D & D

[2006] FamCA 199

[2006] FamCA 199

FAMILY LAW ACT 1975

IN THE FULL COURT OF THE
FAMILY COURT OF AUSTRALIA

AT SYDNEY  Appeal No. EA52 of 2005

File No. SYM979 of 2004

IN THE MATTER OF:  D

Appellant Husband

AND:  D

Respondent Wife

CORAM:  WARNICK, MAY AND BOLAND JJ

DATE OF HEARING:  6 FEBRUARY 2006

DATE OF JUDGMENT:  17 MARCH 2006

JUDGMENT OF THE FULL COURT

Appearances:             Mr G Watkins of counsel, instructed by Johnson Horsley Lawyers, 63A Market Street, Wollongong, NSW, 2500 appeared for the Appellant Husband

Mr C Simpson of counsel, instructed by Kells The Lawyers, 83-85 Market Street, Wollongong, NSW, 2500 appeared for the Respondent Wife

Name of Appeal	D and D
Appeal Number	EA 52 OF 2005
Date of Appeal Hearing	6 FEBRUARY 2006
Date of Judgment	17 MARCH 2006
Coram	WARNICK, MAY AND BOLAND JJ

Catchwords:      
APPPEAL – FROM DECISION OF FEDERAL MAGISTRATE

PROPERTY SETTLEMENT – JUST AND EQUITABLE – The orders divided a net asset pool of $343,550, 55% to the wife, 45% to the husband – The two major “assets” in the pool were the former matrimonial home, having a net value of approximately $187,000 and the husband’s superannuation interest of $170,000 – The orders of the Federal Magistrate effectively saw the wife receive all (or more) of the realisable assets and the husband retain only his superannuation interest - Since the availability of orders under Part VIIIB where one party  might effectively receive a share of the superannuation interest of another party, consideration of the constitution or “mix” of assets with which each party will be left as a result of proposed orders would seem a necessary, if not critical, factor in determining the justice and equity of proposed orders in each case in which superannuation interest are involved – The decision about the mix of assets is a discretionary one – In the absence of evidence in support of the husband’s particular purpose or need for such cash as he might receive from a sale of the home and equal division of its proceeds and more particularly, in the absence of submissions on his behalf in support of this, the option which Her Honour exercised was well open to her.

PROPERTY SETTLEMENT – s 75(2) FACTORS – The Federal Magistrate found contributions to be 53% to the husband and 47% to the wife and made an adjustment on s 75(2) factors of 8% to the wife on the basis of a disparity of earning capacity and the wife’s ongoing care and control of a child of the marriage – No factual error by the Federal Magistrate is suggested – there is no reason to infer that, in making a comparison of gross incomes, her Honour in any way misled herself or gave inappropriate whether to the disparity of earning capacities which existed and would continue to exist.

Bellenden (formerly Satterthwaite v Satterthwaite) (1948) 1 All ER 343

Norbis and Norbis (1986) 161 FLC 91-712

Bennett and Bennett (1991) FLC 92-191

Coghlan and Coghlan (2005) FLC 93-220

Appeal dismissed.

1. On 15 April 2005 Sexton FM made orders disposing of an application for alteration of property interests between the parties.  In short, the orders divided a net asset pool of $343,550, 55% to the wife, 45% to the husband.  The two major “assets” in the pool were the former matrimonial home, having a net value of approximately $187,000 and the husband’s superannuation interest of $170,000.  Under the orders the wife retained the former matrimonial home as she had sought, provided she paid the husband $7,300.  The husband had sought an order for the sale of the home and division of proceeds equally, accompanied by an order for an equal splitting in respect of his superannuation.

2. The husband has appealed and these reasons relate to the disposition of that appeal.

3. While grounds of appeal and argument in support included a challenge to the learned Magistrate’s assessment of section 75(2) factors, counsel for the husband himself categorised the appeal as essentially one that challenged the justice and equity of orders which effectively saw the wife receive all (or more) of the realisable assets and the husband retain only his superannuation interest.

4. We will return to the grounds of appeal after setting out a short background taken from the reasons of the learned Magistrate and a summary of those reasons, and after reference to the principles applicable to the appeal.

