Cosio & Cosio
[2022] FedCFamC1A 187
Federal Circuit and Family Court of Australia
(DIVISION 1) APPELLATE JURISDICTION
Cosio & Cosio [2022] FedCFamC1A 187
Appeal from: Cosio & Cosio [2022] FedCFamC2F 987 Appeal number(s): NAA 179 of 2022 File number(s): SYC 6131 of 2019 Judgment of: TREE J Date of judgment: 16 November 2022 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Where the husband appeals from final property settlement orders – Whether it was just and equitable to adjust the parties’ interests in their property – Error of fact – Where the primary judge made an error of fact – Where the wife concedes the error but submits it was immaterial – Whether the error of fact was material – Where the Court is satisfied the error was material and likely influenced the result – Where it is unnecessary and undesirable to consider the remaining grounds of appeal – Appeal allowed – Where the circumstances compels a remitter for rehearing – Application to adduce further evidence dismissed – Orders made for the filing of written submissions on costs. Legislation: Family Law Act 1975 (Cth) s 79
Federal Circuit and Family Court of Australia Act2021 (Cth) ss 5, 67
Cases cited: Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
House v The King (1936) 55 CLR 499; [1936] HCA 40
Kuru v New South Wales (2008) 236 CLR 1; [2008] HCA 26
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Number of paragraphs: 44 Date of hearing: 8 November 2022 Place: Cairns (via video link) The Appellant: Self-represented litigant Solicitor for the Respondent: Marsdens Law Group ORDERS
NAA 179 of 2022
SYC 6131 of 2019FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR COSIO
Appellant
AND: MS COSIO
Respondent
order made by:
TREE J
DATE OF ORDER:
16 November 2022
THE COURT ORDERS THAT:
1.The Application in an Appeal filed 24 October 2022 is dismissed.
2.The appeal is allowed.
3.The matter is remitted for rehearing before a judge other than the primary judge.
4.No later than:
(a)4:00pm on 23 November 2022 the appellant is to make file and serve any material or submission in support of his application that the respondent pay his costs;
(b)4:00pm on 30 November 2022 the respondent is to make file and serve any material and submissions in relation to the appellant’s application for costs;
(c)4:00pm on 7 December 2022 the appellant is to make file and serve any material strictly in reply to any material filed by the respondent under Order 4(b).
5.Upon the last filing of material in conformity with Order 4, the decision in relation to costs stands reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cosio & Cosio has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
TREE J:
introduction
Mr Cosio (“the husband”) appeals from final property settlement orders made on 2 August 2022 by a judge of the Federal Circuit and Family Court of Australia (Division 2), in proceedings between him and Ms Cosio (“the wife”). Those orders provide for an adjustment of the parties’ interests in their property such that the husband retains 52.5 per cent and the wife receives 47.5 per cent of the net pool of assets.
Practically, that adjustment provided an opportunity for the husband to retain the former matrimonial home, but pay the wife a cash sum of $824,369, or in default of that payment, for the matrimonial home to be sold to fund the payment to the wife. A superannuation split of the husband’s superannuation to the wife was also ordered.
The wife resists the appeal. For the reasons that follow, the appeal will be allowed.
background
The husband is currently 53 years old and is a professional. The wife is currently 52 years old and is a public servant. The parties commenced their relationship in 1991, married in 1992, separated in 2017 and divorced in 2019. Two now adult children were born to the relationship, the youngest of whom still lives with the husband in the former matrimonial home. The husband has re-partnered.
The primary judge heard the trial over two days in February 2022. It was the husband’s position at trial that he should receive 86 per cent, and the wife 14 per cent, of the parties’ net assets and superannuation, whereas the wife sought a property division in the order of 55/45 in her favour.
The primary judge delivered her reasons for judgment on 2 August 2022, and made the orders as set out above.
the appeal
The husband’s Amended Notice of Appeal filed 12 September 2022 extended to no less than 22 grounds, almost all of which contained numerous sub-grounds.
The error of fact complained of by Ground 3 was conceded by the wife, however she argued that nonetheless the error was immaterial. No other error was conceded.
