Gilmour & Hofte (No 2)
[2024] FedCFamC1A 9
•22 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Gilmour & Hofte (No 2) [2024] FedCFamC1A 9
Appeal from: Hofte & Gilmour [2023] FedCFamC1F 919 Appeal number: NAA 293 of 2023 File number: BRC 1692 of 2020 Judgment of: ALDRIDGE, RIETHMULLER & BRASCH JJ Date of judgment: 22 February 2024 Catchwords: FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – Application by the appellant to adduce further evidence – No adequate explanation for failure to produce taxation assessment at trial – Other documents of limited significance in circumstances of case – Application dismissed.
FAMILY LAW – APPEAL – PROPERTY – Appeal from final property orders and interim spousal maintenance order – Whether the primary judge erred in assessing the property pool, contributions and the appellant’s income – Where evidence before the primary judge was far from helpful – Findings not unreasonable or plainly unjust – Findings open on the state of the evidence – No appealable error – Appeal dismissed – Appellant to pay the respondent’s costs in fixed sum.Legislation: Family Law Act 1975 (Cth) ss 75, 90SF, 90SM, 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 67 and s 68
Federal Proceedings (Costs) Act 1981 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.47
Cases cited: Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67
Conway v The Queen (2002) 209 CLR 203; [2002] HCA 2
Coulton v Holcombe (1986) 162 CLR 1; [1986] HCA 33
Fields & Smith (2015) FLC 93-638; [2015] FamCAFC 57
House v The King (1936) 55 CLR 499; [1936] HCA 40
Keymer & Keymer [2020] FamCAFC 70
Omacini and Omacini (2005) FLC 93-218; [2005] FamCA 195
Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110
Saltern & Mink [2020] FamCAFC 320
Sharman vEvans (1977) 138 CLR 563; [1977] HCA 8
Sun Alliance Insurance Ltd v Massoud [1989] VR 8
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35
Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12
Number of paragraphs: 73 Date of hearing: 1 February 2024 Place: Brisbane, delivered in Sydney Counsel for the Appellant: Mr Wilson KC Solicitor for the Appellant: EV Law Counsel for the Respondent: Mr Alexander Solicitor for the Respondent: Wilsons The Family Lawyers ORDERS
NAA 293 of 2023
BRC 1692 of 2020FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR GILMOUR
Appellant
AND: MS HOFTE
Respondent
ORDER MADE BY:
ALDRIDGE, RIETHMULLER & BRASCH JJ
DATE OF ORDER:
22 FEBRUARY 2024
THE COURT ORDERS THAT:
1.Appeal number NAA 293 of 2023 is dismissed.
2.The appellant pay the respondent’s costs fixed in the sum of $45,000.
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 Gilmour & Hofte has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE, RIETHMULLER & BRASCH JJ:
This is an appeal against property settlement orders made on 28 September 2023 following a trial. The primary judge determined that the property of the parties should be divided 80 per cent to 20 per cent in favour of the respondent, and that the appellant should continue to pay spousal maintenance at the rate prescribed by earlier interim orders made on 19 July 2022, until the respondent obtained full-time employment or until further order.
BACKGROUND
The appellant and the respondent were in a de facto relationship for ten years, separating on a final basis in June 2018. There are two children of the relationship who are 13 and nine years of age. The appellant does not challenge the parenting orders which were made by the primary judge at the same time (28 September 2023), which provide for the children to live with the respondent and spend six nights per fortnight, and one half of school holidays, with the appellant.
At the trial of the matter, the evidence filed by the parties was far from helpful, as the primary judge identified in his reasons for judgment (at [5]). In particular, the appellant did not produce financial records setting out his professional income or expenses. The appellant is not an unsophisticated litigant, having had a law practice that was said to have a value of around $1.6 million in 2019, but was placed in liquidation prior to the trial. There were considerable debts pursued by the liquidator against the appellant as a result of director’s loans from the company to him which, by the time of the trial, had been reduced to $110,000 (through negotiations and some payments).
The primary judge delivered an ex tempore judgment the morning after addresses. Ex tempore judgments, by their very nature, are not carefully revised and edited works and must be read in that light. Ex tempore judgments offer significant benefits: they are given at a time when the evidence is fresh in the judge’s mind; they are usually more accessible to litigants as they are succinct and focused upon the substantive issues in dispute; and they end the proceedings quickly. For these reasons, the Court should be “conscious of not picking over an ex tempore judgment” (Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [56]).