5. Following discussion of the grounds we will address our conclusion overall and the consequences of that conclusion.

Background and summary of the reasons of the Federal Magistrate

1. At the trial, the parties who were aged respectively 41 and 42 years of age,  agreed that their contributions up until the time of separation were equal.  Neither party had contended that superannuation should be treated in any other way than included with other assets and liabilities in a single pool for division.

2. Argument before the learned Magistrate turned firstly upon whether the husband, as he contended, had made greater contributions in the period after separation and secondly as to the amount of a section 75(2) adjustment.  The husband contended for 55% in his favour on account of contributions, but conceded a 5% adjustment to the wife on account of section 75(2) factors.

3. The learned Magistrate concluded that contributions made post-separation up to the time of trial resulted in a 6% differential in favour of the husband, namely 53% to him and 47% to the wife.

4. As to section 75(2) factors, her Honour said:

   “33.  …I find the wife has a low income and had very limited capacity to meet any more than the most essential expenses after the breakdown of her marriage until May 2004. From that time, [Mr DU], the wife’s de facto partner, was able to share in day to day expenses.  However, [Mr DU] was required to support his 15 year old daughter and on his salary of about $22,000.00 a year, would not have been in a position to assist the wife to any significant extent.

   …

   48.    Both parties are in paid employment. The husband has secure and permanent employment [within the public service] earning over $73,000.00 a year. The wife works part time for [ICS] earning between $7,000 and $16,000 a year. The wife holds an Out of School Hours Certificate from TAFE and plans to enrol in a Diploma of Child Care for 18 months from July 2005, while continuing to work part-time. Her income is supplemented by Centrelink benefits. The wife hopes a Diploma will improve her chances of obtaining additional work. The husband has demonstrated an earning capacity of over six times that of the wife and the husband will continue to have a future maintainable capacity for employment that is superior to the wife. The wife will have the ongoing care of a 12 year old child of the marriage. The wife is living in modest circumstances which are unlikely to improve. This is the most significant of the Section 75(2) factors. I have made an adjustment in favour of the wife.

   49.    Both parties are living in de facto relationships. Neither of the parties’ new partners gave evidence in these proceedings. The husband deposed to his partner [Ms E] “sharing expenses of the household”. The husband deposed to [Ms E] earning $600.00 per week. The husband lives with [Ms E] in a home in her sole name at [F]. The husband gave evidence that his partner contributed towards a holiday to Bali for himself and the three children and herself and her two children for 10 days in March 2004. In or around October/November 2004 the husband entered into a joint loan arrangement with [Ms E] in the sum of approximately $234,000.00. The loan is secured by the property at [F]. The husband has guaranteed another loan to his daughter for the purchase of a car. The wife deposed to her partner, [Mr DU] working as a casual coach driver earning approximately $22,000.00 - $23,000.00 gross per annum. The wife deposed to the husband living in superior accommodation at [F] in comparison to her accommodation in the former matrimonial home in [WD]. I am satisfied the husband is living in superior financial circumstances to those of the wife.

   …

   51.    …The wife has an ongoing obligation to support [B]. Although the husband’s child support obligation will increase when his non-agency payments are reduced, the husband will be significantly better off paying child support without meeting mortgage repayments.”

5. Her Honour assessed section 75(2) factors as favouring the wife by 8%, making the ultimate adjustment 55% to her and 45% to the husband.

6. Passages of the learned Magistrate’s reasons relevant to her decision about the division between the parties of the realisable assets on the one hand and superannuation on the other will be discussed when addressing the relevant grounds.

Principles applicable to the appeal

1. This is an appeal from a discretionary judgment.  In so far as an appeal against such a judgment does not rely on a mistake of fact or error of principle, a failure to take account of a relevant consideration or the taking into account of an irrelevant matter, but challenges the propriety of the exercise of discretion, what Brennan J said in Norbis v Norbis 161 CLR 513; (1986) FLC 91‑712 at 75,178 is apposite:

   “The ‘generous ambit within which reasonable disagreement is possible’ is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community.  The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.”

2. To similar effect is what Asquith LJ said in Bellenden (formerly Satterthwaite  v Satterthwaite) [1948] 1 All.ER 343 at 345:

   “… It is, of course, not enough for the wife to establish that this court might, or would, have made a different order.  We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable.  It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.”