Although as cast, aspects of Grounds 14 and 21 alleged actual bias, when explored during the hearing of the appeal, those challenges were not pressed, nor was an allegation of procedural unfairness seemingly encompassed in Ground 21(b). I therefore need not consider them before all other grounds (Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577).
The balance of the grounds were in two categories. The first category comprises only one ground (Ground 4) which contends that the primary judge erred by making any order for property settlement at all, as her Honour’s conclusion that it was just and equitable to make such an order (seemingly other than in relation to superannuation) was wrong. If successful, that ground would not see any occasion for re-exercise of the primary judge’s discretion, or the remitter of the matter for rehearing.
The second category, which comprised the remaining grounds, contends error in the exercise of the discretion under s 79 of the Family Law Act 1975 (Cth) (“the Act”). Ground 3 was amongst that group. Success on any of those grounds would require the Court to either re-exercise the discretion, or remit the matter for rehearing.
Logically therefore, Ground 4 should be considered first.
However at the outset, it is useful to recall that this is an appeal from the exercise of a discretion. In House v The King (1936) 55 CLR 499 at 504–505, it was said in relation to such appeals:
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 the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
Ground 4
This ground provides:
4.The Court below erred, in assessing whether or not it was just and equitable, in accordance with s79(2), to make the order by:
(a)failing to consider, or to rationally or adequately consider, or to give adequate reasons in relation to, whether it was just and equitable for the burden of an order, or the order that was made, to be visited upon the husband;
(b)not adopting, as the starting position, the legal interests of the parties in the property, in circumstances where it was not suggested that the equitable interests were any different to the legal interests, and in further treating the legal interests of the parties in specific property as irrelevant;
(c)adopting a community property approach, together with assumptions: that an order for adjustment of property must follow from property having been acquired during the relationship; that the wife had a right to have the property divided or had the right to an interest in the property that is fixed by the matters set out in s79(4); that the rights or interests in the property were or should be different than those that then existed;
(d)relying on the wife’s relative lack of separate assets, the length of the marriage, and the fact that there were children per se as making it just and equitable to make an order, without reference to the reasons for that circumstance having arisen and whether that arose from the marriage, and a fortiori in circumstances where the wife had no burden of the major life expenses of funding the provision of house and home and recurring household expenses and ought, with responsible application of her income, to have been able to accrue substantial property of her own;
(As per the original)
At [51] and [52] the primary judge said:
51.The first question that must be asked as articulated by the High Court in Stanford v Stanford (2012) 247 CLR 108 at [37] is whether “it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property”.
52.If answered in the affirmative, I must then take into account the factors set out in sections 79(4) and 75(2) of the Act, so far as they are relevant.
It is not in dispute that the primary judge there accurately identified what her role was; what this ground contends is that she did not thereafter in fact do what was required.
At [55]–[63] the primary judge said:
IS IT JUST AND EQUITABLE TO MAKE A PROPERTY SETTLEMENT ORDER?
55.Having identified the parties’ assets and liabilities, and prior to making any order pursuant to section 79(4) of the Act, I must first be satisfied that it is just and equitable that any order be made pursuant to section 79(2) of the Act. Making that finding is a precondition to making any order at all.
56.The husband did not submit in detail on this issue, other than to indicate that the bar was not conceded. He argued that the parties purposely and actively conducted separate finances throughout the relationship and it was one characterised by financial autonomy and independence.
57.In assessing whether it is just and equitable for an order to be made, I have regard to the matters contained in section 79(4) of the Act. I also have regard to a range of other matters, including numerous authorities that have considered this concept and observed that the consideration of whether it is just and equitable to make an order requires consideration of the overall circumstances of the matter, as well as the circumstances of and consequences to each of the parties.
58.The manner in which the parties conducted their finances for almost 30 years was not in contention. The wife came to Australia to pursue a long term relationship with the husband and has remained here since. A home was purchased in the husband’s name in 2007 and the family resided in it throughout the marriage. It remains the home of the husband and [the youngest child], post separation. Apart from the parties’ respective superannuation interests, there are no other assets of significance. This leads the husband to now argue that in the circumstances of this case, it would not be just and equitable to make an adjustment to anything but the superannuation interests held by the parties.
