Franklyn & Franklyn
[2021] FamCAFC 112
•9 July 2021
FAMILY COURT OF AUSTRALIA
Franklyn & Franklyn [2021] FamCAFC 112
Appeal from: Franklyn & Franklyn [2021] FCCA 588 Appeal number(s): EAA 37 of 2021 File number(s): DUC 63 of 2018 Judgment of: AUSTIN J Date of judgment: 9 July 2021 Catchwords: FAMILY LAW – APPEAL – PRACTICE AND PROCEDURE – Where the mother made an oral application to amend the grounds of appeal and to rely on a new Summary of Argument – Where it is necessary to ensure procedural fairness to both parties – Application refused.
FAMILY LAW – APPEAL – PARENTING – Where the mother appealed from orders requiring her to either re-establish the children’s residence within a reasonable proximity of the father or, in default, for the youngest child to live with the father – Assertions of failure to consider material considerations – Adequacy of reasons – Error of law – Where there is no merit in the parenting appeal – Appeal dismissed – Typographical error – Where the parties agree an error within the parenting orders is better amended by the primary judge under the slip rule.
FAMILY LAW – APPEAL – PROPERTY – Where the mother appeals from orders dividing the parties’ assets 65 per cent and 35 per cent in favour of the father – Add backs – Where the primary judge erred by mischaracterising a loss as a premature distribution of a matrimonial asset because the sum was not received by the mother – Where the loss could only be characterised as an unjustifiable waste of an asset – Adequacy of reasons – Where the primary judge does not explain why the loss should be attributed to the mother as a notional asset – Mathematical error – Where the primary judge fell into error when computing the net value of the parties’ property and superannuation interests – Appeal allowed – Orders set aside – Remitter of property settlement proceedings for rehearing – Costs reserved for 28 days.
Legislation: Family Law Act 1975 (Cth) pts VII, VIII, ss 60CC, 61DA, 65DAA, 75(2), 79(4), 94AAA Cases cited: A & A (1998) 92-800; [1998] FamCA 25
Agius & Agius (2010) FLC 93-442; [2021] FamCAFC 143
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27
Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33
Cubbin & Cutler [2018] FamCAFC 84
Fitzmaurice & Woolridge (2020) FLC 93-951; [2020] FamCAFC 64
Franklyn & Franklyn [2019] FamCAFC 256
Gilles & Irby (2016) FLC 93-687; [2016] FamCAFC 13
Goudarzi & Bagheri (No.2) [2017] FamCAFC 190
Hakimi & Nasser (No.2) [2021] FamCAFC 88
House v The King (1936) 55 CLR 499; [1936] HCA 40
Marcin & Marcin (2020) FLC 93-956; [2020] FamCAFC 85
Sedgley & Sedgley (1995) FLC 92-623; [1995] FamCA 154
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
O’Brien v Komesaroff (1982) 150 CLR 310; [1982] HCA 33
Omacini & Omacini (2005) FLC 93-218; [2005] FamCA 195
Pates & Pates [2018] FamCAFC 171
Re Andrew (1996) FLC 92-692; [1996] FamCA 43
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12
Division: Appeal Division Number of paragraphs: 79 Date of hearing: 6 July 2021 Place: Newcastle Counsel for the Appellant: Mr Strik Solicitor for the Appellant: Urban Family Lawyers Counsel for the Respondent: Mr Kenny Solicitor for the Respondent: Matthew Folbigg Lawyers Counsel for the Independent Children's Lawyer: Mr Guterres Solicitor for the Independent Children's Lawyer: Legal Aid NSW Sydney Central Family Law ORDERS
EAA 37 of 2021
DUC 63 of 2018APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA
BETWEEN: MS FRANKLYN
Appellant
AND: MR FRANKLYN
Respondent
INDEPENDENT CHILDREN'S LAWYER
ORDER MADE BY:
AUSTIN J
DATE OF ORDER:
9 JULY 2021
THE COURT ORDERS THAT:
1.The appeal is allowed in part.
2.Orders 24 to 32 inclusive made by the Federal Circuit Court of Australia on 26 March 2021 are set aside.
3.The parties’ applications for relief under Part VIII of the Family Law Act 1975 (Cth) are remitted to the Federal Circuit Court of Australia for re-hearing.
4.Costs are reserved for 28 days.
Note: The form of the order is subject to the entry in the Court’s records.
