Franklin & Ennis - [2019] FamCAFC 91

FAMILY COURT OF AUSTRALIA

FRANKLIN & ENNIS

[2019] FamCAFC 91

FAMILY LAW – APPEAL – PROPERTY – De Facto relationship – Adequacy of reasons – Whether orders inconsistent with findings of fact – Appeal conceded –Where failure to give full and frank disclosure of documents connected to beneficial ownership of a private family company needed to be evaluated by reference to what was known about the company – Myriad of contributions made by the appellant over significant period –Lack of regard to financial positions of parties and future financial prospects – Appeal allowed – Orders varied by consent – Respondent to pay additional $125,000.

FAMILY LAW – APPEAL – COSTS – Where both parties applied for costs certificates – Appellant entitled to a costs certificate – Application for costs certificate by respondent refused.

Family Law Act 1975 (Cth) s 90SF(3)
Federal Proceedings Costs Act 1981 (Cth) s 9

Harris v Caladine (1991) 172 CLR 84; [1991] HCA 9
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Williams & Williams [2007] FamCA 313

APPELLANT:

Mr Franklin

RESPONDENT:

Ms Ennis

FILE NUMBER:

SYC

2160

2014

APPEAL NUMBER:

EAA

125

2018

DATE DELIVERED:

5 June 2019

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Ryan, Aldridge & Watts JJ

HEARING DATE:

24 May 2019

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

31 August 2018

LOWER COURT MNC:

[2018] FCCA 2351

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Coleman SC

SOLICITOR FOR THE APPELLANT:

Burt & Allen Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Kearney SC

SOLICITOR FOR THE RESPONDENT:

Willis & Bowring Solicitors

Orders dated 24 May 2019

That appeal EA 125 of 2018 from the orders of Judge Harper made on 25 September 2018 (and amended on 4 April 2019) be allowed.
That Order 2 of the orders of Judge Harper made on 25 September 2018 be varied such that the respondent shall pay to the solicitor for the appellant on behalf of the appellant the further sum of $125,000 within twenty-eight (28) days of the date of these orders.
That each of the appellant and the respondent shall bear their own costs of and incidental to this appeal, save as otherwise provided by any order as to costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth).

Orders dated 5 June 2019

The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
The respondent’s application for a certificate under the Federal Proceedings (Costs) Act 1981 (Cth) be dismissed.

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 Franklin & Ennis 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: EAA 125 of 2018
File Number: SYC 2160 of 2014

