Gibb & Norman
[2022] FedCFamC1A 14
•9 February 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Gibb & Norman [2022] FedCFamC1A 14
Appeal from: Orders dated 23 March 2021 Appeal number(s): WEA 10 of 2021 File number(s): PTW 4496 of 2017 Judgment of: AUSTIN J Date of judgment: 9 February 2022 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Appeal from the Magistrate’s Court of Western Australia – Whether the magistrate erred in refusing the wife’s application for an adjournment – Where the refusal was an entirely rational procedural decision which did not unfairly prejudice the wife – Whether the magistrate erred in refusing to allow the wife to re-open and adduce further evidence – Where the nature of the evidence had no material bearing upon the outcome – Whether the magistrate erred in disregarding evidence affecting the value of the wife’s impending inheritance – Where the wife failed to adequately disclose facts and circumstance about her inheritance – Whether the magistrate “made a significant error of law or fact” in disregarding evidence of the wife’s “obligation and intention to transfer” a piece of real property to her family – Where the property was not included in that which was divisible between the parties, and the wife’s decision to transfer it did not detract from the fact it was a valuable resource – Whether the magistrate erred in respect of property orders concerning a corporation – Where the wife will have no contingent liability in respect of that corporation.
FAMILY LAW – APPEAL – PARENTING – Whether the magistrate failed to take the children’s best interests into account – Where the decision was open – No error demonstrated – Appeal dismissed – Costs ordered in a fixed sum.
Legislation: Family Law Act 1975 (Cth) ss 60CC, 75, 79
Property Law Act 1969 (WA) s 34
Transfer of Land Act 1893 (WA) s 63
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 13.53
Cases cited: Autodesk Inc v Dyason (No.2) (1993) 176 CLR 300; [1993] HCA 6
Conway v The Queen (2002) 209 CLR 203; [2002] HCA 2
De L v Director-General of NSW Department of Community Services (No.2) (1997) 190 CLR 207;[1997] HCA 14
Lane & Nichols (2016) FLC 93-750; [2016] FamCAFC 234
Smith v NSW Bar Association (No 2) (1992) 176 CLR 256; [1992] 36
Number of paragraphs: 74 Date of hearing: 9 February 2022 Place: Newcastle (via video link) The Appellant: Litigant in person Counsel for the Respondent: Mr Klicker Solicitor for the Respondent: Beacon Family Law ORDERS
WEA 10 of 2021
PTW 4496 of 2017FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS GIBB
Appellant
AND: MR NORMAN
Respondent
ORDER MADE BY:
AUSTIN J
DATE OF ORDER:
9 FEBRUARY 2022
THE COURT ORDERS THAT:
1.The appeal is dismissed.
2.The appellant shall pay the respondent’s costs of and incidental to the appeal in the fixed sum of $10,000.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Gibb & Norman has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE
REASONS FOR JUDGMENTAUSTIN J:
On 23 March 2021, a magistrate of the Magistrates Court of Western Australia made orders to finalise the parties’ disputes over their children and the division of their property.
The appellant wife appealed from all of the property settlement orders but, in respect of the parenting orders, only the order which provided for the children to live with the respondent husband. He resisted the appeal.
For the reasons which follow, the appeal is dismissed.
BACKGROUND
The parties met in 1991, began cohabitation in 1993, and married in 1996.
In 1995, they purchased the former family home at Suburb A (“the family home”) in which they and the children lived for the remainder of the marriage and, over time, it was renovated and improved.
In around 2010, the parties set up a corporation and self-managed superannuation fund as vehicles for wealth creation and expansion. The parties established the corporation named “K Pty Ltd” (“the corporation”), of which they were equal shareholders and joint directors. The husband conducted a business via the corporation, which the wife helped administer. She terminated other paid employment to work in the corporation’s business. The parties were the joint trustees of the self-managed superannuation fund they established.
The wife’s father passed away in November 2016 and probate was granted in respect of his deceased estate in April 2018. The wife is a beneficiary of the estate, but the estate had still not been distributed either at the time of trial in February 2020 or at the time the final orders were pronounced in March 2021.
Upon the parties’ separation in 2017, the wife vacated the family home, which the husband and the children have since occupied. After initially living alone elsewhere, the wife eventually commenced to live with her mother and sister in a property she was given by her late father in 2013 (“the Suburb B property”).
At the time of trial, the husband was still operating the corporation’s business. By then the wife was unemployed, but was still assessed by the magistrate to have an income-earning capacity, albeit significantly less than that of the husband.