59.He refers me to the case of Elford & Elford (2016) FLC 93-695 (“Elford”). Elford concerned a second relationship for the parties who largely had led separate financial lives for their nine years of cohabitation. The husband, who was about 22 years older than the wife, suffered a stroke prior to separation. The contention in that case was the treatment of a lottery win by the husband which had sat in a savings deposit in his name for most of the relationship. It was argued unsuccessfully in Elford at [24] by the wife that:
this was a partnership and therefore there was no necessity to examine discrete financial contributions because everything during the relationship had accrued to the parties as a partnership. That is, the property of the parties or either of them was to be seen as a form of ‘community’ property.
60.The trial judge and Full Court confirmed “there is no doctrine of community of matrimonial property under Australian law”. While the case does support the need for a careful consideration of the contributions by the parties, it does not seem to advance the “just and equitable” argument in this case.
61.Both parties relied upon the case of Jabour & Jabour (2019) FLC 93-898 (“Jabour”) to support their positions. In Jabour the Full Court considered the trial judge’s treatment of a property (referred to as “Property A”) that had been brought into the relationship by the husband at the time of cohabitation. Whilst the case has some similarities (a 25 year marriage bearing three children) there are also some significant differences. In that case the wife had already received by way of interim property settlement an amount of $1 million and an adjustment of superannuation had been ordered. The Full Court in any event found at [83] that the trial judge was in error in quarantining “Property A” because it “had the effect of minimising the myriad of other contributions that were made in the course of a long marriage during which both parties worked very hard and raised a family”.
62.Whilst not directed to it, I have also had regard to the recent Full Court decision of Oamra & Williams (2021) FLC 94-035 (“Oamra”). There, the parties cohabitated for 18 years and had four children. They kept their finances and property separate and in a similar way to these parties, contributed in a structured manner. Notably and by way of distinguishing the facts, in Oamra they each brought property into the relationship. The wife submitted that the court should find that it was not just and equitable to make any order for the alteration of property interests, arguing that the parties operated on express or implied assumptions that they would keep their property separate. While the focus of this case was on the term “common use” of a matrimonial home as opposed to other property, she was in any event unsuccessful.
63.I have taken into account the range of factors as I am required to do. Having done so, I have concluded that it would be just and equitable to make a property settlement order for the following reasons:
(a)The only property with a value of any significance is the former matrimonial home;
(b)The parties made a range of different contributions that were different in nature during the course of the relationship and these will be outlined in more detail under section 79(4) considerations; and
(c)I have considered the impact on the parties in the event it is determined that it is not just and equitable for any orders to be made. I have concluded that should a property settlement order not be made, the wife would be left after the 26 year relationship bearing two children with no property of any significance (apart from superannuation entitlements), and such outcome would be unjust.
(Footnotes omitted)
Turning to the specific challenges made by the husband by the four sub-grounds, as to sub-ground (a), self-evidently the primary judge was aware that the burden of any adjustment would fall on the husband’s property, as it was the only non-superannuation item of substantial value, as her Honour expressly acknowledged at [63(a)]. Her reasoning for so concluding is well able to be ascertained, and justice is able to be seen to have been done as between the parties’ cases (Bennett and Bennett (1991) FLC 92-191 at 78,266). It must also be remembered that the primary judge was not required to “mention every fact or argument relied on by the losing party as relevant to an issue” (Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at [62]). This sub-ground has no merit.
As to sub-ground (b), this challenge may be swiftly despatched. Plainly it was uncontroversial – and the primary judge well knew and acknowledged – that the wife had no property of significance, and the husband had the only property of significance. This was not a case where the parties’ legal and equitable interests were in dispute. Her Honour did not treat the parties’ legal interests in property as irrelevant.
Turning then to sub-ground (c), her Honour expressly eschewed any “community property approach” (at [60]) and it is not apparent from either the reasons, or the determination that it was indeed just and equitable to make a property adjustment order, that any of the contended assumptions were made by the primary judge. Whilst it is true that necessarily the last contended assumption was the actual result of the determination by the primary judge, there is no warrant for construing it as an assumption.
