Fitzmaurice & Woolridge
[2020] FamCAFC 64
•30 March 2020
FAMILY COURT OF AUSTRALIA
| FITZMAURICE & WOOLRIDGE | [2020] FamCAFC 64 |
| FAMILY LAW – APPEAL – De facto property dispute – Appeal against property orders requiring the sale of the former matrimonial home – Failure to quantify an assessment of contributions made by the parties – Where the primary judge did not attempt to make an assessment of future needs – Inadequacy of reasons – Appeal allowed – Orders set aside – Proceedings remitted for rehearing – Costs certificates granted to the parties for the rehearing. |
| Family Law Act 1975 (Cth) ss 90SF(3), 90SM |
| Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148 Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395 Keskin & Keskin and Anor (2019) FLC 93-932; [2019] FamCAFC 236 Martin & Newton (2011) FLC 93-490; [2011] FamCAFC 233 Norman & Norman [2010] FamCAFC 66 Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88 Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52 Steinbrenner & Steinbrenner [2008] FamCAFC 193 |
| APPELLANT: | Ms Fitzmaurice |
| RESPONDENT: | Mr Woolridge |
| FILE NUMBER: | DGC | 2566 | of | 2017 |
| APPEAL NUMBER: | SOA | 42 | of | 2019 |
| DATE DELIVERED: | 30 March 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Strickland, Ainslie-Wallace & Ryan JJ |
| HEARING DATE: | 17 February 2020 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 23 July 2019 |
| LOWER COURT MNC: | [2019] FCCA 1834 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Dr Smith, directly briefed from the appellant |
| SOLICITOR FOR THE RESPONDENT: | Farrar Gesini Dunn (not participating) |
Orders
The appeal be allowed.
The orders made on 23 July 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.
There be no order as to costs.
The Court grants to each of the appellant and the respondent a costs certificate pursuant to s 8 of the Federal Proceedings (Costs) Act1981 (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 and to the respondent in respect of the costs incurred by each of them in relation to the new trial ordered.
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 Fitzmaurice & Woolridge 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 MELBOURNE |
Appeal Number: SOA 42 of 2019
File Number: DGC 2566 of 2017
| Ms Fitzmaurice |
Appellant
And
| Mr Woolridge |
Respondent
REASONS FOR JUDGMENT
On 23 July 2019 a judge of the Federal Circuit Court of Australia made property settlement orders in proceedings between Ms Fitzmaurice (“the appellant”) and Mr Woolridge (“the respondent”). The appellant principally argues that the primary judge failed to give adequate reasons for his conclusions and subsequent orders. We agree with that complaint as our reasons that follow will demonstrate. Thus, the appeal will be allowed, his Honour’s orders set aside and the matter remitted to the Federal Circuit Court of Australia for rehearing by another judge.
The respondent filed no Summary of Argument in the appeal, and by letter from his solicitors indicated that he intended to take no part in the appeal. He was said neither to consent nor to oppose the appeal.
We were however, considerably assisted by pro bono counsel, Dr Robin Smith, who appeared for the appellant.
The parties were in a de facto relationship which ended in 2016. The date of the commencement of the relationship was disputed, the appellant suggesting in 2007 and the respondent in 2014. The primary judge found that the relationship was “…somewhat longer than that than [sic] contended for by the respondent, but nowhere near as long as that asserted by the applicant, even though it is not practicable to put a precise date of inception of the relationship” (at [2]). However, despite this, his Honour did ultimately find that it was at least October 2012.
By the time of its commencement the appellant owned a property at Street H, Suburb J (“the Suburb J property”) which she had purchased in 2010 for $670,000 using funds received from a property settlement with her ex-husband. That property was unencumbered.
In 2015 the appellant sold the Suburb J property, receiving net proceeds of $511,000. The money was paid into the appellant’s bank account, and most of it was disbursed within a very short time of its receipt. The appellant maintained that the money was deposited into a joint bank account of the parties and the respondent had a hand in disbursing the funds, but the respondent denied that he had received the money. There was no doubt however that $500,000 of the appellant’s money was unaccounted for.
The respondent purchased a property in 2009 in Suburb B which was encumbered by a mortgage. That same year he received a compensation payment in the sum of $378,000 and applied some of these funds to pay out the mortgage on this property. The respondent is the sole registered proprietor of that property which is unencumbered.
Together in 2012 the parties purchased an investment property in Suburb D for $420,000 (“the Suburb D property”), and it appears that all of the purchase price was borrowed. The parties leased the property and applied the rental payments towards repaying the mortgage. The respondent said that he paid the shortfall between the rental payments received and the mortgage repayment. He later claimed that $60,000 was owed to him in relation to meeting that shortfall and in relation to other payments made in respect of that property, and he “helped himself” to $60,000 of the appellant’s money to repay that asserted debt to himself (at [123]).
