Fontana & Fontana
[2018] FamCAFC 63
•12 April 2018
FAMILY COURT OF AUSTRALIA
| FONTANA & FONTANA | [2018] FamCAFC 63 |
| FAMILY LAW – APPEAL – PROPERTY – Whether the primary judge adequately revealed process of reasoning in assessing contributions – Whether division of property in favour of wife plainly wrong or unjust so as to bespeak error – Whether division of property in favour wrong erroneous in principle – Whether the primary judge failed to consider a potential insurance payment – Whether the husband’s lack of full and frank disclosure should have resulted in a further adjustment to the wife – No error established – Appeal dismissed. |
| Family Law Act 1975 (Cth) ss 75(2), 79(4), 79(5) |
| Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148 Black and Kellner (1992) FLC 92-287; [1992] FamCA 2 Brandt v Brandt (1997) FLC 92-758; [1997] FamCA 21 Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63 House v The King (1936) 55 CLR 499; [1936] HCA 40 Miller & Miller [2009] FamCAFC 121 Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Steinbrenner & Steinbrenner [2008] FamCAFC 193 Sun Alliance Insurance Ltd v Massoud (1989) VR 8 Weir and Weir (1993) FLC 92-338; [1992] FamCA 69 |
| APPELLANT: | Mr Fontana |
| RESPONDENT: | Ms Fontana |
| FILE NUMBER: | PAC | 5188 | of | 2008 |
| APPEAL NUMBER: | EA | 67 | of | 2017 |
| DATE DELIVERED: | 12 April 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Pascoe CJ, Ryan & Aldridge JJ |
| HEARING DATE: | 12 December 2017 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 19 May 2017 |
| LOWER COURT MNC: | [2017] FamCA 374 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Bob Rosic |
| SOLICITOR FOR THE APPELLANT: | Gonzalez & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Greg Johnston |
| SOLICITOR FOR THE RESPONDENT: | Agatha Satala & Associates |
Orders
The appeal be dismissed.
The cross-appeal be dismissed.
There be 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 Fontana & Fontana 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 SYDNEY |
Appeal Number: EA 67 of 2017
File Number: PAC 5188 of 2008
| Mr Fontana |
Appellant
And
| Ms Fontana |
Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed on 16 June 2017, Mr Fontana (“the husband”) appeals against orders for the settlement of property made by Foster J on 19 May 2017. The husband seeks that Orders 1 and 2 are set aside and the Full Court re-exercise the discretion of the primary judge.
By Notice of Cross-Appeal filed on 31 July 2017, Ms Fontana (“the wife”) appeals the same orders and also seeks that the Full Court re-exercise the discretion of the primary judge.
The primary judge was satisfied that it was just and equitable to make an order adjusting the existing property rights of the parties pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). The total value of the asset pool was $2,800,688. The adjustment order made by his Honour required the wife to pay the net sum of $323,033.00 to the husband (Order 1). The parties agreed during the appeal that this amounted to a distribution of 42.45 per cent of the property to the husband and 57.55 per cent to the wife. It is this order, along with the order granting the husband liberty to apply for enforcement in the event of default (Order 2), that is challenged.
The wife argues the appeal should be dismissed and the husband that the cross-appeal should be dismissed.
Neither the appeal nor cross-appeal expose any error on the part of the primary judge and so will be dismissed.
Background
To provide context to the appeal it is useful to record some brief facts.
The parties married in 1993 and separated in 2008. In the course of their 15 year marriage, the parties had one child, together operated a business and also invested in a number of properties.
In the long period since ceasing cohabitation, the parties separated their business interests. The wife has continued to work, to live in the former matrimonial home and she has used her income to reduce the parties’ joint debt and to build the asset pool. The child, who was 10 years old at separation and 18 years old at the time of trial, lived with the wife and has spent substantial and significant time with the husband. The husband experienced significant health issues since separation and has not been able to work since 2010. Whether he will be able to return to work in the future was a matter of some conjecture. He receives monthly income protection insurance payments and had received a lump sum trauma payment.
Unfortunately, there has been ongoing litigation between the parties since separation. In 2013, Collier J made final parenting and property orders in which he ordered the wife to pay the husband $289,734 and the husband to transfer to the wife his interest in the former matrimonial home and an investment property. The wife paid the required amount to the husband. However, the matter was successfully appealed and remitted for rehearing. It is the remitted hearing that came before the primary judge.