The wife’s Suburb B property and her expected inheritance from her late father’s estate were excluded from the divisible pool of property, but were taken into account by the magistrate as being resources available to her when assessing the adjustment under s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).
The magistrate determined the divisible pool of assets and superannuation should be justly and equitably divided in shares of 62 per cent to the husband and 38 per cent to the wife, for which outcome written reasons for judgment were published on 19 October 2020. However, no property settlement orders were actually then made.
In more reasons subsequently published on 25 May 2021, the magistrate explained it was not possible to pronounce final orders in October 2020 because, in the months elapsed since the trial had finished in February 2020, the corporation had sold two real properties which yielded a much greater return than the parties had expected, creating some uncertainty about the revised value of the pool of assets once the sale proceeds and capital gains tax were taken into account. If that were so, one wonders why the original reasons were published before the final decision was reached and final orders were pronounced.
In any event, in October 2020, the proceedings were adjourned to enable the parties to garner more evidence about the financial effect of the sale of the corporation’s properties. As it transpired, the sale proceeds increased the net value of assets and superannuation from $1,468,884 to $1,777,811. The husband consequently conceded the wife deserved a greater proportion of the assets and superannuation: he conceded 40 per cent, but the magistrate found 42 per cent, thereby increasing the wife’s share by four per cent.
The orders made by the magistrate on 23 March 2021 to then finally determine the property settlement proceedings reflected the revised division. As an incident of the property division, the husband acquired sole title in the family home and exclusive ownership of the shares in the corporation, subject to a lump sum payment to the wife and her protection against liabilities.
In respect of the parenting proceedings, orders were made for the parties to have equal shared parental responsibility for the children, for the children to continue living with the husband, and for them to spend time with the wife in accordance with their wishes.
THE APPEAL
Grounds 1, 3, 6 and 8 were struck out by interlocutory orders made on 13 October 2021.
The entirety of the wife’s effort in the appeal was directed to the property settlement orders, so it is convenient to start there.
PROPERTY SETTLEMENT ORDERS
In effect, the property settlement orders required:
(a)the division of the net sale proceeds realised on the sale of the corporation’s two real properties between the parties, after the payment of capital gains tax, in proportions of 42 per cent to the wife and 58 per cent to the husband (Order 14);
(b)the husband’s acquisition of sole title to the family home, subject to his discharge of the mortgage (Orders 15(a) and 15(b)) and his indemnity of the wife against any liability in respect of outgoings on the family home (Orders 16 and 18);
(c)the husband’s acquisition of sole title to the shares in the corporation (Orders 15(d) and 17); and
(d)the husband’s payment to the wife of $32,500 (Order 15(e)).
In summary, aside from two procedural complaints (Grounds 2 and 10), the wife challenges the magistrate’s treatment of her expected inheritance (Grounds 4 and 9), the treatment of the Suburb B property (Ground 5), and the treatment of her contingent liability as a guarantor of the corporation’s bank debt (Grounds 7 and 11).
Ground 10
This ground alleged the magistrate erred in applying ss 75 and 79 of the Act “regarding the [wife’s] state of health”.
By advertence to the wife’s Summary of Argument, it is apparent that this ground of appeal pertains to the magistrate’s refusal of her adjournment application at the commencement of the trial, supposedly made because she was feeling unwell.
The transcript shows the wife’s application for an adjournment of the trial was indeed refused, though her application was not actually predicated upon her feeling unwell. The following exchanges in the transcript reveal the wife foreshadowed an adjournment application the week before because she was without legal representation:
[THE WIFE]: I’m not feeling very well, your Honour. I’ve been vomiting all morning, so if I get sick, I’ve got a bag, but there’s not much I can do.
HER HONOUR: All right. Well, look, if you need to leave the courtroom, you will just need to let me know and we can adjourn the court for a short time. So, [to the wife], you’ve wrote to the court last week requesting that the trial date be adjourned.
[THE WIFE]: Yes.
HER HONOUR: The difficulty is that you’ve decided not to have legal representation. But this case has been before the court since 2017, and these three days have been set aside to hear the case. So it’s improbable that I’m going to be able to grant you an adjournment. So you’ve sought an adjournment on the basis that you are seeking a grant of legal aid.
[THE WIFE]: Yes.
…
HER HONOUR: Look, I have got the impression that it’s unlikely that you’re going to be granted Legal Aid because of the assets that you have an interest in. So Legal Aid refused on – do you have a copy of the letter that Legal Aid sent to you so I can see what grounds they refused your Legal Aid on?
[THE WIFE]: Yes, I do.
