DULTON & DULTON
[2020] FamCAFC 209
•26 August 2020
FAMILY COURT OF AUSTRALIA
| DULTON & DULTON | [2020] FamCAFC 209 |
| FAMILY LAW – APPEAL – PROPERTY – Where the appellant argues that in the circumstances of the case the primary judge should not have applied the principles propounded in Jones v Dunkel (1959) 101 CLR 298 to infer that the appellant had retained two term deposits – Where the respondent did not cross-examine the appellant on this issue and did not raise the principles in that case in his submissions – Where it was not put to the appellant that she could have produced further documentary evidence or that if she could have she had chosen not to and thus the appellant’s evidence as to what had happened to those funds was unchallenged – Where there is merit in Ground 1 – Where it was conceded by the respondent that the primary judge erroneously recorded the appellant’s evidence that she paid a sum of legal fees from a redrawn amount – Where it was impossible to identify precisely how much of the redrawn amount was used to pay the appellant’s legal fees – Where the authorities establish that the process of adding-back assets to the asset pool is not only discretionary but also exceptional – Where there is a lack of adequate reasons by the primary judge and it is not possible to ascertain the reasoning which led to the primary judge forming the view that it was “appropriate” to add-back the amounts spent by the appellant on her legal fees – Where there is merit in Ground 2 – Where there is merit in two of the five grounds of appeal – Appeal allowed in part. FAMILY LAW – RE-EXERCISE – Where this Court is asked to re-exercise the discretion – Where there is no challenge to the primary judge’s finding that it was just and equitable to make orders for property settlement or to the primary judge’s assessment of contributions – Where there was no error found in the primary judge’s assessment of the relevant s 75(2) factors – Where the add-backs the subject of the successful grounds of appeal are removed from the net asset pool and the same percentage division as found by the primary judge is applied to the amended net asset pool – Paragraphs (1) and (4)(e)(v) of the Orders made on 19 August 2019 varied. FAMILY LAW – COSTS – Where in the event that the appeal was allowed a costs order was not pursued but costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) were sought by each party – Where the appeal has been allowed in part for errors of law – Where it is appropriate to order costs certificates for each party. |
| Family Law Act 1975 (Cth) s 75(2) Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 9 |
| Babett & Falconer (2015) FLC 98-067; [2015] FamCAFC 124 Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63 House v The King (1936) 55 CLR 499; [1936] HCA 40 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Omacini and Omacini (2005) FLC 93-218; [2005] FamCA 195 Sharman v Evans (1977) 138 CLR 563; [1977] HCA 8 Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173 |
| APPELLANT: | Ms Dulton |
| RESPONDENT: | Mr Dulton |
| FILE NUMBER: | ADC | 4612 | of | 2016 |
| APPEAL NUMBER: | SOA | 47 | of | 2019 |
| DATE DELIVERED: | 26 August 2020 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 26 March 2020 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 19 August 2019 |
| LOWER COURT MNC: | [2019] FCCA 2264 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Tredea |
| SOLICITOR FOR THE APPELLANT: | Carmen Wood & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Childs |
SOLICITOR FOR THE RESPONDENT: | Paul Kirk Legal |
Orders
The appeal be allowed in part.
Paragraph (1) of the Order made on 19 August 2019 be varied to provide as follows:
That on or before Tuesday 24 November 2020 the Wife shall pay to the Husband the sum of THIRTY-FIVE THOUSAND SIX HUNDRED AND SEVENTY SEVEN DOLLARS [$35,677].
Paragraph (4)(e)(v) of the said Order be varied to provide as follows:
That the net proceeds of sale remaining thereafter in addition to $163,359 be divided as to SIXTY PERCENTUM (60%) to the Wife less $17,466 (being the assets in the Wife’s possession) and FORTY PERCENTUM (40%) to the Husband less $86,983 (being the assets in the husband’s possession).
The Court grants to the appellant wife a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), 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 wife in respect of the costs incurred by her in relation to this appeal.
