G & G

[2006] FamCA 877

[2006] FamCA 877

FAMILY LAW ACT 1975

IN THE FULL COURT OF THE
FAMILY COURT OF AUSTRALIA
AT BRISBANE      No. NA37 of 2006

(No. BRM4047 of 2005)

BETWEEN:
  G

Appellant Husband

AND:
  G

Respondent Wife

BEFORE THE HONOURABLE JUSTICE WARNICK

REASONS FOR JUDGMENT

Dates of Hearing:              25 August 2006

Date of Judgment:            8 September 2006

Appearances:  Mr Kearney of Counsel, instructed by Browns The Family Lawyers, PO Box 857, Liverpool BC, NSW, 1871 appeared on behalf of the Appellant Husband

Ms Hogan of Counsel, instructed by Kennedy Spanner Lawyers, PO Box 1461, Toowoomba, QLD, 4350 appeared on behalf of the Respondent Wife

G and G  NA37 of 2006 (BRM4047 of 2005)

Heard:            25 August 2006
Delivered:      8 September 2006

CATCHWORDS:

APPEAL FROM FEDERAL MAGISTRATES COURT – EVIDENCE – CREDIT FINDINGS – PROCEDURAL FAIRNESS – In property proceedings between the parties, the trial was conducted in Brisbane, with the husband appearing by video link from Parramatta – In making orders, the Federal Magistrate made findings of credit in relation to the husband based on his demeanour outside the witness box while the wife was giving evidence – It was incumbent on the Federal Magistrate to draw such impressions of the husband’s demeanour to the attention of Counsel for the husband for submission – While there were many other bases for the Federal Magistrate to draw adverse inferences regarding the husband’s credit, it could not be said that the conclusion would have been the same, absent the behaviour relied upon.

PROPERTY SETTLEMENT – DOMESTIC VIOLENCE – The Federal Magistrate made findings that the wife’s initial contributions were 3.5% - Contributions during cohabitation were assessed as equal, but the Federal Magistrate adjusted a further 6% in the wife’s favour - The Federal Magistrate then found that acts of domestic violence perpetrated by the husband towards the wife significantly affected the wife’s ability to make contributions and “doubled” the wife’s contributions during cohabitation to 12% - In total, the Federal Magistrate assessed the wife’s contributions as being 16% - The Federal Magistrate’s findings that the husband’s conduct had a discernible impact on the wife’s contributions is not supported in the reasons for judgment – The Federal Magistrate failed to assess contributions and the effect of domestic violence on specific contributions in the one exercise of discretion, contrary to the approach set out in Kennon – That failure produced a distorted and illogical result.

PROPERTY SETTLEMENT – INITIAL CONTRIBUTIONS – At the commencement of cohabitation, the parties together contributed $423,300, 96.5% belonged to the husband and 3.5% belonged to the wife – The Federal Magistrate assessed the parties’ other financial and non-financial contributions as being essentially equal – Based on the short duration of the marriage, the Federal Magistrate made findings of contributions, before considering domestic violence, of 90% to the husband and 10% to the wife – As the husband contributed the matrimonial home, unencumbered and the relationship was only a short one, the Federal Magistrate’s increase of the wife’s initial contribution by a further 6.5% was excessive and unexplained.

Kennon and Kennon (1997) FLC 92-757
           Pierce and Pierce (1999) FLC 92-644

Zantiotis and Zantiotis (1993) FLC 92-367

Appeal allowed.  Orders of FM Baumann set aside.  Application for property settlement remitted to the Federal Magistrates Court for rehearing.

1. Alteration of property interests between the parties was determined by orders made by Baumann FM in the Federal Magistrates Court of Australia on 27 April 2006.

2. At trial the husband was 71 years of age, the wife 62.  The parties had not met until in their later years, in 2000.  Though they married in December 2001, they finally separated in early May 2004.

3. Prior to the commencement of the parties’ relationship the husband owned a home and it was by far the major asset in a “pool of assets” of $582,000 approximately which the Magistrate identified for division.  Before the Federal Magistrate, the husband had submitted that he should only pay the wife $16,000.  Together with property that was already in her possession, that equated to about 6 percent of the pool asserted by the wife.  The wife had sought 35 percent of that “pool”.  Baumann FM apportioned the asset pool 80 percent to the husband and 20 percent to the wife.

