Gadhavi & Gadhavi
[2023] FedCFamC1A 117
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Gadhavi & Gadhavi [2023] FedCFamC1A 117
Appeal from: Gadhavi & Gadhavi [2022] FedCFamC1F 999 Appeal number: NAA 11 of 2023 File number: SYC 7722 of 2018 Judgment of: MCCLELLAND DCJ, TREE & HARTNETT JJ Date of judgment: 21 July 2023 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Whether the primary judge’s determination of a 60/40 contribution based division in favour of the wife was reasonable within the context of a Kennon v Kennon (1997) FLC 92-757 claim and the husband’s significant initial financial contribution – Whether adequate reasons for the property division determination were given – Where the property division determination and the husband’s significant initial financial contribution are unable to be reconciled – Weighting of the wife’s contributions being made more arduous by the husband against the husband’s significant initial contribution cannot be reconciled with reference to the reasons – Categorisation of either a lack of adequate reasons or unreasonable determination unnecessary – Error established – Appeal allowed – Re-hearing – Written submissions as to costs. Legislation: Family Law Act 1975 (Cth) s 79
Federal Proceedings (Costs) Act 1981 (Cth)
Cases cited: Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Australian Competition and Consumer Commission (ACCC) v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25; [2016] FCAFC 181
Beale v Government Insurance Office (NSW) (1987) 48 NSWLR 430
Benson & Drury (2020) FLC 93-998; [2020] FamCAFC 303
Blandford & Esmore [2022] FedCFamC1A 67
Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49
Brodie v Brodie (2009) 41 Fam LR 18; [2009] FamCAFC 6
Cabbell & Cabbell [2009] FamCAFC 205
de Winter v de Winter (1979) FLC 90-605
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
DL v The Queen (2018) 266 CLR 1; [2018] HCA 26
Douglass v The Queen (2012) 290 ALR 699; [2012] HCA 34
Ghosh v Ninemsn Pty Ltd (2015) 90 NSWLR 595; [2015] NSWCA 334
Grunseth & Wighton [2022] FedCFamC1A 132
House v The King (1936) 55 CLR 499; [1936] HCA 40
Kennon v Kennon (1997) FLC 92-757; [1997] FamCA 27
Loude & Loude [2009] FamCAFC 52
Lovine & Connor (2012) FLC 93-515; [2012] FamCAFC 168
Petruski v Balewa (2013) 49 Fam LR 116; [2013] FamCAFC 15
Pierce v Pierce (1999) FLC 92-844; [1998] FamCA 74
Roverati & Roverati (2021) FLC 94-027; [2021] FamCAFC 89
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Steinbrenner & Steinbrenner [2008] FamCAFC 193
UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45
White & White (1982) FLC 91-246; [1982] FamCA 37
Number of paragraphs: 54 Date of hearing: 2 May 2023 Place: Sydney Counsel for the Appellant: Mr Walker SC, Mr Hodgson & Ms Dunlop Solicitor for the Appellant: O’Sullivan Legal Counsel for the Respondent: Mr Cummings SC & Mr Othen Solicitor for the Respondent: Broun Abrahams Burreket ORDERS
NAA 11 of 2023
SYC 7722 of 2018FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR GADHAVI
Appellant
AND: MS GADHAVI
Respondent
order made by:
MCCLELLAND DCJ, TREE & HARTNETT JJ
DATE OF ORDER:
21 July 2023
THE COURT ORDERS THAT:
1.The appeal be allowed.
2.The matter be remitted for rehearing before a judge other than the primary judge.
3.Within 14 days of the date of these orders, the parties are to file written submissions of no more than five (5) pages in respect to the issue of costs.
