Fontana and Fontana
[2016] FamCAFC 11
•9 February 2016
FAMILY COURT OF AUSTRALIA
| FONTANA & FONTANA | [2016] FamCAFC 11 |
| FAMILY LAW – APPEAL – PROPERTY – Where the appellant husband challenges the trial judge’s reasons and findings in relation to specific subsections of s 75(2) of the Family Law Act 1975 (Cth) – Where the husband also challenges the overall adjustment the trial judge made to the non-superannuation asset pool pursuant to s 75(2) – Where the trial judge dealt with s75(2) factors collectively and as a cumulative process –Where the trial judge made an error in taking into account the husband’s life expectancy in the way that he did – Appeal allowed – remitted for rehearing. |
| Family Law Act 1975 (Cth) – s 75(2), s 79 Family Law Rules 2004 (Cth) Federal Circuit Court Rules 2001 (Cth) |
Allesch v Maunz (2000) 203 CLR 172
House v The King (1936) 55 CLR 499
Jurlina & Jurlina [2014] FamCA 284
Lawrie and Lawrie (1981) FLC 91-102
Miklic & Miklic and Anor [2010] FamCA 741
S & P (unreported, Family Court of Australia, Fogarty, Lindenmayer and Finn JJ, 29 April 1997)
T & D & Anor [2006] FamCA 1248
| APPELLANT: | Mr Fontana |
| RESPONDENT: | Ms Fontana |
| FILE NUMBER: | PAC | 5188 | of | 2008 |
| APPEAL NUMBER: | EA | 123 | of | 2013 |
| DATE DELIVERED: | 9 February 2016 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Strickland, Murphy & Watts JJ |
| HEARING DATE: | 14 May 2015 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 23 July 2013 |
| LOWER COURT MNC: | [2013] FamCA 548 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Schroder |
| SOLICITOR FOR THE APPELLANT: | Gonzalez & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Hodgson |
Orders
The appeal be allowed.
The orders made by Collier J on 23 July 2013 be set aside.
The matter be remitted for rehearing by a Judge of the Family Court of Australia.
The Court grants to the Appellant Husband 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 Husband in respect of the costs incurred by the Appellant in relation to the appeal.
The Court grants to the Respondent Wife 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 Wife 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 payment under that Act to each party in respect of such part as the Attorney-General considers appropriate of any costs incurred by each party in relation to the new trial granted by these Orders.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Fontana & Fontana has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 123 of 2013
File Number: PAC 5188 of 2008
| Mr Fontana |
Appellant
And
| Ms Fontana |
Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed 13 September 2013 Mr Fontana (“the husband”) appeals against an order made by Collier J for property settlement on 23 July 2013. Ms Fontana (“the wife”) seeks that the appeal be dismissed.
At the date of the hearing, the husband was 49 years of age and the wife was 43 years of age. The parties married and commenced cohabitation in 1993. There is one child of the parties’ marriage who was 15 years of age at the date of the hearing (“the child”).
The parties set up a professional practice together in July 1999 with the wife gradually increasing her working hours in that practice as the child grew older. The parties separated in mid to late 2008 and were therefore married for about 15 years.
His Honour found the wife was a successful business woman with annual net income in excess of $200,000.
The husband has serious health problems, particularly, renal failure and diabetes. His Honour found that at the date of the hearing the husband was dependent upon dialysis three or four times weekly.
The husband has income protection insurance which, at the time of the hearing, was guaranteeing a net income to him in the sum of $12,500 per month (an annual income of $150,000).
Parenting orders made at the same time as the orders for property settlement the subject of the appeal provided that the child would primarily be cared for by his mother up until when he commenced as a day boarder at S College at the commencement of term 1 2014. Thereafter, the orders provided that weekend and holiday time would be divided evenly between the parents.
The assets of the parties included the former matrimonial home in which the wife lives (with an agreed value of $1.2 million, subject to a mortgage of $104,000) and a 50 per cent interest in an investment property in which the parties had little equity. The only other significant non-superannuation asset was the balance of the husband’s trauma insurance payout in the sum of $393,000. In addition, there were total superannuation assets of $120,610. The net pool of assets, including some agreed so called “addbacks” totalling $184,885, was in the sum of $1,847,273.
