Dorin & Alina
[2024] FedCFamC1A 26
•8 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Dorin & Alina [2024] FedCFamC1A 26
Appeal from: Alina & Dorin (No 3) [2023] FedCFamC2F 878 Appeal number: NAA 215 of 2023 File number: SYC 166 of 2017 Judgment of: TREE J Date of judgment: 8 March 2024 Catchwords: FAMILY LAW – APPEAL – Property – Appeal from final property orders – Consideration of Stanford & Stanford (2012) 247 CLR 108 – Whether the primary judge conflated the consideration of s 79(2) of the Family Law Act 1975 (Cth) (“the Act”) with the ultimate consideration of whether the outcome was just and equitable – Whether the primary judge failed to consider s 79(2) separately from the assessment of the factors under s 79(4) of the Act – Where there are arithmetical errors in the judgment – Where there is insufficient exposure of reasoning for the conclusion reached by the primary judge – Appeal allowed – Costs certificates granted for the appeal and the rehearing.
FAMILY LAW – CROSS APPEAL – Property – Where the success of the appeal means that all of the orders of the primary judge must be set aside and the cross-appeal falls away – Cross appeal dismissed..
Legislation: Family Law Act 1975 (Cth) ss 75, 79
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 12.13
Cases cited: Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Bennett & Bennett (1991) FLC 92-191; [1990] FamCA 148
Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49
House v The King (1936) 55 CLR 499; [1936] HCA 40
Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52
Water Board v Moustakis (1988) 180 CLR 491; [1988] HCA 12
Number of paragraphs: 40 Date of hearing: 5 December 2023 and 8 March 2024 Place: Heard in Cairns (via video link) and in Sydney Counsel for the Appellant: Mr Condon SC and Mr Watkins Solicitor for the Appellant: Juris Cor Legal Counsel for the Respondent: Ms Bateman Solicitor for the Respondent: Burt & Allen Lawyers ORDERS
NAA 215 of 2023
SYC 166 of 2017FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS DORIN
Appellant
AND: MR ALINA
Respondent
ORDER MADE BY:
TREE J
DATE OF ORDER:
8 MARCH 2024
THE COURT ORDERS THAT:
1.The Appeal is allowed.
2.The Further Amended Notice of Cross-Appeal filed 4 October 2023 is dismissed.
3.The matter is remitted for rehearing by a judge of the Federal Circuit and Family Court of Australia (Division 2) other than the primary judge.
4.The appellant is granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate stating that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in the appeal.
5.The respondent is granted a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate stating that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in the appeal.
6.The Court grants to each party a costs certificate pursuant to s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) being certificates that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise payments under that Act to the parties in respect of the costs incurred by them in relation to the rehearing.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Dorin & Alina has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
TREE J:
INTRODUCTION
On 19 July 2023, a judge of the Federal Circuit and Family Court of Australia (Division 2) made final property division orders, for written reasons then published. By Further Amended Notice of Appeal filed 20 December 2023, Ms Dorin (“the wife”) appealed against those orders. Mr Alina (“the husband”) resists the appeal, and also has brought a cross-appeal, which the wife opposes.
For reasons which follow, the appeal will be allowed and the cross-appeal dismissed.
BACKGROUND
The husband is presently 66 years of age and the wife 59. They commenced their relationship in 2011, married in 2013, and separated in August 2015, thereby concluding a relationship of a little over four years duration. There were no children born to the relationship.
During the relationship various real properties were acquired, mostly, if not entirely, funded by the wife.
As determined by the primary judge, at the time of trial, the net pool of property was worth $1,432,895, all of which was legally owned by the wife (at [173]).
The primary judge found that, at the commencement of the relationship, the husband brought in “no capital” (at [189]), whereas the wife brought in equity in investment properties worth $299,000 (at [188]) together with equity in property in Country B of an unknown value (at [189]).
Next the primary judge concluded that during the relationship, the husband contributed his salary, superannuation and a tax refund, all totalling $206,0788, and the wife made direct financial contributions of $66,425 (at [197]).
The primary judge found that, mathematically expressed, relative to each other, up until separation the husband had made 36 per cent of the total financial contributions, and the wife 64 per cent (at [198]). This appears to have been adopted by her Honour as the foundation for the property division.