At the time of the hearing, the primary judge found that the pool of property available for division between the parties consisted of:
121....
·the husband’s [Suburb B] property, $375,000 (husband’s estimate in most recent Financial Statement);
· the former matrimonial home (Not agreed – respondent asserts $660,000 – paragraph 5 of trial affidavit – wife asserts $530,000 in evidence)
· husband’s superannuation, $45,000
· wife’s superannuation, unknown
· mortgage on former matrimonial home $358,000
(As per the original)
It is to be observed that although the primary judge had directed the respondent to obtain a valuation of the Suburb D property (referred to as the former matrimonial home), he had not, and the matter proceeded before his Honour with no evidence of its value.
Turning then to contributions, his Honour said:
123. …I accept that the respondent paid the difference between the rent on the [Suburb D] property and the mortgage from 2012 to 2014… He helped himself to $60,000 to repay the figure, and although nobody has presented me with any calculations, as a matter of impression, I have little doubt that he took far more than he put in.
…
125. The real question that is of vital import is what happened to the balance of the proceeds of the sale of the [Suburb J] property. The wife received in excess of half a million dollars net and it has basically vanished (this leaves aside moneys admittedly applied to the mortgage on the [Suburb D] property).
126. In the end, I accept that the respondent did not get this money. That is what he said, and I have heard his evidence and I believe him. In the ultimate, the applicant’s case is that she really does not remember what happened to her finances, to which she paid little attention at the time. It struck me, however, that she had, in some respects, a remarkably precise memory as to certain financial issues. The wife has had serious and significant mental health difficulties which necessitated the appointment of a litigation guardian, only recently removed at the applicant’s insistence. I have no doubt that whatever has happened to those funds, they were funds disbursed in one way or another by the applicant. Whether they are hidden in some bank account, as is possible, or simply expended, they are moneys she has had and/or continues to have.
His Honour then considered the future needs of the parties and found that the appellant’s future prospects of employment were “bleak”, she had two underage children then living with her and she had some mental health difficulties (at [127]). On the other hand, the primary judge found the respondent’s position to be “far better” than that of the appellant, and he noted that while he was not then working there was no reason to believe that he could not continue to run his own business; he is much younger than the appellant, has an unencumbered property and some superannuation (at [128]).
His Honour, under the heading “The just and equitable outcome” concluded that the respondent should retain his property at Suburb B on the basis that he bought it before the parties commenced living together and used his compensation payment to pay for it. He turned then to the Suburb D property and concluded that:
131.The [Suburb D] property was bought as an investment by the parties. The respondent’s contributions until 2014 were effectively repaid to himself, something which, in the context of the fact that at the time he was controlling the applicant’s moneys and in a committed relationship with her, strikes me as being extremely underhand and unattractive. To the extent that there is any equity in the [Suburb D] property, it derives wholly from the contributions made by the wife from such of the [Suburb J] proceeds as she may have applied.
132.The applicant has remained in occupation of the [Suburb D] property since 2014 and appears to have simply failed to pay the mortgage, at least in large part. It is plain that the mortgage is one that she must meet herself. If, as is very possible, she is unable to pay it, then the property will have to be sold, but it is plainly just and equitable that she receive the entirety of the proceeds of such sale. There has been no meaningful contribution to that property by the respondent, and it is inappropriate that he be paid any sums in respect of it.
His Honour thus concluded that this was plainly the only just and equitable resolution of this particular dispute.
Failure to give reasons
As we have said, the appellant contends that his Honour failed to give adequate reasons for his conclusions and orders. This ground goes directly to the integrity of the trial process and thus ought be considered first (Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128 at [9]).
The obligation on a judge to give adequate reasons is well-known (Bennett and Bennett (1991) FLC 92-191 at 78,266–78,267). The reasons must enable the parties to understand the basis of the judge’s decision and the extent to which the parties’ arguments have been accepted (Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [58]–[59]).
Before the primary judge, both parties each sought orders for property settlement against the other, thus it is implicit that his Honour concluded that it was just and equitable to make an order pursuant to s 90SM(3) of the Family Law Act 1975 (Cth) (“the Act”) (Stanford v Stanford (2012) 247 CLR 108 (“Stanford”)).
The argument of the appellant addressed this contention by reference to a number of aspects that form part of his Honour’s ultimate conclusion. Those aspects are:
·the value of the property of the parties or each of them at the time of the hearing;
·the assessment of the contributions of the parties pursuant to s 90SM(4)(a)–(c) of the Act; and
·whether there should be an adjustment to that assessment having regard to the matters to which s 90SM(4)(d)–(g) of the Act speaks, and in particular s 90SF(3).