4.Within 21 days of the date of these orders the parties may, if they wish, file submissions in reply to the issue of costs of no more than two (2) pages.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Gadhavi & Gadhavi has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCCLELLAND DCJ, TREE & HARNETT JJ:
INTRODUCTION
This matter concerns an appeal from orders made by a judge of the Federal Circuit and Family Court of Australia (Division 1) effecting a division of the parties’ property which, as at the date of the hearing, had a net value of $24,230,275 including superannuation. After considering all relevant factors set out in s 79(4) of the Family Law Act 1975 (Cth) (“the Act”), the final apportionment determined by the primary judge was 45 per cent of the parties’ property to the appellant husband (“the husband”) and 55 per cent to the respondent wife (“the wife”). Relevantly, that division was made after determining that consideration of those matters set out in ss 79(4)(a)–(c) of the Act required a contribution based entitlement of 60 per cent to the wife, which was then reduced by the primary judge’s determination that the husband was entitled to a differential in his favour of 5 per cent, having regard to those matters set out in ss 79(4)(d)–(g) of the Act.
The primary issue in the appeal concerns whether the primary judge’s determination of a contribution based entitlement in favour of the wife as a result of her contributions being made significantly more arduous by the husband’s conduct was reasonable and/or, as a related issue, properly explained by adequate reasons in circumstances where it was accepted that the husband’s initial financial contributions were more than seven times greater than that of the wife.
BACKGROUND
In circumstances where the husband raises only a single challenge to a finding of fact made by the primary judge in respect of the parties’ initial contributions, which will be considered in respect of Ground 1, we do not propose to re-canvas the chronology of this matter set out by the primary judge from [11]–[150] of the reasons, save to note the following.
The parties were married in 1998 and separated some 20 years later in 2018. There are two children of the marriage, who are currently 22 and 20 years old respectively. At [2] of the reasons, the primary judge notes the eldest child presented with behavioural difficulties during the parties’ marriage, while the youngest child had a surgery as an infant and experienced health issues. The consequent challenges were found to have impacted upon both parties’ contributions.
Significantly, as at the date of marriage and cohabitation in 1998, the husband’s assets amounted to $2,716,236 while the wife’s assets were valued at approximately $375,000, that figure being an estimation provided by the husband that was accepted by the primary judge given the absence of precise financial disclosure from the wife (at [205]–[206]).
In 1999, the husband sold a property in Suburb H for $1,275,000 and the parties jointly purchased the former matrimonial home (“the Suburb H property”) unencumbered for $2,050,000.
It was agreed that the value of the Suburb H property as at the date of the hearing was $14,500,000 (at [405]), although that increase in value was due, in part, to renovations substantially supervised by the wife together with market forces.
Prior to the marriage and until 2003, the husband was highly successful in his work in the financial sector and earned significant income and bonuses. From 2003 to 2005, the husband ceased work to assist caring for the parties’ youngest child, who had undergone surgery and required 24 hour care. Subsequently, the husband resumed his employment in the financial sector, which continued until 2008, at which time he received a bonus of $1 million. From 2008 to 2021, the husband earned significant income through investing in shares whilst taking on the parent at home role, primarily caring for the children (at [32]–[33] and [35]).[1]
[1] See also [287] and [316] of the primary judge’s reasons for judgment.
The wife is a medical professional in the public health sector. Shortly after the birth of each of the parties’ two children, the wife took maternity leave for periods of 12 and 18 months respectively (at [27] and [31]). From July 2005 to March 2013, the wife reduced her work hours to part time to care for the children and, following her resumption of full time hours, would often collect the eldest child from school and sometimes take him out for dinner (at [51]). Sometime before 2016, the wife obtained her tertiary qualifications after commencing her studies in 2008 (at [47]). From June to November in 2018, the wife sought and was granted six months of long service leave to support the eldest child as he completed his Higher School Certificate (at [68]).
Allegations of family violence featured prominently in the substantive hearing. No challenge has been made to the findings of the primary judge that, during the course of the parties’ intact relationship and subsequent to their separation, the husband engaged in a pattern of coercive and controlling conduct towards the wife and the parties’ children which included several incidents involving actual physical violence. Senior counsel for the husband conceded, appropriately in our view, that, consistent with the principles adumbrated in the case of Kennon v Kennon (1997) FLC 92-757 (“Kennon”), it was appropriate for the primary judge to have given additional weight to the contributions made by the wife during the period of and subsequent to the parties’ relationship as a result of the conduct engaged in by the husband. The central issue in the appeal is the extent of that weighting and the adequacy of the primary judge’s reasons in explaining her determination of that issue.