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 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Franklyn & Franklyn has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AUSTIN J
The mother appeals from orders made on 26 March 2021 by a judge of the Federal Circuit Court of Australia between the parties in respect of two children and their property interests under Pts VII and VIII of the Family Law Act 1975 (Cth) (“the Act”).
At the time the parenting orders were made, the two children were aged nearly 13 and six years. The youngest child was the parties’, but the eldest child was the mother’s from a former relationship with another man, since deceased. The children had been living with the mother in south eastern Queensland (“Qld”) for about two years before trial; far from the father, who continued to live on his farm in central west New South Wales (“NSW”). Essentially, the orders required the mother to re-establish the children’s residence closer to the father’s residence in NSW, from whence they had come. In default of the mother’s compliance, the youngest child would instead live with the father, but the eldest child would remain living with the mother and would spend time with the father (and younger sibling) in school holiday periods. The parties were vested with equal shared parental responsibility for the youngest child, but the mother retained exclusive parental responsibility for the eldest child.
As for the property settlement, the parties’ property and superannuation interests were found to be worth $1,674,593.00 in aggregate and, allowing for the primary judge’s findings about respective contributions and the relevance of factors prescribed under s 75(2) of the Act, were divided in overall proportions of 65 per cent to the father and 35 per cent to the mother. To effect the division, the father was ordered to pay a cash sum of $99,827 to the mother and, otherwise, the parties each retained the assets they either then possessed or of which they had already had the benefit.
This appeal was heard by a single-judge pursuant to a direction given by the Chief Justice under s 94AAA(3) of the Act.
For the reasons which follow, the appeal from the parenting orders fails but the appeal from the property settlement order succeeds.
BACKGROUND
The eldest child was born to the mother in 2008, but his father died in 2009. The eldest child is now 13 years old.
The parties met online in July 2013 and began cohabitation by January 2014 at latest. The parties and the eldest child lived on the father’s farming property in central west NSW.
The parties married in 2014, at about which time the eldest child’s surname was changed to match the father’s and he began referring to the father as “dad”.
The youngest child was born in 2015. He is now six years old.
The parties separated in late October 2017, upon which the mother and both children vacated the farm and moved to another township in central west NSW.
The father initiated proceedings under both Pt VII and Pt VIII of the Act in February 2018. Interim orders were made in May 2018, with the parties’ consent, for both children to spend supervised time with the father. As it transpired, only the youngest child ever spent time with him. The parties’ separation tended to spoil the relationship between the eldest child and the father, as they have not spent any time together since November 2017.
At some indistinct point between June 2019 and September 2019, the mother relocated with the children from central west NSW to south eastern Qld without warning the father. Then, in September 2019, more interim orders were made requiring the mother to relocate the children’s residence back to central west NSW, but she successfully appealed from those orders and the interim dispute was remitted for re-hearing (Franklyn & Franklyn [2019] FamCAFC 256).
The interim parenting dispute was re-heard and fresh orders were made in May 2020 providing for the youngest child to spend unsupervised time with the father on not less than two weekends each month – one in Sydney and the other in south eastern Qld. No orders were made in respect of the eldest child. Those orders prevailed until the final trial in February 2021.
At trial, the mother proposed that the children live with her in south eastern Qld and that the youngest child spend time with the father, in both Qld and NSW, during school holidays and on one weekend each month during school terms. She was willing to equally share parental responsibility for the youngest child, though she wanted sole parental responsibility for the eldest child and proposed that he only spend time with the father as and when he wished.
The father proposed that the youngest child continue to live with the mother, but only if she chose to move back within 165 kilometres of his home in central west NSW. If she was unwilling to do so, he instead proposed that the youngest child live with him. Regardless of with whom the youngest child lived, the father wanted equal shared parental responsibility for him. The father raised no contest over the eldest child’s residence or parental responsibility, but did want an order compelling the eldest child to spend time with him. By and large, the Independent Children’s Lawyer (“the ICL”) proposed similar orders to the father. Their joint position enjoyed the support of the Family Consultant.
The final orders, which generally accorded with those proposed by the father and the ICL, were pronounced and reasons were delivered on 26 March 2021.
Following the mother’s institution of this appeal in April 2021, the subject orders were stayed in May 2021 and a raft of substitute interim parenting and property orders were made pending finalisation of the appeal.
THE APPEAL
The mother moved on her Amended Notice of Appeal filed on 30 April 2021.
