Fosbery & Fosbery
[2009] FamCAFC 51
•30 March 2009
FAMILY COURT OF AUSTRALIA
| FOSBERY & FOSBERY | [2009] FamCAFC 51 |
| FAMILY LAW – APPEAL – CHILDREN – from decision of Federal Magistrate – lack of reasons – with whom a child lives – child’s school – appeal dismissed FAMILY LAW – APPEAL – PROPERTY– from decision of Federal Magistrate – error of law in excluding certain sums from the pool – contributions of the parties – error of calculation in making adjustment in wife’s favour – inadequate adjustment with respect to Family Law Act 1975 (Cth) s 75(2) factors – appeal dismissed FAMILY LAW – APPEAL – COSTS – each party to bear their own costs Family Law Act 1975 (Cth) Australian Coal & Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 |
| APPELLANT | Ms Fosbery |
| RESPONDENT: | Mr Fosbery |
| FIRST INSTANCE FILE NUMBER: | BRM | 9841 | of | 2006 |
| APPEAL NUMBER: | NA | 23 & 26 | of | 2008 |
| DATE DELIVERED: | 30 March 2009 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Bryant CJ, Finn & Benjamin JJ |
| HEARING DATE: | 8 August 2008 |
| LOWER COURT JURISDICTION: LOWER COURT JUDGMENT DATE: LOWER COURT MNC: | Federal Magistrates Court Reasons delivered 8 February 2008, property orders made 20 February 2008 and parenting orders made 7 March 2008 [2008] FMCAfam 95 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT | Mr Kearney of Counsel |
| SOLICITOR FOR THE APPELLANT | Hirst & Co. |
COUNSEL FOR THE RESPONDENT: | Mr Galloway of Counsel |
SOLICITOR FOR THE RESPONDENT | Parker Family Law |
Orders
That the appeal against the orders with respect to property settlement made on 20 February 2008 be dismissed.
That the appeal against the parenting orders made on 7 March 2008 be dismissed.
That there be no order for costs in relation to the appeals.
IT IS NOTED that publication of this judgment under the pseudonym Fosbery & Fosbery approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
APPEAL NUMBER: NA 23/2008 & NA 26/2008
FILE NUMBER: BRM 9481/2006
| Ms Fosbery |
Appellant
and
| Mr Fosbery |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Fosbery, the wife, appeals from property and parenting orders made by Federal Magistrate Baumann on 20 February 2008 and on 7 March 2008, respectively, reasons having been delivered on 8 February 2008.
The wife and the husband, Mr Fosbery, are aged in their mid forties and were married in 1985, they separated in August 2006. They have three children; however, orders were only made in respect of their youngest child, M, aged nine at the time of the trial. His elder siblings live with the husband and were under 18 at the time of the trial.
The parenting orders provide that the parties have equal shared parental responsibility for M and for him to live for a greater amount of time with the husband than with the wife. During school term he is to live with the wife on alternate weekends and one weeknight and spend equal time with his parents during school holidays and on special occasions. The parents could not agree on which private school M should attend and the parenting orders provide M is to attend a school preferred by the husband, rather than the school preferred by the wife.
The property orders entitle the wife to 55 per cent of the property pool of $1,731,220.
In addition to the parenting and property issues determined by the Federal Magistrate, the wife sought spousal maintenance, which first instance application remains undetermined.
Background
Proceedings were commenced in the Family Court and interim orders were made by Carmody J in November 2006. The proceedings were then transferred to the Federal Magistrates Court and were heard on 1 November 2007.
The Federal Magistrate heard the competing applications as to property and parenting. The parenting dispute related to the time M was to live with each parent during school term, the school M was to attend and parental responsibility for him.
At the commencement of his reasons for judgment, the Federal Magistrate provided the following summary of the factual background (which was not challenged before us) which is as follows:
1.The [wife] and the [husband] were a high achieving and high profile couple who married in 1985. In their respective professions […] they were, on any assessment, progressing rapidly and would have appeared to most observers as financially prosperous.
2.They were blessed with three children, [two daughters] and [M]. By 2003, the girls were students at a […] private school and were progressing well.
3.On 23 July 2003 an event which had [sic] catastrophic effect on this seemingly successful and functional family took place. In most distressing circumstances the family home was raided by … [p]olice said to be investigating the wife for fraud offences associated with her …[businesses].
4.The quite public humiliation and innuendo associated with this action and ongoing investigations resulted in the [businesses] being sold and the wife plunging into mental illness and depression. Her functioning as a parent was compromised. She became, in December 2004, and remains, as a patient in a therapeutic relationship with her psychiatrist.
5.Eventually in around August 2006 the husband informed the wife that the marriage was at an end. Since that time the children have predominantly resided in the care of the husband, in the family home until its sale some months ago.
Following separation the relationship between the wife and the elder children deteriorated. At the time of the hearing the elder children were living primarily with the husband in accordance with interim orders. The wife had not spent time with her daughters for some time. The Federal Magistrate found (in his reasons for judgment, paragraphs 8 and 9):
8.Tragically the mother’s relationship with her daughters was estranged by the time of trial…
9.As a result, the entire focus of these highly competitive parents was concentrated on [M] (apart from the property dispute)…
In accordance with interim orders made by Carmody J on 29 November 2006 M spent time with the wife each Monday and Wednesday on an overnight basis and from after school Friday until 5.00pm Saturday on each weekend. During school holiday periods M spent Monday, Wednesday and Friday overnight and each Tuesday and Thursday with the wife.
There was agreement between the parties regarding the time that they would spend with M in relation to school holidays and special occasions and the parties agreed to M living alternate weekends with each parent during school term. As already mentioned, the contentious issues at trial were parental responsibility for M; the time M spent with each of the parents during the school week; and which school M was to attend.
In addition to an order for shared parental responsibility for M, the wife sought orders that M live with her and spend time and communicate with the husband each alternate weekend Friday to Monday and half of the school holidays. The wife sought an order that M attend G School in 2009.
The husband opposed those orders and sought orders that M reside predominantly with him and that M attend N School from 2008.
In November 2006 a family report was prepared by Dr H (a psychiatrist). This report was admitted into evidence without challenge.