…
HER HONOUR: I think – my preliminary view is that I can’t see how you’re likely to be successful in review application given what evidence I have about the financial assets and resources that might be available to you. Legal Aid have strict criteria in relation to financial eligibility, and that letter appears to confirm to me that you don’t meet their guidelines for a grant of legal aid. So, [to the wife], it would be preferable for you to have legal representation, but I think the trial has to proceed. Is there anything else you wanted to say in relation to the application to adjourn?
[THE WIFE]: Well, I’ve got $200 in my bank account and I – when I wrote to Legal Aid, I told them …
…
HER HONOUR: Is there anything else you wanted to say in respect of your request that the trial be vacated?
[THE WIFE]: Only just that I haven’t – I’m not ready and my mental health hasn’t been the best, so I don’t feel like I can self-represent. But I’m here today and I’m just trying everything. …
…
HER HONOUR: Okay. All right. Well, look, unfortunately, [to the wife], I can’t vacate today’s listing and the trial needs to proceed. I don’t believe that you’re – there’s very – I don’t believe there’s any prospect that you’re going to be successful on a review application and that review, I think, would take many weeks before it could be organised, in any event. And you did have an option to have Firm L to continue to represent you on the basis of deferred fees. So I think we really need to push ahead with the trial. So I can give you – if you become unwell, you can let me know and we can take a break so that – until you’re comfortable to resume again. But we really do need to proceed. If I don’t proceed today, it would be a very significant delay before the matter could then be relisted for a trial, and that is not appropriate in my view.
(Transcript 17 February 2020, p.2 lines 16–36 and 45–50, p.3 lines 1–33 and 46–50, p.4 lines 40–46, p.5 lines 28–44)
(Emphasis added)
Thereafter, the trial commenced and ran for three days, with the wife representing herself throughout. She did not request any breaks to accommodate her physical illness, despite the magistrate’s offer.
In the reasons for judgment, the magistrate said:
10.…
(a)Initially the wife applied for an adjournment of the trial because she was in the process of seeking a review of a decision by Legal Aid WA after her grant of aid for representation at trial was refused. The adjournment was declined on the basis the proceedings had been on foot since 2017 and Legal Aid funding was unlikely to be forthcoming given the wife's assets and financial resources would render her ineligible to receive aid.
The refusal of the adjournment application was an entirely rational procedural decision which did not unfairly prejudice the wife and, from her perspective, had no deleterious effect upon the outcome of the proceeding. This ground fails.
Ground 2
This ground asserted the magistrate “made a significant error of law or fact” in the application of ss 75 and 79 of the Act, given the “significant changes in circumstances” which supposedly occurred during the time elapsed between the trial in February 2020 and the pronouncement of final orders in March 2021.
The wife did not specify, either in the ground of appeal or in her Summary of Argument, what the “significant changes in circumstances” actually were. Nor did she articulate them during the appeal hearing. The only circumstances which changed materially after the trial were those concerning the sale of the two properties by the corporation and the liability for capital gains tax incurred in respect thereof. Following that particular issue being raised in October 2020, the proceedings were successively adjourned to November 2020, December 2020 and March 2021, thereby holding up the pronouncement of final orders.
At the hearing before the Court on 10 March 2021, the husband’s counsel said this to the magistrate:
[COUNSEL FOR THE HUSBAND]: … so we adjourned to today in relation to the issue of any additional evidence about the tax and proceeds of sale. Your Honour has – or the applicant has filed two additional affidavits. I have spoken with the respondent and she does not seek to cross-examine them. I note that … the accountant, Mr N, is available by telephone if required, but that evidence is not sought to be opposed. The respondent has then filed an additional affidavit, your Honour; however, that affidavit does not go to the tax issue and the proceeds of sale, and the applicant opposes that affidavit being relied upon.
(Transcript 10 March 2021, p.2 lines 13–25)
(Emphasis added)
The husband’s counsel then explained the import of the additional evidence led by the husband and, once several enquiries raised by the wife about the meaning of such evidence were satisfactorily answered, she had no objection to the reception of that evidence.
In relation to the admission of the additional evidence filed by the wife (being an affidavit she filed on 26 February 2021), to which the husband objected, the situation was left quite unclear. The wife did not overtly make any application to re-open her case and adduce the evidence contained in her recently filed affidavit, though the husband and magistrate certainly understood that was what she wanted.
On 10 March 2021, these further exchanges occurred about the wife’s affidavit:
HER HONOUR: So I will just give you a date to come back so that I can pronounce those orders once I’ve been able to consider the matter. … I will make an order that the proceedings be adjourned to not before 12 noon on Friday, 19 March.
