FERRICK & FERRICK
[2020] FamCAFC 61
•25 March 2020
FAMILY COURT OF AUSTRALIA
| FERRICK & FERRICK | [2020] FamCAFC 61 |
| FAMILY LAW – APPEAL – PARENTING – Where the appellant mother appeals from final orders allocating equal shared parental responsibility to the parties and providing for the child to spend substantial time with the father – Where the mother also appeals from the primary judge’s refusal or failure to make orders for which she applied – Where the primary judge did not err in applying s 61DA of the Family Law Act 1975 (Cth) – Where the orders made by the primary judge stipulating the time for the child to spend with the father were consistent with the evidence – Where findings were open – Where the primary judge appropriately considered factors pursuant to s 60CC of the Family Law Act 1975 (Cth) – Where sufficient reasons were provided – Where no material error demonstrated – Where the primary judge’s failure to grant or dismiss the mother’s application for an injunction regulating communication between the parties is rectified by an order dismissing all outstanding applications in the parenting dispute under s 94AAA(6) of the Family Law Act 1975 (Cth) – Where no merit in the grounds of appeal – Appeal dismissed – No order as to costs. FAMILY LAW – APPEAL – PROPERTY – SPOUSAL MAINTENANCE – Where the appellant mother appeals from final property orders dividing the parties’ property and splitting the father’s superannuation interests – Where multiple grounds of appeal conceal the essential points – Where the primary judge failed to correctly apply s 79(2) of the Family Law Act 1975 (Cth) – Where the primary judge did not determine the identity and value of the parties’ contested assets and liabilities – Where there are inadequate reasons and errors of law which caused the exercise of discretion to miscarry – Where the primary judge made few findings to resolve the factual disputes over the parties’ contributions – Where the primary judge erred in the treatment of the mother’s spousal maintenance application – Where the primary judge erred by failing to make an intended order to dismiss the spousal maintenance application – Where the parties’ applications under Part VIII of the Family Law Act 1975 (Cth) are remitted for re-hearing – Appeal allowed. FAMILY LAW – APPEAL – PROPERTY – COSTS CERTIFICATES – Where the appeal succeeded on errors of law – Where parties are granted costs certificates for the appeal and the rehearing. |
| Family Law Act 1975 (Cth) ss 60CC, 61DA, 65DAA, 75, 79, 93A, 94A, 94AAA Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 8, 9 |
| Carlson & Carlson (2019) FLC 93-934; [2019] FamCAFC 245 Conway v The Queen (2002) 209 CLR 203; [2002] HCA 2 Cramer v Davies (1997) 72 ALJR 146 Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63 House v The King (1936) 55 CLR 499; [1936] HCA 40 Lane & Nichols (2016) FLC 93-750; [2016] FamCAFC 234 Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166 Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49 |
| APPELLANT: | Ms Ferrick |
| RESPONDENT: | Mr Ferrick |
| FILE NUMBER: | BRC | 8700 | of | 2016 |
| FIRST APPEAL NUMBER: | NOA | 84 | of | 2019 |
| SECOND APPEAL NUMBER: | NOA | 7 | of | 2020 |
| DATE DELIVERED: | 25 March 2020 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Aldridge, Kent & Austin JJ |
| HEARING DATE: | 16 March 2020 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 27 August 2019 17 December 2019 |
| LOWER COURT MNC: | [2019] FCCA 2336 [2019] FCCA 3674 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms S Downes |
| SOLICITOR FOR THE APPELLANT: | Pullos Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr S J Williams QC |
| SOLICITOR FOR THE RESPONDENT: | Hartley Healy Family Law Specialists |
Orders made on 16 March 2020 in appeal no. noa 7 of 2020
Appeal no. NOA 7 of 2020 be allowed.
The orders made by the primary judge on 17 December 2019 be set aside.
The proceedings be remitted to the Federal Circuit Court of Australia for rehearing by a judge other than the primary judge.
The Court grants to the appellant wife a costs certificate pursuant to 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 in respect of the costs incurred by the appellant in relation to the appeal.
The Court grants to the respondent husband a costs certificate pursuant to 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 in respect of the costs incurred by the respondent in relation to the appeal.
The Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 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 each of them in respect of costs incurred by them in relation to the new trial ordered.
Orders made on 16 March 2020 in appeal no. noa 84 of 2019
Appeal no. NOA 84 of 2019 be dismissed.
Judgment on the issue of costs be reserved.
Further orders in appeal no. noa 84 of 2019
Any outstanding application between the parties under Part VII of the Family Law Act 1975 (Cth) is dismissed.
No order as to costs.
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 Ferrick & Ferrick 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 FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NOA 84 of 2019; NOA 7 of 2020
File Number: BRC 8700 of 2016
| Ms Ferrick |
Appellant
And
| Mr Ferrick |
Respondent
REASONS FOR JUDGMENT
On 27 August 2019, a judge of the Federal Circuit Court of Australia made orders determining the dispute between the appellant mother and the respondent father in respect of their child under Part VII of the Family Law Act 1975 (Cth) (“the Act”). In essence, those orders provided for the parties to have equal shared parental responsibility for the child, for him to live with the mother, and for him to spend substantial time with the father. The mother’s appeal was from the orders which allocate equal shared parental responsibility and designate the time the child will spend with the father, and from the primary judge’s refusal or failure to make other orders for which she applied.
On 17 December 2019, the same judge made orders determining the parties’ allied dispute under Part VIII of the Act, dividing their property and splitting the father’s superannuation interest. The mother additionally applied for lump sum and periodic spousal maintenance orders but, despite the intended dismissal of her application being made clear from the reasons for judgment, no dismissal order was actually made. The mother appealed from all of those orders.
The two appeals were consolidated and heard together.
