Douglas & Douglas

FAMILY COURT OF AUSTRALIA

CCD & AGMD

[2006] FamCA 1291

APPEAL – FROM DECISION OF FAMILY COURT JUDGE – PROPERTY SETTLEMENT – CONTRIBUTIONS – The parties married in 1998 and separated in 2003, with the wife giving up her paid employment at a bank prior to entering the marriage – At the time of the commencement of cohabitation, the husband had property in excess of $2.5 million – The trial Judge assessed contributions at 92.5/7.5 in favour of the husband – The trial Judge then made a further adjustment of 7.5% in favour of the wife on account of s 75(2) factors –During the course of the judgment, the trial Judge embarked upon an expansive discussion of societal and moral values and principles relating to the alteration of property interests between spouses on marriage breakdown – One such statement of the trial Judge was that “intention, contribution, reliance, compensation and need” were “recognised justifications” for making adjustments to property interests – On appeal, the husband argued that the trial Judge’s decision was manifestly wrong as it was not explained in accordance with established principle – The wife, while acknowledging that the trial Judge may have “waxed lyrical” about matters of societal values and morality, argued that none of the statements were relied upon by the trial Judge to reach the end result – Some of the trial Judge’s formulations of principle went beyond the established principles relating to property settlement – Intention and compensation are factors which ought not in the usual run of cases influence the outcome of a property settlement and it is clear by looking at portions of the judgment that the trial Judge imported these considerations into the decision.

JUDGMENTS – UNCERTAINTY ARISING FROM “IMPORTED” PASSAGES – In the section of the judgment considering s 75(2) factors, it was submitted by the wife that certain paragraphs were identical to paragraphs from an earlier decision of the trial Judge – The facts of the earlier judgment were significantly different from the case before the trial Judge – Concern that “imported passages” where they involved conclusions, may not have directly addressed the facts in the case under appeal – The functions of reasons are to provide a discernible path to the result and to demonstrate that justice has been done and the importation of passages from an earlier judgment militated against the trial Judge’s reasons performing the second function.

Family Law Act 1975 (Cth)
Federal Proceedings (Costs) Act 1981 (Cth)

Beck and Beck (No 2) (1983) FLC 91-318
Figgins and Figgins (2002) FLC 93-122
SL and EHL [2005] FamCA 132
Mallet v Mallet (1984) 156 CLR 605
Norbis v Norbis (1986) 161 CLR 513
W and W (1980) FLC 90-872

APPELLANT:

CCD

RESPONDENT:

AGMD

FILE NUMBER:

BRF

3310

2004

APPEAL NUMBER:

2006

DATE DELIVERED:

1 DECEMBER 2006

PLACE DELIVERED:

Brisbane

JUDGMENT OF:	FINN, WARNICK AND MAY JJ
HEARING DATE:	20 NOVEMBER 2006

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

11 April 2006

LOWER COURT MNC:

[2006] FamCA 245

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Murphy SC

SOLICITOR FOR THE APPELLANT:

Barry and Nilsson Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Laurie

SOLICITOR FOR THE RESPONDENT:

Walkers Solicitors

Orders

That the appeal be allowed.
That order 1 of the orders of 11 April 2006, as amended by order of 9 October 2006 be varied by the deletion of the sum “$328,584” and the insertion of the sum “$99,073”.
That the court grants to the appellant husband a costs certificate pursuant to the provisions of section 9 of the Federal Proceedings (Costs) Act 1981 being a certificate 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 husband in respect of the costs incurred by the appellant husband in relation to the appeal.
That the court grants to the respondent wife a costs certificate pursuant to the provisions of section 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by the respondent wife in relation to the appeal.

FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 33 of 2006
File Number: BRF 3310 of 2004

CCD

Appellant

And

AGMD

Respondent

REASONS FOR JUDGMENT

FINN J:

This is an appeal by the husband against orders for property settlement made by Carmody J on 11 April 2006 which were amended by his Honour pursuant to the slip rule on 9 October 2006.
The overall effect of his Honour’s orders was to award the wife property to the value of 15 per cent of the net value of the parties’ property, which was found by his Honour (in paragraph 25 of his judgment) to have been $3,459,636.
This award was made in circumstances where the husband and the wife, aged 78 and 52 respectively at the time of the trial, had cohabited for a period of five years (June 1998 to June 2003), with no children being born of their marriage.
His Honour found in paragraphs 107 and 108 of his judgment that:
·“[t]he parties’ total assets increased from $2,662,000 in 1998 to $3,460,564” at the time of the trial;
·“[t]he wife’s own financial position had improved from $85,000 to $191,289”;
·“[t]he wife’s initial contributions amounted to 3.15 per cent of the total asset pool of $2,697,000. They currently represent 5.5 per cent ($289,452 - $98,163 ÷ $3,460,564 x 100)”.
His Honour then concluded (at paragraph 110) that “the wife cannot really receive any less that 5 per cent of the property on account of direct financial contribution”.
Then a little later, having referred (in paragraph 111) to the wife’s “indirect financial contribution via the work she did and the taxation advantages she represented to the (husband’s) business” and to her “non-specific contribution under s79(c) to the family and the husband’s emotional well-being”, his Honour concluded (in paragraph 116) that the wife should receive “7.5 per cent ($259,542) based on contribution, represented by the approximately 5 per cent she retains and a 2.5 per cent loading reflecting her other indirect Kennon type contributions”.
His Honour then made a further adjustment of 7.5 per cent to the wife on account of the s 75(2) matters, with the overall result thus being that the wife received 15% of the available property.
In his judgment, which I have had the advantage of reading in draft form, Warnick J has explained the substance of the husband’s grounds of appeal. I would summarise the complaints contained in the husband’s grounds of appeal as being that the award of 15 per cent to the wife was beyond a reasonable exercise of the discretion, and that this miscarriage of the discretion may have occurred because of certain extraneous matters which his Honour would seem to have taken into account in reaching his conclusions in relation to the parties’ contributions and to the s 75(2) adjustment.

