CAZ & GAZ

[2005] FamCA 732

[2005] FamCA 732

FAMILY LAW ACT 1975

IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA
AT SYDNEY

Appeal No. EA 116 of 2004
File No. SYF 2316 of 2003

IN THE MATTER OF:

CAZ

Appellant Wife

- and -

GAZ

Respondent Husband

REASONS FOR JUDGEMENT OF THE FULL COURT

CORAM:  Bryant CJ, Coleman and May JJ
DATE OF HEARING:         4 May 2005
DATE OF JUDGEMENT:  4 August 2005

APPEARANCES:   Queens Counsel appeared on behalf of the Appellant Wife.

Counsel appeared on behalf of the Respondent Husband.

Legal Aid Commission of NSW appeared on behalf of the Child  
 Representative.

1. Introduction

1. This is an appeal by the wife from part of the orders made by Rose J on 15 October 2004 under the heading “Property Settlement”. His Honour ordered that the former matrimonial home (“the S property”) be sold together with various orders as to how this was to be effected and that after the costs of sale and mortgage were discharged, the net proceeds be paid to the wife. To complete the property distribution found by the trial Judge to be just and equitable of 57.5 : 42.5 in favour of the wife, the husband was ordered to pay her a lump sum of $403,496 on or before 17 January 2005.

1. The parts of the orders to which the appeal primarily relate are the sale of the S property, the fixed sum payable to the wife and in addition, as per the amended Notice of Appeal, that she and the husband equally bear the costs incurred of the child representative. That order was made on 20 January 2005 by Rose J. By agreement between the parties an order was made on 1 February 2005 that they each pay $756.80 to Legal Aid with the balance not to be enforced against them by Legal Aid NSW until the determination of the appeal.

1. In the Notice of Appeal, the wife asks that she be given three months to rearrange finance over the S property and upon an unencumbered transfer from the husband, she will pay him a lump sum amount equal to the percentage portion of the parties’ assets as decided by the Full Court. She further seeks that her percentage entitlement be increased by 8 per cent to 65.5 per cent and that the repayments for the three mortgages currently secured by the S property be met by the husband for the period ‘up to and including the complete month following the delivery of Judgment handed down by this Full Court and the three months following’. In addition to or upon default of the above conditions, the wife proposes the husband sell the M unit, being the property held solely by him, discharge the two loans relating to it and pay her the amount of $403,496 as ordered by Rose J or such other sum as may be ordered by the Full Court, with interest.

1. Should the wife be unable to retain the home, she asks that the S property be sold by auction with a reserve price of $2,600,000 or as may be agreed between the parties. After the costs of the sale being met and the home loan discharged, she seeks to be ‘reimbursed’ the amounts she has paid in mortgage instalments since and including 7 April 2005 and that the balance of the sale proceeds or other sum fixed by this Court be paid to her. In relation to the M unit, the wife seeks that the husband refinance the two other mortgages or discharges them by sale of the property to allow her personal guarantee to be released. She also seeks the husband pay the land tax owing on the M unit as well as half of that for the S property.

1. Irrespective of the method with which orders are to be made above, the wife asks that the husband pay the entire costs of the child representative.

1. In a cross appeal, the husband appeals from paragraph 14 of the orders being the calculation of the lump sum payable to the wife as he contends it does not account for the mortgage repayments made by him. He seeks to reduce the amount payable to the wife to $364,930.50.

1. Applications to adduce further evidence were heard at the time of the appeal in relation to a number of matters and subsequently in relation to the payment of mortgage instalments. These will be dealt with below.

1. Relevant background

1. The factual matters as set out by the trial Judge are not in dispute. The agreed schedule of property is contained in Exhibit 20.

1. The husband was 49 years and the wife 46 years at the time of trial. They lived together for a period of approximately twenty years, from the date of their marriage in 1983 until separating in December 2002 or January 2003.

10. There are three children of the marriage. They are now aged 18, 16 and 14 respectively. The children have resided with the wife since separation.

11. At the time of separation, the parties jointly owned the former matrimonial home, [the S property]. The agreed value of the property at trial was $2,725,000.

12. Three loans are secured over the S property totalling $1,522,590. The indebtedness of the first mortgage at trial was approximately $450,000 and is singularly secured by the S property.

13. The remaining two loans arose from the purchase of a unit (“the M unit”). The M unit was purchased in December 2001 in the husband’s name alone and he has lived there since June 2003. The second and third mortgages over the S property total approximately $1,100,000. The value of the M unit agreed at trial is $1,350,000.

14. At separation the parties also owned a unit [“the FM unit”]. By agreement, it was sold in September 2003 for $489,000. The wife received $41,800 and the remaining net proceeds were divided equally.

15. At the time of trial, the husband was unemployed, having become redundant from his position as a regional director for his company in early 2004. The wife was engaged in home duties and in receipt of a single parenting pension and other like benefits. Following his redundancy, the assessment of child support payable by the father reduced from $3,032.25 per month to $21.67 per month.

16. On 5 October 2004 the wife filed a further application asking for orders for the sale of the M unit and for the husband to pay the mortgage instalments on the S property.  Orders were made by consent on 6 October 2004 to the effect that the husband was to pay from his redundancy proceeds all the mortgage arrears and further instalments falling due that month, totalling $59,069.

17. Final orders were delivered by Rose J on 15 October 2004.

18. By orders made 1 February 2005, the effect of orders contained in paragraphs 10, 11, 12 and 14 made on 15 October 2004 which are now the subject of appeal, were stayed.