Unfortunately, the grounds of appeal were not illuminated by her Summary of Argument, filed in accordance with the registrar’s procedural orders. Save in respect of Grounds 15 and 17, the mother made no submissions at all and simply recited the grounds of appeal verbatim. Some commentary did accompany Grounds 15 and 17, but only by the repetition of facts and circumstances the mother had alleged at trial, which could not be characterised as submissions intended to explain the errors asserted under those two grounds of appeal.
After business hours on the evening before the appeal hearing, the mother’s freshly-engaged lawyers sent to the appeal registrar an entirely new Summary of Argument. It was 25 pages in length and bore almost no correlation at all to the pleaded grounds of appeal. As the appeal hearing commenced, the mother’s counsel sought leave to amend the grounds of appeal and to rely upon (at least in part) the new Summary of Argument, which application was opposed by the father’s counsel. Counsel for the ICL neither consented to nor opposed the application. The application was refused with reasons to follow, which are now provided.
The mother’s appeal was filed on 16 April 2021. An Amended Notice of Appeal, prepared by lawyers on her behalf, was filed on 30 April 2021. Those were the grounds of appeal to which the father and the ICL responded in their respective Summaries of Argument filed in late June 2021 in readiness for the appeal hearing on 6 July 2021.
The mother wished to proceed with the appeal hearing and did not seek an adjournment. So, with the hearing to proceed, it was necessary to ensure procedural fairness to both parties – not just to the mother. That could only be achieved by holding the mother to the appeal grounds she had already amended once and had had several months to consider. It would have been inherently unfair to expect the father to address, on the run, amended grounds of appeal and the entirely new submissions made in support of them.
Decisions about amendments are pre-eminently interlocutory decisions on matters of practice and procedure. In cases warranting expeditious resolution, such as those involving children, decisions about amendments and adjournments must be made speedily. The adversarial system does not permit disregard of undue delay. Avoidance of undue delay and efficient use of public resources are considerations which may transcend the interests of the parties. The resolution of litigation serves the public as a whole, not merely the parties to the proceedings (Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 189–190, 211–215, 217 and 227). So it was here. The efficient and fair disposition of the litigation required the dismissal of the mother’s belated application to amend her grounds of appeal, though her counsel was permitted or make any submission at all, provided it could be connected to the existing grounds of appeal.
THE PARENTING ORDERS
Ground 5 – error of law
This ground of appeal alleged an error of law by the primary judge’s failure to consider whether the orders were reasonably practicable, as s 65DAA of the Act required.
Section 65DAA of the Act is engaged when an order is made allocating equal shared parental responsibility to the parents of the subject child. The primary judge is then obliged to consider both the advisability and practicability of the child living for equal time with both parents, or alternatively, living primarily with one and spending substantial and significant time with the other. In this instance, the primary judge did precisely that in respect of the youngest child (at [117]), including by express reference to the obligation under s 65DAA(5) to consider certain features of the evidence in determining whether it was reasonably practicable for the child to spend either “equal time” or “substantial and significant time” with each parent.
Having determined that the parties should have equal shared parental responsibility for the youngest child (at [115]), the primary judge examined the advantages and disadvantages of the alternate residential regimes posited for him (at [144]–[152]) and found his best interests were advanced by him being able to enjoy meaningful relationships with both parents, which would require him to live with the mother in reasonable proximity to the father or, alternatively, to live with the father instead.
The appealed orders do not make provision for the youngest child to live with the parties for “equal time” (s 65DAA(1)). Nobody sought that. If the mother chooses to relocate back to central west NSW within 165 kilometres of the father’s home, so the youngest child remains living with her, then the orders provide for the youngest child to spend “substantial and significant time” with the father, which would be reasonably practicable (s 65DAA(2)).
If, however, the mother chooses to remain resident in Qld and the youngest child therefore moves to live with the father in central west NSW, it would not be reasonably practicable for him to spend substantial and significant time with the mother in view of the distance separating the parties’ homes. In that event, the orders provide for the youngest child to spend time with the mother in school holidays and on one weekend each month during school terms – which is effectively the same regime the mother proposed in reverse if the youngest child continued to live with her in Qld. That being so, she could hardly now contend the regime was unworkable. It would have been disingenuous of her to propose a regime with which she could not comply.