The primary judge then addressed the parties’ non-financial contributions, finding that they were equal (at [208]).
Her Honour next considered relevant factors under s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) concluding that they favoured the husband to the extent of a 10 per cent adjustment (at [212]). However curiously, the primary judge said that “[t]his produces an overall distribution of the 44 per cent to the husband and 56 per cent to the wife” (at [212]). Plainly that involved an arithmetic error, as the relevant addition of 36 per cent and 10 per cent would see the husband entitled to 46 per cent, not 44 per cent, however it is an error to the advantage of the wife.
Her Honour perpetuated this error by assessing the husband’s entitlements at $630,473 (when it should have been $659,131). Ultimately the primary judge concluded that the husband should take all the equity in a particular property, in the wife’s sole name, at a value of $640,512, together with accounting to the wife for a disbursement by her, to a value of $16,000. Ultimately the husband was found to be entitled to $657,012 (still some $2,000 less than a 46 per cent entitlement). Her Honour was satisfied that outcome was just and equitable (at [216]).
THE APPEAL
At the outset, it is useful to restate the relevant principles which govern appeals from discretionary judgments. Particularly, it is well settled that error of the type identified in House v The King (1936) 55 CLR 499 at 504–505 (“House v The King”) must be established. There, the majority of the High Court said:
… The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. …
The Further Amended Notice of Appeal filed 20 December 2023 extends to some 7 grounds, however it is convenient to commence by considering Grounds 6 and 7 first, and together.
Grounds 6 and 7
These grounds provide:
6.The primary judge should not have been satisfied that it was just and equitable, pursuant to s 79(2) of the FLA, to make an order for property adjustment having regard to the following factors:
a.it was a short marriage;
b.the husband made no initial financial contributions;
c.the properties were purchased in the wife’s name, and she had provided the funds for the acquisition thereof;
d.the husband had had the benefit of rent-free accommodation at the [Suburb D] Property;
e.the wife had also made contributions to the marriage (including the income from the rent properties;
f.The parties agreed that each would retain the properties they owned or possessed and neither would make a claim against the other’s property.
with the consequence that there was no statutory entitlement to make an order under s 79.
7.The primary judge erred in finding that it was just and equitable to make an order for property adjustment pursuant to s 79(2) of FLA, as (i) it was not open to the Court to make such a finding; or (ii) such a finding was unreasonable or (iii) her Honour failed to provide reasons for such finding.
Plainly these grounds significantly overlap.
Section 79(2) of the Act provides:
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
In Stanford & Stanford (2012) 247 CLR 108 (“Stanford”) at [35]–[46] the High court said:
The operation of s 79
35.It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
36.The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds. And while the power given by s 79 is not "to be exercised in accordance with fixed rules”, nevertheless, three fundamental propositions must not be obscured.
37.First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the text of s 79(1)(a) itself, which refers to “altering the interests of the parties to the marriage in the property” (emphasis added). The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.
38.Second, although s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion. In Wirth v Wirth, Dixon CJ observed that a power to make such order with respect to property and costs “as [the judge] thinks fit”, in any question between husband and wife as to the title to or possession of property, is a power which “rests upon the law and not upon judicial discretion”. And as four members of this Court observed about proceedings for maintenance and property settlement orders in R v Watson; Ex parte Armstrong:
“The judge called upon to decide proceedings of that kind is not entitled to do what has been described as 'palm tree justice'. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down”.
39.Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is “just and equitable” to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that “[c]ommunity of ownership arising from marriage has no place in the common law”. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be “decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses”. The question presented by s 79 is whether those rights and interests should be altered.
40.Third, whether making a property settlement order is “just and equitable” is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised “in accordance with legal principles, including the principles which the Act itself lays down”. To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.
…
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).
43.By contrast, the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order. It does not permit a court to disregard the rights and interests of the parties in their respective property and to make whatever order may seem to it to be fair and just.