19. On 14 April 2005 the wife filed an application to admit fresh evidence on the appeal. She sought to introduce the affidavit and valuation of a valuer, information and evidence regarding her role in the property management of various properties throughout the marriage, information as to her earning capacity since separation in comparison to that of the husband and information regarding the effect of the defaulting mortgage repayments on her future earning capacity. Included also was the wife’s proposed plans with regard to her desire to keep the S property, the husband’s business name registered soon after termination from his employer, the effect of the husband’s actions on the ability of the wife to draw income from the properties, expenses incurred by the children, capital gains tax and the state of the loans that the wife has incurred in order to meet the mortgage repayments. We informed counsel that consideration of this application would be included in the determination of the appeal so that counsel would then have the opportunity to make further submissions on whether we could re-exercise the discretion effectively, whether they would need to call further evidence or a new trial be ordered should the appeal succeed.

20. The appeal was heard on 4 May 2005. Before us it was agreed desirable that the parties organise a 30A Statement showing, where possible, agreed values of the two properties. Leave to file agreed values was granted.

21. On 18 June 2005 the wife filed the 30A Statement disclosing that the valuers for the party’s agreed on the value of the S property but have failed to agree on the value of the M unit. The 30A Statement reads:

As directed, the Valuers in this matter, [Mr F] for the husband, and [Mr A] for the wife met on 15th June, 2005 to discuss the fair market value of the properties nominated above.
The results of the conference are as follows:-
[The S property]
Agreed value - $2,575,000
[The M unit]
Agreement on value could not be reached. All the sales evidence was considered however differing opinions and interpretations of the comparability of sales prevented agreement taking place.
[Mr F] agreed to increase his valuation to $1,150,000 and [Mr A] agreed to decrease his valuation to the sum of $1,350,000.

22. On 28 and 29 July 2005 the Appeals Registrar received letters from the parties advising an agreement had been reached on the value of the M property for $1,275,000. It was submitted by counsel for the husband that there had been substantial delays in reaching this agreement caused by the actions of the wife and her lawyers.

1. Application (Post Appeal)

23.  The wife filed an Application in a Case on 22 June 2005 seeking leave to re-open the evidence on appeal and submit further evidence. The application is opposed by the husband.

24. The new evidence is contained in the affidavit of the wife’s then solicitor and relates to mortgage repayments of two defaulting loans in the husband’s name relating to the M unit which are secured by the S property; and new loan arrangements made by the wife to effect payment in order to avoid foreclosure and eviction from her current residence at the S property. Consequentially, the wife seeks a further adjustment of $43,109 in her favour (and further adjustment for any other instalments she pays in respect of these loans).

25. On 28 June 2005 the wife’s solicitor wrote to the Appeals Registrar with the inclusion of the following submission:

it should be emphasised that the only practical solution seems to be an Order for the sale of the [M unit], the proceeds to be applied in discharge of the two (2) loans which relate to the acquisition of the [M unit].

26. On 6 July 2005 the solicitor for the husband wrote rejecting such an assertion. The husband seeks the matter be dealt with on the existing submissions or be re-listed. In addition, as was correctly explained in the letter:

at the hearing, the Court was advised that because it was conceded there had been a change in the valuation of the S property and the [M unit], from when the judgement was delivered by His Honour Justice Rose, there would be the necessity of new valuations either by agreement or determination by the Court.

27. The Full Court reconvened on 2 August 2005 to hear the wife’s application of 22 June 2005.

1. Judgment of the trial Judge

(a)Property issues

28. At trial the wife sought 70 per cent of the net asset pool and the husband 55 per cent. The wife also requested three months to seek refinancing of the S property by way of a capitalised loan so she could retain it as the primary residence for her and the three children and a lump sum payment from the husband of $47,374. The husband sought the property be sold, the net proceeds be paid to the wife and that he pay her the sum of $200,269.

29. All financial figures were based on the 2003-2004 financial year.

30. Following a brief overview of the relevant legal principles pertaining to s 79 of the Family Law Act 1975 (Cth) (“the Act”), including the four step process, Rose J reproduced the agreed schedule of net property of the parties as Exhibit 20 in his judgment.

31. There were a number of disputed items of property in relation to value and liabilities. Of relevance to the appeal are the value of the wife’s motor vehicle and associated loan to her sister (Ground 5) and whether the husband failed to disclose share options held in his former employer’s company (Ground 3).

32. His Honour determined that as the only evidence before the court on the value of the motor vehicle was that of the wife, which was plausible and readily explained, he accepted her value of $15,000. However the wife also claimed a loan of $40,000 was obtained by her sister to enable her to purchase the motor vehicle and the interest component valued at $6,000 was to be repaid by the wife. In oral evidence at trial, the wife agreed that $6,000 for interest was much higher than the appropriate lending authority’s interest rate. In his reasons for judgment, his Honour said:

102.In relation to the purchase of the motor vehicle I have already referred to the wife’s evidence that it cost approximately $25,000.00. There was no adequate explanation as to why $40,000.000 was borrowed or the expenditure of the balance.

103.Accordingly, having regard to the contradictory evidence given by the wife and the failure of her sister to refer to the question of this indebtedness of her affidavit, I am not satisfied on the balance of probabilities that the wife does in fact owe her sister $6,000.00. Any alternative amount cannot be safely quantified on the evidence. Accordingly, this alleged debt of the wife will not be included for the purpose of calculation of the parties’ net property.