[COUNSEL FOR THE HUSBAND]: … I note that I did make some brief submissions about the respondent’s affidavit, and I don’t think your Honour made a ruling on that. I think it is important that your Honour makes a brief comment.
HER HONOUR: … I’m not going to reject the affidavit as such except insofar as it deals with the child-related issues. But, insofar as it relates to issues that would, effectively, be potentially a reopening, I don’t intend to have any regard to them. Okay?
[COUNSEL FOR THE HUSBAND]: Thank you, your Honour.
HER HONOUR: … I don’t think it’s appropriate for me to reopen the children’s issues, but I will have regard to the balance of your affidavit that deals with the implementation of the judgment. Some of your affidavit deals with issues that I don’t believe I’m entitled to take into account, but I can elaborate on that on the next occasion. All right?
[THE WIFE]: All right.
(Transcript 10 March 2021, p.11 lines 41–44, p. 12 line 44 to p.13 line 26)
(Emphasis added)
The proceedings resumed nearly two weeks later on 23 March 2021 (not 19 March 2021), at which time the magistrate said this:
HER HONOUR: … I’m just going to give some very brief reasons and then pronounce the orders. … Now, [to the wife], I didn’t feel that the proceedings could be reopened in light of the – you didn’t make a formal application but I did take into account that that’s what I think you were trying to do. But I wasn’t prepared to do that. If I’ve made an error it will be a matter to be dealt with by the Appeal Court …
(Transcript 23 March 2021 p.2 lines 12–14 and 45–50)
(Emphasis added)
That was all the magistrate said to deal with the wife’s imputed request to re-open and adduce further evidence, from which it now remains uncertain what part, if any, of the wife’s further evidence was admitted and taken into account. The issue was not mentioned in the written reasons later published in May 2021, so the oral exchanges in open court on those two occasions in March 2021 offer the only insight.
Assuming for the moment that none of the evidence was taken into account and the magistrate thereby fell into error, either by making that decision without proper regard for binding legal principles (De L v Director-General of NSW Department of Community Services (No.2) (1997) 190 CLR 207; Autodesk Inc v Dyason (No.2) (1993) 176 CLR 300; Smith v NSW Bar Association (No 2) (1992) 176 CLR 256) or, alternatively, by failing to give adequate reasons to explain the refusal to allow the wife to re-open and adduce the evidence, another question importantly arises as to what (if any) effect that had on the outcome of the proceedings.
The evidence in the wife’s affidavit filed in February 2021, in so far as it related to the property settlement dispute, covered these matters: the sale of the two properties owned by the corporation and the capital gains tax implications; her disagreement with the orders proposed by the husband in respect of the corporation; the closure of an investment loan account secured against the family home; and the inchoate liability allegedly payable by the estate of the wife’s late father to the Bank P.
First, the information related to the sale of the two properties owned by the corporation and the capital gains tax thereby attracted was already covered by the additional evidence adduced by the husband and did not advance the matter. None of the wife’s evidence was any different.
Secondly, the wife’s disagreement with the property settlement orders propounded by the husband was already patent, so it was unnecessary to receive her sworn evidence confirming such disagreement.
Thirdly, the evidence concerning the closure of the investment account made no difference to the property settlement orders made by the magistrate, as the husband was ordered to discharge the mortgage secured over the family home and to indemnify the wife against any other liability related to the family home (Orders 15(b), 16 and 18).
Lastly, the debt allegedly owed by the wife’s late father’s estate to Bank P was an issue addressed at length at the trial and in the reasons for judgment delivered on 19 October 2020. The wife’s further evidence revealed proceedings were commenced against her late father in the Supreme Court of Western Australia in 2015 and how, in June 2019, Bank P was substituted as the second plaintiff in those proceedings. Self-evidently, that evidence was available to the wife before the trial occurred in February 2020, though she had done nothing to acquire it at the time, but it still did not prove the deceased estate will be saddled with enormous debt, as the wife sought to contend at trial and in the appeal. The Supreme Court suit might yet be successfully defended but, even if not, the extent of the ultimate liability is still completely unknown.
Those other proceedings are moving very slowly, given they were commenced in 2015 and the identity of the parties to the suit was still being settled in 2019. There is still no evidence about the state of the proceedings since June 2019. The wife made no application to adduce further evidence about that issue in the appeal, though she did say in her Summary of Argument:
The Executors of the Estate have resolved to dispute the debt claimed by [Bank P]. The Estate has not had a response to date from [Bank P] and the Appellant wife is unable to elaborate further at this stage.
Evidently, the situation with the Supreme Court suit is just as opaque now as it was before the magistrate.
