F v F

[1996] FamCA 13

[1996] FamCA 13

FAMILY LAW ACT 1975

IN THE FULL COURT

OF THE FAMILY COURT OF AUSTRALIA

AT MELBOURNE

Appeal No. SA17 of 1995

File No. ML399 of 1986

IN THE MARRIAGE OF:

MR F

Appellant/Husband

AND

MS F

Respondent/Wife

REASONS FOR JUDGMENT

BEFORE:        Ellis, Baker and Warnick JJ.

HEARD:         19th day of February 1996

JUDGMENT:       23rd day of February 1996

APPEARANCES:     Ms Bryant of counsel (instructed by Madgwicks, Solicitors, 535 Bourke Street, Melbourne VIC 3000), appeared on behalf of the appellant husband.

Mr Holzer of counsel (instructed by A. I. F. Lucas & Co, Solicitors, 963 Ferntree Gully Road, Wheelers Hill VIC 3250), appeared on behalf of the respondent wife.

Catchwords:    PROPERTY SETTLEMENT -variation of orders - miscarriage of justice pursuant to s.79A(1) (c) - re-exercise of discretion - categorisation of lump sum - whether discretion miscarried.

This is an appeal by the husband against orders made on 25 January 1995. The facts appear in the judgment of the trial Judge reported at (1995) FLC 92-576.

The approach of the trial Judge in 1995 was to make findings as to the property of the parties as at August 1990, the value of the property, the liabilities of the parties and then to consider the nature and form of the orders to be made and then to categorise them.

Submitted that, in adopting that approach, the trial Judge erred.

Held: -

1.That the approach adopted was not open to the trial Judge and was such as to call for intervention.  He should have identified the property of the parties as at the date of hearing, valued the property, as best he could, at that date, assessed the parties' respective contributions, considered the relevant s.75 (2)matters and taken into account s.79 (4) (d), (f) and (g).

2.It was beyond power for the trial Judge to categorise an order for a lump sum payment as an order for maintenance.

3.The approach adopted in relation to spousal maintenance wa not open to the trial Judge.  Observation in Clauson and Clauson (1995) FLC 92-595 as to the distinction between the s.75 (2) component of a s.79 order and a claim for maintenance and as to the steps to be taken before making an order for lump sum maintenance adopted.

Appeal allowed.

Application and cross-application remitted for rehearing.

Reportable.

This is an appeal by the husband against the following orders made by the trial judge on 25 January 1995, namely:

“(1) That I set aside paragraph 5 of my order made 8^th August 1990, and order in lieu thereof:

(a)That the husband forthwith pay to the wife by way of alteration of property interests the sum of $725,250.00.

(b)That the husband forthwith pay to the wife lump sum spousal maintenance of $1,000,000.00. I order that this order be retrospective to, operative from, and deemed to have been made on, 8 of August 1990, and take effect accordingly.

(2) That I vary paragraph 9 of my said order by substituting for the words “$2,000,000.00”, wherever appearing, the words “the said sums of $1,000.000.00 and $725,250.00”.

(3) That I dismiss the husband’s application filed 25^th May 1994 and his amended application filed 7^th November 1994.

(4) That I adjourn to a date to be fixed by the Listings Registrar paras 4 and 5 of the wife’s cross-application filed 8^th August 1994.

(5) That I reserve to the wife liberty to apply to bring those applications on for hearing on giving reasonable notice to the husband.

(6) That I make no order as to costs.

IT IS CERTIFIED

(7) That this was a matter proper for the attendance of counsel on behalf of the wife.”

At the commencement of the hearing of the appeal, leave was granted to the husband to further amend his notice of appeal. In that further amended notice of appeal, the following orders were sought:

“1.That the following orders be set aside:

(a) paragraphs 5, 6, 8, 9 and 17 of the order made on the 8^th August 1990;

(b) paragraphs 1(a), 1(b), 2 and 3 of the order made 25^th January 1995;

(c) paragraphs 4, 8, 10, 11 and 12 of the orders made 4^th February 1986.

2.That the wife pay to the husband the sum of $500,000.00 by way of settlement of property within such time as the court may order.

3.That the husband pay to the wife maintenance for the children of the marriage namely [X] born […] 1979, [Z] born […] 1991 and [Y] born […] 1984 in the sum of US $20.00 per week per child.”

