Cosola & Moretto

Case [2023] FedCFamC1A 61

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Cosola & Moretto [2023] FedCFamC1A 61

Appeal from: Moretto & Cosola (No 2) [2022] FedCFamC1F 924
Appeal number: NAA 284 of 2022
File number: PAC 3192 of 2019
Judgment of: MCCLELLAND DCJ, AUSTIN & CAMPTON JJ
Date of judgment: 8 May 2023
Catchwords: FAMILY LAW – APPEAL – PROPERTY – De facto relationship of approximately 15 years – Where the primary judge determined it was not just and equitable to make an order adjusting the property interests of the parties – Where the primary judge’s determination under s 90SM(3) of the Family Law Act 1975 (Cth) (“the Act”) was informed extensively by their consideration of matters relevant to
s 90SM(4) of the Act – Whether the primary judge failed to separately assess, rather than consider, the factors identified in s 90SM(4) of the Act ­–Whether a consideration or assessment of the s 90SM(4) factors is mandatory in the s 90SM(3) determination – Where the primary judge conformed with the principles identified in Bevan & Bevan (2013) FLC 93-545 – Consideration of correct approach to s 90SM(3) and s 90SM(4) of the Act – Consideration of Chapman & Chapman (2014) FLC 93-592 – No error of law established – Whether the circumstances of the parties’ relationship were ipso facto a principled reason for the adjustment of property between the parties as envisaged in Stanford v Stanford (2012) 247 CLR 108 – Where the primary judge’s findings were reasonably open upon due consideration of all the evidence – Appeal dismissed – Appellant to pay costs of the respondent in a fixed sum.
Legislation:  Family Law Act 1975 (Cth) s 90SM
Cases cited:

 Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116

Chapman & Chapman (2014) FLC 93-592; [2014] FamCAFC 91

Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28

Nguyen v Nguyen (1990) 169 CLR 245; [1990] HCA 9

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28

Robinson Helicopter Company Inc v McDermott (2016) 331 ALR 550; [2016] HCA 22

Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52

Whent & Marbrand [2018] FamCAFC 95

Number of paragraphs: 65
Date of hearing: 28 March 2023
Place: Sydney
Counsel for the Appellant: Mr Othen with Ms Tabbenor
Solicitor for the Appellant: Michael Vassili Barristers & Solicitors
Counsel for the Respondent: Mr Dura
Solicitor for the Respondent: York Law Family Law Specialists

ORDERS

NAA 284 of 2022
PAC 3192 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTION
BETWEEN:

MS COSOLA

Appellant
AND:

MR MORETTO

Respondent

order made by:

MCCLELLAND DCJ, AUSTIN & CAMPTON JJ

DATE OF ORDER:

8 May 2023

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.Within 28 days of the date of these orders, the appellant shall pay the…

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AGLC
Cosola & Moretto [2023] FedCFamC1A 61
Case
[2023] FedCFamC1A 61
Decision Date

CaseChat Overview and Summary

The appeal, Cosola & Moretto, was brought by the appellant against the respondent regarding the settlement of their de facto relationship. The relationship began in January 2004 and ended in December 2018. The appellant owned an unencumbered property at Suburb G, while the respondent owned a property at Suburb D, subject to a debt to his parents. The appellant moved into the Suburb D property, and the respondent did not directly contribute to its costs or outgoings. The respondent was the sole director of a company, H Pty Ltd, which conducted a bank account, and all costs and outgoings for the Suburb D property were met from the company’s bank account. The primary judge found that the appellant received a dividend in the 2006 financial year, and she was not a director but had access to the company’s bank account. The respondent generated the income of the company by physically completing skilled work.

The primary issue before the court was whether the primary judge erred in law by not considering the s 90SM(4) factors when determining whether it was just and equitable to make an order under s 90SM(3). The court considered the Full Court’s decision in Bevan and the plurality in Chapman, which held that it is permissible for a trial judge to consider the s 90SM(4) factors when answering the s 90SM(3) question, but it is not mandatory that they do so. The court found that the primary judge had considered the s 90SM(4) factors and was informed by those considerations as part of the s 90SM(3) enquiry, in conformity with the principles identified by the Full Court in Bevan. The court also found that the primary judge did not err in law by not separately assessing the factors identified in s 90SM(4), as he had extensively considered both uncontroversial matters and disputed matters for which he made findings, falling within the remit of s 90SM(4).