Both parties ran a case that the youngest child could not spend substantial and significant time with the non-residential parent if they each maintained their current homes in central west NSW and south eastern Qld. The mother conceded, albeit reluctantly, that she was prepared to relocate back to central west NSW if it meant she could then retain the youngest child’s primary residence (at [58] and [152]). Having made that concession, there could be no genuine dispute about the practicability of the youngest child then spending substantial and significant time with the father, when the two households would be reasonably proximate.
The presumption of equal shared parental responsibility (s 61DA) did not apply in respect of the eldest child because the father is not his parent. The primary judge ordered that the mother have sole parental responsibility for him, which order did not engage s 65DAA of the Act in his case. Although the mother’s appeal was said to incorporate this particular order, there was no other reference to it in her submissions.
Grounds 6, 7 and 10 – failure to consider material considerations
These grounds contend for the failure of the primary judge to consider a series of material considerations, being:
(a)the mother’s undisputed historical role as primary carer;
(b)the mother going to “considerable measures” to ensure the youngest child spent time with the father;
(c)the prospect of alternative orders being made to preserve the youngest child’s relationship with the father; and
(d)the effect upon the mother’s parenting capacity by her having to live with the youngest child in central west NSW and how that would affect the children.
The short answer to the grounds is that the primary judge did consider the first three of those features of the evidence and the last point cannot now be maintained as a complaint.
The primary judge accepted the mother had been the children’s primary carer and so it would be a “very difficult” adjustment for the youngest child if he was to live with the father instead (at [132], [137] and [147]), which was influential in the decision for him to remain living with the mother, provided she relocates his residence back within reasonable proximity to the father.
As the mother correctly said, she did ensure the youngest child continued to spend time with the father in accordance with the interim orders made in May 2020 until the trial, but there was still an abundance of evidence before the primary judge about her apparent unwillingness to support the children’s relationships with the father.
The mother conceded the eldest child had not seen the father since November 2017 (at [46]), despite interim consent orders made in May 2018 requiring it. Even if, as the mother said, she did not deliberately sever their relationship (at [60]), she was still unable to persuade the eldest child to comply with parenting orders to which she agreed and which she must have thought were made in his best interests. Had she not thought that, she would not have agreed to them. Conversely, if she consented to the orders believing they were contrary to the eldest child’s best interests, then such duplicity would tend to compromise the mother’s reliability.
As for the youngest child, the mother’s mere compliance with the interim parenting orders requiring him to spend time with the father did not necessarily equate with her recognition of the importance of the long-term maintenance of the youngest child’s relationship with him. The Family Consultant certainly concluded the mother was trying to prevent the children from having meaningful relationships with the father (at [75], [84]–[85], [99]), labelling it “one of the worst examples of alienation [she has] seen” (at [92]). As was open, the primary judge accepted the Family Consultant’s evidence and doubted the reliability of the mother’s denials of alienating the children from the father (at [102], [127] and [137]). Such evidence and findings underpinned the ultimate conclusion that, to counteract such influence, the youngest child needed to spend substantial and significant time with the father (at [149] and [151]).
The mother did not explain her assertion that there were alternative orders which the primary judge could have considered making, but failed to consider. His Honour transparently examined the various options propounded by the parties and the ICL (at [144]–[152]), observing none was “particularly palatable” and how each had advantages and disadvantages (at [144]). The first option was the mother choosing to relocate back to central west NSW, without being forced by mandatory injunction to do so. The second option was the youngest child living with the father in central west NSW, if the mother chose to stay in Qld. The third option was the youngest child remaining resident with the mother in Qld and only being able to occasionally spend time with the father.
The appealed orders left the mother with a choice and were entirely consistent with the concession she made at trial about her willingness to relocate back to central west NSW, if that was necessary to fulfil her desire to retain the youngest child’s residence (at [58] and [152]). The orders also accommodated the primary judge’s conclusion that the youngest child’s best interests required the maintenance of his meaningful relationship with the father, which could only be achieved by them spending substantial and significant time together.
The mother contended the primary judge attached “overriding significance” to the benefit the youngest child would derive by living in closer proximity to the father, at the expense of “other important considerations” which she omitted to specifically identify, save for a vague and generic reference to the factors specified under s 60CC(3) of the Act. The assertion is rejected. The primary judge gave specific consideration to that provision (at [118]–[152]). Given the finding that neither party posed a serious risk of harm to the children (at [114]), the solitary applicable “primary consideration” under s 60CC(2) of the Act was the desirability of the youngest child being able to benefit from the retention of meaningful relationships with both parties. The primary judge found, without challenge, that the youngest child would likely lose his relationship with the father if he remained living with the mother in Qld. No other “additional consideration” under s 60CC(3) of the Act was found to outflank the importance of that primary consideration.
