Freestone & Freestone
[2013] FamCAFC 190
•29 November 2013
FAMILY COURT OF AUSTRALIA
| FREESTONE & FREESTONE | [2013] FamCAFC 190 |
| FAMILY LAW – APPEAL – SPOUSAL MAINTENANCE – Where the appellant appeals against an order dismissing an application for spousal maintenance – Where it was common ground before the Full Court that the order could not apply to the dismissal of the application insofar as it related to final orders because the parties had not been heard on that matter – Where insofar as the order related to the application for interim orders, the trial judge did not make the required finding as to whether the respondent was ‘reasonably able’ to pay spouse maintenance – Leave to appeal granted – Appeal allowed – Remitted for rehearing. |
| Family Law Act 1975 (Cth) |
Federal Proceedings (Costs) Act 1981 (Cth)
| Curnow & Curnow (unreported, Full Court of the Family Court of Australia, 28 April 1997) |
| APPELLANT: | Ms Freestone |
| RESPONDENT: | Mr Freestone |
| FILE NUMBER: | CAC | 250 | of | 2011 |
| APPEAL NUMBER: | EA | 1 | of | 2013 |
| DATE DELIVERED:: | 29 November 2013 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Bryant CJ, Finn and Watts JJ |
| HEARING DATE: | 14 October 2013 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 7 December 2012 |
| LOWER COURT MNC: | [2012] FMCAfam 1391 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Bak |
| SOLICITOR FOR THE APPELLANT: | Farrar Gesini & Dunn |
| COUNSEL FOR THE RESPONDENT: | Ms Petrie |
| SOLICITOR FOR THE RESPONDENT: | KJB Law |
Orders
Leave to appeal against the order made by Federal Magistrate Brewster (as he then was) on 7 December 2012 (“the order”), insofar as it related to the dismissal of the application by the wife for interim spousal maintenance orders, be granted.
The appeal against the order be allowed.
The order be set aside.
The application by the wife for interim spousal maintenance be remitted for rehearing by a judge of the Federal Circuit Court other than
Judge Brewster.
IT IS NOTED in connection with this order that the Full Court considers that it would be desirable for the application for final orders to be given an early hearing, thereby avoiding the need for a further hearing of the application for interim orders.
There be no order for costs.
The Court grants to the appellant wife a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 (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 wife in respect of the costs incurred by the appellant wife in relation to the appeal.
The Court grants to the respondent husband a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent husband in respect of the costs incurred by the respondent husband in relation to the appeal.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Freestone & Freestone has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT CANBERRA |
Appeal Number: EA 1 of 2013
File Number: CAC 250 of 2011
| Ms Freestone |
Appellant
And
| Mr Freestone |
Respondent
REASONS FOR JUDGMENT
Introduction
On 25 October 2012, Ms Freestone (“the wife”) filed an initiating application (together with a supporting affidavit and a financial statement) in the Federal Magistrates Court (as it then was) seeking that by way of final and also of interim orders Mr Freestone (“the husband”) pay her “by way of spouse maintenance, the sum of $1,200.00 per fortnight.”
The initiating application was given a “court date” of 4 December 2012. On 19 November 2012, the husband filed a response (together with a financial statement) seeking that the wife’s applications for final and interim orders be dismissed.
When the matter came before Brewster FM (as he then was) on 4 December 2012, it could not be heard because of other court commitments on the part of his Honour and of the parties’ legal representatives. It was therefore adjourned to 7 December 2012.
At the commencement of the hearing on 7 December 2012, the solicitor for the wife informed his Honour:
“… [T]his is an application for interim spousal maintenance”
(Transcript, 7 December 2012, p 2, line 7).
Shortly thereafter there was an adjournment of just under two hours, after which the solicitor for the wife made some brief submissions. At the conclusion of those submissions, his Honour informed the solicitor for the husband that he did not need to hear from him.
