Gibbs & Gibbs
[2023] FedCFamC1A 37
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Gibbs & Gibbs [2023] FedCFamC1A 37
Appeal from: Gibbs & Gibbs (No 2) [2022] FedCFamC1F 831 Appeal number(s): NAA 257 of 2022 File number(s): SYC 5405 of 2018 Judgment of: ALDRIDGE, BAUMANN & STRUM JJ Date of judgment: 30 March 2023 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Where the appellant husband did not file material for trial – Where the husband asserts the primary judge did not provide adequate reasons – Where the husband asserts the primary judge made errors of law regarding a five per cent adjustment in the respondent wife’s favour under s 79(4)(e) and s 75(2) of the Family Law Act 1975 (Cth) – No error established – Appeal dismissed. Legislation: Evidence Act 1995 (Cth) s 144
Family Law Act 1975 (Cth) ss 75(2), 79, 79(4)(d)–(e)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Sch 3
Succession Act 2006 (NSW) ss 102, 129
Cases cited: AMS v AIF (1999) 163 ALR 501; [1999] HCA 26
Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
Brandt & Brandt (1997) FLC 92-758; [1997] FamCA 21
Chapman v Chapman (2014) FLC 93-592; [2014] FamCAFC 91
Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33
Dickons v Dickons [2012] FamCAFC 154
Elgin v Elgin [2015] FamCAFC 155
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
Hayne & Hayne (1977) FLC 90-265; [1977] FamCA 41
House v The King (1936) 55 CLR 499; [1936] HCA 40
Kannis & Kannis [2002] FamCA 1150
Kessey & Kessey (1994) FLC 92-495; [1994] FamCA 162
Lovine & Connor (2012) FLC 93-515; [2012] FamCAFC 168
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Noetel v Quealey (2005) FLC 93-230; [2005] FamCAFC 677
Rigby & Olsen [2021] FedCFamC1A 46
S & S [2000] FamCA 262
Singerson & Joans [2014] FamCAFC 238
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Suttor v Gundowda Pty Ltd (1950) CLR 418; [1950] HCA 35
Wallis & Manning (2017) FLC 93-759; [2017] FamCAFC 14
Washburn & Pacini [2020] FamCAFC 296
Waters & Jurek (1995) FLC 92-635; [1995] FamCA 101
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Williams and Williams (1984) FLC 91-541; [1984] FamCA 25
Number of paragraphs: 123 Date of hearing: 27 February 2023 Place: Sydney Counsel for the Appellant: Mr Batey Solicitor for the Appellant: Lionheart Lawyers Counsel for the Respondent: Mr Ford with Mr Watkins Solicitor for the Respondent: Solari & Stock Lawyers ORDERS
NAA 257 of 2022
SYC 5405 of 2018FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR GIBBS
Appellant
AND: MS GIBBS
Respondent
order made by:
ALDRIDGE, BAUMANN & STRUM JJ
DATE OF ORDER:
30 March 2023
THE COURT ORDERS THAT:
1.The husband have leave to rely upon “Ground 6” as a further ground of appeal.
2.The wife’s Application in an Appeal filed on 27 February 2023 be dismissed.
3.The husband’s appeal be dismissed.
4.The husband pay the wife’s costs of and incidental to the appeal, fixed in the sum of $16,224.15.
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 Gibbs & Gibbs has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE, BAUMANN & STRUM JJ:
By Notice of Appeal filed 25 November 2022, the appellant husband, Mr Gibbs, appeals from a final order altering the parties’ interests in property pursuant to s 79 of the Family Law Act 1975 (Cth) (“Act”) made by a judge of the Federal Circuit and Family Court of Australia (Division 1) on 31 October 2022 (“Final Order”).
Given the husband’s conduct in the proceedings at first instance, both interlocutory and at trial, it is somewhat surprising that he has seen fit to appeal.
For the reasons that follow, the husband’s appeal shall be dismissed.
BACKGROUND
At the date of the trial, the respondent wife, Ms Gibbs, was 55 years of age and the husband was 62 years of age. They married and commenced cohabitation in 1997 and they separated finally in 2018, over two decades later. There are no children of their relationship.
The primary judge found the net asset pool available for division (including superannuation and add-backs) to be $8,151,926.
Her Honour assessed the overall contributions of the parties pursuant to ss 79(4)(a)–(c) of the Act at 60 per cent in favour of the husband and 40 per cent in favour of the wife.
Her Honour then made a further adjustment of 5 per cent in favour of the wife on account of the matters set out in ss 79(4)(d)–(e) and 75(2) of the Act.
In circumstances where the wife already had assets, superannuation and “notional assets” [sic] totalling $364,653, her Honour (inter alia) ordered the husband to pay to the wife the sum of $3,303,714 within 42 days of the date of the Final Order and otherwise made orders in the event of default by him (at [98] and Order 1).
Relevant procedural history
The proceedings were instituted by the wife, who filed an Initiating Application on 24 August 2018, which she amended on 20 June 2019 and upon which she relied at trial, seeking a payment to her of $3,443,000. The husband filed a Response on 16 October 2018, which he amended on 2 October 2019 and upon which he relied at trial, seeking a payment to the wife of only $150,000.
In November 2021, the matter was listed for trial on 16 May 2022. However, the hearing date was vacated in circumstances where the husband had failed to file trial material and there were outstanding valuation issues.
On 10 May 2022, the husband was again directed to file his trial material on or before 30 June 2022 (“first extension of time”). The husband did not comply with the first extension of time.
On 14 September 2022, the primary judge made a direction that, if the husband failed to file trial material on or before 23 September 2022 (“second extension of time”), he would require leave to rely on any material served after that date.
The husband similarly did not file material in accordance with the terms of the second extension of time, or at all.
The primary judge had indicated on 10 May 2022 that, balancing the interests of the parties and other litigants in the court, it was necessary for the matter to be heard and determined on a final basis.
The trial commenced on 11 October 2022 and proceeded over four days.
On the first day of trial, counsel for the husband provided to the court a Case Outline which set out the material upon which he sought to rely, namely, an affidavit by him filed on 18 December 2018, a Financial Statement filed on 28 February 2019 and another affidavit by him filed on 9 May 2022. Given the nature of the previous directions concerning filing, he needed leave to rely on such material. The material was not recent; the wife had notice of its contents for some time; her Honour could not see any apparent prejudice to her in granting leave for the husband to rely on that material; and the wife did not oppose leave. In the circumstances, leave was granted.
The primary judge noted that the husband was at a disadvantage as a consequence of his failure to file in accordance with the Court’s directions, because he did not have any evidence of his current financial circumstances before the Court. However, her Honour further noted that his affidavit filed 18 December 2018 dealt with issues relating to the parties’ financial and non-financial contributions and his affidavit filed 9 May 2022 provided some evidence about his current state of health.
