Doig & Doig

[1999] FamCA 1363

FAMILY LAW ACT 1975

IN THE FULL COURT  
OF THE FAMILY COURT OF AUSTRALIA  Appeal No WA29 of 1998
AT PERTH  File No PT 3235 of 1997

BETWEEN:

KEVIN ARTHUR DOIG
Appellant Husband
- and -

ASTRID FRANCIS DOIG
Respondent Wife

REASONS FOR JUDGMENT OF THE FULL COURT

CORAM:  KAY, HOLDEN & MARTIN JJ
DATE OF HEARING:  13 September 1999
DATE OF JUDGMENT:                  13 September 1999

APPEARANCES:  Mr Hedges of Counsel, instructed by Paterson & Dowding, Solicitors, Level 2, 28 The Esplanade, Perth WA 6000, appeared on behalf of the Appellant Husband.

Mr Hooper of Counsel, instructed by Holden Barlow, Solicitors, Level 9/16 St Georges Tce, Perth WA 6000, appeared on behalf of the Respondent Wife.

PROPERTY – Erroneous s 77A declaration – Property identified in s 77A order awarded as an exercise of s 79 power and not as an award of spousal maintenance

The parties, aged 46, had been married for twenty years.  They had an 18 year old son who lived independently and a 15 year old daughter who lived with W.  H earned c$60,000pa.  H had superannuation (c$245,000 at age 55), whereas W had none.  After separation W was unable to find employment and instead commenced a tertiary course.  The parties’ pool of assets totalled c$241,100, including the former matrimonial home valued at c$210,000.

The issues before Anderson J concerned alteration of property, spousal maintenance and child support.  The child support payable by H was increased to reflect the formula, and that order was not appealed.  Orders were made whereby W received the former matrimonial home and chattels, and H retained his superannuation and various chattels.  W took 90% of the available assets, whereas H had his earning capacity and superannuation.

His Honour declined to make orders for periodic spousal maintenance on the basis that W could support herself while she retrained on a sum of $55,000 which could be realised if land on which the former matrimonial home stood was subdivided. The orders stated that $55,000 was attributable to W’s maintenance for the purposes of s 77A.

On appeal the appellant/ H contended:

1. That the learned trial Judge erred as a matter of law by awarding the wife $55,000 property by way of lump sum spousal maintenance.

2. That it was mandatory for the trial Judge to make findings at each step in the s 79 process and his Honour did not make findings nor could these findings be found by implication.

Held (per curiam) dismissing the appeal:

1. His Honour did not err as a matter of law. Section 77A is a section designed to circumvent possible demands upon income tested pensions. His Honour’s inclusion of a s 77A order did not effectively give W more nor was there a denial of natural justice, despite the fact that the s 77A order was not sought or the subject of submissions. His Honour awarded the wife 90% of the property under s 79 and then identified the part of the moneys which came within s 77A. If his Honour was in error, it was in making a s 77A order but this favoured the appellant/H and therefore he could not be aggrieved by that order.

1. In relation to the adequacy of reasons for decision, Davut v Raif (1994) FLC 92-503 and the cases cited therein are authority for the proposition that in determining a s 79 application, the trial Judge has to explain what he or she is doing. The s 75(2) factors were the dominant feature of this case and the failure to ascribe a percentage division based on contribution and s 75(2) factors did not amount to a flaw in the process.

Per Holden J

The appellant’s contention regarding the adequacy of the trial Judge’s reasons was not, in any event, a ground of appeal.

Appeal dismissed
Appellant to pay $2500 towards the Respondent’s costs
Reportable

1. KAY J:          This is an appeal by the husband from property settlement orders made by Anderson J on 8 October 1998 whereby the assets of the parties were divided such that the wife received the former matrimonial home worth $210,000 and various chattels, and the husband retained his superannuation and various chattels.

1. The orders pronounced included:

"7.This is an order to which Section 77A of the Family Law Act applies and $55,000.00 shall be attributable to the maintenance of the wife.

8.        All other applications be and are hereby dismissed."

1. Amongst the applications that were dealt with at the trial was an application by the wife for maintenance for herself. 

Background

1. At trial the parties were 46 years of age.  They had begun to live together in 1974 and married on 6 December 1975.  They separated on 20 January 1996.  The marriage was subsequently dissolved by a decree which became absolute in February 1998.  There were two children born of the marriage, Clinton born 1 February 1980, and Cleo born 13 August 1982.  At the time of the trial Cleo was living with her mother and Clinton was living independently of the parties.