Mr Franklin

Appellant

And

Ms Ennis

Respondent

REASONS FOR JUDGMENT

By Notice of Appeal filed on 28 September 2018, Mr Franklin (“the appellant”) appeals from orders for the settlement of property made on 25 September 2018. The grounds of appeal raised a number of issues, however, the essence of the asserted errors was that:
·The primary judge failed to adequately expose the process of reasoning which lead to the judgment;
·The judgment was not supported by and was inconsistent with the findings of material fact recorded therein; and
·If the decision of the primary judge was not vitiated by appellable error as asserted by the other grounds of appeal, the decision was erroneous in law in that the award made in favour of the respondent was, on the findings of fact on which it was made, manifestly excessive, and plainly wrong.
At the commencement of the appeal, senior counsel for the respondent conceded that the appeal should be allowed. It was also agreed that the orders should be varied so that the appellant receives an additional $125,000. In this respect, the respondent conceded the first of the challenges identified above. We agreed that the appeal should be allowed and, having done so, the orders were varied in accordance with the parties’ agreement. These are our reasons for so doing and in relation to the parties' applications for costs certificates.
So as to put the settlement in context, it needs to be understood that the parties cohabited for a period of 18 years and at the time of trial, the appellant was 72 years of age and the respondent was 63 years of age. The property of the parties was overwhelmingly constituted by real estate registered in the sole name of the respondent. On the other hand, the appellant had assets of little value.
When the parties commenced cohabitation, the respondent was the sole registered proprietor of a property that became the family home. Together, the parties purchased an investment property which was subsequently transferred into the respondent’s sole name. A third property was acquired by the respondent through an inheritance and the original family home was traded up, also with the benefit of an inheritance bequeathed to the respondent.
During their 18 years of cohabitation, both parties had paid employment and made contributions as homemakers and other non-financial contributions. It was uncontroversial that the respondent’s greater contribution of property at the commencement of cohabitation and the inheritances which she received, meant that she was entitled to a markedly greater share of the parties’ property than was the appellant. Indeed, the respondent contended that there should be no property adjustment. On this basis, the appellant would retain 0.5 per cent of the parties’ net assets and the respondent would receive 99.5 per cent.
The parties’ net property was valued at $4.15 million in relation to which the primary judge determined that the appellant’s contributions entitled him to receive four per cent of the net property owned by the parties, exclusive of one inherited real property. Expressed in monetary terms, by way of contributions he was awarded $82,000 out of $2.054 million. By reference to the total net property owned by the parties, pursuant to s 90SF(3) of the Family Law Act 1975 (Cth) (“the Act”) an adjustment of two per cent in favour of the appellant was deemed appropriate. This gave him an additional $75,000.
We agree with the appellant that this outcome cannot be reconciled with his Honour’s findings, for example at [177]:
(a)The [respondent] is 63 and in reasonable health and expects to continue in her employment;
(b)The [appellant] is 72 and is moving towards the end of his working life;
(c)The [appellant] has no assets;
(d)There is an enormous disparity in the wealth of each party;
(e) If no order adjusting the property interests is made the [appellant], at age 72, will have almost nothing (cf Fielding Thackray CJ at [52]);
(f)The [appellant] will need to rehouse himself;
(g)The contributions of the [appellant] to the Suburb C and Suburb F properties were not negligible;
(h)The [appellant] made some contribution as a homemaker.
(i)The [appellant] made a contribution in helping to raise the [respondent’s] children.
Otherwise, and importantly, it was accepted that the appellant contributed “whatever income he retained after business expenses for the purposes of the relationship” [117], albeit he did not save any money during the relationship.
The primary judge appeared to place great weight on his conclusion that the appellant’s contributions during cohabitation were no greater than those made by the respondent (putting to one side the inheritances) and then took into account against him, his failure to adequately disclose documents relevant to the company (owned by his son but beneficially owned by the appellant) through which he contracted his employment. However, given that the primary judge was able to make findings about the income earned through the company by the appellant for many years and that the company had no assets other than a motor vehicle (which was disclosed), the effect of the non-disclosure was no more than to complicate the fact finding process and could not all but eliminate the significance of the contributions made by the appellant.
The effect of this is that little weight was given to the myriad of all contributions made by the appellant during the course of their 18 year de facto relationship (Williams & Williams [2007] FamCA 313 at [26]). In this respect there is no doubt that the appellant worked for many years and contributed as best he could within the roles each party took in their relationship. Although the respondent earned more than the appellant and twice he was made bankrupt, this does not justify his contributions being treated as having little value, which is what occurred. The appellant was no wastrel and notwithstanding the “generous ambit within which reasonable disagreement is possible” (Norbis v Norbis (1986) 161 CLR 513 at 540), in this case the assessment of contributions fell outside the legitimate exercise of discretion.
The same must be said of the adjustment made pursuant to s 90SF(3) of the Act; in particular the lack of regard for the findings made as to the duration of the de facto relationship and the disparity in the financial positions of the parties and their future financial prospects. In short, we consider that the order is inconsistent with the findings made. As to the amount of variation to the order, in deciding that the order is appropriate we take into account that the amount was negotiated through senior counsel and each of the parties was advised in relation to the compromise (Harris v Caladine (1991) 172 CLR 84).
The settlement included agreement that there be no order as to costs and on the understanding that each party applied for a certificate under the Federal Proceedings Costs Act 1981 (Cth) (“the Costs Act”).
In our view, the appellant is entitled to a certificate under the Costs Act. This is a federal appeal which has been allowed on the basis of an error of law. The appellant placed evidence before the primary judge which justified an order in his favour, considerably more advantageous than the amount ordered. Furthermore, we take into account that the appellant is of limited means and his financial future is precarious.
The respondent is in a different position. Firstly, she has property in the vicinity of $4 million and is in secure, well paid employment. Secondly, in our view she overplayed her hand in relation to the significance of the non-disclosure by the appellant concerning the company and in so doing, probably contributed to the error made by the primary judge. Next, having been served with the Notice of Appeal, the respondent should have given careful consideration to its merits and whether it was prudent for her to concede the appeal much earlier and without her needing to incur sizeable legal expenses. In these circumstances it is inappropriate to expect the public purse to meet any of her costs associated with this appeal.
We therefore decline to grant a costs certificate for the respondent.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ryan, Aldridge & Watts JJ) delivered on 5 June 2019.

Associate:

Date: 5 June 2019