an order below that level would not remove the need for maintenance, as defined in s 72.
See also Bevan and Bevan (1995) FLC 92-600.
As to lump sum maintenance in Brown and Brown (supra) I also said:
292.Particular types of orders that a court may make are identified in s 80(1). Relevantly to these proceedings s 80(1)(a) provides that the Court, in exercising its powers under Part VIII may order payment of a lump sum, whether in one amount or by instalments.
293.A number of cases suggested that the maintenance power is available to make a lump sum order only in circumstances where there is a recalcitrant payer who is unlikely to meet a periodic obligation, or, substantial doubt about the payer’s continuing capacity to pay: Spano and Spano (1979) FLC 90-707; Molier and Van Wyk (1980) FLC 90-911; Vaughan and Vaughan (1981) FLC 91-066; Vartikian v Vatrikian (No 2) (1984) FLC 91-334; Luckie v Luckie (1989) FLC 92-036 and Clauson v Clauson (1995) FLC 92-595.
294.In Clauson the Full Court said at 81,908:
The other aspect which it is important to identify in this case is that the power to make a maintenance order is to be found in s 74. As s 80(1) makes clear, the Court, in exercising that power, can do so in a number of ways, including by a periodic order or a lump sum order. Periodic maintenance should be considered before lump sum maintenance. The central power is to order maintenance; that power may be exercised in different ways. A claim for lump sum maintenance is not a claim to the exercise of a separate head of power; it is a claim for maintenance which may be satisfied by a periodic order or by a lump sum order; see Davidson and Davidson (No 2) (1994) FLC 92-469 .
This type of lump sum maintenance is not a separate entity. It is the capitalizing over a period of time of what is considered to be appropriate periodic maintenance for that period, usually with a discount because of immediate payment. The power to capitalize periodic spousal maintenance is a power to be exercised cautiously for reasons referred to by his Honour in the passage cited above: see, for example, Vaughan and Vaughan (1981) FLC 91-066 at 76,508; O'Brien and O'Brien (1983) FLC 91-316; Spano and Spano (1979) FLC 90-707; Anast v Anastopoulos, supra; Vartikian and Vartikian (No. 2) (1984) FLC 91-587 at 79,739-40. In particular, uncertainty about future events explains this approach, and capitalization of maintenance would rarely be justified where there was no genuine concern about the capacity and preparedness of the payer to comply regularly with a periodic order.
295.I observe that some years before Clauson in Branchflower and Branchflower (1980) FLC 90-857 at 75,449 the Full Court said:
In some cases it is appropriate to compound all or part of the periodical payments in the form of a lump sum. Section 81 seems to require that this be done where practicable. It is impossible to lay down exhaustively the circumstances where it is appropriate to order a lump sum rather than periodical payments. It is usually regarded as essential that the respondent have access to the sum proposed to be awarded. Examples of situations where a lump sum order may seem appropriate include those where payments have been irregular or where there have been difficulties with enforcement and those where the period of dependency is expected to be of short duration. These are, of course, no more than examples.
It may be relevant to the decision to order a lump sum that such an award may assist the payee in the purchase of accommodation and thus potentially reduce the on-going need to be maintained. Such an award need not necessarily be tied to an amount representing the compounding of a periodical sum but may, e.g. be related to the standard of living of the parties. The borderline between orders under sec. 79 and maintenance orders is often a fine one. It is impossible to define precisely every situation where lump sum maintenance is appropriate or to forecast whether in the circumstances of this case an order for a lump sum, or for any particular sum should be made. The question posed for our consideration in para. 18(iii) can be answered only in the negative in the terms put.
296.In Tyson v Tyson (1996) 70 ALJR 285 an application for special leave to appeal to the High Court was refused. However, the High Court (Gaudron, McHugh and Gummow JJ.) said that there are worrying aspects of the approach taken in Clauson as to the power to award lump sum maintenance. In the written submissions Senior Counsel for the wife quoted from the transcript of the hearing and it is clear that the High Court doubted the correctness of what the Full Court said in Clauson.