33. The wife asserted the husband held stock options in his former employer’s company to the value of $26,599. The husband denied that he held such options. Rose J considered this issue in some depth before arriving at his conclusion, as can be seen below:

82.Exhibit 3 includes a letter dated 23 April 2004 from the Director [of the husband’s former employer (Australia)] to the husband confirming that the husband’s position of employment with that company […] will be redundant as at that date. Exhibit 3 also includes a Deed of Release. The husband executed the Deed of Release and received the payment set forth in schedule 1 to the Deed. Those payments included net entitlements $25,452.09 and net redundancy package $203,229.13.

83.It is important to bear in mind the distinction between the Australian company which was the husband’s former employer and the US company which approved the award to him of stock option for [the company] class B stock referred to in the letter dated 28 February 2003 from the Chairman of the US company to the husband.

84.Whilst I accept the submissions made on behalf of the husband the Exhibit 3 in terms of the Deed of Release represents a release by the husband of all of his entitlements pursuant to clause 5, that appears to only relate to his entitlements as against the other party to the Deed which is his employer being the Australia company “and related entities”. It is not clear on the evidence as to whether or not the US company falls within the description of a related entity or whether a stock option as a matter of interpretation is an “entitlement”. I have doubt that that is in fact the correct interpretation when one has regard t the terms of clause 5 which refer to such claims and entitlements “arising out of his employment with [former company]” which is the Australian company. My doubts are further emphasised by the nature of such entitlements described in clause 5.

85.Exhibit 7 contains not only the letter to which I have referred but also a document described as “award summary” dated 25 February 2003. The relevant stock option shares number 300 at a purchase price of $29.8450. That is presumably in US currency. It provides for vesting dates of one third of such option shares occurring on 25 February in each of 2004, 2005 and 2006 with the expiry date being 25 February 2013. The grant of options is on the terms and conditions of the agreement attached to the award summary.

86.Clause 1 of that option agreement makes provision for the granting of the option to the employee (the husband) to purchase the stock shown on the award summary.

87.Clause 2 determines that the exercise price is the price described in the award summary.

88.Clause 3 provides that the vesting of the right to purchase is as provided in the award summary.

89.I have concluded that the husband is correct in his oral evidence that he “has to buy in order to sell”. There is no evidence before me that he has indeed exercised the option that was granted to him at least on the first of the vesting dates for that purpose being 25 February 2004 and otherwise in accordance with clause 3 of the Agreement contained in Exhibit 7.

90.No documentary evidence is before me that the husband did in fact exercise the option right granted to him by having purchased the stock to which he was then entitled.

91.No doubt there is cause for suspicion as no reference was made to the subject of stock options in either his affidavit sworn 23 December 2003 or his Financial Statement sworn 5 May 2004. Whilst the husband, as with any other litigant, is under a duty at all material times to make a full and frank disclosure, strictly speaking he did not have to disclose an interest in property or a financial resource which he did not have and on his evidence was no longer conditionally entitled to subsequent to the first vesting date having regard to the provisions of clause 3 of the Agreement contained in Exhibit 7.

92.Accordingly, I find that the husband does not hold stock options nor is he in the position to exercise any conditional rights to any stock option as he is no longer a full-time employee on vesting dates subsequent to 25 February 2004 having regard to the terms and conditions of the documentation that forms Exhibit 7.

34.  After making determinations on the disputed items, his Honour re-calculated the net property of the parties’ to be $2,864,350.

35. The trial Judge then considered the contributions of the parties’. While the husband was the primary income earner, he was also actively involved as a parent and homemaker. Similarly the wife was the uncontested primary homemaker and parent although also financially contributing through her employment earnings, termination and redundancy payments and compensation for a workplace injury. Additionally, both parties made significant indirect financial contributions through subdivision, redevelopment and improvements to the various real estate property owned by them.

36. The only ground of appeal in relation to contribution is Ground 7 where it is asserted that the trial Judge erred in assessing contributions of the parties’ as equal because it undervalued the wife’s contribution of initiating and instigating property investments from which profits were made.

37. His Honour’s findings in relation to real estate are as follows:

114.It was not a matter of controversy that the husband and the wife joined in the purchase and subsequent sale of different real estate, applying their respective savings and net proceeds of sale towards meeting the purchase price of successive purchases including obtaining funding from financial institutions. In that regard, I find that the husband did apply his savings at the commencement of cohabitation together with those of the wife in meeting part of the purchase price of the [K] Road property.

…

115.The wife joined in with the husband in the purchase and sale of successive real estate including its renovation and interior decoration.

116.Her contributions in relation to real estate was particularly exemplified so far as the former matrimonial home was concerned due to her deep involvement in work with the architect, interior design, co-ordination of interior work, landscaping and dealing with tradespeople.

117.The wife also made a contribution by working together with the husband in relation to subdivision of the [K] Road property. The wife made another indirect contribution due to her management of investment property.

38. Requests from counsel to apply a global analysis of the parties’ contributions together with the fact that both parties made substantial contributions, led Rose J to conclude that neither contribution to the net property outweighed the other and assessed them as equal.

39. The trial Judge then turned to the assessment of relevant factors under s 75(2) of the Act.

40. His Honour noted the ill health of the wife, her parental commitment to the three children, especially for the eldest who experiences residual disabilities from a motor vehicle accident, and the care she provides her parents, one of whom is in serious ill health. His Honour also noted the amount of time the wife has spent out of the work force and her current qualifications in real estate. His Honour thus found that the wife does not have a capacity to earn an income as she has limited physical and mental capacity for appropriate gainful employment until her health issues are at least largely resolved. 

