Daines & Daines
[2014] FamCAFC 61
•11 April 2014
FAMILY COURT OF AUSTRALIA
| DAINES & DAINES | [2014] FamCAFC 61 |
| FAMILY LAW – APPEAL – PRACTICE AND PROCEDURE – where the trial judge purported to make orders on a “final basis” effecting a property settlement between the parties – where the “orders” purporting to effect a distribution between the parties did not alter the legal or equitable interests of the parties and were wholly unenforceable – whether the “orders” constituted a “decree” for the purposes of s 94AAA(1) of the Family Law Act 1975 (Cth) – where the “orders” were not “orders” for the purposes of s 79 of the Act and were not a “decree” for the purposes of s 94AAA(1) – where the appeal is incompetent – where, however, subsequent orders made by the trial judge can be seen to be orders effecting a property settlement between the parties – where the challenge on appeal relates to the reasons given at the same time as the ineffectual “orders” – where the subsequent orders give effect to those reasons –where the appeal can proceed as if it was from the second set of orders. FAMILY LAW – APPEAL – PROPERTY – where the appellant husband contends that the trial judge conflated ss 79(2) and 79(4) – where each of the parties proposed orders altering their existing legal interests – where this is one of “many cases” in which the s 79(2) requirement was readily satisfied – where no error demonstrated in the trial judge’s approach. FAMILY LAW – APPEAL – PROPERTY – CONTRIBUTIONS – where the appellant husband contends that her Honour’s discretion miscarried as a result of her findings regarding the parties’ contributions were “plainly wrong” – whether the trial judge’s decision was “plainly wrong” – where the appellant contends the trial judge erred in findings made regarding his earning capacity – whether the trial judge so erred – where no error demonstrated. FAMILY LAW – APPEAL – PROPERTY – where the appellant contends the trial judge failed to consider whether the orders ultimately made were just and equitable in all of the circumstances – where the orders made were not only as agitated by the parties, but were the only orders that could be made in the circumstances of this case – where no error demonstrated – appeals dismissed – appellant ordered to pay the respondent’s costs. |
| Family Law Act 1975 (Cth) |
| Ah Toy v Registrar of Companies for the Northern Territory (1985) 61 ALR 583 Allesch v Maunz (2000) 203 CLR 172 Bevan & Bevan (2013) FLC 93-545 Coghlan & Coghlan (2005) FLC 93-220 Mickelberg v R (1989) 167 CLR 259 Mullane v Mullane (1983) 158 CLR 438 Wang v State of New South Wales [2011] NSWCA 321 Willis & Willis [2007] FamCA 819 |
| APPELLANT: | Mr Daines |
| RESPONDENT: | Ms Daines |
| FILE NUMBER: | SYC | 3797 | of | 2011 |
| FIRST APPEAL NUMBER: | EA | 136 | of | 2012 |
| SECOND APPEAL NUMBER: | EA | 16 | of | 2013 |
| THIRD APPEAL NUMBER: | EA | 37 | of | 2013 |
| FOURTH APPEAL NUMBER: | EA | 38 | of | 2013 |
| DATE DELIVERED: | 11 April 2014 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ainslie-Wallace, Murphy and Loughnan JJ |
| HEARING DATE: | 2 October 2013 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 19 September 2012, 7 December 2012, 4 March 2013 and 21 March 2013 |
| LOWER COURT MNC: | [2012] FMCAfam1014, [2012] FMCAfam 1486, [2013] FMCAfam 217 and [2013] FMCAfam 292 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Sansom |
| SOLICITOR FOR THE APPELLANT: | Price & Company, Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Miller |
| SOLICITOR FOR THE RESPONDENT: | Robyn Sexton & Associates, Solicitors |
Orders
That appeal EA 136 of 2012 be dismissed.
That appeal EA 37 of 2013 be dismissed.
Each of the parties shall, within twenty-eight (28) days of the date of these orders file such written submissions as they might choose in respect of appeals EA 16 of 2013 and EA 38 of 2013, limited in length to five pages.
The remaining issues in each of appeals EA 16 of 2013 and EA 38 of 2013 shall be determined by this Full Court on the papers unless, within the written submissions provided for in paragraph 3 of these Orders, one or both parties request an oral hearing and provide submissions in support of that request.
In the event the appellant fails to file written submissions in respect of
either or both appeals EA 16 of 2013 and/or EA 38 of 2013 within the time specified, either or both appeals as the case may be shall be deemed abandoned.
Each of the parties shall, within twenty-eight (28) days of the date of these orders file such written submissions as they might choose in respect of the costs of the appeals, limited in length to five pages.
The issue of the costs of the appeals shall be determined by this Full Court on the papers unless, within the written submissions provided for in paragraph 6 of these Orders, one or both parties request an oral hearing and provide submissions in support of that request.
In the event that the parties reach agreement about any or all of the issues outstanding between them, including but not limited to the issue of costs, they shall file with the Appeals Registrar a minute or minutes of the orders consented to and shall be at liberty to do so by email jointly.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Daines & Daines has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Numbers: EA 136 of 2012; EA 16 of 2013; EA 37 of 2013; and, EA 38 of 2013
File Number: SYC 3797 of 2011
| Mr Daines |
Appellant
And
| Ms Daines |
Respondent
REASONS FOR JUDGMENT
Four separate appeals are brought by the husband against orders made by Judge Cassidy emanating from proceedings for settlement of property.
