Craig & Craig (No. 2)

[2006] FamCA 1559

FAMILY COURT OF AUSTRALIA

CRAIG & CRAIG (NO. 2)  [2006] FamCA 1559

FAMILY LAW - APPEAL – PROPERTY SETTLEMENT - Decision of Federal Magistrate - Exercise of Federal Magistrate’s discretion in determining property distribution - Failure to disclose - S 75(2) adjustment in favour of the husband – Just and equitable division of assets

Family Law Act 1975 (Cth)

AMS v AIF (1999) FLC 92-852

Fox v Percy (2003) 197 ALR 201

Gronow v Gronow (1979) 144 CLR 513

House v The King (1936) 55 CLR 499

Kowaliw (1981) FLC 91 092

Norbis & Norbis (1986) 161 CLR 513

APPELLANT:   Mr Craig

RESPONDENT:         Mrs Craig

FILE NUMBER:  BRM 5919 of 2004

APPEAL NUMBER:  NA 87 of 2005

DATE DELIVERED:  3 August 2006

PLACE DELIVERED:  Brisbane

JUDGMENT OF:       May J

HEARING DATE:  3 May 2006

LOWER COURT JURISDICTION:                     Federal Magistrates Court

LOWER COURT JUDGMENT DATE:                 31 October 2005

COUNSEL FOR THE APPELLANT:  Mr O’Neill

SOLICITORS FOR THE APPELLANT:               Stacks Gray

SOLICITORS FOR THE RESPONDENT:           Mr Frank Carroll

ORDERS

1. The appeal be allowed.

2. The matter be remitted for rehearing in the Federal Magistrates Court at Brisbane.

3. The parties be at liberty to file written submissions with regard to the costs of the appeal in accordance with the following timetable: -

   (a)         On behalf of the appellant husband within 21 days of today;

   (b)         On behalf of the respondent wife in response thereto within 21 days thereafter;

   (c)         On behalf of the appellant husband in reply thereto within 7 days thereafter.

4. Each submission have endorsed on the coversheet the date on which a copy of that submission was served on the other party.

IT IS NOTED that publication of this judgment under the pseudonym Craig & Craig is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
FAMILY COURT OF AUSTRALIA AT BRISBANE

APPEAL NUMBER: NA 87 of 2005

FILE NUMBER:                 BRM 5919 of 2004

Mr CRAIG

Appellant Husband

And

MRS CRAIG

Respondent Wife

REASONS FOR JUDGMENT

Introduction

1. The appeal ‘by the husband’ from property settlement orders made by FM Baumann on 31 October 2005 relates to the first order, being a lump sum figure of $70,000 payable by the wife to the husband. Substantially this order gives effect to the division of assets decided by his Honour being 65:35 in the wife’s favour. 

2. I mention at this introductory stage that this appeal is to be determined by me as a single Judge of the Family Court pursuant to arrangements made under s 94AAA(3) of the Family Law Act 1975 (“the Act”).

3. In his appeal, the husband seeks orders that the property be divided so that he receives 55 per cent of the pool of assets.  If successful, the husband asks that should the wife not pay the moneys giving effect to the new division within 60 days, then a Gold Coast apartment referred to as ‘the [P] Apartment”, currently property of the wife, be sold to effect the distribution. 

4. The husband’s grounds of appeal complain that the learned Federal Magistrate wrongly exercised his discretion in determining the property distribution, that the value of the furniture was wrongly excluded, that a section 75(2) adjustment in favour of the husband should have been provided, and that the decision was not just or equitable. 

Background

1. Apart from a brief separation in 1987, the parties were married for 23 years, finally separating in June 2004.  Two children were born of the marriage, both of whom are and were at the time of the judgment self-supporting adults. 

2. Assets of insignificant value were brought into the marriage.  Over the course of their marriage both parties worked, the husband as a chef and the wife as a hairdresser and homemaker.  Additionally, the parties bought and sold a number of properties resulting in all instances but one, a financial gain. 

3. The husband is now 65 years of age and the wife is soon to be 54.  Currently, the husband receives a pension and the wife owns and operates her own hairdressing business supporting herself financially. 

