Gartner & Gartner
[2000] FamCA 793
•3 July 2000
[2000] FamCA 793
FAMILY LAW ACT 1975
IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA Appeal No SA90 of 1999
AT MELBOURNE File No ML 4578 of 1996
BETWEEN:
G
Appellant Husband
- and -
G
Respondent Wife
REASONS FOR JUDGMENT OF THE FULL COURT
CORAM: KAY, HOLDEN & MULLANE JJ
DATE OF HEARING: 20 June 2000
DATE OF JUDGMENT: 3 July 2000
APPEARANCES: Mr Wood of Counsel, instructed by Hallett West Johnston, Solicitors appeared on behalf of the Appellant Husband.
Mr Spicer of Counsel, instructed by, Berry & Maloney, Solicitors appeared on behalf of the Respondent Wife.
G and G
SA90 of 1999
ML 4578/96
Coram: Kay, Holden & Mullane JJ
Dates of hearing; 20 & 21 June 2000
Date of judgment: 3 July 2000
PROPERTY SETTLEMENT-pool of assets - tax liability - treated as s75(2) issue when it needed to be deducted from pool - s75(2) adjustment for child too great
PROPERTY SETTLEMENT-Superannuation- trial Judge’s treatment of superannuation as property rather than a financial resource was made without warning to parties - whether taxation ramifications properly considered
The parties married in 1971 and separated under one roof in April 1995. There were four children of the marriage.
In November 1974, H commenced private practice as a GP and shortly afterwards commenced a partnership. In the late 1970’s, W ran a business manufacturing children’s clothes. By 1984, W’s business had expanded and it was incorporated into the family trust. It ran at a loss and the losses were offset against the husband’s earnings and reduced his income tax. W began to wind the business down in 1995. In late 1996 W commenced work as a receptionist.
In 1998, H was struck of the list of practising medical practitioners. The then matrimonial home was sold and pursuant to a court order, W used the proceeds of sale to purchase a home in W Lane.
In the year after separation H earned $190,000. The tax applicable of $101,028 with penalties remained outstanding. Morgan J observed that H had devoted the income from 1995/96 financial year to the welfare of the family and to the payment of legal fees properly spent in defending himself successfully against criminal charges. Her Honour therefore concluded that it would be inequitable not to take the liability into account. However, her Honour noted that as W had no funds to meet the liability and if the ATO accepted the equity in the home in full settlement, W would have no home.
H had over $200,000 vested superannuation entitlements. The case proceeded on the basis that the superannuation would be considered as a financial resource of the husband. No evidence was sought or led as to the taxation ramifications of cashing in the superannuation prematurely.
The Judge found the pool to be house $62,000, superannuation $215,000 and W's car $2,500.
She divided this 50/50 on pre separation contribution and adjusted to 55/45 in favour of W on post separation contribution. She then added 15% to W for child related s75(2) factors off-set by 10% for H having regard to the tax debt. Net result was 60/40 to W. This left W with the house, the car and $103,000. It left H with the balance of the superannuation (c$112,000 less tax,) and the tax bill of $103,000.
On appeal, H contended that her Honour erred in:
the treatment of H’s tax debt;
making a finding that the superannuation entitlements were property without first placing the husband on notice of such possibility and providing him the opportunity to provide evidence of the tax liability on such superannuation; and
allowing the 15% adjustment (other than the tax debt) under s 75(2)
Held (per curium)
The tax debt should have been directly taken from the pool of available assets
Whilst the finding that the superannuation could be treated as property as open, such a finding should not have been made without allowing for any tax liability on the superannuation entitlements if they were withdrawn.
However, given an unchallenged finding that the superannuation may have been greater than disclosed (there being no up to date figures provided by H), absent any application to adduce further evidence as to the net value of the cashed in superannuation at the trial or the appeal, the appeal would not be allowed on this ground there being no evidence that the mistake would result in any material change.
The s75(2) adjustments was excessive. The factors in W's favour support a further adjustment of no more than 7.5% of the pool. A final result that saw the wife with $44,500 more than the husband was just and equitable in all the circumstances.
Any reduction in the amount payable for the tax debt should be divided 62.5/37.5 in favour of the wife.