On 19 September 2012, her Honour made orders which indicated an intention to distribute the parties’ property and superannuation interests in the proportion 62.5 per cent to the wife and 37.5 per cent to the husband. There is an issue in this appeal whether in fact her Honour made orders capable of being appealed on that date. The husband has appealed those “orders” (EA 136 of 2012). For convenience, this will be referred to as “the first appeal”.
The husband subsequently sought a stay of her Honour’s “orders” pending the present appeal. The wife, in turn, applied for her costs of the substantive proceedings and the costs of the stay application. Her Honour refused the stay and ordered that the husband pay the wife’s costs of the substantive proceedings, the costs application and the application for a stay. The orders for costs are the subject of appeal EA 16 of 2013 (“the second appeal”).
Later again, issues arose in respect of the implementation of the 19 September 2012 “orders” and their terms. On 4 March 2013, after a hearing on 19 and 21 February 2013 (after the filing of the Notice of Appeal in the first appeal), her Honour made a number of orders described as being necessary to “…perfect the form of the orders that I made on 19 September 2012 in relation to superannuation and non-superannuation assets.” The March 2013 orders are the subject of appeal EA 37 of 2013 (“the third appeal”).
Her Honour subsequently ordered that the appellant husband pay the respondent wife’s costs of the hearing on 19 and 21 February 2013. That order is the subject of appeal EA 38 of 2013 (“the fourth appeal”).
The Grounds of Appeal in the Four Appeals
Many of the issues about to be discussed have ramifications in all four appeals and it is, therefore, convenient to set out the grounds relied upon in each at the outset.
The appellant’s Notice of Appeal in respect of the first and third appeals was amended within the appellant’s summary of argument. No point was taken in respect of the amendment and the respondent’s written outline responded to the grounds as amended.
The Grounds in the First Appeal (EA136/2012)
The Notice of Appeal filed in the first appeal contained ten grounds. Amendment reduced those grounds to two as follows:
1. The trial judge erred in principle in that:
(a)her Honour failed to identify the legal and equitable interests of the parties in the property of the parties identified by her,
(b)her Honour failed to consider in a principled way whether it was just and equitable to alter the legal and equitable interests of the parties in such property,
(c)her Honour conflated the consideration of S79 (4) and S75 (2) [sic; the written submissions make plain that should be “s 79(2)”] of the Family Law Act 1975 (Cth) (“the Act”),
(d)her Honour failed to consider how the division of the property of the parties might be achieved, and thereby precluded any, or any proper determination of the justice and equity of the proposed division of property.
2.The trial judge erred in the exercise of her discretion pursuant to S75 (2) of the Act in that:
(a)the adjustment in favour of the respondent determined by her Honour did not [sic] produce a “difference” of 25% in the respective entitlements of the parties rather than the 12.5% “difference” suggested by her Honour (at para 64 of her Reasons for Judgement)
(b)the basis of the quantification of such adjustment suggested by her Honour was erroneous
(c)the adjustment in favour of the respondent determined by her Honour exceeded the ambit of a reasonable exercise of discretion.
The Grounds in the Second Appeal (EA16/2013 – Orders of 7 December 2012)
The grounds relied upon in the second appeal are:
1.The Court erred in ordering that the Husband pay the costs of the proceedings by Order made 7th December 2012 in circumstances where the Court had already taken into account the wife’s costs of $66,000 within the balance sheet and a much lesser (and apparently incomplete) figure of $19,430 for the husbands [sic] costs and in circumstances where the Court could not ascertain where the burden of those costs fell as between the parties and further without making findings as to the relative capacity of the parties to bear those costs, and prior to the hearing of this Appeal without at least linking the making of such order to the Appeal or granting the husband leave to revisit that question of whether the order is appropriate upon the completion and subject to the appeal.
The Grounds in the Third Appeal (EA37/2013 – Orders of 4 March 2013)
As amended, the grounds in the third appeal are as follows:
1.The Court erred in the making of its purported Order of 4 March, 2013, in circumstances where the Courts [sic] power had been “spent” by the making of its property order of 19th September, 2012 and/or the Court was “functus officio” (noting that the parties await written reasons);
2.Alternatively to paragraph 9 [sic] hereof, the Court erred in making various of the parts of its purported Order of 4 March, 2013 without evidence or findings and without providing any reasons in its Judgment delivered 19th September, 2012 or to date, at all.
3. The trial judge erred in principle by:
(a)failing to determine that altering the legal and equitable interests of the parties was just and equitable.
(b)conflating her Honour’s consideration of S79(4) and S79(2) of the Act.
The Grounds in the Fourth Appeal (EA38/2013 – Orders of 21 March 2013)
Relevantly, the fourth appeal has only one ground:
1.The Court erred in the making of any order against the husband as the further costs incurred by both parties were incurred as a result of the Courts [sic] failure to make proper or appropriate Orders ending the parties financial relationship on 19th September, 2012 and in respect of such proceedings the Court was “functus officio” and otherwise its power “spent” by the making of the order of 19th September, 2012.
Is the First Appeal Incompetent?