The Court grants to the respondent husband a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), 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 husband in respect of the costs incurred by him in relation to this appeal.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Dulton & Dulton has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE |
Appeal Number: SOA 47 of 2019
File Number: ADC 4612 of 2016
| Ms Dulton |
Appellant
And
| Mr Dulton |
Respondent
REASONS FOR JUDGMENT
Introduction
By Amended Notice of Appeal filed on 6 March 2020, Ms Dulton (“the wife”) appeals against final orders for property settlement made by a Judge of the Federal Circuit Court of Australia on 19 August 2019.
Mr Dulton (“the husband”) opposes the appeal.
In summary, the orders appealed against provided for the wife to pay to the husband the sum of $56,596, for the husband to transfer to the wife a property at Town U, for the wife to discharge the three loans secured over the title to that property, for the wife to pay all outstanding rates and taxes and school fees, that in default of a transfer the property be sold and the net proceeds of sale be divided 60 per cent to the wife and 40 per cent to the husband, taking into account the assets that they each retain, and for the husband to pay and indemnify the wife with respect to all liabilities of the husband’s business. In addition, there were orders relating to motor vehicles, furniture and personal effects.
Relevant Background
At the time of the trial the husband was aged 50 years and the wife was almost 47 years.
The parties commenced living in a de facto relationship in 1990, and they married in 1993.
The three children of the marriage are A born in 1999, B born in 2001, and C born in 2005. A lives with the husband and is estranged from the wife. The other two children live with the wife and are estranged from the husband and A.
At the commencement of their relationship, the wife was working in retail, and the husband was working as an apprentice mechanic.
In 2001, the parties purchased land at Town U and built a home.
The husband qualified as a mechanic and worked on an employed basis until approximately 2008 when the parties established a business through a company D Pty Ltd and a family trust.
After the birth of A, the wife was primarily engaged in homemaking and parenting duties until 2007, when she undertook studies over three years to qualify in healthcare, subsequently working on a casual basis at a hospital. She also attended to the bookkeeping duties for the business.
The parties separated on 15 June 2016, with the wife remaining in the home with the two youngest children.
The Appeal
Ground 1 – The learned Trial Judge erred in including in her calculations of the asset pool available for distribution by her property orders the balances of two Term Deposits held in the name of the wife, namely those with E Bank numbered …660 and …160. In particular:
(a) those Term Deposits were extinguished and ought not to have been “added back” to the pool, being monies that had been spent prior (sic) trial in meeting ordinary household expenditure for the wife and the children;
(b) there was no occasion for the application of the Jones v Dunkel principle (see (79) of Her Honour’s Reasons for Judgement (sic) (hereinafter “her Reasons”) given her finding (at [71]) of her Reasons that:
“The wife was not challenged in cross-examination by the husband as to her evidence regarding the term deposits, including as to how/why the accounts were created, nor about the wife’s asserted use of those funds post separation and whether indeed she had applied them to her living expenses or otherwise”.
As explained in the wife’s amended summary of argument filed on 11 March 2020, the primary issue here is whether her Honour was entitled, given the actual evidence that was before the court, to apply the principles propounded in Jones v Dunkel (1959) 101 CLR 298, to infer that the wife had not closed two term deposits and utilised the proceeds to meet the reasonable living expenses of herself, and the two children in her care.
In terms of the evidence before the court, the wife produced a bundle of bank statements for the period 1 July 2011 to 6 May 2017, which became Exhibit W4, and which revealed that as at 6 November 2016, one term deposit that had been in existence during the marriage had a credit balance of $3,070, and another term deposit that had also been in existence during the marriage had a credit balance of $6,335.46 as at 6 May 2017. However, there were no bank statements evidencing when those accounts were closed (if at all), and no other documentary evidence as to what happened to the funds from those accounts.
The evidence of the wife was that she had closed those accounts and used the money in them to fund the living expenses of herself and the two children in her care. Although the husband in his affidavit material, in effect, alleged that the wife still had those two term deposits, and in his final submissions sought that if not, they be added back at least notionally, significantly, he did not challenge the wife’s evidence in cross-examination.
Her Honour’s finding as to this evidence is as follows:
77.In circumstances where the Wife has chosen not to produce those statements for the term deposits that she now asserts are closed, and indeed, where I have no evidence (other than the Wife’s assertions) that she has closed those accounts, I propose to bring to account the two further amounts, bringing the combined amount to be brought to account for the term deposits to $17,298.76.