297.Then in Vautin v Vautin (1998) FLC 92-827 the Full Court said at 85,423-85,424:
41. Part VIII is directed to enabling the Court to make orders adjusting the financial circumstances of the parties and their children arising out of the breakdown of their marriage whether by way of property or maintenance. As Windeyer J pointed out in Sanders (1967) 116 CLR 366 at 379-380, those powers may “'overlap and may be exercised separately or in combination to produce a total result which in the circumstances of the case is just and equitable'”: see also Mullane (1983) 158 CLR 436 and Best and Best (1993) FLC 92-418.
42. Maintenance is a term of wide meaning directed to various forms of provision for the support of a spouse or child. It is not confined to a subsistence level of support but to that which is reasonable in the circumstances of the particular case: see Mitchell and Mitchell (1995) FLC 92-601, Gamble, supra, Bevan, supra, Wilson, supra, and Best, supra. In making the order which is appropriate in that context, the Court may make a periodic order or lump sum order or a combination of both and/or make any other orders of the kind referred to in s 80(1).
43. It has been pointed out on a number of occasions in this Court that in the exercise of the power to order lump sum maintenance caution is usually appropriate because of the apparent finality of lump sum orders and the difficulties in making predictions into the future. However, it is a power, the exercise of which may be appropriate in particular cases. It may be ordered, amongst other reasons, to meet non-periodic expenditure for the maintenance of that person where there is an established need and a capacity to pay. It is not confined to cases of the capitalisation of periodic maintenance and/or where periodic maintenance is unlikely to be paid because of concerns about the capacity or willingness of the liable parent to pay (as passages in the judgment in Clauson and Clauson (1995) FLC 92-595 at pp. 81,907 and 81,908 may suggest) or to cases where the need for or the capacity to pay periodic maintenance is demonstrated.
44. It is clear that in exercising the power under s 72 the trial Judge is not confined to one only of the categories of order referred to in s 80(1). In an appropriate case the Court may make orders which encompass several of those options. Here the wife's claim was for both periodic and lump sum maintenance. It would normally have been most convenient if these two aspects of her application had been heard together when the matter could be looked at as a whole. However, for reasons which we have referred to previously, the two claims were split into two separate hearings.
298.The broader view of the role of lump sum maintenance expressed since Clauson by the Full Court in Vautin is that it may be ordered:
· To meet non-periodic expenditure.
· Where an order for periodic maintenance is unlikely to be complied with.
· Where it is possible to assess a financial need for a particular period.
· Where it is desirable that the financial relationship be ended.
There may be other circumstances where it may be appropriate to make an order for a lump sum amount. I accept the submission on behalf of the wife that there is no warrant in the Act to restrict the circumstances in which a lump sum may be ordered: Norbis v Norbis (1986) 161 CLR 513 at 519 per Mason and Deane JJ.
299.On behalf of the wife it was submitted that support for the broader view both in legal terms and in a context of social responsibility is amply provided by Morgan J. in her paper Equity Does Not Necessarily Mean Equality: Spouse Support and Other Techniques as a Means of Redressing Economic Equalities in a Marriage delivered at the Seventh National Family Law Conference, Canberra, October 1996, published at page 43 ff of the Conference Papers Book. This is an interesting and important paper.
300.On behalf of the wife it was submitted that the discussion in the paper of Moge v Moge (1992) 43 R.F.L. (3rd) 354 about the feminisation of poverty and the considerations to bring to bear in a relationship where one spouse has had the opportunity to individually develop economically, to pursue an independent career, as opposed to the other spouse who has interrupted his or her career opportunities in fulfilling important roles in the home or in the care of children are of particular relevance.