In his reasons, his Honour dealt with the assets of the parties in two pools, being the net non-superannuation assets in the sum of $1,726,663 and the net superannuation assets in the sum of $120,610.
Based upon the contributions of each party, his Honour found that the non-superannuation assets should be divided 52 per cent / 48 per cent in favour of the wife. His Honour then made a further 4.5 per cent adjustment in the wife’s favour in respect of the non-superannuation assets as a result of considerations pursuant to s 75(2) of the Family Law Act 1975 (Cth) (“the Act”). Finally, his Honour found that the wife was entitled to 55 per cent of the superannuation assets but made no further adjustment pursuant to s 75(2) in respect of those assets.
As a result of these findings, his Honour made a property settlement order, whereby the wife received assets (including superannuation) valued at $1,041,899 (56.4 per cent) and the husband received assets valued at $805,374 (43.6 per cent). His Honour also made orders for the husband to pay the wife the costs of an adjournment the husband sought in the proceedings.
Ultimately the challenge in the appeal focuses on how his Honour dealt with the s 75(2) considerations. The 4.5 per cent adjustment made in the wife’s favour for the s 75(2) factors, calculated upon the non-superannuation assets, was in the sum of $77,700 and created a difference in the value of the assets received by the parties of $155,400.
Grounds of Appeal
Ground 1
Ground 1 of the Notice of Appeal filed 13 September 2013 (as reformulated in [23] of the husband’s written submissions) asserts that the trial judge was in error by adding to the balance sheet the husband’s trauma insurance payout in the sum of $393,000, and further, in the alternative, that his Honour failed to make contribution findings which fell within the ambit of a reasonable exercise of discretion, having regard to the husband’s trauma insurance payout. At the commencement of the hearing, counsel for the husband abandoned this ground. Consequently there was no challenge to his Honour’s findings as to either the asset pool, or how that pool should be divided, based upon the respective contributions of the parties.
Ground 2
The Appellant’s second ground of appeal was as follows:
2. That the trial judge erred in adjusting the entitlement of the Respondent by 4.5% pursuant to s75(2) of the Family Law Act (“the Act”), and failing to make an adjustment in favour of the Appellant in circumstances where:
a. the trial judge was unable to find that the Appellant would receive a kidney transplant prior to January 2017, without which the Appellant’s capacity for employment would continue to be “considerably limited” by the Appellant’s ongoing need for regular dialysis and his diabetes;
b. the trial judge correctly found that there was no evidence that the Respondent “suffers from any present medical condition or ill-health”;
c. the trial judge correctly found that the Respondent’s demonstrated capacity to earn “in excess of $200,000” net per annum, compared with the Appellant’s income of $150,000 per annum from an income protection policy, placed the Respondent in a position which was “at present superior to that of the husband so far as income is concerned”;
d. the trial judge did not find that the financial burden of caring for the parties’ child would be borne inequitably by the parties after the end of 2012;
e. the evidence did not establish that the retention of the parties’ former matrimonial home was a factor which supported a s75(2) adjustment in favour of the Respondent;
f. having said that the increase in the mortgage over the parties’ former matrimonial home during its occupancy by the Respondent after separation was “something I would take into account when endeavouring to assess the contributions of the parties”, but not done so, the trial judge failed to have regard to that factor, which militated against an adjustment in the Respondent’s favour, and supported an adjustment in the Appellant’s favour pursuant to s75(2) of the Act.
g. despite having made findings critical of the manner and timeliness of the Appellant’s financial disclosures, the trial judge correctly did not find that the Appellant had undisclosed or inadequately or inaccurately revealed income, property or other financial resources.
The appellant’s written outline contends that “the overwhelming preponderance of relevant s 75(2) factors favoured a substantial adjustment in the [husband’s] favour, and that a s 75(2) adjustment in the [wife’s] favour was plainly wrong … His Honour’s references to most of these factors, and accurate recognition that they favoured an adjustment in favour of the [husband] are submitted to demonstrate that the exercise of the discretion miscarried”.