Orders were made immediately following the appeal hearing allowing the property and spousal maintenance appeal (Appeal No. NOA 7 of 2020), which was conceded by the father, and dismissing the parenting appeal (Appeal No. NOA 84 of 2019). The reasons which follow explain those orders and the additional orders we now make.
The parenting appeal
Although the parenting appeal comprised 17 grounds, only seven were pressed and the rest were abandoned. At the outset, it should be observed there was an unfortunate lack of correlation between the grounds of appeal and the mother’s Summary of Argument in support of them.
Grounds 1 and 2
These grounds of appeal concern the order allocating to the parties equal shared parental responsibility for the child.
Ground 1 contended the primary judge failed to properly consider s 61DA(4) of the Act and Ground 2 contended the primary judge erred in the consideration of s 61DA of the Act when dealing with the mother’s application for an order granting her sole parental responsibility for the child.
Notwithstanding the terms of the two grounds of appeal, the Summary of Argument in support of these grounds commenced:
The [primary judge] erred at law in failing to consider or give any reasons as to whether the presumption against making an Order for equal shared parental responsibility was rebutted (s 61DA(4)) …
(Emphasis added)
The point which must immediately be made is that neither ground pleaded any challenge to the adequacy of the primary judge’s reasons for the order granting the parties equal shared parental responsibility. We also impute a grammatical error in the submission because s 61DA(1) of the Act establishes a presumption in favour, not against, an order for parents to have equal shared parental responsibility, which presumption may be rebutted by the evidence pursuant to s 61DA(4) of the Act.
At trial, the mother sought sole parental responsibility for the child, whereas the father sought an order for equal shared parental responsibility. In this case, as the primary judge correctly noted (at [177]), the presumption of an order allocating equal shared parental responsibility was not rendered inapplicable pursuant to s 61DA(2) of the Act by any evidence of family violence or abuse. Consequently, the presumption would apply unless rebutted under s 61DA(4) of the Act.
The primary judge found evidence of “disagreements and an apparent inability [of the parties] to cooperate” (at [6], [62], [63], [83], [125], [137], [177]) and acknowledged the parties may never enjoy an easy parental relationship because they are reluctant to “give in to one another” (at [36] and [70]), which was why the mother contended for the rebuttal of the presumption for an order for equal shared parental responsibility (at [180]). However, his Honour balanced those considerations against others and was not persuaded the evidence rebutted the presumption.
There was a solid evidentiary platform for the conclusion reached by the primary judge. His Honour did not consider the child had ever been at “imminent” or “immediate” risk of harm due to the parties’ disagreements over him (at [184]-[186]) and concluded, if vested with sole parental responsibility, the mother would likely restrict the father’s involvement in decisions about the child’s development (at [190]-[192]). The mother asserted in evidence she could mend the parental relationship in an effort to promote the child’s best interests (at [59]) and she sought orders prescribing the manner in which the parties should communicate with one another in writing, which she presumably would not have sought if she genuinely believed that temperate communication between the parties was impossible. The mother’s counsel conceded in final submissions that the parties did have some limited capacity to communicate and had reached compromises in the past. The Family Consultant opined that overcoming the parties’ communication difficulties could be better achieved with an order for equal shared parental responsibility because of the power imbalance that would exist if the mother had sole parental responsibility. It was open to the primary judge to accept that expert opinion as his Honour did.
Another judge, seized of the same evidence and having made the same findings about the parties’ past disharmony, might have found the presumption of equal shared parental responsibility rebutted and acceded to the mother’s proposal to have sole parental responsibility for the child. But that is not the test on appeal (Gronow v Gronow (1979) 144 CLR 513 at 519-520). The primary judge, in the exercise of wide discretion, did not find the presumption rebutted by the evidence and the mother was unable to demonstrate in the appeal how that finding was unavailable. Demonstrating that the opposite conclusion was just as open is not enough to sustain the appeal.
In answer to these grounds of appeal, as they were pleaded, the primary judge did properly consider the provisions of s 61DA of the Act and reached a conclusion which is not demonstrably unsound.
Before leaving these grounds, in oral argument the mother’s counsel expressly disavowed any challenge of procedural unfairness implied by Ground 2.
Grounds 8 and 9
These grounds of appeal concern the orders stipulating the time the child should spend with the father during school terms, during school holidays, and on other special occasions.
Again, the mother’s Summary of Argument did not correlate with the pleaded grounds of appeal, but we infer the gist of the mother’s complaint was that the primary judge’s exercise of discretion miscarried for two reasons: first, his Honour made orders which increased the amount of time the child must spend with the father at a faster rate than either the Family Consultant recommended or the father even proposed; and secondly, his Honour gave inadequate reasons for that particular decision by reference to the considerations mandated by s 60CC of the Act.
The child was nearly four years of age when the appealed orders were made and the parties were at odds over how much time he should spend with the father.
The mother proposed that the child continue to spend three nights per fortnight with the father until February 2022, by which time he would be six years old, when the regime should be reviewed by the parties in mediation (at [8], [23], [148], [197]). The mother proposed that the child also spend time with the father in school holidays, but confined to only three days per holiday period until 2021, when the time would expand to five days per holiday period.
The father proposed that the child immediately commence spending four nights per fortnight with him until June 2020, then five nights per fortnight until December 2020, after which time the child would live with the parties for equal time on weekly rotations. As for school holidays, he proposed the child immediately spend five days of each holiday period with him, but then one-half of each holiday period from January 2021.
During cross-examination the Family Consultant recommended a regime which fell between the parties’ competing proposals. She perceived no disadvantage for the child by immediately expanding his time with the father to four nights per fortnight and believed the parties’ dispute over the exact number of nights was not the important issue, though five consecutive nights would likely be at the limit of the child’s tolerance while he is still young. The appealed orders went no further than that.