1. At the time of the marriage the husband was working in the refrigeration industry.  In 1978 he commenced employment as a trade lecturer at Perth Central TAFE and he then, in 1980, obtained a Bachelor of Education and continued to work with TAFE in management training throughout the marriage and up to the date of trial.

1. The wife had come to Australia from Holland in 1978.  She had a Diploma in Fashion Design that was not recognised in Australia.  She worked in a factory as a kitchen hand but ceased employment 6 months before Clinton's birth.  His Honour found that during the course of the marriage the husband was always in paid employment whilst the wife fulfilled the role of homemaker and parent.

1. The parties had initially purchased a farming property in Pemberton in 1983.  In 1989 the husband was posted to Manjimup and the parties began to reside on the Pemberton property operating as a farm.  The wife in the meantime commenced her fashion diploma course but ceased her study when the parties moved to Pemberton.  She did some very limited part-time work in Pemberton at the local TAFE for 2 hours a week.

1. In 1993 the husband was promoted to a position in Bunbury and the parties sold the Pemberton property.  They also sold their property in Lathlain in Perth and the moneys from those sales went towards the purchase of the matrimonial home at Australind, a boat for the husband and a family holiday in Malaysia.

1. A significant financial issue which arose at trial concerned $10,000 which had been borrowed by the parties to enable the wife and children to travel to Holland shortly prior to separation.  About $5000 had been repaid at the time of separation.

1. Post-separation, the children remained with the mother.  A child support agreement was entered into immediately at separation which required the husband to pay $310 per fortnight for the children, which amount was subsequently increased to $385 per fortnight.  Once Clinton left home the child support was reduced by a factor of 50 per cent and that left about $100 a week or a little under being paid for the support of the daughter Cleo.

1. The post-separation history of the parties was that the wife endeavoured to find some employment but was by and large unsuccessful, and then decided in 1998 to begin a 3 to 4 year course at university with the view to obtaining a social work degree.  The husband, in the meantime, continued on in his employment.  He entered into another relationship with a co-worker.  He purchased a property by borrowing money from his mother and from a bank and subsequently sold the property, making a profit of some $19,000.  He cashed in some long service leave and utilised that for his support.

1. By the time the parties came to the hearing the husband was living with his new friend in her home, which was itself the subject matter of Family Court proceedings.  He and the lady he was living with were each earning a little under $60,000 a year and they were sharing in some expenditure.

1. The issues before the trial Judge concerned alteration of property interests, spousal maintenance and child support.  Ultimately the trial Judge determined that the child support agreement ought to be varied to pay proper attention to an amount that would have become payable if the normal administrative provisions of the Child Support (Assessment) Act were to apply.  That order has not been the subject matter of the appeal.  It increases significantly the amount of child support payable from the $100 a week the parties had agreed upon.

1. The major features in this case focused upon what I would call the s 75(2) factors.  The husband was in secure employment and his Honour made findings as to the earning capacity of the husband which featured in his Honour's reasons relating to the child support.  In particular, his Honour made findings, and I speak in round terms, of the husband's earning capacity to be in the vicinity of $60,000 per annum.  He made findings that the wife, with some retraining, would have been able to earn some income but that presently she was not in a position to earn a reasonable income.

1. He then focused upon the superannuation of the husband.  I will turn to that in a moment after just setting out briefly the findings that his Honour made as to the pool of assets for division.  These were not controversial findings. 

The former matrimonial home,       $210,000; 
Range Rover,   $8500; 
boat and outboard motor,               $8000; 
horse float,   $1800; 
tools,   $1320; 
trailer,   $650; 
wife's vehicle,   $2000; 
wife's furniture and contents,          $6825; 
husband's furniture and contents, $2000. 
These totalled (in round terms)       $241,100. 

His Honour added notionally back the legal fees that each of the parties had paid, namely the wife $4500 and the husband $9022.

1. His Honour then determined that, having regard to the history of the marriage, the role each party played in the marriage, the differential in income-earning capacity, the fact that the daughter continued to live with the wife, and particularly the superannuation, a just and equitable outcome was that the wife would take the matrimonial home and most of the chattels that she possessed, and the husband would retain his car, his boat, his tools and some more chattels which were the subject matter of dispute between the parties but which were not of significant value.  The effect of such a division in broad terms was to leave the wife with about 90 per cent of the available assets.  It left the husband with his earning capacity and his superannuation entitlements.