Her Honour also noted that the husband and his counsel had referred to work having been undertaken to complete a new Financial Statement and that it seemed apparent a draft document had been prepared. However, no application was ever made on behalf of the husband to receive an updated Financial Statement into evidence. Similarly, no application was made by the husband at trial for an adjournment thereof. Accordingly, the matter proceeded on the relisted trial date.
Her Honour also recorded that, in addition to the husband’s failure to file trial affidavits and a Financial Statement, he had also failed to file an Undertaking as to Disclosure.
Trial
One of the issues for determination by the primary judge, relevant to this appeal, was how the Court should treat the husband’s rights under the Succession Act 2006 (NSW) (“Succession Act”) as they related to the estate of his late sister, Ms B.
Section 102 of the Succession Act defines an “intestate” as “a person who dies and either does not leave a will or leaves a will but does not dispose effectively by will of all or part of his or her property”.
Section 129(1) of the Succession Act provides that:
(1) The brothers and sisters of an intestate are entitled to the whole of the intestate estate if the intestate leaves:
(a) no spouse, and
(b) no issue, and
(c) no parent.
The husband did not dispute at trial that his sister died intestate. He told the Court in his oral evidence that a solicitor had been engaged to apply for Letters of Administration and, it appears, such application had already been filed. However, notwithstanding that evidence, the husband did not disclose any documents or file any affidavit which touched on that issue.
Prior to the death of the husband’s sister, she and the husband (together with their remaining siblings) owned several real properties together. The wife contended at trial that the husband had a legal entitlement to one fifth of his sister’s estate which share, she asserted and the primary judge accepted, was valued at $666,413.
The husband said in oral evidence that he and his brother, Mr L, did not intend to exercise their rights in respect of the estate and intended their remaining sisters (Ms P and Ms Q) to receive the property of the estate.
The primary judge said at [42]:
42.The wife was not provided with documentation about the Letters of Administration despite multiple written requests and court directions. It placed her in a position where it was difficult for her to challenge the veracity of the husband’s assertion. This difficulty was compounded by the husband’s decision not to call evidence from any of his siblings.
At trial, the wife’s case was that the forgone claim of the husband should be included as an asset. The husband contended that it should be excluded as the property was not in his name and he did not intend to have it conveyed into his name, nor did he intend to take any part of it or payment for it.
In this regard, the primary judge said as follows at [44]:
44.In reaching a conclusion about the proper approach to the estate of the husband’s sister I am conscious that his entitlements arose on her death – which occurred in January 2022, some four years after the parties’ separation. If I were minded to include the entitlement as property for the purpose of constructing the pool available for adjustment it would be necessary to observe that the wife had made no direct or indirect contribution to it. Given the timing and the husband’s evidence about his intention it seems that, having regard to the necessity to do justice and equity as between the parties, it is more appropriate to exclude it from the items that constitute the pool of assets available for adjustment. I consider the fact that the husband has voluntarily declined to claim monies to which he may have been entitled must however be a factor to which I have regard pursuant to s 75(2)(o) of the Act.
Another issue at trial, relevant to this appeal, was the financial interrelationship between the husband and his siblings. In about 1996, the year prior to the parties’ marriage, the husband and his brother incorporated K Pty Ltd, in which they each held 50 per cent of the issued share capital. In 2015, three years prior to separation, the husband commenced working for D Pty Ltd, the shares in which were held by the husband and his siblings.
In relation to the real property at E Street, Suburb F, in the state of New South Wales, which was registered in the name of the husband, he contended that it was held on trust for his nephews. That property had previously belonged to another brother of the husband. In 1993, it was transferred to the husband and he took on responsibility for the mortgage by refinancing it. The husband’s brother and his family continued to live in that property. However, from the date at which the husband became the registered proprietor, he commenced to make mortgage payments and pay for all of the other outgoings. In 2011, the husband’s brother died. It was the husband’s evidence that, after his brother’s death, he felt morally obliged to support the brother’s children.
The primary judge said as follows at [46]:
46.There is scant evidence about the facts and circumstances which existed at the time at which the property was transferred into the name of the husband. Certainly there is no affidavit evidence from the husband which details any agreement, any declaration, any paperwork or any conversation with any of the persons who would be relevant parties should the Court be considering a trust arrangement. In his oral evidence the husband suggested that until approximately 18 months ago his two nephews remained living in the property.
Her Honour concluded (at [47]) that the husband’s assertion that the property was held in trust for his nephews was not consistent with the way in which it had been treated by him. He had continued to meet all of the expenses associated with it and, despite his nephews being aged 31 and 30 years at the time of trial and no longer living there, he had not taken any action to transfer the property into their names and gave no explanation for why that might be the case, nor had he called them to give evidence. In the circumstances, her Honour concluded (at [48]):
48.… I therefore intend to include that property in the list of assets available for division between the parties but take into account, as I am entitled to do under the Act, an obligation which falls short of a legal obligation felt by the husband towards his, now adult, nephews.
The primary judge also noted at [51] that, although the husband indicated he was indebted to his sisters, he did not submit that the debts should be included as a liability in the joint balance sheet and, accordingly, it was not it included. In his Financial Statement filed 28 February 2019, the husband disclosed as “other income” the sum of $1,385 per week paid by his three sisters Ms P, Ms B and Ms Q which he described as being the weekly equivalent of a “loan” by them to him of $6,000 per month. He also disclosed a liability to his sisters in respect of a “personal loan” (presumably the same loan) with a balance of $260,000.
The primary judge referred to the husband having undertaken financial work for the two companies of which he was a director, for which he said in oral evidence that he was not paid. Her Honour also referred to the parties, in the early years of their marriage, having had the benefit of some rent-free accommodation which was provided by the husband’s family.
Having assessed the overall contributions of the parties at 60/40 per cent in favour of the husband, the primary judge turned to consider the relevant matters in ss 79(4)(d)–(e) and 75(2) of the Act.
Her Honour referred, inter alia, to:
(a)the evidence about the husband’s current income not being clear, due in part to his failure to file a Financial Statement;
(b)the husband’s evidence that he continued to work for the two companies without pay, for which he estimated that he would otherwise have been entitled to charge about $15,000 per annum;
(c)the husband’s evidence that he might recover some monies for his labours if he and his brother reached an agreement; and
(d)the husband’s asserted moral obligation towards his deceased brother’s adult children.
Further, her Honour said at [93]–[95]:
93.The husband is older than the wife and, apart from work undertaken without pay on behalf of the companies of which he is a director, he has not worked in the paid workforce since 2014 or 2015. It is unlikely, having regard to his age, that he will find a job for which he earns personal exertion income and he has given no evidence that he intends to re-join the workforce in this capacity. This position is not unreasonable having regard to his age and the assets and income available to him. On the other hand the wife is younger and indicated an intention to work for the next 12 years. That is consistent with the fact that she has some time to go until she would be considered of retirement age.