While Ground 8 alleged that the primary judge fell into error by finding there was an ambiguity in the Family Consultant’s recommendations (at [203], [225]), the mother conceded in oral submissions that his Honour’s reference to an “ambiguity” in the Family Consultant’s evidence was nothing more than an intended reference to the “differences” between the recommendations made by the Family Consultant in oral evidence at trial in August 2019 and in the Family Report compiled over a year before in June 2018. The recommendations made in June 2018 were more restrictive because the child was then younger.
The appealed orders were made about a month after the trial and provided for the child to immediately begin spending four nights per fortnight with the father (Orders 5(a) and 5(b)), expanding to five nights per fortnight from December 2019 (Order 5(c)). As can be seen, the orders escalated the child’s time with the father sooner than even he proposed, but stopped well short of his ultimate objective of an “equal time” residential arrangement. The orders were obviously more generous than those proposed by the mother but, as the primary judge remarked (at [172], [218]), there was no evidence to support, nor did she present a “clear and cogent case” for, the constriction of the child’s time with the father to only three nights per fortnight for several more years when the child enjoyed a loving relationship with him. It was found such an outcome would not be in the child’s best interests (at [220]).
Contrary to the mother’s appeal submissions, the orders were within the broad parameters of the Family Consultant’s opinion evidence. Even if they had not been, the Family Consultant’s evidence was only ever liable to be persuasive, not dispositive. The primary judge’s discretion was not confined by the recommendations made by the Family Consultant. The mother’s submission, therefore, about the miscarriage of the primary judge’s discretion merely because his Honour’s decision departed from the Family Consultant’s opinion evidence cannot be sustained.
The other limb to the mother’s complaint was that the decision about whether the child spends three, four, five, six, or seven nights per fortnight with the father was not reasoned by advertence to the factors prescribed by s 60CC of the Act. In fact, it was. His Honour specifically referred to the obligatory statutory considerations (at [15]-[16], [152]) and, in respect thereof, found:
a)the child had a good relationship with both parents (at [29], [51], [156]), with the mother even agreeing that the child was happier to go to the father than to day-care (at [157]), which were references to s 60CC(2)(a);
b)family violence did not play any role in the decision (at [129], [158], [177]), and the father posed no risk of harm to the child (at [167]-[171]), being references to s 60CC(2)(b);
c)although the distance between the parties’ homes “imposes travel time on the child”, it did not stand in the way of increasing the time spent by the child with the father (at [38]-[42]), but did preclude him from living with the father for equal time (at [47]-[49], [94]), which were references to ss 60CC(3)(d), 60CC(3)(e), and 60CC(3)(m);
d)the child was too young to express any view (at [51]), a reference to s 60CC(3)(a);
e)the child’s relationships with extended family members was not decisive (at [53], [61]), being references to s 60CC(3)(b); and
f)it was important to make orders which were least likely to lead to the institution of further proceedings (at [210]), referring to s 60CC(3)(l).
Tellingly, there were no other factors under s 60CC of the Act to which the mother directed the primary judge’s attention as being influential in the decision about the number of days the child should spend with the father each fortnight or during school holiday periods. Nor did she point to any in the appeal.
The mother’s “Updated Outline of Case Document” informed the primary judge that her summary of argument would be handed up on the first day of trial, but the transcript reveals it was not. The only written submissions for the mother within the Appeal Book which relate to the parenting dispute were filed after the trial concluded and those submissions were confined to the school at which the child should be enrolled and the mother’s desire for the orders to be reviewed in 2022. The only issues which were mentioned in oral submissions by the mother’s counsel at the conclusion of the trial were the child’s “night terrors” and “how he copes with travel”, both of which were covered in the primary judge’s reasons (at [39]-[49], [130]-[138]).
Given the primary judge determined to order that the parties have equal shared parental responsibility for the child, s 65DAA of the Act was engaged and it was necessary to first consider whether the child living for equal time with each parent would be in his best interests and the reasonable practicability of that outcome. His Honour concluded such a regime was not in the child’s best interests (at [210], [217]), having earlier commented upon its impracticability (at [47]-[49], [94]), but the child’s best interests were served by him spending substantial and significant time with the father. Unlike the father’s proposal and the Family Consultant’s recommendation, the mother’s proposal for the amount of time the child should spend with the father barely met the definition of “substantial and significant time” (s 65DAA(3)).
In answer to these grounds of appeal and the ancillary complaints in the mother’s Summary of Argument, the orders stipulating the time the child must spend with the father were consistent with and therefore open on the evidence, reasoned in accordance with the statutory considerations, and sufficiently explained.
Ground 14
This ground of appeal contended that the orders regulating the time the child must spend with the father lack specific detail and therefore fail to prescriptively quell the parties’ dispute over when the child should be exchanged between them. The orders are said to be unenforceable because, first, they do not say whether the time spent by the child with the father each fortnight is suspended during the school holidays, and secondly, the orders do not state when the time spent by the child in the school holidays starts and finishes.
Even if both those complaints are assumed to be valid, the mother was impelled to confront the irony of her complaint, since the orders she proposed to the primary judge suffered from exactly the same shortcomings.
However, the father denied any drafting error in the orders providing for the child to spend time with him in both school terms and school holidays. He contended the text of the orders necessarily means the child, as was intended, will spend time with him each and every fortnight, which visits are then supplemented by some extra time when it falls in school holiday periods. The corollary is that there is no need for the orders to define when school holidays start and finish.
The mother could not demonstrate the father’s interpretation of the orders was flawed. In fact, she candidly conceded in her Summary of Argument that the reasons for judgment (at [231]) appeared to make plain the school holiday time was an extension of the fortnightly rotation, in which event we are not satisfied of any error.