contributions

When his Honour came to consider in his judgment the contributions of the parties, he first referred (in paragraphs 27 to 39) to certain factual matters and then to each party’s case in relation to contribution. He then embarked (in paragraphs 40 to 105) on what can be termed a discussion in theoretical or perhaps philosophical terms, of the Australian law concerning the alteration of property interests on the breakdown of a marriage as contained in s 79 of the Family Law Act 1975.
In the course of that discussion, his Honour referred to a number of decisions of the Full Court and of single Judges of this Court in property settlement cases, and also to certain English decisions. In the course of that discussion his Honour made some references to the facts of the present case. At the end of that discussion he returned (in paragraphs 106 to 116) to a specific consideration of the parties’ contributions in this case. I have referred earlier to the conclusions reached concerning the parties’ contributions.
Warnick J, in his judgment, has pointed to certain errors in his Honour’s analysis of the law as contained in s 79 of the Act. For my part, I need only say that although Counsel for the appellant was able to distil sufficient findings from his Honour’s reasons such as would permit this Court to re-exercise the discretion, his Honour did not relate those findings to the content of the paragraphs of s 79, which are concerned with various forms of contribution, to the extent necessary to persuade me that he did not take into account extraneous matters, thus leading to a miscarriage of the discretion. This is particularly so in circumstances where his Honour’s ultimate award might well be seen to be beyond the ambit or range of a reasonable exercise of the discretion.
Finally, in relation to the issue of the assessment of contributions, I suggest that in the pluralist society of present day Australia, little assistance is to be gained from a search by trial Judges, or indeed by intermediate appellate courts, for the underlying philosophy or values of the provisions of s 79. The task – not itself always easy – is to apply those provisions to the facts of the particular case. In other words, to determine the parties’ contributions (financial and non-financial, direct and indirect) to the acquisition, conservation and improvement of the past and present property of the parties and to the welfare of the parties’ family.

the s 75(2) adjustment

Again, as Warnick J explains in detail in his judgment, there has been incorporated into his Honour’s discussion of the s 75(2) matters, certain paragraphs which refer to facts and submissions which bear no relation to the facts of, and submissions advanced in, the present case. It can therefore be concluded that his Honour has made mistakes of fact, or taken into account irrelevant matters in his consideration and determination of the adjustment to be made on account of the s 75(2) matters. Accordingly, the appeal must also succeed insofar as it is directed to his Honour’s adjustment on account of the s 75(2) matters.

the re-exercise of the discretion

As will be apparent from the judgment of Warnick J, it is possible on the basis of the findings made by the trial Judge as identified by Counsel for the appellant and otherwise on the material before us, to re-exercise the discretion vested in his Honour.
I agree with what is said by Warnick J concerning an appropriate re-exercise of the discretion, and accordingly with the orders (including the orders for certificates under the Federal Proceedings Costs Act 1981) which his Honour proposes.

WARNICK J:

In this appeal counsel for the respondent wife grants that the trial Judge, in his reasons for judgment for the orders appealed, embarked upon an expansive discussion of societal and moral values and principles relating to the alteration of property interests between spouses on marriage breakdown. That counsel, Mr Laurie, acknowledges that some of that discussion was superfluous to an explanation of the result. Further, he concedes that in the trial Judge’s discourse, some statements are wrong. But, he says, none of these statements were relied upon by the trial Judge to reach the result, which he based upon subsequent correct expression and application of the terms of s 79 of the Family Law Act 1975 and applicable principles.
On the other hand, Mr Murphy SC, appearing for the husband, submits that the result is manifestly wrong, is not explained by reasoning in accordance with established principle and, in those circumstances, was or at least might have been, based on the general discussion, some at least of which was contrary to the terms of the Act and authority.
The other major point in the appeal arises from a coincidence between, on the one hand, the content of four paragraphs late in the judgment, when Carmody J, the trial Judge, was dealing with “Adjustment Factors” (ie. s 75(2) factors) and, on the other hand, the content of paragraphs in another judgment of his Honour in a property settlement application, delivered a year beforehand.
The paragraphs in the judgment under appeal contain at least one finding of fact that related to the evidence in the earlier decision and not to the evidence in this case.
Counsel for the wife says that “slip” is obvious and unlikely to have affected the result and that the other content of the paragraphs in question has application to the case in hand.
Senior counsel for the husband says the consequences of the importation go deeper.
There are other points in the appeal, but after a short description of the case I will return to these main points and to such consequences as follow our consideration of them.

