Gaspaldi & Gaspaldi
[2008] FamCAFC 134
•4 September 2008
FAMILY COURT OF AUSTRALIA
| GASPALDI & GASPALDI | [2008] FamCAFC 134 |
| FAMILY LAW - APPEAL – From decision of Family Court judge – whether the trial Judge made adequate reference to oral evidence and concessions – whether trial Judge gave sufficient reasons – whether trial Judge adequately evaluated the contributions of the parties – where the parties conceded that the trial Judge erred in identifying and valuing the assets of the parties – appeal allowed – re-exercise of discretion FAMILY LAW - APPEAL – Procedure – Application to re-open an appeal – Application to introduce further evidence – evidence of a loss of assets before and subsequent to the hearing of the appeal – whether it was in the interests of justice to permit the introduction of the further evidence – permission to introduce further evidence refused FAMILY LAW - PROPERTY SETTLEMENT – Contributions – Compensation payment |
| Family Law Act 1975 (Cth), s 75(2) s 93A(2), s 94(2) |
| Allesch v Maunz (2000) 203 CLR 172 CDJ v VAJ (1998) 197 CLR 172 Fox v Percy (2003) 214 CLR 118 Griffiths and Kerkemeyer (1977) 139 CLR 161 JEL and DDF (2001) FLC 93-075 Joyce v Government Insurance Office of New South Wales (unreported, Supreme Court of New South Wales, Sheppard J, 21 July 1976) Kowaliw v Kowaliw (1981) FLC 91-092 Londish v Gulf Pacific Pty Ltd (1993) 45 FCR 128 McCrossen and McCrossen (2006) FLC 93-283 Monie v The Commonwealth (2005) 63 NSWLR 729 P and P [2002] FamCA 1006 R v Maxwell (1998) 217 ALR 452 Smith v NSW Bar Association (1992) 176 CLR 256 Wall and Wall (2002) FLC 93‑110 Warren v Coombes (1979) 142 CLR 531 |
| APPELLANT: | Mr Gaspaldi |
| RESPONDENT: | Mrs Gaspaldi |
| FILE NUMBER: | CAF | 80 | of | 2004 |
| APPEAL NUMBER: | EA | 134 | of | 2006 |
| DATE DELIVERED: | 4 September 2008 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Bryant CJ, Thackray and Le Poer Trench JJ |
| HEARING DATE: | 2 October 2007 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 29 November 2006 |
| LOWER COURT MNC: | [2006] FamCA 1274 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Richardson SC |
| SOLICITOR FOR THE APPELLANT: | Dobinson Davey Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Millar |
| SOLICITOR FOR THE RESPONDENT: | Farrar Gesini and Dunn |
Orders
That the husband have leave to re-open the hearing of the appeal.
That the application to adduce further evidence filed on 17 April 2008 is dismissed.
That the costs of the application filed on 17 April 2008 and the response filed on 12 May 2008 are reserved as costs in the appeal.
That the appeal is allowed.
That the husband pay to the wife the sum of $12,209 within 60 days.
IT IS NOTED that publication of this judgment under the pseudonym Gaspaldi and Gaspaldi is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 134 of 2006
File Number: CA 80 of 2004
| Mr Gaspaldi |
Appellant
And
| Mrs Gaspaldi |
Respondent
REASONS FOR JUDGMENT
This is the husband’s appeal against property orders made by Faulks DCJ on 29 November 2006, following a trial in June 2005.
His Honour determined that the pool of assets, worth about $1.36 million, should be divided in proportions 70% to the husband and 30% to the wife. His Honour found that the contributions had been made 75% by the husband and 25% by the wife, but made a 5% adjustment in the wife’s favour on account of the factors in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).
To bring about the proposed division of assets, his Honour ordered the husband to pay the wife $350,000. By his Amended Notice of Appeal the husband sought to substitute the sum of $221,327 for the sum of $350,000.
The wife concedes that his Honour made three errors in the calculation of the asset pool, but otherwise resists the appeal.
Background
The following background facts were not contentious.
The husband was aged 46 years and the wife 39 years at the time of judgment. They were married in March 1990 and separated under the one roof in 2003. The wife left the former matrimonial home in January 2005.
There were two children of the marriage, aged 12 and 13 years at the time of judgment. The parties have shared the care of the children since separation.
At the date of the marriage, the husband owned a home in [a] suburb of Canberra. He had acquired the property in 1986 at a cost of $60,000, with the assistance of a $40,000 mortgage.
In addition to his equity in the [first Canberra] property, the husband had superannuation entitlements, a motor vehicle and some personal effects. The wife owned a motor vehicle and had some personal effects.
The husband was working [in his early job] at the date of the marriage, but took a voluntary redundancy in November 1991. He received a redundancy payment of about $36,000. He also received a payout of $55,000 from his superannuation fund.
The husband’s redundancy payment was used to help discharge the mortgage on the [first Canberra] property. There was $38,000 outstanding on the mortgage prior to the discharge in December 1991.
At around the time he took his redundancy, the husband commenced renovations and extensions to the [first Canberra] home as an owner builder. He also obtained work in a [shop].
In 1993 the husband commenced operating a [business], which the parties acquired in partnership at a cost of $160,000. They paid $55,000 from their own funds to meet a portion of the cost and the balance was borrowed. The wife received an income from the business, although it was the husband who [operated the business].
The wife was working in a shop at the time of the marriage. She continued working full-time until shortly before the birth of the first child in December 1992. Thereafter she was primarily engaged in looking after the home and family.
The [first Canberra] home was sold in 1995 for $176,000. The family moved to a new home in […] another suburb of Canberra. The [second Canberra] property cost $240,000, a portion of which was borrowed.
In the middle of 1997, the husband [operated the business in] Sydney, where more work was available. He commenced living in Sydney during the week and returned to Canberra on weekends. By this time, the second child had been born. The wife continued to live in Canberra with the two children. She gave up the part-time employment she had obtained in 1996.
In June 1998, the husband [was involved in an accident] in Sydney. He was critically injured and remained in hospital for five months before returning home to Canberra. He spent about four years on crutches after the accident.
The wife spent almost a month in Sydney visiting the husband in hospital after the accident. The children were cared for by her parents. She then returned to Canberra, but travelled to Sydney with the children on weekends during the husband’s time in hospital.
The husband was still seriously disabled after his discharge from hospital. The wife […] provided him with intensive care for a few months. She returned to full-time employment in February 1999, initially working in a shop and later as a supervisor at a [workplace].
The wife had taken charge of the business when the husband was injured. She made a claim on the business insurance policy and engaged a relief [person]. The [business equipment] was sold in early 1999 for $156,000. The parties used $140,000 from the sale to pay off a portion of the house mortgage.
The husband has not worked outside the home since the accident. He received some social security benefits and payments on an insurance policy for a couple of years. He also drew substantial sums against the mortgage account on the [second Canberra] home.
In December 2002, the husband was awarded damages of about $1,238,000 for his injuries. The net amount received was in the region of $945,000. He expended about $112,000 of this on hormone drugs, which he hoped would assist in his recovery. He has invested the balance, using some of the money to speculate on the stock market.
The wife had been the primary carer of the children in the period leading up to the husband’s accident. The husband began to take on more responsibility around the home as he gradually recovered from his injuries.
The husband gave the wife $40,000 at the time she left the home in January 2005. She used about half to discharge accumulated credit card liabilities. Consent orders were made in March 2004 indicating that the $40,000 was to be treated as “a partial final property order”. The parties continued to treat it as such both at trial and on appeal.
The husband continued to reside in the home up until the trial in June 2005. It was common ground that he remained in occupation until the delivery of judgment, nearly 18 months later.
The trial Judge’s judgment
Faulks DCJ commenced his reasons by setting out some of the factual background, the most significant aspects of which we have already mentioned. As we will discuss later, in many instances his Honour merely noted the assertions made by the parties without making any finding in relation to contentious issues.
His Honour then dealt with the husband’s submission that the pool of assets should be divided into two and dealt with separately. One component would be the “compensation pool”, containing assets worth just over $958,000 and the other would be the “matrimonial pool”, comprising assets of about $368,500. His Honour found it inappropriate to deal with the two pools separately. However, he went on to say (original emphasis):
25.… There is some basis for distinction between the parties’ contributions to the pool. In particular some account should be taken of the fact that it was the husband’s accident and of the husband’s dealings with the compensation money since he had control of it. His share dealings were unsuccessful and the question is whether this should be recognised in some way.
His Honour then discussed the way he should treat the husband’s compensation payment and contributions generally. We will set out in detail that part of the judgment when we come to consider the grounds of appeal relating to contribution issues.
His Honour then turned to discuss the partial property settlement paid at the time the wife left the home. He noted the wife’s contention that the $40,000 should be regarded as her financial contribution, as she used the funds to meet necessary living costs for herself and the children. Having noted this submission, his Honour said:
28.… [H]er difficult financial circumstances it seems to me, should be a consideration under s 75(2) and not a matter for changing the ordinary principles of adding back or perhaps more accurately regarding the money as part of the pool which had been prematurely distributed.
His Honour next considered the husband’s initial contributions. He observed these fell into three categories; namely the husband’s equity in the [first Canberra] home at the time of the marriage, his redundancy payment and his superannuation entitlement. Apart from these items, his Honour found the parties “had little in the way of initial assets”.
He went on to observe:
30.The marriage was of some duration and the effect of the initial contributions might properly be regarded as diminishing in significance over the period. However consistently with Pierce v. Pierce [(1999) FLC 92-844] it is appropriate to consider the way in which the money was applied and to acknowledge that in this case, at least, the property previously owned by the husband constituted in some respects the foundation for the subsequent development of the asset base of the parties.
His Honour found that the husband’s redundancy payment had been applied towards the [first Canberra] property and the superannuation funds had gone towards the purchase of the [business equipment]. In relation to the [business equipment], his Honour observed (at paragraph 32) that because of the husband’s accident:
… the [business equipment] finished up being something less than an asset as such but nevertheless the contribution from the husband ought to be at least acknowledged in so far as it represented a proportion of benefits accumulated prior to the time the parties began to live together.
His Honour next considered the contributions each of the parties made before the husband’s accident. In dealing with this matter, his Honour said:
33.… the arrangements the parties entered into were characterised by mutual contributions (for example in relation to the renovations and gardening and other matters) and by the preponderance of primary child care by the wife. The fact that she earned less money than the husband did is not relevant and I find that their contributions during the period that they were together apart from the initial contributions I have mentioned before until the time of the accident should be regarded as equal. This acknowledges the additional contributions made by the wife in the capacity of home maker and parent which in my opinion off-set any disparity in the financial contributions.
His Honour then directed his attention to an assertion made by the husband concerning income he derived from [trading in goods]. As there is a specific challenge to his Honour’s approach to this issue, we will reproduce the whole of what he said.