The mother did not run a case at trial that her relocation to central west NSW would cause her to suffer such psychological degradation as to impair her parenting capacity and deleteriously affect the children, for which proposition there is a long line of authority (Sedgley & Sedgley (1995) FLC 92-623 at 82,259–82,260; Re Andrew (1996) FLC 92-692 at 83,200–83,202; A & A (1998) FLC 92-800 at 84,995–84,997). Such a contention would have been quite inconsistent with her concession of reluctant willingness to return with the children to live in central west NSW. She could not have rationally made that concession unless she believed she could fulfil it. Had she run that different case at trial, his Honour may have been inclined to find her concession of her willingness to return to NSW unreliable and instead have ordered the youngest child to live with the father unconditionally. But since the mother chose not to run that case, she cannot now do so in the appeal (Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; O’Brien v Komesaroff (1982) 150 CLR 310 at 319; Metwally v University of Wollongong (1985) 60 ALR 68 at 71; Coulton v Holcombe (1986) 162 CLR 1 at 7; Water Board v Moustakas (1988) 180 CLR 491 at 497).
Grounds 2, 3, 4, 8, 9 – failure to give adequate reasons
Collectively, these grounds all complain of an absence of satisfactory reasons for certain findings made, to which there are two answers. First, the primary judge was obliged to give sufficient reasons to explain the overall result; not to explain every forensic step in reaching that result (Cubbin & Cutler [2018] FamCAFC 84 at [13]; Pates & Pates [2018] FamCAFC 171 at [62]). Secondly, taken as a whole, the primary judge’s reasons were adequate to explain the result, as the following summary reveals.
The primary judge found the youngest child would benefit from having meaningful relationships with both parents, but would probably be deprived of any meaningful relationship with the father if he continued to live with the mother in Qld. As was open, the primary judge accepted the evidence of the Family Consultant that the mother was actively impeding their relationship, or would at least do nothing to promote it. Since the father posed no tangible risk of harm from which the youngest child needed protection, the optimal way to ensure the preservation of his relationship with the father would be for them to spend substantial and significant time together, requiring them to live reasonably near one another. Alternatively, if the mother declined to move back to NSW, the child could live with the father instead because there was no reason to doubt his capacity to meet the youngest child’s intellectual, physical and emotional needs, including by the active promotion of his relationship with the mother (at [138] and [146]).
Ground 1 – alleged error of law
This ground was pleaded in the following terms:
1.The primary judge erred in law in failing to engage in the process of determining and forming orders which would facilitate a meaningful relationship between [the youngest child] and the Father whilst maintaining the Mother’s right to decide where she should live.
(Emphasis added)
First and foremost, it remains quite unclear what form of appealable error, as is available from a discretionary judgment (House v The King (1936) 55 CLR 499 at 504–505), is being alleged.
In essence, it appears to be a complaint that the primary judge fell into discretionary error by failing to properly rationalise two counter-vailing considerations in deciding the dispute: on the one hand, the benefit the youngest child would derive from maintaining his meaningful relationship with the father, and on the other, the mother’s right to decide where she lives.
As the Full Court recently said in Hakimi & Nasser (No.2) [2021] FamCAFC 88:
21.The mother’s desire to relocate overseas with the children was but one factor which would influence the primary judge’s determination about proper parenting orders for the children. While the mother did not lose her right to enjoy a high measure of freedom of movement merely because of her parental responsibility for the children (AMS v AIF (1999) 199 CLR 160 at 196, 206–208 and 210), her desire to relocate potentially conflicted with the children’s interest to know and have regular contact with the father. The mother’s position at trial was that she would not leave Australia without the children (at [197]), so her right to the freedom of mobility had to yield if their interests, being the paramount consideration, would be harmed by the international relocation (U v U (2002) 211 CLR 238 at 262). It is well recognised that, other than in instances of abusive relationships, children benefit from the development of good relationships with both parents (U v U at 285–286; M v M (1988) 166 CLR 69 at 76 and 78).