The Federal Magistrate’s judgment in relation to parenting matters
There was no complaint about the Federal Magistrate’s analysis of the law and therefore we will only refer to his findings of fact and the reasons he gave for his decision – the sufficiency of which is at the heart of this appeal.
The Federal Magistrate stated at the outset of his reasons:
6.…There is voluminous material filed by each party during the course of this litigation, commenced initially by the wife in the Family Court of Australia in September 2006, before being transferred to this Court in November 2006. Although the parties may be disappointed in the approach I have adopted, I have come to the view that an analysis of every disputed fact (of which there are many) is not necessary to enable me to demonstrate why the orders I propose to make are:-
a) In the best interests of [M] at this time; and
b) Divide the available pool of assets in a manner which I regard as just and equitable.
7.I have consciously decided to adopt this approach as a number of the disputed issues were not, of themselves, determinate of the primary issues and an unnecessarily detailed analysis would only have fuelled the chronic conflict which has engulfed this family - a family who have, in many ways, lost so much over an event beyond their control in many ways.
The Federal Magistrate noted that by the date of trial the family report was over 12 months old but concluded that this did not mean that it had no probative value.
The Federal Magistrate also noted the evidence of the wife’s treating psychiatrist. He preferred her diagnosis of the wife over that of the family report writer’s and found that the wife did not represent a risk to the physical and emotional well-being of M (at paragraph 40).
Although noting (correctly in terms of the husband’s contentions and, as we will later discuss, possibly incorrectly in terms of the wife’s) that neither party sought an order for equal time, the Federal Magistrate considered that proposition as required by the legislation. He rejected it, saying:
44.…I find that on the evidence, sharing time equally would be unworkable. [M] needs a predominate base from where his daily routines emanate…
Immediately thereafter, the Federal Magistrate determined that M ought live with the husband and have significant and substantial time with the wife in the form proposed in the orders made by him (paragraphs 44 and 45).
Thereafter, his Honour returned to a consideration of relevant matters contained in s 60CC(3) of the Family Law Act 1975 (Cth) (“the Act”). In this context he found that:
(a)M maintained a meaningful relationship with both parents (paragraph 46);
(b)the “quite intensive” orders made at interim stage ensured that M had spent regular time with the wife (paragraph 46);
(c)the husband had been M’s consistent stable influence (paragraph 46);
(d)the husband was not alienating M from the wife (paragraph 47);
(e)the only independent evidence of M’s views was over 12 months old (paragraph 48), being that M “missed the other parent when staying with one parent” (paragraph 35(c)) and that any evidence from the parties as to M’s wishes both with respect to living arrangements and schooling should be dealt with cautiously (paragraphs 47 and 59);
(f)M’s important relationship with his sisters was likely to be nurtured in the husband’s home (paragraph 50);
(g)it was not in M’s best interests to change the current arrangements, in which all children were living predominantly in the husband’s home (paragraph 52);
(h)that although neither party proposed M spending time with the wife in the “off” week, he would so order and that the “slight disruption to his routine by having, in effect, every Thursday evening during school terms with her is outweighed in my view by the benefit to him of doing so (paragraph 60).
When determining M’s school the Federal Magistrate placed weight on the fact that the husband would continue to be M’s primary carer during school terms, further saying:
Doing the best I can on the limited evidence, and considering the principles enunciated by the Full Court in Re G: (Children’s Schooling) (2000) FamCA 462, I believe it is in the best interests of [M] that the [husband’s] preference for [N School] be supported at this time (at paragraph 59).
We note that although the wife had sought to differentiate between an order for the child to live with her and spend time with the husband, the orders made by the Federal Magistrate provided for M to live with both parents. We understand that his Honour was by this means emphasising the importance of both parents and indicating that the real issue was to determine in which household M would spend more time during school weeks. On a fortnightly basis the orders envisaged that M would spend five nights with the wife (including weekends) and nine nights with the husband.
We will return later to his Honour’s reasons for his property settlement orders after considering the grounds of appeal directed to the parenting orders.
The Grounds of Appeal directed to the parenting orders
The appellant’s notice of appeal contained seven grounds of appeal (although part of the seventh ground was not pursued). In his written summary of argument, counsel for the appellant explained that “in broad terms” the grounds asserted that his Honour had erred in that:
12.1the factual determinations leading to the critical conclusions made as to matters including [M’s] wishes, his relationships and the effects of change [were] unable to be determined;
12.2the factual determinations considered relevant for the purpose of the evaluative findings required by Part VII of the Family Law Act 1975 [were] not able to be determined; and,
12.3having failed to attend to the above, the exercise of discretion pursuant to Part VII has miscarried in that consideration of the matters relevant to determination of that which was relevant to [M’s] best interests has been constrained to a consideration (at best) of the arrangement to be made for time with the Appellant.
Ground 1 – The reasons for judgment.
The wife contended that the reasons for judgment did not adequately identify the findings on which the conclusions concerning parenting matters were formed, and thus were inadequate. However, the wife did not take issue with the fact that the Federal Magistrate was entitled to confine his reasons for judgment to those findings of fact necessary to disclose his reasons for the conclusions he reached.
The wife contends that the extent of the factual findings are to be found at paragraphs 27 to 31 (where the wife’s relationship with her daughters is discussed) and possibly paragraphs 34 to 40 (where the evidence of both the psychiatrist who prepared the Family Report and the wife’s treating psychiatrist is discussed) of the reasons. We are satisfied that the Federal Magistrate’s findings of fact extended further in the reasons, particularly into paragraphs 46, 47, 50 and 51. At paragraph 46 his Honour discusses M’s relationship with his parents:
[M], unlike his sisters, currently maintains a meaningful relationship with both his parents. He did, to a large degree, avoid the full consequences of the family dysfunction because of his age at that time. The continual quite intensive order made by Carmody J, has ensured the mother has regular time with [M] which, as her functioning has improved, has meant [M] has had a greater opportunity to enjoy his mother’s special qualities. The father has been the consistent stable influence over this time and remains [M’s] primary male role model. Their relationship is intact and I believe the order I propose to make will preserve both of the critical child/parent bonds.