Appeal allowed in part
Full Court re-exercised discretion
Costs certificates granted to both parties
W to refund H $56,000 from monies previously paid pursuant to trial and enforcement orders
Introduction
This was a hearing of an appeal from orders of Morgan J made on 20 August 1999 under s 79 of the Family Law Act altering the property interests of the parties.
Background
The husband was born in July 1947 and the wife was born in May 1948. They married in April 1971. They separated in April 1995.
There are four children of the marriage, T (born in January 1975), J (born in May 1978), H (born in August 1979) and G (born in October 1984).
The parties were separated under the same roof from April 1995 until the husband left the home in May 1996.
In November 1974 the husband, who is a medical practitioner, commenced private practice at a medical clinic and shortly afterwards commenced a partnership. In the late 1970s the wife ran a business manufacturing children's clothes. It ran at a loss and the losses were offset against the husband's earnings for tax purposes. The wife began to wind the business down in 1995. Her evidence was that she worked a day per fortnight and assisted the medical practice with their books and accounts, for which she was paid a weekly wage.
In March 1995 the husband was arrested and charged with offences, including gross indecency and indecent assault on young girls. He was found not guilty in the County Court in February 1996 on some charges and an aborted trial resulted in relation to other charges. The prosecution subsequently did not proceed further with the remaining charges. In July 1996 the husband was charged with five further counts of indecent assault. He pleaded guilty in April 1997 to two of those charges and was released on a three year good behaviour bond without conviction. In December 1998 he was struck off the list of practising medical practitioners.
In October 1995 the former matrimonial home was sold and two months later the parties purchased a property in A Drive. The same month the husband's position at the medical centre was terminated and 50 per cent of the freehold was sold to the other partner for $90,000.
Pursuant to interim orders, the wife was responsible for the mortgage payments for the A Drive property but could not meet them and the property was sold in January 1998. Pursuant to a court order, the wife used the proceeds of sale to purchase a home in W Lane.
The judgment of the trial Judge
Her Honour recited the factual background. She recited the proposals of the parties. She said that the application of the wife proposed:
"...that she retain the [W] Lane property and all other assets in her possession and that she receive 65% of the husband's superannuation..."
She said that the husband's proposal was that:
"a.'The equity in the [A] Drive property be liquidated' to pay the debt owing to the Tax office. That meant a sale of the property where the wife resides with [the children G] and [T] and a distribution of the entire net profit to the Australian Tax Office; and
b.That he retain the entirety of his superannuation benefits which were approximately $215,055 in June 1998. That would have had the effect of the wife receiving nothing apart from retaining a small superannuation entitlement."
Her Honour then said:
"10.The authorities require that I adopt a 3 step procedure in determining applications pursuant to Section 79 of the Family Law Act. I must first determine the net assetts (sic) available for distribution. I must then determine the parties’ respective contributions and finally the so called Section 75(2) factors."
Her Honour determined the dispute as to the date of separation and accepted the wife's case that it was April 1995, rather than May 1996 as the husband alleged. Her Honour then said:
"16.As I understand the submission for the wife it was that as the tax debt accrued after separation it should be the sole responsibility of the husband. However, in this case, the husband devoted his income during the relevant period to the welfare of the family and to the payment of his legal fees. Nothing to the contrary was suggested. The wife did not suggest that the financial welfare of the family declined during this period. In my view, in those circumstances it would be totally inequitable to the husband not to take the tax liability into account. However, the wife has no funds to meet the liability. The husband said that he had reached an agreement with the Australian Tax Office in that it would accept the equity in [the W Lane property] in full settlement of the tax debt. He produced no evidence of that. It would be equally inequitable to make an order which would leave the wife and [the child G] without a home and no funds.
17.The husband made a significant contribution to the family in the relevant period albeit after separation. I am proposing, when I come to the Section 75(2) factors to give the husband a significant loading in respect of the debt by way of adjusting the parties[’] respective entitlements to his superannuation fund."