78.I do so, in circumstances where the Wife has long known that the Husband sought to bring those monies to account, yet she has failed to put any meaningful documentary evidence before me that supports her assertions about having closed the accounts and spent those monies.
79.In doing so, I am mindful of the principles that flow from the decision in Jones v Dunkel (1959) 101 CLR 298, and in particular to the comments of Menzies J at paragraph 132, namely that:
“… where an inference is open from facts proved by direct evidence and the question is whether it should be drawn, the circumstance that the defendant disputing it might have proved the contrary had he chosen to give evidence is properly to be taken into account as a circumstance in favour of drawing the inference.”
It is apparent that the primary reason for her Honour’s finding is that the wife “chose” not to produce the relevant bank statements, when she had known for some time that the husband sought to bring the credit balances to account. Further, and in so concluding, her Honour was “mindful” of the principles emanating from Jones v Dunkel.
First, it is unclear on what basis her Honour found that the wife had “chosen” to not provide the relevant bank statements. The evidence does not establish this given that there was no cross-examination on this issue by the husband. The wife was never asked why the only bank documents produced were those in Exhibit W4.
Secondly, and again in the absence of any challenge to the wife’s evidence, it is unclear on what basis her Honour concluded, in effect, that in the time available, the wife would have been able to locate, or obtain, the relevant bank statements.
Thirdly, there is no basis to infer that the presentation of further bank statements would support the wife’s contention as to the use of the money. At most, they would reveal when the accounts had been closed, but not what happened to the money.
Fourthly, it is unexplained by her Honour how she has applied the quoted principle from Jones v Dunkel, and no assistance can be gleaned from any submission made by the husband, because he did not raise the principles in that case. For example, what is the “inference” that is “open” from “facts proved by direct evidence”? The only possible facts proved by direct evidence are that as at 6 November 2016, the wife had a term deposit of $3,070, and another as at 6 May 2017 of $6,335.46, and presumably the inference to be drawn is that the wife still had that money at the time of the trial. But that inference can only be drawn where the wife could have proved the contrary, and had chosen not to. To repeat, it was not put to the wife that she could have produced further documentary evidence, or that if she could have, she had chosen not to, and of course overarching this, there was her unchallenged evidence as to what had happened to those funds.
It is also noteworthy that when the wife gave that evidence, her Honour asked this question:
And that has all been used in the post-separation period?
And the wife answered:
Yes.
(Transcript 18 June 2019, p.31 line 34)
Importantly, there was no follow-up questioning by her Honour, for example as to the absence of documentary evidence of that assertion. Thus, the implication is that her Honour accepted the wife’s explanation for the use of the money.
Moreover, and to repeat, there was no submission made by the husband as to this issue, or indeed, the application of Jones v Dunkel.
At no point was the wife put on notice that an adverse inference would be drawn based on the principles propounded in that case.
In the circumstances, I find merit in this ground of appeal.
Ground 2 – Further or in the alternative the learned Trial Judge erred in “adding back” (at [97] of her Honour’s Reasons) the sum of $49,497 in that:
(a) she disclosed no or no sufficient reasons for so doing in her Reasons;
(b) not pursued
(c) her finding (at [96] of her Reasons) that the wife had, from the actual sum drawn down by her from the redraw facility paid legal fees of an amount of $49,497, was contrary to the clear and unchallenged evidence before her;
(d) the adding back of such sum was unjust and inequitable given her own findings (at [94] of her reasons);
(e) the adding back of such sum was, given the circumstances of the wife and of the parties as disclosed in the evidence, contrary to long-established Full Court authority and well without the bounds of a proper exercise of any discretion exercisable by the learned Trial Judge in relation to the adding back of assets to the asset pool.
As submitted by the wife, this ground is premised upon two incorrect factual findings by her Honour. In addition, the exercise of discretion by her Honour is challenged, and it is contended that her Honour failed to provide adequate reasons.
As to the factual errors, they are said to arise in [86] and [96] of her Honour’s reasons.
In [86a)] the primary judge is said to have erroneously recorded that the wife “acknowledged having taken and spent” the amount of $56,669 which she drew down from a redraw facility that was available to the parties.