The case under appeal

Unless otherwise indicated, the facts stated in this section are taken from the judgment of Carmody J.
The parties commenced cohabitation in 1998. According to the wife’s affidavit of evidence in chief, cohabitation commenced in June 1998, the marriage was in September 1998 and the parties finally separated in June 2003. At the time of trial, the husband was 78 years of age and the wife 52. There were no children of the marriage.
The trial Judge found that when cohabitation commenced in 1998 the husband had property in excess of $2.5 million, including a golf course and two rental properties. By contrast, the wife had her severance pay from a bank of $35,000, and equity in a house of $50,000. Expressed in percentage terms, her assets represented 3.15 percent of the “initial joint estate”.
The wife’s position at trial may be more readily understood if I include a summary from senior counsel for the husband’s submissions which, subject to a qualification about mortgage payments, deals with matters that were non-contentious, although not set out in the reasons for judgment.
“15.At the commencement of the relationship the Wife owned a house at [“A Street, E”]. The Wife sold that property on or about 8 December 2000 for $140,000. In her evidence, the Wife said that she used the net proceeds of sale (“approximately $50,000”) and “approximately $35,000” from my redundancy payment from the “[bank]” to purchase another residence at [“H Street, T”] for $124,000 “with my son, [“P”]”. At trial the Wife gave evidence that she had purchased the [H Street] property in [T] for $129,500 and that she applied the net proceeds from the sale of the [A Street] property at [E], together with the monies that she received from the [bank] when she was made redundant, towards the purchase price of the [H Street] property. The Wife admitted that she effectively paid the purchase price and that she regarded the [H Street] property as her property. The Wife admitted that the mortgage repayments for the [H Street] property were about “$200.00 a fortnight” and that she paid the mortgage payments on that property and that her son did not make any of the mortgage payments to the bank.
16.The Wife received $200 per week from 2001 for living expenses. During the marriage the Wife paid the mortgage payments on the [H Street] property. The source of the Wife’s funds to make those payments was the Husband.”
Of importance to the trial Judge’s ultimate decision, he found that the wife had given up paid employment to marry. She had been a bank teller for the previous 10 years, working an average 32 hour week for $22,000 gross per annum. She turned down the offer of a promotion and transfer to Melbourne and accepted a redundancy package instead. His Honour found:
“29.She was almost wholly financially dependent on the husband until separation.
30.She was well provided for and enjoyed a comfortable lifestyle during the marriage. Most of the parties' married life was spent caravanning around Australia and travelling overseas. The couple travelled overseas on three separate occasions. On the last of these they travelled business class. They went to Asia on a cruise for a month in 1998 on their honeymoon. In 1999 the husband paid all the wife's expenses to travel to Hungary for three weeks to visit her family, and in 2002 they spent three months together in Europe.
31.[The husband] made the total financial contribution during the marriage to the preservation and conservation of assets. He estimates that he spent $150,000 for the joint benefit of the parties on travel alone.
32.The wife admits receiving direct monetary benefits during the marriage totalling $58,865 including $38,000 paid as superannuation, 500 [“CM”] shares at a cost of $4,415, a Holden [motor vehicle] costing $5,000 and jewellery worth $3,450.
33.She was also paid $200 a week from 2001 for living expenses.
34.The wife’s property has increased in real terms by about $100,000 since 1998. This is due largely to inflation and the superannuation payment received from the husband. Her current assets represent just under six percent after a value of the distributable pool.
35.She made indirect financial contributions to the business by performing bookwork and general administrative functions for the first two years of marriage. She did not receive any actual money for this work but the business presumably received a tax benefit by declaring a notional salary of $800 per fortnight for the period.
36.The wife also established and maintained new gardens at the golf course and did the cleaning and cooking for the household, including the husband’s son.”
Early in his judgment, Carmody J referred to a common approach in “short marriage cases” being an asset by asset approach but, after referring to authority for so doing, he stated that he would adopt the global approach, which he thought more appropriate to the circumstances of the case.
At trial, the property pool was in the order of $3.5 million. Of those assets, the husband had $3,269,000 approximately, the major asset being the golf course and sports complex. The wife had the house subject to mortgage, some chattels and superannuation, her total assets being approximately $290,000 (gross).
Shortly after setting out his findings about contributions of the parties, Carmody J referred to some arguments of the husband, that he described as the husband not wanting to share any of the growth in value of the husband’s estate with the wife, on the basis that she had already taken out more than she put into the marriage and was in a much better financial position than she was beforehand. The trial Judge recorded counsel for the wife’s counter-argument that the wife had made economically valuable contributions to the emotional wellbeing and overall welfare of the parties as a couple; and that what she brought in were the intangibles of youth and companionship and these had made the husband’s twilight years much more enjoyable than they were likely to have otherwise been.
Counsel for the wife had suggested to the trial Judge that at the very least, the parties should share in “value increase during the relationship”.
From that introduction to the arguments, his Honour went on to refer to the regime of general property law in Australia. He passed to the particular position arising on breakdown of marriage and discussed s 79, in terms as to which, on this appeal, no exception has been taken. However, following those passages, the discussion moved into some areas to which exception was taken.

Did the trial Judge identify and apply incorrect principles or values?

This is the essential question that arises from grounds 4 and 8.
The significance of comments in passages which were discussed in the argument on appeal, or which are of similar content to those so discussed, varies. Some statements are unexceptional and describe matters of which account should be taken in exercising the power under s 79. However others, while referring to a topic, aspects of which may be taken into account in the application of s 79 in some circumstances, do so in terms that may be unduly sweeping.