Grounds of appeal

1. The grounds of appeal ultimately argued were those contained in an amended Notice of Appeal filed 16 August 2005 save as adjusted by leave granted on unopposed application at the hearing of the appeal.  The consequence of that leave was that some of the grounds contained in the amended notice were abandoned (grounds 1(b), 3, 4 and 5) and two further grounds (7 and 8) added.

Grounds 1(a), 6 and 8

1. These grounds contain the challenge, based on the “nature” of the assets received or retained as a result of the orders appealed.

   “1.    Her Honour erred in, and failed to correctly apply, the four step process, as determined by Her Honour, collectively or individually as follows,

   (a)Her Honour erred in distributing to the parties pursuant to section 79(4) and Section 75(2) a net amount in excess of the amount Her Honour found to constitute the net pool of assets available for such distribution.

   …

   6.     Her Honour failed, and or incorrectly considered, and or misapplied her discretion when considering whether the Orders were just and equitable, collectively or individually as follows,

   (a)The justice and equity of the wife receiving a disproportionate share of the immediately available tangible assets [and/or receiving tangible assets pursuant to Her Honour’s Orders in excess of the tangible assets available for distribution] with the husband taking all of his property entitlements in superannuation, not realizable for many years.

   (b)The justice and equity of the financial implications of Her Honour’s Orders upon the husband in leaving the husband without any tangible immediately realizable property, but conversely leaving him with excessive debt.

   …

   8.     Her Honour erred in failing to take into account the justice and equity of the actual orders made, not just the underlying percentage division of the net value of the parties’ assets.”

2. Counsel for the husband confirmed that the complaints in these grounds did not raise any point of jurisdiction or power, along the lines that the effect of the order was to divide or provide to the wife more property than was in existence, but rather, the grounds encapsulated a challenge to the exercise of discretion as to the allocation of assets “in specie” between the parties.

3. Prior to the introduction of Part VIIIB of the Family Law Act (1975) (Cth) (“the Act”), the question of the justice and equity of orders which resulted in one party receiving all or the bulk of the realisable assets and the other retaining an interest in a superannuation fund frequently fell for consideration, and such deliberations have been frequently reported.  Of course, those deliberations took place in a context very different from that in which such cases are now heard.  It was then not possible to make an order in respect of the superannuation interests of one party whereby the other party might effectively receive a share of the superannuation interest. Since the availability of such orders following the introduction of Part VIIIB, consideration of the constitution or “mix” of the assets with which each party will be left as a result of proposed orders would seem a necessary, if not critical, factor in determining the justice and equity of proposed orders in each case in which superannuation interests are involved.

4. As the majority said in C and  C (2005) FLC 93-220:

   “59.  It may well be that if a superannuation interest is considered having regard to the matters in s 79(4) in a case where a splitting order has not been sought by either party, it will become clear to the Court on such consideration that the only just and equitable order which can be made in the particular case is a splitting order.  The Court can then afford the parties an opportunity to be heard in relation to such an order with the requisite notice being given to any trustees of the superannuation fund and a formal valuation according to the Regulations, if necessary, obtained.”

5. At the trial, simply because of the orders sought by each of the parties, the question of the appropriate “mix” of assets was alive before the learned Magistrate.  Her Honour dealt with the issue in this way:

   “56.  In the orders sought by the husband at hearing, he asked that the home be sold and the mortgage discharged. He asked that his superannuation entitlement be subject to a splitting order such that each party receive half the entitlement. Counsel for the husband made no submissions in relation to the issue of superannuation splitting and sale of the home against retention of the home by the wife. The wife asked that the husband transfer his interest in the home to her and that she discharge the joint loan and refinance. The wife deposed to [B] being settled in the home and to the two older children enjoying their contact time with her in the home. Counsel for the wife submitted that the husband would not be disadvantaged in the longer term if the wife were permitted to retain the home. Counsel submitted that although the husband would not be in a position to access his superannuation for many years, he was living in a secure relationship in a comfortable home, he had a good income which was likely to improve and an ability to borrow money. Counsel submitted that the husband had resources superior to those of the wife. His financial position would improve when he was relieved of the mortgage payments. In counsel’s view the husband would soon overcome any initial difficulties he may face being left with a superannuation entitlement, not yet available to him. On the other hand, the wife was unlikely to be in a position to own a home if the home was sold and the wife received a share of the husband’s superannuation entitlement.  (emphasis added)