His Honour then proceeded to deliver ex-tempore reasons for judgment, which in settled form contain twelve paragraphs, and which begin with the words:
“This is an application by the applicant wife for spousal maintenance.”
It is important to note that at no point in his reasons did his Honour indicate whether he was determining the application for interim orders, or the application for final orders, or both. He concluded his reasons by saying:
“The wife’s application is dismissed.”
His Honour’s engrossed order reads:
“THAT the wife’s application for spousal maintenance is dismissed.”
It is from that order that the present appeal is brought.
The scope of the appeal
The first two grounds of appeal do no more than assert error in his Honour’s dismissal of the applications for interim and final spousal maintenance; they do not specify the nature of the asserted errors. Similarly, the last ground (Ground 7) contains only a general assertion of a miscarriage of discretion.
However, Ground 3 asserts a denial of procedural fairness in relation to the dismissal of the application for final orders when the matter was only listed for an interim hearing and no notice was given to the parties that dismissal of the application for final orders was being considered. As will shortly be seen, this ground was effectively conceded.
Grounds 4 and 5 challenge certain aspects of his Honour’s reasons for the order which he made and Ground 6 is a general challenge to the adequacy of his Honour’s reasons for his order.
In our view, the appeal would have to succeed and his Honour’s order be set aside on the basis of the challenge in Ground 6 to the adequacy of reasons. This is because it is impossible to be certain from his Honour’s reasons whether he was determining and dismissing the application for final orders, or the application for interim orders, or both. However, because of the way in which in the appeal was argued before us, we will address all complaints in the grounds of appeal.
The application for final orders
Proceeding on the assumption that his Honour intended to dismiss the application for final orders as well as the application for interim orders, it was common ground before us:
· that the matter had been listed before his Honour for an interim hearing only;
· that neither party had been heard in relation to final orders; and
· that the application for final orders had therefore not been dealt with.
It was originally submitted by counsel for the respondent husband in her written outline of argument that his Honour’s order should be rectified under “the slip rule” to make it clear that it related only to the application for interim orders.
However, because the uncertainty in relation to which application was determined permeates not only his Honour’s order, but also his reasons, we consider that an amendment by way of the slip rule would not be the appropriate course. Rather, the appeal would have to be allowed on the basis of Ground 3, which asserts a denial of procedural fairness insofar as his Honour’s order dismissed the application for final orders, without giving the parties the opportunity to be heard. Despite her earlier written submission in relation to the slip rule, we understood counsel for the respondent ultimately to agree that the appeal would have to be allowed and his Honour’s order set aside, at least insofar as it related to the dismissal of the application for final orders, and that that application still required a hearing.
The application for interim orders
Given that it was common ground that the application for final orders had not been dealt with, the issue before us then became whether his Honour’s order could stand on the basis that it related only to the application for interim orders.
It was the position of counsel for the respondent husband that on the basis that the order only related to the application for interim orders, the appeal against the order was incompetent because it was an interim, or interlocutory, order for which leave to appeal was required, but leave had not been sought. It was further submitted that it was now too late for an oral application for leave to be made.
However, we permitted counsel for the appellant wife to make an oral application for leave to appeal. We did so having regard to the somewhat confused circumstances of this case, and also because as will now be explained, we consider that there was an error of principle in the manner in which his Honour reached his decision to dismiss the application insofar as it was for interim orders.
The essential principles governing the making of an order for spousal maintenance under the Family Law Act 1975 (Cth) (“the Act”) (be it an interim or final order) are as follows:
72 Right of spouse to maintenance
(1)A party to a marriage is liable to maintain the other party, to the extent that the first mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b)by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
…
74 Power of court in spousal maintenance proceedings
(1)In proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part.
…
75 Matters to be taken into consideration in relation to spousal maintenance
(1)In exercising jurisdiction under section 74, the court shall take into account only the matters referred to in subsection (2).