Her Honour then addressed the issue of the husband's superannuation and found that the husband had given evidence which was untrue as to the identity of the trustee of his superannuation fund. He said his former partner was the trustee, but the husband himself was one of the trustees. She also found that:
"The husband was not forthcoming with details of his superannuation entitlement. Neither did he produce documents such as the trust deed."
The wife tendered the 1998 financial statements of the husband's then superannuation fund and the trust deed for his new fund.
Her Honour found that the entirety of the husband's superannuation entitlements accrued during the marriage and held:
"The financial statements show a total entitlement of $215,055 at 30 June 1998 of which $202,460 is vested and unpreserved."
Her Honour then found that the husband's superannuation entitlements were property, not a financial resource, and set out relevant law, factual findings and her reasons. She acknowledged that in her Practice Direction Document the wife described the husband's superannuation as a "financial resource". She concluded:
"On the authorities and the evidence to which I have referred I am satisfied that the husband has access to his superannuation fund and thus it is available to pay the tax debt."
Her Honour then held:
"The Asset Pool
27.The assets include [the W Lane property] which has an agreed equity of $62,000. As I have said, the husband’s superannuation was valued at $215,055 in June 1998. The husband conceded that it would have increased in value. The wife has a car worth $2,500 and a superannuation entitlement of $7,361. That is a financial resource."
The trial Judge then discussed the parties' contributions in the 24 years prior to separation and concluded that they were equal.
She then dealt with an issue about funds used by the husband before and since separation for payment of his legal fees in criminal proceedings. She held:
"The Husband’s Legal Fees
29.The wife said that the parties’ assets were depleted by the money spent on the husband’s legal fees incurred in facing the criminal charges. There was a dispute as to the amount of fees paid prior to physical separation in May 1996. There was no dispute that part of the proceeds of sale of [the R Road property] was applied to legal fees. It was common ground that the husband worked very hard during the relevant time to support the family and pay his legal fees. I do not need to determine the precise amount paid out for reasons which will shortly become apparent.
30.The wife alleged that the husband had wasted the parties’ assets and relied upon authorities such as Kowaliw ((1981) FLC 91-092) and Townsend ((1995) FLC 92-569). I do not accept that submission. Those authorities are readily distinguishable. In the latter case the husband sold an asset and spent all the proceeds and in the former money was lost through the commercially inept and reckless conduct of the husband. Baker J. said that:
'As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth or matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.'
31.True in this matter the parties separated before the legal fees were expended. However, in my view, the principle applies. As I have said, the husband worked very hard during that period. The wife’s evidence was that it was a mutual decision to pay for legal representation. The husband had no choice but to defend himself, thus I do not find that the husband has wasted assets nor made a 'negative contribution.'”
Her Honour then dealt with post-separation contributions and held that they favoured the wife. She determined that the overall ratio of the parties' contributions under sub-s 79(4) of the Act was 55:45 in the wife's favour.
The trial Judge then made findings in relation to matters under sub-s 75(2) of the Act in the following terms:
"The Section 75(2) Factors
38.I now consider the matters set out in Section 75(2) which are relevant to these proceedings. I have already said that I would make a significant adjustment in favour of the husband by reason of the debt to the Australian Tax Office. Both the parties are in good health. The husband said that a neck problem prevented him engaging in heavy physical work. There was no evidence of that. The husband said his income was $200 per week from unemployment benefits. He said he has expenses of $413,000. His evidence that he was looking for work but was unsuccessful was not challenged.
39.The most significant expenses is $150 which he said he paid in board/rent. He lives in the house of a close female friend. She has a home … but stays with the husband at his father’s home if her … home is let for a weekend. The husband said he shared the house with 3 others. He claims to spend an additional $30 per week on food, $44 per week on mobile phone bills and $20 on household supplies. He produced no evidence of his board/rental payments.
40.The only financial document produced by the husband was a check book that showed that he spent $610 for tickets for the Olympics on 14 July 1999 and spent $70 on a ski trip on 19 June 1999 and $60 on 10 August 1999. In view of the husband’s history of non-disclosure and the evidence of his relationship with his landlady I am not sceptical about the husband’s claim that he pays $150 per week. Nevertheless, I accept that his financial circumstances are poor.