The Federal Magistrate’s Judgment

1. The orders made by FM Baumann on 31 October 2005 were as follows:

   1.      That the wife shall pay to the husband the sum of $70,000 within sixty (60) days from today.

   2.      That the husband shall retain as [sic] his interest in the [C] property, his motor vehicle and all other back accounts, furniture and personal property in his possession power and control at the date of this order.

   3.      That the wife shall retain as her sole property, to the exclusion of the husband, her interest in the [P] Apartment (including the Marina), her superannuation entitlements, motor vehicle, hairdressing business, shares, bank accounts, furniture and personal property in her possession power and control at the date of this order.

   THE COURT DIRECTS:

   4.      That the parties file and exchange any further written submissions as to the husband’s Application for costs, within 21 days.

2. At the commencement of his reasons for judgment, Federal Magistrate Baumann flagged a prominent issue in the matter before him, namely the “significant disputes about whether full and complete discovery” had been made of the parties’ “past financial dealings”.  His Honour described the nature of the evidence before the Court in this regard as “unsatisfactory”. The trial commenced on 6 May 2005, was adjourned part heard until 21 July 2005 because of various difficulties including disclosure. Following the initial day of trial, the wife commissioned an independent audit by a public accountant to be placed before the Court, which was accepted by the husband.  The public accountant was not required for cross examination.

3. His Honour set out the principles governing property settlement matters under the Family Law Act 1975 (“the Act”), identifying the four step process to be undertaken.  

4. His Honour then said about the evidence:

   ‘… both of the parties at times proved unreliable in their recount, somewhat evasive, defensive and non-responsive to questions from counsel’ (para 13)

5. The property pool was ‘essentially’ agreed upon by the parties prior to trial and a table was produced at paragraph 16 reflecting this understanding:

Unit – [P] Apartment (wife)	$390,000
[C] property (husband)	$150,000
Wife’s superannuation	$23,640
Husband’s motor vehicle	$14,000
Wife’s motor vehicle	$11,000
Wife’s business	$ 5,000
Cash at wife’s disposal	$56,000
Wife’s shareholding	$21,000
$670,640

Included was the wife’s superannuation and the total value of the wife’s savings account prior to her payment of legal fees in the sum of $26,000.  Other assets appeared under separate headings in the judgment being furniture and shares. 

1. As to furniture, his Honour noted that the husband did not seek to dispute the exclusion of the furniture in the wife’s possession in the pool of assets at the commencement of the trial.  The wife acknowledged when cross-examined that she estimated the value of her furniture at approximately $20,000 based on some figures in the public accountant’s report.  His Honour accepted the wife’s counsels submissions that it was “not open to Counsel in circumstances where there was no issue as to the content of the pool to attempt in submissions to import a further asset” and did not include the value of any furniture in the pool of assets.

2. As to the shares, his Honour noted the usual course of action would be to include them in the pool and did so, mentioning he would take into account “the fact that this should be regarded as a contribution effectively made by the wife”. The wife had received the shares as a gift early in the marriage.

3. His Honour described, as he says as best he can, the financial history of the parties. He recounts that the parties decided to separate their finances in about 1991 although remained living together, on the husband’s account “for the benefit of the children”, and “still did pool in a certain degree, their respective salaries and funds to meet the joint expenses of the household and their family unit”. 

4. When they moved to Queensland, still as a family unit, in early 2001, they had approximately $581,000 in cash funds. 

5. A redundancy payment received by the husband in late 1999 of approximately $68,000 was contributed to joint finances.  The Federal Magistrate commenting that it had been “dissipated in a manner not requiring further investigation by me”(para 25).  It was also uncontroversial that the husband had contributed $16,500 in July 2002 and $98,213 in September 2002 from superannuation. These moneys were ultimately in one of the bank accounts controlled by the wife.

6. Considering the evidence of the parties and the report from the accountant, his Honour went into some detail about the transactions of the parties following their move to Queensland in January 2001:

   “The transactions which occurred post-January 2001 are, for the purpose of this matter, the most relevant.  Many of the aspects are challenged.  Despite extensive discovery and disclosure, honestly and faithfully (they each say) by both parties of all bank accounts and documents, there are still some significant uncertainties not resolved by the evidence.  These gaps are both puzzling and concerning.” 