The appeal was dismissed, and the decision of the primary judge was affirmed. The court found that the primary judge had not erred in law by not considering the s 90SM(4) factors when determining whether it was just and equitable to make an order under s 90SM(3), and that he had considered those factors as part of the s 90SM(3) enquiry. The court also found that the primary judge did not err in law by not separately assessing the factors identified in s 90SM(4), as he had extensively considered those factors. The appeal was dismissed with costs.

Orders

Orders of the court

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Background

Background to the litigation

For reasons that follow, the appeal will be dismissed.Background The parties commenced cohabitation in January 2004. The appellant was 45 years of age at that time while the respondent was 44 years of age. They had each been previously married and divorced with children from those prior marriages. There are no children of their relationship. The parties separated in December 2018. Prior to cohabitation the appellant owned an unencumbered property at Suburb G (“the Suburb G property”) and the respondent owned a property at Suburb D, subject to a debt to his parents (“the Suburb D property”). At cohabitation the appellant moved into the Suburb D property, where the parties lived during their relationship. The appellant did not directly contribute to the costs or outgoings associated with the Suburb D property. The appellant retained the Suburb G property throughout the parties’ relationship. It was initially tenanted (from March 2004), and the appellant retained any rental income received. It was later made available for occupation to the appellant’s son. Her son made sporadic payments of rent or board to the appellant and, when he did not pay rent, he effected repairs and renovations to the property (at [75]). The respondent did not directly contribute to the costs or outgoings associated with the Suburb G property. The respondent is a tradesperson. He has limited reading and writing skills. Prior to cohabitation, he conducted an enterprise as a sole trader under the business name “U Company”. In December 2003, he and the appellant incorporated H Pty Ltd (“the company”), of which the respondent was the sole director. The parties were equal shareholders. It was the respondent’s uncontested evidence, accepted by the primary judge, that the company was a vehicle to receive income by way of him undertaking skilled work for Y Company, who required a company rather than a sole trader to do their work (at [66]). Save for the 2006 financial year when the appellant received a wage, the sole employee of the company was the respondent. The primary judge found that in the 2006 financial year, the appellant received a dividend (at [68]). The company conducted a bank account. The appellant, albeit that she was not a director, undertook banking and administrative roles for the company. She had access to the company’s bank account. The respondent generated the income of the company by physically completing skilled work. All costs and outgoings for the Suburb D property were met from the bank account of the company (at [74]). The assets of the company were two vehicles, some hand tools and other equipment of negligible value (at [69] and [70]). The primary judge recorded that the company ceased to trade in 2017, prior to separation (at [66]). Thereafter, the respondent established a new company with the assistance of his daughter, through which he has continued to conduct work as a tradesperson. At [81] of the reasons, the primary judge recorded that the appellant earns $603 gross per week. The evidence at trial was that she worked in a retail business. It was uncontested that she did not contribute her income earned from this work into either the respondent’s bank account or the company’s bank account.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The plurality in Chapman (consisting of Strickland and Murphy JJ) considered the Full Court’s decision of Bevan at [85] and said the following:25. If the plurality intended that a consideration of the s 79(4) matters is mandatory in answering the s 79(2) question, we respectfully disagree.26. The judgment in Stanford points, in our view, to the opposite conclusion. In particular:•The “…range of potentially competing considerations” and the consequent impossibility of charting the “metes and bounds” of what is just and equitable (at [36]);•The ready satisfaction of the s 79(2) requirement in “many cases” by the fact of separation (at [42]);•The statement that “it will be just and equitable” to make an order in “many cases” by reason of the “…choice made by one or both of the parties…” to end the marriage (at [42]);•Equally, the statement that “it will be just and equitable” to make an order “in many cases” because “…there is not and will not thereafter be the common use of property by the husband and wife” (at [42], emphasis in original);•The reiteration that: “…nothing in these reasons should be understood as attempting to chart the metes and bounds of what is ‘just and equitable’ (at [46]); and,•The further reiteration that nothing in their Honours’ reasons is “…intended to deny the importance of considering any countervailing factors which may bear upon what, in all the circumstances of the particular case, is just and equitable” (at [46]).27. Further, and crucially, in “applying s 79 in this case” the Justices of the High Court did not themselves take into account the matters in s 79(4). Indeed [51] of the judgment suggests they eschewed those s 79(4) matters relating to contribution. If, as the plurality held in Bevan, it is a “…requirement to consider the s 79(4) matters…” in determining if, pursuant to s 79(2), it is just and equitable to make any order it is, respectfully, inconceivable that their Honours in Stanford would not have done so. (Emphasis added) The appellant contended, and we accept, that Chapman stands for the proposition that it is permissible for a trial judge to consider the s 90SM(4) factors when answering the s 90SM(3) question, but it is not mandatory that they do so. The appellant did not argue in oral submissions that this statement of law is incorrect. That proposition, however, does not support the appellant’s contentions that the primary judge “does not get to dismiss pursuant to s 90SM(3) alone” and “does not have a discretion not to make a determination under s 90SM(4)”. For reasons which we have set out, it is permissible to consider the matters arising by way of s 90SM(4) when answering the s 90SM(3) question. It may be that in most cases, a consideration of those matters will be informative of the s 90SM(3) enquiry. Insofar as the plurality in Chapman purported, in [25] and in the first two sentences of [27], to lay down principle, it may be that they have impermissibly extended what the High Court said (or more accurately, what it did not say) in Stanford. However, it is unnecessary to determine that question in the context of this appeal. That is because the issue that confronts the appellant is that the primary judge did consider the s 90SM(4) factors and was informed by those considerations as part of the s 90SM(3) enquiry, in conformity with the principles identified by the Full Court in Bevan.