On 19 September 2012, her Honour made “orders” in the following terms:
THE COURT ORDERS ON A FINAL BASIS:
(1)That the husband and the wife do all acts and things and sign all documents to effect a distribution of the non-superannuation assets in Pool 1 (annexed and marked “A”) to the parties as follows:
(a) 62.5% to the wife; and
(b) 37.5% to the husband.
(2)That the husband and the wife do all acts and things and signs all documents, including serving the relevant trustee, to effect a distribution of the superannuation assets in Pool 1 (annexed and marked “A”) to the parties as follows:
(a) 62.5% to the wife; and
(b) 37.5% to the husband.
(3)That the wife retain the property in Pool 2 (annexed and marked “A”) to the exclusion of any claim by the husband.
(4)That the parties are at liberty to relist the matter on the giving of seven (7) days notice in relation to the operation of these Orders or in relation to any issue in relation to the distribution of the parties’ chattels.
Annexure “A”
Asset Pool 1
Description Value ASSETS Joint [L property] $1,400,000 Joint Toyota … motor vehicle $5,000 Husband Honda … motor vehicle $4,000 Husband Boat and trailer $6,000 Wife St George Savings Account $17 Husband Westpac Savings Account $1,352 Husband [B] Pty Ltd $11,079 Husband Shares (3,000 at $1.65) $4,950 Wife Shares (1,228 at $3.78) $4,642 Wife Jewellery $5,500 Husband Jewellery and watches $500 Joint Furniture and contents $9,000 Total $1,452,040 ADDBACKS Husband Paid Legal Fees $21,500 Wife Paid Legal Fees $1,518 Wife $5,000 received from mortgage account post-separation NIL Total $23,018 LIABILITIES Joint [L property] $57,803 Wife Line of Credit $18,227 Husband Altitude Qantas credit card $60 Husband Altitude Qantas credit card $1,337 Husband Westpac MasterCard NIL Wife Altitude Qantas credit card $6,695 Husband Unpaid legal fees $19,430 +WIP Wife Unpaid legal fees $66,000 Total $169,552 +WIP SUPERANNUATION Member Name of Fund Type of Interest Value Husband [H Superfund] Accumulation $190,727 Wife [W Superfund Accumulation $65,331 Total $256,058 Total Nett Pool for Pool 1 $1,561,564
Asset Pool 2
Owner Description Value Wife [Q property] $86,000 Total Nett Pool for Pool 2 $86,000
No issue was raised by the respondent regarding the competence of the first appeal. However, if error is detected as to a matter of substance, it must be corrected. For the following reasons, we consider that the appeal is incompetent.
Were the 19 September 2012 “Orders” a “Decree” for the Purposes of s 94AAA?
Pursuant to s 94AAA(1) of the Family Law Act 1975 (Cth) (“the Act”) an appeal lies to the Family Court “from a decree of the Federal Circuit Court [formerly the Federal Magistrates Court] of Australia exercising original jurisdiction under this Act”. “Decree” is defined in s 4(1) of the Act as a “decree, judgment or order”, including “an order dismissing an application” or “a refusal to made a decree or order.” No authorities have been located which deal directly with the issue of whether her Honour’s “orders” might be a “decree” for the purposes of s 94AAA. Authority does, however, illuminate the meaning of “judgment” for the purposes of similar legislation providing a right of appeal.
Although “judgment” is not defined in the Act, it is an expression used in section 24(1) of the Federal Court of Australia Act 1976 (Cth) (“FCAA”). That section confers jurisdiction on the Federal Court to hear appeals from “judgments” of various courts, including the Federal Circuit Court. “Judgment” is defined in s 4 of the FCAA as “a judgment, decree or order, whether final or interlocutory…”
The meaning of “judgment” in s 24(1) of the FCAA has been considered in a number of cases including, perhaps most notably, in Ah Toy v Registrar of Companies for the Northern Territory (1985) 61 ALR 583. In Ah Toy, Toohey, Morling and Wilcox JJ, after discussing a number of authorities, held (at 588-589):
Unless there is a “judgment, decree or order”, there is nothing against which an appeal may be brought…
…
These dicta make it clear that reasons for judgment are not of themselves judgments, that a judgment must be binding upon parties and definitive of their rights and that a judgment is the formal order whereby a court disposes of the matter before it. It is not enough that, in conducting an inquiry under s 278 of the Companies Act, the Chief Justice was exercising judicial powers; it may be accepted that he was doing so. The question rather is whether what the appellant seeks to appeal against, in the various paragraphs of his notice of appeal, is a judgment of the Supreme Court of the Northern Territory.
(Bold emphasis added).
Ah Toy was recently considered in Wang v State of New South Wales [2011] NSWCA 321. Campbell JA considered the meaning of “judgment or order” and held, relevantly:
23.…A “judgment or order” in this context means an operative judicial act, ie the formal judgment or order which when entered is binding on the parties and definitive of legal rights: …
…
While error in a judgment or order might be demonstrated on an appeal by showing error in a judge’s reasons for judgment, the appeal is against the judgment or order, not the reasons for judgment…
(Authorities and citations omitted; Bold emphasis added).
Special leave against that decision was refused by the High Court, with Hayne and Crennan JJ observing that “[t]here is no reason to doubt the correctness of the decision of the Court of Appeal below” (Wang v State of New South Wales [2012] HCASL 10 at [4]).