Even if the magistrate did err by refusing to allow the wife to re-open and adduce the evidence within her affidavit filed in February 2021 before pronouncing the final orders in March 2021, it is reasonably clear from its nature that the evidence had no bearing upon the outcome and so the assumed error of law was immaterial. Errors of law will not sustain an appeal unless they cause a miscarriage of justice (Conway v The Queen (2002) 209 CLR 203 at 207, 208, 217, 219, 220, 232 and 244; Lane & Nichols (2016) FLC 93-750 at [72]–[81]). That did not occur here. This ground of appeal is rejected.
In her Summary of Argument, the wife gratuitously alleged the magistrate’s bias against her, but those allegations fall outside this or any other ground of appeal and are therefore rejected.
Grounds 4 and 9
These two grounds attack the magistrate’s decision to disregard evidence affecting the value of the wife’s impending inheritance from the deceased estate of her late father. It was asserted the omission entailed misapplication of ss 75 and 79 of the Act amounting to a “significant error of law or fact”.
The magistrate set out the parties’ positions in respect of the wife’s expected inheritance this way:
5.In the property proceedings, the husband seeks orders to effect a 65% division of the matrimonial assets, liabilities and resources in his favour. In calculating the value of the matrimonial asset pool, the husband does not seek to include the wife's inheritance assets, namely her share in the estate of her deceased father, [name] ("the Estate") nor does he seek to include a property valued at $1.5 million [the Suburb B property] ("the Suburb B property") which is registered in the wife's sole name.
6.The wife claims she holds the Suburb B property on trust for her mother and sisters. The husband believes the wife is the beneficial owner of the property but he accepts it is appropriate for the wife's mother to retain a life interest in the property. The husband argues the wife's entitlements to the inheritance pool and ultimately to the Suburb B property are substantial and relevant to the Court's consideration of s 75(2) factors.
…
10.
(f)The value of the wife's interest in the Estate of her father was difficult to assess and a range of values for the Estate are possible. The potential range is significant and the value of the wife's ultimate interest will be depend on both disputed land valuations but primarily whether a significant debt is owed by the Estate to Bank P.
(g)The husband complained the wife had failed to give proper disclosure of her bank accounts and documents concerning her inheritance, the Estate and other assets in which she has an interest. It was acknowledged by both parties that there had been a lack of disclosure by the wife about documents concerning the Estate and in particular the issue of the potential liability owed by the Estate to Bank P. The husband argued there is a possibility that the claim by Bank P has been abandoned.
16.The wife struggled to clearly present her case as a self-represented litigant. There were several significant inconsistencies in aspects of the wife's evidence particularly about the circumstances in which she claims the Suburb B property was transferred into her sole name. Further inconsistencies arose in respect of statements the wife made about her future intention to transfer this property from her name into the names of her mother and siblings. The wife's evidence about the delay in the winding up of her father's Estate and the alleged debt owed to Bank P was vague and not supported by any recent independent evidence.
17.The wife did not appear to appreciate the importance of her potentially substantial inheritance upon the determination of what would be an equitable division of the marital asset pool. It also appeared the wife and her family had taken a "none of your business" attitude to the husband's repeated requests for disclosure of relevant Estate documents.
…
20.The wife was quick to blame her family and the other Executors of the Estate for her failure to provide any disclosure of relevant documents. Clearly, these documents were relevant and I consider that the wife was in a position to give disclosure but chose not to because she did not appreciate the relevance and she did not wish to reveal the value of her entitlements. The wife's failure to give disclosure in the overall presentation of her case made it very difficult to obtain a clear picture of her future entitlements. As a consequence, I consider it appropriate to take a robust approach to the assessment of the wife's interest in the Estate.
…
118.Around 2008, the wife became involved with a dispute which had arisen between Bank P, the wife's brother and the wife's father in respect of borrowings advanced by Bank P. The wife's father had acted as guarantor for the loan. Her brother's business enterprise was unsuccessful and Bank P pursued the wife's father pursuant to the guarantee. It was claimed by the [wife’s] family that Bank P had breached its fiduciary duties and the borrowings had been a form of predatory lending.
119.Bank P later took action to seize property owned by [the wife’s late father] in Town Y but the sale of that property did not entirely extinguish the debt. The wife claims the Estate is subject to a potentially significant outstanding debt owed to Bank P pursuant to the guarantee. The Estate also has a potential claim against other co-guarantors.
…
124.The wife's father passed away on 30 November 2016, at the age of 81. The beneficiaries of his Estate are the wife's mother, [name], the wife and her five siblings.