Finally as to sub-ground (d), shorn of its argumentative verbosity, it does not contend that the primary judge’s reliance on the recited matters involved taking into account an irrelevant consideration, but rather that she failed to have regard to a relevant consideration, namely, in blunt terms, that it was the wife’s fault that she had no assets. Particularly the husband contended that the wife should have worked instead of staying home to raise the parties’ children, and such money as she did earn or have access to was wasted by her, rather than saved.
This is a recurrent theme to the husband’s challenges advanced in other grounds of this appeal – he was a saver, whereas the wife was a spender, and hence the outcome should acknowledge that, in that apart from some superannuation, the husband’s assets should be untouched.
The first point to note is that this was not an argument raised in relation to this particular issue at trial. Rather the husband merely contended that the wife had not established it was just and equitable to make any non-superannuation adjustment without particularising why that was so (see Transcript 2 February 2022, p.87 lines 1-6). Parties are bound by the conduct of their case at trial (Metwally v University of Wollongong (1985) 60 ALR 68).
The second point is that in any event, plainly the primary judge was well aware of the husband’s relevant contentions (see for example [96(c)] and [97(d)]). However her Honour rejected that the wife had been “reckless” financially, (at [107]) and it was self-evident that the wife did not earn income when not working but either raising the parties’ children or studying. There is no reason then to think that the primary judge ignored these matters in considering s 79(2) of the Act, especially given what she said at [63(b)].
Ground 4 fails.
Ground 3
It is next convenient to consider Ground 3. It provides as follows:
3.The Court below erred, and acted without evidence, and contrary to the facts known to both parties, and forming part of the basis on which the case was run, in assuming that the funds raised to commence the husband’s [business]:
(a)were drawn down from the home loan rather than (as was the case known to the parties) from a separate line of credit (albeit also secured against the home);
(b)had not been repaid (when in fact, as was known to both parties, the line of credit had by the time of the hearing been fully repaid and had a zero balance); and
(c)were not already contained within the balance sheet of the [business] (when in fact until fully paid they had always been recorded in the balance sheet of the [business] as a long term loan so that the value of the [business] was always an amount that was net of the debt),
and for that reason purporting to “include” in the balance sheet in the judgment, savings from post-separation personal exertion earnings and the value built in the [business] from post-separation personal exertion earnings, on the basis that they were being included together with an “offsetting” debt which did not exist.
Although the wife concedes that the primary judge erred as the husband contends, she says that the error was immaterial. Notwithstanding that concession, I must be independently satisfied as to error.
At [33] the primary judge referred to the husband’s borrowing of $150,000 to fund his commencing in the business, and referred to the fact of the borrowing again at [72]. However it emerged during cross-examination that, at least by the time of trial, the husband had repaid the loan from his earnings (Transcript 1 February 2022, p.62 lines 4-5).
In considering post-separation contributions, at [106] the primary judge said:
106.While arguably the post separation savings and earnings of the husband are a contribution on his own behalf, I note that just prior to separation the mortgage over [the former matrimonial home] was extended by $150,000 to support the husband’s transition to the [business].
Later, under the heading “Conclusions on Contributions” at [113] the primary judge said:
113.Post separation earnings are relevant when used to increase the pool of assets. They are also relevant where assets have been disposed of or significant liabilities reduced post separation. Taking into account the liability incurred by the husband shortly before separation, his post separation contributions place the parties where they would have been but for his extension of the mortgage.
(Emphasis added) (Footnote omitted)
It was conceded by the wife that the last sentence evidenced that the primary judge erroneously thought that the $150,000 loan was still outstanding. I accept that is the only sensible construction of it. Error is therefore established.
But for that error, it seems plain that post-separation contributions would have favoured the husband. Whilst if mathematically expressed, it might have been in the order of $150,000, of course contributions are assessed holistically, not mathematically (Dickons v Dickons (2012) 50 Fam LR 244 at [21]).
Hence despite the valiant efforts of the wife to persuade me that the maximum extent to which the error could have informed the ultimate outcome was, in dollar terms, minimal, simply one cannot know how, in the primary judge approaching her task of holistically assessing contributions, the superior post-separation contributions of the husband would have impacted on the ultimately assessed 52.5/47.5 split in the husband’ favour. It seems almost certain that it would have made some impact, as it simply cannot be ignored that $150,000 is a significant percentage of the net pool here. That in the holistic assessment of contributions it might not have been given full expression in that value, or may have been offset by other matters such as the husband’s tax liability, is neither here nor there. The error was material, and I am satisfied it likely influenced the result.