There are real similarities in the meanings of “decree” as used in the Act and “judgment” as used in the FCAA. Both pieces of legislation were enacted relatively contemporaneously. The statements in Ah Toy and Wang support a similar meaning being given to the expressions. We are, then, prepared to hold that there is, relevantly, no difference of substance between “decree” as used in the Act and “judgment” as used in the FCAA.
By reference to those authorities, we consider that paragraphs 1 and 2 of the orders of 19 September 2012 were not a “decree”, “judgment” or “order” for the purposes of s 94AAA(1) of the Act; they were not “binding” on the parties in that they were utterly unenforceable, and they were certainly not “definitive of [the parties’] legal rights.”
The 10 September “Orders” as s 79 Orders
Further support for the proposition just advanced can be found in what Mason ACJ, Wilson, Brennan, Deane and Dawson JJ said in Mullane v Mullane (1983) 158 CLR 438 (at 445): “…s 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them…”
An “order”:
That the husband and the wife do all acts and things and sign all documents to effect a distribution of the non-superannuation assets in Pool 1 (annexed and marked “A”) to the parties [in the proportion determined by her Honour to be just and equitable]…
or:
That the husband and the wife do all acts and things and signs all documents, including serving the relevant trustee, to effect a distribution of the superannuation assets in Pool 1 (annexed and marked “A”) to the parties [in the proportion determined by her Honour to be just and equitable]…
does not “…work an alteration of the legal or equitable interests…” of the parties; it is not possible to discern what is to become of the legal and/or equitable interests of the parties in the property listed in Annexure A.
In contrast, an order that “…the wife retain the property in Pool 2 (annexed and marked ‘A’) to the exclusion of any claim by the husband” is amenable to being described as working an alteration of, at the least, the husband’s “equitable interests” in respect of that property.
As the preceding consideration of Ah Toy, Wang and Mullane makes plain, the “orders” made by the trial judge on 19 September 2012 were, despite being (wrongly) characterised as such, not final orders pursuant to s 79. There was no “decree” from which an appeal – a right referenced solely to the terms of the Act – could be brought.
The conclusion that the orders of 19 September 2012 were, at least in respect of paragraphs 1 and 2, neither “orders” nor a “decree” for the purposes of, respectively, s 79 and s 94AAA, also draws support from the fact that, as her Honour herself observed, paragraph 2 of the orders made on 19 September 2012 did not comply with Part VIIIB of the Act since “…s 90MS(2) makes it clear that the Court cannot make an order in relation to a superannuation interest except in accordance with Part VIIIB” and “…superannuation interests will not be able to be divided as is property generally, for the purposes of Part VII…” (Coghlan & Coghlan (2005) FLC 93-220 at [44], per Bryant CJ, Finn and Coleman JJ and at [90], per Warnick J).
Consequences for the First Appeal
There are a number of consequences for the first appeal flowing from the matters just discussed.
First, the appeal, in so far as it purports to challenge paragraphs 1 and 2 of the orders of 19 September 2012, is incompetent.
Secondly, and consequentially, the orders giving effect to the reasons of 19 September 2012 are, in fact, the 4 March 2013 orders. As a result, the challenges as to the justice and equity of the 19 September “orders” made in the first appeal must in fact be properly directed to the 4 March 2013 orders.
Consequences for the Third Appeal
The findings just outlined pertain not only to the first appeal.
A further, significant, consequence is that her Honour cannot have been, as the appellant asserts, functus officio when she made what were plainly the final orders pursuant to s 79 on 4 March 2013; her Honour can only have been functus if final orders were made on 19 September 2012 and they were not.
That has the necessary consequence that ground 1 of the third appeal fails. Grounds 2 and 3, however, are unaffected by that determination and will be considered later in these reasons.
That aspect of the third appeal, and the appellant’s arguments in respect of it before this Court, has a troubling context. The appellant husband seeks by ground 1 in the third appeal to challenge what her Honour did on 19 September despite her Honour herself warning his then counsel that the “orders” made that day would have the effect which has just been outlined (albeit that, despite this, her Honour used the expression “orders on a final basis” in the 19 September 2012 “orders”). Her Honour said this in an exchange with the appellant’s then counsel:
HER HONOUR: …So just before I commence with the substantive applications, as I understand it, there was – and there is indeed emails – the form of order that was submitted by the application wife [sic], and I understand that it adopts the husband’s proposal with respect to chattels and has dealt with all of the superannuation issues that I was concerned – you know, the splitting issues about notifying the trustee and the like.
…
HER HONOUR: [in an exchange with the husband’s legal representative]… I asked you to settle the orders that you’re going to appeal. So you need to have, for the Full Court to decide whether it is just and equitable or not, a set of orders to give them. You haven’t got that at the moment. The ones that are annexed to the wife’s case document that was emailed at about yesterday afternoon, or the afternoon before, sets out order 1 in relation to the property at [L], order 2 in relation to the super split, order 3 in relation to procedural fairness of [H superfund], the operative time in order 4 – I wouldn’t have thought there would be anything in dispute about those. The [Toyota] car, the signing the documents with respect to the interest in the share capital of [B] Pty Ltd and the various orders in relation to going through to order 16. Now, if you don’t have instructions with respect to those 16 orders, I will ask you to get those…
…
HER HONOUR: All right. Yes. All right. Well, look, I just – you’ve got to get those orders, otherwise you will be waiting for your appeal. They – I mean, they have to know what it is you’re appealing. There’s nothing.