41.The wife earns $740 per week and receives $18 in benefits. [The child T] pays her $50 per week. Her total income including family allowance is $740 per week. Her total expenses are $935. They were not challenged.
42.As I have said the wife ias (sic) the sole support of [the child G] and it is highly unlikely that she will ever receive child support.
43.I have already set out the parties respective financial resources. In my view, were it not for the tax debt, the Section 75(2) factors would favour the wife by about 15%. However, as I have said, I propose to give significant weight to the tax debt. That should be in the order of 10%. Thus, the Section 75(2) factors result in an additional loading of 5% in favour of the wife."
Her Honour said in conclusion:
"44.There will, thus, be a distribution of 40% to the husband and 60% to the wife. As I have said, the categorization of the husband’s fund as a financial resource or property is not material. Either way was it is available to him to apply to the tax debt if he sees fit and to pay the wife the sum of $103,000 which is necessary to achieve a 60% distribution in her favour.
44.This distribution will be on the basis that the husband’s superannuation is valued at $215,055. It is highly likely that it has significantly increased. There was an increase of $22,672 in the year 1997/98. Thus, it is more likely than not that the husband will in fact receive in excess of the 40%."
The Appeal
The orders of the trial Judge have not been stayed and the husband has paid the sum of $103,000 to the wife.
By his Notice of Appeal the husband seeks an order that the wife repay that amount.
Before us the appellant relied on only three grounds of appeal which were:
1. That the trial Judge erred in law in treating the husband's tax debt for 1995/96 in the way she did.
2. That because of the hearing both parties had adopted the view that the husband's superannuation entitlements were a financial resource only and neither had contended that they were property, the trial Judge erred in making a finding that the entitlements were property, and thus could be the subject of an order under the Section, without first placing the husband on notice of such possibility and providing him the opportunity to provide evidence of the tax liability on such superannuation;
3. That the adjustment of 15 per cent for matters under sub-s 75(2) (other than the tax debt) was excessive and the final result was not just and equitable.
As will become apparent, we propose to re-exercise the relevant discretion, accordingly it is unnecessary for us to deal with ground 3.
Ground 1 - the tax debt
The trial Judge found that the husband owed a debt to the Taxation Department at the date of the hearing of $101,028 for income tax for 1995/96. Counsel for the wife submitted at the appeal that her Honour referred to other figures and counsel suggested that it was not clear that her Honour settled on that figure. That submission was without substance. The trial Judge referred to only the one figure and adopted it.
Her Honour held that the debt was "a tax debt incurred by the husband for the financial year 1995/96". That is clearly based on the husband's uncontested affidavit evidence at AB 53:
"In May 1997 I received a notice of Income Tax Assessment for the 1996 year of $101,028.21 being made up of primary tax and penalties."
The submission for the wife before us is that the Court should have held the tax debt to be a lesser figure of $62,000, being the value of the equity in the home, the husband having testified that the Tax Office had indicated to him that it would be prepared to accept this in full settlement. However, her Honour rejected that approach in the passage in para 16 of her judgment set out in full above when she said:
"The husband said that he had reached an agreement with the Australian Tax Office in that it would accept the equity in [the W Lane property] in full settlement of the tax debt. He produced no evidence of that. It would be equally inequitable to make an order which would leave the wife and [the child G] without a home and no funds."
and there is no appeal against that finding. In any event, the wife sought to retain the home, and if she did so, it would not be available for any compromise with the Taxation Office to proceed.
There was no submission before the trial Judge on the wife's behalf in the closing submissions that the tax debt should be found to be a figure of $62,000. There was no evidence before the trial Judge of any concluded or enforceable agreement with the Tax Office to compromise the tax debt. It was open to the trial Judge to have found, as she did, that the tax debt was $101,028, and it was not on the evidence open to her to have found that the debt was $62,000.
However, if the appeal succeeds and this Court re-exercises the discretion, the justice of the case would dictate that there should be an order to ensure that, if the husband is subsequently able to compromise the tax debt, the wife shares in the benefit of any compromise. The husband's counsel indicated at the hearing before us that the husband agrees to this proposal and the wife's counsel did not oppose it.