Relevantly in respect to the issue of family violence, in February 2008, an Apprehended Domestic Violence Order (“ADVO”) was made against the husband, on application by NSW Police, naming the wife as a protected person for a period of 12 months.
Consequent to the wife reporting a number of other incidents of family violence perpetrated by the husband against herself and the eldest child, on the date of separation, an ADVO was made against the husband for the wife’s protection and a provisional ADVO was granted by Suburb SS Local Court on behalf of the wife in July 2018. Police removed the husband from the Suburb H property on charges of assault and stalk and intimidate (at [75]).
During 2015, renovation works commenced on the Suburb H property, which remained unfinished at the date of separation (at [54]). Post separation, between 2018 and 2019, significant renovations were completed in the absence of the husband (at [82]). The primary judge found that the efforts of the wife in overseeing those renovations were also rendered significantly more arduous as a result of the husband’s conduct.
APPLICATION IN AN APPEAL
At the outset of the appeal hearing, the husband confirmed that his Application in an Appeal to adduce further evidence filed 1 May 2023 was abandoned and orders were made dismissing that application.
THE APPEAL
In his Notice of Appeal filed 16 January 2023, the husband advances 14 grounds of appeal, which are as follows:
1.That the Trial Judge was in error in her mathematical calculation and conclusion that the Husband’s superior initial financial contributions were some six times the wealth of the Wife at the commencement of cohabitation, having regard to her acceptance of the evidence that the Husband had initially contributed $2,716,236 and the Wife had initially contributed $375,000 (the parties net wealth therefore being $3,091,236 at this time) in circumstances where the Husband’s contributions were in fact some 7.2 times the wealth of the Wife at the commencement of cohabitation.
2.That the Trial Judge was in error on the evidence in failing to consider the impact of the Husband’s initial financial contribution, which principally enabled the former matrimonial home at [Suburb H] to be purchased unencumbered for $2,050,000, shortly after the commencement of cohabitation, in circumstances where this property in value now comprises in percentage terms, some 73% of the quantum of the parties’ net asset pool.
3.The Trial Judge was in error on the evidence in determining that the parties made an equal contribution during the marriage financially by her reference to a comparison of the “taxable income” as opposed to the “income” of the parties, in circumstances where the Husband derived income through interest on infrastructure bonds, which was not assessable income, however interest expenses incurred on the borrowings of those funds which were used to acquire infrastructure bonds were allowable deductions, the net effect of which was to reduce the "taxable income" of the Husband, however not his “income” received.
4.That the Trial Judge was in error in assessing the contributions of the parties in failing to give sufficient weight to the fact that whilst earning a significant “taxable income” from 2008 onwards, which exceeded the “taxable income” of the Wife until separation, (as is apparent from Schedule 3 Part 1 of the Reasons for Judgment) the Husband was also the parent at home, who primarily cared for the children until they became independent, which inferentially would have been until the time of separation, namely a period of some ten years.
5.That the Trial Judge was in error in placing excessive and undue weight upon her extremely adverse findings as to the Husband’s conduct and behaviour in her assessment and evaluation of the parties’ respective contributions, particularly her reliance upon findings as to the Husband's conduct and behaviour after the parties’ separation.
6.That the Trial Judge was in error in law in not providing adequate reasons for her final assessment of the parties’ contributions as to 60% to the Wife and as to 40% to the Husband, by her failure to articulate her assessment of those contributions of the Wife during cohabitation and after separation, which offset the Husband's superior initial financial contribution and by her failure to articulate the extent of the percentage adjustment in favour of the Wife to reflect the Kennon considerations and argument, in the context of a net asset pool determined by her to be $19,826,297.