4. The orders provided an opportunity for the husband to pay the wife $96,500 in exchange for the re-transfer to the husband of the wife’s interest in the home that had been conveyed to her during the marriage.  Other orders provided, in the event the husband did not pay the wife, for the consequent sale of the home and division of the proceeds and for the retention by each party of other property including, in the husband’s case, “notional” property that had been added back to the asset pool.

5. Against these orders, the husband has appealed.

6. By leave, the grounds of appeal became as set out in the written summary of argument on behalf of the husband.  In summary, the challenges were to:

•Add backs to the pool;

•A finding that the husband did not have $20,000 cash at the commencement of the relationship;

•Adverse credit findings against the husband;

•Findings about the effect of domestic violence perpetrated by the husband on the wife;

•The approach taken to reflect the impact on the wife of domestic violence in the contributions assessment;

•The approach to the assessment of contributions, having regard to initial contributions of the husband and the finding of equality of contribution during the course of the relationship;

•Apparent regard to the conduct of the husband, in assessing the wife’s earning capacity for the purposes of s 75(2);

•An absence of regard to the husband’s health and lack of earning capacity in assessing s 75(2) factors;

•The adequacy of reasons for the credit findings, the treatment of domestic violence and the assessment of contributions; and

•The overall justice and equity of the orders.

1. The husband also filed an application to adduce further evidence, which was that, within a short time after publication of the judgment of Baumann FM, the wife instituted proceedings for damages for assault in the District Court in New South Wales.  Counsel for the husband argued that the further evidence went to the question of whether, if merit was found in the appeal, the discretion of the Federal Magistrate ought be re-exercised by this court, or the application for property settlement ought be remitted.  He urged remission.

2. I will commence with discussion of the most significant grounds, that is those relating to the credit findings and those about the impact of domestic violence.

The challenge to the credit findings

1. The learned Magistrate recorded that:

   “3.    …The trial was made more difficult by the need for the husband to give, at his request, evidence by video from Parramatta with the assistance of [an interpreter].…

2. Baumann FM said he regarded the wife “…essentially as a witness of truth…”.  Of the husband, he said:

   “8.    I accept the added difficulty in assessing the Husband’s evidence when he was not personally in Brisbane and also asked to use an interpreter.  I must say, even with these difficulties, the Husband was unimpressive.  There was a general air of smugness I observed in both his body language and his responses.  I noted, on many occasions, he seemed to regard the Wife’s evidence (particularly in respect of the incidents of Domestic Violence) as unreliable or comical – smiling and shaking his head in apparent disbelief – even before the English answer she gave was interpreted for him.  This was also apparent to me when he was under cross-examination.

   9.     I was left with a very clear impression that he understood most of the questions put to him, and that he used the interpreter to give him some more time to consider his answers.  His denials were unconvincing and his memory selective (for example when being questioned about the incidents of Domestic Violence) – choosing at times to answer in an evasive manner.

   10.    It follows that I preferred the Wife’s evidence on disputed facts to that of the Husband on most occasions.  This finding, as to credit, does shape some of the critical findings I have been required to make in these proceedings.”

3. I accept that in paragraph 8 of the learned Magistrate’s reasons, demeanour of the husband outside of the witness box is discussed.  I accept also that it is not possible on the learned Magistrate’s findings or from any other of the material before me, to ascertain whether the legal representatives of the husband were in a position to observe the husband’s behaviour under discussion, nor if in such a position, that they did observe it.

4. Counsel for the husband submitted:

   “24.  It is further submitted that in the event that His Honour intended to consider as relevant and attach weight to the behaviour of the Appellant during the course of the trial, and particularly when such conduct is said to have occurred other than in cross-examination and at a time where it appears that no translation of the proceedings was occurring, it was incumbent upon His Honour to draw such alleged behaviour to the attention of Counsel for the Appellant for both concurrence (or otherwise) as to it having occurred and for submission:  Zantiotis (1993) FLC 92-367.”