34.The husband asserted that he had made money with a friend by [trading in goods] between 1987 and 1992. He made references to this being “his” money and his contributions. While he may have applied his skill in this area to produce some form of income, the amount is unquantified in any satisfactory sense and as he could not have been [trading in goods] at least without the wife’s being involved in other household duties and the care of the children, in my opinion it would be inappropriate to regard the parties’ contributions in this regard otherwise than as joint.
35.I have mentioned previously in other judgments the fact that each couple will make their own arrangements about how duties between them including the raising of children should be arranged. It is not for this Court to query that arrangement even if subsequently the parties choose to put a different complexion upon the way in which their efforts should be regarded. In my opinion the parties reached an agreement or an accord about how they should organise their financial and non-financial contributions during this part of their marriage and their contributions should be regarded as equal.
His Honour next discussed the consequences of the husband’s accident. He observed the husband had been “significantly affected in his physical activities”. His Honour recorded his acceptance of the husband’s assertion that as a result of his injuries he was unable to carry out [work-related] activities, which it had been suggested might have been a potential source of income.
His Honour went on to observe that the accident had also had a significant effect on the wife and “the nature of her contributions to the marriage, to the husband and to the finances of the parties”. He found that, after the accident, the family’s income comprised the wife’s income from employment, together with the husband’s income protection insurance.
He also observed that after the accident, the wife spent significant time travelling to Sydney to be with the husband, “with consequential difficulties in the care of the children”. He referred to (and impliedly accepted) the wife’s evidence concerning her efforts in caring for the husband, the home and the children after the accident. He found that “by any measure this must have been arduous for her”. He went on to refer to the “high-level care” which the wife provided for the husband for some time after he returned home. He found that during the husband’s recuperation period the wife “bore not only the lioness’s share of the work but also the lion’s”.
His Honour did not identify the duration of the husband’s recuperation period, but nevertheless found the “situation somewhat reversed as the husband regained his mobility in that he then assumed some ‘househusband’ activities (as he described them) around their home”. However, his Honour also found there was force in the wife’s submissions that “her contributions as home-maker and carer during this period should be regarded as having a particularly high quality because of the difficulties under which she was operating”. His Honour did not specify the “difficulties” to which he was referring, but it may be that he had in mind the wife’s allegations (some of which were admitted) concerning unfortunate changes in the husband’s behaviour after the accident.
His Honour then briefly discussed the husband’s share dealings. He observed that although the husband had taken a course in investing and acquired some skills, this had not prevented him from incurring losses. His Honour made no finding as to the extent of the husband’s losses but found that it would be inappropriate to “leave him with the consequences of his own actions” because if he had been “spectacularly successful” the Court would have rejected any argument that this was attributable to his special skills. His Honour concluded that “the value of his assets at the time of trial is the appropriate way of proceeding”. (This finding was no doubt directed to the wife’s submission that the value of the husband’s investments should be fixed at an earlier point in time, prior to their deterioration in value.)
His Honour next found that the husband continued to make mortgage and other payments in relation to the matrimonial home after separation. He said these should “receive some but little weight”. He considered it inappropriate to “make any adjustments to post-separation contributions as parents” as the children had spent roughly equal time with each parent.
His Honour went on to find the net assets (including the wife’s superannuation of nearly $16,000) were worth $1,359,360. Included in the pool of assets was $958,156 held by a Trust which had been established as a vehicle for the husband’s investment activities. The breakdown of the assets of the Trust was contained in an Endnote to the judgment. Reference to the Endnote establishes that the partial property settlement of $40,000 was included as one of the assets of the Trust.
His Honour then went on to list the assets which “currently the wife has in her possession”. This included the partial property settlement of $40,000, notwithstanding that the money had been largely expended.
Under a heading entitled “Summary”, his Honour set out his findings in relation to the contributions. He first recorded the submissions made on behalf of the husband, noting that they were based on the two pools of assets approach. His Honour noted that he had found the distinction between the two pools to be “artificial”, but did record his agreement with the proposition that “there should be some adjustment in favour of the husband on the grounds of contribution”, albeit not as significant as had been sought. His Honour then observed:
47.I believe it is inappropriate in almost every case to give special credit for special skills on the part of a money-maker so consistently, it seems to me that I should find that the husband’s inability to generate income from the compensation money should not be regarded as a negative contribution from him.
His Honour next recorded the wife’s submissions concerning contributions. In referring to these, his Honour said:
48.… Part of [counsel’s] consideration (which I accept as being relevant) is that the wife’s superannuation has been added into the pool. The amount is overall relatively small but nevertheless, for the wife, significant.
His Honour concluded his brief discussion of contributions by saying:
49.In my opinion I should treat the contributions of the parties overall as 75 percent to the husband and 25 percent to the wife. This recognises the husband’s initial contributions, his “contribution” of the accident claim and the wife’s more arduous home making and parenting duties particularly during the husband’s convalescence.
His Honour then turned to consider the adjustment to be made on account of the s 75(2) factors. He first noted that the assets the husband had available to use for investment would be reduced if he gave “proper effect to the contributions of each of the parties”. He accepted “broadly that [it] is probably true” that the husband was incapable of carrying out his previous work [in the business] and his sometime work [in work-related activities] and that he was also out of touch with work [in his early job].
As there were a number of controversial aspects of his Honour’s treatment of the s 75(2) adjustment, we will set out in full the balance of his reasons in relation to the adjustment he ultimately made.
51.In the end I am left with little evidence about what [the husband] might be capable of doing with some evidence that he is capable of doing something. What he says he wants to do is to continue his occupation as an investor.
52.In summary this is a factor that weighs heavily in the ultimate distribution of property between the parties but must be balanced between the reasonable entitlements of the wife. It needs to be recognised however that the compensation would not be part of the pool if it were not for the fact that it was there to in part provide for the husband’s future security.
53.The wife continues to have a limited but nevertheless reasonable capacity to support herself and to contribute to the support of the children when they are in her care. It is however likely that she would be capable of earning more money then the husband even if he were (only) engaged full-time with investment activities with adequate funds to carry that out.
54.It is inappropriate to take account of the children as a relevant factor because of the arrangements agreed to by the parties about them.
55.The wife also while being “debited” with the interim property settlement was obliged to expend a substantial part of that money on living expenses and has her superannuation added into the pool without its being presently available to her.
56.The husband drew down on the mortgage on the family home on what apparently was anticipation of his compensation payment. He was unable to account for much of what is about $100 000 and in my opinion this should be regarded in his hands as a resource.
57. The wife also has credit card debts.
58.Weighing these factors is not easy but in my opinion should generate a small adjustment to the wife of 5 percent ie, 70 percent to the husband and 30 percent to the wife. If the wife was to receive 30 percent of the pool it would be $407 808 less what she has $61 872 which equals $345 936 which I round up to $350 000.
His Honour then turned to consider whether the order he proposed to make was “just and equitable”. As this portion of his reasons touches on controversial matters, we repeat his remarks in full:
60.The effect of the payment of some $350 000 to the wife would give her some potential opportunity to reaccommodate herself but also incorporates into her share money which she has logically had to expend on her own support from the pre-emptive property settlement of $40 000. It also includes her superannuation which so far as I am able to determine is not immediately accessible by her.
61.On the other hand the payment of this amount of money by the husband from the assets mainly in the sale of his former family home or a substantial in-road into his share portfolio. The effect of this occurring is to diminish his ability to make money from the share portfolio and hence may reduce a factor previously taken into account under s 75(2). Nevertheless as I mentioned above this has to be balanced against the appropriate recognition of the wife’s contributions and of her future financial requirements as well. In my opinion on balance the provision of the $360 000 [sic] to the wife is appropriate, just and equitable.
In the final paragraph of his judgment, his Honour noted that he had not overlooked that the husband had expended “some $100,000” from his compensation on hormone drugs which were “probably illegal and ill-advised”. He accepted, however, that the purchase was “undertaken in good faith by the husband in the hope if not the expectation that they would restore some of his previous amenity of life and potentially I suppose his ability to earn an income from physical exertion”. His Honour found that the husband ought not to be penalised for purchasing the drugs, even if it was his unilateral decision to acquire them.
Grounds of Appeal
By his Amended Notice of Appeal, the husband raised the following Grounds of Appeal:
1.That his Honour erred at law in that his Honour failed to give adequate reasons for his decision;
2.That his Honour’s discretionary judgment miscarried as a consequence of errors in principle in that:-
2.1his Honour’s approach to taking into account funds contributed from the appellant’s damages claim was wrong at law or in the alternative so inconsistent as to deprive this Court the ability to identify that it was in accordance with law;
2.2his Honour erred in misdirecting himself as to his obligation at law (paragraph 35 judgment) to evaluate and assess all relevant contributions made by or on behalf of each party;
2.3that his Honour misdirected himself in the task of assessment of contributions (paragraph 33 judgment) in his Honour’s statement of the proposition that the fact that the respondent earned less money than the appellant is not relevant;
2.4that his Honour erred, having regard to the limited factual findings made, in determining that funds disposed of could properly be regarded as a “resource” in the hands of the appellant, or in the alternative, that without finding that the appellant held such funds or should be treated as notionally holding such funds, that they can be treated as either property or a resource.
2A.That his Honour erred in finding that the appellant was unable to account “for much of what is about $100,000” of funds drawn down on the mortgage secured upon the family home.
3.That his Honour’s determination of the pool of property for division was contrary to the evidence, inconsistent with other findings or otherwise in error in that:
3.1having taken up the net assets of the […] Family Trust his Honour erred in bringing to account two bank accounts and a [type of] motor vehicle with an aggregate value of $45,300 (para 44 judgment) when those items had already been included as assets of and within the value of the […] Family Trust;
3.2that his Honour failed to bring to account as an advance on the property settlement entitlement of the respondent a notional asset in her hands in the form of paid legal fees in the sum of $15,000 such error impacting again in the reconciliation of property currently with the respondent (para 45 judgment)
4. That his Honour’s discretionary judgment miscarried in that:
4.1his Honour failed to take into account relevant facts, namely, the appellant’s superior earnings referred to at judgment para 33;
4.2that his Honour took into account irrelevant facts namely that although the respondent’s superannuation entitlement was “relatively small”, for the respondent it was nevertheless “significant” (judgment para 48).
5.That his Honour’s discretionary judgment miscarried in that the result embodied in his Honour’s orders, upon the facts as determined is unreasonable and plainly unjust.
Ground 1 – Adequacy of reasons
Counsel for the husband made three submissions in support of the contention that his Honour erred by failing to give adequate reasons.
Counsel first drew attention to the many instances where his Honour recorded assertions made by one party and contrary assertions made by the other, without then going on either to resolve the dispute or indicate he could not resolve the dispute or otherwise explain that it was unnecessary to resolve the dispute.
The second submission was to the effect that any fair reading of the judgment, the affidavits and the transcript of oral evidence would indicate that his Honour had addressed only the matters raised in the affidavits, without at any stage referring to the oral evidence, including clear concessions made during the hearing. This submission was made in the context of his Honour having taken nearly 18 months to produce his judgment.