…
135.The wife disputes the husband's claim that her interest in the Estate is substantial and she argues the Estate has a significant outstanding claim by Bank P. She acknowledges that the [wife’s] family dispute the claim of Bank P however her position is that ultimately her entitlements in the Estate may be modest. The wife explained the delay in winding up the Estate has been partially caused by the need to first finalise the estate of her grandmother. The wife could not provide recent or satisfactory evidence of the intention of Bank P to pursue any alleged but unsecured debt. The only evidence of an outstanding debt owed to Bank P was a statement dated 2017.
…
137.The wife's father died in 2016 and probate of his Estate was granted on 27 April 2018, on an amended basis. The executors of the estate are the wife's mother, the wife and her three sisters.
…
139.The wife says her father's one-third interest in the Town O property was left to his wife, [name] together with the wife and her sisters but not to the wife's brother. The residuary of the Estate was left to the wife, all of her siblings and the wife's mother in 7 equal parts. The wife claims that the distribution of her father's Estate cannot be finalised because of the claim by Bank P. The wife says that if the claim is upheld the Estate will be worth around $800,000 and the wife will receive between $115,000 and $130,000. The Estate has however disputed the entirety of the claim by Bank P. The wife understands that the next step will be Court proceedings if Bank P choose to proceed with its claim. The wife conceded that Bank P had not commenced court proceedings against the Estate.
…
168.It is the wife's case that ultimately she may receive very little by way of inheritance due to the fact that there is a significant debt owed to Bank P She claims the Bank is now owed nearly $5 million. She therefore argues that it is appropriate for the Court to make an adjustment in her favour for s 75 (2) factors. The wife has however failed to give proper disclosure of documents concerning the administration of the Estate and in respect of the claim by Bank P When a subpoena was issued to her legal representatives it was met by a request that the sum of $5,000 be paid by the husband to meet the costs of compliance.
169.The fact that the wife was unrepresented at trial was an inadequate explanation for the long-standing failure to give disclosure of important documents. It should have been abundantly clear particularly whilst the wife was legally represented that the extent of the wife's interest in the Estate was highly relevant. If the Estate was indeed still subject to a significant claim it was in the wife's interests to establish this by giving disclosure and by providing appropriate evidence. The only evidence provided to the Court was an old statement dated in 2017 which could not be authenticated or placed in any context.
(Emphasis added)
Against that evidentiary background, the magistrate found it was unclear when the inheritance would crystallise (at [171]), but attributed a value of around $185,000 to it, which allowed for the estate’s liability to Bank P of over $4 million (at [136]).
The wife’s submissions were all directed to the proposition that, when considering the value of her imminent inheritance, the magistrate ignored the debt due by the estate to Bank P, which would greatly diminish her proportional share of the estate. The submissions are rejected as the magistrate was expressly cognisant of the uncertainty which attended both the existence and quantification of the alleged estate debt to Bank P (at [10(f)] and [147]).
Given the allied finding about the wife’s failure to adequately disclose facts and circumstances about her inheritance (at [10(g)], [16], [17], [20], [135], [168] and [169]), the correctness of which finding is not challenged, then, as was open, the magistrate decided to take a robust approach to the assessment of the value of her prospective entitlement (at [20]). While the wife contended her inheritance might be worth as little as $115,000 to $130,000 (at [139]), the magistrate approximated its value at around $185,000 (at [136]).
The lack of merit in these grounds can be demonstrated in another way. In finding the wife’s inheritance would approximate $185,000, the magistrate assumed that one of the estate assets – a parcel of real property at Town O – was worth only $1.6 million (at [136]). However, the magistrate accepted the wife’s contention that the expert valuation evidence in respect of that property was unreliable and it was in fact worth much more (at [22] and [153]–[154]). The wife admitted in evidence-in-chief she believed the property was worth $4.2 million but, later during the proceedings, she said she thought it could even be worth much more (at [154]). The magistrate and the wife had this exchange:
HER HONOUR: … if you take the debt out from Bank P, then the estate is potentially worth a lot of money, especially because the valuation of the Town O property at 4.2 million might be conservative. Because as you point out, it might be much more valuable.
[THE WIFE]: Yes. Absolutely, I believe that.
(Transcript 19 October 2020, p.9 lines 22–27)
Obviously enough, if the assets of the deceased estate are worth much more than originally thought then, regardless of the size of the estate’s potential debt to Bank P, the wife’s share of the estate is liable to be much more valuable than the magistrate found. Significantly, the wife believes the value of her inheritance from the estate of her late father could be much greater than the sum assumed by the magistrate.