…
53.The mother’s case was not really that the children would be better off living in Country B. Rather, her case was she would be better off living in Country B and the children would not be disadvantaged by moving with her. Of course, her desire to live in Country B was a material consideration, duly taken into account by the primary judge. But when the primary judge found the children’s best interests were better served by them staying in Australia and the mother was intent on remaining their residential carer, then the children’s best interests, being the paramount consideration (s 60CA and s 65AA), had to take precedence over the mother’s freedom to choose her place of residence.
(Emphasis in original)
While this was not a case in which the children’s international relocation was at stake, the situation of the parties wanting to live a long way apart is still analogous. Here, the primary judge plainly recognised the mother wanted to remain living in Qld with the children, but the youngest child’s interests were found to be best served by him living closer to the father. If the mother wants to preserve her role as the youngest child’s primary carer, as she said she did, she will have to relocate their residence closer to the father, as she said she would. The orders made by the primary judge do not compel her to live anywhere other than where she desires, but her choice may come at a cost. If, contrary to her concession at trial, she has changed her mind and now wishes to remain living in Qld, she is free to do so. But the youngest child will then live with the father in NSW. By making orders in those terms, the primary judge adroitly managed to reconcile the youngest child’s best interests and the mother’s freedom of choice to the extent that was reasonably possible on the evidence.
Typographical error
Although not detected in the appeal, an error was accidentally made by the trial judge in drafting the parenting orders. The orders require the mother to establish the children’s residence “not less” than 165 kilometres from the father’s residence when the evident intention was to require the children’s residence to be established “not more” than 165 kilometres from the father’s home. It was agreed the error should be corrected under the slip rule by the primary judge, as it would be better for the parties to have a single suite of sealed self-contained orders, rather than the issue of an amended order in isolation from the original orders which would then leave the operable orders spread across two separate documents.
THE PROPERTY SETTLEMENT ORDER
At the outset it should be observed that the parties paid little heed to their dispute over property. Their attention at the trial was devoted almost entirely to resolution of the parenting dispute. As a consequence, the primary judge’s reasons in relation to the property settlement order are quite truncated.
Mathematical error
Although not directly raised by the grounds of appeal, the primary judge fell into error when computing the net value of the parties’ property and superannuation interests.
The parties’ property (excluding superannuation interests) was identified and valued by the primary judge at $2,411,897, but his Honour also found that another $436,560 was prematurely distributed to the mother. When liabilities of $808,058 were deducted from the gross value of assets and superannuation, the primary judge omitted to include the premature distributions to the mother as notional assets in the calculations. However, when the mother’s 35 per cent share of the overall assets and liabilities was calculated, her share was calculated to include the $436,560 she had already received. Allowing for the findings made about the premature distributions to the mother, the net value ascribed to the parties’ assets and superannuation interests should have been $2,111,153, not $1,674,593.
The mother’s 35 per cent entitlement therefore amounted to $738,904, not $586,108 (or $586,187 as the primary judge miscalculated), and allowing for the premature distributions (totalling $436,560) comprising part of her proportional share, the property settlement order should have required the father to pay her $302,344, not $99,827.
Had these mathematical errors been the only errors made then, absent the desire of either party to adduce fresh evidence, the errors could have been corrected now (Marcin & Marcin (2020) FLC 93-956 at [160]–[171]; Gilles & Irby (2016) FLC 93-687 at [18]; Goudarzi & Bagheri (No.2) [2017] FamCAFC 190 at [62]–[63]; Agius & Agius (2010) FLC 93-442 at [169]–[173]). However, they were not the only errors, so remitter of the Pt VIII proceedings for re-hearing is the only feasible option. The mother sought an order for remitter of the proceedings in her Amended Notice of Appeal and did not consent to simple mathematical correction under either the slip rule or by exercise of the power within s 94AAA(6) of the Act.
Grounds 13 and 14 – add-back error
These two grounds attack the primary judge’s finding in respect of a capital loss of $90,000 realised on the sale of real property. His Honour attributed the loss to the mother as a premature distribution of property in her favour. The loss was treated as a notional asset, which would then inflate the aggregate value of the parties’ property interests available for division but, as has already been explained, the primary judge erred by omitting the distributions as notional assets and then inconsistently treating them as assets in the mother’s hands as part of her ultimate 35 per cent share of the property and superannuation.