7.That the Trial Judge was in error in law that notwithstanding her acknowledgment it was generally the case that parties share the losses and wins in a marriage and the uncontroverted evidence that during cohabitation, the Husband alone and with the Wife’s acquiescence, had been the successful investor of the parties’ funds over many years, from which she had benefitted, determined that as the Husband had dealt with his SMSF unilaterally, post-separation and without the Wife’s knowledge, that she would depart from general case law and the Husband should solely bear any loss and further that the full amount of the superannuation should be added back and regarded as still being in the Husband’s hands and included in the net asset pool for division between the parties.
8.That the Trial Judge was in error on the evidence in concluding that there was a good prospect that the loss of the Husband's SMSF would be able to be recovered and inferentially recovered in full.
9.That the Trial Judge was in error in law in adding back the total amount of a presently non-existent asset, namely the Husband’s SMSF, and treating it essentially as being equivalent to an existing asset, without applying any discount to reflect the facts that the legal costs of recovering the total amount which would be incurred by the Husband may be irrecoverable, that any legal claim by the Husband may fail and that any Judgment obtained by the Husband may not be able to be satisfied in whole or in part.
10.That the Trial Judge was in error in law failing to provide adequate reasons in concluding that the final orders she made were just and equitable, in circumstances where the Wife will receive $10,903,624 and the Husband will receive $8,921,834, this latter amount including the add back of the Husband's SMSF of $1,125,000, which he may never be able to recover.
11.That the Trial Judge was in error on the evidence in determining that the Wife had made a significant contribution to completing the renovations to the former matrimonial home at [Suburb H] in circumstances where the cost of these renovations had been met from the parties’ joint assets, which the Wife controlled.
12.That the Trial Judge was in error on the evidence in concluding that the Husband’s conduct and behaviour made the Wife’s contributions in completing the renovations to the former matrimonial home at [Suburb H] more onerous, in circumstances where she had also had the benefit of residing in the home to the exclusion of the Husband for some four years.
13.That the Trial Judge was in error in her treatment of the amount of the expenditure by the Wife of a substantial proportion of the parties’ $2.185million, which she had retained post separation in circumstances:-
a.where the Husband did not concede that all of the expenditure on the children, namely $547,755.09 was acceptable.
b.where the Wife had expended on credit card repayments for living expenses an amount of $585,644.76, on disability insurance an amount of $5,697.07 and an amount of $11,894.00 on miscellaneous expenses, being a total of $603,235.83, when she had the benefit of earning a secure and substantial income during this period.
14.That the Trial Judge was in error determining that as the Husband had unilaterally expended income derived from the joint share portfolio and monies received by way of inheritance from the Estate of his late father, all of which had been received after separation, she did not propose to make any adjustment in favour of the Husband in relation to the expenditure of the amount of $603,235.83 from the parties’ $2.185million, which she stated at “first blush” ought to have been met from the Wife's resources and not joint resources.
(As per the original)
In the husband’s Summary of Argument filed 4 April 2023, it is noted that Grounds 5, 11 and 13 are abandoned. The Summary of Argument categorises the remaining grounds of appeal into five groups as follows:
a.erred in relation to certain questions of fact (Grounds 1, 3, 4, 6, 12);
b.failed to provide adequate reasons for the final assessment of the Parties’ contributions, being 60% to the Wife and 40% to the Husband before adjustment for s 75(2) factors (Ground 6), or for the conclusion that the final orders were just and equitable (Ground 10);
c.failed to articulate the percentage adjustment applied in relation to the Wife’s successful Kennon argument (Ground 6);
d.erred in law and on the evidence in the treatment of the Husband’s lost SMSF investment (Grounds 7–9);
e.erred in law and on the evidence in relation to the Husband’s post-separation expenditure (Ground 14).
(Emphasis in original) (Footnote omitted)
While Ground 2 is absent from the above categorisations, during the appeal hearing, counsel for the husband confirmed that Ground 2 remains an advanced ground, albeit in “combination”[2] with Ground 6.