At the request of the parties, the assets were divided into three pools: Pool A, consisting of the majority of the assets and liabilities; Pool B being the husband’s post-separation trauma payout referred to above; and Pool C comprising the parties’ superannuation assets.
In relation to Pool A, the primary judge found the only difference to the parties’ contributions at the time of separation was the wife’s trauma insurance payout of $200,000, which was invested into their property and accounted for one third of the purchase price of the former matrimonial home.
In weighing up the post-separation contributions, the primary judge considered the wife’s ongoing occupation of the former matrimonial home but noted that, while the husband had been in the rental market since separation, the child primarily resided with the wife and the wife had used her income to significantly reduce the parties’ liabilities. His Honour found that the balance of post-separation contributions favoured the wife.
The primary judge assessed the contributions to Pool A at 70 per cent in favour of the wife and 30 per cent for the husband. No adjustment was made under s 75(2) of the Act.
The husband’s trauma insurance payout in Pool B was divided 95 per cent to the husband and 5 per cent to the wife. Based on Miller &Miller [2009] FamCAFC 121, the primary judge held that, while the parties had jointly taken out the insurance and funded the premiums, the payment was received because of the husband’s kidney failure and the subsequent ongoing impact on his health. No adjustments were made under s 75(2) of the Act.
No splitting order was sought in relation to the parties’ superannuation in Pool C, and no order was made.
The focus of both the appeal and the cross-appeal is Pool A. Neither party is contesting the three pool approach, nor the division of Pools B and C. To add clarity to the discussion below, it is helpful to reproduce the asset pools as formulated by the primary judge:
Pool A:
Wife [Suburb H] property $1,750,000.00
Wife 50 per cent [Suburb D] property $ 762,500.00
Husband Part settlement payment $ 289,400.00
$2,801,900.00
Liabilities
Wife [Suburb D] property mortgage $ 496,698.00
Wife Mortgage [Suburb H] property $ 98,799.00
Wife Debt to related parties $ 50,000.00
Joint Debt to [Mr CC] $ 20,000.00
Wife Debt to [Mr SR] $ 11,625.00
$ 677,122.00
Nett: $2,124,778.00
Pool B:
Husband Trauma payout $ 495,500.00
Pool C:
Superannuation
Wife Accumulated superannuation $ 124,353.00
Husband Accumulated superannuation $ 56,057.00
The Husband’s Appeal
No challenge is made to the primary judge’s statement of the law.
It is important to note that this is an appeal to be determined in accordance with the well-established principles set out in House v The King (1936) 55 CLR 499 and enunciated by Stephen J in Gronow v Gronow (1979) 144 CLR 513 at 519 to 520:
The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge's discretionary decision on grounds which only involve conflicting assessments of matters of weight.
Grounds of Appeal
The husband presented three grounds of appeal. Ground 3 of his Notice of Appeal was abandoned prior to the hearing and, with leave, the husband relied on an amended ground 3. The grounds relied upon, as set out by the husband’s counsel, are:
·The primary judge erred in law by failing to adequately expose the process of reasoning which led the judge to decide that Pool A of the property of the parties should be shared by the appellant and the respondent in shares of 30 per cent and 70 per cent respectively;
·In the alternative to ground 1, the primary judge’s decision with respect to the division of Pool A was so plainly wrong or unjust as to bespeak error, in that, on the findings of fact made by the judge, a division of Pool A of the property of the parties favouring the respondent by 70 per cent to 30 per cent to the appellant, a disparity of $849,911 fell beyond the ambit of a reasonable exercise of discretion;
·The decision of the primary judge with respect to Pool A was erroneous in principle, in that his Honour failed to give genuine, serious or proper consideration to mandatory relevant considerations, being the provisions of s 79(4) of the Act in finding or concluding that the parties’ contributions to Pool A favoured the respondent by 70 per cent to the appellant’s 30 percent.
The crux of the appeal, as articulated by the husband’s counsel at hearing, is the difficulty in discerning the reasoning process by which the primary judge decided that the wife should receive so much more than the husband.
Ground 1: inadequacy of reasons
Under ground 1, the husband argued that while it was open to the primary judge to hold that the post-separation contributions favoured the wife, he did not adequately explain his reasoning as to why the contributions and overall division of Pool A should be a 70-30 split in favour of the wife. While counsel for the husband conceded that the primary judge discussed a range of considerations, it was claimed that the process by which the primary judge made the assessments required by s 79(4) of the Act was difficult if not impossible to discern.