7. Earlier in the judgment his Honour said:

   ‘15.As will be seen from the reasons which I give, I could not be absolutely satisfied on every occasion that the parties were telling me the whole truth.  To this extent the report of [the public accountant] was of great assistance.  As I say the mother, helpfully, after the first part of the hearing was completed, decided to engage the assistance of an independent qualified person to prepare a report.  Even she, as I will soon identify, was somewhat hamstrung by the information she had and raises some uncertainties which were not adequately satisfied by the evidence I heard during the trial but nonetheless, in the end result she was not required for cross-examination by either party and her report, having been accepted by the wife, was also generally accepted by the husband.’

In paragraphs 28 to 37 his Honour set out the deficiencies in the evidence and it seems was rightly critical of the difficulties this presented.

1. In paragraph 28 his Honour said:

   ‘28.     In their evidence both the husband and wife allege the other party has the funds in another account not disclosed (the husband's allegation) or has wasted, dissipated or otherwise gambled away that sum (the wife's allegation).  Neither party satisfied me to the requisite standard of their assertion.  Generally on these issues, as the transcript reveals, both, at times, raised more uncertainties than they answered’

2. In relation to the various allegations about misappropriation and missing funds his Honour finally concluded:

   ‘I have come to the view that as both parties seem to have:-

   a)maintained a reasonable lifestyle since coming to Queensland, with limited regular income;

   b)have had access to joint funds and have been unable to properly explain many significant transactions;

   c)have not satisfied the onus of proof necessary to support the allegations made by them of waste, dissipation and non-disclosure;

   that I should not add back any of the so-called “missing funds”’.

3. Considering the deficiencies in the evidence and the findings about credit which were not attacked on the appeal his Honour’s conclusions in relation to the allegations of misappropriation and waste were not just open to him but inevitable.

4. In relation to contributions his Honour made the following findings:

   38.‘In respect of contributions during the course of this long marriage, I would adjust in the wife's favour to take account of:-

   a)the equal financial contributions, considering the additional contributions arising from her initial contribution (used to purchase land at [KL]);

   b)the gift of shares and her continued hard work as a "Trojan" (so described by the husband) during the relationship. 

   c)the husband was constantly in employment and contributed what must have, at times, superior income to the wife as she was involved primarily caring for the young family;

   d)allow for some adjustment in the wife's favour for the losses, I believe minimised by the husband, as to his gambling and drinking.  He acknowledged the loss of $3,000-4,000 in 1984.  I accept the wife's general allegation, having seen the husband give evidence, that he probably spent a little more of the family's finances than he was prepared to concede.  He, for example, accepted in one three-month period, that he spent over $16,000 post-separation.  His explanations were unconvincing.

   e)I allow for the wife's superior non-financial contributions in the role as homemaker and parent.  I accept the husband's work hours in the licensed club industry were likely to mean he was less available to care for the children, increasing the burden on the wife.

   39.I do not ignore the husband's contribution from the redundancy and superannuation; however, these were not "extraordinary" in any sense.  They arose from his employment during the course of the relationship and were generally dissipated in normal living expenses.

   40.I think an adjustment ought be made for the wife and I regard a 65:35 contribution-based assessment as fair in all the circumstances.’ 

1. In relation to the consideration of matters relating to Section 75(2) his Honour decided that no adjustment should be made. He said:

   41.‘I have come to the conclusion that I should make no adjustment for the section 75(2) factors in favour of either party.  Although the husband is 11 years older than the wife and one may say has, therefore a lesser life expectancy than the wife, he now relies on government benefits.  The wife's income from her small hairdressing business is also very modest.  The husband and wife have similar incomes from their respective sources.  It must be said that the wife showed in the witness box, a fine presentation, and one would anticipate that she has a capacity to earn which is superior to that of the husband because of the difference in age and her formal qualifications.’

1. In addition his Honour said:

   44.‘The wife has a slight disadvantage that a small proportion of her assets are in superannuation.  I take this into account, she not being able to access those funds, but it does not require, in my view, an adjustment of any significance. I also take into account the effect of my contribution-based assessment and the fact that it may, when all considered, require the wife to borrow a small amount of funds to make the required payment to the husband which I have estimated and that she needs to service this loan.’ 