BACKGROUND

The judgment of the trial judge has been reported at [1995] FLC 92-576. At pp 81,704-7 in that report, under the heading, “The First Chronology”, “The Judgment and Orders of 8th August 1990” and “The Second Chronology”, the trial judge set out the relevant background. As none of the findings relating to the relevant background referred to under those headings have been challenged at the hearing of this appeal, it is not necessary for us to repeat that material.

JUDGMENT OF THE TRIAL JUDGE

After some introductory comments, the trail judge noted that the issues with which he was concerned were the application of the husband to vary or set aside such parts of the orders of 8^th August 1990 as were made pursuant to the provisions of s 79A(1)(a) and (b) of the Act and the wife’s application that the order for payment by the husband of a lump sum of $2,000,000 (made pursuant to s 79) be categorised as an order for lump sum maintenance pursuant to ss 74 and 80(1)(a) of the Act. He then set out relevant material under the three headings to which we have referred. He then turned to the basis of the husband’s application under s 79A(1) and recorded that the husband asserted firstly that there had been a miscarriage of justice by reason of fraud, suppressions of evidence and the giving of false evidence, and secondly, that circumstances had arisen since the making of the orders of 8^th August 1990 which made it impracticable for the order or part of it to be carried into effect. He noted that in August 1990, he had relied upon an aide-memoire, which had been produced to him by counsel then appearing for the wife, as accurately setting out the contents of the annexures to the husband’s affidavit of 19 January 1990 but found that it had not, in fact, done so.

He concluded that the net value of the husband’s US property as at the date of the 1990 hearing was $US764,000 or approximately $A970,000, a sum markedly less than the $A3,000,000 which was the value that he had placed on the United States assets in 1990 based upon the information contained in the aide-memoire. He found that the overvaluation of the husband’s United States assets was simply the result of a misreading of the husband’s affidavit and the annexures thereto. He further found that the overvaluation was not the result of fraud by the wife or by any of her legal representatives, that no evidence available to be called on behalf of the wife had been suppressed and that none of the evidence given on behalf of the wife, or by her, was false.

He then turned to consider whether the overvaluation of the husband’s United States assets by about $A2,000,000 ought to be treated as a miscarriage of justice. He concluded that consideration by saying:

“I hold that the wife’s reliance upon an aide-memoire, which inadvertently overestimated the value of the husband’s US property by approximately $2 million, here resulted in a miscarriage of justice by reason of any other circumstance.”

He then dealt with the submissions relating to impracticability of compliance (s 79A(1)(b)) and whether, in the exercise of his discretion, he ought to set aside or vary the order, of 8 August 1990. He concluded those latter considerations by saying:

“I hold that the miscarriage of justice which I have here found established ‘‘is of such a serious nature and results in such inequity that it can only be rectified by the extreme step of setting aside or varying” my order of 8^th August 1990. See Simpson and Hamlin 9 Fam LR 1040 at 1047, (1984) FLC 91–576.

In applying s 79A(1) I may set aside or vary the order or I may, if I consider it appropriate, make another order under s 79 in substitution for the order so set aside. There is no proper basis, I find why I ought to set aside the whole of the order. I find that justice will be done if I proceed to make findings concerning the property of the parties as at August 1990, the value of that property, the ownership of that property, the liabilities of the parties, the existence of any other order under this Act. I will then consider the nature and form of the orders to be made, and I will categorise them.”

Thereafter, under the heading “The Section 79 Approach”, the trial judge referred to certain aspects of the evidence relating to the property of the parties and the value thereof and then said: “Accordingly I find that the total value of the property which was property the subject of my order on 8^th August 1990 is $2,947,000, made up as follows:”

Australian property        $1,977,000.00

U.S. property              $970,000.00

TOTAL  $2,947,000.00"

He noted that in August 1990, he had “altered the parties’ interests to 75/25 in favour of the wife in the Australian assets, and to 25/75 in the wife’s favour in the US assets”.

Thereafter, he said:

“Using the formulae above specified, I find that of the total pool of $2,947,000 the wife is entitled to $1,725,250 and the husband is entitled to $1,221,750. I will, accordingly, order payment to the wife by lump sum of the sum of $1,725,250.”

The trial judge then turned to a consideration of the order sought by the wife in her amended answer and cross-application filed on 28^th  October 1994 as follows:

“3. That the para 5 of the orders made 8^th  August, 1990 be confirmed and the payment therein categorised as a lump sum payment by the husband to the wife.”