At paragraph 47 of the reasons, his Honour considered the need to protect M from harm and says:
I have formed the view that the mother does not present as a risk to [M], nor do I agree the father is alienating [M] from his mother. The conflict between the parents does represent a continual risk that [M] could be exposed to ongoing parental disputes. Both parents are contributors to that risk. The father’s case is that as the child gets older he may “clash” with his mother in the same manner that the history shows has occurred with the older siblings. Although I cannot ignore that possibility, I find that [M] did not suffer the same sense of loss the daughters did. He does not seem to blame his mother for the effects on his life in the same way [his elder sisters] have done.
Further at paragraphs 49, 50 and 51 his Honour considered M’s relationship with his parents and his sister and concludes:
49.Although on balance I would be inclined to the view that prior to mid 2003 the mother was the primary carer of [M], both of these parents had heavy work schedules and devoted time to their children when available. The mother’s mental unwellness post 2003 did make her detached. Even before separation this would have meant an increased parenting focus by the father. I believe that occurred such that by the time of trial the attachment that [M] holds to his parents is likely to be similar.
50.It is a factor which supports the father’s proposal that by remaining predominately with the father, the sibship relationship which [M] enjoys with [her daughters] is more likely to be preserved. Even though the parents have clearly been through tough times, this sibship group have endured the same painful journey. Because of the lack of time the daughters spend with their mother, [M’s] important relationship with his sisters in the foreseeable future is only likely to be nurtured in the home of the father. I accept that the girls are at a quite different developmental stage with many more distractions and interests open to them, however I do not wish to further reduce the opportunity for their interaction with their brother which would be a consequence of the mother’s proposal.
51.I do not ignore the negative attitude the girls have to their mother. The notes of conversations between [one of the daughters] and Mr N (see Exhibit 2) are alarming in their depth of anger. However I accept that the father understands the importance to [M] of shielding him from these adverse perceptions and remarks and believe he will do his best in the future to balance up these comments, if made.
When read carefully and in their entirety, his Honour’s reasons provide the line of reasoning for him to have reached his determination that the child should spend more of his time with the husband. It may well be, however, that a difficulty could arise from a casual read of his Honour’s reasons on account of the fact that his Honour expressed his conclusions regarding the living arrangements for M (at paragraphs 44 and 45) before going on to explain more fully his reasons for those conclusions. But as we have indicated we are able to understand his Honour’s reasons for his conclusions.
Accordingly ground 1 is not established.
Grounds 2, 3 & 5 – relationship of the children with the wife.
In grounds 2, 3 and 5 of her appeal the wife asserts that the Federal Magistrate failed to set out reasons for finding that the husband had not actively sought to alienate the older children from the wife; further that when making a finding that the husband would support a relationship between M and the wife, the Federal Magistrate failed to have regard to all the evidence and gave undue weight to the Family Report, which was some 12 months old at the time of trial.
The wife relied heavily on a passage of cross-examination of the husband appearing at page 849 of the appeal book, when he was asked at line 20:
You won’t take any positive steps, sir, you just won’t prevent [the children] from talking to their mother, is that what you’re telling His Honour?
Answer: Yes
This response has to be seen in the context of the husband’s earlier evidence (at page 848 of the appeal book) concerning his having taken advice from a school counsellor and having accepted the advice including:
Allowing [his daughter], in the most important year of her high school, to make decisions that she needs to so that she can be at ease, without putting further pressure upon her ….
We consider that it was open to the Federal Magistrate to accept that the husband had acted on advice from the school counsellor about how to deal with his daughter’s reluctance to talk to her mother at this important time of her schooling, and thus to conclude that the husband had not sought to ‘actively alienate the older children from their wife’. He concluded that ‘he [the husband] found it difficult to disguise both his frustration and disappointment with the wife’s reactions to the events in 2003’.
The Federal Magistrate did not accept the wife’s case that the husband’s evidence demonstrated that he was alienating the girls from her. Rather he categorised it differently. That was open to him. In addition his reasons identify the part the wife may have played in the estrangement with the daughters and the history of the husband endeavouring to support the wife.
The factual platform to base the conclusion that the husband had both the willingness and capacity to foster the relationship between the children and the wife is contained in the reasons. It includes the findings of the wife’s diminished insight into the events post 2003 on the older children and the wife’s lack of sensitivity. There was also the unchallenged evidence of the Family Reporter, albeit that it was somewhat dated.
The Federal Magistrate found that M, unlike his sisters, maintained a meaningful relationship with both his parents and ‘did, to a large degree, avoid the full consequences of the family dysfunction because of his age at that time’ (at paragraph 46). In relation to the allegation of alienation, the Federal Magistrate found that the husband was not alienating M from the wife, but that the ‘conflict between the parents does represent a continual risk that [M] could be exposed to ongoing parental dispute’ (at paragraph 47). He went on to say:
I do not ignore the negative attitude the girls have to their mother. The notes of conversations between [one daughter] and [her counsellor] are alarming in their depth of anger. However I accept that the [husband] understands the importance to [M] of shielding him from these adverse perceptions and remarks and believe he will do his best in the future to balance up these comments, if made (at paragraph 51).
It is clear from his reasons that the Federal Magistrate was well aware of the issues of alienation, the possible negative effect on M of his sisters’ animosity to the wife, and the strength of the wife’s relationship with M. Thus, we are not persuaded that these grounds have substance.
Ground 4 – M’s views
Ground 4 of the wife’s appeal relates to M’s views in relation both to his schooling and the amount of time he spends with the wife. It was contended by the wife that his Honour opted to cautiously accept the views of M, but that the reasons for judgment do not identify the basis for that caution. It would appear that this contention or complaint by the wife, at least in relation to M’s living arrangements, is based on the following paragraph in his Honour’s reasons:
48. Although [M’s sisters] were able to express clear wishes. [sic] The only independent capture of [M’s] views was undertaken by [the psychiatrist who prepared the family report] and that was over 12 months ago. Certainly the mother says the child shows a strong desire to remain with her becoming “clingy”, but I think any of the feelings expressed by [M] to each of his parents should be dealt with cautiously. He is more aware of the conflict now and he is likely to tell each parent what he thinks they want to hear.