301.In her paper Morgan J. considered Australian case law since the decision in Moge. Her Honour observed in Best v Best (1993) FLC 92-418, a case where there was minimal property available, but the husband had a very substantial earning capacity at the end of a reasonably lengthy marriage which had produced four children and the wife had a very limited earning capacity, the Full Court said at 80,296:
In cases such as the present where there are minimal assets, but on the one side significant needs and on the other a significant future earning capacity, the power to award lump sum maintenance, which may be met by annual payments over a period years against that income or savings from it, may be an appropriate course. In such cases, and provided that the requirements of the Act are otherwise satisfied, it may be a mistake to conclude that where there are few assets they should be divided and that is the end of the matter other than for periodic maintenance.
Thus the court was suggesting that as well as periodic maintenance, maintenance in the form of a lump sum, which was not the equivalent of capitalising periodic payments, was a possible order to make provision for the wife out of the husband’s resources.
302.Her Honour then observed that in Bevan the Full Court made what she regarded as an important statement namely:
We have considered s.81 in making this order, but we feel the expression of legislative policy which it contains must give way to the requirement of s.74 that the court is to make such order as it considers proper, once the threshold test of s.72 are overcome. Further, we do not think, having regard to s.75(2) that this means that an award of spousal maintenance should be at a subsistence level and we think that it should pay proper regard to the factors set out in the section.
Her Honour said that this is a clear recognition that s 81 does not enshrine an overriding “clean break” principle but is but one factor to be taken into account.
303.Her Honour then considered Mitchell v Mitchell (supra) in which the Full Court approved Moge and said at 81,997:
Importantly, and particularly in more recent times, there is the notorious circumstance that there is a significant gap between theory and reality for employment, especially for people in middle age, lacking experience and confidence, and who have been out of the skilled work- force for many years, and in the context of current high unemployment. Loss of security, missed promotion opportunities, loss of retraining in developing skills in an increasingly skilled work-force with the loss of confidence which this brings, particularly in times of high unemployment, are notorious circumstances of which the Court must take notice and apply in a realistic way. In this regard, we refer to the detailed analysis of comparable problems in Canada by the Supreme Court of Canada in Moge v Moge (1992) 43 RFL (3d.) 345 and the discussion by this Full Court in Best, supra, esp. at 80,295 and the reference in those cases to the “feminization of poverty” and to some of the numerous articles upon that subject both here and overseas to that time. For useful articles discussing the judgment in Moge see also Toward an Equitable Distribution of Resources: Support after Moge and Moge (1994) 16 Advocates Quarterly 452 and Equality and Support for Spouses (1994) 57 Mod.L.R. 681.
In this case there is also a complaint about the adequacy of the reasons given by the Federal Magistrate. It is not necessary for me to discuss the circumstances in which there is an obligation to give reasons for a decision and the requirement that the reasons are adequate: Pettitt v Dunkley [1971] 1 NSWLR 376; Brazel and Brazel (1984) FLC 91-568; Power and Power (1988) FLC 91-911; Horsley and Horsley (1991) FLC 92-205; Bonnici and Bonnici (1992) FLC 92-272; Bennett and Bennet (1991) FLC 92-191 and Merriman and Merriman (1993) FLC 92-422. The requirement to give reasons and the adequacy of reasons was recently considered by the Full Court (Boland, O’Ryan and Murphy JJ) in Rollings & Rollings [2009] FamCAFC 87 at [55] – [62]. I also observe that in Brazel and Brazel (supra) an order was made for lump sum maintenance and on appeal the Full Court upheld the appeal because the trial judge “gave no reasons as to the manner in which the [amount] was calculated or what it was intended to represent”: FLC 91-568 at 79,598.
GROUNDS OF APPEAL
Introduction
The grounds of appeal in the amended Notice of Appeal are as follows:
1.The learned judicial officer failed to give adequate reasons for the judgment requiring the husband to pay to the wife spouse maintenance.