Her Honour held that the husband had devoted his income for 1995/96 to the welfare of the family and the payment of legal fees. She rejected a submission that the payment of his legal fees should be treated as waste or a negative contribution. None of those findings has been challenged. Nor were her Honour's reliance on the dicta of Baker J in Kowaliw (1981) FLC 91-092 at 76,644 and her finding that the tax debt should not be borne solely by the husband, but shared by both of the parties.
What was challenged by the husband was the way her Honour shared the tax debt by dealing with it under sub-s 75(2) as an adjustment instead of treating it as part of the pool to which the ratio of contributions was applied.
Counsel for the wife relied upon dicta of Nygh J in Af Petersens and Af Petersens (1981) FLC 91-095 at 76,669. There his Honour said:
"...Normally this Court will distribute amongst the parties the net value of their assets after deduction of all debts. But this is not invariably the case: the Court will not normally take account of debts incurred after the separation and on some occasions has ignored debts, although incurred during the marriage, for which it felt one of the parties should bear exclusive responsibility: Antmann and Antmann (1980) FLC 90-908."
But, of course, the present facts do not fit with either of the exceptions Nygh J described. This was a case where the trial Judge did not decide that the debt should not be taken into account. On the contrary, she decided that it should, but did not deduct it from the value of the assets to be distributed.
Unfortunately, her Honour's reasons for adopting the approach she did, which are quoted earlier, do not provide justification for such an approach. In addition, her Honour's other findings about the debt are much more consistent with the approach of including the debt in the calculation of the pool. In failing to adopt the latter approach, her Honour erred.
The principles to be applied by this Court in dealing with situations where an error has been made of this nature were those set out in House v The King (1936) 55 CLR 499 at 505:
"...If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so."
Ground 2 - the husband's superannuation
Although in her case outline the wife sought:
"Orders that the wife be entitled to 65% of all superannuation entitlements of the husband",
at the hearing both parties treated the superannuation as a financial resource. The same case outline referred to the superannuation as a financial resource. She had not sought an order in relation to the superannuation in her application. She did not amplify the exact nature of the orders she sought in respect of the superannuation during the proceedings before her Honour.
The trial Judge's finding that the superannuation was to be treated as property was made without warning to the parties. There was no evidence of the tax liability on the superannuation entitlements if they are withdrawn. The trial Judge had evidence of only the gross value before tax. That figure was at 30/6/1988 and her Honour held that the value had probably increased since then. If the entitlements were only a "financial resource", as the parties had anticipated, the Court lacked power under s 79 to make an adjustive order in respect of them.
At the hearing the husband was entitled to assume, in the absence of an indication to the contrary by the Judge, that the superannuation would not be found to be property and that no order would be made against his entitlements. He might therefore have seen no need to provide evidence of the tax liability on the superannuation. However, depending on the extent of the liability and the increase in the gross value of the superannuation between 30 June 1998 and the hearing, it may have been seriously prejudicial to the husband to have had no evidence of the tax liability if the Court were contemplating making a finding that the superannuation was property.
Accordingly, the trial Judge erred in making a finding that the superannuation was property without first warning the husband and allowing him an opportunity to seek to reopen his case to provide evidence of the tax liability.
That said however, in all the circumstances this ground could not be relied upon to set aside the orders of the trial Judge in the absence of any evidence that in fact the after tax value of the superannuation entitlements at the date of the hearing was less than the figure of $215,055 used by the trial Judge.
The husband did not seek leave to produce any such evidence at the appeal hearing. It is now almost six months since the appeal was filed. There is no agreement between the parties as to what the correct figure was, no application by the husband to admit further evidence as to that figure, and no affidavit going to that issue which might be relied upon by the husband at a rehearing or which might be relied upon by him before this Full Court if new evidence was admitted.
It may well be that such evidence could have been provided. Kay J queried its availability at the very commencement of the hearing. We understood Counsel for the appellant to say that he would do his best to obtain it. When the hearing concluded before lunch, such evidence had not been provided. The matter was relisted on Wednesday at 10.00am at the husband's request, but his counsel was not able to provide any evidence on the issue and no application to admit new evidence was made.