However, I can see no error here. In paragraphs 49 – 57 of the wife’s affidavit filed on 10 January 2019, the wife deposed to having taken that money, deposited it into bank accounts, and then spent it on business related expenses ($18,600), and the balance on food, fuel, swimming fees, children’s education expenses, and legal expenses.
Turning to the other factual error, that was conceded by the husband. At [96] her Honour erroneously recorded the wife’s evidence that she paid legal fees totalling $49,497 from the redrawn amount of $56,669, and that led her Honour to conclude as follows:
97.I accordingly consider it appropriate to add-back the amount spent by the Wife on her legal fees from the funds redrawn by the Wife from the home loan in the amount of $49,497.
There was no issue that the wife’s paid legal fees totalled $49,497, but her unchallenged evidence was that only some of that was paid from the accounts into which the $56,669 was paid, and given the deposit of money from various sources into those accounts, it was impossible to identify precisely how much of the redrawn amount was used to pay legal fees.
In any event, the authorities establish that the process of adding-back assets to the asset pool is not only discretionary, but also exceptional (Trevi & Trevi (2018) FLC 93-858 at [30]; Omacini and Omacini (2005) FLC 93-218). The more appropriate course is to take the same into account as a relevant factor pursuant to s 75(2)(o) of the Family Law Act 1975 (Cth) (“the Act”).
As for the exercise of discretion, there were compelling considerations present here as to why, even if an amount could be identified as coming from the redraw facility, the same would not have been added-back. For example, there were all the matters described by her Honour in [94] and [143].
Added to this, and in light of the compelling discretionary considerations, there is the lack of adequate reasons by her Honour, in that it is not possible to ascertain the reasoning which led to her Honour forming the view that it was “appropriate” to add-back the amounts spent by the wife on her legal fees (even if that amount had been able to be accurately identified).
Again, there is merit in this ground of appeal.
Grounds 3, 4 and 5
Ground 3 – Further or in the alternative the learned trial Judge (at [146-147] of her reasons) erred in her finding that a consideration of the s 75(2) factors relevant to the circumstances of this case required that the wife receive an award of only a further 10 per centum of the asset pool notwithstanding:
(a) her own findings (at [142-143]) of her Reasons) that the husband had failed to comply with various orders of the court requiring him to pay loan instalments, family health cover, spousal maintenance, house and car insurance and rates and taxes;
(b) the very significant disparity of the present and future income earning capacities of the parties;
(c) the husband’s retention of the only income earning asset of the parties;
(d) the responsibilities of the wife in relation to the children of the marriage;
(e) the relatively small dimension of the asset pool available for distribution;
(f) that such an award was well without the bounds of a reasonable exercise of the discretion the learned Trial Judge had in relation to such an award.
Ground 4 – Further or in the alternative to Ground 3(a) herein, the learned Trial Judge erred in that, having indicated an intention (at [44] of her reasons) to bring to account the matters referred to at [143] of her Reasons pursuant to s 75(2)(o), she failed to do so.
Ground 5 – Further or in the alternative, the learned Trial Judge erred in that in making the section 75(2) adjustment referred to in paragraph 3 herein she failed to provide any or any sufficient reasons for doing so.
At the hearing of the appeal these grounds were addressed together, and it is convenient for this Court to do the same.
Plainly, these grounds challenge the adjustment made by her Honour in the wife’s favour pursuant to s 75(2) of the Act, and they are expressed to be in the alternative.
Ground 3 is a weight challenge, Ground 4 alleges an error by her Honour in failing to take into account a matter that she indicated that she would, and Ground 5 asserts a failure to provide adequate reasons.
Her Honour’s identification of the relevant s 75(2) factors, the evidence in relation to the same, and how that should be treated, is traversed in [129]–[144], and her Honour arrived at her conclusion in [145]–[147]. However, I am not persuaded that her Honour has erred in reaching that conclusion in any of the ways suggested.
Importantly, and albeit a matter that the wife relied upon heavily, I do not accept the submission that the reference to “all of those factors” in making the finding in [146] only referred to the factors in [145], being those relevant to why her Honour adopted a single pool approach. The factors referred to were plainly those identified in [129]–[144].
That renders Grounds 4 and 5 unsustainable, and to a certain extent, Ground 3 as well.