These three aspects echo three of the four steps or stages developed in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 (“Hickey”). Adherence to those four steps is not mandatory, and the approach “merely illuminates the path to the ultimate result” (see Norman & Norman [2010] FamCAFC 66 at [60]). Indeed in Martin & Newton (2011) FLC 93-490 at 86,127, it was said of the four step calculus:
305.… [T]hat approach is not legislatively mandated, and as the Full Court [in Hickey] said, is simply the preferred approach. This is because it will be sufficient, in most cases, to have regard to the overall justice and equity of the orders after determination of the asset pool, consideration of contributions and assessment of the relevant s 75(2) matters.
(Emphasis in the original)
The short point however is, whether a staged or another approach is adopted by a judge engaged in determining the parties’ entitlement to property settlement orders, the fundamental responsibility imposed by s 90SM is to:
a)identify the assets and liabilities of the parties available for consideration;
b)consider and assess the parties contributions under s 90SM(4)(a)–(c); and
c)consider and asses the matters relevant in s 90SM(4)(d)–(g), including referral to matters in s 90SF(3).
In undertaking this responsibility, the primary judge is required to give reasons sufficient to be able to follow the primary judge’s line of reasoning upon which the decision is based.
Valuation of property
The thrust of this part of the ground is that there being no valuation of the Suburb D property, his Honour was unable to take the value of that property into account together with the values of the other properties as a foundation for his consideration of the parties’ contributions and the orders ultimately made.
His Honour had ordered the respondent to obtain a valuation of the Suburb D property. The respondent had not done so. As a result there was a dispute between the parties as to the value of that property. His Honour identified the ambit of that dispute and understood that the value of that property fell within a range of values asserted by the parties. That understanding was, in our view, sufficient for the purposes of the requirement to ascribe a value, albeit imprecise, to the property of the parties or each of them available for distribution. This aspect of the challenge is not made out.
Assessment of contributions
Next, it was contended that the reasons do not enable the appellant to discern how his Honour assessed the parties’ contributions.
As referred to above, under the heading “Contribution” from [123] to [126], the primary judge set out the matters to which he had regard and, in particular referred to the $60,000 used by the respondent to reimburse himself for money he paid out in relation to the Suburb D property, and the disposition of the $500,000 from the funds received by the appellant from the sale of her Suburb J property.
However, it was argued, and we agree, that in identifying these issues his Honour’s reasons do not allow an understanding of what conclusion his Honour arrived at as to the respective contributions of the parties.
While it is desirable and indeed can be a useful foil against a charge of insufficiency of reasons to express the quantification of the assessed contributions in percentage terms, it is however, imperative to quantify the assessed contributions in some way, whether expressed in percentage or other terms so as to provide a basis against which any adjustment derived from a consideration of the matters referred to in s 90SM(4)(d)–(g) can be made. Here, his Honour made no attempt to quantify the contributions and the parties and the Full Court are in the dark as to what assessment of those contributions his Honour made (see Keskin & Keskin and Anor (2019) FLC 93-932 at 79,371).
Although His Honour touches on contributions at [130] to [132], he does so to no end other than to identify various contributions by the parties but without making any assessment holistically or otherwise of the impact of those contributions. That consideration does not satisfy the requirement for a proper assessment of the contributions of the parties or each of them.
Assessment of future needs
His Honour turned to consider “future needs” at [127] and [128].
His Honour was obliged to consider whether having regard to the matters to which s 90SM(4)(d)–(g), and in particular s 90SF(3) relate, there should be some adjustment to the assessment of the parties’ contributions. However, his Honour’s reasons do no more than set out the facts he considered relevant to this issue and his reasons do not demonstrate what work, if any, those facts did in relation to the parties’ assessed contributions.
Further, and in any event, it is impossible to tell from [127] and [128] whether his Honour makes an adjustment or not; all his Honour does is identify the factors that would be relevant to an adjustment, and then simply concludes that “[t]he respondent is in a far better situation” (at [128]).
Just and equitable
As was said in Stanford at [36]:
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations…
Although his Honour said that the orders he made were the only just and equitable orders which could be made on the facts of the case, nowhere in the reasons does it appear that his Honour considered how the parties’ assessed entitlements are reflected in the monetary value of the orders to be made or, in the terms of Stanford, what examination his Honour made of those potentially competing considerations and how that conclusion rested on that examination.
Here, his Honour’s reasons do not permit of an understanding of how he evaluated the parties’ contributions nor what, if any, adjustment to those assessed contributions was made having regard to s 90SM(4)(d)–(g), and the “leap” from his Honour’s findings to the orders ultimately made is too great (Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234]).
This ground having been made out, there is no need to consider the balance of the grounds given that we propose to remit the proceedings to the Federal Circuit Court of Australia for rehearing by another judge.
Costs
Counsel, as we have said, appeared pro bono and eschewed a costs certificate for the appeal hearing although sought one for the rehearing. It is appropriate and we will make that order in favour of both parties.
I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ainslie-Wallace & Ryan JJ) delivered on 30 March 2020.
Associate:
Date: 30 March 2020
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