2. It seems that his Honour did not take into account that the husband had no superannuation it having been contributed to the parties’ joint assets.

3. Under the heading ‘Just and Equitable” an impression is given that his Honour prepared the figures based on a 65 percent division of the pool in the wife’s favour to allow her an opportunity to retain the unit. This impression is given in the final two paragraphs of his judgment where he said:

   ‘I am aware that this may require the wife to borrow a small sum to retain the unit.  It is not clear, for example, how much of the available cash funds are still at her disposal.  She has, of course, the shares as well, which could be, it seems to me, disposed of and converted to cash. 

   No evidence was produced before me to suggest that the wife would find borrowing a small sum of money on the security of the [P Apartment] as a difficulty considering her age and the fact that she is in employment as a self-employed hairdresser.’

4. In fairness to the Federal Magistrate it must be observed that he did also set out the effect of the husband receiving 35 percent of the pool which is that he receives his modest residence valued at $150,000, a car and cash in the sum of $70,724.

Appellate Principles

1. The first of the grounds allege an error in the exercise of the Federal Magistrate’s discretion. The applicable principles to which an Appeal Court must turn their minds are well known. Disagreement only on matters of weight or a preference for a different result infrequently justifies the reversal of a discretionary judgment at first instance.

2. Clearly stated in House v The King (1936) 55 CLR 499, at 504-505 is the prevailing view that:

   ‘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. …

3. 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.’

4. Where erroneous conclusions of fact can be shown to have influenced or formed the basis of the learned Federal Magistrate’s findings and ultimate decision or an error of law is made, there will have been a miscarriage of the exercise of discretion.

5. In allowing the appeal, the orders are set aside and, where possible, the Court will substitute its own decision, as was explained by Kirby J in AMS v AIF (1999) FLC 92-852, at 86-043:

   ‘[A]n appellate court, invited to review the exercise of discretion at first instance will avoid an overly critical, or pernickety, analysis of the primary judge’s reasons, given the large element of judgment, discretion and intuition which is involved.  Only if a material error of the kind warranting disturbance of a discretionary decision is established is the appellate court authorised to set aside the primary decision, to substitute its own exercise of discretion or to require that it be re-exercised on a retrial.’

Submissions on behalf of the appellant husband

1. In the written submissions provided on behalf of the appellant, there were two areas particularly urged upon the Court. The first is that the finding made by his Honour about the husband’s superannuation and redundancy payments were not a conclusion open to him on the evidence. The second relates to what was described in the submissions as ‘Financial dealings’. Under this sub-heading there were four areas as follows:

   1.By reference to the judgment that the unchallenged evidence was that the wife controlled the joint funds so that the main beneficiary of any financial transactions was the wife.

   2.Secondly, that the wife sought to hide her accounts and that there was a failure to disclose. It was submitted that the report of the public accountant provided on the eve of the second day of the trial found significant discrepancies concluding that there was one account missing which would explain that a sum of $90,026 could not be accounted for. It was submitted that the obvious inference is that the wife has these monies.

   3.Thirdly, it was submitted that the husband had contributed three significant amounts of money late in the marriage, $68,000 in November 1999 from his redundancy, $16,500 in July 2002 through superannuation and $98,213 in September 2002 also from his superannuation. It was submitted that the consequence of this is that his Honour failed to properly acknowledge the contribution by the husband and that as he now has no superannuation that it is an important Section 75(2) factor.

   4.Fourthly, it was submitted that the wife lives in the unit worth approximately two and a half times more than that of the husband and that she has retained the bulk of the family’s furniture. This submission is made it seems as an alternative to the main submission which is that the sum of $20,000 for furniture should be added into the pool.

1. Submissions were then made under the headings of each ground of appeal. The first ground is largely in relation to the question of contribution. The finding that the contribution of the wife is assessed at 65 percent is challenged on the basis that each of the matters relied upon by his Honour contained errors or that as a matter of weight inaccurate.