The primary judge found that the parties’ net asset pool was around $715,731 (comprising assets of $1.48 million (including superannuation) and liabilities of $772,589) (at [27]). The primary judge found that the parties made equal contributions during the relationship (at [41]). After adjusting for the factors set out in ss 90SM(4)(d), 90SM(4)(e), 90SM(4)(f), and 90SM(4)(g) of the Family Law Act 1975 (Cth) (“the Act”), his Honour determined that the final property settlement should be 80 per cent to 20 per cent, in favour of the respondent (at [53]). Whilst the adjustment was a large percentage (30 per cent), this was in the context of the appellant’s case at trial where an adjustment of 25 per cent was argued to be appropriate (albeit based upon the appellant’s argument that the contributions assessment should be 60 per cent to 40 per cent, in his favour) and, as the primary judge noted, 30 per cent of the parties’ property represented only around $210,000; a sum less than the appellant’s yearly income (at [54]).
The primary judge made an interim order for the appellant to pay spousal maintenance in the sum of $583 per week (the spousal maintenance rate prescribed by earlier interim orders made on 19 July 2022) until the respondent obtains full-time employment, noting that the respondent was expected to soon qualify as a healthcare professional.
APPLICATION TO LEAD EVIDENCE ON THE APPEAL
The appellant sought to adduce further evidence on the appeal. As was explained in CDJ v VAJ (1998) 197 CLR 172 (“CDJ v VAJ”) at [116]:
The failure to have adduced the evidence before the primary judge will be a variable factor, the weight of which will depend upon all the other factors pertinent to the case. Where the evidence has been deliberately withheld, the failure to call it will ordinarily weigh heavily in the exercise of the discretion.
Whilst the discretion requires particular care in parenting cases, parties are generally expected to put their case at trial and are bound by the way in which they run their case at trial (see Water Board v Moustakas (1988) 180 CLR 491 at 497; Coulton v Holcombe (1986) 162 CLR 1 at 7–8 and Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438).
The appellant sought to adduce evidence of his Notice of Assessment for the 2022/23 financial year which became available to him a few weeks before the trial. There was no adequate explanation for the appellant’s failure to produce this evidence at the trial, where a central issue concerned the appellant’s actual earnings. The appellant did not seek to adduce copies of the Individual Tax Return, nor the source documents supporting the preparation of the return. It cannot be said that a Notice of Assessment is definitive evidence of the income of a person in a given year.
The appellant also sought leave to adduce evidence that he now holds a limited practicing certificate. The reason for this restriction was not provided. The primary judge had regard to the risk of such a restriction in his reasons (at [48]). On the appellant’s case at trial, he was not operating a practice as a principal but was working as a “consultant”, and therefore not a principal solicitor.
The appellant also sought to lead evidence as to a trust account ledger (for monies of the parties that was held on trust at the time of the trial) in order to show that the respondent received slightly less than that contemplated by the primary judge. The respondent makes no complaint and does not cross-appeal.
We were not persuaded that the appellant should be permitted to adduce this evidence on appeal and refused leave.
It was agreed between the parties that the property located at Suburb J had sold for $910,000, a price less than the valuation relied upon at trial, which we have taken into account when considering the appeal (see CDJ v VAJ at [114]).
THE GROUNDS OF APPEAL
The appellant relies upon eight grounds of appeal, as set out in his Amended Notice of Appeal filed 22 December 2023.
Ground One – Errors in the calculation of the pool
The first ground of appeal alleges that the primary judge made a number of errors in determining the value of the assets and liabilities of the parties, as follows:
1.The learned [primary] judge erred in his calculation of the value of the property available for adjustment between the parties by:
a. Using an incorrect figure for the debt owed to [G School];
b. Disregarding partial property settlements made to the Respondent;
c.Disregarding interim payments made to the Respondent over and above those made to the Appellant;
d. Disregarding a loan made by the Appellant's mother;
e. Disregarding a taxation liability of the Appellant.