41. The trial Judge then referred to the husband’s current unemployment since redundancy in April 2003 and his capacity to gain employment at a senior managerial level in administration similar to that in the past, or as a consultant which his recent activities pointed to his being

more active than he has disclosed in establishing such a business or otherwise having gainful employment. However, the evidence is not of real substance and I am not satisfied on the balance of probabilities that he has failed to make a frank financial disclosure. The wife did not seek to reopen her case for the purpose of recalling the husband for further cross-examination in relation to those matters, including alleged recent overseas travel and perhaps departmental records which would demonstrate the purpose of such travel. No doubt there were good reasons for the approach taken in that regard. It is not for me to speculate about possibilities as I can only make findings having regard to the nature and the viability of the evidence before me. The husband has been unsuccessful to date in gaining other employment. I find that the husband has the physical and mental capacity for managerial and/ or consultancy work in the areas of his recent employment but as yet is unable to exercise that capacity. The evidence does not enable me to make any findings as to the likely remuneration package that the husband could gain on a pragmatic basis from another potential employer.

42. His Honour noted that at present the father is liable for ‘a meagre amount’ of child support.

43. In making an adjustment in favour of the wife of 7.5 per cent, his Honour specifically noted the wife has the care of three children, the oldest child likely to require continued financial and emotional support after turning 18, the negligible child support received from the husband, and the husband’s greater income earning capacity.

44. In relation to the application on behalf of the wife that she have the opportunity to retain the S property, the trial Judge in concluding that ‘there is not the slightest evidence to support that proposition’ said that it was clear that the house would have to be sold ‘as neither of the parties has the capacity to service the mortgage or any re-financing’.

45. In his Honour’s final conclusions he calculated the wife’s entitlement of 57.5 per cent or $1,647,001 to consist of the equity in the S property ($1,202,410), less the net balance of $41,095.50 of her current assets and liabilities (those assets being a motor vehicle, household contents, paid costs and her bank account; less the liabilities of one half portion of land tax, capital gains tax from the FM unit, the loan to her parents and creditcard debt) and a lump sum payment from the husband of $403,496. Three months was given for the husband to pay the wife this amount.

46. By his Honour’s calculations, the husband’s major assets are the bank account $196,738 and the M unit $1,350,000 unencumbered. Even allowing for his liabilities, his net assets excluding the S property amount to $1,620,844. The trial Judge, having ‘taken into account the economic consequences’ for the husband in meeting the lump sum payment within this timeframe, noted that

it is clear that he has a capacity to pay the wife the lump sum that I will order even if it means that he has to sell [the M unit] because the consequence will still leave him in a position to have a reasonable lifestyle in all of the circumstances.

47. Further, in consideration of the husband’s current negligible child support payments, the funds readily available to him, his superior capacity to make payments compared to the wife and in taking into account the benefits of stable accommodation for the eldest child, his Honour ordered the husband pay the mortgage instalments for the S property for the month of November 2004, ‘representing a further order for property settlement’.

1. Relevant law

48. This is an appeal against a discretionary order. The circumstances in which the Full Court can interfere with a discretionary judgment are well known. In Gronow v Gronow (1979) 144 CLR 513 Stephen J said at 519:

The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight.

49. In House v The King (1936) 55 CLR 499 Dixon, Evatt and McTiernan JJ said at 504-505:

The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.  In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.

1. Grounds of Appeal

50. Before us, counsel for the wife, argued each of the eight amended grounds of appeal separately in light of the fact that they each deal with separate issues. Accordingly we will adopt that approach here.

Ground 1

“The trial judge erred in the formulation of his order as to the sale of the former matrimonial home by not adopting any formula to provide for the possibility that the property may sell for less than or more than the estimated value.“

51. The order provided that the house be sold by public auction at a reserve price of $2,725,000 or such other reserve as the parties may agree,

[p]rovided that should there not be an offer for purchase equal to or in excess of the reserve price then the parties shall join in the sale of the former matrimonial home at the best price reasonably obtainable by them.

52. The argument is that there is ‘no mechanism in the Orders to cover the possibility of the property selling either for more or less’ than the valuation agreed at the time of trial of $2,725,000.

53. The calculations of the trial Judge in relation to the sum payable by the husband to the wife depended on the sale price being the value agreed so that potentially there would be unfairness to one of the parties if the house is sold for a different figure.  Appropriately this ground was conceded by counsel for the husband. We agree that in this case different orders should have been made which allow the parties to receive assets on a percentage basis rather than a fixed sum.

54. To avoid the potential of injustice especially as it is now agreed that the value of the home is $2,575,000, this ground must succeed and clearly further calculations need to be made.

Ground 2

“The trial judge erred by not acceding to the application of the wife that these orders give her a reasonable opportunity to see if she could re-finance the property with a view to retaining it.”

55. At trial the wife asked for three months to investigate whether she could refinance the property to purchase the husband’s interest. It is admitted that no evidence was provided in support of her proposals but it is asserted that this was not possible without knowing the trial Judge’s decision about property distribution as various contentious factors were involved, including the value of the property pool and the ultimate financial viability of the wife. In any case, counsel for the wife asserted that any hypothetical indication given by a lending authority, if they were so inclined to do so, would not be worth much because it does not denote what will actually ultimately happen. For example, if the wife is liable for the home loan in a sum of $450,000 only and not the debt of $1,100,000, which while secured over the home relates to the purchase of the M unit and could be met by the sale of that property, the proposal seems more likely to be viable.

56. In paragraph 2.5 and 2.6 of the wife’s submissions, a calculation is prepared on the current percentage split as ordered by the trial Judge which would require the wife to pay the husband the sum of $669,000. This would give her a total liability of $1,119,000, about half the value of the property. The real question remains whether the wife has the capacity to repay such a debt, but it seems that the wife has plans.