1. One aspect of the property of the parties was that the matrimonial home was on land which was capable of subdivision, and one block could be excised from it which would net some $55,000.  The husband submitted, both at trial and before us, that it would be appropriate and just and equitable for the husband to receive that block which would enable him to re-establish his life and that otherwise the wife could basically retain the other portion of the assets.  In a pool that has already been identified of approximately $260,000, that sum would be seen to represent about 20 per cent of the pool.  Rather than an adjustment of 90/10, that would lead to an adjustment of 70/30 in favour of the wife.  His Honour rejected that submission.

1. The findings as to superannuation were:

"The information from the Government Employees' Superannuation Board is that if the husband retired on the 11^th June 1998 as a result of total and permanent incapacity, the amount to be received by him would be $378,957.  Unfortunately, the subpoenaed documents from the Government Employees' Superannuation Board do not show what the tax would be on this amount.  The subpoenaed documents show, for example, that the retirement benefit at age 55 would be $317,606.  5% of $54,259 would become taxable income on the husband's next income tax return, and on $240,616, tax of $62,223 would be deducted, and on the balance there would be nil tax payable.  If the husband retired now he would have a preserved benefit of $183,810, which he would be able to collect when he reached retirement age.  The husband has shown in his statement an entitlement of $245,176 at the earliest possible retirement date of the 8^th April 2007.  This is no doubt the retirement benefit at the age of 55, less tax.  Whatever the situation, it will be seen that the husband has a reasonably substantial superannuation benefit, whereas the wife has nothing."

1. His Honour came back to the superannuation later in his judgment, after having made findings on s 79(4)(a), (b) and (c) factors and references to s 79(4)(e) factors, by demonstrating that if the husband retired immediately the result that the husband sought would be, in his Honour's view, unfair.  He said:

"Taking the least favourable view of the husband's superannuation where he could retire with a preserved benefit of $183,810, and a nett after the sub-division of the land of $55,000, he would essentially be left with assets worth nearly $258,000, including the legal fees he has paid.  The wife would be left with her interest in the former matrimonial home at, say, $170,000, a horse float, trailer and vehicle worth $4,450, furniture worth $6,825, and legal costs paid of $4,500, a total of $185,775.  Bearing in mind the parties' disproportionate earning capacities, and the length of the marriage, the husband's proposals, in my view, would be totally unjust."

1. Having dealt with the orders that his Honour thought would be appropriate for alteration of property interests, that is, that the wife receive that which she wanted except for the few chattels which were the subject matter of controversy, his Honour then turned to issues of child support and determined that the husband should pay child support in accordance with the statutory formula rather than the agreement, and then turned to the issue of spousal maintenance.  The claim before the Court had been opened on the basis of a periodic claim and his Honour said this:

"The wife has a realisable asset in the block that can be sub-divided from the land on which the former matrimonial home stands.  That being the case, the wife does not, in my view, have any claim for spousal maintenance.  Those funds that are realisable from that piece of land can be used by her over the next couple of years during the period that she is retraining in order to obtain employment."

His Honour then said:

"Subject to any submissions by counsel, the formal orders I propose are as follows:..."

Then his Honour set out the orders which included the reference to s 77A of the Family Law Act 1975 that I have already identified.

1. This is the first reference it would appear to s 77A at the trial. It was not a matter discussed by counsel with his Honour in submissions, nor is there any pleading relating to it.

1. Section 77A is not without its own problems:

"Specification in orders of payments etc. for spouse maintenance purposes

(1) Where:

(a)a court makes an order under this Act (whether or not the order is made in proceedings in relation to the maintenance of a party to a marriage, is made by consent or varies an earlier order), and the order has the effect of requiring:

(i)payment of a lump sum, whether in one amount or by instalments; or

(ii) the transfer or settlement of property; and

(b)the purpose, or one of the purposes, of the payment, transfer or settlement is to make provision for the maintenance of a party to a marriage;

the court shall:

(c)express the order to be an order to which this section applies; and

(d)specify the portion of the payment, or the value of the portion of the property, attributable to the provision of maintenance for the party.

(2) Where:

(a)a court makes an order of a kind referred to in paragraph (1)(a); and

(b)        the order:

(i) is not expressed to be an order to which this section applies; or

(ii) is expressed to be an order to which this section applies, but does not comply with paragraph (1)(d);

any payment, transfer or settlement of a kind referred to in paragraph (1)(a), that the order has the effect of requiring, shall be taken not to make provision for the maintenance of a party to the relevant marriage."

It deals with an order which is made whether or not it is made in relation to the maintenance of a party to a marriage, so it can be an order made even though there is no maintenance application before the Court.  Its concern is to identify in an order, where one of the purposes of the order is to make provision for the maintenance of a party to a marriage, that which is being so provided.