(Transcript of proceedings, 9 November 2012, pp 12-13. Emphasis added).
The profound significance of that extract in the context of the appellant’s challenge in the third appeal based on her Honour being functus cannot be overstated. Yet, staggeringly, no reference at all was made to that portion of the transcript in either the written or oral submissions made on behalf of the husband in this appeal. It might be said that the husband’s appeal counsel did not appear at the trial. Neither did we. The appellant’s counsel had access to (at least) the same materials as us. Despite this, our reading of the transcript revealed readily the crucial matter just outlined.
Consequences for the Challenges Embraced in the First Appeal Grounds
The grounds in the first appeal assert significant injustice and a failure to observe fundamental requirements of s 79 and raise issues of potential significance.
Given that the issue regarding whether the 19 September 2012 “orders” were, in fact, “orders” or a “decree” for the purposes of s 94AAA was not raised on appeal, and in light of the fact that the challenges mounted in the first appeal pertain to the reasons of 19 September 2012, we will proceed to consider the first appeal as if the orders appealed from were the orders of 4 March 2013.
The Amendments – s 79(2) and Stanford
The amendments to the grounds in the first and third appeals can be seen to emanate from what was said by the High Court in Stanford v Stanford (2012) FLC 93-518. Stanford was not decided at the time of her Honour’s judgment.
This Court applies the law applicable at the time of trial in assessing if error of law is established and applies the law (and facts) as at the time of the hearing of the appeal in the event that this Court decides to exercise for itself the relevant discretion (see, for example, Allesch v Maunz (2000) 203 CLR 172 at [23], per Gaudron, McHugh, Gummow and Hayne JJ; and, Mickelberg v R (1989) 167 CLR 259 at 278, per Deane J). However, Stanford made clear matters arising from the Act itself. The argument is, then, that her Honour erred by not applying the terms of the Act in the manner elucidated by the decision and, as a result, the error arises from a misapplication of the Act.
Nothing to which the Court was taken in written or oral argument is persuasive of any such error. The circumstances of this relationship are entirely different to the unusual circumstances in Stanford (and, also, in the later decision of this Court in Bevan & Bevan (2013) FLC 93-545 which discussed extensively the principles emerging from the decision of the High Court).
We are not persuaded by the argument that sought to address issues of justice and equity by reference to what is sometimes called “the fourth step” in the application of s 79. With respect, we consider the argument misconstrues any principles that might be applicable to such arguments with an entirely different issue addressed in Stanford, namely, the justice or equity of making any order at all; an enquiry arising from s 79(2) of the Act.
To the extent that the argument by counsel for the husband extends more broadly in challenging her Honour’s asserted failure to address s 79(2), it should be observed that each party put before her Honour a common list of the property of the parties or either of them; did not raise any contentions as to any equitable interests; and, importantly, each party contended for orders adjusting those existing property interests. Conversely, and significantly, neither party suggested to her Honour that no adjustment to those interests should be made by reason of s 79(2).
Counsel for the appellant was unable to suggest what her Honour ought to have done that was not done in addressing the question posed by s 79(2). That inability is understandable – indeed self-evident – in light of the case which each party ran before her Honour as just outlined. Those matters echo, relevant to the facts of this case, what the High Court said in Stanford at [42]:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
The result is that we can see no merit in ground 1 in the first appeal nor in the added grounds 3(a) and (b) in the third appeal.
The Remaining Challenges Central to the Four Appeals
No challenge is made to any factual findings by her Honour. No challenge is made to the findings as to the property of the parties or either of them or its value or the superannuation interests of the parties or their amount. So, too, no challenge is mounted to her Honour’s ultimate conclusion that, taking into account all of the contributions of differing types made by each of the parties, contributions should be assessed as equal.
Against that background and leaving aside the issues arising from s 79(2) and the decision in Stanford just discussed, (and any issues specific to the challenge to the costs orders to which we shall return), counsel for the husband agreed that the arguments in all of the appeals boiled down to two essential propositions.
First, it is said that her Honour’s adjustment of 12.5 per cent in favour of the wife in respect of s 79(4)(e) (the so-called “s 75(2) factors”) fell outside the bounds of a reasonable exercise of discretion. That error is said to emerge “in large part” from, or be illuminated by, erroneous findings as to the respective earning capacities of each of the parties. That is the gravamen of the first appeal.
The second proposition, which has already been disposed of, was that her Honour was functus officio when she purported to make the further final orders of 4 March 2013.
The First Appeal – the Challenge to the s 75(2) Adjustment
As can be seen, Grounds 2(a) and (b) challenge, in terms, a finding said to have been made at [64] of her Honour’s reasons. It appears the reference should be to [63]. Her Honour there said this:
63.Having regard to the guidelines in In the marriage of Clauson & Clauson (1995) FLC 92-595, I must, in assessing any adjustments for relevant s.75(2) factors, consider the real impact in money terms and not operate within artificially delineated boundaries. A difference of 12.5% is $195,195.00. This is not much more than one year’s income when the husband’s practice was successful.
(Bold emphasis added).