5. I accept that submission.  However, but for the following matter, I might have been persuaded that there were so many other bases upon which the Federal Magistrate found the husband generally not worthy of credit, apart from the observations of the husband’s demeanour when the legal advisors might not have been in a position to observe it, that the conclusion Baumann FM reached about the husband’s credit was inevitable.  That apparently similar behaviour to that observed when the husband was outside the witness box was repeated by him in the witness box, reinforces the argument that the matter erroneously taken into account did not affect the ultimate conclusion on credit.

6. The aspect which I consider compounds the omission is that the learned Magistrate had before him the evidence of a Dr B, a clinical psychologist and Dr A, a psychiatrist.  This evidence was summarised by counsel for the husband in his submissions as follows:

   “…

   23.1the unchallenged evidence of [Dr B] (clinical psychologist) that as at June 2004:

   23.1.1the Appellant had “significant problems in information processing abilities” [AB 209J];

   23.1.2the Appellant was “functioning in the borderline intellectual range.  Overall there is a fairly consistent general cognitive decline with particular impairments in attention, executive functions, verbal learning and memory and tasks requiring effortless processing” (AB 210); and,

   23.1.3“due to English as his second language’ the Appellant “was often difficult to understand, and … appeared at times to struggle with comprehending instructions” [AB 206] even in a clinical environment;

   23.2the unchallenged evidence of [Dr A] (psychiatrist) in October 2005 (and on earlier review in September 2004) that

   23.2.1the Appellant presented with symptoms consistent with cognitive deficits and possibly dementia and may have an underlying neurological disorder (AB 212 and 253); and,

   23.2.2that the Appellant’s functioning is “mildly to moderately impaired” (AB 217).”

7. Of course, the medical evidence may well have supported reservations about the reliability of the husband’s evidence, but on grounds of diminished capacity rather than dishonesty.  The effect of reservations on the basis of lack of capacity might well have been quite different from the effect of the conclusions about credit to which the Federal Magistrate came.  The medical evidence also bore consideration in relation to the observations that the Federal Magistrate made of the husband’s demeanour.  While it is not possible to say that the learned Magistrate did not have regard to the medical evidence when considering the issue of the husband’s credit worthiness, it cannot be seen that he did so.  Having regard to the two matters, the failure of the Federal Magistrate to bring to the attention of the legal representatives of the husband his concerns about the demeanour of the husband when not in the witness box and the absence of any indication that the medical evidence about the husband’s condition was considered, in my view the learned Magistrate has fallen into an error, of significance. It will be recalled that the learned Magistrate himself expressed his finding as to credit as shaping “…some of the critical findings I have been required to make in these proceedings.”

The treatment of domestic violence

1. There are two issues here.  Firstly, counsel for the husband argues that, before domestic violence can affect a contributions assessment, two matters of fact must be established:

   “27.  …

   27.1a relevant course of conduct towards the other party to the marriage;

   27.2which is demonstrated to have had a significant adverse impact upon that party’s contributions to the marriage to have made his or her contributions significantly more arduous.  Such conduct must have had a discernable impact upon the contributions of the other party.”

2. I accept that these submissions are consistent with what the Full court said in Kennon v Kennon (1997) FLC 92-757, at 84,294 – 84,295.

3. Counsel for the husband further submits (among other arguments) that there were no reasons given, and so no evidence identified, for the learned Magistrate’s findings in respect of the impact on the wife’s contributions of domestic violence.

4. Counsel for the husband’s second argument is best understood after the relevant passage of Baumann FM’s reasons are set out, but in short, the submission is that the approach taken by the Federal Magistrate to assessing the weight to be given to his (allegedly erroneous) findings that contributions by the wife were made more arduous by domestic violence was also flawed, primarily because a “multiplier” was applied to weight earlier given to unspecified contributions, but which probably included some that could not have been made more arduous by domestic violence.