[2] Appeal Transcript 2 May 2023, p.75 line 16.
For reasons which we explain, we have found error in terms of Grounds 2, 6 and, to the extent to which it is related to those grounds, Ground 10. In circumstances where that finding of error is determinative of the appeal, it has been unnecessary to consider the remaining grounds of appeal.
RELEVANT APPELLATE PRINCIPLES
The making of orders for the division of the parties’ property pursuant to s 79 of the Act involves the exercise of a broad discretion reposed, by that section, in the primary judge. Accordingly, the primary judge’s conclusions attract the standard of appellate review articulated in House v The King (1936) 55 CLR 499 (“House v The King”). This requires “in substance, identification of an error of principle or a material error of fact, or, if no specific error can be identified, demonstration that the decision is ‘unreasonable or plainly unjust’”.[3]
[3] UBS AG v Tyne (2018) 265 CLR 77 at [74], citing Ghosh v Ninemsn Pty Ltd (2015) 90 NSWLR 595 at [37].
Additionally, appellate intervention may be required in circumstances where a trial judge fails to provide adequate reasons “sufficient to identify the principles of law applied by the judge and the main factual findings on which the judge relied”.[4] One reason for this obligation is to enable the parties to understand the basis for a decision that is adverse to their interests such that proper consideration can be given to the potential for such parties to exercise any rights of appeal.[5] Correspondingly, the adequacy of reasons is fundamental to the appellate court being able to discharge its statutory duty on an appeal from a challenged decision.[6]
[4] Douglass v The Queen (2012) 290 ALR 699 (“Douglass”) at [8].
[5] DL v The Queen (2018) 266 CLR 1 (“DL”) at [32].
[6] Douglass at [14] and DL at [32].
The adequacy of reasons will depend upon an assessment of the issues in the case, including the extent to which they were relied upon by counsel, their bearing upon the elements of the relevant statutory criteria and their significance to the course of the trial.[7]
[7] DL at [33], referring to Beale v Government Insurance Office (NSW) (1987) 48 NSWLR 430 at 443.
Reasons will not be inadequate “merely because they fail to address an irrelevant dispute or one which is peripheral to the real issues. Nor will they be inadequate merely because they fail to undertake ‘a minute explanation of every step in the reasoning process that leads to the judge’s conclusion’”.[8]
[8] DL at [33], referring to Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 259.
Relevantly for the purpose of this appeal, reasons may be inadequate “if the trial judge fails to explain his or her conclusion on a significant factual or evidential dispute that is a necessary step to the final conclusion”.[9]
DISCUSSION
[9] DL at [33].
Ground 1 – error in determining the ratio of the parties’ initial contributions
The primary judge acknowledged that a significant issue for determination in the proceedings was “the impact of the husband’s acknowledged superior initial financial contributions in this 20 year marriage with two children” (at [184]).
The primary judge accepted the husband’s evidence that, at the commencement of the parties’ relationship, he had assets and superannuation totalling approximately $2,716,236. These assets were “in the form of cash, properties, shareholdings, and superannuation” (at [202]).
Significantly, the primary judge also accepted that “the husband did make a superior initial financial contribution to the initial acquisition of assets, given his wealth at cohabitation was more some six times the wife’s” (at [209]).
It is accepted that the ratio of the husband’s initial financial contributions as compared to those of the wife, which were found to be approximately $375,000, was in fact 7.2 times greater than the wife’s at the commencement of cohabitation.
Ordinarily, failure to take into consideration an initial contribution by such an amount would constitute a failure to have regard to a material consideration and constitute error within the principles set out in House v The King. However, it is contended, by the wife, that the error on the part of the primary judge was simply one of calculation and no error occurred in respect to her determination of the actual amounts of the parties’ initial contributions.