It will thus be seen that this Honour had noted the evidence that M was aware of the conflict between his parents and had concluded that the child was likely to ‘tell each parent what he thinks they want to hear’. This was a conclusion open to his Honour and, once reached, his Honour was entitled to adopt caution in accepting M’s views.
It is important to remember in relation to the issue of children’s wishes that the principles are clear that a court must take into account children’s wishes but is not bound by them. (See R v R: Children's Wishes (2002) FLC 93-108 where the Full Court referred to its earlier decisions in H v W (1995) FLC 92‑598 and R v R: Children's Wishes (2000) FLC 93‑000.)
Accordingly, we find no substance in Ground 4, in so far as it relates to M’s views concerning his living arrangements. We will return to the issue of his views regarding his schooling in the context of Ground 7.
Ground 6 – The wife’s proposals
As drafted, Ground 6 asserts that his Honour ‘erred in failing to consider properly or at all an arrangement pursuant to which [M] would reside primarily with the appellant’. However, the following rather different complaint appears in the written outline of argument for the appellant, being:
35.As [h]is Honour correctly identified, the Appellant’s position at trial was that [M] reside predominantly with her [AB1:39]. Erroneously, [h]is Honour records that neither party sought an order that [M] spend time equally between his parents [AB1:48], the Appellant having made it clear at trial that such an outcome was sought by her on an alternate basis [AB5:725].
The wife contends that she made clear her alternative position of equal time, notwithstanding that this alternative was not part of her closing submissions.
The transcript reveals that during the hearing, counsel for the wife stated that the wife sought equal time in the alternative in the context of this exchange between counsel and the Federal Magistrate:
FEDERAL MAGISTRATE: “[M] should be in her care,” I think, “12 out of 14 nights.” That’s her primary position isn’t it?
MR KIRK: Her primary position is alternate weekends.
FEDERAL MAGISTRATE: Right. Yes.
MR KIRK: Her alternative position is effectively week about.
FEDERAL MAGISTRATE: Week about. So you know, I just find now, in the post 1 July changes, that we can spend a lot of time talking about issues which don’t really go to the capacity, because I haven’t found too many cases that say, “This person is only good for four days, but you gave them the fifth day, and all of a sudden their whole parenting collapses.” It is a control case. It is a case about who ought to be the predominant carer. That’s what this case for [M] is.
MR KIRK: Yes.
However in her case outline filed 25 October 2007 the wife did not seek equal time nor was equal time sought in the written submissions provided by her counsel at the conclusion of the hearing, nor in counsel’s oral submissions.
Whether the wife’s alternative position was clear or not, the Federal Magistrate did consider equal time in accordance with his obligation under the Act to do so. In his reasons the Federal Magistrate acknowledged the requirement to consider equal time and did so at paragraph 44:
Because the presumption shall apply I am required to consider making an order that [M] spend equal time with each parent. Neither parent seeks such an order; however that of itself does not inhibit me from considering an equal time regime. Although I have formed a view [that] the parties could communicate on the larger more important long term issues – I find that on the whole of the evidence, sharing time equally would be unworkable. [M] needs a predominate base from where his daily routines emanate. In my view after consideration of the matters in s60CC, it is in his best interests that he lives predominantly with the [husband].
Thus the Federal Magistrate did consider the alternative of equal time, and as such any contention by the wife to the contrary cannot be sustained. Nothing, in our view, turns on the fact that his Honour may have misunderstood that this was the wife’s alternative position.
The wife complains that in reaching the determination that M should live for more of the time with the husband, there was no proper consideration of the benefits offered by the wife; the views of the child; the ability of M having a meaningful relationship with the wife (all of which have been dealt with earlier in these reasons), and also no proper consideration of an arrangement that M live predominantly with the wife.
In support of the last-mentioned matter the wife contends that the Federal Magistrate disregarded evidence that supported her proposal that M live predominantly with her.
We do not consider that the Federal Magistrate fell into error as asserted. The Federal Magistrate considered the benefit of allowing M to live with the wife as the wife proposed, and weighed this against the loss that would arise from separating him from his sisters a little more than was the present position (paragraph 52). He outlined the competing proposals and considered them in light of the background, the findings of fact and the factors under s 60CC of the Act. In particular, in paragraphs 41 to 56 of his reasons, he analyses the facts in terms of those legislative factors. These include the wife’s health post 2003 (paragraph 49), the sibling relationship (paragraph 50), the daughters’ attitude to the wife (paragraph 51), the husband’s response to that attitude (paragraph 51), the present arrangements (paragraph 52), parental attitude and capacity (paragraph 54) and equal time sharing (paragraph 55). There was no issue that the child would spend significant time in both households. The Federal Magistrate set out the difficulties in the relationship between the wife and her daughters.
Thus we find no substance overall in Ground 6.
Grounds 7.1 & 7.2 – The determination of M’s school.
The Federal Magistrate determined that M attend N School rather than G School (N School being the school nominated by the husband and G School by the wife). The grounds directed to this determination fall into two areas, the first being that the reasons were deficient as generally contended in ground 1; and the second that the Federal Magistrate failed to give any evident weight to M’s wishes.
The Federal Magistrate did take M’s views both generally and in relation to schooling into account as can be seen from the following paragraph in his reasons:
59.I would regard the remarks which [M] makes to his parents about his schooling with caution. The father acknowledges [M] has expressed a desire to go to [G School] but says he is not unhappy about going to [N School]. It is a great pity that [M] has been aware of the parents’ conflict about an issue so important to him. Doing the best I can on the limited evidence, and considering the principles enunciated by the Full Court in Re G: (Children’s Schooling) (2000) FamCA 462, I believe it is in the best interests of [M] that the father’s preference for [N School] be supported at this time. I believe that as the child gets older and his academic interests become clearer, these parents are capable of ensuring that [M] continues to attend a school through secondary levels which will meet his needs. That might mean, in the future, that [G School] becomes an option to be further considered.