Even if the mother’s complaint of error had been correct, the omissions she identified could and should have been resolved by an application to the primary judge for rectification of the orders under the slip rule. That remedy is still available – if it is really necessary – since the parties have been operating under the appealed orders for more than the last six months and no application was made to adduce further evidence in the appeal to demonstrate the orders have failed because of those omissions. If the mother makes an application to the primary judge for rectification under the slip rule, the primary judge will either confirm they are drafted as was intended or correct the slip in the orders. An appeal on this ground was unnecessary.
Grounds 13 and 16
These grounds of appeal asserted the primary judge erred by failing to make two orders sought by the mother and, additionally, by failing to give reasons for why such orders were refused.
The two specific orders proposed by the mother which were the subject of these grounds were an injunction restraining the father from bringing the child into contact with a particular counsellor or any other therapist or medical practitioner without her consent and another order compelling the parties to communicate in writing via an electronic parental communication website.
As to the restrictive injunction, the primary judge expressly referred to the mother’s proposed order and refused to make it because his Honour accepted the father’s evidence that he only took the child with him to the named counsellor on one occasion, he left the child waiting outside during his consultation, and he would not take the child again (at [140]-[147]). The reasons of the primary judge were consistent with the evidence and sufficient to dispose of Ground 13. This ground of appeal and the submissions made in support of it both wrongly contended that the father consented to such an injunction being made against him. He did not. He simply confirmed he was agreeable to the mother’s wish for him not to take the child with him back to that particular counsellor.
In so far as the mother applied for the injunction to be made in wider terms, restraining the father from taking the child to any other therapist or medical practitioner without her consent (other than in emergencies), her application was unnecessary. The order granting the parties equal shared parental responsibility for the child precludes the father from doing so.
As to the communication order expressed in the form of a mandatory injunction, the primary judge was cognisant of the mother’s application for the order in those terms (at [8(i)]), but his Honour did not expressly deal with it in the reasons for judgment or in the orders. The failure to entertain and decide her application for that particular order was an error of law, but it need not sustain the appeal if it was immaterial. If no miscarriage of justice results from an error of law then it is not necessarily “appropriate”, under s 94AAA(6) of the Act (or s 94(2) either, when applicable), to order the dispute be re-heard (Conway v The Queen (2002) 209 CLR 203 at 207, 208, 217, 219, 220, 232, 244; Lane & Nichols (2016) FLC 93-750 at [72]-[81]).
Here, the error is not material and caused no injustice for several compelling reasons: the father asserted the parties had managed to communicate effectively (even if it did not result in their agreement) without any such order to regulate them from the time of their separation in 2016 until the time of trial in 2019, often by their use of the “Our Children” website; the mother admitted such communication between them had been respectful; although the mother made an application for the compulsive order at trial, she did not make a single submission (written or oral) to the primary judge in support of it, thereby implying it was of little moment; the parties were allocated equal shared parental responsibility for the child and no application was made by the mother in the appeal to adduce further evidence under s 93A(2) of the Act to prove that the absence of the proposed order has prevented them from communicating and thereby properly exercising their shared responsibility over the last six months; and, the absence of the order neither precludes the parties from communicating electronically in the manner the mother would prefer, nor forces them to communicate in some different way.
Nevertheless, the primary judge neither granted nor dismissed the mother’s application for the communication injunction, which left the application unresolved. The application could and should have been formally dismissed by the primary judge if the order was not to be made. Pursuant to the power reposed within s 94AAA(6) of the Act, an order should now be made to dismiss any and all other outstanding applications between the parties under Part VII of the Act not already covered by the appealed orders.
The property and maintenance appeal
The property and spousal maintenance appeal comprised 32 separate grounds of appeal. Regrettably, they were pleaded in such a discursive way that many were not recognisable grounds of appeal at all, since the available grounds of appeal from a discretionary judgment are both confined and defined (House v The King (1936) 55 CLR 499 at 504-505). This appeal was a good example of the situation in which multiple grounds of appeal conceal the essential points (Thorne v Kennedy (2017) 263 CLR 85 at [49]).
The mother conceded in her Summary of Argument that the grounds of appeal pleaded in her Notice of Appeal “amble incorrectly into submissions” which, although commendably admitted, hardly cures the problem. The mother abandoned Grounds 1, 3, 6, 14, 17, 18 and 29 of the appeal, but purported to prosecute the remaining 25 grounds. Although the remaining grounds were all identified by number in the mother’s Summary of Argument, many were not substantively addressed. Additionally, just as with the parenting appeal, it was an unduly difficult task to correlate the written submissions in the Summary of Argument with each ground of appeal.
The father helpfully conceded in his Summary of Argument that the “judgment is vitiated by numerous errors of material significance”, though not for the same reasons advanced by the mother.
On the eve of the hearing of the appeal, the parties filed a joint submission in these terms:
The Respondent concedes that the Appeal should be allowed as a result of material errors by the [primary judge] which have led to errors in law, errors of fact and errors in the exercise of his discretion.
The Respondent concedes errors with respect to the Grounds set out in the Appellant’s Summary of Argument and also contends further errors of material significance in the Reasons including the [primary judge’s] consideration (or proper lack thereof) of add-backs, taking into account irrelevant considerations and statements in his Reasons which lack proper judicial or legislative foundation.
Notwithstanding the parties’ concurrence about the existence of material error, the appeal does not succeed unless we are persuaded of it and the errors of law must be identified to support the grant of costs certificates, as both parties seek pursuant to the Federal Proceedings (Costs) Act 1981 (Cth). Thus, it is necessary to analyse the reasons given for the appealed orders. The parties’ joint submission acknowledges multiple errors, but does not explain them, so we will address the primary judge’s reasons in various categories, identifying error or vindicating his Honour’s approach where appropriate.