94.The Act directs the Court to consider the health of each party. The wife is in good health. The husband has had a number of health challenges both physical and mental arising, it would appear from an accident in November 2021 and compounded by the death of his sister. The evidence does not indicate whether he has incurred any significant expense in respect of these matters. Since the husband is not in paid employment (in any event) I cannot conclude that his health has had an impact on his income or earning capacity.
95.As against that I need to take into account the fact that the husband is in, and will be in, a more stable financial position than the wife as a consequence of the contribution findings I have made above and he has chosen to forgo income producing assets (or interests in income producing assets) in favour of his sisters. The husband is entitled to forgo entitlements at law but the consequences of that are that those funds which might otherwise have been part of the asset pool are not part of the asset pool. Having regard to the fact that these would have been an inheritance significantly after the parties separated, I am further confirmed in my view that it is appropriate to exclude the forgone inheritance from the pool of assets available for division. That does not mean that I do not intend to make an adjustment in the wife’s favour to take into account the fact that the husband’s stronger financial position has allowed him to gift or forgo these funds. In the same vein, it was submitted that the husband’s family are a significant financial resource to him. Whilst I am unable to make any findings about the extent of this financial resource to the husband in circumstances where he failed to file a trial affidavit and filed no affidavits by any of his other family members with whom he has significant financial relationships. I am able to find on the available evidence that the husband and his family have always acted in a way such as to provide financial support one to the other and one would anticipate that this would continue into the future.
Her Honour concluded at [96] that, taking those matters into account, the contribution-based entitlement of the parties should, “having regard to the matters set out in ss 79(4)(d)-(e) and 75(2)(e) [sic] of the Act”, be adjusted by five per cent to the wife, concluding that “[a]fter a long marriage each of the parties should have a standard of living that in all the circumstances is reasonable”. It is not apparent to us why, having referred to s 75(2) of the Act at the commencement of her Honour’s consideration of this issue at [88], at the conclusion thereof at [96], she referred only to s 75(2)(e), namely, the responsibilities of either party to support any other person. It is clear from [88]–[96] that her Honour turned her mind to a number of the matters set out in s 75(2) she considered relevant, as required by s 79(4)(e). When we raised this issue, counsel for the wife submitted that it was likely a typographical error in her Honour’s reasons for judgment and counsel for the husband did not demur.
APPEAL
The husband’s Notice of Appeal raised five grounds of appeal of narrow compass, all relating to the five per cent adjustment made by the primary judge on account of s 75(2) factors.
No amended Notice of Appeal was filed; however, in the husband’s Summary of Argument filed on 3 February 2023, an additional ground of appeal was sought to be raised. In circumstances where reliance upon it was not seriously opposed by the wife, who in any event had already responded to it in her Summary of Argument filed on 17 February 2023, albeit under cover of objection, leave was granted to the husband to rely upon the further ground of appeal.
Notwithstanding that the wife had been on notice of the further proposed ground of appeal since 3 February 2023, on the morning of the hearing of the appeal, she filed an Application in an Appeal seeking leave to adduce further evidence. That was opposed by the husband who, in the alternative, sought an adjournment if leave were granted, in order to seek leave to adduce further evidence himself. No explanation was proffered by the wife for the late filing of that application. In those circumstances, and in circumstances where we were of the opinion that the further evidence sought to be adduced was not necessary for the determination of the further ground of appeal, we dismissed the wife’s application.
In circumstances where the majority of the grounds of appeal attack the exercise of the primary judge’s discretion, it is salient to recall briefly the appellate principles in relation thereto.
Appeals from discretionary judgments
It is well-settled that appeals from discretionary judgments must establish grounds that fall within the principles identified by the High Court in House v The King (1936) 55 CLR 499 at 504–505, where the majority said:
…The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. …
It is not enough that the appellate court may have come to a different decision on the same facts; it must be “well satisfied that the primary judge was plainly wrong” and did not properly exercise judicial discretion (Gronow v Gronow (1979) 144 CLR 513 at 519).
Ground 1
Ground 1 of the husband’s Notice of Appeal, which was only faintly pressed by his counsel at the hearing before us, contends that:
1.When the Primary Judge made an adjustment of 5% under section 75(2) of the [Act] to the respondent wife, the Primary Judge failed to give adequate reasons to explain why the same was just and equitable.
In Rigby & Olsen [2021] FedCFamC1A 46, the Full Court stated that:
38.The requirement for the giving of reasons is a fundamental requirement of the exercise of the judicial function, as it both demonstrates that justice has been done, and enables the proper challenge of a decision. The content required varies depending upon the circumstances of the case, but is that which makes apparent how the decision was arrived at (see Bennett and Bennett (1991) FLC 92-191 at 78,266). It is not required to give reasons regarding every argument, nor to perform a microscopic analysis “if, in all the circumstances, it is clear that the trial judge has considered and evaluated the relevant evidence [and] taken into account all relevant factors …” (A v J (1995) FLC 92-619 at 82,230).
Further, it is not necessary that the primary judge “mention every fact or argument relied on by the losing party as relevant to an issue” (Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at [62]; Fox v Percy (2003) 214 CLR 118 at [41]).
The husband, in his Summary of Argument, concedes:
10.It is not disputed that Her Honour’s reasons were carefully measured. Throughout the course of providing reasons as to why a 5% adjustment was made in the wife’s favour, Her Honour did at times refer to evidence and/or submissions of the parties, and Her Honour’s judgment similarly comprised relevant findings of facts. But critically, the limitations of those reasons preclude the Full Court from identifying Her Honour’s path to a 5% adjustment in favour of the wife in circumstances where Her Honour had previously advised that there was no obligation on the husband to make a claim on his sister’s estate, but nevertheless went on to include that lack of obligation as a 75(2)(o) factor in determining a 5% adjustment to the wife.
(Husband’s Summary of Argument filed 3 February 2023, paragraph 10) (Footnotes omitted)
We have already set out her Honour’s reasoning at [38] above in which the matters that led to an adjustment of 5 per cent are clearly identified.
We agree with the wife’s submission that the primary judge’s reasons for that adjustment are readily apparent from the following matters:
(a)In relation to the husband’s inheritance, her Honour stated at [44] that she was conscious that his entitlement arose on her death in January 2022, some four years after separation.
(b)In relation to the husband’s current income, her Honour stated at [88] that the evidence in relation thereto was not clear, in part, due to his failure to file a Financial Statement for trial. He cannot rely upon his deliberate non-disclosure and then complain about an (asserted) inadequacy in her Honour’s finding in this regard. As the Full Court said in Kannis & Kannis [2002] FamCA 1150 at [51]:
51.Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour.
(Emphasis added)
(c)In relation to the husband’s financial resource by way of support from his family, to which her Honour referred at [95], her Honour recorded that they had always acted in a way such as to provide financial support but was unable to make more findings about the extent thereof (other than the provision of $6,000 per month by way of loan, the balance of which he did not seek to include as a liability), as he had failed to file both a trial affidavit and/or affidavits by any of his other family members with whom he had long-standing and significant financial relationships, to which we have referred above. Again, that was a matter which her Honour was entitled to and did take into account, doing the best she could on the limited evidence before her, for which the wife was in no way to blame.