2.The learned judicial officer erred in law by ordering the husband to pay the wife spousal. maintenance without first ascertaining:
a. the wife's maintenance needs;
b. whether or not the wife was able to meet her needs through her own income and earning capacity;
c. the husband's capacity to meet his own needs, and those of his current family, once the payment was ordered.
3.The learned judicial officer erred in ordering the payment of $40,000 in maintenance, in circumstances where:
a. the $40,000 accessible by the husband was not property of the husband but only a financial resource;
b. the $40,000 accessible by the husband was the only financial resource available to the husband for the foreseeable future to meet his own self-support or the needs of his current family.
4.The husband was denied procedural fairness when the judicial officer ordered payment of capitalised spouse maintenance in circumstances where the faunal application of the wife, pursuant to orders made 24 July 2008, was for periodic payments.
5.The learned judicial officer erred in ordering the payment of capitalised spouse maintenance. Having found that there were no capital assets divisible for the purpose of a section 79 property division, it was not open to the judicial officer to require a capitalised payment.
6.The learned judicial officer erred in finding that the wife was not in a position to ascertain the husbands real financial circumstances where:
a. the husband's evidence as to his financial circumstances and assets available for distribution was not controverted;
b. there were no adverse findings of credit against the husband or his financial disclosure.
7.The husband was denied procedural fairness when the judicial officer did not allow submissions on the question of the wife's needs or her ability to maintain herself.
There is some overlapping and perhaps repetition in the grounds of appeal. However I will briefly deal with each ground.
Although I did not have before me the application of the Wife, the hearing before the Federal Magistrate proceeded on the basis that the Wife had sought an order for property settlement and an order for periodic spouse maintenance.
The property settlement proceedings were easily disposed of because the Federal Magistrate was of the view that there was no property of the parties to the marriage or either of them. The spouse maintenance proceedings were readily disposed of by the Federal Magistrate but in circumstances where:
34.1there was no application by the Wife for lump sum spouse maintenance;
34.2there was no notice given that the Federal Magistrate proposed to consider making an order for lump sum spouse maintenance;
34.3there was a controversy as to the needs of the Wife;
34.4there was no opportunity given to cross examine the Wife about her needs;
34.5there were no submissions made or even invited in relation to whether an order could be made for spouse maintenance;
34.6there were no submissions made or even invited in relation to whether an order could be made for lump sum spouse maintenance;
34.7there were no submissions made or even invited in relation to whether the Wife was unable to support herself adequately;
34.8there were no submissions made or even invited in relation to the needs of the Wife;
34.9there were no submissions made or even invited in relation to the capacity of the Husband to pay spouse maintenance;
34.10there were no submissions made or even invited in relation to the capacity of the Husband to pay lump sum spouse maintenance;
34.11it was found that there could be no property settlement because there was no property;
Then in the very brief reasons that were given, the Federal Magistrate made no findings in relation to the needs of the Wife or whether or not the Wife was unable to support herself adequately. The Federal Magistrate simply said at [7]: “I am satisfied that the wife has an ongoing need for support”, but gave no reasons for this finding.
The Federal Magistrate continued at [7] and said that “the husband does have the capacity to pay such maintenance” and at [8] “I am not satisfied that the husband is not in a position to pay the wife some periodic payments” but gave no reasons to support these conclusions.
As to the lump sum amount the Federal Magistrate simply said at [4] that “those representing [the Wife] and to some level this court, were never in a position to ascertain the real financial circumstances of [the Husband]. The matter comes before the court today and nothing has changed”. The Federal Magistrate at [5] referred to the evidence of the Husband in relation to the amount of $10,000.00 per month and the source of this payment and simply said that the Husband said that he will “[m]ake something happen” (emphasis in original) and concluded “as this has been his employment history all his life”.