In response, the wife contended that the primary judge provided adequate reasons in his consideration of the evidence, including the significant contribution of the wife’s trauma pay out, the husband’s borrowing, his separate investments, the son living with the wife, the wife paying out the husband’s business debt, the insurance payments made to the husband, and the husband’s vague and non-responsive answers and lack of disclosure relating to his expenditure. The wife further notes that the husband received 95 per cent of Pool B so that, over all, the husband received 42.45 per cent of the entire pool. This is a total disparity of only $447,707.
It is well established that an articulation of reasons which enables the basis for a decision to be seen and understood is a necessary part of the judicial process (Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 279 per McHugh JA). Where reasons are inadequate, “the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected” (Sun Alliance Insurance Ltd v Massoud (1989) VR 8 at 18 per Gray J, followed by the Full Court of this Court in Bennett and Bennett (1991) FLC 92-191 at 78,266).
Paragraphs 111 to 113 of the trial reasons adequately set out, in our opinion, the primary judge’s reasoning and assessment of Pool A. The primary judge noted the long marriage during which both parties made financial and non-financial contributions, the only significant difference being the injection of the $200,000 lump sum trauma payment by the wife. Following separation, the primary judge took into account the wife’s occupation of the former matrimonial home while the husband was in the rental market, the fact that the son primarily resided with the wife and the wife’s use of her income to make significant reductions to the mortgages against the parties’ properties. Accordingly, the primary judge was satisfied that the post-separation factors favoured the wife.
As noted in the decision of Coleman J in Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234]:
Given that the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion …
This is not a case where the “leap” is so great as to render the reasoning process defective.
Contrary to the husband’s submissions, there is no requirement for the primary judge to particularise percentages for contributions at each stage of the relationship. Indeed, the authorities are consistent in finding that assessing contributions is not an accounting exercise but a holistic one (Brandt v Brandt (1997) FLC 92-758; Norbis v Norbis (1986) 161 CLR 513).
Ground 2: plainly wrong
The submissions made in support of ground 2 focussed on the weight given to the wife’s trauma insurance payout during the relationship. The husband complained that a percentage amount was not given to this lump sum at both the time of separation and at trial. The husband argued that, based on the division of the pool, the only conclusion open is that the primary judge extrapolated the proportion of the trauma payout in relation to the purchase price of the former matrimonial home to the current value of that home.
The husband’s oral submissions focussed on the disparity of the outcome in Pool A. However, when considering a ground such as ‘plainly wrong’, it is necessary to look at the global outcome. It is the final orders that are the subject of appeal and the overall result must be plainly wrong. As the wife noted in her submissions as to ground 1, the overall division of the pool is 42.45 percent to the husband and 57.55 per cent to the wife. The husband submitted that an outcome whereby the husband received no less than 45 per cent would not be “plainly wrong” but that any less was. He did not elaborate as to why a minimum of 45 per cent was appropriate in this case.
Relying upon the Full Court decisions in Black and Kellner (1992) FLC 92-287 and Weir and Weir (1993) FLC 92-338 (“Weir”), the wife responded that, in the context of the husband’s failure to make full and frank financial disclosure, there is nothing unjust about the decision. The Full Court stated in Weir at 79,593:
It seems to us that once it has been established there has been a deliberate non-disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
Counsel for the husband effectively conceded this point in his response to the wife’s cross-appeal, allowing that the primary judge had taken into account the husband’s non-disclosure in both the formulation of the three pools and the assessment of contributions in Pool A. On a not-dissimilar income, the wife used her income to reduce the mortgages on the properties and add value to the pool of assets. The husband, admittedly with the added burden of rental payments, had not created any value nor was he able or willing to account for his substantially discretionary expenditure.
When taking into account the overall outcome of the case (a total disparity of $447,707 in a pool of $2,800,668), the contribution of the wife’s $200,000 trauma payment during the marriage, the son residing primarily with the wife, and the wife’s use of her income to build the asset pool even against the husband’s ill health and rental costs, it is clear that the primary judge’s decision was not plainly wrong but falls comfortably within the scope of his discretion.
Ground 3: erroneous in principle
The husband relied on arguments made under grounds 1 and 2 for ground 3. Nothing more was said about this challenge before us. Grounds 1 and 2 have not been made out and it follows that this ground must also fail.