The third submission drew attention to the failure of his Honour to give any reasons for his finding that the husband had been unable to account “for much of what is about $100,000” and his further failure to indicate how such an amount, on the facts of the case, could constitute a resource presently available to the husband or otherwise.
In support of the first submission, it was submitted that his Honour had fallen into precisely the same error as had been identified in P and P [2002] FamCA 1006 where the Full Court (Finn, Coleman and Guest JJ) found error on the part of the trial Judge in having recorded assertions made by each of the parties, but then failing to make any findings concerning the claims made.
Given the view we have adopted in relation to other aspects of the appeal, it is unnecessary for us to engage in what would be the painstaking task of identifying each of the paragraphs of the judgment where his Honour referred to a contention and then checking the balance of the judgment to see whether the contention was accepted or rejected. In most instances, we accept the submission made by counsel for the wife that a reading of the entire judgment indicates how particular controversies were resolved. So, for example:
·the contention at paragraph 5 concerning the encumbrance over the [first Canberra] property at the date of marriage was resolved at paragraph 30;
·the contention at paragraph 7 concerning the income from the [trading in goods] was resolved at paragraph 34 – albeit by his Honour saying in effect there was insufficient evidence to make a finding;
·the contention at paragraph 15 concerning the payment of the mortgage and other household accounts after the separation was resolved at paragraph 42.
We consider there is more substance in the husband’s second submission concerning the apparent failure of his Honour to refer to any of the evidence, apart from that contained in the affidavits. As we have already noted, this criticism was made in the context of the unfortunate delay in the delivery of judgment.
The Full Court in McCrossen and McCrossen (2006) FLC 93-283 discussed the approach to be adopted by an appellate court when dealing with a judgment delivered long after the trial. It is unnecessary for us to repeat all that was said there, but we accept that an appellate court must apply the strictest of scrutiny in dealing with a judgment which may have been affected by “the inevitably adverse consequences of delay”: R v Maxwell (1998) 217 ALR 452. It is important we keep in mind, as was said in Monie v The Commonwealth (2005) 63 NSWLR 729 at [43], that:
long delay may give rise to a reasonable apprehension by the losing party that the judge delayed giving judgment because he or she had been unable to grapple adequately with the issues and, in the end, had become attracted to the decision which was the easiest to make. The possibility that such an apprehension may be held by the losing party requires the judge to deal with that party’s arguments in such a way as to demonstrate that those arguments have been understood and that their rejection has been based on a clear and rational process of reasoning.
His Honour’s failure to make any reference to (or apparently take into account) any aspects of the oral evidence did not assist in demonstrating to the parties that their arguments had been properly understood and that their rejection was based “on a clear and rational process of reasoning”. On the contrary, consideration of the judgment lends credence to the proposition that only a portion of the evidence was taken into account in the formulation of the reasons.
For example, at paragraph 5, his Honour records the husband as contending that at the date of marriage the [first Canberra] home was unencumbered and at paragraph 30 he finds that he only had equity in the home, “which is the way the wife had put it”. No reference was made to the fact that when this issue was raised with the husband in cross-examination, he immediately conceded he was wrong and had “got the dates mixed up”. (Appeal Book 350) By way of further example, his Honour recorded at paragraph 7 that the husband “alleges” that he used his redundancy payment to fund the renovations to the [first Canberra] home. He made no reference to the fact that in cross-examination the husband conceded that this proposition was also wrong. (Appeal Book 352) It is also noteworthy, although not referred to by counsel for the husband, that his Honour made no reference at all to serious issues that emerged during the cross-examination of the medical experts touching on the husband’s credibility on issues associated with his disability. We will make further reference to this matter later in these reasons.
Issues associated with the delay in delivery of the judgment are of particular relevance in considering the husband’s third submission concerning the adequacy of the reasons. This relates to his Honour’s treatment of the alleged failure of the husband to account “for much of what is about $100,000” and his finding that this amount was a resource available to the husband. It is significant to note that the wife did not submit at trial that the husband should be treated as having such a resource available to him or that it was a matter to be taken into account pursuant to s 75(2).
It appears to us most likely that when his Honour came to prepare his reasons, he was prompted to embark upon consideration of this issue by re-reading paragraphs 52 to 55 of the wife’s affidavit (Appeal Book 76-78). In those paragraphs, the wife had made reference to the husband drawing more than $226,000 from the mortgage account in anticipation of receiving his damages payment. She asserted in paragraph 53 that she was unaware of what had happened to the money, save for about $39,000 spent on a car and about $20,000 spent on dental work. She also complained that the husband had failed to honour a promise to repay the mortgage account on receipt of his damages.
If these paragraphs of the wife’s affidavit were indeed the starting point for his Honour’s consideration of this issue, it is not entirely clear how his Honour then came to decide that the amount unaccounted for was “much of what is about $100,000”. Counsel for the wife contended that his Honour had in mind Exhibit W8 which indicated that by the time of trial, the wife was asserting that the husband had failed to account for $76,918. We suppose, in some circumstances, it might not stretch credulity to see this figure as being “about $100,000”.
As Exhibit W8 is of some significance, we replicate it in full:
Significant Transactions In Mortgage Account (see paragraph 52 of Wife’s Affidavit) 2.5.99 $17,000.00 Tax 2.9.99 $7,420.00 Shares 5.10.99 $45,000.00 [shares] 5.11.99 $14,000.00 Unknown 2.12.99 $8,140.00 Shares 6.12.99 $33,000.00 Husband’s Evidence T2 7.12.99 $33,000.00 Husband’s Evidence T2 10.12.99 $7,922.00 Tax Refund 30.12.99 $39,000.00 [car] 24.10.00 $17,643.00 $149,560.00 $72,565.20 Note: Wife says $226,478 withdrawn. Husband says and Wife agrees $149,560 properly accounted for.
Therefore balance not accounted for amounts to $76,918
Exhibit W8 was tendered on behalf of the husband but it was acknowledged that it had been jointly prepared by both counsel. (Appeal Book 455) In tendering Exhibit W8, counsel for the husband said:
And the second document, your Honour, is a document which sets out the significant transactions in the mortgage account, those being the figures upon which I cross-examined the wife and it would have to be said in relation to that document that the $1000 error has not been picked up, so that when she says 226,000 was withdrawn it’s 225. Your Honour, otherwise those documents are agreed.
Looked at in isolation long after the trial, we can see how the comments contained in two boxes at the foot of Exhibit W8 might have been interpreted as containing an admission by the husband that he had not properly accounted for $76,918. This in turn might explain why, in paragraph 56 of his judgment, his Honour made no attempt to justify his finding that the husband was unable to account for the funds in question.
We accept the submission made by counsel for the husband that Exhibit W8 is properly characterised as no more than an “aide memoire” of “significant transactions” in the mortgage account. It was not evidence of a failure on the part of the husband to account for monies. Exhibit W8 should have been considered in light of the opening address made by the husband’s counsel at trial, during which she made clear that $76,000 had been used from the mortgage account “for living expenses and the balance was used for either payment of identifiable things that have come back into the [asset] pool, or for share trading”. (Appeal Book 309)
In considering whether the husband had failed to account for $76,918 his Honour did not apparently pay any attention to Exhibit H1. This was a list prepared by the husband showing some of the expenses he claimed to have paid from funds available to him. We consider it was encumbent upon his Honour to make reference to that document in explaining his conclusion that the husband had failed to account for funds. Such reference would have required mention (and rejection) of the husband’s oral evidence concerning the expenditure identified. Mention would also have been required of concessions made by the wife on this issue, to which we will refer in detail later. In our view, failure to make any reference to these vital aspects of the evidence constitutes appellable error.
We also consider that his Honour erred in failing to give any reasons for finding that the funds amounting to “what is about $100,000” was a “resource” in the hands of husband. We have difficulty in accepting the interpretation urged by counsel for the wife that it was likely his Honour meant only that the husband had already had the benefit of the money and that this should therefore be taken into account pursuant to s 75(2). We consider it was encumbent upon his Honour to explain what he meant in concluding that the funds were a resource in the hands of the husband, especially where that proposition had never been put to the husband and there was no submission seeking such a finding.
Although his Honour did not indicate what weight he placed on these matters, we can only assume it must have had some impact on the outcome, especially given the amount involved. We are therefore satisfied there is substance in Ground 1.
Ground 2 – Assessment of contributions
By this Ground the husband asserts three errors in his Honour’s assessment of the parties’ contributions.
In order to understand the first of the challenges (Ground 2.1), we set out below paragraphs 26 and 27 of the judgment.
26.The Court’s obligation under s 79 of the Family Law Act 1975 is to deal with the property of the parties. The husband’s accident was by any measure a disaster for him. The extent of the injuries he received is reflected in the compensation paid to him and in his inability to generate income in the way in which he did previously. This is a factor properly to be taken into account under s 75(2) but should not necessarily be reflected in a determination of what property is to be distributed between the parties. In some respects an analogy might be drawn in this case with a party’s having a substantial lottery win. It would be inappropriate to consider that the husband contributed his compensation in any way although he was the subject of the compensation.
27.I am mindful of the decisions of their Honours in the Full Court in James and James [(1984) FLC 91-537] and Aleksovski v Aleksovski [(1996) FLC 92-705] and accept that the compensation money should be considered as a contribution of the husband however as Baker and Rowlands JJ stated in Aleksovski at p 83, 437,
“in most cases, a damages verdict arising from a personal injury claim, whenever received, is a contribution by the party who suffered the injury. It should not be considered in isolation, for the reason that each and every contribution, which each of the parties makes to the relationship, must be weighed and considered at the same time.”
The husband’s contribution must in this case should [sic] also be considered in the context of the marriage and the other contributions of the husband and the wife.
Although this discussion appears under the heading “Issues about the Assets Pool”, it seems his Honour was directing his attention not only to the submission that the pool should be divided into two, but was also discussing the way in which the damages should be treated in the assessment of contributions.
We agree with counsel for the husband that his Honour’s “substantial lottery win” analogy is not helpful. More importantly, we accept his submission that paragraphs 26 and 27 appear internally inconsistent. On the one hand, in paragraph 26 his Honour is seen to be saying that it would be inappropriate to regard the husband as having contributed his compensation “in any way”, whereas in paragraph 27 his Honour adopts authorities indicating that compensation monies should be regarded as a contribution on behalf of the person injured. Counsel for the husband submitted:
Problematically the judge leaves the two statements sitting together and if it is accepted that the statement of principle at paragraph 26 is wrong then the judgment provides no clear path of his reasoning such as to permit the reader to conclude that his Honour’s considerations have not been tainted by the erroneous propositions in paragraph 26.
Although we accept there appears to be an inconsistency in the two paragraphs, we accept the submission of counsel for the wife that it is obvious from consideration of his Honour’s entire judgment that he did take the damages into account as a contribution by the husband. His Honour said so not only at paragraph 27 but also at paragraph 49 where he took the husband’s “‘contribution’ of the accident claim” into account in summing up his assessment of contributions. In these circumstances, we accept that his Honour’s treatment of the damages payment was in accordance with authority and that the last sentence of paragraph 26 can be disregarded as of no significance to the outcome.