It will be seen that the weight accorded to M’s views was seen by the Federal Magistrate in the context of M’s age (9 ½ years). There was no challenge to the determination about the quality of the education offered by each school. The Federal Magistrate was aware of M’s preference but treated it with caution as M also said that he was not unhappy about going to N School. Consideration was given to the relative proximity of the schools and the wife’s concerns about bullying.
In terms of the wife’s complaint about the adequacy of reasons, we are satisfied that the Federal Magistrate’s judgment contained sufficient factual findings to support his determination of what would be in the best interests of M in respect of the school he attends.
Conclusion in relation to parenting appeal
Having regard to our conclusions in relation to the grounds of appeal directed to the parenting orders, that appeal must be dismissed.
The appeal against the property settlement orders
His Honour commenced his reasons for judgment in relation to the property settlement dispute by summarising the parties’ financial history in the following table (appearing at paragraph 64 of his reasons):
1962
Husband and wife born
1981
Husband purchases … home at [A]
1982
Wife purchases … unit at [K]
8 June 1985
Marriage/Cohabitation
… [Husband and Wife both employed as professionals]
Approximately 1985
Wife sells … unit at [K] – netts $15,000
1987
…home [at A] sold – netts $55,000
Parties purchase … home in [H] for $122,000 – renovations assisted by interest free loan of $93,000 from husband’s parents
1990
Husband [gets promoted]
[First daughter] born
1992
[Second daughter] born
1993
… home at [H] sold with nett proceeds of $237,000
… home [at C] purchased for $562,000 with borrowings of $325,000
1994 - 1998
Wife works for wages in Senior positions in [some companies]
1998
Wife acquires first [business] … for $300,000
[M] born
2000
Wife acquires second [business] … for $1,040,000
2001
Wife acquired third [business] …
2002
Wife acquires fourth [business] … for $219,735
January 2003
Home mortgage discharged
23 July 200[3]
… [Police] raid home and [businesses]
February 2004
Wife sells … [one of her businesses] for $100,000
March 2004
Husband receives inheritance from Aunt of $68,000
May 2004
Wife sells … [all remaining businesses] for $1,956,870
Refinancing of aggregate remaining debt of $669,000 secured by wife over [C] property
December 2004
Wife becomes patient of Dr [S]
January 2005
MLC commence payments of approximately $10,679 per month under Disability policy (Taken out in October 2001)
February 2006
MLC payments cease
August 2006
Parties separate
April 2007
$123,714 paid to Official Trustee to release proceeds of crime charge on home
August 2007
[C] home sold for $2,350,000
September 2007
Proceeds of crime proceedings against the wife were dismissed and funds (with interest) of $123,714 released to the wife
Husband purchases home at [B] for $1,100,00 with facility of $1,150,000
Ultimately and for reasons that we will in due course canvass (in so far as relevant to this appeal), his Honour concluded that the parties’ property should be valued at $1,731,220, and that it should be divided between the parties as to 55 per cent to the wife and 45 per cent to the husband. That division was arrived at on the basis of a contribution assessment of 55-45 per cent in the husband’s favour, with a 10 per cent adjustment in favour of the wife on account of the matters mentioned in s 75(2) of the Act.
The Grounds of Appeal directed to the property settlement orders
In her grounds of appeal directed to the property settlement orders, the wife contends:
that the learned Federal Magistrate erred in his calculation of the net value of the property pool by excluding the wife’s post-separation credit card debts in the sum of $58,012 and the husband’s bank account in the sum of $9,155 (identified in the reasons as post-separation earnings) (Ground 1).
that the finding of contributions of 55 per cent by the husband was contrary to the weight of the evidence and outside the reasonable ambit of discretion (Grounds 2 and 3).
that the Federal Magistrate either intended to make a 20 per cent adjustment in her favour, but that an error of expression caused him to award only 10 per cent; or alternatively that a 10 per cent adjustment was manifestly inadequate and contrary to the weight of the evidence (Grounds 4 and 6).
A further ground (Ground 5) related to the spouse maintenance component of the wife’s application, which is still pending before the Federal Magistrate. The wife contends that it was incumbent on the Federal Magistrate to determine the spouse maintenance application at the same time as the property proceedings, and in failing to do so his discretion miscarried.
Ground 1 – treatment of post-separation debts and earnings in the calculation of the value of the pool
When in his reasons for judgment his Honour had to determine the pool of property available for distribution between the parties, he:
a)declined to allocate any value to a possible claim by the wife pursuant to an income protection insurance policy (with MLC);
b)added back the parties’ legal fees;
c)used an agreed estimation of the net proceeds of sale of the former matrimonial home;
d)declined to include the wife’s post-separation credit card debts of some $58,000, on the basis that there was insufficient evidence to enable him to be satisfied that it was necessary for her to use credit cards to meet her reasonable living expenses ‘in the context of her having available over $60,000 (after payment of legal costs) since October 2006 as well as funds at separation’;
e)declined to include the husband’s bank account balance of $9155 which he found arose from post-separation earnings; and
f)noted the agreement of counsel to include the parties’ modest superannuation entitlements in the one pool.
The pool as found by his Honour was then as follows:
Assets
Estimated proceeds of sale of [C] home
$2,286,000
Furniture
- husband
- wife
$22,213
$18,917
… Motor vehicle
$66,000
Husband’s business interests
$280,640
Husband’s nett loan accounts
$17,639
Balance of [IS] funds
$96,021
Shares
- [TTS Club]
- [SP]
$6460
$9,984
Frequent Flyer Points (as valued)
- Amex
- Qantas
$4968
$13,117
Superannuation
- husband
- wife
$34,861
$42,374
Legal expenses
- husband
- wife
$100,278
$68,981
Liabilities
National Australia Bank
- Flexi Facility
- … Secured Funds
- Cheque Account
- Business Loan
- Car Loan
$963,676
$128,622
$9995
$145,313
$89,627
$1,337,233
Nett
$1,731,220
As already indicated, the first ground of appeal relates to what counsel described as identification of net asset issues, being:
·the credit card debts of the wife of $58,012.00, and
·post-separation savings of the husband’s of $9,155.00,
both of which, as seen, were excluded from the pool.