The finding in relation to the loss was expressed in these terms:
205.Both parties agree that the respondent mother received an initial distribution of $155,000 from the sale of the [Town F] premises. A loss of $90,000 was incurred on the sale of the premises purchased in [Town F] from joint assets. This loss was occasioned post separation. The premises were purchased for the respondent mother to conduct a [beauty business] from, and were renovated. The respondent mother never used the premises and they were left empty, and was later sold at a considerable loss. The Court is satisfied that, in the circumstances, it is open to the Court to include these funds as a premature or initial distribution.
The apparently uncontentious facts were that the real property was purchased in May 2017 in the mother’s sole name, several months before the parties finally separated. The purchase price and attendant costs were paid by a combination of the mother’s own funds and a joint loan from a bank, presumably secured by mortgage over the property (at [3] and [193]). A further sum of $59,560 was drawn down on the loan and paid into the mother’s business account to cover the cost of a re-fit of the premises to accommodate her new beauty business (at [171] and [196]). It remains unclear from the reasons whether the re-fit ever eventuated, either in part or at all (at [171] and [205]). In November 2020, the mother sold the property for $85,000 less than the purchase price and she received the net proceeds of sale (at [195]). No finding was made as to how the debit balance of the bank loan was affected by the sale. The parties still bore joint liability to the bank at the time of trial, which was reflected in the balance sheet constructed by the primary judge (at [210]).
On the raw figures, the primary judge found the property was sold at a loss of $90,000 instead of $85,000, though the difference might be explained by the addition of the selling costs. That is not, of itself, a material error and was not the subject of complaint in the appeal.
Significantly though, the primary judge considered it was “open” to conclude the loss of $90,000 was a “premature or initial distribution” of property in which the parties were mutually interested. However, it was not merely a question of whether the finding was available to make. Rather, his Honour was required to find, on the available evidence and in accordance with established principles, whether or not the loss should actually constitute a notional asset in the mother’s hands. Arbitrarily falling into the conclusion that it should do so, merely because it happened to be one of two alternate “open” conclusions, was the wrong approach.
It is well established that the notional add-back of exhausted funds and assets falls into three recognised categories (Trevi & Trevi (2018) FLC 93-858 at [27]–[30]; Omacini & Omacini (2005) FLC 93-218 at [30]–[31]).
Here, the primary judge concluded the loss fell into the second category – being a premature distribution of a matrimonial asset – rather than the third category – being a wanton, reckless or negligent dissipation of an asset. But that could not be so. The loss realised on the sale of the property could not possibly have been a premature distribution of matrimonial property, as the primary judge found, since the mother did not receive the sum. It was not paid or distributed to her. If anything, it could only have been an unjustifiable waste of the asset – and only then if properly explained why, though the reasons are devoid of any such explanation.
In this instance, the father only sought to pitch the case to the primary judge as a third-category deliberate or reckless dissipation of wealth, submitting:
[COUNSEL FOR THE FATHER]: She then let that asset, effectively, lie fallow – a shop in a country town doing nothing, not being leased, not being fitted out. Unsurprisingly, when it sold four or five years down the track, it’s not an attractive asset, so it hasn’t got a lease, it’s not operating as a business. That’s a decision the wife took, and it has caused that loss.
(Transcript 3 February 2021, p. 306 lines 33–36)
In rebuttal of the proposal to add-back the loss against her, the mother submitted as follows:
[COUNSEL FOR THE MOTHER]: … let’s deal with the [subject] property. There is no doubt that my client gives some evidence about where the money went in. The suggestion advanced that somehow that was a project that she went into on her own folly, and therefore is responsible to deal with the consequences of having to exit that at a loss, does not support the evidence of either party. The husband in the witness box gave evidence that he was involved in relation to it and actually did some work on the property. So clearly he was involved with it. Clearly it was going to be a benefit to both parties.
(Transcript 3 February 2021, p.314 line 44 to p.315 line 4)
As can be seen, the husband characterised the loss only as a deliberate or reckless dissipation of wealth and, while the mother conceded the loss, she denied it was deliberately or recklessly incurred. The primary judge’s reasons do not resolve the issue on the terms constructed by the parties. The mischaracterisation of the loss as money actually received by the mother (when it was not), compounded by the failure to explain why it should then be attributed to her as a notional asset when add-backs are the exception rather than the rule (Trevi & Trevi at [28]), leads inexorably to the conclusion that the primary judge fell into error.