Before passing from this topic, we observe for the sake of completeness that although the husband now complains that his Honour failed to treat the damages as having been contributed by the husband, his counsel at trial submitted that such a course was open. Ms Rees said this in her closing address: (Appeal Book 476)
Your Honour, there are, one supposes, two ways of looking at accident verdicts; either nobody makes a contribution to them and one deals with them only on section 75(2) bases, or the person who makes the – who has the accident makes the contribution and the question is whether section 75(2) factors flow after that, and in my submission, it doesn’t really matter which way the Court approaches that exercise.
The second challenge to his Honour’s treatment of contributions (Ground 2.2) focussed on paragraph 35 of his judgment, which it was submitted showed that his Honour misdirected himself concerning his obligation to evaluate and assess all relevant contributions. We have already recited the paragraph in which his Honour expressed the opinion that once spouses reach “an agreement or an accord” about how they will organise their financial and non-financial contributions, those contributions should be regarded as being equal.
We accept the submission that such a proposition is in conflict with the legislation and the case law. Section 79(4) of the Act directs a trial judge to take into account a variety of contributions made by or on behalf of the parties to a marriage. There is no indication that an agreement by spouses as to how they will share duties will, in itself, have any relevance to the assessment of contributions. It is, of course, commonly the case that spouses agree to divide duties in a way that the Court later determines resulted in an equality of contributions. Such outcomes are not the product of the agreement but rather of the way in which the duties were divided and how each spouse performed them.
We adopt the summary of the law contained in JEL and DDF (2001) FLC 93‑075 where Holden and Guest JJ, with whom Kay J agreed, said:
152. It seems to us that the following general principles can be said to arise from the cases referred to in these reasons, namely:
(a) There is no presumption of equality of contribution or “partnership”.
(b) There is a requirement to undertake an evaluation of the respective contributions of the husband and the wife.
(c) Although in many cases the direct financial contribution of one party will equal the indirect contribution of the other as homemaker and parent, that is not necessarily so in every case.
(d) In qualitatively evaluating the roles performed by marriage partners, there may arise special factors attaching to the performance of the particular role of one of them.
(e) The Court will recognise any such special factors as taking the contribution outside the “normal range”' in the sense that that phrase was understood by the Full Court in Mclay (supra).
…
(h) It is ultimately the exercise of the trial Judge's own discretion on the particular facts of the case that will regulate the outcome.
Counsel for the wife submitted that regardless of the opinion expressed at paragraph 35, his Honour nevertheless did identify and assess the contributions made by each party. For example, in paragraphs 33 to 35 he considered house renovations, gardening, child care, income earning and the husband’s efforts in [trading in goods]. In paragraphs 38 and 39 he considered the changing nature of the parties’ contributions following the accident. In his concluding discussion of contributions at paragraph 49 his Honour explained his ultimate finding by referring to three particular aspects of contributions, namely the husband’s initial contribution, his contribution of the compensation monies and the wife’s more arduous homemaking and parenting duties during the period of the husband’s convalescence.
Whilst we accept that his Honour has demonstrated an awareness of his obligation to assess and weigh a variety of contributions, it remains the case that reference to paragraph 35 suggests that his Honour found that the parties’ contributions during one part of the marriage should be regarded as equal because they were being made in accordance with “an agreement or an accord”. In so doing, his Honour erred in that he failed to undertake an evaluation of the respective worth of the contributions. The fact that it would have been open to his Honour on the evidence to find the parties’ contributions were of equal worth is not a sufficient answer to the challenge.
The third challenge to his Honour’s treatment of contributions (Ground 2.3) relates to paragraph 33 of his judgment where he said that “the fact that [the wife] earned less money than the husband did is not relevant”. Read alone, we accept the statement would be in conflict with authority; however, it is not appropriate to read the sentence without having regard to the context. In order to provide that context we repeat the last half of the paragraph in which the sentence appears:
33.… The fact that she earned less money than the husband did is not relevant and I find that their contributions during the period that they were together apart from the initial contributions I have mentioned before until the time of the accident should be regarded as equal. This acknowledges the additional contributions made by the wife in the capacity of home maker and parent which in my opinion off-set any disparity in the financial contributions.
It is apparent that in making the final comment in this paragraph, his Honour was acknowledging that a differential in incomes is potentially a relevant consideration, but in the circumstances the differential was offset by the additional contributions the wife had made as homemaker and parent. Although his Honour’s finding could have been expressed more felicitously, we perceive no error in the approach he adopted.
For these reasons we conclude there is no substance in Grounds 2.1 and 2.3 but that Ground 2.2 has been made out. It will be convenient for us to consider Ground 2.4 at the same time as we consider Ground 2A.
Ground 2A – failure to account for funds drawn on the mortgage
This ground asserts error by his Honour in finding that the husband had failed to account “for much of what is about $100,000” drawn on the mortgage account after the accident. The associated Ground 2.4 asserts error in the finding that the unaccounted for funds were properly to be regarded as a “resource” in the husband’s hands.
We have already touched on this subject when considering the adequacy of his Honour’s reasons. It will be recalled that, putting the wife’s case at its highest, the amount for which the husband was unable to account was only $76,918 (Exhibit W8). It will be recalled also that this figure did not take into account other items of expenditure identified by the husband (Exhibit H1) as having been paid from the damages.
Exhibit H1 referred to payments made by the husband totalling $48,240. The wife was taken through these items of expenditure in cross-examination (Appeal Book 439 et seq). She acknowledged that many of the expenses had been met from funds withdrawn from the mortgage account. At the conclusion of this series of questions, the following exchange took place between counsel for the husband and the wife: (Appeal Book 442).
What I’ve put to you, [Mrs Gaspaldi] is about $48,000 worth of expenses that came out of the mortgage account for the family. Do you agree with that?--- Yes I do.
Your Honour, I return exhibit H1. In addition to that I think you say in your affidavit that he had extensive dental work done? --- Yes
That would have been paid for out of the mortgage account too wouldn’t it? --- Yes.
In the context of the cross-examination, we accept that in her answer to the first question the wife was conceding not only that it had been put to her that there were $48,000 worth of expenses paid from funds withdrawn from the mortgage account, but that these expenses had been paid from that account. His Honour made no reference at all to this concession in his judgment. Once the concession is taken into account, the amount identified in Exhibit W8 as being unaccounted for was reduced to $28,678. (Indeed, it was common ground that there was an error in that document, which reduced the amount by $1,000).
It had been the husband’s case that quite apart from the items of expenditure referred to in Exhibits W8 and H1, he had used funds from the mortgage account to meet other costs, including living expenses for the family over a period of years. The wife conceded this was the case during cross-examination (Appeal Book 442-443). For example, the following exchange took place between counsel for the husband and the wife concerning the money drawn from the mortgage account: Appeal Book 442
So, is it then the case that anything that was spent that isn’t represented by those assets [i.e. those items of property included in the pool of assets for division] you say I concede that’s living expenses?---Yes, I would say living expenses.
Because that was the only money apart from income from share trading that he had between the dates that you refer to in the affidavit, that’s between May 1999 and January 2003, isn’t it---Yes.
It is true that shortly after this exchange, counsel for the wife objected and pointed out that the husband had access to other funds from which he could have drawn to meet the living expenses: Appeal Book 443. Nevertheless, even after this was pointed out, the wife again conceded that some of the money from the mortgage account was spent by the husband on living expenses: Appeal Book 443. Even if this expenditure was, understandably, not precisely quantified, it would have explained what had become of at least a portion of the funds.
In our view, in light of the concessions made by the wife, there was no reasonable basis for his Honour to conclude that the husband had failed to account for the money drawn on the mortgage account. We therefore find there is substance in Ground 2A.
It follows that it was not open to his Honour to find that any of the monies drawn from the mortgage account were properly to be treated as a “resource” in the hands of the husband. Ground 2.4 is therefore also made out.
Ground 3 – Errors in determination of the asset pool
By this ground the husband alleged a variety of errors in the calculation of the asset pool. The wife unsurprisingly conceded that errors had been made, since the net effect was in her favour. The upshot was that the parties agreed that the pool was worth $1,329,060 (not $1,359,360) and that the wife had in her possession net assets of $36,509 (not $61,872).
It was common ground that if these were the only errors found in the judgment, we should order the husband to pay the wife an additional sum of $12,209.
Ground 4 – Failure to take account of relevant facts and taking account of irrelevant facts
By Ground 4.1 the husband asserts that his Honour failed to take the husband’s superior earnings into account. We touched on this issue when discussing Ground 2.3. For the reasons we then indicated, we consider that his Honour did take into account the husband’s superior earnings prior to his accident. Accordingly there is no substance in Ground 4.1.
By Ground 4.2 the husband asserts his Honour took into account an irrelevant fact, namely that although the wife’s contribution of her superannuation was “relatively small”, it was nevertheless “significant” for her. Given the obligation of a judge to evaluate all contributions objectively, we agree that the fact that the wife’s superannuation might have been perceived by her as “significant” was irrelevant, given that the entitlement was indeed “relatively small”.
We therefore find there is substance in Ground 4.2, although considered alone it would not have been of sufficient consequence to justify appellate interference.
Ground 5 – Unreasonable and plainly unjust outcome
In view of the merit we have found in other grounds of appeal, it is unnecessary to consider this ground.
The husband’s application to re-open and adduce further evidence
As we have found merit in the appeal, we must now determine whether we should re-exercise his Honour’s discretion or remit the matter for retrial. At the time of hearing of the appeal both counsel urged us to re-exercise in the event the appeal succeeded. We were informed at that time that neither party proposed to adduce any further evidence, despite the long delay since trial.
Notwithstanding the position that he adopted at the hearing before us, the husband filed an application on 17 April 2008 seeking that the appeal be re‑opened and that he be granted leave to adduce further evidence. On 12 May 2008 the wife filed a response seeking the dismissal of that application.
Directions were made for the filing of written submissions in relation to the husband’s application. These submissions were completed by the filing of the husband’s submissions in reply on 4 August 2008.
The husband’s evidence in support of the application
The husband filed two affidavits addressing both the application to re-open and the application to adduce further evidence.
In his first affidavit, the husband noted that at the time of the trial before Faulks DCJ in November 2006 he held cash, shares and securities (“the equities”) to a value of approximately $790,000. The husband asserted that he had used portion of the equities to make payments to the wife of $350,000 in accordance with the orders of Faulks DCJ.
The husband went on to record that in 2003 he had placed a substantial portion of the damages settlement he had received with [a stockbroking company] (“[the stockbroking company]”) and commenced trading in options, using [the stockbroking company] as his broker. The husband said that he had been required to place readily realisable assets in the form of shares or cash with an options clearing house as collateral for his options trading. He claimed that “in or about August 2008 [sic, semble 2007], all of the shares held in the options clearing house were sold to cover trading losses, incurring the loss of approximately $200,000”.