In relation to the wife’s credit card debts, her counsel submitted that there had been no suggestion of waste; that the quantum of debt had not been challenged; and that the credit cards were the means by which the wife supported herself post separation. He further submitted that no real challenge had been made to the wife’s estimation of her reasonable living expenses being some $114,400 per annum.
It was further argued on behalf of the wife that the effect of the Federal Magistrate’s decision was that the wife had in effect funded her ongoing living costs post-separation from her own pocket entirely, whilst the husband utilised at least in part some marital resources in that regard.
Specifically in relation to the husband’s post-separation savings of $9,155, it was argued for the wife that the Federal Magistrate failed to clearly articulate why he failed to include this sum in the property pool and that he was obliged to do so.
In support of these arguments, counsel relied upon the principles in Chorn & Hopkins (2004) FLC 93-204, and while acknowledging those principles, he queried whether as a matter of law ‘post-separation earnings from personal exertion fall necessarily to be excluded where they are derived from an asset, being the accountancy practice, and an earning capacity accumulated over the 21 years or so of these parties’ marriage, without further consideration’.
The Full Court has long recognised the wide discretion of a trial judge depending upon the circumstances of the case in determining the pool of property (including notional items) available for division: see Wilde & Wilde [2007] FamCA 1044; Townsend and Townsend (1995) FLC 92-569; C and C [1998] FamCA 143; Chorn & Hopkins (supra); Omacini and Omacini (2005) FLC 93-218 and Gollings and Scott (2007) FLC 93-319.
His Honour explained in the following paragraph of his reasons why he had not deducted from the pool the wife’s credit card debts:
75.The wife says at paragraph 234 of her trial Affidavit that her credit card liabilities totalling (for the three cards) a sum of $58,012 were “utilised to meet payments of legal costs, living expenses, pharmaceutical and medical needs, health insurance.” This bland assertion in the context of her having available over $60,000 (after payment of legal costs) since October 2006 as well as funds at separation, is not sufficient to satisfy me that it was necessary to use her credit cards to meet reasonable living expenses over this period. I do not intend to include the wife’s credit cards as a joint expense in the pool.
Given the other amounts available to the wife to fund her living expenses post separation, we do not consider that his Honour’s discretion miscarried in refusing to take into account her credit card debts.
As to his Honour’s refusal to include in the pool the husband’s bank balance of $9,155 which, as his Honour found, arose from post-separation earnings, we acknowledge that his Honour did not expand on the reasons why he adopted this approach. However, having regard to the authorities mentioned, we consider it was sufficient that his Honour explained, as he did, that the bank balance in question arose from post-separation earnings.
Again having regard to the relevant authorities, we do not consider that there was any inconsistency in his Honour’s approaches to the husband’s post-separation savings and to the wife’s post-separation liabilities. His approaches were well within the bounds of discretion as explained in the authorities mentioned. Thus ground 1 has not been established.
Grounds 2 and 3 – the contribution assessment
The wife contends that the finding of contributions of 55 per cent by the husband was contrary to the weight of the evidence and outside a reasonable ambit of discretion. Her counsel’s submissions in relation to these grounds can be regarded as raising the following three broad complaints:
that the Federal Magistrate ought not to have made, and subsequently relied upon, a finding that the husband’s actions prevented a further diminution of the matrimonial assets, as such a finding was not open to him on the evidence;
that the Federal Magistrate failed to properly recognise the wife’s financial and non-financial contributions;
that reliance on the husband’s post-separation contributions led the Federal Magistrate into error, given the relatively short post-separation period and the wife’s post-separation contributions.
Notwithstanding this categorisation by counsel, we consider that the essential question being whether or not his Honour’s 55-45 per cent assessment of contributions in the husband’s favour was beyond the ambit of discretion, can be best evaluated if we now set out in their entirety his Honour’s findings and conclusions in relation to the parties’ contributions (emphasis added):
79.In this relationship which spanned a period exceeding 20 years, the parties’ initial contributions were not significant. They each brought into the relationship a professional qualification and a strong work ethic. As I deal with below, they each supported the other in developing their careers.
80.The husband’s […] career has been a consistent source of income throughout. He now enjoys an income which approximates $300,000 gross pa. He is good at what he does and works hard. His income has contributed to the lifestyle of the family and the extensive renovations to the family homes which have shown significant capital improvement (particularly the [C] home). He also contributed the inheritance from his Aunt’s estate [$68,000 in March 2004]. I do not ignore that benefit that flows from the $93,000 interest free loan from his parents. It was repaid relatively quickly from joint income (the husband says “draws” from his businesses), but it was still a help [to] the family. The husband was, and remains, a devoted parent and although I regard the wife’s contributions as slightly superior as a homemaker and parent (at least until mid 2003), he did make a contribution when available despite his long hours of [work]…
81.The wife, as the uncontroversial history demonstrates was energetic, capable and entrepreneurial. After rising to a senior level in [some companies], she identified an opportunity to work outside of the [these companies] as [a marketing consultant]... She developed a higher profile in that industry.
82.A combination of this profile and expertise and the husband’s […] skills saw this relatively young couple in 1998 plunge into their first purchase of a [business]. I have no doubt the husband was assiduous in his review of the finances of the business and subsequent acquisitions. The acquisitions were almost fully financed. It would have not been lost on the husband that this involved substantial risks; however the couple amassed four [businesses] over a period of four years. They were highly ambitious and the wife, although she had a number of staff, was still the [supervisor]... The wife also was a successful tenderer for […] a [relatively large] organisation… Consistent with her entrepreneurial spirit, during this busy period (remembering the children were all quite young), the wife travelled to the United States and purchased a […] machine [...] It cost $250,000. After developing a software programme for Australian use, she marketed that product receiving, she says, about $25,000 in commissions. She was working long hours; was often on call; completed a MBA and was a regular presenter at […] conventions [relating to her profession]. The wife pays tribute to the husband’s contribution to the [businesses] at paragraph 78 of her Affidavit.
83.The events of mid 2003 caused the “[Fosbery] Empire” to crumble with devastating effects. It would be hard to imaging how such a high profile and successful team as the couple were, would be expected to cope with the public humiliation of [negative] press articles... That no charges were ever laid against her […] [is] simply unbelievable.