No error is demonstrated and these grounds fail.
Ground 5
This ground asserted the magistrate “made a significant error of law or fact” in applying ss 75 and 79 of the Act to the evidence regarding the wife’s “obligation and intention to transfer [the Suburb B property]” to members of her family.
The magistrate observed this in the reasons for judgment about the Suburb B property:
5.In the property proceedings, the husband seeks orders to effect a 65% division of the matrimonial assets, liabilities and resources in his favour. In calculating the value of the matrimonial asset pool, the husband does not seek to include the wife's inheritance assets, namely her share in the estate of her deceased father, [name] ("the Estate") nor does he seek to include a property valued at $1.5 million [the Suburb B property] ("the Suburb B property") which is registered in the wife's sole name.
6.The wife claims she holds the Suburb B property on trust for her mother and sisters. The husband believes the wife is the beneficial owner of the property but he accepts it is appropriate for the wife's mother to retain a life interest in the property. The husband argues the wife's entitlements to the inheritance pool and ultimately to the Suburb B property are substantial and relevant to the Court's consideration of s 75(2) factors.
…
121.The husband case is that in September 2013, in recognition for the work the wife had done for the [wife’s] family the wife's father transferred the Suburb B property into the wife's sole name. Stamp duty of $25,000 was paid at the time by the husband and wife through [the corporation]. The wife's case is that the Suburb B property was always intended to be held on trust for the wife's family.
…
127.The husband seeks property settlement orders to achieve a distribution in his favour of 65% of the net value of the matrimonial asset pool inclusive of the parties' superannuation entitlements. He does not seek to include in the matrimonial asset pool the wife's inheritance assets. Although the wife claims she holds the Suburb B property on trust, the husband does not accept this to be the correct position and argues the wife is the beneficial owner of the property but her interest is subject to the wife's mother having a right to occupy the property during her lifetime.
134.The wife denies that she is the beneficial owner of the Suburb B property and claims that she holds that property on trust for her mother and siblings. She gave evidence that other family members were unhappy about the fact that the property had been transferred into her name and she intended in the future to use her savings of over $42,000 to pay stamp duty to transfer the property out of her name and to comply with her late father's wishes. The wife concedes that she currently lives in the Suburb B property with her mother and sister and there was no suggestion that she would be unable to live in that home in the future.
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144.The husband does not concede that the wife holds the Suburb B property on trust but accepts the wife's mother and sister, [name], will continue to reside there. The property therefore does not form part of the Estate. In terms of s 75(2) factors the husband argues that at some point in the future the wife will acquire the entire interest in the property which is currently valued at $1.5 million.
(Emphasis added)
The magistrate then found as follows in relation to the Suburb B property:
170.Further the wife's evidence about her interests in the Suburb B property was contradictory and confusing. Overall I consider the evidence indicates the wife has substantial entitlements in the inheritance pool including her interest in the Suburb B property. I do not consider it appropriate in the circumstances to make any s 75(2) adjustment in favour of the wife because of these substantial financial resources.
There is no factual contest at all that the wife was the sole registered proprietor of the Suburb B property, following the property being transferred to her by her late father in 2013. The terms of the deceased’s will signed in 2012 shows the Suburb B property was originally intended to form part of his estate (at [142]–[143]), but its ademption was ensured by its transfer to the wife in 2013.
The wife contended she held the Suburb B property beneficially upon trust for herself and her siblings (and perhaps also her mother) in equal shares. There was no evidence of that fact at trial, save for the wife’s uncorroborated assertion of it, which was misconceived in any event. The trust favouring the wife and her sisters was only alleged to exist by reason of an oral agreement the wife said she had with her late father, in which case the trust was invalid since no proprietary interest in land can be created other than in writing (s 34(1) of the Property Law Act 1969 (WA)). As the sole registered proprietor, the wife enjoyed indefeasible title in the Suburb B property (s 63 of the Transfer of Land Act 1893 (WA)).
The wife submitted in her Summary of Argument that she has since transferred the Suburb B property into the names of herself and her siblings as equal tenants in common. Assuming that to be so (since there is no evidence adduced in the appeal to affirmatively prove it), it was the wife’s prerogative to favour her siblings in that way due to her sense of moral obligation, but there is no evidence she was legally obliged to do so. Her voluntary divestiture of the majority of the asset did not remove it from consideration under s 75(2) of the Act.