57. The request to have three months to investigate these possibilities is not really opposed by the husband for any apparently valid reason, although in submissions reference was made to the different reasons now given by the wife as to why this order should be made as opposed to that stated at trial. As such a short time is asked we regard it as a reasonable order to be made, especially as there needs to be some recalculations and further orders as explained above in relation to Ground 1.

Ground 3

“The trial judge failed to deal with the submissions made on behalf of the wife, supported by a number of pieces of evidence establishing that the husband had not told the truth to the court and had not made full and proper disclosure, that the court should proceed on the basis that there having been no proper disclosure the court should make a more generous award to the wife to allow for the possibility that there were assets undisclosed.”

58. The first consideration is what submissions were made at the trial, and the second is the evidence or the alleged absence of disclosure.

59. It was submitted before us that it is now an established principle that where it is shown there has been a failure to make a full and frank disclosure, then a ‘more liberal view’ may be taken. The submission on appeal about the husband’s apparent failures can be summarised as follows:

i.From the date of separation to the date of the termination of employment being 16 months it is said that the husband received $572,885 and that the use of these moneys is not explained. It was conceded that the tax payable on these receipts would be approximately $250,000.

ii.The husband had $32,000 in a Westpac bank account in January 2004 which is not subsequently referred to.

iii.The husband did not disclose what he did with $49,000 in his share of proceeds of sale from [the M unit].

iv.The husband did not disclose a tax refund from income in the year ending 30 June 2003 in the sum of $40,000.

v.The husband did not disclose a bonus of $20,293 received on 30 April 2003.

vi.The husband failed to disclose two categories of benefits received by his employer being a fully-maintained car and telephone services by land line and mobile.

vii.The husband underestimated his superannuation entitlement by $8,000.

60. In addition, it was submitted that the court should have regard to how financial information was revealed and in this case as much of it was as a result of cross-examination, this provides further reason for the trial Judge to have been more expansive in favour of the wife. It was submitted that the trial Judge should have considered that about $300,000 was undisclosed and added back a figure to the property pool.

61. A considerable difficulty we think is that these submissions were not made at the trial. The written submissions refer to the decision in Chang v Su (2002) FLC 93-117 especially at paragraphs 67-70 but did not ask for an order that any sum be added back to the pool. The nature of the submission to the trial Judge was directed to questions of credit and that findings should be made in favour of the wife. The elaborate submission now made about the sum of $572,885 was not then made.

62. While it may be that there was not a careful explanation of these matters by the husband, he was responsible for the repayment of substantial loans, the monthly mortgage commitment being about $8,000. 

63. In relation to superannuation the husband was cross-examined so that the trial Judge had an opportunity to consider the matter. 

64. As orders were not asked for in the terms as now sought and as the trial Judge carefully considered all the evidence before him, this is not a matter upon which an appeal court should interfere.

Ground 4

“The trial judge erred in proceeding on the basis that it was agreed that CGT in respect of [the M unit] should be taken into account in the sum of $64,380 as it was only an agreed fact in the event that the property was sold by the end of the financial year 2003/4, which it was not.”

65. In the list of assets and liabilities CGT in the sum of $64,380 is included. It is accepted that the concession that such liability be included, was made only on the basis that the sale of the property was concluded before June 2004. The property has not been sold.

66. The husband is resisting its sale. The amount of the CGT payable by the husband of course depends on his taxable income in the year of sale and the use of the property since purchase.

67. It is asked that the sum should be altered to a figure of $4,397 being that calculated by an accountant in the ‘fresh evidence’ annexed to the affidavit of the wife. This of course should only be applied if it becomes obvious that the property will be sold to satisfy the court orders because otherwise no adjustment should be made for CGT.

68. Counsel for the husband correctly concedes this point.

Ground 5

“The trial judge erred in saying that there was no adequate evidence as to the use of part of the borrowed funds referred to in paragraph 102 of the Judgment.”

69. Reference has already been made to the relevant parts of the judgment where the trial Judge found that ‘there was no adequate explanation as to why $40,000 was borrowed or the expenditure of the balance.’ The car was purchased for $25,000 so that the amount unexplained is $15,000.

70. It is submitted that his Honour overlooked the evidence in relation to the very poor financial circumstances of the wife, herself not employed and ultimately receiving $21.60 per month child support from May 2004. 

71. In addition, the sum of $36,015 was included in the assets being the sum expended on her lawyers without reference to its source.

72. It is submitted that there was material explaining the wife’s expenses at that time, although it seems that it did not specifically address the use of those moneys. An attempt to now do this is contained in the wife’s affidavit filed for the purpose of the appeal.

73. As a result of a consent order, the wife repaid her sister the capital sum from part of the proceedings of the FM unit, so therefore this ground can only be directed to the interest component which his Honour no doubt correctly found seemed excessive. The view expressed by the trial Judge at paragraph 101 was open to him in the circumstances. It was not for counsel for the husband to seek to cross-examine the wife’s sister about matters not contained in her affidavit.

Ground 6

“The trial judge erred by not taking into account that by reason of inadequacy of maintenance payable to the wife, the monies received from [the FM unit] [approximately $91,000] had been absorbed in living expenses, meeting of obligations and payment of debts.”

74. The first difficulty with this ground is that there is no basis for the assertion that the proceeds of sale of the investment property should have been part of the wife’s capital and to do otherwise is likely to cause double counting. The trial Judge understood the financial contribution of each of the parties post separation and made specific reference to the wife’s use of the funds at her disposal. (para 134) The wife gave evidence at the trial that she had to use approximately $70,000 to pay bills.