The appellant husband concedes that an adjustment in favour of the wife was warranted on the evidence before her Honour (appellant’s written outline, p 5.5). It is argued that “a balanced reading of the trial judges [sic] reasons (… [62] – [63] …) renders apparent that her Honour intended by the s 75(2) adjustment as determined by her to effect a ‘difference’ in the entitlements of the parties of $195,195 [i.e. 12.5 per cent]” whereas what in fact her Honour ordered represented a difference of 25 per cent.
We disagree; that her Honour did not intend a “difference” of 12.5 per cent is, contrary to that which is submitted, readily apparent on a balanced reading of her Honour’s reasons and the context within which [63] quoted above appears:
62.The wife, because of the two pool approach that I have taken in this matter, has the benefit, ultimately, of a reversion interest in a property that her brother holds the life estate in, in Western Australia. Certainly, it is something that she may ultimately benefit from, or as her counsel submitted, if she doesn’t, the parties’ daughter will. I see it as a factor that offsets, to a certain extent, the difference in earning capacity. However given the wife’s age and state of health, as well as the difference in their earning capacity, I am satisfied that, under the provisions of s.75(2), there should be an increase in favour of the wife of 12.5%.
63.…
Just and Equitable Orders
64.As a result of my conclusions in this matter, I consider that a just and equitable outcome between the parties is a property division in favour of the wife in percentage terms as 62.5% and 37.5% to the husband for Asset Pool 1. The wife will retain the whole of Asset Pool 2 which is the reversion interest in the property that was left to her by her mother that is encumbered by the life interest that her brother enjoys.
(Emphasis added).
The reference to an “increase” of 12.5 per cent can only be by reference to the earlier finding that contributions should be assessed as equal as [64] of the reasons makes plain. The reference to the dollar value of the “difference” in [63] rather than to the adjustment in that amount is plainly an oversight not otherwise infecting either the reasoning or the outcome.
The appellant’s written argument goes on to contend that, if a difference of about $390,000 was intended by her Honour (as in our view it plainly was) the assessment reflected by that difference “…exceeded the generous ambit of her Honour’s discretion.”
The concession, properly made, as to the ambit of her Honour’s discretion embraces the truism that the fact that any of the members of this Court, or any other judge of the court, may have arrived at an adjustment less generous to the wife than that arrived at by the trial judge does not lead to the conclusion that her Honour was “plainly wrong”, the result being “no proper exercise of [her] judicial discretion” (Gronow v Gronow (1979) 144 CLR 513 at 519).
Her Honour’s discussion of the section 75(2) factors was brief. Her Honour then referred (at [57]) to what she described as “the single most important factor” being the “…difference in income and earning capacity between husband and the wife.” Her Honour continued:
57.…In the husband’s annexures to his affidavit, and in particular annexure 25, it is apparent that the husband’s income has continued to increase from when he started his practice as an architect until about 2010. In 2010 the gross income was $140,122.00. The preceding year $139,671.00. The preceding year prior to that $109,474.00. In 2011, it then dropped to $40,386.00 and it is even less this year.
…
60.In the present case I am satisfied that the husband has an earning capacity that is greater than the wife’s. He is an architect. The husband says that there has been a downturn in his business over the last two years. This happened to coincide with the parties’ separation. The wife says that the husband has been working long hours in his office and certainly, the husband took out insurance to cover all aspects of his profession as an architect and paid that insurance as recently as July 2012.
61.The professional insurance that the husband took out on 9 July 2012 is indemnity insurance that covers any work that he does in architecture, design management, project management, interior design or tenancy coordination. The husband has had a particular area of expertise in retail coordination. In cross-examination, it was apparent that the husband has done other work in areas including designing homes and interiors of homes. In my view there is sufficient evidence to support a finding that the husband has an earning capacity as a consequence of that and his history of earning. I accept that the husband’s earning capacity is greater than the wife’s earning capacity.
While her Honour finds that “…the husband has an earning capacity that is greater than the wife’s” the reasons do not evidence an attempt to draw a quantitative comparison, noting that at [63] her Honour records that the proposed adjustment (wrongly described as the “difference”) is “…not much more than one year’s income when the husband’s practice was successful.”
No ground of appeal challenges the adequacy of her Honour’s reasons.
Notwithstanding her Honour’s (unchallenged) identification of a “single most important factor”, the s 79(4)(e) assessment embraces both the husband’s proper concession that an adjustment was warranted and a number of findings, none of which is the subject of challenge, that can be seen to favour the wife. The wife was aged 58, some six years older than the husband and as a result, her Honour found, “the husband has the potential to continue to work longer than the wife”. Her Honour also referred to the fact that the wife had a knee complaint and to evidence from a doctor that there was “…major osteoarthritis involving the knee joint, making standing for prolonged periods and working as a retail assistant extremely difficult” (at [56]).
Her Honour found, at [58], that the wife’s income “…has always been reasonably low and she has been on a New Start Allowance since March of this year.” Her “earning capacity and income” was assessed by her Honour as “limited” and “…that she will need a knee replacement and that may affect her capacity to earn income given that the job she does requires her to stand for periods of time.”