The husband further asserted that in August 2007 he had complained to [the stockbroking company] about the losses and was allocated a new broker. He claimed that in the period between October 2007 and December 2007 his trading position had improved and he had “substantially rebuilt the losses” he had sustained in August 2007. However, he went on to say:
12.In March 2008 the whole of the shares and cash held in the options clearing house were sold or otherwise utilised to meet trading losses and as at the date of this Affidavit the whole of the amount invested by me with [the stockbroking company] has been lost. The loss incurred by me is in the order of $500,000 and represents approximately 40% of the asset pool as at the date of trial.
The husband subsequently made a further affidavit containing more detailed information concerning his trading activities. In that affidavit he said:
6.My options trading strategy from November 2003 until October 2007 primarily involved writing (selling) call and put options. A call option gives the holder of the option the right (but not the obligation) to buy the underlying asset from the writer at a predetermined ‘strike price’, at any point on or before the expiry date. A put option gives the holder of the option the right (but not the obligation) to sell the underlying asset to the writer at a predetermined ‘strike price’ at any point on or before the expiry date. When I wrote these options I would receive an upfront payment but faced the risk that the holders of the options might chose [sic] to exercise them, obliging me to either sell or buy the underlying asset from them.
7.While these trading strategies involved a level of risk, I achieved strong returns. In August however 2007 [sic] I suffered significant loses [sic] due to a period of increased market volatility (as will be detailed below).
8.After I sustained those losses I was allocated a new broker by [the stockbroking company], with whom I pursued a lower risk strategy of writing covered call and covered put options. This strategy had a lower level of risk, but was less profitable.
The husband went on to describe the way in which he had incurred the losses to which he had referred. For present purposes, it is sufficient to note that he asserted that:
· in August 2007 “the market experienced a period of significant volatility”;
· as a result he was required by [the stockbroking company] to maintain an increasing amount of security in his margin account;
· in the middle of August 2007 he had been called upon by [the stockbroking company] to place a further large sum into his margin account which he was unable to do and as a result of which the collateral shares held by [the stockbroking company] were sold;
· prior to the shares being sold he had not been “fully aware of the risks of using those shares as collateral in my margin account”;
· his former broker at [the stockbroking company] had consistently assured him that the shares held as collateral were not at risk of being sold but rather were to “free up” monies in his margin account for other investments;
· had he been properly informed of the risk by [the stockbroking company] he would not have placed the shares in the margin account;
· he wanted to pursue a claim against [the stockbroking company] but had been unable to do so because he could not provide monies on account of anticipated costs to the solicitors he had consulted.
The husband went on to say that:
· notwithstanding the deterioration in his trading position during August 2007, by the end of that month he still had a total of $368,507 remaining of his investment with [the stockbroking company];
· he had attempted to rebuild his investment during September 2007 and had been confident that by following his previous “successful trading strategies” he would be able to recover his losses;
· nevertheless, by the time of the hearing of the appeal on 2 October 2007, the value of his investment with [the stockbroking company] had reduced further to $312,870;
· he had been informed by [the stockbroking company] that the new broker allocated to him in October 2007 had significant experience in rebuilding portfolios and that he would be able to rebuild his portfolio to its position prior to the losses sustained in August 2007.
The husband went on to concede that whilst he had said in his original affidavit that in the period from October 2007 to December 2007 he had substantially “rebuilt” the losses sustained in August 2007, on reviewing his position he had ascertained that the value of his investment had dropped during that period.
Having set out this background, the husband then said:
33.The value of my holdings with [the stockbroking company] has dropped to the point where I have now lost all the funds I had invested. I lost significantly in January due to falls in the stock market and the increased market volatility. [The stockbroking company] thereafter limited my options trading and between January 2008 and early April 2008 my existing options positions were gradually closed out by [the stockbroking company] in an effort to minimise my losses.
34.As the market fell in the early part of this year, the put options entered into by [the stockbroking company] on my behalf were exercised against me. As a result I was obliged to buy large parcels of shares at a price which was above the market price. On each occasion this occurred I immediately sold those shares on the market, and sustained losses.
The husband annexed to his affidavit a statement of his trading account, which showed that by the end of April 2008 he was indebted to [the stockbroking company] to the extent of $11,268.
The husband also filed an updated statement of his financial circumstances in support of the application to re-open. That statement discloses that as at 22 May 2008 the husband had the following assets:
| [Second Canberra home] | 480,000 |
| [shares] | 2,295 |
| [motor vehicle] | 26,000 |
| [motor vehicle] | 28,500 |
| Household contents | 6,000 |
| [chattels] | 28,850 |
| Total | $571,645 |
The husband’s statement of financial circumstances showed his liabilities as follows:
| Mortgage – [second Canberra] home | 67,045 |
| Income taxation assessed and unpaid – estimated | 80,000 |
| Credit cards | 8,127 |
| [the stockbroking company] – overdrawn account | 11,269 |
| Personal loan | 10,000 |
| Total | $176,441 |
The husband’s claimed net worth is therefore $395,204, which represents a deterioration of more than $500,000 since the time of trial.
The wife's evidence in response to the application
The wife’s solicitor swore an affidavit in which she referred to communications between herself and the husband’s solicitors prior to the hearing of the appeal. The culmination of this was a letter dated 18 September 2007 from the husband’s solicitors to the wife’s solicitors. The letter contained the following paragraph:
We note that you have proposed that neither party file further valuation evidence on the basis that the evidence is likely to be complex and would inevitably lead to the Full Court ordering a re-trial. We have now obtained instructions from our client in relation to your proposal and confirm our client’s agreement to your proposal. On this basis, we do not propose filing any further evidence and will inform the Court that the parties are agreeable to the Court adopting the values used by the Trial Judge.
The letter concluded by asking for confirmation of the agreement to the proposal that neither party “file further valuation evidence”. The wife’s solicitor asserted in her affidavit that confirmation was unnecessary, given that the correspondence was in response to her own proposal.
The husband’s submissions in support of the application
Counsel for the husband advised that the application to adduce further evidence was made on two bases. The first was to demonstrate that the orders under appeal were erroneous in the sense explained in CDJ v VAJ (1998) 197 CLR 172. The second was to provide evidence of the husband’s current circumstances in the event the Full Court allowed the appeal and was minded to re-exercise the trial Judge’s discretion.
In our view, it is unnecessary to consider the submissions relating to the first base upon which the husband relied. We have already found his Honour erred and further evidence to show that his orders were “erroneous” is therefore unnecessary.
We should nevertheless note that in dealing with the first limb of his argument, counsel for the husband directed our attention to the decision in CDJ v VAJ where McHugh, Gummow and Callinan JJ said (supra at paragraph 111):
… the Full Court of the Family Court must decide the rights of the parties upon the facts and in accordance with the law as it exists at the time of hearing the appeal.
Consistent with this statement and with the views expressed in the High Court in Allesch v Maunz (2000) 203 CLR 172, counsel for the husband went on to submit that if the appeal was allowed and the Full Court proposed to re-exercise the discretion of the trial Judge, each party would be entitled to adduce evidence of their current circumstances “as of right”. However, counsel conceded the merit in the submission made on behalf of the wife that in the event such evidence were permitted to be adduced, the matter would have to be remitted for rehearing.
The wife’s submissions in response to the application
In his submissions, counsel for the wife asserted that it is “often likely that the value of particular assets will change [but] the mere fact that values may change is not a ground for admitting fresh evidence”. He conceded there would have been a different result at trial had the husband’s share portfolio been valued at its present value, however, it was asserted this was “always likely to be the case where assets have changed in value after the trial”.
Counsel for the wife referred to and strongly relied upon the agreement of the parties that they would not seek to adduce further evidence on the hearing of the appeal. It was conceded that the husband could not have known at the time of the agreement that the value of his portfolio would change to the extent it had; however, it was submitted he should not now be permitted to depart from the position he originally adopted. It was asserted that the agreement “was not qualified in any way by being limited to changes in particular financial circumstances or the size of those changes”. It was further submitted that if the husband were to be permitted to depart from the agreement, “there will be no purpose served in agreements of this kind being made in future appeals”.
It was also submitted that account should be taken of the fact that the change in circumstances relied upon by the husband had come about because the husband had “chosen to invest in particular listed shares and has apparently used margin lending to do so”. It was noted that the wife had had not been consulted in relation to the husband’s choice of investment.
Counsel also made reference to Wall and Wall (2002) FLC 93‑110, where the Full Court had refused to allow a party to adduce evidence as to the performance of a business after the date of trial on the basis that fluctuations were to be expected in the fortunes of a business.
Counsel for the wife advised that if the evidence were to be admitted, the wife would wish to cross‑examine the husband “at least for the purpose of establishing whether there is evidence of the kind that would establish negligence, recklessness or the like of the kind referred to in Kowaliw v Kowaliw (1981) FLC 91-092”. It might also be necessary for the wife to make an application to adduce further evidence in relation to her own financial circumstances. The matter would accordingly have to be remitted for hearing, thereby incurring significant further costs.
The husband’s submissions in reply
In reply, counsel for the husband submitted that there was no evidence that the husband had engaged in “margin lending”. It was further submitted that this was not a case where the relevant assets would fluctuate in value since the assets in question had been lost entirely.
In responding to the argument relating to the agreement reached prior to the hearing of the appeal, counsel for the husband submitted:
4.There was never an agreement that neither party would seek to adduce further evidence (relying upon the decision of the High Court in Allesch v Maunz (2000) FLC 93‑033), in circumstances where there was relevant evidence to be adduced, but rather an agreement that, based upon the circumstances as they existed at that time, neither party would seek to adduce further evidence. In any event it is not, in the [husband’s] submission, possible to have such an agreement which is binding into the future. The [wife] characterises the agreement as if it somehow gives rise to an estoppel but in the [husband’s] submission it cannot give rise to an estoppel, nor is there evidence of even the most fundamental elements of reliance and detriment.
Application to re-open – Discussion
As we have indicated, it is necessary for us to deal only with that part of the husband’s application which relates to the introduction of further evidence in the event we were minded to re-exercise his Honour’s discretion. In doing so, it is important to emphasise the nature of an appeal to this Court. This can be ascertained by reference to ss 93A(2) and 94(2) of the Act.
Section 93A(2) relevantly provides that in hearing an appeal (other than an appeal from a court of summary jurisdiction):
… the Family Court shall have regard to the evidence given in the proceedings out of which the appeal arose and has power to draw inferences of fact and, in its discretion, to receive further evidence upon questions of fact, which evidence may be given:
(a) by affidavit; or
(b) by oral examination before the Family Court or a Judge...
Section 94(2) provides that in an appeal from a decree of the Family Court:
… the Full Court may affirm, reverse or vary the decree or decision the subject of the appeal and may make such decree or decision as, in the opinion of the court, ought to have been made in the first instance, or may, if it considers appropriate, order a re‑hearing, on such terms and conditions, if any, as it considers appropriate.