It is unnecessary to determine this ground of appeal in circumstances where we have found appellable error in respect of Grounds 2, 6 and, to the extent that it is relevant, Ground 10. That is, we have accepted the submission of senior counsel for the wife that the calculation error of the relevant ratio of the parties’ contributions, even if it be categorised as a mistake of fact, is not one that, in and of itself, has affected the final result of the proceedings: de Winter v de Winter (1979) FLC 90-605.
Grounds 2, 6 and 10 – failure to consider the impact of the husband’s initial contributions and failure to provide adequate reasons
It was not in dispute that the primary judge applied proper principle in determining that the assessment of the impact of the husband’s initial contributions could only properly occur after she assessed “the totality of the parties’ contribution-based entitlement over the entirety of the marriage and post-separation” (at [210]).
In that respect, in Pierce v Pierce (1999) FLC 92-844 (“Pierce”), the Full Court stated at [28]:
…It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
(Emphasis added)
To similar effect, in Cabbell & Cabbell [2009] FamCAFC 205, the Full Court stated at [54] that in considering the parties’ contributions, it is necessary to trace the use of those assets and consider the foundation that they laid for the subsequent accumulation of wealth by the parties.
That is, in evaluating the parties’ contributions, it was necessary for the primary judge to have regard to the context of the husband’s initial contribution and specifically, to the opportunity that initial contribution created and the impact of that initial contribution on the subsequent wealth of the parties as at the date of the hearing.
The primary judge acknowledged that a significant portion of the husband’s wealth that existed as an initial contribution at the commencement of the parties’ relationship, being the net proceeds of sale of a property that he owned in Suburb H of approximately $1.275 million, was applied “with some funds from the wife” to purchase the Suburb H property unencumbered (at [209] and [392]). It was accepted that the Suburb H property was, as at the date of the trial, valued at $14,500,000 and represents 73 per cent of the asset pool.
The primary judge otherwise found that the parties’ financial contributions during their marriage were equal (at [211]) and that there was “little difference” in the contributions the parties respectively made during the course of the parties’ marriage as a parent and homemaker (at [212]).
In determining that there should be a contribution based entitlement in favour of the wife of 60 per cent, having regard to the considerations set out in ss 79(4)(a)–(c), the primary judge placed significant weight upon the following:
·the wife’s contributions had been made “significantly more arduous by the husband’s treatment and reactions to [the eldest child’s] clearly challenging behaviour and his violent and thuggish treatment of her” (at [213]);
·the husband’s conduct impacted “all contributions generally”, including the wife’s parenting which was made significantly more arduous “due to the husband’s dysfunctional, unacceptable, demeaning, and poor treatment of her and [the eldest child]” (at [220]);
·the wife was required to take six months off work from June 2018 to care for the children, the eldest child in particular, “due to the conflict at home between the husband and [the eldest child], and to enable [the eldest child] to do his best in the HSC by protecting him from the husband” (at [216]);
·the husband’s poor behaviour, including rudeness to the builders, which contributed to the delay in the renovations of the Suburb H property (at [295]) and resulted in the wife having to “solely complete long-running renovations to the [Suburb H] property” in circumstances where the project manager would not deal with the husband (at [391]–[392]); and
·the wife made a direct financial contribution to the cost of the renovations of the Suburb H property in the sum of $547,982.72 (at [356] and [414]).
No challenge has been made to the detailed and comprehensive analysis of the evidence undertaken by the primary judge and her Honour’s findings of fact, based on that analysis, that the father had engaged in a pattern of coercive and controlling behaviour towards the wife and the children, including incidents of actual physical violence that separately and cumulatively made the wife’s contributions significantly more arduous in terms of the principles adumbrated in Kennon. Further, there was no dispute that a contribution based entitlement in the wife’s favour was required as a result.
Senior counsel for the wife submitted that the primary judge adopted an approach that was entirely consistent with authority, which requires a trial judge to adopt a holistic approach and eschew one that segments or compartmentalises the various contributions and weighs one against the remainder.[10] In that context, it was contended that the primary judge could not, consistent with those authorities, have done other than to have provided the detail, which she unquestionably did, of the objectionable conduct of the husband and the effect that it had on the wife’s contributions.[11]
[10] Benson & Drury (2020) FLC 93-998 at [35].