84.Even though some pressures were obvious in the business prior to the police raid […], the raid and publicity coupled with the other structural changes in the industry necessitated these highly geared businesses to be sold. Apart from the husband’s businesses, all the other assets were in the wife’s home [sic]. The [C] home was at risk. Whilst the wife’s stress induced condition deteriorated, I have no doubt the husband did all he could as well to “cut their losses”. They were required to consolidate loans and debtors to do so (including substantial credit card liabilities), which amounted to around $669,000. The husband’s cash flow from his [business] was critical to saving the family from even more financial disaster.
85.From mid 2003, if not slightly before, the mounting pressures on the wife caused her to become more detached. I am satisfied this caused the husband’s contribution to the family to increase – to fill the gap in a sense for the wife’s emotional unavailability. The wife fairly concedes that he husband stood by her as they fought these unfair actions. The submission made by the wife’s Counsel that damages for malicious prosecution cannot be launched, whilst not supported by any evidence, seems to be accepted by the husband, and demonstrates starkly the unfairness of the situation created by the authorities.
86.There is a long line of legal authority which supports the view that in a marriage partnership, the parties are expected to take the good with the bad. This couple have faced extreme financial highs and lows. I am satisfied they both did their best.
87.I have come to the conclusion, which is contrary to the submissions of Senior Counsel for the wife, that an adjustment to the husband on the contribution based assessment is justified. This is not to penalise the wife for her mental illness – but to give proper recognition that the pool of assets would have been likely to have been further diminished without the husband’s resolute efforts from mid 2003. Since then he has also maintained payments on mortgages (increased from time to time to meet the parties’ needs […]) which enabled the [C] property to attract during a boom in the […] property prices, a significant capital gain. He also carried the significant and increasing responsibility for the children, whilst I accept the family had the benefit of living in the house.
88.These issues couple with the other contributions of both a financial and non-financial character even over a long relationship persuade me that a contribution based division as to 55% to the husband and 45% to the wife is proper.
When regard is had to the totality of his Honour’s findings in relation to the parties’ contributions as set out above, we do not necessarily agree with the submission made on behalf of the wife, that his Honour’s 55-45 per cent contribution assessment in favour of the husband was made on account only of the post-separation contributions of the husband and as a recognition that the pool of assets would have been likely to have been further diminished without the husband’s efforts from mid 2003.
It is true that a cursory read of paragraph 87 of his Honour’s reasons could give the impression that these two matters alone were the basis for a 55 per cent assessment in favour of the husband. But it must be noted that at no point in his reasons, did his Honour say that apart from the matters mentioned in paragraph 87, he would have found an equality of contributions. Certainly an assessment of 55 per cent would be well within the range of discretion for all contributions of the husband throughout the relationship as identified by his Honour.
If it be that his Honour did intend the 55 per cent assessment to be made only on the basis of the two matters mentioned in paragraph 87 of his reasons for judgment, it would need to be remembered (particularly having regard to the wife’s third complaint concerning the limited period from separation to trial, being August 2006 to November 2007), that his Honour’s findings in paragraph 87 regarding the husband’s efforts, both financial and non-financial, relate not to the post-separation period but rather to the period from mid-2003 (see also paragraph 85 of his reasons). Again such an assessment would not be outside a proper exercise of the wide discretion.
To the extent it is asserted that there was no evidence to support the conclusion that the husband’s efforts had effectively preserved the parties’ assets after the calamitous events of 2003, that conclusion was, in our opinion, one which could clearly be drawn from the extensive affidavit evidence of the husband which was before his Honour, and appears not to have been the subject of any real challenge.
We are also not persuaded, again having regard to the entirety of his Honour’s discussion of the parties’ contributions, that our interference with his Honour’s orders would be warranted on account of the second of the specific complaints raised on behalf of the wife, being that her financial and non-financial contributions were not properly recognised. The specific contributions on which the wife particularly relied in this regard were her contributions from the MLC disability and/or income protection insurance policy.
Further in relation to that policy, counsel for the wife referred to the order made by his Honour providing for the husband to share in any net proceeds of any successful litigation by the wife regarding the cessation of payments under that policy and submitted that given the lack of recognition of the wife’s contribution of the payments which were made, the husband became the beneficiary of a “double credit” effect in respect of the policy payments.
We consider that that last-mentioned submission is without substance given the entirely speculative nature of any such future litigation concerning the cessation of the MLC payments. It is useful here to have regard to his Honour’s observations about this potential claim:
98.I have not ignored the possibility of some return on the MLC policy. It is not clear to me whether the wife has the will to pursue further litigation. It will be expensive and no guarantee of success exists. Because of this uncertainty I propose to make an order which will require the wife to share with the husband, in the ultimate proportions, any nett payments that are recovered. The wife, at trial, submitted the husband should contribute to such litigation. I think for these parties that would be difficult to work as the wife must first decide whether she wishes to pursue an action and, if she does, she should have control of the litigation including instructing lawyers; compromising settlements etc.
99.If she does pursue a claim she will need to initially bear the costs of doing so. Any costs may be claimed against any successful recovery before sharing the nett amount with the husband. The uncertainty of this issue troubles me when considering the question of spouse maintenance as I set out below.
It must be acknowledged, however, that although his Honour referred in his table of the chronology, to payments of approximately $10,679 made under the MLC policy in the period from January 2005 to February 2006 (there were apparently ten such payments: see paragraph 129 of the wife’s affidavit of 11 October 2007), he did not refer specifically to those payments in his discussion of the parties’ contributions. But neither did he refer to the husband’s financial and non-financial contributions to issues surrounding the MLC policy.
It may well have been preferable given the relative complexity of the parties’ financial affairs, particularly after the events of mid 2003, and given the volume of material from both parties about these matters, for his Honour to have made more detailed findings regarding those matters.
But having regard to the totality of the extensive evidence which was before his Honour regarding the parties’ contributions of all varieties over the relatively long period of their relationship and also to the presumption in favour of the correctness of a discretionary decision such as the present (Australian Coal & Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621, particularly at [627]), we are not persuaded that his Honour’s assessment of the husband’s contributions at 55 per cent to those of the wife at 45 per cent was other than correct. Thus our interference with his Honour’s orders on account of his contributions assessment would not be warranted.