The husband worked full-time throughout the marriage and contended at the hearing that the income earned by him over at least 20 of the parties’ 30 years of the marriage amounted to some $1.16 million (net of tax) and that those earnings should sound in an adjustment in his favour in respect of contributions (transcript of proceedings, 7 September 2011, p 185, lines 25-30). Those same historical earnings are said to have come to an abrupt halt in 2010. It seems clear that her Honour sought to imply that this correlation was not as a result of the downturn in the economy as he claimed (at [60] and [61]).
We agree with the argument for the appellant that if such a finding was to inform significantly her Honour’s assessment, it ought to have been made clearly and unequivocally and by reference to clear and cogent evidence underpinning it. That was not done. As a result, the adjustment of 12.5 per cent, or a disparity between the parties of about $390,000, needs to be sustainable without reference to that finding.
That said, we recognise, as did her Honour, that current income is a factor to be considered but so, too, is the capacity to earn income. In circumstances where no challenge is mounted to the adequacy of her Honour’s reasons, we consider that her Honour’s other findings, at [57] and [61], permit of the ultimate conclusion as to the significant disparity in current and future earning capacity.
Her Honour did not address the property, superannuation interests and financial resources that each of the parties would receive by reference to the mooted assessment of contributions, prior to considering whether any adjustment pursuant to s 75(2) was warranted. That consideration is important. In Willis & Willis [2007] FamCA 819, at [50] this Court found error “…in the trial judge’s treatment of the section 75(2) factors…” because, “…[h]er Honour failed to consider the effect of the findings as to contribution on the respective positions of the parties, before proceeding to determine whether any adjustment was warranted pursuant to section 75(2).” While reasons are challenged more broadly in the third appeal, no ground of appeal addresses this important issue.
At trial, counsel for the wife submitted that the disparity in earning capacity between the parties would sound in an adjustment pursuant to s 75(2) of “up to 20 per cent”. In contrast, counsel for the husband conceded that “[i]t would be wrong for us to contend…that your Honour should give zero adjustment for capacity…” Counsel for the husband went on to submit that an “appropriate” contributions assessment, including any adjustment pursuant to s 79(4)(e), “…would be in the range of 52 to 50 per cent in favour of the husband; 48 to 50 per cent in favour of the wife” (transcript of proceedings, 7 September 2012, p 209, lines 5-10). That ultimate position needs to be seen in light of the submissions made by the husband’s counsel in respect of the assessment suggested prior to any adjustment pursuant to s 75(2). In that respect, it was submitted on behalf of the husband that:
For the reasons submitted above, and having regard to the evidence that’s before your Honour, in my respectful submission, it would not be unreasonable for your Honour to consider on 79(4)(a) to (d) a division of property based on the contribution set out in those subsections of between 58 to 60 per cent to the husband and 40 to 42 per to the wife…
(Transcript of proceedings, 7 September 2012, pp 192-193. Emphasis added).
Thus, to reach an overall assessment of between 48 to 50 per cent to the wife, the husband’s case at trial was that an adjustment of 8 per cent (that is, a difference of 16 per cent) in favour of the wife would be just and equitable in the circumstances of the case.
During the appeal, counsel for the wife submitted that whilst an adjustment of 12.5 per cent was “well within the range”, he would not have “gone as high as 15-20 per cent.”
While it might be argued that the s 75(2) adjustment in this case is generous to the wife, that is not a basis upon which this Court can disturb her Honour’s discretionary determination. In order to find error, this Court must be satisfied, relevantly, that her Honour’s determination was “plainly wrong”.
Her Honour’s finding regarding the husband’s earning capacity (which we have found was open to her Honour), the age disparity between the parties, together with the nature and value of the property and superannuation interests each of the parties received on an equal distribution between them by reference to the unchallenged contributions assessment, provide ample basis for the 12.5 per cent adjustment in favour of the wife ultimately determined by her Honour to be just and equitable. In those circumstances, we are not persuaded that the assessment falls outside the range of a reasonable exercise of discretion. That is, we do not consider that the trial judge’s adjustment of 12.5 per cent in favour of the wife was “plainly wrong”.
The first appeal fails.
The Third Appeal – Orders Just and Equitable?
As to the remaining ground of the third appeal, it is contended that if the orders of 4 March 2013 were a valid exercise of jurisdiction and power, “…the Court erred in making various of the orders of its purported Order of 4 March 2013 without evidence or findings and without providing any reasons in its Judgement delivered 19th September, 2012 or to date, at all.”
The challenge, as we understand it, is twofold. First, it is contended that there was insufficient evidence to support the orders made on 4 March 2013. Second, it is asserted that her Honour provides no reasons for, and thus must not have been satisfied, that the orders ultimately made were just and equitable.
With respect to counsel, ground 2 appears to misconstrue what is required of a trial judge pursuant to s 79 of the Act. The argument made on behalf of the husband in support of this ground is best met by reference to the decision of the High Court in Mallett v Mallett (1984) 156 CLR 605. There Gibbs CJ said at 608-9 “[i]t is necessary for the court, in each case, after having had regard to the matters which the Act requires it to consider, to do what is just and equitable in all the circumstances of the particular case.”
Reference to the reasons delivered by her Honour on 19 September 2012, together with the record (including transcripts of hearings that occurred before her Honour between 19 September 2012 and the making of the orders on 4 March 2013) plainly reveals that the orders made by her Honour were “just and equitable in all of the circumstances of the particular case”. Indeed, the form of the orders made by her Honour was in accordance with the form of orders sought by the parties at trial. More significantly, perhaps, orders of that type were the only orders that could, feasibly, be made.