Arguments on appeal which focus on the weight that was, or was not, attached by a trial judge to factors identified as important to a consideration of, and ultimate conclusion in respect of, s 75(2) face considerable difficulties, the attribution of weight being quintessentially the province of the trial judge. The relevant authorities have frequently been referred to by this court as have relevant passages of the judgments from those cases. They do not need to be repeated here.
As argued orally before us, however, the husband’s complaint evolved into an assertion that his Honour erred in law in taking into account the husband’s life expectancy when no finding made by his Honour justified him doing so.
The Trial Judge’s consideration of s 75(2) matters and the husband’s life expectancy
His Honour said that he considered the s 75(2) factors collectively and cumulatively. His Honour noted that the husband was in poor health and the wife was not, but placed no weight on those facts standing alone and unrelated to the earning capacity or the needs of the parties or the child. His Honour found that no adjustment should be made based upon the disparity in the parties’ income. His Honour concludes that no adjustment should be made relating to the responsibilities of either party for the care and control of the child of the marriage, except in so far as those responsibilities might be affected by a deterioration in the husband’s health. His Honour takes into account the husband’s lack of full and frank financial disclosure.
Life expectancy may be a relevant consideration, inter alia, pursuant to s 75(2)(d)(i) and (ii) of the Act and in respect of this, his Honour concluded at [544]:
I am satisfied that the husband’s needs, whether he has a transplant or not, are likely to subsist for a shorter time than are the wife’s needs. With some regret, this is a matter that I must take into account in the wife’s favour. The wife, I am satisfied, whether or not the child attends boarding school, will be the parent principally responsible for his welfare. I am satisfied that the wife will be the parent providing more and more for the ongoing needs of the child as the husband’s health, unfortunately, deteriorates. I am satisfied that an adjustment is required, in these circumstances, in the wife’s favour. I am satisfied that the wife should receive an additional 4.5 percent of the asset pool in this regard.
Counsel for the wife argued that his Honour was not making reference to the husband’s life expectancy in this paragraph. We do not accept that submission. The words “subsist for a short time” is a plain reference to life expectancy.
Counsel for the husband argued that by taking the husband’s life expectancy into account in the way his Honour did at [544], his Honour had allowed an extraneous matter to guide or affect him.
Earlier in his reasons, his Honour had discussed matters relevant to the husband’s health and life expectancy. At [361] his Honour said:
His [Dr [O], the husband’s general practitioner] evidence was that the prognosis for the husband was for a significantly reduced life expectancy. When further cross-examined, he appeared to indicate that whilst there was a significant range in life expectancy without a transplant, the probably range was between eight and 20 years. He gave evidence of the husband’s ability to work as significantly diminished.
His Honour, however, specifically did not make any finding in relation to life expectancy:
523.It is, on the material that I have read, clear that if the husband does not obtain a successful transplant, then his life expectancy will be very considerably shortened. I am unable, on the material available to me, to put any realistic figure on his life expectancy from this point. If he obtains a transplant, which is successful, then his life expectancy would be at least doubled.
524.In addition to renal failure, the husband suffers from diabetes, which in the past, has clearly not been adequately managed. Indeed, Doctors sound the warning that unless the husband manages his diabetes properly, and regardless of what occurs in respect of his kidney difficulties, his life will be substantially shortened. I am satisfied on what I have read, that if the husband does manage his medical conditions satisfactorily, that is by dealing with his diabetes and undergoing dialysis on a regular basis, he will be in a position to enjoy a reasonable quality of life. I am unable, however, to make an educated guess, let alone a finding, of what his life expectancy will be in this situation.
525.In the event of a successful transplant, and again conditional upon him managing his diabetes, his quality of life must improve. Once again, I can make no finding as to how long he is likely to live, except to say it will be longer, by a significant margin, than if he does not receive a transplant.
(emphasis added)
In Lawrie and Lawrie (1981) FLC 91-102, Asche SJ, Fogarty and Gee JJ were dealing with a case where the husband had cancer with an agreed life expectancy of about six months. Fogarty J, with whom Gee J agreed, said at 76,750:
It is appropriate and, in my view, necessary to consider the relative future needs of the parties in determining what is a just and equitable order under sec. 79. Where there is a significant disparity that would ordinarily be reflected in the orders. This is frequently a result in cases of a more usual type. Further, where in any case it is clearly established that the future financial needs of a party will terminate (or perhaps significantly diminish) upon the happening of a definite future event, it is proper to take that into account. A number of examples of that readily spring to mind. The weight to be given to that will obviously vary from case to case...