75. The second difficulty is that this proposition was not argued before the trial Judge. 

Ground 7

“The trial judge erred in that his assessment of contributions at 50% undervalued the wife’s contribution having regard to the profits made, from the property investments of which she was the initiator and instigator.”

76. This argument does not challenge the trial Judge’s findings in relation to s 72(2) matters where he provided that the wife receive a further 7.5 per cent of the assets or his Honour’s other findings in relation to contribution.

77. It was submitted on behalf of the wife that an analysis of the gross profit made from sale of properties equalled a large proportion of assets the parties now have, so that her contribution was significantly greater than that of the husband. In essence, the argument put on behalf of the wife is that the wife made the more significant contribution as home maker and parent, and in addition, was the main instigator and manager of the property investments. Further, that the profits derived from the successful real estate investments of which it is asserted the wife was the principal instigator compares favourably with the income made by the husband from employment. 

78. As correctly submitted by counsel for the husband, this argument fails to look at the global contribution of both parties, and asks that the wife’s contribution to the purchase of investment properties be quarantined. Certainly the trial Judge referred to the wife’s contribution to these endeavours, and it is clear that each party contributed during the marriage to their full extent. There is no proper basis for interfering with the discretion of the trial Judge in this respect. 

Ground 8

“The trial judge erred in declining to order the applicant husband to pay the entire costs of the separate representative in these proceedings.”

79. The children’s representative was appointed on 30 May 2003.

80. Nine orders with various sub-components were made in relation to the children, some of which were made by consent. The essential orders were that the three children would live with the wife, except when living with the father on alternate weekends during the school term from 6pm Friday to 9am on Monday; that the day to day care, welfare and development of the children is the sole responsibility of which ever parent the children are living with at that time; and that the long term care, welfare and development of the children is the joint responsibility of the parties.

81. Details surrounding contact arrangements with the two younger children that were reached by consent of the parties were those orders for one half of the school holidays and specific times during Christmas, Fathers Day, Mothers Day and birthdays. Other issues were that during periods that one of the parties has contact with the children they permit and facilitate liberal telephone contact between the children and the other/non-contact parent; advise the other/non-contact parent of any serious illness or injury along with the details of the relevant hospital or medical practitioner; provide all reports by any medical consultant for the ongoing medical care of any of the children to the other/non-contact parent and permit them to attend on such appointments at the sole discretion of the medical consultant. Further, the husband and the wife consented to advising the other in writing of their residential address and telephone contact numbers and advise the other in writing within 14 days of any proposed and actual changes to these details, as well as providing irrevocable authority to the school of each child to provide each parent with any reports, photographs and other material pertaining to academic or extra curricular activities, including events that parents are invited to attend or participate in.

82. The judgment set out in detail the position of the parents and the expert evidence which essentially supported the orders as asked by the wife. The husband sought orders for equal shared parenting (Exhibit 2) whereas the wife sought to continue the contact regime in place (Exhibit 15), being contact with the father on alternate weekends during school term, one half of school holidays and specific times during special occasions.

83. The trial Judge noted each party gave evidence that one or more of the children preferred to spend greater periods with them than the other party. To ascertain the wishes of the children in light of the current regime and those proposed by the husband, a report from a Clinical Psychologist was requested. Ms J provided this report (which appears as Exhibit 1) and gave oral evidence.

84. The report reveals that the eldest child was most concerned with maintaining stability and consistency during her final year at school and to be able to ‘negotiate her own arrangements with both of her parents after completion of her HSC’ without the confines of a court order. The middle child indicated no strong preference for either parent, although felt familiar with the current arrangement and opined ‘it would be annoying to move so frequently’ in reference to the husband’s proposal. The youngest child considered the shared parenting regime would be “fair”, but she did not want to be the only one of her siblings who spent that amount of time with her father. Each of the children felt the current contact was adequate and the two older children felt at ease in increasing the contact informally as and when they felt so inclined.

85. In light of this, Rose J said:

44. I accept the evidence of [Ms J] contained in Exhibit 1 and otherwise as given by her orally. Her recording of the substance of interviews, her observations and conclusions appear to have been accurate with professional insight and remained consistent throughout.

…

54. There is no issue that the husband has the capacity to provide for the physical and intellectual needs of the three children. He loves and is devoted to the three children which seemed to be the guiding forces behind his current application for equal shared parenting. However, as noted in Exhibit 1, he needs to reduce his levels of stress and distress and if necessary seek professional counselling. He considers that such counselling is unnecessary. However, he is prepared to join in with the wife in counselling to improve communication between them. Should that happen, it may well be that he is better able to then provide for the emotional needs of the three children who would benefit from improved communication between their parents. Undoubtedly his concern that he is only a “weekend parent” is impacting upon his capacity to provide for the emotional needs of the three children. However, as [Ms J] has emphasised, the children themselves consider that they have a loving and close relationship with him which is contrary to his view that his bond with the children has been destroyed. It may well be a case of him being focused on what he needs as opposed to the current needs of the three children.

86. The judgment of his Honour in relation to the application made on behalf of the children’s representative that the parties equally bear the costs incurred totalling $11,513.60 is contained in the further judgment given on 19 November 2004. The husband was prepared to consent to meeting one half of the costs. The costs comprised the expert’s fee of $2,200 for preparation of the report and attendance at the court of $1,513, and the children’s legal representative’s costs of $7,800. 