   57.     I agree with counsel for the wife that the wife should be given the opportunity to remain in the matrimonial home. The home has a relatively modest value and the wife has the ongoing care of the youngest child of the parties. Although it will be difficult for the husband initially, I am satisfied with his greater disposable income once relieved of the mortgage payments, it will not be long before the husband’s position should markedly improve. I am satisfied the husband is in a secure relationship and has the benefit of living in his partner’s home and has her assistance with day to day living expenses.  He has borrowing capacity well beyond that of the wife. The husband will have debts to repay but in relation to the largest of these, the debt to his mother, there is no evidence before me to suggest the loan must be repaid immediately. On the orders I intend to make, the husband will receive some cash from the wife.”

6. As to some of the submissions recorded in the above paragraphs and attributed to counsel for the wife, her Honour had earlier found:

   “54.  The husband has been living with [Ms E] for about a year. He is sufficiently secure in that relationship to have entered into a very substantial loan arrangement with [Ms E]. The husband said in evidence he has built a deck at the front of [Ms E’s] home, located in a prime real estate area of [W]. I am satisfied the husband’s arrangements are secure.”

7. As counsel for the wife pointed out, a relevant matter also to be considered in relation to the sale of the former matrimonial home and militating against a sale, were the costs of sale which would mean a reduction in an already modest asset pool. 

8. Counsel for the wife advised us (and counsel for the husband did not say otherwise) that there had been no evidence before the learned Magistrate of any particular purpose or need for which the husband would use such cash as he might receive from a sale of the home and equal division of its proceeds.  Nor was there evidence of the husband’s intentions with regard to an age of retirement.

9. There will no doubt be cases in which close consideration and discussion of factors to be taken into account when deciding on division of assets, including superannuation, “in specie” is necessary.  Indeed, guidance from the Full Court may be highly desirable.  This is not the case for that discussion.

10. The decision about the mix of assets was a discretionary one.  In our view, in the absence of evidence in support of the orders that the husband sought and more particularly in the absence of submissions on his behalf to support the form of those orders, we consider that the option which her Honour exercised, having regard to what we earlier said of the principles applicable to this appeal, was well open to her.

11. In so far as these grounds raise any question of the adequacy of her Honour’s reasons, (which was not expressly argued), it is appropriate to bear in mind what was said by the Full Court of the Family Court in Bennett v Bennett (1991) FLC 92-191 at 78-267:

    “We stress that we are not suggesting that reasons must be extensive.  Their adequacy must frequently be judged by reference to the issues raised by the parties at trial. …”

12. Again, having regard to the way in which the case of the husband was conducted, we consider her Honour’s reasons at least adequate.

13. We find no merit in these grounds.

Grounds 2 and 7

1. These grounds relate to the challenge to the assessment of section 75(2) factors.

   “2.    Her Honour erred in adjusting the wife’s entitlements under section 75(2) by 8% was manifestly unjust in that it did not give sufficient weight, collectively or individually to the following factors

   (a)     The wife’s actual and potential earning capacity

   (b)The husband’s significantly greater liabilities affecting his financial circumstances

   (c)The husband’s responsibility for caring for [C] and paying child support for [B]

   (d)The financial benefit to the wife of living in a secure, permanent relationship.

   …

   7.       Her Honour erred in failing to take account of a relevant matter, that is the husband’s tax and child support obligations in the calculation of the parties’ respective incomes which resulted in a calculation of the parties’ respectful [sic] financial positions as being incorrect.”

1. At the outset it may be recognised that an appellant would normally have a large hurdle to leap to persuade an appellate court that when at trial a 5% weighting in the wife’s favour on account of section 75(2) factors was conceded, an award of 8% for those factors was manifestly unjust.  Indeed, this part of the appeal was much more lightly pursued than the challenge to the mix of assets.

