Burberry & Mobb
[2007] FamCA 1264
•26 October 2007
FAMILY COURT OF AUSTRALIA
| BURBERRY & MOBB | [2007] FamCA 1264 |
|
| Family Law Act 1975 (Cth) ss 75(2); 79(4) |
| Australian Coal & Shale Employees Federation v The Commonwealth (1953) 94 CLR 621 at 627. House v The King (1936) 55 CLR 499 at 504‑505 Gronow v Gronow (1979) 144 CLR 513 at 519‑520 Pierce v Pierce (1999) FLC 92-844 at 85, 881 |
| APPELLANT: | MR BURBERRY |
| RESPONDENT: | MS MOBB |
| FILE NUMBER: | BRM | 16531 | of | 2005 |
| APPEAL NUMBER: | NA | 49 | of | 2007 |
| DATE DELIVERED: | 26 October 2007 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Warnick J |
| HEARING DATE: | 26 September 2007 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 29 June 2007 |
| LOWER COURT MNC: | [2007] FMCAfam 368 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Hamwood |
| SOLICITOR FOR THE APPELLANT: | Crane Butcher McKinnon |
| COUNSEL FOR THE RESPONDENT: | Mr Cameron |
| SOLICITOR FOR THE RESPONDENT: | McNamara James & O'Connor |
Orders
That the husband’s appeal be allowed.
That Orders 1 to 8 of the orders made by Federal Magistrate Jarrett on 29 June 2007 be set aside and in lieu thereof it be ordered: -
“1.That provided the husband pay to the wife the sum of $67,600 within 42 days of the date hereof, the wife transfer to the husband the whole of her right title and interest in the property situated at and known as [T Avenue], [W] in the State of New South Wales being the whole of the land comprised in Folio Identifier [49/XXXXX X] (“the property”).
2.That simultaneously with the transfer in accordance with Order 1 hereof, the husband indemnify the wife against any outgoings in respect of the property and any liability in respect of the mortgage held with [W] Banking Corporation.
3.That in the event that the husband does not pay the said sum of $67,600 to the wife within the said period of 42 days, the husband and the wife and each of them forthwith execute all deeds and documents necessary to effect a sale of the property within a further 28 days, at a price of not less than $400,000 or such other price as the parties may in writing agree.
4.That the property be listed for sale with such real estate agent or agents as the parties shall agree upon (provided that neither party shall be entitled to require the listing of the property with more than two (2) agents of his or her choice).
5.That the parties must do all acts and execute all documents to cause the proceeds of sale of the property to be used as follows:-
(a)to pay the reasonable expenses of the sale including agent’s commission and legal costs and disbursements;
(b)to discharge the mortgage secured on the property to [W] Banking Corporation; and
(c)to pay to the wife $67,600 plus or minus 20 per cent of the difference between the net sale price and $357,000; and
(d)the balance to the husband.”
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Warnick delivered this day will for all publication and reporting purposes be referred to as Burberry & Mobb.
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA49 of 2007
File Number: BRM16531 of 2005
| MR BURBERRY |
Appellant
And
| MS MOBB |
Respondent
REASONS FOR JUDGMENT
Dealing with the question of alteration of property interests between Ms Mobb and Mr Burberry, who later in life had cohabited for about six years, Jarrett FM divided property consisting of superannuation interests of around $450,000.00 and other assets of $326,000.00, so that the husband received 60 per cent of the non-superannuation assets and retained all of his superannuation assets (approximately $111,000.00) and the wife received the balance of the non-superannuation property and retained all of her superannuation assets (approximately $338,000.00). Against the orders effecting this division, the husband has appealed.
There are seven grounds of appeal. The first four assert that the learned Federal Magistrate erred in concluding that the evidence did not enable him to make findings about certain contributions made by the husband.
The fifth ground asserts a failure to give adequate reasons for the conclusion that the parties’ contributions to the non-superannuation assets were only 60 per cent in the husband’s favour.