When consideration is given to what the Federal Magistrate said it is quite clear that her Honour did not consider the relevant statutory provisions. The Federal Magistrate did not make findings in relation to the needs of the Wife and did not undertake, even in a summary way, the task of ascertaining whether the Wife was unable to support herself adequately. The Federal Magistrate did consider the capacity of the Husband to pay, but as submitted by the Husband the findings were not supported by the evidence.
As to why a lump sum payment may be made, referring to her finding that she was not satisfied that the Husband was not in a position to pay the Wife some periodic payments, the Federal Magistrate said at [8]: “I am satisfied that any order that I was to make in those terms would involve the parties being back here before I had had an opportunity probably to get back upstairs”. I infer that the Federal Magistrate had in mind s 81 of the Act. As I said in Brown and Brown (supra), lump sum maintenance may be ordered where it is desirable that the financial relationship be ended. However the Federal Magistrate gave no reasons as to why, in the circumstances, lump sum maintenance should be ordered because it was desirable to end the financial relationship. For example the Federal Magistrate did not explain the history of the litigation or why in the future, if a periodic sum was ordered, there may be further litigation.
Ground One
In the first ground of appeal it was contended that the Federal Magistrate failed to give adequate reasons for the judgment requiring the Husband to pay to the Wife spouse maintenance. For reasons I have given this ground has been established.
Ground Two
In the second ground of appeal it was contended that the Federal Magistrate erred in law by ordering the Husband to pay the Wife spouse maintenance without first ascertaining the Wife's maintenance needs; whether or not the Wife was able to meet her needs through her own income and earning capacity; and the Husband's capacity to meet his own needs and those of his current family once the payment was ordered. For reasons I have given this ground has been established.
I also observe that it was submitted on behalf of the Husband and not responded to by counsel for the Wife that “[t]he wife's own evidence is that she is employed and is able to exercise her earning capacity for the foreseeable future. No evidence to the contrary was before the Court” and further “[t]he wife deposed that she was in paid employment. Her financial statement indicated that she did not have a weekly shortfall of expenditure over income”.
Ground Three
In the third ground of appeal it was contended that the Federal Magistrate erred in ordering the payment of $40,000.00 in spouse maintenance in circumstances where the $40,000.00 accessible by the Husband was not property of the Husband but only a financial resource and the amount accessible by the Husband was the only financial resource available to him for the foreseeable future to meet his own self-support or the needs of his current family.
An order for spouse maintenance may be made in circumstances where there is no property, as defined in s 4 of the Act, of the parties or either of them. For example an order may be made where the respondent to an application only has a financial resource. However, there is a requirement to consider whether the party liable to pay is reasonably able to maintain the applicant. In circumstances where a lump sum is ordered the capacity of the respondent to pay the amount must be determined.
I have already referred to the evidence of the Husband in cross-examination about his income and the source of it and I accept that the reasons of the Federal Magistrate did not explain how the entire amount of $40,000.00 could be regarded as a financial resource of the Husband. I also accept that the finding of the Federal Magistrate did not allow a conclusion that the Husband would be able to meet his self-support, and that of his family, if all of the $40,000.00 was awarded to the Wife.
Again I observe that no submissions were made on behalf of the Wife in relation to the matters contended for by the Husband. In this case the Husband did not have the capacity to pay the amount ordered. Further I do not accept that what the Federal Magistrate said in [4] and [5] of her reasons was adequate.
Ground Four
In the fourth ground of appeal it was contended that the Husband was denied procedural fairness when the Federal Magistrate ordered payment of capitalised spouse maintenance in circumstances where the formal application of the Wife, pursuant to orders made on 24 July 2008, was for periodic payments.
It was submitted on behalf of the Husband that the application for capitalised spouse maintenance was made by the Wife's counsel on the day of the trial without notice. On my reading of the transcript at best what happened was that the Wife’s counsel adopted what the Federal Magistrate said.
It was submitted on behalf of the Husband that he was not given an opportunity to be heard on the question of capitalisation. Upon review of the transcript of proceedings, I accept that the Husband was not given the opportunity to make a submission as to whether in fact he had a capacity for a capitalised payment. This ground has been established.