87. The submission made at the time on behalf of the wife was that all costs should be borne by the husband because she had been largely if not wholly successful in relation to the orders as asked by her, and that the husband should not have contested these proceedings. In rejecting that submission, his Honour said in paragraph 18 of that judgment:

Whilst it is true that the wife was substantially successful in terms of the orders sought by her, an important aspect of her success in that regard was the report provided and oral evidence by the expert witness. Parenting orders sought are often fraught with much emotion, especially when there are other issues to also be determined such as in this case, property settlement proceedings that had many aspects of controversy about them. It is often unrealistic to expect that parties can sit back and apply an objective clinical approach to parenting proceedings in those circumstances, notwithstanding that they are represented by very experienced and competent legal representatives as has been the situation in these proceedings.

88. His Honour then observed that there were aspects of the husband’s case that had some merit and that in the circumstances an order should be made recognising the weight to be given to the role of the Child Representative. Although it is correctly submitted by counsel for the wife that ultimately the orders made by the trial Judge were substantially those sought by the wife, the picture as correctly described by the trial Judge in relation to children’s proceedings is not so simply stated. The discretion to make the order that the parents share the costs of the child representative was based on the matters as carefully explained by his Honour and appropriate in the circumstances of this case.

Cross Appeal

“The Trial Judge erred in his calculation of the amount payable to the wife by the husband in Order 14 by failing to take into consideration the necessary adjustment to the table of assets consequent upon the payment by the husband of $59,069 (from part of his redundancy payment referred to in Paragraph 28 of the judgement) and the payment of $8,000 being the mortgage instalment for the month of November 2004 (referred to in paragraph 173 of the judgment).”

89. Counsel for the husband submitted the trial Judge effectively ordered a double counting against the husband when ordering the husband to pay $68,069 towards the repayment of mortgage debts without a consequential deduction from the asset pool for an equivalent sum.

90.  In his Honour’s conclusions, consideration was given to the economic reality of the parties’ situations and the desirability of providing a stable home for the eldest child in her final year of school. In our view, his Honour’s intention is clear where he said:

173. I propose to make an order that the husband pay the mortgage instalments in respect of the former matrimonial home for the month of November 2004, representing a further order for property settlement. [our emphasis]

91. Accordingly, we find no merit in the cross appeal.

1. Fresh evidence

92. Submissions were made separately in relation to the application to adduce fresh evidence.

93. It is clear that valuation evidence must be admitted in view of our acceptance of Ground 1 and to a lesser extent Ground 2. As to the affidavit of the wife, the accountant’s evidence about CGT also must be admitted as the property has not been sold. As to the evidence in relation to the wife’s contribution to property development as conceded by counsel this is clearly evidence available to her at the time of trial. It should not be admitted now.

94. The admission of the evidence was opposed by counsel for the husband and with the exception of those matters referred to, it will not be admitted.

95. The evidence contained in the further application filed on 22 June 2005 must be admitted to allow a proper calculation of the division between the parties. This includes a figure of $43,109 paid by the wife to Westpac on the two defaulting mortgages relating to the M unit. Counsel for the husband concedes Westpac was at the point of bringing an action in the Supreme Court for this debt, prior to the wife’s arrangements to pay the outstanding amounts. According to the wife’s solicitor at the time, interest is to accrue on the $43,109 at a rate of 7 per cent. In our view the wife should be reimbursed for the payments made relating to the M unit in the sum of $43,109.

96. The further evidence also included letters of demand from Westpac which showed the balance as at 9 June 2005 of the two loans relating to the M unit. Those amounts are $311,732.06 and $828,666.15 respectively.

1. Conclusion

97. The appeal succeeds on three grounds and is therefore allowed.

98. In final submissions, counsel for the wife indicated a preference that the entire matter be remitted for a re-hearing. Counsel’s previous preferred position was for us to re-exercise the discretion; however he opined that in light of recent events, a review of not only the matters of fresh evidence was warranted.

99. Counsel for the husband asked that we turn our minds to re-exercising the discretion rather than remitting it, as the husband was not in a financial position to afford the wait of a new trial. Counsel asserted the parties’ are ‘hovering on the steps of foreclosure’ and a timely resolution was necessary. This submission is obviously correct.

1. In contemplation of the urgency requested, we sought oral submissions regarding events that had transpired since the appeal in May 2005. Counsel for the husband indicated the wife had frustrated efforts to reach agreement on property valuations whereas counsel for the wife asserted it was always the case that the valuers could not reach agreement and that it was only because of a change in the wife’s solicitor that brought about a concession from the parties’ to an agreed figure. We do not see that these difficulties have any impact on the outcome of the appeal.

1. Based on our findings, a revised list of assets and liabilities is as follows:

Assets  

Item  Ownership        Value  

[The S property]  joint               $2,575,000

[The M unit]  husband          $1,275,000

Motor vehicle  wife               15,000

Motor vehicle  husband          32,500   

Husband’s bank account          husband          196,738 

House contents  wife               6,000    

House contents  husband          6,000    

Husband’s bank account          husband          112      

Husband’s paid costs             husband          34,406   

Wife’s paid costs                   wife               36,015  

Jewellery of the husband in
the wife’s possession             husband          20       

Superannuation  husband          77,938   

Superannuation  husband          9,729    

Bank Account  wife               27,916

Australian Eligible
Rollover Fund  husband          36,416   

TOTAL ASSETS:   $4,328,790
               Approximate assets to be retained by each party (not including real estate):  
  Husband:  $393,859  
    Wife:  $84,931

Liabilities

Item  Ownership        Value

Mortgage debt  M property       1,097,289   (1,140,398 – 43,109)   