1. The section is designed to protect the revenue. There are pensions available which are means tested according to the income of parties and one way historically of maximising those pensions was to make a capital allowance and thus minimise income. In order to minimise demands upon income-tested pensions the Court was required by s 77A and similar legislation in respect of s 87 to identify so much of any capital amount which could be attributable to maintenance. In this case no orders were sought under s77A. An opportunity was offered to counsel to address about the proposed orders once his Honour had announced what they were to be, but that opportunity was not availed of by counsel at the hearing and no complaint was made as to the sudden inclusion of the s 77A order.

1. It is clear to me on reading his Honour's reasons for judgment that before his Honour came to deal with the issue of spousal maintenance and indeed the s 77A issue his Honour had already made provision to the wife in accordance with the orders ultimately made, that is, the home was to go to the wife and the husband was not to take any share of it. His Honour did that purely as an exercise of s 79 power. The passage that I read earlier commences with the words, "The wife has a realisable asset in the block that can be subdivided", and that passage can only make sense on the basis that that property is already the wife's by reason of the s 79 issues.

1. Indeed, when his Honour was obliged, as a matter of law, to consider the issue of maintenance, the matters that his Honour had to take into account were set out in s 75(2).  They are mandatory.  One of the things his Honour had to turn to was the income, property and financial resources of each of the parties, and he was prohibited under s 72 from making a maintenance order if the claimant was reasonably able to maintain herself. 

1. His Honour is effectively saying, at the bottom of page 26, that now the wife owns the house, which includes a subdivisible block worth $55,000, she does not need maintenance. I read the passage as saying no more than that. There is confusion then by the introduction of s 77A into the proceedings. However I do not read his Honour's inclusion of that as being an order giving the wife something extra in circumstances where there was a denial of natural justice because it was not sought and nobody was given an opportunity to talk about it.

1. Ultimately the only ground of appeal that has been urged upon us has been that the learned trial Judge erred as a matter in law by awarding the wife $55,000 property by way of lump sum spousal maintenance. In my view, that is not what his Honour did. What his Honour did was to award the wife 90 per cent of the property as an exercise under s 79 and then to identify part of the moneys that he had so ordered as coming within the purview of s 77A. If his Honour was in error in any way it was to make a s 77A order, but that is an order which favours the husband and does not favour the wife. He cannot be aggrieved by that order and there is no cross-appeal in respect of it, although in an opportunistic way the wife has sought in her written submissions to indicate that she would be only too happy to have the order excised from the orders. I would not make such an order absent a consent or absent a cross-appeal.

1. In the course of submissions counsel indicated that there were other grievances about the reasons for judgment.  They were not strongly pressed.  It was suggested that it was mandatory for the trial Judge to make findings at each step along the s 79 route as identified in Pastrikos (1980) FLC 90-897 and in Davut v Raif (1994) FLC 92-503, amongst other places. It was submitted that his Honour did not actually make the findings, nor can they be found by necessary implication. My view is that Davut v Raif and the cases therein cited are authority for the proposition that in determining a s 79 application the trial Judge has to explain what he or she is doing.  Here it is clear to a reader of this judgment exactly what Anderson J was doing.  The dominant features of this case were the s 75(2) features which so overwhelmed the issues of contribution which were not of themselves in any controversy.  In my view, the failure to actually say, "I allow so many per cent for contribution, or so many per cent for s 79(4)(a), (b) and (c) factors and make the adjustment under s 79(4)(e)", does not amount to any flaw in process and I make reference to the words of Mason and Deane JJ in Norbis' case (1986) FLC 91-712 where they emphasise that often the search for contributions is a search which ought not be carried out overzealously because the s 79(4)(e) features dominate the proceedings.

1. In the circumstances, in my view, the appeal should be dismissed.

1. HOLDEN J:  As was observed by the learned presiding judge, some attack was made during the course of counsel's submission on the adequacy of his Honour's reasons for judgment.  I would simply add that in my view that was not a ground of appeal in any event.  Otherwise I agree with the reasons delivered by the presiding judge and that the appeal ought to be dismissed.

1. MARTIN J:    I agree that the appeal should be dismissed for the reasons given by the presiding judge.

1. KAY J:          Is there any application?

1. KAY J:           We think that this is a case in which it is appropriate that a costs order should be made and we take regard of the factors set out in s 117(2A).  Having regard to the parties' respective financial positions and the outcome of this appeal, on the assumption neither party is on legal aid, we think it appropriate that the appellant pay the sum of $2500 towards the respondent's costs. 

1. The orders of the Court will be:

(1)that the appeal be dismissed;

(2)that the appellant pay $2500 towards the respondent's costs.