The sixth ground alleges a failure by the Federal Magistrate to properly take into account the value of the wife’s superannuation interests when considering the justice and equity of his orders. The seventh ground, a “catchall” ground that the decision was wrong and contrary to law, was abandoned.
I have concluded that there is merit in the fifth ground, namely a failure by Jarrett FM to explain his conclusion about the contributions to the non-superannuation assets. In this particular case, this is equivalent to saying that on the face of the Federal Magistrate’s reasons, the conclusion is manifestly wrong.
In the circumstances of this appeal, I think it unnecessary to deal with the other grounds, though some reference is necessary to the subject-matter of them, either in discussion of the successful ground or in the re-exercise of discretion.
The failure to explain the conclusion that the husband and wife contributed to the non-superannuation assets in the proportions of 60 per cent/40 per cent
The context (derived from the Federal Magistrate’s reasons) in which contributions were made can be shortly stated.
The parties commenced living together in February 1999. The husband was then 48 years of age, the wife almost 45. The husband had equity in a home (at [AH], shares in a business, a car, household chattels and $38,000.00 in a superannuation accumulation fund. The wife had a motor vehicle of modest value (subject to debt), some furniture and about $3,000.00 in savings. She was receiving a pension from her superannuation interest (a defined benefit), which, valued in accordance with the regulations relevant for family law purposes, was then worth $311,136.00. The wife also had an entitlement to borrow up to $25,000.00 using a Defence Service loan facility and the parties later utilised that facility. The property introduced by the husband was sold in June 2001 and the proceeds enabled the purchase, without borrowing, of a property at [W].
At the beginning of cohabitation, the wife received her weekly pension and was in full-time employment as a pharmacy assistant, earning $400.00 a week. She continued in that job until June 2002. Until that time she also assisted the husband in his business.
While he was in business, the husband earned more than the wife, but he sold his business in July 2004, receiving $57,000.00. These funds were placed in a superannuation fund.
As to non-financial contributions, the Federal Magistrate accepted the wife’s evidence of “the extensive work she and the husband performed together at the [AH] property”. He also accepted the wife’s account of “the work performed by her and the husband on the [SP] property” (a property bought entirely with borrowed funds and sold during the marriage) and “that together she and the husband renovated and improved their property at [W]”.
Neither party asserted “any particular post-separation contributions that need to be taken into account”.
There were no children of the marriage.
Though, Mr Hamwood, Counsel for the husband on the appeal, as earlier seen, asserts that, when considering the justice and equity of orders, Jarrett FM failed to have regard to the value of the wife’s superannuation, there is otherwise no attack on the learned Magistrate’s treatment of superannuation interests and his assessment of contributions in respect thereof. In these regards, the learned Magistrate said:
13.Given the length of the parties’ relationship, the period over which the wife at least has been accumulating her CSS superannuation and the different nature of that interest compared to the husband’s (a non-commutable pension entitlement versus a lump sum accumulation interest receivable as a lump sum) it is appropriate to adopt the “preferred approach” spoken of by the Full Court in Coghlan (above).
…
43.I assess contributions to the acquisition, conservation and improvement of the parties’ superannuation interests assets accordingly. In my view, the husband has made 100% of the contributions to his superannuation interests and the wife has made 100% of the contributions to her superannuation interests.
Against this background, I turn to the Federal Magistrate’s conclusions in respect of contributions to the non-superannuation assets. After recording the context as set out above, the Federal Magistrate said:
41.Having regard to those findings, in my view, contributions to the acquisition, conservation and improvement of the parties’ non-superannuation interests should be seen 60% to the husband and 40% to the wife. The husband introduced the [AH] property and, although it is impossible on the evidence to ascribe a value to the property at the commencement, it was clearly of some worth to the parties as it provided the source of funds for the purchase of the [W] property. Further, he made greater contributions during the course of the relationship from his income, although I am unable to quantify those contributions.