Whilst the trial Judge erred in failing to give the husband notice of the possibility of a finding that the superannuation was property, we are not satisfied that there is any useful purpose in ordering a rehearing of the issue of the post tax value of the superannuation, as the husband has not identified any evidence capable of supporting a finding more favourable to him.
Accordingly, this ground does not provide a basis for disturbing the trial Judge's orders.
Money spent on legal costs paid in family law proceedings.
Before the Full Court Counsel for the respondent wife drew our attention to the fact that at the hearing the evidence was that the husband had already spent $35,000 in legal costs of the family law proceedings and the wife had spent $16,000 on her costs. Counsel submitted that if we re-exercise the discretion under s 79, this Court should notionally add those amounts back into the pool in calculating the alteration of property interests.
That submission was not made to the trial Judge and there was no evidence before the trial Judge as to the source of the funds used to pay the costs. They may have been paid by loans or gifts. Each of the parties referred to extensive loans from banks and individuals in their financial statements, all of which have apparently been incurred since separation and none of which were taken into account in calculating the pool of assets.
Whilst the principle the emerges from Farnell (1996) FLC 92-681 is that where prepayment of legal costs has the effect of depleting the pool of assets available for division, it is usual to notionally include those prepaid costs in the pool, such a finding is normally dependant upon evidence as to the source of the prepayment. In the absence of any such evidence it would be entirely speculative of this Court to guess where the monies came from. If this was an issue that was important it should have been raised at the trial by Counsel so that the Judge could have dealt with it and made the necessary findings. It is too late to raise it on appeal. (Suttor v Gundowda Pty Ltd (1950) 81 CLR 418).
Re-exercise of the discretion
Each counsel urged us to re-exercise the statutory discretion rather than remit for a new trial in the event we decided that her Honour had erred in her calculation of the pool of assets to be divided between the parties. We agree that is the appropriate course to adopt. Because of the error in her Honour's treatment of the tax debt we intend to now re-exercise that discretion.
The property and liabilities of the parties comprises:
Equity in the home $62,000
Husband's superannuation $215,055
Wife's car $2,500
------------
$279,555
Less tax debt of husband
for 1995/96 $101,028
------------
$178,527
=======
There is no dispute that the parties' contributions until separation were equal.
The findings of the trial Judge as to contributions after separation are set out as follows:
"Post Separation Contributions
32.It was the wife’s case that she had made a significant post separation contribution to the welfare of the children. Immediately after separation [the child J] went to live with the husband. [The children T and H] went to the husband in September 1997 but moved out in October 1998. They lived together for a while. [The child H] lives in shared accomodation (sic). [The child T] returned to the wife in 1997 and still lives with her. [The child G] has lived with the wife at all times material.
33.The wife said that all the children had been seriously affected by the husband’s criminal charges requiring an additional contribution by her. However, here was no independent evidence of the extent of that. The husband conceded some effect.
34.There was no such evidence in relation to [the child G]. The wife said that she was strong, stable and coping well. The husband’s unchallenged evidence was that she has an excellent relationship with him and spends every weekend with him at his father’s home….
35.In opening the wife’s counsel said that [the child T] “dropped his bundle”. That was not the evidence. He has recently obtained a full time job and is paying off a car. He pays $50 rent to the wife. The wife agreed that he had suffered serious psychiatric problems and had been difficult since early childhood. The husband has little contact with him.
36.The husband supported [the children J and H] whilst they lived with him. They have a good relationship with him. However, the evidence was clear that the wife has been the major financial and emotional support for the children. She has received no child support since July 1997. I have already referred to the husband’s post separation contributions whilst the parties were separated under the same roof.
37.However, I am satisfied that the wife has made a significant post separation contribution to the financial welfare of [the child G]...."
Counsel for the husband submitted that the effect of the contributions after separation is that the overall contributions should remain as found by the trial judge in a ratio of 55:45 in favour of the wife. Counsel for the wife submitted that it should be increased in his client's favour to 57.5:42.5.