It is unnecessary for present purposes to set out the matters referred to in s 75(2), except for that contained in s 75(2)(o), which is:
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; …
In the second and third paragraphs of his reasons, his Honour recorded that property and maintenance orders had been made between the parties (by consent) on 2 March 2011; that under those orders the husband had had to pay the wife maintenance of $1,200 per fortnight for eighteen months; and that that period had now expired. His Honour then went on to say that he had no doubt that he had the power to make the further maintenance order now sought by the wife.
His Honour said at [4] of his reasons “I accept that the wife qualifies for spousal maintenance under s 72(1)”. We understand that his Honour meant that the wife was unable to support herself adequately for one of the reasons set out in s 72(1)(a), (b) or (c) of the Act.
His Honour then said that he noted s 74 and he set out the terms of s 74(1).
His Honour observed that in considering whether it is proper to make a maintenance order, the court is to have regard to the matters set out in s 75(2). He then set out the terms of s 75(2)(o), before expressing the opinion that “the justice of this case” required him “to take into account the previous maintenance orders, in the context of the overall property settlement”. His Honour continued:
6.… Both parties, it seems, were represented at the time, and relevantly the wife was represented by a prominent firm of lawyers in Canberra. The husband, I infer, would have thought that the financial relationship between the parties would end, in accordance with the orders, in 18 months. One assumes that he would have planned accordingly.
7.It is pointed out, on the issue of capacity, that the husband is paying more by way of superannuation contributions than he is required to. But one can infer that he would have factored all these matters into consideration when deciding to enter into the consent orders. In particular I imagine that he would have assumed, as I say, that once he had complied with order 6, the parties’ financial relationship would be at an end, and he could plan accordingly.
8.In my view it is not, under these circumstances, proper in this case to make an order for spousal maintenance ... When one looks at his financial statement it does not instantly reveal any capacity, so far as I can see, to pay spousal maintenance. It could be pruned. His figure for food, for example, is high. He gives a figure of $220 a week. His figure for clothing is high … and it has been pointed out that he could reduce his superannuation contributions, but I have already addressed that issue.
Although no ground of appeal was specifically directed to the assumptions which his Honour expressly made in [6] and [7] of his reasons, it was submitted by counsel for the appellant wife in support of Ground 1, that there was no evidence from the husband on which his Honour could have based the assumptions, or inferences, which he drew in [6] and [7] to the effect that the husband would have considered that the previous orders would finalise any liability for maintenance between the parties. Such an understanding about finality on the part of the husband would, it was further submitted, be erroneous.
We consider that there is force in these submissions. There was no evidence on which his Honour could have based assumptions about the husband’s state of mind when he agreed to the earlier orders. Moreover, and as his Honour had recognised earlier in his reasons (at [3]), there was still power in the court to make further orders for maintenance.
Having said that under the circumstances (which we have just discussed) it was not “proper in this case” to make an order for spousal maintenance, his Honour then turned to discuss the husband’s capacity to pay maintenance, saying:
9.However, on the other hand, when I deal with spousal maintenance matters, I usually add a buffer to take account of expenses that are not necessarily incorporated into a financial statement. Life is not a financial statement. One constantly comes across things that crop up which are not anticipated in financial statements. There is no buffer allowed for.
10.Whilst the husband may be able to afford to pay spousal maintenance, he is not able easily to afford to and would be required to reduce his standard of living, or change his retirement plans by reducing his superannuation contributions.
11.Given all those circumstances I do not believe it proper to make an order for spousal maintenance. As I say, if the husband had easily ascertainable surplus income, and could pay spousal maintenance without any significant hardship, my decision might be different, and, as I say, to that extent, this is not a precedent for all future cases.
Grounds 4 and 5 are specifically directed to his Honour’s conclusions regarding the husband’s capacity to pay maintenance in that they assert that he “erred in his discretion” in deciding:
4.… that an Order was not proper in circumstances where there were findings that the wife qualifies for spousal maintenance and the husband maybe [sic] able to afford to pay spousal maintenance.