Examples of such statements are:
“61.The task of a judge in property cases is to measure and value contribution not time. Income earned during the marriage is to be treated as being acquired through joint effort regardless of the roles each party played.…
62.Property which is not the product (or fruits) of the partnership should be treated as separate property of the one who brought it into the marriage. It is only the joint property (including separate property) which has been improved or preserved during the marriage by joint efforts or, arguably, good fortune, which should be shared though not necessarily equally between the parties. The parties should divide the fruits of the marriage partnership according to effort giving equal weight to the breadwinner and homemaker contributions. However, they should arguably only share in premarital assets to the extent that each has contributed to the maintenance and improvement of them and not otherwise.”
I think some of the formulations in these paragraphs go too far, unless qualification is implied or is to be found in other parts of his Honour’s reasons. However, because the position in relation to other statements in his Honour’s reasons is much clearer, I think it unnecessary to further explore the correctness of the statements in paragraphs 61 and 62.
Yet other statements by Carmody J refer to “values” which may well commonly lie beneath the application of authoritively approved propositions. As to such values, I said in SL and EHL [2005] FamCA 132:
“233.In my view, these submissions by each counsel, in particular that of senior counsel for the husband, referring to the danger of undervaluing the contribution as home-maker/parent, point to the true nature of the assessment of contributions under section 79. There are two aspects to the process. Firstly, the “value” given to a role, of itself. Secondly, the assessment of the quality with which a particular role was performed. Within the concept of “value of a role” is the idea of “the reach” of that role, particularly where a variety of assets has been acquired.
234.The first aspect, the “value”, given to a role, of itself, will, I suggest, be derived, at least mostly, from considerations beyond the individual case. The second will focus on the facts of the particular case, but there may well remain elements of “value” even in the assessment of “quality” of contributions.
…
236.Moreover, within the concept of “fairness” referred to by senior counsel for the husband, is a choice of parameters, or principles. What is fair will depend on the criteria - the values - used for measurement. For example, is marriage a partnership, the fruits of which ought be equally shared, as long as each partner has performed “usual” or “assigned duties” during its course? Or, irrespective of the way that during cohabitation the parties viewed their separate contributions in agreed roles, the partnership agreement having foundered, does a “winding up” involve a retrospective re-allocation of the worth of contributions by an external arbiter.
237.Though the presence of “values” in the assessment of contributions has on occasion, been acknowledged in cases, the basis for, and the origins of, “values” in that assessment, has received little or no attention. Nor have a number of other important questions about the use of values been addressed.
…
293.A number of questions immediately arise:
·How are values divined; “the human outlook of the period”, ascertained?
·Is a trial Judge bound by the values approved in cases decided by superior courts, including the Full Court of this court, in the same way that a trial Judge is bound by the doctrine of precedent in respect of legal principle?
·Is a trial Judge free to introduce “new” values?
·How would a guideline about a “value” compare with a “presumption” and if there is no difference, and there can be no presumptions (and so no predetermined “values”) what reins are there on arbitrariness?”
An example of discussion by Carmody J of “values” in terms similar to those that I contemplated in SL and EHL is:
“50. …The degree of effort counts for more than the actual results achieved. What matters most is whether each of them pulled their weight and shouldered their fair share of the burden.”
It may well be appropriate for a Full Court of this court to closely examine the propositions raised in SL and EHL but, despite Carmody J’s judgment providing an opportunity for such an examination, I think this appeal not the appropriate vehicle. This is because the questions raised in SL and EHL were not the subject of argument in this appeal.
Rather, argument focussed on statements made by Carmody J about propositions or principles which, senior counsel for the husband argued, were entirely extraneous to the proper application of the terms of s 79. I turn to those now.
“46.Intention, contribution, reliance, compensation and need are all recognised justifications for the power to adjust the property interests of spouses because of the circumstances of the marriage or its breakdown … Compensation is similar to reliance because it responds to the differential impact on the parties of their relationship and involves sharing its economic consequences and compensating for losses associated with contributions made to it which are not recouped under other principles. Common heads of compensation include lost income and earning capacity, loss of living standard and future financial support.” (emphasis added)
As indicated earlier, counsel for the wife argued that, though Carmody J may have “waxed lyrical” about matters of societal values and morality, he did so as a preface to the identification and application of principle upon which he based the result. Asked to identify the best example where this differentiation was demonstrated, counsel for the wife pointed to paragraph 47 which was:
“47.These are all covered by the provisions of s 79(4), especially the matters referred to in pars (a), (b), (d) and (e).”
In my view, this paragraph, far from showing that Carmody J left behind such content of paragraph 46 as was extraneous to the correct approach to the application of s 79, in fact establishes that his Honour imported into his decision all of the opinions expressed.
As to those opinions, whatever the justifications for the power to adjust property interests, I doubt that, at least without heavy qualification, intention and compensation are factors which ought influence alteration of property interests. In particular, I consider that the concept of compensation for income lost during a marriage (of itself) and compensation for a loss of living standard (of itself) are not factors which ought influence the outcome of a property settlement. In Beck and Beck (No2) (1983) FLC 91-318 the Full Court said:
“With respect to maintenance there is, we agree, no concept of compensation for loss of expectations in the Family Law Act. The underlying concepts in sec. 72, 73, 75 and 76 are first the appropriate needs and financial circumstances of the party or child whose claim for maintenance is under consideration and, secondly, the capacity of the respondent to the application.
…
In determining a maintenance claim, a Court having determined the needs of the person or persons on whose behalf the application has been made then looks at the capacity of the respondent to pay. There are no other relevant issues and certainly the question of compensation for past loss is not relevant to the determination.
Past conduct may be an issue in determining the mechanics of an order, how it is to be implemented, or whether or not there should be security but it is not an issue in determining quantum. Section 75(2) is directed to the factors to be considered in making an appropriate assessment under sec. 72 for the party whose maintenance is under consideration, an assessment just to both parties and to children, it is not in any way at all directed to compensation.
In considering a claim under sec. 79 of the Act, the Court is enjoined to look at contribution as therein defined. The Court is then directed to take into account such parts of sec. 75(2) as are relevant. Conduct, except for financial conduct, is not an issue and even as to financial conduct there is no element of compensation. The question is still the assessment of an appropriate amount which would result in financial justice between the parties taking into account all of the facts relevant to the particular case.” (at 78,166-78,167) (emphasis added)
In paragraph 48, Carmody J said:
“48.The basic rationale for the power to alter private property interests on separation or divorce in Australia, however, lies in the binding nature of the marital relationship and its hallmark features of "give and take". Marriage in this country is "an institution" … It is, first and foremost, a sacred covenant.…”
While I may or may not agree with his Honour’s opinion about the rationale for the power expressed in s 79, on its own the expression of his Honour’s opinion may not constitute the application of any wrong principle in altering the property interests of the parties. However, concern arises in the light of later statements, for example, paragraph 52:
“52.The alteration exercise…compensates them for unmet expectations or lost opportunities and misplaced reliance on the strength of assurances of the permanence and stability of the relationship…”
and:
“106.I readily infer the wife here would probably have had much the same expectation as the wife in Miller. It is unlikely that when entering into the marriage, although the parties were aware of the possibility of divorce (having regard to their matrimonial history), they expected not to remain married for life. Indeed, they promised to do so. Surely, anyone with that state of mind who marries a person with financial means late in the game, will have a legitimate expectation that once married his or her standard of living will increase permanently. The disappointment of that reasonable expectation is a relevant consideration under paragraph 75(2)(o) even though it is not expressly mentioned in section 79(4).” (emphasis added)
In my view, there is a real possibility that his Honour imported into his consideration of the extent to which property interests ought be altered, concepts of compensation for loss of the marriage and all it offered.
It has been said often enough that the Family Court is a creature of statute. Jurisdiction and powers are, save for such inherent powers as might be possessed by a superior court of record, contained within the statute. In particular, as to the exercise of power contained in s 79, the following observations are pertinent
In Mallet v Mallet (1984) 156 CLR 605, Gibbs CJ said (at 610):
“Even to say that in some circumstances equality should be the normal starting point is to require the courts to act on a presumption which is unauthorized by the legislation. The respective values of the contributions made by the parties must depend entirely on the facts of the case and the nature of the final order made by the court must result from a proper exercise of the wide discretionary power whose nature I have discussed, unfettered by the application of supposed rules for which the Family Law Act provides no warrant.”
Deane J said (at 639-641):
“It is clear that the function of the Family Court in determining what order should be made under s. 79 of the [Family Law Act 1975 (Cth)] involves the exercise of a judicial discretion. The exercise of that discretion is neither controlled nor fettered by any general rule or presumption of law that an appropriate order under s. 79 will effect an equal division between husband and wife of assets acquired during the life of the marriage. In each case, the Family Court must pay regard to the matters specified in s. 79(4) and determine whether it is just and equitable that any order be made and, if it is, what represents the appropriate order in the particular circumstances of the case before it.
…
It is plainly important that, conformably with the ideal of justice in the individual case, there be general consistency from one case to another of underlying notions of what is just and appropriate in particular circumstances. Otherwise, the law would, in truth, be but the “lawless science” or a “codeless myriad of precedent” and a “wilderness of single instances” of which Lord Tennyson wrote in his poem “Aylmer’s Field”. It is inevitable and desirable that the need for such consistency should lead the judges of the Family Court to look to what has been said and decided in prior cases for assistance and guidance in determining what is just and appropriate in the differing circumstances of subsequent cases and that shared experience and accumulated expertize should lead to the emergence of generally accepted concepts of what is prima facie just and appropriate in particular types of cases.”
In Norbis v Norbis (1986) 161 CLR 513, Mason and Deane JJ said (at 521):
“Section 79(1) of the Act provides that the Court may make such order as it thinks fit altering the interests of the parties to a marriage in the property of the parties or either of them. In so providing, the Act confers a very wide discretion on the Court. But that discretion is not unlimited. Its exercise is conditioned by the requirement that it is just and equitable to make the order (s 79(2)), and that the Court take into account the matters specified in s 79(4) and the general principles embodied in ss 43 and 81, so far as they are applicable.”
In W and W (1980) FLC 90-872, referring to the decision of Asche J in McDougall and McDougall (1976) FLC 90-076, Nygh J said (at 75,528):
“It must be stressed however that sec. 79(2) does not give this court an independent power to effect “palm tree justice”. What is “just and equitable” depends on a proper consideration of the factors set out in sec. 79(4)…”
Before leaving the content of the paragraphs of Carmody J’s judgment under discussion here, we simply observe, with regard to the trial Judge’s apparent acceptance of what was said in the United Kingdom case of Miller [2006] 1 FLR 151, what was noted by the Full Court in Figgins and Figgins (2002) FLC 93-122 (with regard to the United Kingdom decision in White and White [2001] 1 AC 596), namely that there are important differences between the United Kingdom regime for and approaches to alteration of property interests and the position in Australia.
Senior counsel for the husband also contended that Carmody J erred by approaching the assessment of contributions from the starting point of considering himself unable to award the wife any less than 5 percent of the property pool on account of direct financial contribution. The submission arises from the following paragraphs:
“108.The wife's initial contributions amounted to 3.15 per cent of the total asset pool of $2,697,000. They currently represent 5.5 per cent ($289,452 - $98,163 ÷ $3,460,564 x 100).
109.Admittedly, $50,790 or 1.5 per cent is attributable to the superannuation, $38,633 of which was paid in by the [“D”] Super Fund in October 2003.
110.However, the wife cannot really receive any less than 5 per cent of the property on account of direct financial contribution.
111.The question is whether she is entitled to any more or, more specifically, whether she has any claim over the acquest or the increased value of the golf course etc. I think she can legitimately claim a share based on her indirect financial contribution via the work she did and the taxation advantages she represented to the business, and the non-specific contribution under s 79(c) to the family and the husband's emotional well-being.”
In developing his argument, senior counsel for the husband pointed to what the trial Judge had said in paragraph 34:
“34.[The wife’s] property has increased in real terms by about $100,000 since 1998. This is due largely to inflation and the superannuation payment received from the husband. Her current assets represent just under six percent after a value of the distributable pool.”
Senior counsel for the husband then contrasted the attitude of the trial Judge expressed (in the wife’s favour) in paragraph 110, with what the Judge had much earlier said of the husband’s stance:
“37.The husband is worth about $800,000 more today than he was five years ago thanks largely to inflation but does not want to share this windfall with the wife on the basis of the argument that she has already taken out more than she put into the marriage and is in a much better financial position than she was beforehand.”
While I see readily enough senior counsel for the husband’s argument about unexplained differential treatment in what seem matching circumstances, I do not think that in the 110^th paragraph of his reasons, that the view expressed by the trial Judge that the wife could not receive less than the property she held at trial necessarily represents an inappropriate “starting point”, as against a conclusion, based on all the reasoning that had gone before.
However, overall, I consider that Carmody J did identify and apply incorrect principles or propositions in reaching the result.