(d)In relation to the husband’s uncharged work, her Honour was entitled to and did take this into account at [90]–[91].
(e)In relation to the parties’ ages, her Honour took into account the age difference between them and the fact that the wife might continue to work for the next 12 years.
(f)In relation to the parties’ respective states of health, her Honour considered same at [94].
(g)In relation to the husband’s sister’s estate, her Honour recorded at [95] that the husband intended not to claim on his sister’s estate but that did not mean that no adjustment should be made in the wife’s favour under s 75(2) to take that entitlement, which might otherwise have been part of the asset pool, into account. Further, in the circumstances, it was open to her Honour to infer that it was the husband’s stronger financial position that allowed him to gift or forgo those funds.
In the circumstances, the primary judge gave adequate, if not ample, reasons to explain why she made an adjustment of five per cent in favour of the respondent wife, under s 75(2) of the Act. Properly and holistically, rather than myopically, read, the path by which the primary judge reached that adjustment is, in our view, readily discernible, if not expressly, then by implication. See Bennett and Bennett (1991) FLC 92-191.
At [12] of the husband’s Summary of Argument signed by his counsel, it is submitted:
12.Respectfully, Her Honour’s manufactured and optimistic consideration of the husband’s financial position is irreconcilable with Her Honour’s prior description of the husband’s current income as ‘not clear’, nor Her Honour omitting to indicate what weight, if any, she gave to the husband’s type calculation which records his total taxable income for the year ended 30 June 2022 and his rental income and expenses for that same period.
(Husband’s Summary of Argument filed 3 February 2023, paragraph 12) (Footnotes omitted)
We are compelled to express our displeasure at the impertinent assertion that Her Honour’s consideration of the husband’s financial position was “manufactured”, even if qualified by an expression of purported respect.
The husband also contends, in relation to the primary judge’s reference to s 75(2)(e) that it:
13.… was not the subject of express findings, but would logically only favour the husband, given the absence of evidence from the wife of any responsibilities to support any other person. On Her Honours’ [sic] reasons, it cannot be known how this pertinent factor led Her Honour to arrive at a 5% adjustment to the wife and how the same was supposedly just and equitable. In the absence of adequate reasons, in the wording of Her Honour’s judgment at [95]-[6], Her Honour’s consideration of s 75(2)(e) may have relegated the wife to an adjustment of 5% or may have promoted the wife to an adjustment of 5%.
(Husband’s Summary of Argument filed 3 February 2023, paragraph 13)
Whilst the latter submission is opaque, we need not consider her Honour’s reference at [96] to s 75(2)(e), in circumstances where counsel for the husband did not demur from the suggestion by counsel for the wife, with which we agree, that the reference to paragraph (e) of that sub-section was likely a typographical error.
The wife’s submissions under this ground veered quickly into substantive matters which, although bearing no relation to the ground of appeal, are readily dealt with.
The wife submits that the rights that accrued to the husband pursuant to s 129 of the Succession Act vested in the husband as at the date of his sister’s death, that her Honour was correct in treating those vested rights as property of his and that, in circumstances where those entitlements arose four years after separation, “the conventional manner of dealing with this bundle of rights is through the device found at s 75(2)(o)” of the Act (Wife’s Summary of Argument filed 17 February 2023, paragraph 11). Whilst we agree that so dealing with the husband’s vested rights is a conventional manner of dealing with them, we observe that another equally conventional manner would have been to include the value thereof ($666,413) in the asset pool and to take that contribution into account in favour of the husband. Further, in addition to par (o) of s 75(2), those proprietary rights could have been taken into account under par (b) thereof.
We also agree with the wife’s submission that the fact the husband indicated he would not be claiming that asset and would be giving his share to his two remaining sisters was a matter for him, which the primary judge was entitled to take into account.
In relation to the primary judge’s statement at [96] that “after a long marriage each of the parties should have a standard of living that in all the circumstances is reasonable”, the husband submits that, as no other explanation of that reference is provided by her Honour:
15.… that would prove problematic to the Full Court as various possibilities arise of what Her Honour’s thinking may have been regarding that isolated yet agreeable and general reference to a reasonable standard of living. The undefined and unexplored “standard of living” evidently considered by Her Honour would otherwise be an irrelevant consideration in circumstances where the wife had a ready been found to have a 40% contribution-based entitlement of the net asset and superannuation pool (being some $3,260,770) and an ability to financially support itself by way of employment for at least next [sic] 12 years, with no explanation as to why this 40% entitlement plus the wife’s 12 years of income earning capacity would not suffice to provide a “standard of living that in all the circumstances is reasonable”.
(Husband’s Summary of Argument filed 3 February 2023, paragraph 15)
We do not find the proposition that, after a long marriage, each of the parties should have a standard of living that, in all the circumstances, is reasonable at all problematic. That consideration applies to both parties. Given the primary judge’s assessment of the parties’ contributions, the husband received 20 per cent (or 1.5 times) more than the wife. Expressed in dollar terms, on a contribution-based assessment, the husband was to receive $4,891,156 and the wife was to receive $3,260,770 – a difference of $1,630,386. It is axiomatic that, with such a differential, the husband would be better placed than the wife to enjoy a reasonable standard of living. Further, but for similar reasons, a reasonable standard of living would not be an irrelevant consideration merely because the wife had a ready been found to have a 40 per cent contribution-based entitlement to a net asset pool of $8,151,926 and an ability to financially support herself by way of employment for about the next 12 years.
It is well established that a trial judge must approach the assessment task under Part VIII of the Act, both in relation to contributions and s 75(2) factors, on a holistic basis: see Dickons v Dickons [2012] FamCAFC 154; Lovine & Connor (2012) FLC 93-515 at [40] and [41]; Chapman v Chapman (2014) FLC 93-592 and Singerson & Joans [2014] FamCAFC 238.
Accordingly, there is no merit in Ground 1 of the Notice of Appeal.
Ground 2
Ground 2 of the husband’s Notice of Appeal contends that:
2.To the extent the adjustment was in part because as a consequence of the contributions division the appellant husband was wealthier than the respondent wife:
a. The Primary Judge acted upon a wrong principle; and
b.The Primary Judge failed to have regard to a material consideration namely that by reason of the contributions division the respondent wife would receive 40% of the net assets of $8,151,926 which is $3,260,774.
Notwithstanding this complaint, the husband correctly concedes that, taking into account his financial position as against that of the wife, as the primary judge did at [95], “in itself is not an incorrect approach” (Husband’s Summary of Argument filed 3 February 2023, paragraph 18).