5. The effect of violence on contributions was first mentioned by the Federal Magistrate when dealing with contributions more generally, when he said:

   “24.  As I deal with below, I am satisfied this was a volatile relationship at times, but that any contributions the Wife did make were made more arduous and difficult by the domestic violence she suffered at the hands of the Husband.…

   25.    I am satisfied, despite the lack of corroboration, that the Wife has been the subject of appalling abuse both physically and emotionally at the hands and words of the Husband.…

   26.    …Whilst nearly all the incidents were contributed to by excessive use of alcohol, that did not diminish the effect of the impact of the violence upon the Wife.

   27.    … I am satisfied her contributions were made more arduous as a result of his behaviour in a KENNON Sense.”

6. The learned Magistrate then referred to remarks of the Full Court in Spagnardi [2003] FamCA 905 per Kay, May & Carter JJ where the Full Court at page 84,294 said:

   “   … It seems to me that reading these passages carefully, the key words in a case where there are allegations of domestic violence are ‘significant adverse impact’ and ‘discernable impact’.”

7. Following that, Baumann FM said:

   “29.  I take into account the short relationship.  Whilst it is desirable for there to be “evidence” to enable the Court to quantify the effect of that violence upon the parties capacity to “contribute” as defied by s.79(4) (see SPAGNARDI at [47]), such quantification is difficult to calculate mathematically.  I am satisfied the Husband’s conduct had a “discernable impact”.

   30.    I am comforted in assessing a “doubling” of the Wife’s contribution during the relationship (approximately 6%).  On this basis, I would assess the contributions based entitlements to trial, as 16% to the Wife and 84% to the Husband.”

8. With regard to the first argument for the husband, namely that there are no reasons given or evidence identified to support the Federal Magistrate’s findings that the wife’s contributions were made more arduous by the husband’s violence, firstly, I accept that such findings are necessary before weight can be given to the factor.

9. Secondly, the argument is difficult to resist, in view of the passage earlier quoted in which the trial Magistrate said:

   “29.  Whilst it is desirable for there to be “evidence” to enable the Court to quantify the effect of that violence upon the parties capacity to “contribute” as defied by s.79(4) (see SPAGNARDI at [47]), such quantification is difficult to calculate mathematically.  I am satisfied the Husband’s conduct had a “discernable impact”.

10. The reference to the desirability of “evidence to enable the Court to quantify the effect of that violence upon the parties’ capacity to contribute”:

    •  Implies that the “effect” under discussion was a question of fact, rather than the part of the discretionary exercise where “quantification” was given to a contribution made more arduous by violence;

    •  Implies that there was no such evidence; and

    •  Implies that the absence of evidence will be overcome by some counterbalancing factor.

11. As to the last point, what follows the reference to the desirability of evidence (and the implied absence of it) is the statement that “such quantification is difficult to calculate mathematically”.  With respect, the observation that “quantification” is difficult to calculate mathematically is not a counter to the absence of evidence.  It does not explain how the absence is overcome.

12. In my view, the learned Magistrate’s findings that the husband’s conduct had a discernible impact on the wife’s contributions is not explained.

13. I turn to counsel for the husband’s second argument about the approach of the Federal Magistrate to assessing the weight to be given to the wife’s contributions, made more arduous by domestic violence.  When he assessed contributions, the learned Magistrate calculated combined initial contributions of $423,300, of which the husband had 96.5 percent and the wife 3.5 percent.

14. The learned Magistrate then said:

    “23.  I regard the other financial and non-financial contributions during the short relationship of approximately three and a half years to separation, as equal. ….

    24.    …The Husband’s initial contributions were overwhelming.  The relationship was relatively short.  I would assess contributions to the time of hearing to be 90% to the Husband and 10% to the Wife before consideration of issues of domestic violence.” (emphasis added)

15. It will be apparent from paragraphs 24 and 30 (earlier quoted) of the Federal Magistrate’s reasons, that he did not assess all the contributions, including recognition of the context of domestic violence in which some of the wife’s contributions were made, in the one exercise of discretion.  Rather, he separated out the impact of violence, firstly determining an adjustment in favour of the wife on account of contributions, minus that factor.  He then re-visited the adjustment he had made in favour of the wife after considering the impact of domestic violence.  This was an unusual approach and in my view, as contended for by counsel for the husband, meant that all contributions made by the wife, including such financial contributions as she made, were in fact adjusted, because they were deemed more arduous on account of the context of domestic violence.