What was the effect of the importation by Carmody J into the reasons for the orders appealed, of paragraphs from his own earlier judgment in another case?

As indicated earlier, the imported paragraphs appeared within the discussion of “Adjustment Factors”. I think I ought consider most of Carmody J’s discussion of that topic to identify the impact of the content of the imported paragraphs.

“Adjustment Factors”

“117.Section 79(4)(e) requires me to consider the matters in s 75(2). The most relevant of these here are in pars (b), (g) and (k), with any remaining ground being covered by the operation of par (o).
118.Irretrievable breakdown of a marriage – irrespective of how long it lasts - has serious social, financial and psychological consequences for those who suffer it. The object of the adjustive process is not simply to provide the wife in a short and childless marriage with enough money to make her economically independent or to "put her back on her feet".
119.The aim is not to equalise the parties post separation economic positions either. It is to achieve financial fairness or economic equity by reducing anomalies and bridging gaps after relations have broken down.
120.The husband has a much higher income earning potential and greater assets and financial resources than the wife.
121.The husband acknowledges the obvious difference in financial resources between the parties but asserts that disparity alone does not give rise to any s 75(2) adjustment. He says there has to be some proven nexus between the disparity and the circumstances of the marriage. He also contends that the wife has to show economic disadvantage arising out of the role she played in the marriage before being entitled to any 75(2)(k) adjustment and she cannot do this because if anything she owes her radio career to the husband's connections and her luck in being married to him at the right time. Finally, the husband argues that no adjustment under s 75(2)(g) is justified on lifestyle grounds particularly after property division just because hers will be as high at least as it was before the marriage.
122.The role and function of s 75(2)(b) as an adjustment factor is authoritatively dealt with in Collins. It is clear as I have already said that the provision either alone or in combination with other relevant matters mentioned in 75(2) is not a source of social engineering or a back door method for sympathetic judges to even up the parties financial positions. Nevertheless, the obligations of the parties to a marital relationship lasting for "a not insignificant period" of five years or more do not end with the failure of the marriage. There is no rule of law or discretionary principle requiring some causal connection between economic discrepancies and the marriage relationship to activate s 78(2)(b): cf. Guest J in Farmer and Bramley and Kay J in the same case at 87,950 as well as the comments of the Full Court in Dickson.

123.The rationale for making an adjustment pursuant to s 75(2)(b) is to be found in what Fogarty J had to say in Waters and Jurek at 82,378 - 823. While I am unable to identify any specific economic disadvantage, such as impaired earning potential to the wife arising out of the marriage, I am nevertheless satisfied that the disparity in the parties' current and likely future financial circumstances arises as a result of the differential in their earning power during the marriage, their joint decision as to the way they would and did conduct their financial affairs, the people they became in the context of the marriage relationship, and the allocation of roles, duties and responsibilities that entailed and of the sudden and striking transformation of the wife's situation due to the termination of that relationship.
124.The financial disparity is therefore directly attributable to the marriage and the mutual decisions made by the parties but only in a small way.
125.While the relative shortness of the marriage did not have any negative impact on the applicant's earning capacity (the ability to earn money either by way of wages or profits within the meaning of s 75(2)(k)) she did lose income as a result of the marriage and has been generally disadvantaged in both her career and employment prospects.
…
129.Despite its brief duration, the standard of living enjoyed by the wife during this marriage is also a relevant s 75(2) factor under par (g).
130.Having regard to the considerations mentioned above an increase of 7.5 per cent to the wife's contribution based entitlement in my view is called for. This will compensate her for her comparatively poorer post-separation economic position and provide her with sufficient funds to re-establish herself adequately and enjoy a reasonable, though not lavish, lifestyle in her new situation as a single person.
131.I will therefore order the husband to pay the wife $518,945 to finalise their financial relationship.”

Senior counsel for the husband submitted that paragraphs 121, 122 and 123 of the judgment appealed are identical to paragraphs 57, 58 and 59 respectively in his Honour’s judgment in the matter of S and B [2005] FamCA 180 and that paragraph 130 is identical to paragraph 60 of the reasons in S and B, save for the deletion of the words “For these reasons” and the insertion of the words “Having regard to the considerations mentioned above”.
This is not entirely accurate in that the word “obvious” in the first sentence of paragraph 121 was not in paragraph 57 and in that paragraph, rather than “adjustment under s 75(2)(g)”, the term was “loading under s 75(2)(g)”. Also, in paragraph 58 of the reasons in S and B the last authority referred to was “Dixon”, which has been corrected to “Dickson” in the judgment under appeal.
S and B was concerned with a marriage described by his Honour as being “of medium length”. Cohabitation was for 8½ years. The wife was 37, the husband 40. The husband was a specialist obstetrician and gynaecologist in private practice. The wife was a radio announcer. There were no children of the marriage. His Honour assessed the parties’ net assets at $1,534,000 approximately. Both parties worked throughout the marriage. They controlled their own finances and operated separate bank accounts. As to “Adjustment Factors” in that case, in part his Honour said:
“54.The wife is healthy, comparatively young and earns a reasonably good salary from her current employment. However, as I have said, her existing contract does not provide much security of tenure in an uncertain industry.
55.The husband by contrast is slightly older but his health is just as good. He is a highly qualified and experienced specialist medical practitioner with an established and profitable private practice […]. Neither party resides or supports any other person. There is an obvious and substantial disparity of income and overall financial position. The lifestyle funded by the husband and enjoyed by both parties is over.
56.The husband has the capacity to generate an average income in excess of $450,000 on the basis of his last four years returns. This is likely to continue and probably grow in future years. The wife earns an average of $46,000 annually. In comparative terms, her earnings are one-tenth of the husband's.…”
These three paragraphs immediately precede three of the four paragraphs “imported” into the judgment under appeal.
The primary ground of appeal relating to this issue was ground 6:
“6.In assessing the relevant “s. 75(2) factors”, the trial judge erred or led himself into error by adopting verbatim at least three paragraphs of an earlier decision of His Honour (in [S and B] […]) and in particular facts, arguments and/or findings relevant in that case, but which do not pertain to the present case, in particular:
6.1An argument as to nexus between disparity in assets and the marriage not made in the present case;
6.2A finding that the wife “owes her radio career to the husband’s connections and her luck in being married to him at the right time” when in fact no such fact, or any fact analogous thereto, existed in the present case;
6.3An argument that the wife had to show economic disadvantage when in fact no such argument was advanced in this case;
6.4An argument that no adjustment was justified on the lifestyle grounds when in fact no such argument was advanced in this case;
6.5The finding that the trial judge “was unable to identify any specific economic disadvantage, such as impaired earning potential to the wife arising out of the marriage” when in fact that finding is directly contradicted by a finding made by His Honour at another part of the Reasons.
6.6The findings as to the respective roles of the parties and, ultimately, a finding as to “the sudden and striking transformation of the wife’s situation due to the termination of that relationship” when in fact no such fact, or any fact analogous thereto, existed in the present case.”
Senior counsel for the husband discreetly eschewed any criticism of the action, of itself, of “cut and paste” in the production of judicial reasons. Nor did he did speak for it. His arguments were about more substantial questions.
Of the imported paragraphs, paragraph 122 deals with propositions of principle and, if that were the only paragraph imported, that action, even without recognition that it had been “pasted” from earlier reasons, would not in my view constitute appealable error.
As to the other paragraphs, counsel for the wife did not argue against the propositions contained within ground 6, and put again by senior counsel for the husband in submissions, that certain arguments attributed in paragraph 121 to the husband in this case, were not in fact put at trial.
In paragraph 123, Carmody J said:
“…While I am unable to identify any specific economic disadvantage, such as impaired earning potential to the wife arising out of the marriage…”
That finding seems more readily applicable to the wife in S and B than the wife here, given that his Honour found in paragraph 125 that the wife has also been generally disadvantaged in both her career and employment prospects.
In the circumstances, one must also be concerned that when, in paragraph 123 of the case under appeal, his Honour refers to the disparity in the parties’ current and likely future financial circumstances arising as a result of the differential in their earning power during the marriage; the joint decision as to the way they would and did conduct their financial affairs; the people they became in the context of the marriage relationship; the allocation of roles, duties and responsibilities that entailed and the sudden and striking transformation of the wife’s situation due to the termination of that relationship, his Honour was not directly addressing the evidence in the case before him.
Similar comments apply to the conclusions and expressed reasons in paragraph 130.
As senior counsel for the husband (in my view correctly) submitted, the functions of reasons are to provide a discernible path to the result and to demonstrate that justice has been done. He submitted that the importation by Carmody J of passages from his judgment in another case militated against his Honour’s reasons performing the second function.
I agree.