Grounds 4 and 6 – the challenge to the “s 75(2)” adjustment
When he turned to consider the s 75(2) factors, his Honour first discussed and rejected the husband’s case that the wife’s conduct in relation to the running of the businesses had been “negligent, reckless or wanton” (Kowaliw& Kowaliw (1981) FLC 91-092). No issue arises before us about his Honour’s conclusion in this regard.
His Honour then continued:
93.I have come to the view that the wife should receive an adjustment for the current disparity in incomes. The husband has a significant and secure income – sufficient for him to confidently borrow over $1.1 million in the midst of these proceedings to buy a new home. He says he plans to retire (or at least reduce his work commitments) by 2017 – when he turns 55. His commitments, both financially and emotionally to the three children who remain primarily in his care is a factor which otherwise reduces the adjustment I would make to the wife. It is unlikely that the wife, for some time, will make any significant child support contributions.
94.However, I agree with the submissions of the wife’s Counsel that, although the wife is immensely talented and highly qualified her capacity for employment is somewhat uncertain…
…
96.In cross-examination Dr [S], doing the best she could, I accept, suggested the wife would need a further 2-4 years to make a full recovery. Certainly, the relief of the […] charges no longer being contemplated and now with the resolution of these proceedings (although not entirely as the wife would have wanted it to be), sets an environment for further improvement. Certainly the wife presents as an impressive person – her demeanour in the witness box belying her underlying psychiatric condition. She could, she acknowledges, do reviews of [products]. She claims she is no longer depressed. She wants to return to work both to assist financially but she recognises for herself esteem and confidence. She has been dealt some cruel blows, but I sense a growing desire to succeed and regain her reputation.
97.I take all these factors into account but the certainty of the husband’s income compared to the uncertainties facing the wife compel an adjustment in my view of 10% in the wife’s favour – or said, in another way, the wife should have the first 20% of the pool – a sum of about $346,000. I regard this as proper.
Later under the heading “Just and Equitable”, his Honour said:
102.The wife should receive 55% of the nett pool of assets, and the husband 45%. As a rough estimate this could amount to the parties receiving the following outcomes:-
Wife
103.55% of $1,731,220 amounts to $952,171 being…
Husband
104. The husband’s 45% of $1,731,220 amounts to $779,049 being…
It will thus be seen that the wife was in fact to receive $173,122 more than the husband (that is $952,171- $779,049); that figure is of course 10 per cent of the total value of the net pool, being $1,731,220.
The wife’s complaints in relation to his Honour’s consideration of, and adjustment on account of, the s 75(2) matters are twofold. First, it is asserted that the statement by his Honour in paragraph 97 that “the wife should have the first 20% of the pool – a sum of about $346,000” indicated that his Honour intended to make a 20 per cent adjustment in the wife’s favour and that his orders were therefore wrong because they represented only a 10 per cent adjustment. Secondly, it was asserted that if a 10 per cent adjustment was in fact intended, such an adjustment was manifestly inadequate.
As we discussed at considerable length with counsel during the hearing of this appeal, the increasing tendency in this jurisdiction to consider the actual disparity between the parties which any percentage adjustment represents (see the recent discussion by the Full Court of this issue in Phipson & Phipson [2009] FamCAFC 28 at [39]) is likely to lead to the confusion which has arisen in this case. This will be particularly so in a case such as the present where the contribution assessment has resulted in an unequal division of the property and an adjustment is then to be made on account of the s 75(2) matters.
However, in the present case we are satisfied given his Honour’s clear figures in paragraphs 102, 103 and 104 of his reasons that he intended to make an adjustment in favour of the wife on account of the relevant s 75(2) matters which would result in a reversal of the 55-45 per cent division in favour of the husband on account of contributions to a 55-45 per cent division in favour of the wife. His Honour’s orders reflect such a division.
We are also satisfied that such an adjustment on account of the matters identified by his Honour in paragraphs 93, 94 and 96 of his reasons was well within the ambit of the discretion, and we would therefore not be justified in interfering with it.
Accordingly, we find no substance in Grounds 4 and 6.
Ground 5 – the complaint that the wife’s spousal maintenance claim was not determined
In relation to the wife’s spousal maintenance application, his Honour said:
106.The mother maintains that she is unable to adequately support herself. The submissions made in respect of spouse maintenance were limited. Upon reflection, and in circumstances where I am unable to be certain as to:
(a) How much remains for distribution from the sale of the [C] home; and
(b) The intentions of the mother in respect of re-accommodation now that the decision in relation to [M’s] primary residence has been made.
107.I believe I will benefit from receiving further written submissions on the issue of spouse maintenance before I can finally determine that issue.
108.Because of the importance to the parties of receiving a decision in respect of [M’s] care arrangements, and the division of property, I have elected to deliver reasons in respect of those substantive issues today rather than further delay the reasons because of the issue of spouse maintenance.
It will thus be seen that his Honour considered that he needed further submissions before he could determine the spousal maintenance claim. He was entitled to take that view.
If the wife wishes to have her spousal maintenance claim determined, it would seem that she need only apply for a re-listing of the matter for such submissions to be made, or at least directions made for the making of such submissions. Ground 6 is therefore without substance.
Conclusion in relation to the property appeal
As none of the grounds of appeal directed to the property settlement orders have been established, the appeal against those orders must also be dismissed.
Costs of the appeal
At the conclusion of the hearing before us we sought submissions from the parties in relation to the costs of the appeal depending on the various possible outcomes.
In the event that the appeals against both the parenting and the property settlement orders were to be dismissed (as they have been) counsel for the respondent husband sought a costs order in his client’s favour. Counsel for the appellant wife acknowledged that it would be difficult to resist such an order, but nevertheless sought to persuade us that the appeals had raised significant issues.
Having regard to the matters raised in the appeals and notwithstanding their ultimate lack of success, we are not persuaded that the circumstances warrant the making of any order for costs.
I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date: 30 March 2009