Ratio Decidendi

Legal Principle Established

Ground 1 took many forms across the appellant’s Notice of Appeal, Summary of Argument and oral submissions. Before attempting to pin down the complaint purportedly made by this ground, it is useful to recognise that each iteration of the ground hinged on a particular construction of s 90SM of the Act, and to set out the relevant parts of that section: 90SM Alteration of property interests (1) In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate……(3) The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account: … In the Notice of Appeal, Ground 1 was recorded as:1.When determining that it was not just and equitable in all the circumstances to make the property adjustment order under section 90SM(3), the Primary Judge made an error of law when he acted upon the wrong principles and failed to consider the matters at section 90SM(4) at all. (As per the original) The ground, in this form, was somewhat at odds with the articulation contained in the appellant’s Summary of Argument, which recorded a complaint as to the primary judge’s failure to “apply the law” and in particular, their “failure to consider s 90SM(4)… at all”. Ground 1 was explained in the appellant’s Summary of Argument as follows:4. In dismissing the [appellant’s] application, His Honour relied on [Stanford] with relevant sections extracted at [41] of the Reasons. At [46], His Honour indicates, in applying Stanford, that in considering whether it is just and equity to make an order, part of the process will involve a consideration of the s 90SM(4) factors – that is, the assessing the contributions made by the parties, while also adopting the High Court’s reasoning in Stanford that the Court should not conflate the enquiries at s 90SM(3) and 90SM(4) (expressed in Stanford as s 79(2) and s 79(4)). (As per the original) As was conceded by the appellant in the hearing of the appeal, the primary judge extensively considered both uncontroversial matters and disputed matters for which he made findings, falling within the remit of s 90SM(4). The assertion that he had not “considered” the matters raised in that subsection cannot therefore be maintained. During the course of the appellant’s oral submissions, there was a shift in the complaint raised in Ground 1 to an assertion that the primary judge failed to separately assess (rather than consider) the factors identified in s 90SM(4), and that he was required to do so. The appellant distilled the scope of the ground to be that the statement at [46] of the reasons “is a manifestation of an error of legal principle”. The allegedly impugned paragraph of the primary judge’s reasons records:46. I will first determine what the legal and equitable interests of the parties are. I will then consider whether it is just and equitable to make an order. Part of that process will involve a consideration of the s 90SM(4) factors. If I determine that it is not just and equitable, then I would dismiss the applications. If I determine that it is, then I will go onto consider the matters under s 90SM(4) and s 90SF(3) and make such orders as I consider just and equitable.