Grounds 2, 3 and 5

These grounds assert that the assessments of contributions and s 75(2) factors were plainly wrong or manifestly unjust.
Later, I intend to set out the manner in which I would re-exercise the discretion that had been vested in the trial Judge and reach my own conclusions of a just and equitable alteration of property interests. It will be there seen that in proportional terms my conclusion is nearly 50 percent less to the wife than the result reached by Carmody J and in those circumstances I consider that the result reached by his Honour was plainly wrong.
When in respect of a discretionary judgment such a finding is made, it will almost invariably be technically true that the reasons were inadequate to explain the result. In this particular case that “inadequacy” gains significance in view of the presence within his Honour’s reasons of a number of principles or propositions extraneous to the proper application of s 79. The likelihood of influence of those incorrect principles on the result is greatly increased.

Remaining grounds

The Notice of Appeal contains 12 grounds. Ground 1 related to the mathematics used by the trial Judge to implement his decision and was not pursued because of a subsequent correction made by his Honour pursuant to the slip rule.
Ground 12 was abandoned.
Grounds 9, 10 and 11 asserted a failure to give adequate reasons for the 7.5 percent adjustment for s 75(2) factors, and a failure to have regard to the real impact in money terms of these adjustments and ultimate orders. I consider these arguments already dealt with. The only other ground is ground 7.
That ground challenged some findings of fact relevant to the assessment of s 75(2) factors. The ground was:
“7.In assessing the relevant “s. 75(2) factors”, the trial judge erred in fact in the findings made in respect of the parties’ respective earnings and earning capacities, in particular:
7.1 in finding that the wife “did lose income” during the marriage when in fact, by reason of the monies paid to her by the husband; her retention for herself of rental income and expenses paid on her behalf by the husband, her net income position was better than it was pre-marriage;
7.2in finding that “as a result of the marriage [she] has been generally disadvantaged in her career and employment prospects” when in fact the evidence was that, post-separation, the wife was engaged in employment of the same type and approximately the same income as that engaged in pre-marriage;
7.3treating the husband’s income as “$11,000 per month” when in fact that was the gross revenue of the husband’s business and the unchallenged evidence was that the husband’s net income was about $60,000 per annum;
7.4in finding the husband “has a much higher income earning potential” when in fact:
7.4.1 no evidence justified that finding;
7.4.2 such a finding took no account of the need for the husband to fund the contribution adjustment proposed by His Honour; and
7.4.3 the fact that the husband was 78 years of age and the wife was 52.”
While this ground was not abandoned, it was only touched upon in passing in written submissions, which dealt with grounds 6-12 as a group and, though senior counsel for the husband made some comment about aspects of the findings referred to in the ground, the reference was as much in respect of any re-exercise of discretion by this court as for the purpose of persuading us that some error had occurred below.
When read in context, comments by the trial Judge such as that the wife “did lose income” during the marriage and that the husband “has a much higher income earning potential” do not seem erroneous. For example, the comment about the husband’s higher income earning potential was by way of comparison with that of the wife, rather than a comparison with an existing level of earnings of the husband. In that context it was clearly correct.
I think it unnecessary to discuss the matters raised in this ground further.

Re-exercise of discretion

Both parties sought that if we found merit in the grounds of appeal, we re-exercise the discretion and neither party sought to put any further evidence before us in that event.
Senior counsel for the husband had prepared a summary of the contribution findings made by the trial Judge. This was:

CONTRIBUTION FINDINGS (HUSBAND)