2. First it is said that the wife’s purchase of land at KL was part only of the purchase price and that the repayment of the loan largely was met by the husband’s income. Also, that this contribution was rapidly offset by the husband’s greater financial contributions and the length of this marriage.

3. As to the wife’s shares it seems that at the time of trial they were valued at $21,000. They were given to her in about 1986. The dividends were applied to household expenses. It was submitted that in view of the years that have passed and the way they had been treated by the parties there was no basis for treating them as a separate contribution by the wife.

4. It is somewhat difficult to understand how the Federal Magistrate included the financial contributions of the husband in the list of matters in the wife’s favour especially as they were described as ‘superior income’.

5. There was an element in the wife’s case of conduct having an impact on contributions and financial circumstances. There was an assertion made in the wife’s affidavit about alleged losses of the husband through gambling and drinking. The husband denied it. Documents were put to him in cross examination and it was revealed that much of the expenditure complained of was at supermarkets, garages and food outlets. It does seem by reference to the transcript significant that there was no evidence upon which his Honour could draw an inference of any significant waste by the husband. The Federal Magistrate refers to a spending of some $16,000 post separation in which the explanation was described by his Honour as ‘unconvincing’.

6. It is submitted that what the appellant husband did with his money post separation is irrelevant. Further it is submitted that when considering the findings made by the Federal Magistrate as to the wife’s unreliability and evasiveness it was not appropriate for him to accept the wife’s allegations on this topic where otherwise uncorroborated. Reference was made to Kowaliw (1981) FLC 91 092.

7. Finally, it does seem correct that such a finding is inconsistent with the specific finding made in paragraph 38 of the judgment that both parties seem to have ‘not satisfied the onus of proof necessary to support the allegations made by them of waste, dissipation and non disclosure’. The evidence however upon which his Honour was entitled to rely was that contained in the report of the public accountant, not challenged by the husband. This suggested regular gambling using relatively small amounts.

8. It is also submitted that the judgment gives the impression that his Honour gave more weight to the wife’s contributions as homemaker and parent rather than the husband’s contribution to work and income. It is submitted that the learned Federal Magistrate erred both in fact and in law in finding that a contribution based assessment of 65 percent in favour of the respondent wife should be made. In oral submissions Mr O’Neill added that the percentage division was not clearly explained although absence of reasons was not a ground of appeal. It was submitted that a 50/50 division was the proper result.

9. As to the second ground of appeal it was submitted that in the ordinary course of events furniture in the possession of either or both of the parties would form part of the property pool. In the present case there was no valuation from either party at the commencement of the trial. The wife commissioned the report from the public accountant to which I have referred and a sum of $20,000 appeared as relating to purchases of furniture. The evidence revealed that when the parties separated, the husband took a few items of furniture but the bulk remained with the respondent in the unit. In evidence the wife agreed that she had furniture worth about that value in the unit. The only significant item identified retained by the husband was a computer which was said to be worth about $5,000 at the time of separation.

10. In relation to other chattels there was no valuation but the parties agreed on the value of the motor vehicles in their respective possession and added to the property pool. Consequently, it is submitted that there not having been any agreement about the value of the furniture it was wrong of the Federal Magistrate to conclude that the husband ought to have obtained a valuation especially as the wife’s own document contained a figure for the furniture which she acknowledged and accepted.

11. That is not the end of the matter. It is quite clear at the commencement of the trial there was no attempt to include the furniture and therefore his Honour was quite correct in saying that it was not possible at the end of the matter for Counsel to seek to add another item, being the furniture into the pool. Perhaps it would have been more appropriate for his Honour to acknowledge that the wife had furniture of a greater value than the husband and take this into account as a section 75(2) factor. If this were the only ground of appeal it would not succeed.

12. The third ground of appeal can be said to relate to how the Federal Magistrate dealt with section 75(2) factors. His Honour declined to make any adjustment. He made reference to some factors but it is submitted that he did not attach proper weight to the important matters and did not consider some factors that ought to have been included. If he had done so it is submitted, the result would have been different and the overall result is outside the possible range. It was urged that there are four factors that should have been considered. The first is the age of the husband and his dependence on a pension. In contrast the wife is 11 years younger and has her own business. It was suggested that her declared income of $10,000 per year must be seriously understated unless she is living off other income or undeclared capital. The second matter is the absence of superannuation in the husband’s case because he had cashed it in and applied it to the parties’ joint assets. In contrast the wife has some $23,600 in a superannuation fund, the bulk of which had been provided through joint efforts. It is submitted ‘the net result is that the appellant is in a much weaker financial position than the respondent as a direct result of her manipulation of the family’s assets’.