During the substantive hearing, both parties sought an order, which was ultimately made by consent, that the former matrimonial home be sold. The inevitable consequence of that sale and, indeed, the order sought by each party, was that the net sale proceeds be distributed between the parties. Similarly, in terms of the other major asset, the parties’ superannuation interests, both parties sought a splitting order. Given the nature of the parties’ assets (namely, the proceeds of sale from the former matrimonial home, the parties’ superannuation interests, motor vehicles, a boat, nominal bank accounts and shares, and various chattels), the only orders open to her Honour were orders of the type ultimately made by her.
An order that the husband transfer his interest in a motor vehicle to the wife had been proposed by the husband in an application in a case filed by him on 6 November 2012. Aside from the former matrimonial home and the furniture contained therein, that motor vehicle was the only jointly-owned asset of the parties.
Both parties had sought orders regarding distribution of that furniture at trial. It was excluded from the “pool” by her Honour due to a “lack” of evidence (reasons at [64] and [65]).
In submissions filed on behalf of the husband for the purposes of a hearing that took place before her Honour on 9 November 2012, it was contended that:
(iv)Notwithstanding the Appeal, the Husband pragmatically accepts that the sale of the former matrimonial home will necessitate, inter alia, removal of certain items of personalty currently stored at and located upon the premises of the former matrimonial home.
(v)On 8 November 2012, during the first return date of the Applications currently before the Court, the Wife indicated, through her Counsel, her acceptance of the Husband’s proposal [as set out in the husband’s Application in a Case filed 6 November 2012] pursuant to these orders.
…
The “proposal” referred to in subparagraph (v) of the submissions just extracted entailed the making of two lists of the furniture, with the wife to have first choice of which list she desired.
The matter came back before her Honour on 19 and 21 February 2013 as a result of an application in a case filed by the wife seeking orders giving effect to a distribution of the parties’ “pool” in accordance with her Honour’s findings. Her Honour reserved her decision and, on 4 March 2013, made orders in terms as sought by the wife (although, not all orders sought by the wife were made by her Honour), and delivered reasons for same.
During the hearing before her Honour on 21 February 2013, counsel for the husband dealt with each of the orders sought by the wife. At no point did counsel contend that the orders proposed would work a hardship on the husband. Indeed, the orders sought (and made) were in accordance with those agitated for by the husband at the trial. Further, the husband did not propose any alternative orders.
Significantly, in terms of the orders made by her Honour with respect to chattels, the orders as ultimately made accorded entirely with the orders sought by the husband at the trial. That her Honour was led to believe that the parties were agreed as to the form of the orders is plain from the transcript of the numerous hearings that took place before her between 19 September 2012 and the making of the orders of 4 March 2013.
Nothing to which we have been taken indicates that the orders made by her Honour were not open on the evidence before her or were not what were required “…to do what is just and equitable in all the circumstances of the particular case.”
There is, then, no merit in ground 2 of the third appeal. The third appeal therefore fails.
Costs Appeals
The remaining appeals (the second and fourth appeals), concern costs orders made by her Honour.
It was agreed between counsel for the parties during the hearing of the appeal that the nature of the challenge, if any, mounted to those orders would be impacted by this Court’s determination of the first and third appeals. In those circumstances, it was submitted that an order ought be made that the parties file written submissions regarding the second and fourth appeals within 14 days of the date this Court’s determination regarding the first and third appeals.
In the usual course of events, the public interest in there being an end to litigation and the parties’ usual desire to the same end, militates against that course of action. In the particular circumstances of this case, including the potential interrelationship of issues emanating from the results in the first and third appeals, justice requires the parties being given the chance to consider these reasons and to make submissions accordingly.
That said, orders will be made designed to minimise the costs and inconvenience to the parties; written submissions will be required within 28 days (that timeframe allowing for the possibility that the parties may not now be legally represented); for written submissions to be confined to five pages; and, for the issues to be determined “on the papers”, obviating the need for further appearance unless one or both parties make out a case to be heard otherwise.
In addition, an order will be made that should the appellant fail to file written submissions within 28 days in respect of either or both appeals, he will be deemed to have abandoned either or both.
It goes without saying that nothing just said should prevent the parties from reaching agreement about any outstanding issues, in which case, an order will provide for written minutes to be filed with the Appeals Registrar by email.
Costs of the Appeals
As is customary, at the conclusion of the hearing of the appeals we received submissions regarding the costs of the appeals.
Section 117(2A) of the Act makes reference to the parties’ conduct in relation to the “proceedings” and whether either party has been wholly unsuccessful “in the proceedings”. Consequently, where, as here, the appeal proceedings comprise a number of distinct appeals, the conduct of the parties in respect of each appeal, and the success (or lack thereof) of each appeal, is relevant to a determination regarding the costs of any or all of the appeals.
In circumstances where two out of the four appeals are yet to be finally disposed of, it is appropriate for the parties to file written submissions in respect of this issue also. For the same reasons as just outlined, orders identical to those just referred to will be made in respect of this issue also.
I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Murphy and Loughnan JJ) delivered on 11 April 2014.
Associate
Date: 11 April 2014
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