The High Court had occasion to discuss the nature of an appeal to the Full Court of the Family Court in Allesch v Maunz (supra). McHugh, Gummow and Hayne JJ said (footnotes omitted):
22.The majority in CDJ v VAJ proceeded on the basis that an appeal under s 94(1) of the Act is an appeal by way of rehearing. That is undoubtedly correct. So much is to be discerned from the terms of s 93A(2), in particular its conferral of power to receive further evidence. That is not a power possessed by appellate courts whose jurisdiction is confined to appeals in the strict sense and whose function it is simply to determine whether the decision under appeal was or was not erroneous on the evidence and the law as it stood when the original decision was given. And an appeal under s 94(1) is, as s 93A(2) indicates, to be distinguished from an appeal under s 96 which is a hearing de novo.
23.For present purposes, the critical difference between an appeal by way of rehearing and a hearing de novo is that, in the former case, the powers of the appellate court are exercisable only where the appellant can demonstrate that, having regard to all the evidence now before the appellate court, the order that is the subject of the appeal is the result of some legal, factual or discretionary error, whereas, in the latter case, those powers may be exercised regardless of error … And the critical distinction, for present purposes, between an appeal by way of rehearing and an appeal in the strict sense is that, unless the matter is remitted for rehearing, a court hearing an appeal in the strict sense can only give the decision which should have been given at first instance whereas, on an appeal by way of rehearing, an appellate court can substitute its own decision based on the facts and the law as they then stand.
Their Honours later went on to discuss the options available to the Full Court in cases where it had been determined that appellate intervention was warranted. In doing so, they said [our emphasis added]:
30.Although, on an appeal by way of rehearing from a discretionary judgment, an appellate court may, itself, exercise the discretion in question by reference to circumstances as they then exist, it is not bound to do so. It may, instead, set aside the order under appeal and remit the matter for rehearing or, in terms of s 94(2) of the Act “order a re-hearing, on such terms and conditions, if any, as it considers appropriate”. And where circumstances have or are likely to have changed between the original hearing and the disposition of the appeal, it is not uncommon for an appellate court to remit the matter for rehearing rather than, itself, exercise the discretion in question.
31.If on an appeal by way of rehearing from a discretionary judgment an appellate court is minded to exercise the discretion in question by reference to circumstances as they exist at the time of the appeal, it is necessary that the parties be given an opportunity to adduce evidence as to those circumstances…
In light of this authority, we accept that before seeking to re-exercise the trial judge’s discretion, the Full Court must afford both parties an opportunity to adduce evidence of their circumstances as they exist at the time of the appeal. An obvious consequence of this requirement is that if the material is in any way controversial, the Full Court has little alternative other than to remit the matter for further hearing at first instance. This inevitably causes significant further delay and expense to the parties, as well as placing increased pressure on already stretched judicial resources at first instance.
Since delivery of the decision in Allesch v Maunz it has been customary for the Full Court to enquire at the time of hearing of the appeal whether or not the parties propose to adduce further evidence in the event the Court finds merit in the appeal and is considering re-exercising the discretion. Commonly, the proposed further evidence is tendered at the time of the hearing of the appeal, although in more complex matters the parties may be permitted to delay adducing the evidence until a later stage. It would not be conducive to the expeditious discharge of business for the Full Court ordinarily to determine first whether error on the part of the trial judge has been established and then seek to ascertain the intentions of the parties in relation to the introduction of further evidence.
In the present matter, both counsel originally urged us to re-exercise the discretion in the event error were to be found. Both informed us that they did not intend to adduce further evidence in the event we proposed to re-exercise. In our view, having made that election, it is not correct for the husband to assert that after argument had concluded he was still entitled, “as of right”, to adduce further evidence. The obligation of the Full Court is to afford both parties “an opportunity” to adduce further evidence. That opportunity was afforded, in the usual way, at the time the appeal was argued.
We would characterise the position in which the husband now finds himself as being similar to that of a litigant following the completion of a trial. Each party would have been entitled to adduce any relevant evidence at trial but after the trial is completed and judgment is reserved, a party requires leave to re-open and to adduce further evidence. Where such leave is sought, the trial judge would determine whether or not the interests of justice would be served by allowing the proceedings to be re-opened in order to permit the introduction of further evidence.
In Smith v NSW Bar Association (1992) 176 CLR 256 the High Court (Brennan, Dawson, Toohey and Gaudron JJ) said (at 266‑267, footnotes omitted):
It is again necessary to distinguish between the considerations which may bear on a decision to re‑open and the processes involved in reconsideration once a case has been re‑opened. If an application is made to re‑open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re‑open should be exercised. But those considerations bearing on re‑opening are not decisive of the question whether, a matter having been re‑opened by reason of error, further evidence can be called.
Not every case involving error will invite further evidence: it will depend entirely on the issue that is opened up. If the issue is one that invites further evidence, then, prima facie and subject to the ordinary rules of evidence, that evidence should be allowed. We say prima facie because there may be situations in which the particular evidence involved would cause embarrassment or prejudice such that, in the circumstances, it would be unfair to allow it.
The proposition in the citation from Smith v NSW Bar Association to the effect that “it is difficult to see why … the primary consideration should not be that of embarrassment or prejudice to the other side” was supported by a footnote which read as follows:
As suggested by Sheppard J in Joyce v. G.I.O (N.S.W.) reported in Ritchie’s Supreme Court Procedure, New South Wales, vol 2, pp 8551‑8552. But cf. Watson v. Metropolitan (Perth) Passenger Transport Trust; Murray v. Figge; Hughes v. Hill.
In discussing the discretion to allow a party to re‑open, Sheppard J had said the following in Joyce v Government Insurance Office of New South Wales (unreported, Supreme Court of New South Wales, Sheppard J, 21 July 1976):
The essential principle which I should apply in relation to the application is that I should do justice as between the parties … Some of the cases, however, say that a party ought not be allowed to reopen if the evidence sought to be led was available to him at the time of the trial and an apparently conscious decision was made not to lead it.
…
It is curious to me that such law as there is on this subject has tended to develop in quite a different way from the law which indicated to a judge, faced with an application to amend pleadings, the manner in which his discretion should be exercised. Broadly speaking any amendment should be allowed, unless the embarrassment thus caused the opposite party cannot be cured by an adjournment and costs.
…
I think in arriving at a conclusion as to what I should do I must take very much into account the need to ensure that cases are properly presented and, further, that if risks are taken by counsel consciously, strong reasons must be shown why their clients are, after all, to have a second chance.
For discussion of these and other relevant authorities on re-opening prior to delivery of judgment, see the decision of the Full Court of the Federal Court in Londish v Gulf Pacific Pty Ltd (1993) 45 FCR 128 at 138-143, where it was held that in proceedings in the Federal Court the same principles should be applied to an application to re-open as are applied to applications for leave to amend pleadings during a trial – the object being to make the order most likely to promote the interests of justice, paying proper regard to any prejudice to the other party.
Exercise of the discretion to re-open
As was said in Smith v NSW Bar Association (supra) it is necessary that we distinguish between the application to re-open and the application to adduce further evidence which would be pursued in the event leave is granted to re-open.
Whilst the husband had suffered a decline in his financial circumstance by the time the appeal was argued, he has now lost his entire investment with [the stockbroking company]. This calamity has befallen him during the lengthy period in which our judgment has been reserved. Although the husband made a deliberate decision not to call evidence of his current circumstances at the time of argument before us, the position in which he now finds himself is significantly different.
We accept the submission made on behalf of the husband that the agreement reached between the parties prior to the hearing of the appeal about adducing further evidence related to the parties’ then financial circumstances and that the husband is therefore not estopped from making the application we are now considering. Given the magnitude of the change in his position, we consider that the interests of justice would be served by allowing the husband to re-open so that we can give full consideration to his application to adduce further evidence. There is no prejudice to the wife in giving leave to the husband to re-open, as we have already been provided with the evidence which the husband wishes to adduce and both parties have made their submissions in relation to the application.
Exercise of the discretion to allow further evidence
We accept that the magnitude of the change in the husband’s financial position is a highly significant matter in determining the present application, particularly in circumstances where it is conceded that the variation would make a material difference to the ultimate outcome if the evidence were to be admitted. We consider, however, that there are other significant matters, which when weighed together, are of far greater significance.
First, we accept that the deterioration in the husband’s financial circumstances came about as a result entirely of decisions he made without consultation with the wife. The husband’s investment strategy carried with it considerable risk. He stood to receive the benefits that might have been associated with such a strategy. He would no doubt have strongly (and in our view reasonably) resisted any effort by the wife to share in such benefits on the basis that he was the one who had assumed the risk.
Secondly, the husband’s own evidence indicates that he considers he has a claim for compensation against [the stockbroking company] for the losses he has suffered. Whilst he says he has been unable to pursue such a claim to date, he could potentially do so. He has significant equity in real estate and other assets which may be capable of liquidation in order to meet the anticipated costs of any claim for compensation.
A third and highly significant factor is the inevitability of a re-hearing in the event we were to allow the introduction of the further evidence. In this regard it is important to note that the trial before Faulks DCJ was completed more than three years ago. In the event the matter was remitted for rehearing, there is likelihood that the parties would remain involved in litigation for an extended period of time and at considerable expense. Such litigation is likely to be complicated by a number of factors, not the least of which are the husband’s potential claim against [the stockbroking company] and the wife’s foreshadowed intention to pursue a “Kowaliw argument”.
Finally, we take into account the fact that whilst the husband has apparently suffered a catastrophic reduction in his financial fortunes, he retains net assets worth in excess of $300,000 and is therefore not destitute.
Taking all of these considerations into account, we conclude that the interests of justice would not be served by permitting the husband to adduce further evidence. We will therefore proceed to consider the re-exercise of his Honour’s discretion on the basis of the evidence presented at trial.
Re-exercise of the discretion – settlement of property
Notwithstanding the husband’s assertion concerning his Honour’s alleged failure to resolve factual controversies, it was submitted that we have a sufficient factual matrix upon which to re-exercise his Honour’s discretion. We accept that that this matrix is available by reference either to the findings his Honour did make or to uncontroversial evidence and admissions.
The broader background has been set out at the commencement of these reasons. We will refer to other more detailed factual matters as we consider the parties’ contributions and the s 75(2) adjustment. In doing so, it is necessary that we treat with care the findings made by his Honour, given the view we have expressed concerning his reliance on the written rather than the oral evidence.
In this regard, it is appropriate we remind ourselves of the obligations of appellate courts as they were explained in Fox v Percy (2003) 214 CLR 118 where Gleeson CJ, Gummow and Kirby JJ said:
25.Within the constraints marked out by the nature of the appellate process, the appellate court is obliged to conduct a real review of the trial and, in cases where the trial was conducted before a judge sitting alone, of that judge's reasons. Appellate courts are not excused from the task of “weighing conflicting evidence and drawing [their] own inferences and conclusions, though [they] should always bear in mind that [they have] neither seen nor heard the witnesses, and should make due allowance in this respect”.