Grounds 16 and 17 – mistaken findings about earning capacity under s 75(2)
These two grounds attack the validity of the primary judge’s findings concerning the parties’ respective earning capacity when considering the application of s 75(2) of the Act. They assert the finding about the mother’s earning capacity being unaffected by the marriage was wrong (Ground 16) and the primary judge failed to properly assess the mother’s earning capacity with her being required to live in central west NSW (Ground 17).
In that regard, the primary judge said this:
224.The Court takes into account the following factors pursuant to s 75(2) of the Act which are relevant to the matter:
•Both of the parties are relatively young and have the capacity to be able to undertake remunerative employment into the foreseeable future.
…
•Whilst the applicant father has continued to engage in farming activities, the respondent mother is currently unemployed, having relocated to the Gold Coast, where she claims she is currently unable to find work…in her specialised field and has been reliant on Centrelink benefits since March 2020. The respondent mother claims that she is hoping to lease out a room to conduct…therapy and hopes to be able to earn approximately $55,000-$65,000 per annum.
…
•The Court notes the reasonably short duration of the marriage and that it has not affected the earning capacity of either parent from that time or before the marriage.
Such findings were entirely consistent with the evidence adduced by the mother, as the mother’s counsel was bound to concede when pressed. As it transpired, the mother made an entirely different complaint: that the primary judge failed to find that her earning capacity in NSW was less than it was in Qld.
The grounds of appeal and the mother’s ultimate submission hinge upon the acceptance of three assumptions: first, the mother is forced to live in NSW contrary to her will; secondly, she will actually move back to NSW if her appeal against the parenting orders fails and the current stay of those orders lapses; and thirdly, if that occurs, her income-earning capacity in NSW will be inferior to the income-earning capacity she would have if living in Qld.
The first assumption is simply false. The mother is not required by the orders to live in central west NSW. She can live where she likes, but may then have to surrender the youngest child’s residence to the father.
The second assumption cannot be made because, even though the mother told the primary judge she was willing to move back to NSW in order to remain the youngest child’s primary carer, she is presently fighting against that outcome. Her position in the appeal implies she may yet choose to remain in Qld, as the appealed orders enable her to do. If the mother does choose to move back to NSW, as she told the primary judge she would, it will be because she expects to be reasonably able to do so and to support herself.
The third assumption cannot be made because there is no evidence to establish the fact. At any rate, the mother was unable to point to any evidence to demonstrate the proposition. While the mother gave evidence of there being no job advertisements for work in her field in central west NSW, her earning capacity is hardly so confined. While living with the father, she had intended opening her own business, so she is resourceful and skilled. She had no sensible answer to this question: why would her employment skills not be as ably put to productive use in a regional area of NSW as in the regional area of Qld where she presently chooses to live and is currently unemployed?
These grounds fail.
Ground 12 – failure to give adequate reasons
This ground asserts the primary judge gave insufficient reasons for the property settlement orders.
Having identified and valued the parties’ property and superannuation, the primary judge then considered the parties’ contributions under s 79(4)(a)–(c) of the Act (at [212]–[223]) and the factors prescribed by s 75(2), as required by s 79(4)(e) of the Act (at [224]). His Honour then reached the global conclusion to divide the property and superannuation in the designated shares of 65 and 35 per cent respectively (at [225]–[227]).
The reasons for judgment do not explain how the parties’ contributions compare, nor whether the considerations under s 75(2) resulted in any adjustment, nor the quantum of any such adjustment if one was made. As a consequence, the reasons are insufficient to explain how the result was reached (Fitzmaurice & Woolridge (2020) FLC 93-951 at [19], [20] and [27]).
Grounds 11 and 15 – manifestly unjust result
These two grounds of appeal, in effect, asserted the discretionary exercise must have miscarried because the property settlement orders are “manifestly unjust and inequitable”.
It is unnecessary to address these grounds. When other more specific errors have already been demonstrated, there is no need to resort to an inference of error.
CONCLUSION
The appeal from the parenting orders fails.
The appeal from the property settlement orders succeeds. The parties’ dispute under Pt VIII of the Act must be remitted to the Federal Circuit Court of Australia for re-hearing, as the mother sought.
The parties and the ICL agreed that the question of costs should be reserved. If no application for costs is made within 28 days, the reservation of leave to apply for costs will lapse and the effect will be no order for costs.
I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 9 July 2021
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