Significantly, the magistrate did not count the Suburb B property amongst the property which was divisible between the parties. It was only ever taken into account as a resource which was available to the wife, allowing for the likelihood her mother would continue to live in the property for the remainder of her life and thereby constrain the wife’s ability to liquidate it. What the wife might later do (or has since done) with her own property was her business, but her decision to share it with her siblings did not detract from the fact it was a valuable resource to her. There was no dispute the Suburb B property was worth $1.5 million (at [5], [136], [144] and [149]).
No error is demonstrated. This ground fails.
Grounds 7 and 11
Ground 7 asserted the magistrate “made an error of law or fact” in applying ss 75 and 79 of the Act when “considering” the final orders the wife proposed in respect of the corporation.
The meaning of the ground is not readily apparent but, by reference to the wife’s Summary of Argument, her complaint is that the appealed orders gave the husband sole ownership of the corporation but left her with potential liability for a corporation bank debt, for which she is a joint guarantor. However, her concern is without substance.
Both parties proposed that, as a component of the property settlement, the husband would acquire sole ownership of the corporation. In respect of the corporation liabilities, for which the wife could possibly be indirectly responsible:
(a)on 10 March 2021, the magistrate ordered the parties to discharge a corporation bank debt and close the debit account within 14 days (Order 1), which the husband said, and the wife did not deny, was done; and
(b)on 23 March 2021, the magistrate ordered the husband to discharge the last remaining bank debt which is secured by mortgage over the family home and to indemnify the wife against any other liability related to the family home, once she transfers her interest in that property to the husband (Orders 15(b), 16 and 18).
The wife will therefore have no contingent liability in respect of the corporation, the family home or any other property owned by the husband once the appealed orders are implemented. This ground fails.
Without intending disrespect, Ground 11 is unintelligible and should be recited without any attempt to construe its real meaning:
11.The Judicial Officer made a significant error of law or fact when considering the evidence available at the original trial or refused to take into account available evidence or by the incorrect interpretation of available evidence pursuant to s 75 and s 79 of the FLA. Court Orders dated 10 March 2021 number 1 and sealed in the Magistrates Court of Western Australia, 150 Terrace Road seek to deal with the ongoing financial obligations of the parties to Westpac Banking Corporation ("Westpac") created by a new security guarantee dated 8 August 2012 given by the parties in respect of the purchase of the Units for [the corporation] in 2012 ("personal guarantee")
(As per the original)
It appears to be a further complaint about the wife’s continuing contingent liability under a personal guarantee for a bank debt of the corporation. If that is so, the ground fails for the reasons explained in respect of Ground 7.
PARENTING ORDERS
The only parenting order covered by the appeal was that which provided for the children to live with the husband (Order 2).
The single ground of appeal contends the magistrate erred in making that order because her Honour failed to take the children’s best interests into account, let alone accord their best interests paramount importance.
This ground was not the subject of any submission in the mother’s Summary of Argument or any oral submission during the hearing.
This aspect of the appeal can be disposed of shortly.
The magistrate correctly recited the legal principles by which the parenting dispute was to be determined (at [68]–[73]) and, in dealing with the factors prescribed by s 60CC of the Act which would influence findings about the children’s best interests, the magistrate:
(a)found the husband had been the children’s primary carer since 2016 (at [85]);
(b)acknowledged the children’s relationships with the wife were tense, as she admitted (at [39]) and the Family Consultant opined (at [63]), but were nonetheless improving (at [74] and [76]);
(c)accepted the Family Consultant’s recommendation that the children continue living with the husband (at [65]–[66]);
(d)identified and accorded significant weight to the views expressed by the children to continue living with the husband and to only spend time with the wife when they desired (at [3], [56]–[62], [75], [77] and [82]); and
(e)determined it would be detrimental to the children’s interests for them to live with the wife instead of the husband (at [69]).
Nothing suggests such findings were unavailable on the evidence. Axiomatically, the magistrate took into account the children’s best interests and the discretionary decision then made was open.
DISPOSITION
The appeal fails.
In the event of the appeal’s dismissal, the husband sought an order for costs. He filed a schedule of his itemised scale costs in the sum of $12,023.35, as required by r 13.53 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) and Order 10 made on 13 October 2021. That sum does not include the $500 awarded to the husband by way of costs on 22 September 2021, which order remains in force if not yet fulfilled. In oral submissions, the husband reduced his claim to $10,000 because some of the claimed itemised fees were only estimates.
The wife opposed any order for costs, but was unable to articulate any particular reason why. The wife is due to receive $32,500 as part of her share of the parties’ property, she is yet to receive her inheritance, and the magistrate found she has an income-earning potential, so she is not without financial capacity. The appeal was wholly unsuccessful and the costs order is warranted.
I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 9 February 2022
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