…
46.As has already been emphasised, nothing in these reasons should be understood as attempting to chart the metes and bounds of what is “just and equitable”. Nor is anything that is said in these reasons intended to deny the importance of considering any countervailing factors which may bear upon what, in all the circumstances of the particular case, is just and equitable. In particular, as the Full Court pointed out in its first judgment in this matter, the magistrate erred in not taking account of the consequences that would follow for the husband if a property settlement order were to be made in the terms which were sought on behalf of the wife. The husband would be required to sell the matrimonial home, in which he was still living, despite the needs of his wife then being met by the provision of full time care, a further provision of money against future contingencies and the possibility, if needed, of making a maintenance order.
(Footnotes omitted) (Emphasis added)
In the primary judge’s reasons, under the heading “THE LAW” her Honour adverted to these principles at [155] and [156] as follows:
155.These proceedings are conducted by reference to s 79 of the Family Law Act 1975 (Cth) (“the Act”), which provides:
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property;
[…]
(2)The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
[…]
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage, or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage, or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
[…]
(a)Before an order is made adjusting the parties’ property, the Court must be satisfied that it is just and equitable to do so: Stanford & Stanford (2012) 247 CLR 108 (“Stanford”) at [35] to [40]. The real impact or value of the adjustment in money terms is ultimately the critical issue, not its expression as a fraction or percentage of the overall assets: Clauson & Clauson (1995) FLC 92-595 at 81,911: Adair & Adair [2019] FamCAFC 70 at [66]; Simons & Simons [2020] FamCAFC 128 at [18].
156.The proper exercise of the jurisdiction can be to decline to exercise the power pursuant to s 79(1) of the Act: Horrigan & Jennings (2018) FLC 93-868 per Ainsley-Wallace, Ryan and Austin JJ applying Bevan & Bevan (2013) FLC 93-545 at [108].
(Emphasis added)
Thereafter in her reasons, under a heading “Section 79(2) consideration”, the primary judge said as follows:
213.The effect of the analysis pursuant to s 79(4) of the Act is that the husband would retain $630,473 in assets. He must account to the wife for $16,500 as his half share of disbursements in the proceedings, such that he would receive $613,973. The available equity in the [Suburb D] property is $640,512.
214.The husband wishes to retain that property and it is the property in which he has been living since mid-2015. In considering the Orders, I must have regard to the reality on the ground. I may take a broad-brush approach. On any view, the wife will remain living at the [Suburb E] property, where she has been settled since February 2016. It is just and equitable in the matrimonial context to ensure that each party has a home if that is feasible.
215.I accept the husband may not be able to refinance the existing mortgages having regard to his age and lack of employment. That said, the property is a commercial property that can be leased. The husband adduces no evidence that he cannot obtain finance, nor any efforts to ascertain whether he can obtain finance and, if so, on what terms.
216.I am satisfied that it is just and equitable in all the circumstances for the husband to retain the benefit in the whole of the available equity in the [Suburb D] property.
217.I have considered whether it is just and equitable to make orders that deliver the [Suburb D] property to him unencumbered. To do so would represent a distribution to him of about 69 per cent overall. In my view, such a result would exceed the reasonable range of my discretion.
218.I have considered whether it is just and equitable to make orders requiring the wife to discharge the larger of the two home loan accounts secured by the [Suburb D] property. To do so would represent a distribution to him of about 57 per cent overall. In my view, this would also exceed the reasonable range of my discretion.
219.I will make orders that permit the [Suburb D] property to be transferred to the husband subject to him refinancing the existing mortgages. If the husband cannot refinance the mortgages, the [Suburb D] property will be sold and the husband will retain the whole of the sale proceeds.
(Emphasis added)
However that consideration followed after a consideration of the parties’ contributions and other factors s 79(4) (at [181]–[212]). Particularly it appears after [212] which is in the following terms:
212.I find that an adjustment in the range of 7.5 per cent to 12.5 per cent should be made in the husband’s favour pursuant to s 75(2) of the Act. I will apply an adjustment of 10 per cent. This produces an overall distribution of 44 per cent to the husband and 56 per cent to the wife.
It is therefore readily apparent that either the primary judge conflated the consideration of s 79(2) with the ultimate consideration of whether the outcome was just and equitable, as the High Court in Stanford at [40] explained was erroneous, or failed to separately consider s 79(2), which is equally in error (Stanford at [37]).