Identification of the parties’ property interests
As the Full Court said in Carlson & Carlson (2019) FLC 93-934 at [26]:
It is well established that in considering what, if any, order should be made to alter property interests, the Court is first required to identify and value the parties’ legal and equitable interests (see Stanford v Stanford (2012) 247 CLR 108 … Bevan & Bevan (2013) FLC 93-545; Chapman & Chapman (2014) FLC 93-592)…
Accomplishment of that task enables the judge to compare the parties’ existing financial positions to determine whether it is just and equitable to make any adjustment order at all (s 79(2) of the Act). If so, the initial establishment of the parties’ property interests then enables a reasoned decision to be made about the nature of the just and equitable adjustment order actually required to properly reflect the parties’ contributions and needs, by reference to the mandatory statutory considerations.
Here, the primary judge did not do that. In fact, his Honour even purported to determine under s 79(2) of the Act that it would be just and equitable to adjust the parties’ property interests, without establishing what their respective property interests actually were (at [8]).
In advance of the trial, both parties included schedules of assets and liabilities in their Case Outline documents. The mother submitted their joint assets had a net value of $579,411.45 and their respective superannuation interests were worth $291,673.35, with a combined net value of $871,084.80. The father submitted their joint assets had a net value of $478,211.23 and their respective superannuation interests were worth $312,223.49, with a combined net value of $790,434.72. Therefore, there was a discrepancy of over $80,000 with respect to the asserted value of their property interests.
The trial ended after two days of hearing without the father having had the opportunity to make final submissions in respect of the property settlement dispute so, pursuant to further procedural orders, both parties filed written submissions. The father, as part of his submissions, filed a Schedule of Assets and Liabilities, in which he contended the parties’ joint assets had a gross (not net) value of $621,542.76 and their respective superannuation interests were worth $312,223.49.
The Schedule of Assets and Liabilities filed by the father was defective in several ways: first, it did not include any of the parties’ existing liabilities, so its description as a “Schedule of Assets and liabilities” (emphasis added) was misleading; secondly, it did not include many items of property which the parties admitted in their financial statements they owned and possessed, including real property, cars, furniture, chattels, and bank accounts; and thirdly, it expressly recorded the parties’ disagreement over the values attributed to certain assets which were included in the schedule.
The primary judge simply incorporated the father’s Schedule of Assets and Liabilities into the reasons for judgment saying it represented the pool of property “finally agreed” between the parties (at [10]). It plainly did not. The mother did not signify any deviation from her contention that the schedule set out in her Case Outline document, filed in advance of the trial, accurately represented the parties’ assets and liabilities.
The primary judge realised there were live disputes between the parties about whether a number of interim cash distributions to them during the litigation should be counted as notional assets in their hands or characterised as lump sum spousal maintenance payments to the mother (at [11]-[13]), which disputes his Honour later went on to resolve, but no finding was ever made to determine the identity and value of the parties’ overall assets and liabilities.
Although the parties concentrated their contest upon the characterisation of the interim cash distributions and the proportional division of the sum of money ($413,620.76) held in trust for them, without the primary judge determining their underlying net property interests it was impossible for his Honour to know or explain the ultimate proportional division of their assets and liabilities.
The problem was compounded by the confusing manner in which the parties conducted their cases. The primary judge recorded that the mother contended the orders she proposed resulted in a division of assets favouring her to the extent of between 80 and 85 per cent (at [7], [104]), but her final written submissions contended for her entitlement to no less than 70 per cent, together with an unquantified adjustment under s 75(2) of the Act. The orders she proposed were not amended, so the fluctuations in her submissions about the percentage division remain an unexplained curiosity in the reasons for judgment. The primary judge also recorded that the father contended the orders he sought would give the mother 70 per cent of the assets (at [2], [105]) but, because the orders for which he applied included the distribution between the parties of many assets and liabilities which were not even disclosed and valued in the Schedule of Assets and Liabilities he filed, the proportional division he proposed could not be verified or properly understood. The parties’ submissions as to the proportional division of their assets were effectively meaningless in the absence of any antecedent determination of the identity and value of their assets and liabilities.
As a consequence, the primary judge’s decision to give the father $100,000 from the trust funds of $413,621 (to the nearest dollar), consistently with the father’s application but contrary to the mother’s application for her to receive all of the trust funds, is not adequately explained and appears to be arbitrary. The appealed orders simply replicated those for which the father applied, the reasons given for which were no more than:
103.A sensible starting point is to consider what the parties would receive on the acceptance of each case.
104.In the [mother’s] case, the [father] would receive no existing property apart from some of his superannuation. She states that is about an 80 percent division of the pool.
105.In the [father’s] case, he would receive about $100,000 and most of his superannuation. He states that is about a 70 percent division of the pool.
…
113.Taking all of the evidence as a whole, the discretion should be exercised so that the [father] takes something real and I will determine that he makes out his case.
…
124.Otherwise a just and equitable position is achieved by ensuring the [father] receives part of the pool, the court not being satisfied that the [mother’s] case has been made out. That will be achieved by making the orders the [father] seeks as to the real assets and that would effect a just and equitable alteration of property based on both parties contributions.
The lack of adequate reasons for the orders, which causes the orders to appear arbitrary, is an error of law which cannot be cured other than by the re-hearing of the parties’ applications for relief under Part VIII of the Act.
The parties’ superannuation interests were treated separately. By comparison, the primary judge did determine the values of their superannuation interests, but only by adopting the values quoted in the father’s Schedule (at [107]-[108]). The mother took no issue with those particular valuation findings in the appeal and the superannuation splitting order is considered below.