Their Honours then referred to the following passage in Warren v Coombes (1979) 142 CLR 531 at 551:
[I]n general an appellate court is in as good a position as the trial judge to decide on the proper inference to be drawn from facts which are undisputed or which, having been disputed, are established by the findings of the trial judge. In deciding what is the proper inference to be drawn, the appellate court will give respect and weight to the conclusion of the trial judge, but, once having reached its own conclusion, will not shrink from giving effect to it.
Gleeson CJ, Gummow and Kirby JJ then said:
27.…If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute … [T]he mere fact that a trial judge necessarily reached a conclusion favouring the witnesses of one party over those of another does not, and cannot, prevent the performance by a court of appeal of the functions imposed on it by statute. In particular cases incontrovertible facts or uncontested testimony will demonstrate that the trial judge’s conclusions are erroneous, even when they appear to be, or are stated to be, based on credibility findings. … In some, quite rare, cases, although the facts fall short of being “incontrovertible”, an appellate conclusion may be reached that the decision at trial is “glaringly improbable” or “contrary to compelling inferences” in the case. In such circumstances, the appellate court is not relieved of its statutory functions by the fact that the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses. In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must “not shrink from giving effect to” its own conclusion.
Keeping those observations firmly in mind, we turn first to assess the contributions made by the parties.
Initial contributions
The husband made a substantial contribution at around the time of the marriage:
·He brought in the equity in the [first Canberra] home, which he had acquired four years previously at a cost of $60,000 and on which there was between $38,000 and $40,000 owing. There was no evidence of the value of the home at the time of marriage, but it sold about five years later for $176,000. It is noted that this price was achieved after improvements made in 1991, which the husband says cost $55,000.
·In November 1991, the husband received a redundancy payment of about $36,000. He had been employed since August 1983, hence a large proportion of the payment would have related to years of service prior to the marriage in March 1990:
·At the same time, the husband received a pay-out of his non-preserved superannuation entitlements amounting to $55,020. The benefit was worth about $41,000 in July 1990 (i.e. three months after the date of marriage): Appeal Book 187.
·The husband also had a preserved superannuation entitlement of $3,823 when he received the balance of his benefit in November 2001. It is not clear what became of this, although in May 2000 the husband received a superannuation payment of $9,027, including an “invalidity component” of $5,923: Appeal Book 501.
There were no other initial contributions of substance.
Contribution of damages
The husband made a substantial contribution in the form of his damages payment of nearly $945,000. In considering this contribution, we take a different view from the trial Judge concerning the husband’s expenditure of nearly $112,000 on the hormone drugs which he imported from [another country]. The husband admitted that the importation of the drugs was illegal and that they were not formally prescribed by his medical advisors: Appeal Book 417. Although the husband was not challenged on his claim that the drugs proved to be “extremely beneficial”, they have not resulted in such improvement that he has been able to return to work.
We have difficulty in seeing how it would be just for the husband to receive credit for having “contributed” any portion of his damages that was expended on alleviating the injury for which the compensation was awarded. In our view, that portion of the compensation should be treated no differently to that attributable to past medical expenses or legal costs incurred as a result of the accident. Reference to s 79(4)(a) would indicate that the only portion of a damages award that could properly be regarded as a contribution to the “acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them” would be the net payment received after allowance for disbursements arising from the accident. We therefore proceed on the basis that the contribution from the damages was about $833,000.
Not all of this amount should be treated as having been contributed by the husband. It was conceded that the award would have included a “Griffiths v Kerkemeyer component” [(1977) 139 CLR 161], which should be regarded as contributed by the wife since it would have recognised, amongst other things, the nursing care she provided. Counsel for the husband submitted at trial that this would have represented about 7.5% of the total damages (Appeal Book 330, 301, 316 and 476). The husband’s award was the result of a compromise and hence there is no breakdown of its component parts. Nevertheless, counsel for the wife did not appear to dispute the assertion that the Griffiths v Kerkemeyer component would have been in the region of 7.5% of the award.
If the 7.5% contribution were to be applied to the net payment of $945,000, the wife’s contribution would be $70,875. We find that the wife’s contribution to the award should be assessed at this amount.
Contributions prior to the accident
Both the husband and the wife worked full-time prior to the birth of the first child. The husband did not dispute the wife’s evidence that she was responsible for the great majority of the housework during this time whilst the husband was responsible for the less time-consuming outside maintenance. Appeal Book 59-60.
The husband continued in full-time employment until the accident, whereas the wife gave up work to care for the children. There was no dispute that she was the primary carer of the children and the home until the husband’s accident. This was especially so in the period when the husband was living in Sydney for most of the week. Appeal Book 60-61.
In the first few years of the marriage, the husband earned additional income by [trading in goods]. Although he derived some “cash in hand” income from this activity, the extent of that income was unclear on the limited evidence provided. In this regard, we note that the husband’s oral evidence conflicted with his affidavit evidence (see for example Appeal Book 416) and that the estimate he gave in his affidavit concerning his annual income from this activity was struck out.
There was a dispute concerning the extent to which the parties were each involved in activities such as bookwork for the business, home renovations, gardening and so on. Not all of these disputes can be easily resolved by reference to his Honour’s findings or the transcript of evidence, but overall we concluded that each of the parties contributed in an appropriate manner consistent with their other obligations.
Having considered all of the evidence, we conclude that the parties’ contributions until the time of the accident (excluding the initial contributions) were of equivalent value.
Contributions after the accident
The husband was seriously incapacitated following the accident in June 1998. He was not even able to drive a car until early in 1999. The wife was left responsible for arranging for the business to continue to be operated, whilst at the same time undertaking almost all of the household and childcare duties and attending to the husband’s needs. We concur with his Honour’s assessment that the wife’s contributions during this period were arduous for her and that she provided high-level care for the husband.
The wife returned to full-time work in early 1999 and remained in employment up until trial (albeit her hours were reduced to some extent in December 2003). It is unclear what income the wife earned during this period but even on her reduced hours at the time of trial she was earning $33,000 per annum: Appeal Book 56.
The husband has had no paid employment since the accident. He estimated he had been spending about 20 hours a week attending to his share trading, but by the time of trial had not enjoyed success in this activity.
After the accident, the husband received an insurance payment of $200 per week for a period of two years from [an organisation] (Appeal Book 431). He also received social security totalling $27,583, which was reimbursed from his damages: Appeal Book 167. The parties continued to receive some income from the business after the accident, including payments received after the sale of the [business equipment]: Appeal Book 432. The husband also received a tax refund of approximately $7,900.
The wife should be given at least some credit in relation to some of the income received from the business after the accident, since it was she who made the insurance claim to pay the relief [person] and otherwise managed the business until the husband had recuperated sufficiently to resume this activity prior to the sale of the business.
The only other income received in the period following the separation was that derived from investment of the damages award after it was received in December 2002. The husband gave evidence that his income following the accident until 2002/03 was so low that he was not obliged to file a tax return. His income taxation return for 2002/03 showed only nominal income, although there appeared some doubt as to whether the whole of his income had been disclosed: Appeal Book 467 & 470. The only year in which the husband earned a substantial amount after the accident was 2003/04, when he disclosed an income of $58,000 (Appeal Book 478).
In considering the income derived from the investment of the compensation monies, it is important to ensure the husband does not receive “double credit” for having contributed both the damages award itself and the income derived from interest on the funds received from the damages award. It is true the husband has expended some effort in speculating on the stock market, but those efforts were not productive.
Care should also be taken in giving the husband all of the credit for the disability payments received from the [organisation]. There was no evidence of how it came to be that the husband was entitled to these payments, but we infer he was a member of the [organisation] prior to the accident and paid some form of membership which entitled him to the insurance payments. These membership dues would have been paid from income derived prior to the accident, during a period in which the husband and wife were making contributions of equivalent value. Looked at in this way, each of them can be seen as having contributed to the premiums and hence to the fruits of the insurance.
It was not disputed that in the period after the accident and prior to her returning to work in February 1999, the wife made almost all of the non-financial contributions in caring for the home and the children. It was also not in issue that the husband’s behaviour towards the wife in this period left much to be desired, albeit he denied he had been as obnoxious as she had asserted.
The greatest controversy at trial about household chores concerned the extent of the work done after the wife went back to work. The only finding made by his Honour on this point was that set out on paragraph 39 of the judgment. In order to provide context to that finding, we also reproduce below a portion of what he said in paragraph 38 [our emphasis added]:
38.However, the accident also had a significant effect upon the wife and the nature of her contributions to the marriage…[I]n the period immediately after the accident the wife spent significant time travelling to and from Sydney to visit her husband to be with him - with consequential difficulties in the care of the children. She sets out in her affidavit the weekly program that occurred for some time and by any measure this must have been arduous for her. Moreover, when he returned home she was engaged in high-level care for some time, including physical efforts in getting him on and off the toilet, showering him and with spending the time required to get him to see doctors. Of necessity during this recuperation period she bore not only the lioness’s share of the work but also the lion’s.
39.The situation somewhat reversed as the husband regained his mobility in that he then assumed some ‘househusband’ activities (as he described them) around their home. Nevertheless there is some force to the submissions of Mr Richards on behalf of the wife that her contributions as home-maker and carer during this period should be regarded as having a particularly high quality because of the difficulties under which she was operating.
The wife’s written evidence on this issue was contained in paragraph 38 of her affidavit where she said this:
38.I returned to work in February 1999. I was still required to perform most of the home duties including washing clothes, cleaning the house, changing bed sheets and doing ironing. I also did all the outside garden maintenance and attended to the girls’ personal care. This was a very exhausting period for me. I did 95% of the housework. I got out of bed at 7am, organised the girls for school and laid out their uniforms for school. I made beds and got breakfast for myself and the children. I left for work around 8:45am and [the husband] later drove the girls to school. When I arrived home at around 5:50pm [the husband] would have already collected the girls from school. [The husband] had very little energy as he was still weak and the medication made him drowsy. Having spent the afternoon with the girls [the husband] was exhausted by the time I arrived home. I often arrived home to find him sound asleep on the rocking chair on the front porch. I then cooked dinner, helped the girls with homework, did washing and organised the girls for bed. [The husband] was not able to do simple tasks during the day like hanging washing on the line as he was too weak to carry the washing basket and struggled to reach up to the clothesline.
The husband’s written evidence was contained in paragraphs 82 to 85 of his affidavit, which we reproduce below:
82.From that time [i.e. when the wife went back to work in 1999] I took over the role of househusband and I assumed the greater responsibility for the care of the children who were then in their early primary years at school.
83I usually took the children to and from school and attended school activities to which parents were invited during the day such as helping with lessons, school outings and organizing library reading material. I participated in the School Parents and Citizens Association and became the School Treasurer. I estimate that I spend no less than two hours up to four hours each week at the school assisting with reading and serving on various parent committees.
84.Particularly from mid 2000 until separation, I cooked the majority of meals for the family, prepared the children for school, took them to and from school. I purchased food and household items. From about mid 2000 until the wife moved out in December 2003 [sic] I assumed increasing responsibility for the housework such that in the last twelve to eighteen months of our relationship I was undertaking the majority of the household chores including:
(i)vacuuming;
(ii)dusting;
(iii)washing of the children’s clothes;
(iv)washing, hanging out and folding of bed clothes and towels;
(v)cleaning of the bathroom and kitchen.