Both the parties and the children resided in the matrimonial home for 13 months after separation until May 1996. In three years of so between then and the hearing the wife was the principal carer for the youngest child, G, who was only 11 at May 1996. The wife also accommodated the child T for almost two years. Since May 1996 the husband has accommodated the children J, T and H at various times but the contribution he made to the welfare the children in that way appears to be much less than the wife's because the periods involved were much less and also because each of J, T and H were adults when they stayed with the husband. T has some serious psychological problems and is difficult to deal with. He stayed for only a short time with the father, but with the mother for nearly two years before the hearing.
The mother's contribution post-separation was, particularly because of her responsibility for the care, supervision and financial support of the child G, greater than the husband's. We agree with the figure arrived at by the trial Judge namely 55:45 in the wife's favour.
The findings of the trial Judge as to the relevant matters under sub-s 75(2) have been set out earlier. The tax debt is not such a matter. The significant factors in the wife's favour are that she has the future care and supervision of the child G, who was not yet 14 at the date of the hearing and, as the husband was unlikely to be providing any child support for G, the wife would be providing all of G’s financial support for the four years until she attains adulthood.
The significant factors in the husband's favour were that he was in a weaker position than the wife as to income, earning capacity and property.
The husband's submission is that the 75(2) adjustments should be only 5 per cent. The wife's submission is that it should be 15 per cent.
Overall, we are of the view that the matters under sub-s 75(2) weigh in the wife's favour to support a further adjustment of 7.5 per cent of the pool.
These findings result in a 62.5:37.5 division of the pool in favour of the wife, which translates to about $111,500 to the wife and $67,000 to the husband. A final result that sees the wife with $44,500 more than the husband appears to be just and equitable in all the circumstances.
Adjustment
The wife has already received the following:
The equity in the home, $62,000
Her car, $2,500
Cash payment $103,000
Total $167,500
As her entitlement under our findings is to $111,500, she should now repay the husband $56,000.
The husband has also paid the wife pursuant to enforcement orders of 13 December 1999, $1,100 on account of interest on $30,900 which he sought to withhold pending the outcome of the appeal. There should be a refund to the husband of that interest.
In enforcement proceedings in December an order was also made that the husband provide $5,000 to be held by his solicitors in trust as security for any costs of the appeal he might be ordered to pay. If no such order for costs is proposed, then the security order should be discharged.
Costs
The appellant husband seeks an order for the respondent wife to pay his costs. Both parties seek certificates under the Federal Proceedings (Costs) Act.
The financial circumstances of the parties have been set out in the judgment. Neither party has legal aid. Neither party is in a strong financial situation. The appeal has been successful, but not on a point taken below. At the trial the wife urged the trial Judge to disregard the tax debt on a "waste" argument. The trial Judge rejected that submission, but for reasons which are not abundantly clear, treated the tax debt in the manner referred to above. This does not appear to have occurred at the urging of the wife. Notwithstanding the limited success of the appeal, this is not a case in which the circumstances make it appropriate that there be an inter partes costs order. However, the appeal having succeeded on a question of law it is appropriate that we grant each party a certificate under the relevant provisions of the Federal Proceedings (Costs) Act.
Orders
1. That the appeal be allowed.
2. That order 2 of the orders made by the Honourable Justice Morgan on 20 August 1999 be varied by substituting for the sum "$103,000" the sum "$47,000".
3. That the respondent forthwith repay to the appellant the sums of $56,000 and $1,100.
4. That if the husband secures any compromise or reduction of the tax and penalties of $101,028 assessed by the Commissioner of Taxation in 1997 as payable by him for the 1995/96 tax year he forthwith pay to the wife 62.5 per cent of any such compromise or reduction and in the meantime he keep the wife's solicitors informed of any negotiations with the Tax Office and promptly provide them with any correspondence between him and the Tax Office in relation to that tax debt.
5. That the order for security for costs of the appeal made by the Family Court of Australia at Melbourne on 13 December 1999 is discharged.
6. That the Court grants the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 stating that in the opinion of this Court it would be appropriate for the Attorney-General to authorise a payment under the Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.
7. That the Court grants the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 stating that in the opinion of this Court it would be appropriate for the Attorney-General to authorise a payment under the Act to the appellant in respect of the costs incurred by the appellant In relation to the appeal.
I certify that the preceding 65
paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.
Associate
9
2
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