The characterisation of interim cash distributions to the parties
During the course of the litigation, each party received and made use of cash distributions from their property, which may be summarised as follows:
a)Each party took $50,000 in April 2016;
b)Each party received $50,000, with the payments characterised as “partial property settlement”, pursuant to interim consent orders made in October 2016;
c)The mother received $20,000, with the payment characterised as “spousal maintenance”, pursuant to interim consent orders made in October 2016;
d)The mother received $85,000, with the payment to be “categorised at a later date”, pursuant to interim orders made in August 2017; and
e)The mother received $20,000, with the payment to be “categorised at the Final Hearing”, pursuant to interim orders made in March 2018.
At trial, the mother sought that the first payment to her of $50,000 in April 2016 be characterised as spousal maintenance and that the last two payments, totalling $105,000, be characterised partly as partial property distribution ($55,000) and partly as spousal maintenance ($50,000). The primary judge recorded that the father contended all such payments should be regarded as “partial property distributions” (at [26]-[27]).
The father also allegedly received the benefit of other funds, being $50,400 withdrawn by him from joint accounts after separation, together with another $5,142.70 paid to him from trust funds to repay him for post-separation mortgage repayments. At trial, the mother sought that both those amounts be notionally added-back as assets retained by the father.
The primary judge rejected the mother’s claims in respect of the sums she wanted designated as spousal maintenance, finding them to instead be “interim property distributions” (at [45]). In reaching that conclusion, his Honour said in respect of the evidence:
38.The fact is that the trial affidavit did not state the evidence relied on for a decision on the earlier amounts, the evidence in the older affidavits was not tested due to there [sic] being included towards the end of the hearing, so the court is without power to make the determination in the manner sought.
That was wrong. At the commencement of the trial, the mother nominated her reliance upon an historical affidavit to press her claim for the retrospective lump sum spousal maintenance orders, the father signified his consent to her reliance upon that affidavit, and he was obviously free to then cross-examine her on its content. Nor could it be correctly said the primary judge lacked power to determine the dispute over the characterisation of the money paid to the parties earlier in the litigation. The power undoubtedly existed, though, of course, its exercise would depend upon how the available evidence was applied to the statutory considerations under Part VIII of the Act. The primary judge must have accepted he had power to decide that dispute because he actually determined to characterise the subject payments as “interim property distributions”.
The error made by the primary judge about the evidence upon which the mother relied to press her case for the characterisation of the cash distributions as spousal maintenance caused the primary judge’s exercise of discretion to miscarry.
As for the primary judge’s consideration of the two sums for which the mother advocated be notionally added-back as assets in the father’s hands, his Honour only said obliquely:
55.At no time did her case consider that the monies paid, in total, have gone and cannot be part of the existing pool unless highly artificial reasoning is applied and that the position of add back amounts is rightfully undergoing close scrutiny – see Trevi & Trevi [2018] FamCAFC 173. That does not mean that in appropriate circumstances such artificial reasoning is applied, keeping in mind the money does not now exist.
…
58.The [mother] also claims that the [father] also accessed money from the joint monies to pay the mortgage for two months before paying it from his monies, and she wanted this accounted for. What I will determine is this – both parties had a duty to pay their mortgage and the [father], in paying it for a period from his resources, benefitted the [mother], which is a contribution on his part. The amount accessed was reasonably small, but it did benefit her at a time she needed financial relief – and so it is of no assistance to try to account for it now.
With respect, while it may have been well open to reject the mother’s add-back claims, we are unable to discern how those reasons sufficiently explain the decision to reject them. The insufficiency of reasons is another error of law which caused the exercise of discretion to miscarry.
Assessment of the parties’ contributions under s 79(4) of the Act
The mother’s first complaint about the primary judge’s assessment of the parties’ respective initial contributions was really no more than an arid argument over the ambiguity of the primary judge’s reasons.
There was a dispute about the comparable value of the parties’ contributions at the commencement of their relationship. In that regard, his Honour relevantly said:
65.On the evidence I accept that she ignored the [father’s] claims that he brought superannuation valued at $50,000 and cash valued at $30,000. That the [father] brought a superannuation component to the relationship can be identified from the amount of superannuation he had at trial with no questions as to its total accumulation only materialised during the relationship. No questions were asked of the $30,000 cash claim.
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68.In the way the [mother] ran her case I was satisfied that all she could see was her contributions and I accept the submission that she inflated her own contributions compared with that of the [father] and simply failed to take into account his contributions.
The mother contended the primary judge’s finding that she “failed to take into account [the father’s] contributions” was factually incorrect because she did acknowledge the father’s initial capital contributions in her affidavit. So she did, but she misinterpreted the meaning of the primary judge’s finding. His Honour only meant that the mother gave the father insufficient credit for the capital contributions he made at the commencement of their relationship; not that she denied he made any such contributions at all.
Similarly, the mother contended the primary judge erred by finding she “inflated her own contributions”, but his Honour only meant that she inflated the significance of her contributions in the assessment process; not that she attributed artificially inflated values to the assets she introduced to the relationship.
The mother’s remaining criticisms related to the parties’ respective contributions over a relatively short marriage were that the primary judge “erred in failing to consider, determine or give any or any adequate reasons”.
His Honour certainly “considered” the parties’ contributions, because he “determined” to make orders replicating those sought by the father, which would give the mother about 70 per cent of the assets (at [2], [4], [5], [105]) and equalise their superannuation interests. The real question is whether adequate reasons were given to explain that outcome. As already explained, his Honour did not.
Very few findings were made by his Honour to resolve factual disputes between the parties over their respective contributions and the weight attributed to them. Aside from finding the mother over-emphasised her initial contributions (at [65], [68]) and that the father did not waste assets (at [84]-[93]), his Honour mostly only cited the parties’ competing contentions without deciding their factual disputes and unexceptionally acknowledged that all of their financial and non-financial contributions had to be weighed (at [63]-[64], [69]-[70], [76]-[83], [94]-[102]). The primary judge’s crucial reasons for the decrees (at [103]-[113], [124]), in particular by reference to the parties’ financial and non-financial contributions, were insufficiently transparent to enable the outcome to be properly understood.