85.I estimate that during this period I performed 90% of the household tasks.
The husband was strongly challenged on these allegations. We repeat below the relevant portion of the cross-examination: Appeal Book 425.
It’s false to suggest that you did the majority of the vacuuming, dusting, washing the children’s clothes, washing and hanging out and folding of bedclothes and towels, cleaning of the bathroom and kitchen. I suggest that it’s a falsity to suggest you did the majority of those things? --- In late period of our relationship - - -
You either agree with that or not. It’s a falsity I’m suggesting to you. Do you disagree with that? --- In late period of our relationship, no.
It’s untrue to suggest by you that you did 90 per cent of the household tasks? --- In our – again, in the late stage, yes.
Because the position was that my client still continued to do most of all of those tasks except that you contributed more than you had before you had your accident. Would that be a better way to put it? --- Better of putting it would be that I contributed substantially more.
Yes, but substantially more than what you did before the accident. That’s the best way to put it, isn’t it? --- Substantially more in the (indistinct), when I say I did the majority of work in our late stage, our thing, that’s what I did.
Because what – I’m suggesting to you that she still did the majority, if we look at 50 per cent, 51 per cent being the majority, she still did the majority of those things? --- She didn’t.
It will be noted that the husband was at pains to confine his defence of his claims in his affidavit to the “late period of our relationship”. He was not asked to specify what he meant by this expression, but in the context it did not appear to be directed to the entire period of the relationship following the wife’s return to work in 1999. Indeed, it would be surprising if the husband was physically capable of doing all that he claimed to be doing after 1999 in light of the extent of his injuries and the period he had spent in hospital.
Although not mentioned by his Honour, there can be no doubt that the husband’s credibility was seriously damaged at trial when it became apparent he had not been frank with the medical experts. This is quite apart from the occasions when he conceded in the course of his own cross-examination that statements he had made in his affidavit were inaccurate. The wife’s credibility had also suffered to some extent during the course of her cross-examination. However, given the extent of the husband’s disabilities and the way the parties had always conducted their domestic affairs, even when both were working, we consider it likely that the wife did much more around the home after she went to back to work than the husband was prepared to concede. We accept that the husband probably attended to an increasing share of the household duties as his health recovered, but we consider it most likely that the wife continued to undertake a significant proportion of the housework and childcare when she was not at work.
Taking all of these matters into account, we are of the view that the wife has made a significantly greater contribution than the husband since the accident. Not only has she been in regular employment, but she has also provided significant assistance around the home and in the care of the children, especially in the earlier years following the accident.
Contributions since separation
The wife has continued to work to maintain herself and the children in the period after separation. The husband has continued to spend time on his investment activities but otherwise has not worked.
Although his Honour thought that the payment by the husband of mortgage and other expenses on the [second Canberra] home in the period after separation should be given “some but little weight” we do not propose to give those payments any weight. The husband had the benefit of the occupation of the home and had no capital or income other than from those sources we have already identified and for which he has been given credit. He should not be given credit for meeting expenses out of that capital and income.
Both parties have made a significant contribution to the welfare of the family by caring for the children in the period since separation. Although the youngest child spends one more night a fortnight with the wife than with the husband, we consider that the respective contributions of the parties to the welfare of the family since separation should be seen as being of equivalent value.
Overall, we conclude that the wife has made a greater contribution than the husband following separation, since she has been in regular employment and been providing as much of the care of the children as the husband.
Overall assessment of contributions
Assessment of contributions is a highly subjective exercise. We need to take into account the substantial financial contribution made by the husband around the time of the marriage and we must also take into account his contribution of the greater portion of the damages. We need to factor in the contributions of equal value made by the parties in the period leading up to the accident and we need to take into account that the wife’s contributions have exceeded the husband’s since the accident.
Although we have taken a different approach than his Honour on a number of issues, in the re-exercise of his discretion, we have independently reached the same view as he did – namely that contributions should be assessed as having been made in proportions 75% by the husband and 25% by the wife.
Adjustment for s 75(2) and other factors
We turn now to consider what adjustment (if any) should be made on account of the factors in s 75(2).
The husband is 47 and the wife 41 years of age. The two children are now 15 and 13.
The wife has a qualification [in her field] and earns about $33,000 per annum. She does not have any restrictions on her ability to earn an income, save for the obligations she has to the children. Her hours are presently 9.00 am to 3.00 pm three days a week and 7.00 am until 3.30 pm on the other two days. She reduced her hours in December 2003, because of the stress she said she was experiencing when she was still living with the husband.
We accept that, for the time being at least, it is reasonable for the wife not to work more hours than she presently does. She is obliged to look after the girls every second week and has the youngest child one night in the intervening week. The children are used to having one of their parents at home. In the medium to longer term, the wife should be able to take on more hours of employment and earn a greater income, especially if she is able to find employment where her [particular] qualification is recognised, which is not presently the case. There was no evidence to indicate how much [other people within her field] might be paid, but we are not persuaded that she is likely to earn a great deal more than she presently receives.
The husband claims that he is unable to engage in paid employment and proposes to attempt to earn a living from share trading and investing. There was no challenge made to his Honour’s finding that there is “some evidence that [the husband] is capable of doing something” apart from being an investor. In our view, that finding was open to his Honour, especially in light of the retreat made at trial by the medical experts from earlier pessimistic assessments of the husband’s ability to work.
[A doctor], an orthopaedic surgeon, had always considered that the husband should be “capable of at least part-time modified work duties”. [The orthopaedic surgeon] had been aware when he prepared his assessment that the husband had a significant ongoing involvement in [sport]. He knew, for example, that the husband had taken part in a [significant sporting event]. When he was made aware in cross-examination of the full extent of the husband’s involvement in [sport] [the orthopaedic surgeon] said it highlighted his view that it was “difficult to understand why this gentleman has not been able to return to work”: Appeal Book 452.
[Another doctor], a neurologist who had been appointed as a single expert, originally thought that “on the history available, [the husband] is not able to undertake employment in the outside workplace”. However, the husband had presented himself in such a way that [the neurologist] believed he would not be able to [participate in a sport] and thought it “ridiculous” to imagine he could [participate in a sport in a particular way] – notwithstanding that the evidence established that the husband had done so: Appeal Book 464 & 465.
Whilst his Honour did not make any adverse finding about the husband’s credibility, consideration of his cross-examination (Appeal Book 361 et seq) and the evidence of the medical experts indicates that such a finding would have been open. Although we conclude that the husband exaggerated the extent of his physical limitations to the experts, we nevertheless accept that he does have ongoing disabilities and has suffered from depression. These health problems will undoubtedly impede him from engaging in many types of work, but we were not convinced that the husband will be unable to engage in any paid employment. We are, of course, unable to predict what form that employment might take or how much the husband might earn.
We accept that the husband will be unable to claim social security benefits until 2018. We accept also that he may incur medical expenses in the future relating to his injuries, although there was no evidence of the likely extent of such expenses.
There is a disparity in the capital available to each party. If no adjustment were made on account of s 75(2) factors, the wife would receive assets worth $332,265 and the husband would receive $996,795. We need to take into account also that some of these “assets” are only notional and are not available to the parties to meet their accommodation and other needs.
Both parties have ongoing obligations to provide for the children, who still have some years of dependency remaining. We do not agree with his Honour that it is inappropriate to “take account of the children as a relevant factor” simply because they spend roughly equal time with each parent. It is true that the accommodation needs and other costs would be similar in each household, albeit at the time of trial the wife was living with her parents. Nevertheless, each parent needs to be in a position to provide adequately for the children’s needs and it is the case that the husband has substantially more assets than the wife to meet those needs.
His Honour took into account the credit card liabilities the wife had incurred after separation as a relevant factor under s 75(2). He did not quantify the amounts but reference to Exhibit W7 indicates that they were about $3,785. We would have been inclined to take these into account in the assessment of the asset pool, since there was no suggestion that they represented anything other than reasonable expenses. This would have ensured similar consideration for the wife to that afforded to the husband, who successfully argued that his financial position should be assessed as it stood at the time of trial. In the absence of any cross-appeal, we propose instead to take these liabilities into account in consideration of the s 75(2) adjustment.
We also propose to take into account as a relevant matter the use the wife made of the interim property settlement. As we have already observed, his Honour treated that $40,000 as being in the wife’s possession, notwithstanding that she had expended all but $5,585. She had spent $11,000 on legal costs; $20,274 on discharging credit card liabilities incurred prior to her leaving the home; and the balance on living costs. The parties agreed that the $11,000 spent on legal costs and the $5,585 she had remaining in the bank should not be included in the asset pool. To do otherwise would have amounted to double counting of portion of the $40,000, since the entire interim settlement was added back into the pool. In these circumstances, when assessing the s 75(2) factors we propose to have regard to the fact that the wife spent $23,415 of her settlement on meeting legitimate debts and living costs that she would have had to fund from other sources had she not received the settlement.
It is difficult to predict what child support will be paid in the future. The parties agreed at the time the interim property settlement order was made that they would not make a claim for child support until the property settlement proceedings were determined. The extent of future child support will depend on what work the parties do and the success they have in their investment activities, especially the husband who will be left with the greater share of the capital.
We were not persuaded that there were any other matters referred to in s 75(2) or s 79(4)(e) to (g) that would be of any relevance.
The assessment of adjustments to be made on account of s 75(2) is also a highly subjective exercise. In the exercise of the wide discretion available to us, and after taking into account each of the factors we have identified, we consider there should be an adjustment of 5% ($66,453) in favour of the wife. We have taken into account in particular the wife’s need to provide suitable accommodation for the children; the fact she used much of her interim settlement to meet legitimate expenses; and the disparity in the financial positions of the parties. We have also taken into account that although the wife does not have the same physical limitations as the husband, she has a capacity to earn only a fairly modest income. On the other hand, the husband has the capacity to earn some income from personal exertion to supplement the income he can derive from investment of the much larger capital available to him.
The net effect of our findings is that the wife will receive assets to the value of $398,718 and the husband will receive $930,342. We consider this outcome to be just and equitable.
Orders
We were informed that the husband had complied with the property orders and that in the event the appeal succeeded on any ground other than Ground 3, the wife would be required to refund a portion of the moneys she has received.
Although we have found substance in a number of the husband’s grounds of appeal, we have in the re-exercise of the discretion arrived at the same percentage outcome as his Honour did. Accordingly, the only order we need to make in relation to the substantive appeal is that necessary to correct the errors identified in Ground 3. We have earlier in these reasons foreshadowed the orders we propose to make in relation to the husband’s application filed on 17 April 2008.
There was also an appeal against a costs order made by his Honour. We have previously made orders providing for the filing of written submissions concerning that appeal and the question of costs of this appeal. In the event costs are sought in relation to the application filed on 17 April 2008, submissions in support of that application may be made at the same time.
I certify that the preceding two hundred and eight (208) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date: 4 September 2008
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