The husband also relevantly refers to the decision of Baker J in Waters & Jurek (1995) FLC 92-635 at 82,388, where his Honour stated:
There are many case, in which there has been a disparity in the property and financial resources of one of the parties which has been reflected in an adjustment being made under s 75(2) for that reason. Indeed, one of the arguments raised in Collins and Collins (supra) was that for there to be any adjustment under s 75(2) a financial need for such on the part of the other party must be shown. The Court rejected such a notion in the passage to which I have referred and came to the conclusion that the trial Judge was entitled to take account of any imbalance in property and resources.
…
… Shortly stated, if a trial Judge comes to a conclusion that where there is an imbalance in the income and or respective earning capacity of each of the parties, adjustment can be made in favour of one of the parties. This must be so if for no other reason than that any order which the Court makes under the provisions of s 79 must, in all the circumstances, be just and equitable.
Notwithstanding the dicta in Waters & Jurek, the husband nevertheless submits that the primary judge acted upon a wrong principle, as the disparity of wealth deduced from her Honour’s contribution-based entitlement findings negated (it is contended) any further financial “needs” of the wife. He submits that the contribution-based asset distribution to the wife (namely, 40 per cent of $8,151,296 – some $3,260,774), coupled with the wife’s prospective income earning capacity over 12 years, “in itself minimised any financial disparity that would warrant adjustment, and as well, made capital immediately available to the wife which could be used to further reduce that disparity”, such that, “having regard to the quantum of the matrimonial pool, the disparity in wealth is not one that would justify a s 75(2) adjustment in the wife’s favour” (Husband’s Summary of Argument filed 3 February 2023, paragraphs 19–20).
However, the husband’s complaint in this regard ignores her Honour’s observation, at the commencement of her consideration of s 75(2) factors, that the husband had failed to file a Financial Statement for trial and that the most recent evidence was contained in his Financial Statement filed some three and a half years earlier. Her Honour was doing the best she could on the evidence.
Further, and as was made clear in Waters & Jurek, it is well settled that an adjustment pursuant to s 79(4)(e) on account of s 75(2) factors is not made on account of “needs”, contrary to the husband’s submission referred to above. See also, for example, Williams and Williams (1984) FLC 91-541.
As the wife correctly submits, the adjustment made by her Honour pursuant to s 79(4)(e) of the Act, on account of s 75(2) factors, was made on the basis of holistic findings, and not on the basis that the husband was simply wealthier than the wife.
Moreover, as we have already observed above, after the contributions-based entitlement was assessed, there was disparity between the parties of 20 per cent of the asset pool, namely, $1,630,386. As the wife submits, if one were notionally to add the inheritance of $666,413 (the right to which was vested in the husband), the financial disparity between the parties would increase to $2,296,799. Viewed in this context, the five per cent adjustment to the wife, which amounted to about $441,000 (and not $445,000 as contended by the wife) is modest.
Accordingly, there is no merit in Ground 2 of the Notice of Appeal.
Ground 3
Ground 3 of the husband’s Notice of Appeal contends that:
3.To the extent the adjustment was in part because the Primary Judge found the appellant husband and his family had always supported each other and would continue to do so:
a.The Primary Judge failed also to have regard to a material consideration namely her findings that the appellant husband would not have gainful employment in future but the respondent wife would likely work in gainful employment for 12 more years.
In support of this ground of appeal, the husband points to [93] and [95] of the primary judge’s reasons for judgment.
At [93], her Honour compared and contrasted the parties’ ages and their income-earning capacities. Her Honour noted that the husband is older than the wife (by some seven years) and that, apart from the work undertaken without pay on behalf of the companies of which was a director, he had not worked in the paid workforce since 2014 or 2015. Her Honour accepted that it was unlikely, having regard to his age (62 years at the time of trial), that he would find a job for which he earned personal exertion income. Insofar as there was no evidence that he intended to re-join the workforce, her Honour found this was not unreasonable having regard both to his age and to the assets and income available to him. Her Honour contrasted this with the fact that the wife was younger and had indicated an intention to work for the next 12 years, which she found was consistent with the fact that she had some time to go until she could be considered of retirement age.
At [95], in relation to the wife’s submission that the husband’s family was a significant financial resource to him, her Honour said that she was unable to make any findings about “the extent of this financial resource”, in circumstances where he had failed to file a trial affidavit, nor any affidavits by any of his other family members with whom she found he had significant financial relationships. However, her Honour continued that she was able to find, on the available evidence that, the husband and his family had always acted in a way such as to provide financial support to one another and that it could be anticipated this would continue into the future. The husband does not attack that latter finding and it was clearly open to her Honour on the totality of the available evidence, albeit that it was limited by the husband’s conduct of his case. He cannot approbate and reprobate, namely, fail to adduce relevant evidence himself and then complain about the primary judge’s acceptance of the wife’s case.
The husband submits that the weighing of the wife’s current and future employment as against the husband’s financial support from his family should have resulted in no adjustment being made in favour of either party, and that “anything otherwise would defy a proper exercise of discretion” (Husband’s Summary of Argument filed 3 February 2023, paragraph 26). This entirely ignores the multitude of other matters to which the primary judge referred at [88]– [96] in coming to the global conclusion that a five per cent adjustment was appropriate.
In support of this ground of appeal, the husband contends that it is not readily discernible how her Honour weighed the factors in [93] and [95] of her reasons for judgment. He submits that it was for her Honour to assign greater or lesser weight to one or other of them and that it is not known what weight, if any, those factors played in arriving at a five per cent adjustment in the wife’s favour. As we have already noted, the husband selectively focuses on only two paragraphs of the primary judge’s reasons, rather than the entirety of the nine paragraphs thereof devoted to her consideration of s 75(2) factors.
Notwithstanding this submission, the husband correctly concedes, albeit undermining it, that the weighing and assessing of s 75(2) factors is not necessarily an off-setting style exercise. Indeed, in Brandt & Brandt (1997) FLC 92-758 at 84,343, the Full Court said that the process of weighing these factors “is not generally an accounting exercise nor is it analogous to an award of damages or compensation which might call for division into component parts”. Instead, it is a process of balancing all the factors specified in s 79 as a whole.
In Lovine & Connor, the Full Court considered earlier appellate decisions which confirm that awards under s 79 of the Act are virtually never calculated with mathematical precision and that no amount of enumeration or evaluation of contributions or s 75(2) factors can ever explain exactly why a particular figure or percentage is eventually arrived at and that, in the circumstances, the reasons for judgment requirement ultimately becomes impossible of total fulfilment in the jurisdiction under s 79. Accordingly, the evaluation required of the court under s 79 (including of contributions and s 75(2) factors) inevitably moves from a qualitative evaluation to a quantitative reflection thereof, namely, a leap from words to figures. That is the nature of the exercise of discretion; it is precisely what her Honour did at [88]–[96] of her reasons for judgment; and it has not been demonstrated that her Honour’s broad, unfettered discretion miscarried in this regard.