The assessment of any adjustment under s 75(2) of the Act
As with the primary judge’s assessment of the parties’ contributions, the mother contended the primary judge “erred in failing to consider, determine or give any or any adequate reasons” in relation to the factors his Honour was obliged to consider under s 75(2) of the Act.
His Honour certainly “considered” the factors prescribed by s 75(2) of the Act, because he “determined” to make no adjustment in either party’s favour (at [114]-[122]). That conclusion was reached after consideration of their health (s 75(2)(a)), their future working capacity (s 75(2)(b)), their future standard of living (s 75(2)(g)), responsibility for the care of their child (s 75(2)(c) and s 75(2)(l)), the father’s payment of child support (s 75(2)(d) and s 75(2)(na)), and the father’s financial support of his new partner (s 75(2)(e) and s 75(2)(m)).
The mother did not rely upon any other factor within s 75(2) of the Act to justify an adjustment in her favour. She simply emphasised the significant difference in the parties’ income earning capacity and her continuing primary care of the child, both in final submissions to the primary judge and in the appeal, as the reasons why an adjustment in her favour was warranted. Those factors were expressly considered by the primary judge so, again, the pertinent question could only be whether adequate reasons were given to explain the decision not to make any form of adjustment in the mother’s favour. We consider there were not.
The primary judge’s treatment of the mother’s future earning capacity was scant. His Honour said:
121.…There was no evidence to suggest [the mother] could not get employment in the future.
That is true, but nor was there any evidence at trial to suggest she could get employment in the future or when she might get it.
The father’s annual income for the financial year ended 30 June 2019 was indisputably $295,748 (Exhibit 5). By comparison, the mother’s employment ended and her income ceased in January 2019. Even before then, her annual income was only a fraction of the father’s. She thereafter tried unsuccessfully to obtain new employment and was forced to consider further study to improve her qualifications and enhance her chances of re-employment. Her financial circumstances impelled her to live with her parents and to borrow from them. The finding that the mother was not entitled to some adjustment under s 75(2) of the Act, given the evidence about the limitations of her opportunity for future employment, let alone employment which would be as remunerative as the father enjoyed, hardly seems open on the available evidence.
There is a real prospect the primary judge misunderstood the mother’s case. His Honour said:
122.[The mother] also actually ran her case on taking the whole of the pool based on contributions, not s.75(2) considerations, so on the state of the evidence I would not exercise a discretion to change the proposed orders as sought by the [father].
(Emphasis added)
That was not correct and, in any event, was difficult to reconcile with his Honour’s earlier statement thus:
104.In the [mother’s] case, the [father] would receive no existing property apart from some of his superannuation. She states that is about an 80 percent division of the pool.
(Emphasis added)
By the time the trial ended, the mother’s property claim was predicated upon her contribution-based entitlement to no less than 70 per cent of the aggregated assets and superannuation, plus an unquantified adjustment under s 75(2) of the Act. At no stage did she run a case of her entitlement to “the whole of the pool” based upon only her contributions.
The superannuation splitting order
The primary judge found the father’s superannuation interest was worth $176,827.70 and the mother’s superannuation interest was worth $135,395.79 (at [107]-[108]). There was no challenge to the accuracy of those findings in the appeal.
There was no misunderstanding at trial about the mother’s application for orders to split the father’s superannuation interest in a way which would equalise the parties’ superannuation interests. At the commencement of the trial, the mother’s counsel explained her application to the primary judge as follows:
[COUNSEL FOR THE MOTHER]: Your Honour, if I can say this. My client’s position is that she receives all the money in trust - - -
HIS HONOUR: Yes, I saw that.
[COUNSEL FOR THE MOTHER]: - - - and an amount of 50/50 on the super, which equates to around 72 or 73 per cent.
HIS HONOUR: So she wants an equal division of both super funds?
[COUNSEL FOR THE MOTHER]: Yes, which is a payment of about $20,000, on my calculations.
(Transcript 29 July 2019, p.7 lines 33-43)
As for the father, he submitted for an order splitting 10 per cent from his superannuation interest for the mother’s benefit (at [123]).
The primary judge made an order directing the parties to bring in an order splitting 10 per cent of the father’s superannuation interest for the mother which, save for a minimal difference, suited both parties and effectively amounted to the grant of both applications. Assuming the continuity in the value of both superannuation interests, the reduction of the father’s superannuation interest by 10 per cent would mean the value of his interest is reduced to about $159,144.93. The supplementation of the mother’s superannuation interest by the 10 per cent split from the father’s superannuation interest (valued at about $17,682.77) would mean her interest increases in value to about $153,078.56.
As can be seen, the superannuation splitting order would leave the mother with only about $6,000 less superannuation than the father. The order was therefore consistent with the father’s proposal and was very near to the order for which the mother applied.
The mother’s complaint about the superannuation splitting order distilled to merely the primary judge’s misstatement of the nature of her application when (at [7]) his Honour asserted she “sought half of the [father’s] superannuation” (emphasis added). She did not, because as the primary judge later correctly acknowledged (at [109]), she “sought half of the party’s [sic] superannuation” (emphasis added). His Honour’s orders virtually gave her that.
Spousal maintenance
Aside from the past cash distributions which the mother wanted characterised as lump sum spousal maintenance, she also applied for an order for periodic spousal maintenance of $1,558.59 per week. Although the minute of orders upon which the mother relied did not say so, her counsel informed the primary judge during final submissions that the periodic order should “continue until such time as she is in paid employment”. His Honour’s reference in the reasons for judgment to the mother’s claim for periodic maintenance not being constrained by either time or an event (at [152]) was a mistaken reference to her minute of orders, rather than to her concession in final submissions.