13. The third factor submitted is that the husband lives in a home worth approximately one third the value of that of the respondent and that his standard of living has decreased significantly since separation and that there is a wide disparity between the parties circumstances which cannot be justified.

14. The fourth ground of appeal is the just and equitable ground. It is submitted that his Honour could not have considered what was just and equitable in arriving at a conclusion of 65 percent in the favour of the respondent wife. In view of the wording of the judgment in paragraphs 48 and 49 it was open to the appellant’s Counsel to submit what appears to have been done was an exercise to arrive at a result allowing the wife to retain the unit in which she was living subject to borrowing a small sum that appeared to be within her means. It is of course correct that if that is so then that would not be a proper exercise of discretion.

15. In addition, it was submitted that his Honour ought to have taken into account that the wife did not provide proper information in relation to her financial circumstances so that valuable financial information was only obtained through third party subpoena of banks. Secondly, it was submitted that in coming to a final conclusion, if his Honour did not add back the sum of $90,000 being the so called ‘missing funds’ there should have been some recognition that the wife most likely had available to her monies not available to the appellant.

16. It was emphasised that bearing in mind the length of the marriage and the contribution made by each of the parties and their current financial circumstances the result was simply not open to his Honour. It was submitted that there was no proper analysis to lead to such a result. Reference was made to Norbis & Norbis (1986) 161 CLR 513. Ultimately it was submitted that a just and equitable result would be a equal division of the property pool with a further allowance to the husband for Section 75(2) factors.

Submissions on behalf of the respondent wife

1. Mr Carroll at the outset asked that should the appeal be allowed a new trial be ordered because there may well be changes in the value of the assets and financial circumstances of the parties.

2. It was submitted on behalf of the respondent that there was no deficiency in the reasoning process and that the orders were just and equitable in the circumstances of this case.

3. The real difficulty in considering the question of re-exercising the discretion should the appeal be allowed is that which emerged during Mr Carroll’s submissions being the meaning of the public accountant’s report. In a letter dated 15 June 2005 attached to her report she says as follows:

   ‘It is important to note that some statement for some of the accounts were missing but this was primarily from the earlier periods of time such as September to October 200 in one instance and two weeks of February 2001 in another. Given that these periods were prior to the couple moving to Queensland, and the contentions raised appear to be after these dates, the missing elements were not pursued.

   I am also of the opinion that there is an account missing. I support this statement with the following; -account …closed on the 14 February 2001 and the balance of $4858363.69 was withdrawn. There was no account open immediately elsewhere to which this money was deposited. The next account that was opened with a significant balance was account … on the 30 July 2002 and the opening balance was $395102.34. The difference between these accounts was $90261.35.

   Given this I feel it is reasonable to surmise that the missing account would show these transactions and would certainly account for the differences between the 2 accounts of $90261.35.

   From the transactions on all accounts there are a lot of transfers to and for which appear to be for no reason other than to move money around the accounts. In most instances the money was not spent but remained in one account until transferred back at a later date.’

4. In the following paragraph the public accountant explains that she saw a number of withdrawals for cash of small sums of about $100 on sometimes in excess of six times in a day. Not surprisingly she draws this conclusion:

   ‘Given this it would be difficult to support [the husband’s] statement that his superannuation or other deposits he has made were being used to the betterment of providing for his family. It is more reasonable that this would be more indicative of a gambling habit or some other type of compulsive behavior.’

5. In the next paragraph the public accountant explains that she has undertaken an analysis of significant income and expenditure to see if any monies have been misappropriated. Of this she says:

   ‘…The end result is that all monies have been completely accounted for and the majority are supported by documentary evidence which has been enclosed in the Appendices …’

   It should be noted at this time that neither the personal earnings or the expenditure of [the husband] or [the wife] during this period from salary, business or superannuation or the purchase of vehicles has been taken into consideration in this equation as the buying and selling of the properties has been self funded and no additional funds from the individuals was required.’