Accordingly, there is no merit in Ground 3 of the Notice of Appeal.
Ground 4
Ground 4 of the husband’s Notice of Appeal contends that:
4.To the extent the adjustment was in part because the Primary Judge found the appellant husband had foregone an inheritance received 4 years after separation to which the respondent wife had made no contribution said to have been worth around $666,000:
a.The Primary Judge acted upon a wrong principle when making a 5% percentage adjustment without regard to the dollar impact (an adjustment of $407,550).
The husband, in reliance upon the dicta of the Full Court in Wallis & Manning (2017) FLC 93-759 at [169], correctly submits that, when arriving at an appropriate assessment for s 75(2) factors, the actual quantum of any percentage assessment must be uppermost in the Court’s mind, as well as the ultimate disparity in entitlements which it might produce.
However, in our view, that does not require trial judges to specify expressly the monetary equivalent of the proposed percentage adjustment under s 79(4)(e) on account of s 75(2) factors. As we have noted above, in Bennett and Bennett, the Full Court said that the appellate court should be able to discern, either expressly or by implication, the path by which the result has been reached. Clearly, in a net asset pool found by the primary judge to be valued at $8,151,296 (including add-backs but excluding the value of the husband’s vested right to inherit from his deceased sister), a five per cent adjustment amounts to $407,586. In our view, consistent with earlier authorities, the implicit was not required to be made explicit. The primary judge having considered at [88]–[96] the various matters she deemed relevant under s 75(2), her Honour concluded, in that latter paragraph, that the parties’ contribution-based entitlements should, having regard to those matters, be adjusted by five per cent in favour of the wife.
In support of this ground of appeal, the husband points to the fact that the primary judge’s five per cent adjustment in favour of the wife resulted in a 10 per cent disparity between them, and that she received $407,586, whilst he received $407,586 less, than their respective contribution-based entitlements. However, as we have observed above, after the contributions-based entitlements were assessed, there was initially a disparity of 20 per cent of the net asset pool as found by her Honour, namely, $1,630,386, in favour of the husband. True it is that, by reason of the s 79(4)(e) / s 75(2) adjustment, the parties’ contribution-based entitlements were then increased in the case of the wife and decreased in the case of the husband. However, that trite observation ignores the fact that the ultimate 10 per cent disparity between the parties, in favour of the husband, nevertheless resulted in him receiving $815,193 more than the wife, in addition to his vested right (valued at $666,413) in his deceased sister’s estate, which he apparently elected to renounce.
The husband also points to the fact that the five cent adjustment in the wife’s favour is not much less than two thirds of the value of his inheritance. He boldly submits that:
32.…the foregone inheritance’s inclusion in the asset pool would, on the evidence that was before Her Honour, would [sic] have prevented the wife receiving a significant part of the five per cent adjustment, due to the inclusion of the inheritance falling into a “Kessey” style contribution in favour of the husband, thereby increasing his contribution-based entitlement. …
(Husband’s Summary of Argument filed 3 February 2023, paragraph 32)
See Kessey & Kessey (1994) FLC 92-495. Further, he equally boldly submits that:
32. …On any view, the inclusion of the inheritance, which the wife made no contribution to, in the asset pool would have seen the wife receive no more than 5-10% of that inheritance. …
(Husband’s Summary of Argument filed 3 February 2023, paragraph 32)
He submits that, in the circumstances, the wife’s five per cent adjustment effectively penalises him for not pursuing a possible inheritance.
Her Honour’s reasons for judgment make it abundantly clear that she was not penalising the husband but, in fact, ensuring that the wife was not penalised in relation to his inheritance. It was not a “possible inheritance”. By reason of the operation of s 129 of the Succession Act, immediately upon the death of his sister intestate, the husband acquired a vested interest in her estate. That chose in action was property and it was within her Honour’s broad discretion to take it into account, either by including its value (which she found to be $666,413) in her determination of the net asset pool available for division between the parties or, as she did in the result, in her consideration of s 75(2) factors for the purposes of s 79(4)(e).
Again, in focusing, for the purposes of this ground of appeal, upon his inheritance, the husband ignores the various other matters which her Honour globally, but manifestly, took into account in arriving at her five per cent adjustment.
Further to the authorities to which we have referred above, the wife correctly also refers to Hayne & Hayne (1977) FLC 90-265 at 76,415, where Pawley J said that in applications under s 79 “one cannot approach the problem with an eye for meticulous detail. It should rather be dealt with broadly so that the end result can be said to be just and equitable”.
On any view, when the primary judge’s five per cent adjustment is viewed holistically, in the context of the totality of her Honour’s consideration of s 75(2) factors at [88]–[96], it is clear that there is no merit in Ground 4 of the Notice of Appeal.
Ground 5
Ground 5 of the husband’s Notice of Appeal contends that:
5.Despite the forgoing, if the Appellate Court is unable to identify the particular basis on which the discretion miscarried, because the adjustment was unreasonable and plainly just on the facts as stated the Appellate Court would infer that there has been a failure properly to exercise the discretion by the Primary Judge.
In support of this ground of appeal, the husband submits that the primary judge failed to consider or express any conclusion as to whether it was just and equitable to make the adjustment that she did. Further, he submits:
37.On any view, there is no express finding by Her Honour that it was just and equitable to make the adjustment that she did. That is not always a requirement provided sufficient implication from the totality of the trial judges [sic] reasons. …
(Husband’s Summary of Argument filed 3 February 2023, paragraph 37)
However, that argument does not address the ground of appeal, which is directed towards the “catch-all” reference in House v The King, where the High Court said (as we have referred to above) that, if upon the facts, an order:
… is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
Both the husband’s Summary of Argument, as well as his counsel’s oral argument before us, did not squarely address this ground of appeal, as drawn. It was not demonstrated to us how and/or why the primary judge’s order was so unreasonable or plainly unjust as to enable us to infer that her Honour failed properly to exercise the discretion reposed in her by s 79. Rather, as the wife submits, and we agree, the plain fact is that the husband was not successful in his submissions as to s 75(2) and the result was simply not that for which he contended at trial.
In relation to the submission that the primary judge failed to consider or express any conclusion as to whether it was just and equitable to make the adjustment that she did, it is useful to recall the caution to appellate courts expressed by Kirby J in AMS v AIF [1999] HCA 26, namely, that:
150.…an appellate court, invited to review the exercise of discretion at first instance will avoid an overly critical, or pernickety, analysis of the primary judge's reasons, given the large element of judgment, discretion and intuition which is involved.