Mortgage debt  S property       450,000 

Monies paid on  wife               43,109
the M unit mortgage

Land tax  wife               18,011.50
  husband          18,011.50

Land tax  husband          18,979   

Capital Gains Tax on
the FM unit  husband          19,292   

Capital Gains Tax on
the FM unit  wife               12,324   

Capital Gains Tax on
the M unit  husband          $4,397    (estimated by accountant for the wife)

AP & MP                            wife               5,000

Credit card  husband          1,185    

Credit card   husband          1,167    

Credit card  wife               8,500    

TOTAL LIABILITIES:    approximately $1,757,248

Approximate liabilities to be retained by each party:     
  Husband:  $1,220,303.50
  Wife:  $536,944.50

TOTAL NET PROPERTY:  approximately $2,571,542

1. Costs

1. Counsel for the wife asked that we refrain from making an order for costs against the wife if unsuccessful in the appeal, making reference to the wife’s poorer position. However if an error of law was found and Ground 1 succeeded, the wife asks that a certificate be granted.

1. The husband’s position is that the actions of the wife in bringing the appeal causing delay and in frustrating attempts to reach agreement on property valuations are the cause of the undesirable financial positions of both parties. Further, counsel for the husband explained that the husband has been unable to raise capital to contribute to mortgage repayments in recent months because of the wife’s caveat held over the M unit. In response to suggestions the husband was in receipt of substantial income, counsel explained that while not in a position of disadvantage, the husband’s current financial position is temporary and not reflective of the level it was at trial. Counsel for the husband also submitted that the success of the wife’s appeal would not ultimately benefit the children and so she should bear responsibility for the financial cost of the appeal. 

1. Counsel for the husband asked that in the event the wife was entirely unsuccessful a costs order be made against her, as her poorer financial circumstances are a result of her own action of delaying the sale of the S property in lieu of this appeal. If the appeal was to partially succeed, the husband asks for a combination of a costs order against the wife and a certificate. The quantum of costs sought was not specified. We are not persuaded that there are any features in this case which would cause such a costs order to be made. In these circumstances a certificate will be granted for each party.

10.Orders

1. The orders of this Court are:

   1.The appeal be allowed in part.

   2.Orders 10, 11, 12, and 14 of the orders made by the Honourable Rose J of 15 October 2004 be set aside and in lieu thereof as follows:

   2.1The husband forthwith sign all documents and do all acts and things necessary for the purpose of submitting the property [the M unit] for sale by public auction within 3 months of today to be conducted by an auctioneer agreed upon between the parties in writing or failing agreement as nominated by the President of the Real Estate Institute of New South Wales at a reserve price of $1,275,000 or such other reserve price as the parties may agree upon in writing PROVIDED THAT should there not be an offer for purchase equal to or in excess of the reserve price then the unit be sold at the best price reasonably obtainable.

   2.2The husband apply the proceeds of sale of the M unit in payment of the following:

   a.Real estate agent’s commission and auction expenses;

   b.Legal costs of sale;

   c.Discharge of the two (2) mortgages relating to the purchase of the M unit;

   d.Payment of the liability for land tax;

   e.Payment into a trust account held by the solicitors for the husband being the amount estimated by a professional accountant to be payable for Capital Gains Tax on the M unit;

   f.Payment to the wife of $43,109 together with interest at 7 per cent per annum being the sum representing those mortgage payments made by the wife from 7 April to 22 June 2005; and

   g.The balance of the proceeds of sale to the husband.

   2.3The parties instruct a solicitor to have the conduct of the sale of the M unit as agreed upon between them in writing or failing agreement, as nominated by the President of the Law Society of New South Wales.

   2.4Until settlement of the sale of the M unit, the husband is responsible for the mortgage repayments in relation to the two mortgages relating to the purchase of the M unit and any other outgoings or liabilities.

   2.5The wife is to pay the husband a sum representing 42.5 per cent of the net assets of the parties as defined in paragraph 101 of this judgment, less $393,859 being the sum representing property the husband is to retain, within three (3) months from today.

   2.6Upon such payment to the husband, he transfer his interest in the S property and sign all documents necessary to cause the Westpac Bank to release the wife from all liabilities under the loans related to the M unit including a personal guarantee.  The wife at the same time take all necessary steps to cause the husband to be released from all liability in relation to the mortgage securing loans related to the S property.

   2.7Failing payment by the wife to the husband the amount required in  Order 2.5:

   a.The wife forthwith sign all documents and do all acts and things necessary for the purpose of submitting the S property for sale by public auction to be conducted by an auctioneer agreed upon between the parties in writing or failing agreement as nominated by the President of the Real Estate Institute of New South Wales at a reserve price of $2,575,000 or such other reserve price as the parties may agree upon in writing PROVIDED THAT should there not be an offer for purchase equal to or in excess of the reserve price then the parties shall join in the sale of the S property at the best price reasonably obtainable by them; and

   b.The parties apply the proceeds of sale of the S property in payment of the following:

   (i)Real estate agent’s commission and auction expenses;

   (ii)Legal costs of sale;

   (iii)Payment of the joint liability for land tax; and

   (iv)The balance to be divided between the parties to effect a distribution of 42.5 per cent to the husband and 57.5 per cent to the wife of the net assets of the parties as referred to in paragraph 101 of this judgment.

   2.8Until payment to the husband described in Order 2.5 or the sale of the S property, the wife be responsible for the repayments of the mortgage in relation to the S property and all other outgoings in relation to that property.

   2.9The appellant wife is granted a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney General to authorise a payment under that Act to the wife in respect of the costs incurred by the wife in relation to the appeal.

2.10That the respondent husband is granted a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney General to authorise a payment under that Act to the husband in respect of the costs incurred by the husband in relation to the appeal.