His Honour determined to reject the mother’s application seemingly because, in view of her impending receipt of about three-quarters of the $413,621 (to the nearest dollar) held in trust, she did not establish her reasonable need. The primary judge said:
159.That she is to receive most of the cash held in trust, I cannot make a finding that her immediate need has not been met, because the amount received, if thought of in terms of an annual salary, would be high and tax free.
Respectfully, the mother’s imminent receipt of $312,276 (to the nearest dollar) in cash, together with some modest superannuation and items of personal property, hardly precluded her asserted need for periodic spousal maintenance. She needed the cash to find alternative accommodation for herself and the child. She was not obliged to exhaust her capital before her entitlement to maintenance crystallised.
In respect of the mother’s need, she was unemployed involuntarily and the financial circumstances to which she deposed in her financial statement were unchallenged. The deficit of her expenses over income was undeniable.
In respect of the father’s capacity to pay, similarly, the financial circumstances to which he deposed in his financial statement were unchallenged. His financial statement was filed in January 2019 but, by June 2019, his taxable income proved to be considerably higher than the estimate he declared in his financial statement, so his income well exceeded his expenses.
In final submissions, the mother’s counsel engaged the primary judge in the following way on the issue:
[COUNSEL FOR THE MOTHER]: …And then if for argument every other expense contained in the affidavit are accepted – because I didn’t challenge them – sorry, the financial statement, there was an excess of income over expenditure of $859 a week, on my calculation.
HIS HONOUR: She wants more than that.
[COUNSEL FOR THE MOTHER]: She does. But that’s his capacity. That should be the order. And the order should continue until such time as she is in paid employment.
HIS HONOUR: Yes, but – okay, I’ve got a couple of issues.
(Transcript 30 July 2019, p.159 lines 28-38)
Consequently, at the end of the trial, the mother contended and the primary judge appeared to accept that the father had the capacity to pay periodic spousal maintenance of $859 per week until the mother found paid employment.
The “couple of issues” to which the primary judge adverted were then debated in final submissions and were extracted in the reasons for judgment. They were the potentiality for the mother to decide to study instead of work (at [142]-[143]) and her past decision to spend a large proportion of the interim cash distributions she received on her legal fees rather than on maintaining herself (at [146]-[149]).
The first problem perceived by the primary judge could have been easily cured by any order for periodic spousal maintenance being made conditional upon the mother’s continuing unemployment or by requiring payment for a finite period.
The second problem perceived by the primary judge was not an impediment to a spousal maintenance order at all. The father similarly spent money on legal fees. The primary judge wrongly assumed the mother had incurred legal fees of some $400,000, of which some $300,000 was paid (at [146]). In fact, the primary judge was told the mother’s legal fees were $250,000. His Honour’s pre-occupation with the legal fees incurred and paid by the mother seems to have infected the exercise of discretion.
Expenditure on legal fees was the expressly intended purpose of at least the cash distributions made to the parties in October 2016, which were designated as “partial property settlement” payments. It will be remembered that the primary judge rejected the mother’s claim for some of the other past cash distributions to be characterised as lump sum spousal maintenance and instead characterised them as “interim property distributions” (at [45]). The intended purpose of such interim distributions is to meet legal expenses incurred in the litigation (Strahan v Strahan (Interim Property Orders) (2011) FLC 93-466 at [79]-[81]), so it must follow that his Honour considered that was the purpose of the payments he so characterised. It was inconsistent for the primary judge to, on the one hand, characterise the cash distributions as payments to defray legal costs but then, on the other, deny the mother’s application for periodic spousal maintenance because she used the funds as was intended instead of for her maintenance.
We are satisfied the primary judge erred in the treatment of the mother’s spousal maintenance application. Having determined to dismiss the spousal maintenance application, his Honour also erred by failing to actually make the dismissal order.
Conclusion and costs
The appeal from the orders made by the primary judge on 27 August 2019 fails for lack of merit.
Upon dismissal of the parenting appeal, the father sought his costs of and incidental to this appeal from the mother, which order she resisted. The father contended the factors which militated in his favour were the appeal’s complete lack of success (s 117(2A)(e)) and the mother’s conduct in failing to capitulate once she received his Summary of Argument little more than a week before and then understood how the appealed orders were defended (s 117(2A)(c)). The mother emphasised, and the father conceded, the continuing substantial disparity of their income, notwithstanding her acquisition of part-time employment since the time of trial (s 117(2A)(a)). In addition, it was difficult to discern from the schedule of costs filed by the father whether all of the itemised costs related to the parenting appeal or whether some also related, at least in part, to the property appeal (s 117(2A)(g)). On balance, the relevant considerations do not require any disturbance to the ordinary rule established by s 117(1) of the Act, so each party should bear his and her own costs of this appeal.
The appeal from the orders made by the primary judge on 17 December 2019 succeeded and the parties’ competing claims under Part VIII of the Act were remitted for re-hearing by a judge other than the primary judge.
The parties should be granted costs certificates for the appeal and re-hearing under the Federal Proceedings (Costs) Act 1981 (Cth) because the property and spousal maintenance appeal (Appeal no. NOA 7 of 2020) succeeded on errors of law and the parties mutually accepted that costs orders should not be made. Notwithstanding the father’s concession of this appeal, it was heard and determined (Cramer v Davies (1997) 72 ALJR 146).
I certify that the preceding one hundred and five (105) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Aldridge, Kent & Austin JJ) delivered on 25 March 2020.
Associate:
Date: 25 March 2020
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