When considered holistically, it is manifest from the primary judge’s reasons for judgment that she was well aware of that which was required of her by s 79. At [1], her Honour recorded that the parties did not agree what adjustment of property interests between them would be just and equitable following the breakdown of their marriage and so each of them asked the court to make orders. At [24], her Honour referred to the injunction in s 79(2) against making an order under that section, unless the court was satisfied that, in all the circumstances it was just and equitable to do so. At [49], her Honour referred to matters she had taken into account when determining what orders would be just and equitable. At [96], having addressed s 75(2) matters from [88] onwards, her Honour concluded that, having regard to those matters, the contribution-based entitlement of the parties should be adjusted by five per cent to the wife, with the result being that the overall division of assets between the parties should be 55/45 per cent in favour of the husband. Whilst there was no explicit finding by her Honour that an order to give effect thereto would be just and equitable, we note the concession by the husband that this is not always a requirement, provided there is sufficient implication from the totality of a primary judge’s reasons, which we find to be the case.
The husband, in purported support of this argument, refers in a footnote to his Summary of Argument to Washburn & Pacini [2020] FamCAFC 296 at [28]. However, such reliance, is misconceived. In that passage, the Full Court said:
28.It is not clear from that passage of the reasons, which “circumstances described above” the primary judge relied upon in determining it was just and equitable to make the order in the terms she did. Further, as contended by the de facto husband, it seems clear that in [68] the primary judge did not consider whether it was just and equitable to embark on a property settlement order at all. That paragraph appears to be the result of a consideration of the parties’ contributions and the relevant s 90SF(3) factors, not a consideration of s 90SM(3) of the Act. This assumes significance given that, as we have said, it was the de facto husband’s principal position before the primary judge that there be no adjustment of property interests between the parties (based on Stanford), which her Honour acknowledged (at [2]). There can be no doubt that the de facto husband squarely raised this issue with the primary judge during the hearing (see Transcript 13 February 2020, p.19 lines 25–32; Transcript 14 February 2020, p.158 lines 24–30).
In the present case, both parties, in their application and response respectively, sought orders for property settlement (albeit to different effect), thereby conceding that it was just and equitable to make an order under s 79 of the Act. However, in Washburn & Pacini, it was the appellant de facto husband’s principal position at trial that there should be no adjustment of property interests between the parties, based on Stanford v Stanford (2012) 247 CLR 108. In allowing the appeal, the Full Court there continued at [29]:
29.The de facto husband contends, and the de facto wife concedes, that the primary judge fell into the very error identified by the High Court in Stanford, in that her Honour only considered whether the orders were just and equitable in the context of the ultimate outcome, rather than the separate enquiry mandated by s 90SM(3) of the Act, as to whether there ought be any adjustment at all. We agree.
Unlike in Washburn & Pacini, there is no appellable error in the primary judge’s failure to expressly find that a contribution-based outcome of 40/60 per cent in favour of the husband, together with a five per cent adjustment in favour of the wife pursuant to s 79(4)(e) on account of s 75(2) factors, was just and equitable. It is clear from her Honour’s reasons for judgment that she was both conscious of this requirement and, at least implicitly, satisfied that it would be achieved by the outcome she reached.
Accordingly, there is no merit in Ground 5 of the Notice of Appeal.
Ground 6
With our leave, the husband’s sixth ground of appeal, contained in his Summary of Argument contends that:
In crafting Final Orders, Her Honour’s Order provided for a fixed amount to be paid to the wife but failed to have regard to a material consideration namely that, because the husband had insufficient liquidity to meet the payment without the sale of real property, and therefore would be required to pay interest and a fixed sum from any property sale in a volatile property market that has the potential to deprive the husband of the 55% overall entitlement determined by Her Honour.
(Husband’s Summary of Argument filed 3 February 2023, p.14)
In support of this ground, the husband submits that, should he be required to sell properties in order to comply with the provision of the Final Order requiring him to pay a lump sum to the wife, then the overall division might not represent the percentage division that the primary judge intended, leaving him exposed to a lesser entitlement because of an array of additional costs in meeting a fixed sum order, including sale costs and capital gains taxation.
To that, his Counsel in oral submissions added, as a further consideration, what he said to be the volatility in the real estate market in Sydney. In this regard, we note that there was no application to adduce fresh evidence to this effect, nor is it a matter to which regard could be had under s 144 of the Evidence Act 1995 (Cth), in a vacuum. In any event, any such volatility could equally benefit the husband, were real estate to be sold for a sum greater than that agreed between the parties at trial and adopted by the primary judge.
The husband submits that the evidence at trial was that there was no fund from which the fixed sum order could be met. However, that ignores the fact that, pursuant to the Final Order, the husband is to retain real properties, of which he was the sole registered proprietor, valued in total at $3,590,000, subject only to a mortgage securing $184,089. Further, he is to retain his interests in other real properties (owned together with his siblings) totalling a further $1,950,000, subject only to a mortgage registered over one such property, securing in his case $107,600 (being his share thereof). The husband’s submission ignores the fact that, one alternative open to him (other than sale), might be to borrow from a financial institution. Another alternative might be recourse to his family members, given the primary judge’s finding that he and they have always acted in a way such as to provide financial support one to the other, which could be anticipated to continue into the future.
The husband further submits that the primary judge “did not foreshadow that she may prefer to draft orders in the form of a fixed sum”, nor were reasons or adequate reasons provided as to why her Honour adopted the course that she did (which, he asserts, was not the proper course) (Husband’s Summary of Argument filed 3 February 2023, paragraph 44). Moreover, he submits that the primary judge erred in not giving notice (or explaining in her reasons for judgment) that the outcome of the Final Order might not reflect the percentage division intended by her Honour.
We acknowledge that, as the Full Court said in Noetel v Quealey (2005) FLC 93-230 at [143], the practice of drafting orders based on a percentage entitlement rather than a fixed sum to achieve fairness between parties in the event of a sale is subject of many authorities which were subject of comprehensive review in S & S [2000] FamCA 262. In that latter case, the Court said:
108.A long line of authority in this Court … establishes as a clear guideline for the exercise of discretion under s.79 of the Act, that, absent some special consideration (such as a desire by one spouse to retain a particular piece of property, in specie), and particularly where the value of an asset is contentious, or even where it is not but the market for the property is volatile, or there is likely to be a significant time lapse between judgment and sale, and where the value of the asset is to be divided between the parties, the Court should order its sale and the apportionment of the proceeds between the parties rather than order one party to pay to the other a fixed sum representing a notional proportion of its assessed value.
Again, however, the husband’s submission in this regard, ignores the fact that the primary judge said at [11] of her reasons for judgment:
11.On 24 August 2018 the wife filed an Initiating Application seeking orders for property adjustment. On 20 June 2019 she amended that application and it is on that amended application that the wife moves at the final hearing. The husband filed a Response on 16 October 2018 which was amended on 2 October 2019.