This ground succeeds.
I do not need to consider whether the outcome was nonetheless sustainable as no Notice of Contention contending such was filed by the wife.
The remaining grounds
The other grounds, if successful, would all lead to the same outcome as that which the success of Ground 3 sees, namely a consideration of whether the Court ought re-exercise the primary judge’s discretion, or remit the matter for rehearing. I shall shortly explain why remitter is the only practical alternative here. Given that, the overwhelming number of the remaining grounds compels the conclusion that to deal with them is unnecessary and in any event undesirable, for a number of reasons, not least of which are judicial economy (Boensch v Pascoe (2019) 268 CLR 593 at [7]–[8]), and that the matters which they raise will inevitably be enlivened in the rehearing (Kuru v New South Wales (2008) 236 CLR 1at 6). Moreover the objects of the Federal Circuit and Family Court of Australia Act2021 (Cth), particularly, the efficient delivery of justice (s 5) and the overarching purpose of practice and procedure provisions in s 67, including the quick resolution of disputes, all underscore the imperative that the Court, even when dealing with appeals, should not be bogged down with quite unnecessary tasks.
I therefore will not consider the vast swathe of challenges advanced under the remaining grounds, given that the appeal must in any event succeed and the matter be remitted.
re-exercise or remitter
In Allesch v Maunz (2000) 203 CLR 172 (“Allesch v Maunz”) at [30]–[31] the High Court said in relation to the re-exercise of a discretion by this Court as follows:
30.Although, on an appeal by way of rehearing from a discretionary judgment, an appellate court may, itself, exercise the discretion in question by reference to circumstances as they then exist, it is not bound to do so. It may, instead, set aside the order under appeal and remit the matter for rehearing or, in terms of s 94(2) of the Act “order a re-hearing, on such terms and conditions, if any, as it considers appropriate.” And where circumstances have or are likely to have changed between the original hearing and the disposition of the appeal, it is not uncommon for an appellate court to remit the matter for rehearing rather than, itself, exercise the discretion in question.
31.If on an appeal by way of rehearing from a discretionary judgment an appellate court is minded to exercise the discretion in question by reference to circumstances as they exist at the time of the appeal, it is necessary that the parties be given an opportunity to adduce evidence as to those circumstances. It is not entirely clear that that happened in the present case, particularly as the Full Court indicated that it could only speculate as to the likely outcome of a fresh application of the principles governing property settlement to the property then owned by the parties.
(Emphasis added)
The husband indicated that if Ground 3 of the appeal succeeded, and the Court was minded to re-exercise (as was both parties’ preference, at least initially) he would want to lead further evidence on the appeal, comprising at least an updated valuation of the former matrimonial home.
Pursuant to Allesch v Maunz he is perfectly entitled to do so, as the Court is obliged to re-exercise the discretion on the facts pertaining as at the date of that exercise. That less than a year has elapsed since the last valuation is not to the point, especially given that the husband contends that the value of the former matrimonial home has diminished in that time, in accordance with what he says has befallen the Sydney property market generally.
More, the husband wants to put on evidence as to his post judgment work and expenditure on the former matrimonial home. From the oral submissions advanced by the wife at the appeal, it is likely that the value of the property may prove contentious, as may the claim for an allowance for post judgment work. It is simply not practical to turn the re-exercise into a hearing involving the resolution of conflicting factual contentions; that is, axiomatically, what trials are for.
The success of Ground 3 therefore, in the circumstances, compels a remitter for rehearing. In those circumstances, there is no need to consider the husband’s application to adduce further evidence on the appeal and it will be dismissed.
outcome
The appeal will be allowed, and the matter remitted to another judge of the relevant Court for rehearing.
costs
In the event the appeal succeeded on Ground 3, the wife sought to put on further evidence, seemingly comprising a Calderbank offer. The parties agreed that in the event the appeal succeeded, a timetable for the production of further materials and submissions as to costs was appropriate, and I will pronounce orders in the terms to which they assented.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Tree. Associate:
Dated: 16 November 2022
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