However, further to Ground 3, it is unnecessary to repeat the well-known principles applicable to a weight challenge, but suffice to say that what needs to be established is that the primary judge was plainly wrong, her decision being no proper exercise of her discretion (Gronow v Gronow (1979) 144 CLR 513 per Stephen J at 519-520). That has not been established here.
There is clearly no error of fact or law identified, and the complaint appears to be that the decision of her Honour was “unreasonable”, or “plainly unjust” (House v The King (1936) 55 CLR 499 at 504 and 505). However, as identified by the Full Court in Babett & Falconer (2015) FLC 98-067, “[a]n appellate court’s decision that a trial Judge’s discretionary conclusion is wrong must have a discernible proper foundation and that foundation cannot be merely that it would have reached a different decision based on the same facts” (at [34]). And, to describe an assessment of factors as “unreasonable” or “plainly unjust” where that assessment has been reached on established facts, none of which are challenged on appeal, “begs a foundation for this Court doing other than substituting its own discretionary conclusion for that of the trial Judge” (at [37]).
Thus, here, the submission is no more or less than a submission that this Court would reach a different conclusion to that of the primary judge, and that submission is not one that can enjoy any success (Sharman v Evans (1977) 138 CLR 563, per Barwick CJ at 565).
There is no merit in this ground of appeal.
Conclusion
Having found merit in Grounds 1 and 2, but not in Grounds 3, 4 and 5, the appeal must be allowed in part.
In the event that the appeal enjoyed any success, both parties sought that the discretion be re-exercised rather than there be a remitter. Further, neither party indicated that if the discretion was re-exercised, any further evidence would be adduced.
As can be seen, the errors involved her Honour adding back two term deposits of the wife, and her paid legal costs. There was no challenge to her Honour’s finding that it was just and equitable to make orders for property settlement, or to her Honour’s assessment of the respective contributions of the parties, and I have found that there was no error by her Honour in her assessment of the relevant s 75(2) factors.
Thus, in re-exercising the discretion, all that I propose to do is remove from the net asset pool the add-backs the subject of Grounds 1 and 2, and then apply the same percentage division as her Honour did to that amended net asset pool, but allowing for the assets, superannuation, and liabilities, each party retains.
The net asset pool, including superannuation, as found by her Honour was $365,561. By removing the add-backs, that amount becomes $306,651.54.
Sixty per cent of that figure is $183,990.92. The wife has net assets, including superannuation, totalling $17,466.30, but in addition, if she is to retain the property, the net value there is $202,202, and thus the net assets that she would have would be $219,668.30. Accordingly, she would have to pay the husband the sum of $35,677 (rounded to the nearest dollar) instead of the amount of $56,596 as ordered by her Honour.
The husband will be retaining net assets of $86,983 (incorrectly said to be $89,628 in [151]), but he will receive from the wife $35,677, making total net assets of $122,660.
The overall outcome results in the wife retaining assets of $183,991 (rounded to the nearest dollar), and the husband retaining assets of $122,660, being a difference of $61,331. I find that differential to be just and equitable in all the circumstances.
Given that the wife may have some difficulty in being able to retain the U property, her Honour made orders providing for the sale of that property, and those orders are not challenged, save and except as to the distribution of the net proceeds of sale. Given the amendments to the relevant figures, it is necessary for me to make adjustments to the amounts set out in her Honour’s orders in that regard. Thus, order (4)(e)(v) will now read:
That the net proceeds of sale remaining thereafter in addition to $163,359 be divided as to SIXTY PERCENTUM (60%) to the Wife less $17,466 (being the assets in the Wife’s possession) and FORTY PERCENTUM (40%) to the Husband less $86,983 (being the assets in the husband’s possession).
Costs
In the event that the appeal was allowed, no costs orders were sought, but each party sought the granting of costs certificates pursuant to the Federal Proceedings (Costs) Act1981 (Cth).
Of course, three of the five grounds of appeal were found to have no merit, but unless the appeal was dismissed in its entirety, no costs were sought by the husband.
Given that the appeal is being allowed in part for errors of law, and there are no costs orders, it is appropriate for each party to have costs certificates for the appeal.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 26 August 2020.
Associate:
Date: 26 August 2020
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