He noted that that application was made pursuant to the provisions of s 79A(1)(c) and that he approached the categorisation of the lump sum(s) payable to the wife pursuant to his orders by:

“… having regard to, and taking into account, two significant and basic factors or matters. Firstly, an order of a court, regularly made, ought to be complied with, therefore, when making orders, a judge ought to assume that compliance will occur and a successful party to civil litigation will obtain the benefits of that judgment. Secondly, when, however, a judge, on reasonable grounds, has reason to anticipate that compliance will not occur, then the judge ought so to frame the orders as to ensure that the successful party in fact obtains the fruits of the judgment.”

He concluded that the husband had, in the United States, assets available to satisfy an order for lump sum spousal maintenance, that he had failed to pay to the wife any moneys whether child maintenance, costs or otherwise in compliance with his order of 8 August 1990 and that he had no intention of complying hereafter. As a consequence, he found it proper to order the husband to pay to the wife lump sum spousal maintenance which he subsequently quantified in the sum of $A1,000,000. He indicated that he proposed ordering that the lump sum maintenance order “be retrospective to, operative from, and deemed to have been made at, the date of the August 1990 judgment and orders”.

Under the heading of “Alteration of Property Interests”, he then said:

“I next consider what order, if any, I should make for alteration of property interests. I have earlier assessed the wife’s financial entitlement at $1,725,250. I have now ordered the husband to pay $1,000,000 lump sum spousal maintenance. Before I make an order for property settlement I am required to take into account and consider the order for spousal maintenance. Accordingly, I reduce the wife’s entitlement to property settlement by the amount of maintenance order, and order that she be paid by way of alteration of property interests the sum of $725,250.”

Thereafter, the trial judge made the orders from which the husband has now appealed.

THE APPEAL

The appeal is one from discretionary orders. The principles which govern such an appeal are not in doubt and do not require repeating in the context of this case. See House v R (1936) 55 CLR 499, and Gronow v Gronow (1977) 144 CLR 513.

GROUNDS OF APPEAL

The husband has relied upon some eight grounds of appeal which are set out at pages 1 to 3 of the appeal book. However, having regard to the global manner in which the appeal was conducted, it is not necessary to refer specifically to those grounds of appeal.

SUBMISSIONS ON APPEAL

We have already referred to the approach adopted by the trial judge after finding that there had been a miscarriage of justice as a result of which the order of 8 August 1990 should be set aside or varied, namely:

“In applying s 79A(1) I may set aside or vary the order or I may, if I consider it appropriate, make another order under s 79 in substitution for the order so set aside. There is no proper basis, I find, why I ought to set aside the whole of the order. I find that justice will be done if I proceed to make findings concerning the property of the parties as at August 1990, the value of that property, the ownership of that property, the liabilities of the parties, the existence of any other order under this Act. I will then consider the nature and form of the orders to be made, and I will categorise them.”

It was submitted that, in adopting that approach, the trial judge erred in the appellate sense. It was further submitted that, having concluded that he would set aside or vary the order of 8 August 1990, the trial judge was required, in reaching his ultimate decision, to consider all the factors referred to in s 79(4) and, so far as they are relevant, in s 75(2). This, it was submitted, he failed to do.

In the course of his reasons for judgment, the trial judge verified his finding that, as at 8 August 1990, the value of the Australian assets of the parties was fixed in the sum of $980,000 real property and $197,000 personal property of C Pty Ltd, non-collectible. He further found that the husband had reduced the assets in Australia by about $800,000 and that it was appropriate to take that sum into account. He thus found that the value of the Australian assets to be $1,977,000. However, those findings of the trial judge overlooked the evidence that those assets had been under the control of the wife since 1990 and that by the date of hearing, the Australian real estate had been sold. The wife received no benefit from the proceeds of sale apart from a relatively small portion of the proceeds being applied to her costs. Thus, at the date of hearing, there was no Australian real estate. However, the trial judge was referring to the value of the property of the parties which was the subject of his 1990 order, not the value of the Australian assets of the parties as at the date of the second hearing.

It was submitted, having regard to the evidence, including the evidence, including the evidence relating to events subsequent to the 1990 orders which it was submitted showed that there was no equity in the parties’ Australian real estate at that time, that though it may have been open to the trial judge to have taken into account the $800,000 unused by the husband which reduced the value of the assets in Australia and the $197,000 personal property of C Pty Ltd, non-collectible, it was not open to him on the evidence to include the $980,000 as the value of real estate in the value of the assets of the parties. However, we need not consider that submission because the trial judge was required to identify the property of the parties as at the date of hearing and value it as best he could as at that date.