The Wife’s Cross-Appeal
The wife’s Cross-Appeal contained three grounds of appeal. Ground 2 was abandoned prior to the hearing.
Ground 1
Ground 1 is that the primary judge failed to take into consideration a pending insurance claim in the husband’s favour in the sum of $1,250,000 for total and permanent disability which the husband had not previously disclosed. Firstly, this proposition misstates the facts. The existence of the policy itself was known to the wife, as it had been acquired during the parties’ marriage and paid for from joint funds while the relationship continued. The husband had previously made a claim for a total and permanent disability payment and this was rejected. An inquiry by the husband’s insurance company to his renal specialist indicated a reconsideration of that decision seemed to be underway. However, the husband was unaware of this review and so it is not a matter of non-disclosure by the husband.
As to whether the $1,250,000 payment should be considered in the distribution of assets, the payment was dependent on whether or not the husband was deemed permanently unable to return to work. The primary judge invited the wife to seek an adjournment by reason of a likely significant change in circumstances under s 79(5), but no such application was made.
The total and permanent disability payment would only be made if the husband’s renal specialist confirmed that the husband was permanently unable to return to work. However, the evidence of his renal specialist at trial was that the husband’s health had actually improved since the original claim was rejected. Consequently, it appears unlikely that the claim would now be approved. During final submissions at trial, counsel for the wife agreed with the primary judge that the payment was nothing more than a matter of conjecture:
HIS HONOUR: And it’s so – such a matter of conjecture as to be incapable of any resolution whether he gets it or not.
[COUNSEL FOR THE WIFE]: Yes.
HIS HONOUR: Like, he may end up with a kidney transplant next year and live a long and fruitful life.
[COUNSEL FOR THE WIFE]: Yes. Well - - -
HIS HONOUR: I have not one jot of evidence about his life expectancy, not one.
[COUNSEL FOR THE WIFE]: Well, to an extent there is. It - - -
HIS HONOUR: No, there’s none. The doctor talked about, “Oh, the general studies might say this.” Not one word about his patient in particular.
[COUNSEL FOR THE WIFE]: Yes.
HIS HONOUR: There’s not one word about it.
[COUNSEL FOR THE WIFE]: Yes.
HIS HONOUR: So we don’t have any evidence at all.
[COUNSEL FOR THE WIFE]: No. But, your Honour, I’m not saying he - - -
HIS HONOUR: But, then, if you take into account the fact that there may be a TPD payment, isn’t that completely balanced by I’m going to take into account his horrifying health circumstances for the rest of his life under 75(2), as a health factor?
(Transcript of 23 February 2017, page 426, lines 11-40)
(Emphasis added)
Thus, there was nothing which required the primary judge’s consideration. The issue was one of pure speculation.
Ground 3
Ground 3 states that the primary judge erred in exercising the court’s discretion in awarding the husband 30 per cent of Pool A because this was manifestly outside the upper range of the court’s discretion. The wife’s argument is that the husband’s non-disclosure should have been taken into account under s 75(2)(o) of the Act and that such non-disclosure makes the award of 30 per cent of Pool A (and 42.45 per cent of the total assets in all three pools) manifestly unjust.
As highlighted in the discussion of ground 2 of the husband’s appeal, no adjustment was made under s 75(2)(o) of the Act but the primary judge took the husband’s non-disclosure into account in the formulation of the pools, particularly Pool B, and in the assessment of the contributions of the parties. The primary judge noted (at [103(c)]) that the husband had received and expended without clear explanation the trauma payout of $495,500. The primary judge took into account the entire amount of the husband’s trauma payout, in lieu of his current bank account balance, in Pool B because of the husband’s non-disclosure.
The primary judge repeatedly warned the husband about his vague responses and lack of full and frank disclosure, which was taken into account by the inclusion of much of this unexplained expenditure on the final balance sheet. The approach adopted by the primary judge was available to him and there is no error in his failure to make a further adjustment under s 75(2)(o) by reason of the non-disclosure.
Conclusion
There being no merit in any of the grounds of appeal or grounds of cross‑appeal, both are dismissed.
Costs
At the conclusion of the hearing we sought submissions from both counsel as to the question of costs depending on the result of the appeal.
In the event that the appeal was successful, counsel for the husband sought an order for costs. In the event that the cross-appeal was successful, counsel for the wife sought an order for costs.
Neither the appeal nor cross-appeal is successful. We make no order as for costs.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 12 April 2018.
Associate:
Date: 12 April 2018
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