The wife had expressly flagged her s 79(2) argument in her Case Outline (wife’s Outline of Case filed 16 February 2023, page 2, paragraphs 1 and 2, and page 8 paragraph 34).
Whilst perhaps final submissions by counsel for the wife did not emphasise the s 79(2) point, she did continue to press for “100 per cent distribution” to her (Transcript, 22 June 2023 p 567 lines 10–11), which is effectively an argument that it is not just and equitable to make any order under s 79(2), albeit she also contended the same conclusion would result from any consideration of the s 79(4) factors.
Even if the wife did not press the s 79(2) point, there is no bar to her raising it now on appeal, as it could not be met by evidence (Water Board v Moustakis (1988) 180 CLR 491). Further, even if the primary judge was inferentially satisfied that the making of an order was just and equitable, then there is no sufficient exposure of reasoning for that conclusion (Bennett & Bennett (1991) FLC 92-191).
Grounds 6 and 7 succeed.
Other grounds
Given that the appeal must be allowed, it not necessary, nor appropriate to consider the remaining grounds (Boensch v Pascoe (2019) 268 CLR 593 at [8])
Outcome
The appeal will be allowed.
THE CROSS-APPEAL
By Further Amended Notice of Cross-Appeal, the husband contended:
1.The Cross-Appellant was denied procedural fairness by the Trial Judge dismissing his outstanding costs application, being an application in the Cross-Appellant’s AMENDED Initiating Application (Family Law) filed on 22 December 2022 in the proceedings SYC 166 of 2017 that the Cross-Respondent pay the Cross-Appellant’s costs of and incidental to the conduct of the proceedings SYC 166 of 2017, without the Cross-Appellant being heard in respect of this costs application.
The success of the appeal means that all of the orders of the primary judge must be set aside, and hence the cross-appeal necessarily falls away.
In any event, whilst it is true that Order 14 of the primary judge’s orders of 19 July 2023 dismissed all outstanding applications, and it is also true that the husband’s Amended Initiating Application filed 22 December 2022 sought that the wife pay his costs, nonetheless r 12.13(3)(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) preserves the husband’s entitlement to file an Application in a Proceeding seeking costs within 28 days of a final order being made.
Thus his right to do so remained unimpaired by the primary judge’s orders, and this challenge was without merit in any event.
The husband’s Amended Cross-Appeal will be dismissed.
RE-EXERCISE OR REMITTER
The primary judge’s findings of fact rested significantly upon conclusions as to the parties’ credibility. More, there apparently remains dispute as to what items of property should appear in the balance sheet, particularly as regards properties owned by the wife in Country B, the value of which was not able to be determined by the primary judge (at [174]). That led her Honour to conclude that such assets should be taken into account under s 75(2) (at [174]). However, such pre-supposes that s 79(2) would see it just and equitable to make any property adjustment.
Further I am conscious that the property valuations are now well over 12 months old, having been last undertaken on 26 October 2022. The parties agreed that there will have been movement in their values since then.
The wife argued that the relatively small property pool, coupled with her strong argument that the proper consideration of s 79(2) would see no adjustment of the parties’ property interests, meant that I should re-exercise the s 79 discretion, rather than remit the matter for rehearing.
However, there are some countervailing arguments in relation to s 79(2) relied upon by the wife, including that the husband contributed to the servicing of mortgages over relevant properties over relevant properties when the wife was unable to do so.
Further, in the event that the husband’s s 79(2) argument did not prevail, then the ensuing property division would necessarily be undertaken on out of date material, contrary to Allesch v Maunz (2000) 203 CLR 172 at [30].
In all the circumstances it is appropriate to remit the matter for rehearing.
COSTS
The appeal has succeeded on a point of law, to which the respondent did not contribute, and which saw the cross-appeal necessarily fall away. Although the wife sought that the husband pay her costs of the appeal, not only did he not contribute to the error, but the complaint as to that error was only raised in the Further Amended Notice of Appeal filed on 20 December 2023, consequent upon the appeal being adjourned on 5 December 2023 to enable that to be done. Inevitably some costs were thrown away by virtue of that adjournment.
I decline to make an inter partes order as to costs, however there will be costs certificates issued in relation to both the appeal and the rehearing.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Tree. Associate:
Dated: 8 March 2024
0
7
2