[11] Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [236].
The objectionable conduct engaged in by the husband is detailed throughout the judgment and, in particular, from [151]–[183] under the subheading “Chronology of allegations of family violence raised by the wife” and, further, at [223]–[273] under the subheading “Allegations of family violence perpetrated by the husband towards the wife and the children”. The relationship between the conduct engaged in by the husband and its impact upon the wife was detailed in the judgment at [359]–[392] under the subheading “The Kennon Argument.”
While appropriately conceding that the unchallenged factual findings justify a contribution based entitlement being made in favour of the wife as a result of the husband’s conduct, senior counsel for the husband submitted that:
(1)the property division determination that was made by the primary judge was beyond that which could be considered reasonable, having regard to the principles set out in House v The King and, or alternatively;
(2)in the absence of adequate reasons, it is not possible to determine how the primary judge arrived at her conclusion that an apportionment of the parties’ property of 60 per cent in favour of the wife was appropriate and required, having regard to the context in which the wife made her contributions.
In considering those competing submissions, it is to be appreciated that the exercise of the broad discretion bestowed upon the Court pursuant to s 79 of the Act “‘inevitably involves value judgments and matters of impression’, and accordingly it cannot be treated as ‘a mathematical exercise’”.[12] It is often stated that there is an inevitable ‘leap’ from the evaluation of the parties’ contributions to declaring the “quantitative reflection of such an evaluation”.[13]
[12] Petruski v Balewa (2013) 49 Fam LR 116 at [49], citing Lovine & Connor (2012) FLC 93-515 at [40]–[41].
[13] Coleman J in Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234], cited with approval in Roverati & Roverati (2021) FLC 94-027 at [38].
Moreover, it has been determined that, in undertaking the task of considering the totality of the parties’ contributions in an holistic manner,[14] it is inappropriate for a trial judge to adopt an ‘accounting’ or ‘scoring’ approach to each separate contribution. As explained by the Full Court in Blandford & Esmore [2022] FedCFamC1A 67 at [14], adopting such an approach is flawed because it “would not only require detailed actuarial calculations with respect to financial contributions (which would rarely be possible on the evidence generally available in property settlement cases), but it would still leave the significant problem of how to convert the qualitative factors in s 90SM(4)(b) [s 79(4)(b)] and s 90SM(4)(c) [s 79(4)(c)] of the [Act]”.
[14] Dickons v Dickons (2012) 50 Fam LR 244 at [21].
Similarly it has been determined that, in circumstances where consideration is being given to whether the s 79(4) contributions made by a party have been made significantly more arduous as a result of the other party’s conduct, having regard to the principles set out in Kennon, it is again necessary to make an holistic assessment of those contributions as part of the totality of the myriads of contributions made by each party. As explained by the Full Court in Benson & Drury (2020) FLC 93-998 at [35]:
… The contributions which have been made significantly more arduous have to be weighed along with all other contributions by each of the parties, whether financial or non-financial, direct or indirect to the acquisition, conservation and improvement of property and in the role of homemaker and parent. All contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder (Jabour & Jabour (2019) FLC 93-898 at [73]–[87] (“Jabour”); Horrigan & Horrigan [2020] FamCAFC 25 at [42]–[48]).
It has been acknowledged that the requirement for a trial judge to engage in such an integrated and holistic approach “often makes the process of appellate review difficult, particularly for an appellant seeking to identify and establish error in the reasoning process and outcome, or sometimes the outcome alone”.[15] That difficulty does not, however, relieve the appellate court from the obligation of determining whether the result was reasonably open.[16]
[15] Australian Competition and Consumer Commission (ACCC) v Reckitt Benckiser (Australia) Pty Ltd (2016) 340 ALR 25 (“ACCC v Reckitt”) at [44].
[16] ACCC v Reckitt at [49].