6. Mr O’Neill, Counsel for the appellant submitted that this report revealed that the wife had misappropriated some $90,000 whereas Mr Carroll asserted that it was plain that all monies had been accounted for. The difficulty is that neither party or their lawyers cross examined the public accountant. In part this difficulty arose because her report only came on the second day of the trial.

7. The defence to the allegation of non disclosure provided by Mr Carroll on behalf of the wife is that the husband might have obtained copies of documents himself.

8. In relation to contribution the written submissions on behalf of the wife referred to the transcript where the husband acknowledged the wife’s contribution and that she was a hard worker and supporter of the children. In relation to gambling the transcript reveals that the husband admitted gambling from time to time and that on one occasion in 1999 lost somewhere between $3,000 and $5,000. The husband related his gambling to the wife’s purchase of motor vehicles and their sale which he said he found stressful. It seems from the transcript that in about 1991 there was a separation of the parties finances however the husband asserted that after the wife stopped buying and selling cars regularly, he stopped gambling. In the husband’s evidence he said the last occasion he was involved in gambling was in about January, 2004.

Conclusions

1. It is a well know principle that a party is bound by the conduct of their case at trial. Certainly in relation to the question of the furniture the evidence upon which the appellant now wishes to rely emerged during the trial. However, it is also correct that at the commencement of his case the husband did not seek to include the furniture in the pool of property. To allow the appellant to now argue that the Federal Magistrate erred in the approach in relation to the furniture could be an injustice to the wife and I would not allow the appeal on that ground.

2. His Honour clearly did his best on the evidence placed before him in relation to the allegations of gambling and misappropriation of funds. The parties are responsible themselves for how they conduct their case.

3. The appeal should be allowed on the basis of grounds one, three and four.

4. His Honour could not have properly taken into account the monies contributed by the husband from his redundancy and superannuation to come to the conclusion that the parties’ contribution at the date of separation was as assessed.

5. There is the unfortunate position which could not have been obvious to his Honour that the respective lawyers interpreted the report of the accountant differently. This meant that they thought that they were placing two completely different cases before his Honour who was deprived of the opportunity of the public accountant being cross examined.

6. It also seems that his Honour made an error in dealing with the section 75(2) factors in view of the parties’ current financial circumstances as it is difficult to appreciate how such discretion could have been exercised in this manner.

7. An Appeal Court may allow an appeal and re-exercise the discretion or remit the matter for a rehearing. In this case to re-exercise would be based on the figures contained in the judgment which may not reflect current values together with the greater difficulty of the dispute in relation to the meaning and effect of the accountants report. Although decisions in appeals in the Family Court allow for drawing inferences of fact and where appropriate receiving further evidence, in this case it cannot be seen how the difficulty about the accountants report can be overcome other than by unfortunately the ordering of a new trial. Whilst it is clear that on an appeal by way of rehearing, an Appellate Court can substitute its own decision based on the facts and the law as they then stand, where there is a real dispute as to important factual matters a rehearing appears to be the only option to do justice between the parties. See Fox v Percy (2003) 197 ALR 201. In this case the proper order is to allow the appeal and remit the matter for rehearing.

Costs

1. It seems appropriate in this case that any submissions with respect to the costs of the appeal and rehearing be by way of written submission.

Orders

1. The proposed orders are as follows:

   1.The appeal be allowed.

   2.The matter be remitted for rehearing in the Federal Magistrates Court at Brisbane.

   3.The parties be at liberty to file written submissions with regard to the costs of the appeal in accordance with the following timetable: -

   (a)       On behalf of the appellant husband within 21 days of today;

   (b)On behalf of the respondent wife in response thereto within 21 days thereafter;

   (c)On behalf of the appellant husband in reply thereto within 7 days thereafter.

   4.Each submission have endorsed on the coversheet the date on which a copy of that submission was served on the other party.

I certify that the preceding [67] paragraphs are

A true copy of the reasons for judgment of

The

Honourable Full Court

Associate