Also, he had earlier said:
26.…In so far as initial contributions are concerned, I am satisfied that the husband made a larger contribution of property to the parties’ relationship at its commencement. … .
In considering whether Jarrett FM’s assessment of contributions was manifestly wrong, I am mindful of the principles relating to an appeal from a discretionary judgment, enunciated in cases such as House v The King (1936) 55 CLR 499 at 504‑505; Gronow v Gronow (1979) 144 CLR 513 at 519‑520 and Australian Coal & Shale Employees Federation v The Commonwealth (1953) 94 CLR 621 at 627.
However, in my view, both the description of the parties’ comparative initial contributions and the division struck by the Federal Magistrate, are manifestly inadequate. True it is that, as seen in the paragraph just quoted, Jarrett FM recognised that the husband’s contribution of the equity in the [AH] property was “clearly of some worth” and that the husband made the “larger” initial contribution. But I consider these terms markedly understated. I will discuss something of the evidence before the learned Magistrate shortly, but on any view of it, the husband’s initial contributions were not merely “larger” or “greater” (as also used) than those of the wife, but were overwhelmingly or very significantly so.
In respect of subsequent contributions, none by the wife were found to be greater than those of the husband (indeed, in addresses, then counsel for the wife conceded that the contributions in relation to landscaping and work done in relation to the property were equal) and, as seen Jarrett FM found that the husband made the greater contribution from income. While it is clear that the weight given to an imbalance in initial contributions may be diminished in light of subsequent contributions, even though there is no offsetting disparity in these subsequent contributions (Pierce v Pierce (1999) FLC 92-844 at 85, 881), in a six year cohabitation that produced no children to raise, a 20 per cent disparity of an asset pool consisting primarily of the matrimonial home, is in my view manifestly inadequate to recognise the very significant disparity in initial contributions. As the Full Court in Pierce (supra) also said in the passage referred to above:
28.…In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase of the matrimonial home. … .
Turning then to the evidence before Jarrett FM, in support of his first three grounds, the first two in particular, Mr Hamwood argues that the learned Magistrate had evidence before him which should have led him to find that of the total of initial contributions, the husband introduced around 95 per cent.
The learned Magistrate did not so find and said:
15.I cannot find a value for any of the husband’s non-superannuation property at the commencement of the parties’ relationship because no evidence was led by him about those values.
However, Mr Hamwood points out that the husband in his affidavit of evidence-in-chief swore as follows:
4. ASSETS AT COMMENCEMENT OF COHABITATION
3 bedroom home at [AH] on the north coast of New South Wales (worth approximately
$170,000.00
Colonial Superannuation
38,000.00
Falcon motor vehicle
7,000.00
Shares in the company [PP] Pty Limited
57,000.00
House full of contents, estimated value
10,000.00
Gross of total assets
282,000.00
Liabilities
Mortgage with [N] Bank
40,000.00
Net assets under my control
$242,000.00
…
14.The accountant for the company estimates that the value of the company at cohabitation in 1999 was approximately the same as what it was worth when we sold it. My interest in the company remained stable at about $57,000.00
At trial, no objection was taken to the paragraphs set out, nor indeed did any party take any objection to any portion of affidavit evidence read in the proceedings. In those circumstances, while clearly the husband put forward no evidence of an expertise enabling him to value the home at [AH], one would expect, if his evidence about the value was not to be accepted, perhaps because the Federal Magistrate saw it as weightless, some discussion of that reasoning in the judgment rather than the simple statement that:
15.…no evidence was led by him about those values.
That statement was literally incorrect. In this regard, the hearing occurred on 2 November 2006 and the reasons of the learned Magistrate were delivered on 29 June 2007. This delay reinforces a concern as to whether when he prepared judgment, the learned Magistrate had firmly in mind the evidence that was before him.