It was further submitted that the trial judge erred in concluding as he did at page 40 of the appeal book that there was no evidence as to the current value of the husband’s statement of financial circumstances sworn 12 April 1994 and to the affidavit of Mr TT sworn 15 December 1994 and the material contained in the various charts at pp 438, 440 and 442 of the appeal book. We are satisfied that there was evidence before the trial judge, unsatisfactory though it may have been, which may have enabled him to have identified and valued the United States property as at 1995 but, in any event, it was inappropriate for him to have taken that property into account at its adjusted 1990 value.

It is also apparent that the trial judge determined that the wife should receive a lump sum of $1,725,250 by applying the assets he had made in 1990 as to parties’ contributions pursuant to s 79(4) and the relevant s 75(2) factors. He did not address the questions of contribution and relevant s 75(2) factors in the 1995 context.

In our view, the approach adopted by the trial judge was not open to him and is such as to call for intervention by this Court. He should have identified the property of the parties as at the date of hearing and valued that property at that date, as best he could, on the evidence. He then should have assessed the parties’ respective contributions pursuant to s 79(4), considered the relevant s 75(2) matters and taken into account the provisions of s 79(4)(d), (f) and (g). This he did not do.

It was next submitted that it was beyond power for the trial judge to have categorised an order for the payment to the wife of a lump sum or part thereof as an order for lump sum maintenance and secondly, that it was not open to him to conclude that the wife should receive a lump sum, determine that she was entitled to spousal maintenance and the quantum of that maintenance, and then order that the balance of the lump sum be paid to her by way of property interests.

It was submitted on behalf of the wife that the Act contains specific provisions which enable a trial judge to categorise the whole or part of an order for the payment of a lump sum as an order for lump sum spousal maintenance. In support of that submission, we were referred to the provisions of s 79A(1)(c), s 80 and s 43 of the Act. However, no cogent arguments were advanced in support of the submission. In our view, those sections, whether read separately or together, do no enable a judge to categorise an order in the manner submitted.

We were additionally referred on behalf of the husband, to the distinction between the component of a s 79 order which attracts the terms of s 75(2) and a claim for maintenance. We would with respect adopt the observations of the Full Court in Clauson and Clauson (1995) FLC 92–595 as to the distinction between the two and the steps to be taken before making an order for lump sum maintenance.

In our view, the overall approach of the trial judge was so fundamentally flawed as to call for intervention by this court.

Finally, we would record that it was conceded on behalf of the wife that the appeal should be allowed if we conclude, as we have, that the trial judge had no power to categorise an order for a lump sum payment as an order for maintenance in the manner in which he did.

RE-EXERCISE OF THE DISCRETION

Having concluded that the appeal should be allowed, we must consider whether the application should be remitted for rehearing or whether this court is in a position to substitute its discretion for that of the trial judge.

Regrettably, in our view, there is no sufficient material available to us to identify the assets, liabilities and financial resources of the parties as at the date of the hearing, to weight and assess their respective contributions and to identify and assess the matters referred to in s 75(2) which are here relevant. Accordingly,the matter must be remitted for reheairng before a single Judge. We would recommend, however, that that rehearing take place as soon as practicable.

COSTS OF THE APPEAL

At the conclusion of the hearing of the appeal, both the husband and the wife sought that, if the appeal were allowed on a matter of law, they each receive a costs certificate pursuant to the provisions of the Federal Proceedings (Costs) Act 1981. In our view, it is appropriate that each be granted the appropriate certificate. In addition, the husband sought a certificate pursuant to s 8 of the Federal Proceedings (Costs) Act 1981. We do no consider that it is appropriate to grant that certificate, particularly at this stage.

ORDERS

We therefore order:

1.   That the appeal be allowed.

2.   That the orders of 25 January 1995 be set aside.

3.That the amendment application of the husband filed on 7 November 1994 and the amended cross-application of the wife filed on 28 October 1994 be remitted for rehearing before a single judge as soon as practicable.

4.That the court grants to the appellant husband a costs certficate pursuant to the provisions of s 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.

5.That the court grants to the respondent wife a costs certificate pursuant to the provisions of s 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.