In the wife’s amended Initiating Application filed 20 June 2019, she sought an order for a payment by the husband to her of a fixed sum of $3,443,000 (rather than the lesser sum of $3,303,714 ultimately ordered by the primary judge) and, in default thereof, orders almost identical in form to those made by her Honour including, importantly, for the sale of the real property at H Street, Suburb F, albeit, at that stage, not that at E Street, Suburb F. The husband, therefore, was generally on notice for over three years of the orders which were sought by the wife and which might be made at trial, both as to quantum and as to default mechanisms. The only substantive differences in the minute of orders sought by the wife contained in her Case Outline filed on 8 October 2022, a few days prior to trial, was an increase in the quantum of the fixed sum to $3,964,535 and the inclusion of the real property at E Street, Suburb F in the default provisions.
Further, in the husband’s amended Response filed on 2 October 2019, he similarly sought an order for payment to the wife of a fixed sum (albeit, surprisingly, only $150,000) and, notwithstanding the default orders sought by the wife, did not propose any or any other form of default orders. That remained his position at trial, on the first day of which (11 October 2022) he filed his Case Outline, the orders sought in which replicated those sought in his amended Response.
The husband also complains that the absence of evidence of the amount of additional costs he would incur to comply with the fixed sum order made by the primary judge was not considered. However, this too ignores that fact that this was a matter entirely of his own doing.
At [101] of her reasons for judgment, the primary judge set out relevant parts of the orders and directions made by her at the case management hearing on 2 November 2021, nearly a year prior to trial. Paragraph [5] thereof provided:
101.…
5.The Husband will, as soon as practicable after receipt of any updated real estate valuations, obtain an opinion as to the latent tax impost on all properties and forward that to the Wife within 28 days and the Wife has a further 14 days to respond and, in the event there is no agreement reached in relation to any particular part of that opinion, the parties are to forthwith forward a joint letter of instruction to [Mr C] or such other accountant as the parties agree upon to provide an opinion about latent tax on any property and the parties shall meet the cost of Mr [C]’s report or the agreed expert equally on the basis that the Husband pay for the costs of the valuation reports at first instance and he shall be reimbursed for the Wife’s half share of the report from her share of the property settlement.
…
As with so many of her Honour’s trial orders and directions made in anticipation of the final hearing, the husband again did not comply. Accordingly, he cannot be heard to complain.
He refers to and relies upon a passage from the decision of May J in Elgin v Elgin [2015] FamCAFC 155, where her Honour said:
156.Despite the well-articulated arguments on behalf of the wife, and the apparent failures of the husband to conduct his case, it cannot be regarded as just and equitable to uphold orders that do not take into account such a serious misstep as failing to allow for taxation consequences of a significant sum and ordering the husband to be responsible for the payment. Such an order cannot be said to be just and equitable. It must be in the interests of justice to remit the matter for re-hearing at least on this issue. There is merit in this ground of appeal.
However, as Thackray and Ryan JJ pointed out in their joint judgment in that case at [187], unlike in the present case, in Elgin v Elgin the single expert had included a caveat in her valuation report that she not considered the effect of future capital gains taxation, income taxation or goods and services taxation on the realisation of assets of entities or the parties’ interests in entities (with the exception of notional income taxation calculations for those entities that held properties for sale, not investment purposes) and:
187.…
…Should assets be sold or transferred between the parties as a consequence of these proceedings, the tax consequences and any other realisation costs must be considered prior to the finalisation of any orders.
(Emphasis in original)
Accordingly, Thackray and Ryan JJ said at [200]–[203]:
200.Although it would have been highly desirable for those representing the husband to have emphasised to the trial judge the significance of the single expert’s caveat, and proposed a form of order to deal with it, we nevertheless consider there is merit in the submission now made by the husband that the trial judge erred in failing to take account of the unequivocal warning of the expert.
201.We are fortified in our view by noting that the trial judge told counsel at the outset of the trial that he had read the entire report of the single expert, apart from the attachments. Paragraph 2.11 appears in the body of the report and not in the attachments. We find further support for our view in the fact that it was not contended that there was any way the husband would be able to satisfy the wife’s entitlements without extracting funds from companies, which would have inevitable tax consequences.
202.Although, as was pointed out from the bench, it was the husband who wanted to retain the corporate structure, we do not accept that this means it was for him to agitate for the tax consequences to be considered. It could equally be argued that it was the wife who sought to be free of entanglement with the corporate structure, and to be indemnified against at least some tax liabilities, and that it was therefore incumbent on her to persuade the Court of the merit of her claim. This is especially so where she had not challenged the statement of the expert that the tax consequences “must” be taken into account.
203.In the absence of evidence about the amount of the tax; in the absence of submissions relating to the tax; and in the absence of any reason for leaving the husband responsible for all the tax, we consider it was impossible for his Honour to be satisfied that his orders were just and equitable. Given the unfortunate way the matter had been conducted, we consider it was essential for the parties to have been given an opportunity to make submissions about the proposed form of orders, and the way in which the taxation burden would be shared, in order to bring about the intended equal division of the assets.
It is therefore readily apparent that the present case is distinguishable from Elgin v Elgin.
In response to this ground of appeal, the wife submits, inter alia, as follows. Generally, it is not permissible for an appellant, and, by inference, in this case, the husband should not be permitted, to raise matters of fact that were not raised at first instance: Metwally v University of Wollongong (1985) 60 ALR 68 at 71; Suttor v GundowdaPty Ltd (1950) CLR 418 at 438 and Coulton v Holcombe (1986) 162 CLR 1 at 7–8. Further, the husband is bound by his conduct of his case at trial: Whisprun v Dixon (2003) ALR 447 at [51]. For the reasons we have given above, we agree.
Lastly, the two real properties the subject of the default provisions in the Final Order, being those at H Street, Suburb F and E Street, Suburb F, were agreed by the parties and accordingly found by the primary judge to be worth $2,590,000 and $1,000,000 respectively. The real property at H Street, Suburb F, being the more valuable of the two, was the parties’ former matrimonial home. As counsel for the wife submitted at the hearing before us, in the circumstances, there is no suggestion that any sale of that property would attract capital gains taxation in any event.
Accordingly, there is no merit in appeal Ground 6 and it will be dismissed.
CONCLUSION
The husband’s appeal will be dismissed.
COSTS
At the conclusion of the hearing of the appeal, we invited submissions as to costs by each of the parties in the event they were successful or unsuccessful.
Relevantly, counsel for the husband effectively conceded that if his client were unsuccessful on appeal, he could not resist an order for costs in favour of the wife.
The wife’s schedule of costs, at the scale provided in Schedule 3 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), seeks a total of $26,108.43. However, she was represented at the hearing of the appeal by two junior counsel. Excluding assisting counsel’s fees for his appearance before the appeal judicial registrar, at which lead counsel did not appear, his fees total $9,884.28. This appeal was not of sufficient complexity to warrant the appearance of two junior counsel. Accordingly, we shall deduct this part of assisting counsel’s costs and make an order for costs in favour of the wife in the sum of $16,224.15.
I certify that the preceding one hundred and twenty-three (123) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Aldridge, Baumann & Strum. Associate:
Dated: 30 March 2023
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