On the other hand, in connection with the value ascribed by the husband to his shares in the business, the learned Magistrate obviously had at least the relevant part of the husband’s affidavit in mind, because he said:
24.…The value of his interest was always likely to be an issue in these proceedings but no evidence to support his assertions (apart from hearsay evidence) was led. The allegation as to the value of that interest at the commencement of the relationship fails for want of proof (emphasis added).
The Federal Magistrate footnoted a reference to paragraph 14 of the husband’s affidavit, quoted above. As seen, in that paragraph the husband relied not on his own view but on a view attributed to his accountant. While implicitly the reason for which the learned Magistrate rejected the evidence – namely, that it was hearsay – may be clear enough, the question of possible unfairness to a party to whose evidence no objection is taken, of that evidence being disregarded, may have deserved consideration.
Moreover, in relation to the value of the husband’s business interests, when considering the relevant evidence, the learned Magistrate continued on from the passage from paragraph 24 quoted above, as follows:
25.The husband originally purchased his shares in [PP] Pty Ltd for $40,000, although the evidence does not permit a finding as to when he made that purchase. … .
Mr Hamwood also attacks that conclusion and points to the deposition of the husband in paragraphs 13 and 15 of his affidavit when he said he bought into the company in 1992 and cashed in a policy for “…the $40,000.00 to buy into the company.”
In light of the above, I have concerns about the appreciation of the learned Magistrate of the evidence before him. However, as I indicated earlier, I think it unnecessary to reach firm conclusions about the particular evidentiary issues because, even if the learned Magistrate was rightly disinclined to make specific findings of value of property introduced by the husband, there was ample evidence before him which indicated the enormous disparity between what was brought in by the husband as against that brought in by the wife.
Apart from the matters already referred to, the evidence was that the [AH] home was purchased for $140,000.00 in October 1997 and sold in June 2001 for $174,000.00. (While in Jarrett FM’s reasons, the purchase is recorded as in October 1999 that is conceded to be an error.) The learned Magistrate found the mortgage liability to have been $40,000.00 and this was in accordance with a concession by counsel for the wife. While Mr Cameron, appearing for the wife on appeal, pointed to evidence which he said supported a finding that the mortgage was somewhat larger, of the order of $65,000.00-$70,000.00, I cannot with any confidence draw that conclusion from the material to which I was taken. In any event, in my view it is not now open for the wife to depart from the concession made by her counsel at trial.
Thus on any reasonable view the inference was that at the outset of cohabitation the husband had an equity in [AH] of the order of $100,000.00. In addition he had his share in the business, a motor vehicle and household contents. His non-superannuation assets were many times the value of those introduced by the wife, who had virtually no capital. The wife’s entitlement to a modest Defence Service loan was a slight matter. Rather than the husband’s capital being only “of some worth” to the parties, the only likely inference is that they would not have acquired the [W] property without it. That property was by far the most valuable asset at trial.
I repeat my conclusion that the learned Magistrate erred in his assessment of contributions to the non-superannuation assets and in particular failed to articulate the large disparity in the worth of initial contributions.
Re-exercise of discretion
Both parties sought that if the appeal was to be allowed, I re-exercise the discretion.
I have already set out the evidence relating to the disparity in initial contributions which was overwhelmingly in favour of the husband, whether his precise evidence of value or other evidence of the broad worth of the parties’ comparative positions is accepted.
I have also set out the undisturbed findings about contributions made during the course of cohabitation. The comparative worth of these certainly did not strongly, if at all, favour the wife.
With regard to contributions from income, ground four of the Notice of Appeal challenged the Federal Magistrate’s conclusion that it was impossible to make any findings about the nature or extent of the husband’s financial contributions through income during cohabitation:
…other than to say that it was greater than the wife’s income.
Mr Hamwood points to evidence from the husband that over the six years of the marriage his income was two-thirds of the “contribution” and the wife’s income about one-third, “going by tax returns”. It is not, however, suggested that the tax returns were in evidence and it may well be that given the view which the Federal Magistrate formed of the husband’s unreliability, he was not prepared to accept the husband’s evidence, which was given only in re‑examination.