2. Counsel for the husband was critical of the learned Magistrate’s comparison of the husband’s income and capacity to earn with that of the wife.  As set out earlier, her Honour had said:

   “48.  …The husband has demonstrated an earning capacity of over six times that of the wife.…”

3. This was true on a comparison of gross incomes.  However, counsel argued that, as ground 7 maintains, her Honour failed to take account of the husband’s taxation and child support obligations.  In his written submissions counsel set out some figures, deducting taxation and child support paid from the husband’s gross salary and adding to the upper estimate of the wife’s income, the child support paid.

4. However, in respect of those calculations, counsel at the outset advised us that the husband’s child support was in fact only some $8,400 approximately per annum, not the $12,000 per annum used in the example.  Also, we note that the figures used by counsel for the husband took the wife’s income at the higher end of the parameters rather than an average and of course, if child support is to be added to a person’s income, then the amount of that support expended on the child must receive some recognition, though for consistency, the husband should also receive recognition for the support of the child in his care.  On the other hand, the child in the care of the husband was some 3 years older than the child in the care of the wife and the husband might therefore be expected to be freed of child care costs for that child earlier than the wife would be freed of the cost of care of the younger child residing with her.

5. The point of these remarks is that the availability of an exercise such as set out by the husband’s counsel does not mean of itself that if the exercise is not performed, but some other basis of comparison is used, error has been made.  We accept, subject to what we have said in the preceding paragraph, that the comparison developed by counsel for the husband represents a way of addressing the comparative positions of the parties.  Equally open however, would be an exercise which endeavoured to ascertain the surplus income available to each of the parties, after meeting reasonable and necessary commitments for their own support and those of the child in the care of each.  The percentage comparisons will likely vary dramatically between paradigms, and it is important that the limitations of each demonstration be appreciated.

6. Her Honour’s consideration of section 75(2) factors was earlier set out.  Apart from the comparison just referred to, other comments on the earnings and earning capacities of each party included:

   “33.…I find the wife has a low income and had a very limited capacity to meet any more than the most essential expenses after the breakdown of her marriage until May 2004…”

   …

   48.…The husband has secure and permanent employment…earning over $73,000.00 a year.  The wife works part time…earning between $7,000 and $16,000 a year. … The husband has demonstrated an earning capacity of over six times that of the wife and the husband will continue to have a future maintainable capacity for employment that is superior to the wife…”

7. No factual error is suggested in these findings themselves and we see no reason to infer that, in making a comparison of gross incomes, her Honour in any way misled herself or gave inappropriate weight to the disparity in earning capacities which existed and would continue to exist.

8. Again, having regard to the applicable principles, we are not satisfied that there is any merit in these grounds.

Conclusion

1. It follows from our discussion of the grounds that, no merit being found in any of them, the appeal must be dismissed.  We will make directions for any applications for costs to be made by way of written submissions.

2. As we understand, the parties are agreed that order 1 of the orders of the Federal Magistrate, requiring the wife to pay $7,300 to the husband within 2 months of the date of those orders, is to be amended so that that sum is payable 2 months from this day.

ORDERS

1. That, save that order 1 of the Orders of the Federal Magistrates Court of Australia made 15 April 2005 be, by consent, amended so that payment referred to therein be made by the wife within 2 months of the date of these orders, the appeal be dismissed.

2. That either party be at liberty to make an application by way of written submissions in respect of costs incurred by him or her in relation to the appeal by filing such submissions at the Eastern Region Appeal Registry of the Family Court of Australia and serving them on the other party within 21 days of the date hereof.

3. That the other party have a further 14 days in which to make written submissions in answer thereto by filing such submissions at the Eastern Region Appeal Registry of the Family Court of Australia and serving them on the other party.

4. That either party be at liberty to reply to an answer by way of written submissions by filing such reply at the Eastern Region Appeal Registry of the Family Court of Australia and serving them on the other party within a further 7 days.

5. That each party endorse on the cover sheet of the written submission the date on which a copy of that submission was served on the other party.

I certify that the  preceding 38
 Paragraphs are a true copy of the reasons for judgment delivered by this
Honourable Full Court.
Sgnd:  ………………

Associate