…any concern that the upholding of the orders in this case may open the floodgates to disputes in other cases as to the future life expectancy of parties is misplaced. This case is unique because of the particular circumstances that the evidence as to the husband's life expectancy was clear and not in controversy and related to an early future date. Further and in any event, the task is to do what is just in the case at hand.
(emphasis added)
A subsequent Full Court in S & P (unreported, Family Court of Australia, Fogarty, Lindenmayer and Finn JJ, 29 April 1997) dealt with a case where a husband who was HIV positive had an agreed life expectancy of five years. The Full Court in that case referred to the decision of Lawrie stating at 23 – 24:
We consider that the approach adopted by the majority of the Full Court in Lawrie’s case is correct in principle. However, each case must ultimately be decided on its own particular facts and the conclusion is ultimately an exercise of discretion within s.75(2) and overall within s.79.
In principle, it is correct, as Mr George conceded, to take into account the fact (if it be so) that the future needs of one of the parties within s.75(2) will be limited or diminished by some future event. For example, where it is clear that at the end of a particular period a party will, by inheritance or otherwise, come into substantial property which may limit or diminish that person’s “needs” within s.75(2), at least in comparison with the longer term “needs” of the other party. Here the circumstances are especially tragic and although it is a difficult thing to say, the fact remains that on the uncontested evidence the husband’s needs will terminate within the predicted time whereas the wife’s needs will be likely to continue beyond that time.
The guidance provided by these two cases has been followed in subsequent cases where there has been clear expert evidence, which was accepted, relating to shortened life expectancy of a predictable duration arising from a medical condition (see T & D & Anor [2006] FamCA 1248; Miklic & Miklic and Anor [2010] FamCA 741; Jurlina & Jurlina [2014] FamCA 284).
In this case his Honour, having explicitly said that he was unable to make even an educated guess, let alone a finding, about the husband’s life expectancy, has at [544] reached a conclusion that the husband’s needs are likely to subsist for a shorter time than the wife’s needs. His Honour was in error in making that finding in circumstances where he had explicitly found that he could make no conclusive finding in relation to the husband’s life expectancy. In fact, his Honour earlier noted there was evidence that without a transplant the husband could live for another 20 years, and longer by a significant margin, if he had a transplant.
Conclusion
As indicated above, his Honour made a 4.5 per cent adjustment to the non-superannuation assets in the wife’s favour for s 75(2) considerations. His Honour, having made the findings which he did about the husband’s life expectancy (at [523] – [525]), made an error in taking the husband’s life expectancy into account in the way that he did in [544]. Given the content and position of [544] in the judgment, we conclude that his Honour considered the husband’s life expectancy a relevantly important matter in making the prospective adjustment. That adjustment is ultimately reflected in the trial judge’s property settlement order.
Accordingly we find merit in the husband’s second ground of appeal and the appeal is allowed.
Whether to re-exercise discretion
In the event the appeal was allowed each of the parties contended that this court should re-exercise discretion and consented to this court doing so. However, we are unable to accede to the parties’ request to do so. Allesch v Maunz (2000) 203 CLR 172 mandates that if this court is to re-exercise it must do so by reference to the facts and law as at the date of the re-hearing by this court. Given the time since the trial, features of this case which might impact upon what might now be a just and equitable outcome include changes to the husband’s health, changes to the respective current earning capacities of the parties, an increase in the age of the child and probable movement in the value of assets. The parties did not seek to provide any updating evidence. With some reluctance, we conclude that the matter must be remitted for rehearing.
Costs
In the event that the appeal was allowed as a result of an error of law (which is the case), both parties sought costs certificates for the appeal and the new trial pursuant to the Federal Proceedings (Costs) Act 1981 (Cth). Each party should bear their own costs in accordance with s 117 of the Act, and we find that it is appropriate for orders for costs certificates to be made in accordance with the applications of the parties.
I certify that the preceding Thirty-One (31) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Murphy & Watts JJ) delivered on 9 February 2016.
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