16. Of course, even more correctly viewed, the approximately 6 percent adjustment in the wife’s favour, from the relative proportions of initial contributions, was in fact after considering not only the wife’s contributions during cohabitation, but those of the husband.  Albeit these were found to be equal, after considering all contributions (save the “impact” of domestic violence), Baumann FM made the further 6 percent adjustment to the wife.  That exercise, the result of which was then doubled to reflect the impact of domestic violence, was a very different one to regarding particular types of contribution by the wife, such as homemaker, as entitled to greater weight because made in the context of domestic violence.

1. The latter approach is consistent with authority.  The approach taken by the Federal Magistrate is not.  Moreover, in my view, the approach taken, because of the accumulative steps applied, produced a distorted and illogical result.

Assessment of contributions

(leaving aside the question of domestic violence and the factual accuracy of the Federal Magistrate’s calculation of initial contributions)

1. Counsel for the husband submitted:

   “38.  …there was no warrant for His Honour departing from the contribution finding made in relation to the assets of the parties at cohabitation.  Having regard to the circumstances of this case, an adjustment by reference to contributions during the relationship was not appropriate where:

   38.1his Honour found such contributions to have been equal [AB 231;

   38.2the relationship was one of, at most, TA years during and absent other relevant circumstances, it was appropriate to return to the parties that which they had each contributed financially; Anastasio (1981) FLC 91-093; Bushby (1988) FLC 91-919; Benecke (1996) FLC 92-844;

   38.3there was not said, and nor could it have been, that there were other relevant contributions which would weigh against a “full” recognition of the initial contributions of the Appellant Pierce (1991) FLC 92-844.

   39.    It is submitted that to have made an adjustment in favour of the Respondent of 6% on account of her contributions during the relationship is to have found that, notwithstanding the conclusion of equality, the contributions of the Respondent exceeded those of the Appellant.”

2. The Federal Magistrate did not determine when cohabitation commenced, as between the wife’s contention of July 2000 or the husband’s of in or about 2001.  He thought that the difference mattered little.  Separation was in early May 2004, so, at the outside, the period of cohabitation was of a couple of months less than four years.  There were no children.

3. As earlier seen, the learned Magistrate assessed combined initial contributions of $423,300 of which the husband had 96.5 percent and the wife 3.5 percent.

4. As also earlier seen, the learned Magistrate then said:

   “23.  I regard the other financial and non-financial contributions during the short relationship of approximately three and a half years to separation, as equal. ….

   24.    …The Husband’s initial contributions were overwhelming.  The relationship was relatively short.  I would assess contributions to the time of hearing to be 90% to the Husband and 10% to the Wife before consideration of issues of domestic violence.” (emphasis added)

5. It is of course clear that a percentage assessment of or proportion of initial contributions need not be carried through to an ultimate division of property even though all other contributions are assessed as of equal weight.  This is simply the result of all contributions being considered together (see Pierce and Pierce (1999) FLC 92-644 at 85,881). However, as the Full Court said in Pierce:

   “In considering the weight to be attached to the initial contribution… regard must be had to the use made by the parties of that contribution.  In the present case that use was a substantial contribution to the purchase price of the matrimonial home…”

6. In the instant case the husband contributed the matrimonial home in its entirety and unencumbered.  Moreover, this was a short relationship.  The initial contributions were, as the Magistrate recognised, overwhelmingly in the husband’s favour.  In my view, the increase in the wife’s share by a further 6.5 percent (ie. to three times the proportion of her initial contribution) was excessive and unexplained.

Assessment of s 75(2) factors

1. The first sentence of the learned Magistrate’s reasons relating to this step read:

   “31.  The Husband submits that there are not factors which would justify any adjustment under s 75(2).”

2. This statement may be ambiguous.  One meaning might be that the husband submitted that there were no relevant s 75(2) factors.  Another might be that there were factors, but they were set off, one group against the other.  Counsel for the husband says that the latter is what the husband submitted at trial, but that the absence of any consideration by the Federal Magistrate of the husband’s circumstances indicates that he either misunderstood the husband’s position or overlooked relevant factors in the husband’s favour.