Moreover, the husband’s evidence is rather general. While it might refer to after tax income because of the reference to “contributions”, the inference is not compelling. In the circumstances I consider that I ought not do otherwise than follow the findings in this regard of the learned Magistrate.
Mr Cameron argued that, if re-exercising, I should take into account against the husband a “negative” contribution arising from a refusal by the husband to take up opportunities post-separation to sell the [W] property at a price higher than the valuation at that time. No contract was then entered into. Completion may not have come about.
There are no findings about this issue.
In any event, the valuation now is the figure offered in April 2006.
I do not consider that I ought take any account of the events referred to, particularly when it is agreed that the husband be given the opportunity to retain the property.
Upon the findings that remain undisturbed and the evidence of the disparity of initial contributions, in my view the range for division of the non‑superannuation assets, having regard to the s 79(4)(a) to (c) factors is 75 to 80 per cent to the husband.
As to factors made relevant by s 79(4)(d) and (e), I note that no challenge was made to any of the learned Magistrate’s findings in respect of s 75(2) factors. In that regard, Jarrett FM said:
50.Neither party urged upon me any particular adjustment to the parties’ entitlements to take account of any particular matters arising under section 75(2) of the Act.
However, in support of ground six, Mr Hamwood argues that, when Jarrett FM was addressing the justice and equity of his proposed orders, the terms he used to refer to the parties’ superannuation interests did not accurately take up the real comparison. Jarrett FM noted the husband’s interest at $111,281.00 but, when referring to the wife’s position, merely said that the wife would have “the superannuation interests - $2,873.50 and her pension”.
It might be, in my view, that the learned Magistrate failed to remind himself of the capital value of the asset, namely $335,748.00, but, as I have said, I think it unnecessary to reach a conclusive view.
However, when I have regard to the superannuation interests of the parties and the undisturbed findings of contributions to them, I nonetheless consider that the wife is in the much stronger position in terms of the value of the superannuation interests than is the husband. There was no evidence before the Federal Magistrate bearing upon any adjustments that needed to be made to the commercial value of the wife’s interest in the defined benefit fund because of some factor peculiar to her or for that matter, because it was receivable only as a pension. On the other hand, having regard to the entirety of the contribution to the fund being made by the wife, the comparatively short period of the cohabitation, the ages and capacities for self support of each of the parties as found by the Federal Magistrate, I consider no greater recognition needs to be given to the disparity in superannuation interests than to make the award to the husband at the top of the range struck in respect of contributions to the non-superannuation assets, namely 80 per cent.
The non-superannuation assets of the parties as found by the learned Magistrate (but updated by virtue of agreement between the parties with regard to the value of the [W] property and as to the mortgage debt by virtue of an affidavit by the wife filed without opposition), are as follows:
$ $
[W] property 400,000.00
Husband’s car 5,000.00
Wife’s car 6,000.00 411,000.00
less mortgage to [W] 43,000.00
368,000.00
On the division proposed, the husband will have $294,400.00 net. For him to retain [W], the calculations are:
$ $
[W] less mortgage 357,000.00
plus his car 5,000.00 362,000.00
less his entitlement 294,400.00
payable to wife 67,600.00
The wife is entitled to $73,600.00 and should have net:
$
paid by the husband 67,600.00
plus her car 6,000.00
73,600.00
Having regard to the term of cohabitation and contribution findings, this is a just and equitable result.
Proposed orders
The parties agreed that the orders provide an opportunity for the husband to purchase the wife’s interests and otherwise for the sale of the [W] property.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Warnick.
Associate:
Date: 26 October 2007
Key Legal Topics
Areas of Law
-
Family Law
-
Civil Procedure
Legal Concepts
-
Appeal
-
Costs
-
Remedies
-
Procedural Fairness
0
3
4