The husband contributed long-held real property valued in excess of $2.5M. This included a golf course “developed…with his own hands”	Par 27 AB15
The husband’s property constituted about 96.85% of the property “pool” at the commencement of the relationship	Par 27 AB16
The property held by the husband was producing an income pre-marriage and constituted the only source of income for the parties during the marriage. His Honour found this was about “$11,000 per month. It is, though, a gross figure – the figure net of expenses being about $5,000 per month (par 52/53 H in chief)	Par 27 AB15
He paid all of the wife’s living expenses during the marriage	Par 17 AB13
“Most of the parties’ married life was spent caravanning around Australia and travelling overseas. The couple travelled overseas on three separate occasions. ON the last of these they travelled business class”	Par 30 AB16
The husband made the total financial contribution during the marriage to the preservation and conservation of assets	Par 31 AB16
The husband spent $150,000 for the joint benefit of the parties on travel alone	Par 31 AB15
In addition, the wife admitted receiving direct monetary benefits during the marriage totalling $58,865 including $38,000 paid to her superannuation, shares, a car and jewellery	Par 32 AB16
In addition, the wife deposes to the husband paying her $200 per week “in the last couple of years of the marriage” – i.e. about $20,000	Par 42W AB69
The wife’s pre-marriage property was sold in 2000 (at about the time that the husband leased the golf course and the parties started travelling together). She bought a new property, put it in her adult son’s name, obtained as a result the first home owner’s grant and thereafter permitted him to stay there rent-free until separation at which time she commenced receiving $100 per week board	Par 76W AB72
Rental was received from the wife’s previous property (and retained by her) but after the sale of that property and purchase of her now one, her son paid no rental	T13 I.15 AB136
Post-separation
The husband has maintained the golf course since separation…	Par 115 AB34
He carried out extensive repairs to the golf course (after a flood) in June 2005	Par 115 AB34
The husband paid $450 per week in spousal maintenance and $109 per month private health insurance from June 2003 until April 2004	Par 17 AB13
The wife received proceeds of share sales of $5,000	Par 17 AB13

CONTRIBUTION FINDINGS (WIFE)

The wife gave up her job with the bank to marry the husband	Par 17 AB13
The wife had property valued at about $85,000 or about 3.15% of the then “pool” of property at commencement of the cohabitation	Par 27 AB16
The wife’s property increased by about $100,000 during the marriage due largely to inflation and the superannuation payment received from the husband	Par 34 AB16
The wife’s property at trial had increased to about 6% of the “pool”	Par34 AB16
She was paid $200 per week from 2001 for living expenses	Par 33 AB16
She made indirect contributions by performing bookwork and general administrative functions for the first two years of marriage. She did not receive any actual money for this work but the business presumably derived a tax benefit by declaring a notional salary of $800 per fortnight for the period	Par 35 AB16
`The wife established and maintained new gardens at the golf course and did the cleaning and cooking for the household, including the husband’s son	Par 36 AB16
Post-separation
Despite the monies paid to her by the husband, the wife found it difficult to make ends meet	Par 17 AB13

To this, senior counsel for the husband added during oral submissions that in respect of the effect of the marriage on the wife’s earning capacity and in particular the job which she had been offered in Melbourne about the time of commencement of cohabitation, although a promotion and increase in pay were involved, no details were given.
Some qualification is appropriate to the schedule handed up by senior counsel for the husband, as pointed out by counsel for the wife. He informed us that, though the trial Judge had made the finding that the wife was almost wholly financially dependent on the husband until separation and the husband made the total financial contribution during the marriage to the preservation and conservation of assets, the evidence was that the wife in fact met some of the mortgage payments on her house from her redundancy payment and perhaps from the monies paid to her by the husband.
In my view, an appropriate recognition of the contributions of the parties, having regard in particular to:
•the increase in the wife’s assets;
•the pursuit by the parties of leisure activities, in particular travel, funded by the husband throughout much of the period of cohabitation;
•the enormous disparity in initial contributions;
•the fairly short period of cohabitation and;
•in a marriage of which there are no children;
is for the wife to retain approximately what she already has.
As to s 75(2) factors, I consider that the disparity in the financial circumstances, including both assets and income, requires some adjustment but that, in view of:
•the minor contributions made by the wife when seen in the context of the disparity in initial contributions;
•the increase in the wife’s estate;
•the lifestyle of the parties funded by the husband during cohabitation;
•the shortness of the period of cohabitation;
•the absence of children; and
•the fact that the wife has returned to at least an income level comparable to what she was previously earning
the adjustment ought be small and be in the order of 2.5-3.5 percent.
In fact, I am of the view that if the liabilities of the wife are discharged, that would be a just and equitable result.
I attach as a schedule (“A”), the list of assets and liabilities, as before the trial Judge save that I have amended it to accord with what we were informed were adjustments made during the hearing.
The end result of what I propose is that the wife would have:
House  225,000
Astra  2,500
Bank  200
Jewellery  3,450
Furniture and contents  5,000
“M” Master Trust  2,494
Bank Superannuation  50,789
  $289,433
and no liabilities. That is, she would have 8.36% of the asset pool.
The liabilities of the wife as recorded in the table are $99,073. I would allow the appeal and vary the orders at trial (as amended on 9 October 2006) to provide for a payment of that amount.

Costs

Senior counsel for the husband sought costs if the appeal succeeded. If that request did not find favour he sought a certificate.
Some of the errors identified are of law. I think both parties entitled to certificates, counsel for the wife having sought one in the event.

MAY J:

I have had the benefit of reading the judgments of Finn J and Warnick J and agree with their reasons and the orders proposed.

I certify that the preceding ninety-five (95) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court

Associate: D. Perrett

Date: 1 December 2006

“A”

Property	Item	Ownership	Value
[…] Golf Course	Husband	2,800,000.00
Nissan [motor vehicle]	Husband	40,000.00
Furniture and contents	Husband	5,000.00
ANZ shares (296 @ $25.57)	Husband	7,568.72
AWB B Class (1083 @ $4.10)	Husband	4,440.30
Macquarie (1457 @ $3.11)	Husband	4,531.27
St George (460 @ $29.90)	Husband	13,754.08
NAB savings account	Husband	290,757.00
St George savings account	Husband	22,473.00
NAB savings account	Husband	50,752.00
Loan from son	Husband	30,000.00
House at T	Wife	225,000.00
Wife	2,500.00
ANZ Bank	Wife	200.00
Jewellery	Wife	3,450.00
Furniture and contents	Wife	5,000.00
[M] Master Trust	Wife	2,494.00
[Bank] Superannuation	Wife	50,789.77
Total	3,558,709.00
Liabilities
Mortgage	Wife	87,113.00
Visa Credit Card	Wife	11,960.00
Total	99,073.00
$3,459,636.00

[2006] FamCA 1291

1 DECEMBER 2006

Key Legal Topics

Areas of Law

Family Law

Legal Concepts

Appeal

Reliance

Intention

Remedies

Procedural Fairness