3. The factors mentioned by the Federal Magistrate were:

   “32.  Both parties are effectively at the end of their working lives, although I accept the Wife’s medical condition inhibits her capacity to have worked perhaps for the last 5 years to age 65.…”

4. He then referred to medical evidence relating to the wife and said:

   “33.  I accept this evidence and I regard much of her condition and issues are attributable to the actions of the Husband and the effects of his violent, intimidating and unreasonable behaviour.

   34.    Although the Husband is in a superior asset position (and still will be after my decision takes effect even though he may have a small mortgage), I would make no adjustment for that differential.  To do so would be to unfairly diminish the effect of the overwhelming initial contribution of the Husband. (emphasis added)

   35.    Although the Wife’s post separation standard of living is less than what she enjoyed during the relationship, it must be remembered that she entered the relationship without significant assets.  The effect of the Order I propose to make places her in a better financial position than she was at the commencement of the relationship.

   36.    I would make a further small adjustment in favour of the Wife of 4% of the pool – or an effective sum of approximately $23,000 – less than one year’s average weekly earnings.”

5. It can be seen that the only matter mentioned relating to the husband’s circumstances that might have favoured the husband (though not necessarily beyond the equivalent factor favouring the wife) was that he was effectively at the end of his working life.  As earlier seen, there was medical evidence that the husband had substantial health problems.

6. One then looks to see what factors were mentioned as favouring the wife.  There is only the content of paragraphs 32 and 33.  There, as seen, Baumann FM referred to much of the wife’s “condition” and “issues” as:

   “…attributable to the actions of the husband and the effects of his violent, intimidating and unreasonable behaviour.”

7. I am unable to discern why, other than the husband’s behaviour, such an adjustment in the wife’s favour was made.  Such behaviour is not obviously a relevant s 75(2) factor.  The learned Magistrate did not say that he took it into account under s 75(2)(o).

8. The husband’s behaviour had already been taken into account in respect of contributions.  While the earning capacities of the parties and their health clearly fell for consideration in the assessment of s 75(2) factors, the Federal Magistrate does not explain why any contributing cause of either of those features of the wife’s circumstances would attract a weighting in her favour.  Nor is there any consideration of how a further adjustment on account of the husband’s behaviour would fairly fit with adjustments already made in respect of that behaviour in the assessment of contributions.

9. In my view, the exercise of discretion in respect of s 75(2) factors is also tainted by error.

Remaining grounds

1. The remaining two grounds relate to asserted mistakes of fact; in relation to whether or not the husband had $20,000 in cash at the commencement of cohabitation and whether or not the evidence supported a finding that the husband lost $20,000 on gambling after separation.  In view of the findings already made of merit in the other grounds of appeal and my conclusions, shortly discussed, that the matter must be remitted for rehearing, I think it unnecessary and indeed undesirable to discuss the evidence touching on these factual matters.

Re-exercise of discretion

1. Where the appeal against the credit finding has succeeded and that finding on the face of the reasons underpinned a number of “critical findings”, it is almost inevitable that the applications must be remitted for rehearing.  This conclusion is reinforced by the further evidence which I considered I ought receive.

Terms of orders

1. Counsel for the husband sought that a qualification be placed upon the remission to the effect that rehearing not take place until after determination of the proceedings commenced by the wife in the District Court of New South Wales.  It may indeed be prudent that determination of property settlement between the parties await the result of those proceedings but there are a number of questions likely to bear upon the issue of whether or not that is the better course.  These include the anticipated time for the determination of the District Court proceedings and whether a preferred course might be a hearing of property settlement proceedings, partial property orders and deferment.  These questions are better considered at first instance.

Orders

1. That the appeal be allowed.

2. That the orders of the Federal Magistrates Court made at Brisbane on 27 April 2006 be set aside.

3. That the application for property settlement made by the wife be remitted for rehearing by a Federal Magistrate other than Federal Magistrate Baumann.

   I certify that the preceding 50 paragraphs

   are a true copy of the Reasons for Judgment

   herein of the Honourable Justice Warnick.

   ………………………………….
     Associate

   Date:    2006