Ground Five
In the fifth ground of appeal it was contended that the Federal Magistrate erred in ordering the payment of capitalised spouse maintenance. Having found that there were no capital assets divisible for the purpose of a s 79 property division, it was not open to the Federal Magistrate to require a capitalised payment.
It was submitted on behalf of the Husband that this was not one of those cases where it was proper to exercise the power to award capitalised maintenance. This was because the Federal Magistrate actually found that there were no assets of a capital nature divisible among the parties. The Federal Magistrate (transcript, 8 April 2009, p 19) appears to note that capitalised maintenance cannot be ordered without a capacity for a division of assets. The Federal Magistrate admits that there was uncertainty as to whether there was such capacity (transcript, 8 April 2009, p 20) and seemed to suggest that there were no such capital assets (transcript, 8 April 2009, p 18). The Federal Magistrate at [6] of her reasons makes the express finding that there were no capital assets. Having made this finding it was neither consistent nor open to the Federal Magistrate to make an order for a capitalised payment of $40,000.00 in spouse maintenance. I accept these submissions.
Ground Six
In the sixth ground of appeal it was contended that the Federal Magistrate erred in finding at [4] of her reasons that the Wife was not in a position to ascertain the Husband’s real financial position.
It was submitted on behalf of the Husband that at [4] the Federal Magistrate found that both the Wife and the Court “were never in a position to ascertain the real financial circumstances of [Mr Budding]” and that this finding was not open on the evidence.
It was submitted on behalf of the Husband that no evidence was led by the Wife as to any failure of financial disclosure by the Husband. Further, despite cross-examination of the Husband, no admissions were made by the Husband that he failed to make financial disclosure. Indeed, no allegations of financial non-disclosure were put to the Husband in cross-examination. No submissions were made as to the credit of the Husband by counsel for the Wife. In fact, counsel for the Wife expressly refrained from raising issues of credit (transcript, 8 April 2009, p 18).
I accept the submissions on behalf of the Husband. This ground has been established.
Ground Seven
In the seventh ground of appeal it was contended that the Husband was denied procedural fairness when the Federal Magistrate did not allow submissions on the question of the Wife's needs or her ability to maintain herself.
It was submitted on behalf of the Husband that upon the conclusion of his cross-examination, the Federal Magistrate allowed counsel for the Wife to make submissions without first hearing from counsel for the Husband. At the conclusion of the evidence, the only issue raised by the Federal Magistrate was the question of the Husband's capacity to pay. That question having been raised was not followed up with an opportunity for submissions. In addition, no submissions were heard on the question of the Wife's needs or ability for self-support. This was so despite the fact that from the commencement of the trial, counsel for the Husband submitted that one of the issues to be resolved pertains to “any needs that the wife can establish” (transcript, 8 April 2009, p 3). I accept these submissions. For reasons I have given this ground has been established.
CONCLUSION
In summary, I am of the view that the appeal should be allowed. The Federal Magistrate failed to consider and apply the relevant statutory provisions. The Federal Magistrate failed to adequately consider if it was proper to make an order for spouse maintenance and whether there were appropriate circumstances to order the payment of a lump sum amount. As well, the Federal Magistrate failed to give adequate reasons. Thus there were errors of law.
RE-EXERCISE OF DISCRETION
In the circumstances, the matter must be remitted for rehearing before a Federal Magistrate other than Federal Magistrate Bender. It is very regrettable that the matter has to be remitted given the amount involved and the costs of the hearing, the appeal and the eventual rehearing. However the Federal Magistrate made significant errors and as I said in discussion at the hearing, which was agreed, I cannot re-exercise the discretion. I do not have the evidence of the Wife before me.
I certify that the preceding fifty nine (59) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Ryan.
Associate:
Date: 11 September 2009
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