5.… that an Order was not proper in the circumstances where he found that the Respondent had a financial capacity to pay but could not “easily” pay maintenance on a periodic basis.
It will have been seen that in [8], his Honour observed that the husband’s financial statement did “not instantly reveal any capacity … to pay spousal maintenance.” But that observation was immediately followed by an apparent suggestion that the figures for food and clothing could “be pruned”.
His Honour then made some observations to the effect that there can be unexpected expenses not anticipated in a financial statement, and for which there needs to be some “buffer”.
What his Honour apparently found in paragraphs [10] and [11] of his reasons was that the husband was “not able easily to afford” to pay spousal maintenance and that the husband did not have “easily ascertainable surplus income”. What his Honour needed to find, as is clear from s 72(1) of the Act, was that the husband was, or was not, “reasonably able” to pay maintenance.
The meaning of the words “reasonably able” as it is used in s 72(1) was explained in the following way by Ellis J (with whom the other members of the Full Court agreed) in Curnow & Curnow (unreported, Full Court of the Family Court of Australia, 28 April 1997):
In my judgment, a party is only liable to maintain the other party to the extent that the first-mentioned party is reasonably able to do so. In determining whether a party is reasonably able to support or contribute to the support of another party, one should have regard to the income of the first-mentioned party and then the unavoidable, non-discretionary expenses of that party, including his or her reasonable living expenses. After that exercise, one can consider the amount, if any, from which the first party may be able to contribute to the maintenance of the other party.
(emphasis added)
This explanation of s 72(1) has been accepted by subsequent Full Courts in Keepkie & Keepkie [1998] FamCA 39 (unreported) and DJM & JLM (1998) FLC 92-816.
In recasting the test to be about whether or not it was going to be easy for the husband to make payments of maintenance, his Honour conceded that the husband was paying more than he was required to by way of superannuation contributions and that his weekly estimates for expenditure on food and clothing were both high, but introduced a notion of the husband being given a “buffer” against unspecified contingencies.
In approaching his task in this way, his Honour, with respect, applied a different test than that of “reasonably able” as that term is understood consistent with existing authority.
Put simply, his Honour failed to find that the husband was, or was not, “reasonably able” to pay maintenance. This was an error of principle which, in our view, warrants the grant of leave to appeal his order.
This error of principle also gives substance to the specific complaints in Grounds 4 and 5 (and the non-specific complaint in Ground 7) concerning the error in the exercise of his Honour’s discretion. Those complaints also gain further substance when regard is had to the error which we have identified earlier concerning his Honour’s assumptions, or inferences, concerning the husband’s understanding of the legal effect of the earlier consent orders.
We would therefore grant leave to appeal and allow the appeal insofar as his Honour’s order can be interpreted as dismissing the wife’s application for interim spousal maintenance orders.
Future course of this matter
Given the conclusions we have reached in these reasons, his Honour’s order made on 7 December must clearly be set aside.
As explained at an earlier stage in these reasons, it is common ground that the application for final orders remains to be heard.
As to the application for interim orders, it was initially submitted on behalf of the appellant wife that if we found substance in the appeal against the dismissal of that application, we could re-exercise the discretion. However, we indicated that we would not be disposed to do so.
We took this view having regard to the fact that it was almost twelve months since the wife’s applications and her supporting material was filed, and it is important to have up-to-date financial information when determining an interim application. We are also of the view that in the circumstances of this case the most desirable course would be for the application for final orders to be determined as soon as possible, although we consider we should formally remit the interim application for rehearing given that it can be regarded as having already been heard by his Honour.
Costs
Having regard to the reasons why the appeal has had to be allowed, and to the submissions made in relation to the costs of the appeal at the conclusion of the hearing before us, we consider that there should be no order for costs and that each party should be granted the appropriate certificates under the Federal Proceedings (Costs) Act 1981 (Cth) in relation to the costs of the appeal.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, Finn and Watts JJ) delivered on 29 November 2013.
Associate:
Date: 29 November 2013
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