In summary on this issue, senior counsel for the wife is, with respect, quite right in noting that authorities of the Full Court caution against a trial judge adopting a segmented or compartmentalised approach to the assessment of parties’ respective contributions. Further, it is not open to a trial judge to simply carry forward an original contribution as a mathematical proportion of that party’s total contributions.[17]
[17] White and White (1982) FLC 91-246.
However, there will also be cases where the leap from words to figures is “so great, and so unheralded by the discussion which precedes it” so as to either or both; “render the reasoning process defective”[18] or result in the conclusion that the ultimate assessment by a trial judge of the parties’ respective contributions is one that is outside the reasonable ambit of discretion and will, as a result, constitute appealable error.[19] We are of the view that this is such a case.
[18] Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234], cited with approval in Brodie v Brodie (2009) 41 Fam LR 18 at [90] and Loude & Loude [2009] FamCAFC 52 at [85].
[19] Loude & Loude [2009] FamCAFC 52 at [86].
That is, it is clear that, in weighing various contributions made by each party, the trial judge was not required to quantify those contributions in mathematical or percentage terms. However, on the facts of this particular case, the primary judge was required to explain why the husband’s substantial initial contribution was subsumed by the wife’s contributions such that it was not only wholly negated, but that her contribution based entitlement exceeded his by a differential of 20 per cent.
In summary, in an otherwise sound and comprehensive judgment, the primary judge has failed to weigh or, more accurately, explain how she has weighed the impact of the husband’s conduct upon the wife’s contributions as against what was acknowledged to be a very significant initial financial contribution made by the husband including, specifically, the significance of the application of that initial contribution to the accumulation of the parties’ assets. That initial contribution was more than seven times greater than that of the wife’s initial contribution and has been foundational to the accumulation of the parties’ current wealth.
In short, we cannot reconcile the determination of a 60/40 division of the parties’ property in favour of the wife pursuant to those factors set out in ss 79(4)(a)–(c) of the Act with the fact that the husband made such a significant initial contribution. In that respect it was noted that, in dollar terms, the resulting 20 per cent differential between the parties, as a result of those findings in respect to contributions, equated to the sum of $4,846,055. Unfortunately, our inability to reconcile the respective weighting of the husband’s initial financial contribution as against subsequent contributions made by the wife cannot be resolved by reference to the reasons provided by the primary judge. In those circumstances, irrespective of whether it is categorised as a lack of adequate reasons or as a decision which is unreasonable within the principles adumbrated in House v The King, the outcome is that the appeal must be allowed and the orders set aside.[20]
[20] Grunseth & Wighton [2022] FedCFamC1A 132 at [38]; see also ACCC v Reckitt at [44]–[53].
ORDERS
Once it is determined that the judgment is vitiated by appellable error, the parties must be given the chance to adduce updated evidence.[21] In the circumstances of this case, that updated evidence is likely to be controversial such that cross-examination will be required. It would be inappropriate for the Full Court to re-exercise in those circumstances and, accordingly, the matter will be remitted to a judge other than the primary judge for re-hearing.
[21] Allesch v Maunz (2000) 203 CLR 172 at [31], [57]–[60].
Accordingly, it is unnecessary to consider the remaining grounds of appeal.[22]
[22] Boensch v Pascoe (2019) 268 CLR 593 at [7]–[8].
COSTS
In accordance with what we understand is an agreed position between the parties, we will make orders for the parties to each file written submissions of no more than five pages in respect to the issue of costs within 14 days of the date of the orders. An additional order will be made permitting the parties to file written submissions in reply, of no more than two pages, within 21 days of these orders.
In circumstances where the appeal has succeeded as a result of error on the part of the primary judge, we do not make an order that the wife pay the costs of the husband.
At the same time, given the relative wealth of both parties, we will not make an order for the parties to receive a grant in respect to costs of the appeal or re-hearing pursuant to the Federal Proceedings (Costs) Act 1981 (Cth).
I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland and Justices Tree & Hartnett. Associate:
Dated: 21 July 2023
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