(Amended Notice of Appeal filed 22 December 2023)
The primary judge took into account the debt owed to G School by the parties at $11,881 (at [25]). The amount was taken by the primary judge from the parties’ balance sheets. However, it became clear that the correct amount was actually $16,853 (see Transcript 27 September 2023, p.243 lines 36–37). The correct amount appears in Order 26(b) of the orders made 28 September 2023, as reflected in the children’s school fees invoice (Exhibit 4). The effect of this error is that the primary judge underestimated this debt by $4,972 in the course of the ex tempore reasons for judgment, but not in the final orders. The difference in the amount represents less than 0.7 per cent of the net assets of the parties, of which the respondent was receiving 80 per cent. An error by a primary judge will only lead to an appeal being allowed if the error results in a substantial miscarriage of justice (see Conway v The Queen (2002) 209 CLR 203 and Saltern & Mink [2020] FamCAFC 320 at [43]). We are not persuaded that this minor error in an ex tempore judgment is sufficient to establish appealable error on the part of the primary judge.
The appellant also contends that the primary judge did not account for the partial property settlements received by the parties prior to trial. There are two reasons that this issue cannot found a successful ground of appeal. First, neither party asked that the primary judge take up these sums when putting their cases forward. In the absence of a request by a party that the sums be taken into account by the primary judge, it is not open to the appellant to make a complaint on appeal. Secondly, as the respondent ultimately received far more than 50 per cent of the assets of the parties, any failure to add-back the interim payments only reduced the amount the respondent was to ultimately receive: that is, it was to the appellant’s benefit.
The appellant also alleges that the respondent received an additional $30,000 in interim distribution over and above the $152,000 each party had received pursuant to orders for interim property settlements. The respondent received an additional $30,000 for the purpose of purchasing a motor vehicle (after her car was repossessed), which she did, for $32,000 (Transcript 27 September 2023, p.257 line 35). The respondent’s motor vehicle was included in the assets of the parties at a value of $25,000 at the time of trial, based upon a concession by the respondent’s counsel (Transcript 27 September 2023 p.258 line 1), there being no other evidence of the value of the vehicle. The depreciation of the vehicle was clearly within the ambit of ordinary living expenses. Living expenses pending trial are not ordinarily an add-back (see Omacini and Omacini (2005) FLC 93-218 at [39]–[41]). There is no appealable error in the approach of the primary judge in this regard.
On 30 May 2023, each party received $20,000. The amount ultimately received by the appellant was only $13,431.62, as the Child Support Agency recovered unpaid debts of the appellant from the amount to be paid to him. The amounts recovered by the Child Support Agency discharged debt obligations of the appellant: that is, it was applied to the benefit of the appellant by meeting his outstanding debts. If monies used to discharge the appellant’s debts to the Child Support Agency are not characterised as distributions to the appellant, a person obliged to pay child support would be able to meet that obligation from the assets that are to be divided in the property settlement proceedings. The effect of the appellant’s argument, in this case, would be that the respondent would have paid 80 per cent of the child support debt from her property settlement entitlement.
The appellant’s arguments concerning interim property distributions cannot succeed.
The appellant claims the total of the assets of the parties should be reduced as a result of his tax assessment for the 2022/23 financial year. There was no evidence to this effect before the primary judge, nor any reason such evidence could not have been led at trial (and there tested by the respondent). There was no evidence of how the appellant applied that part of his earnings that would be payable as tax in that year. This ground must fail.
The appellant also contends that the primary judge erred in not classifying his mother’s payment to him of $5,500 as a loan. The appellant said he received the loan from his mother to assist him in paying off the liquidator of his firm (see appellant’s Summary of Argument filed 22 December 2023, paragraph 20). The primary judge did not accept that this was a loan, noting that the appellant’s A Bank account and R Bank account records showed that his mother habitually sent him money, and there was no explanation as to why this amount should be classified as a loan when the other amounts were not (at [26]). We see no error in the primary judge’s reasoning which was open on the evidence before him. In any event, it is such a small amount in comparison to the overall assets of the parties that there cannot be said to be any substantial miscarriage of justice that flows from this finding, even if it were in error.
Ground Two – Error in contributions evaluation
The appellant’s second ground alleges that the primary judge “erred in his assessment of the parties’ contributions, and ought to have found that contributions favoured the Appellant” (Amended Notice of Appeal filed 22 December 2023).
The primary judge noted that the parties conceded that their contributions had been equal (at [39]–[40]). Following an exchange about the nature of the contributions each party made, the primary judge asked counsel for the appellant “[s]o what do you say overall in terms of contribution”, and counsel responded “[y]our Honour is correct that that comes out at about equal contribution” (Transcript 27 September 2023, p.247 lines 1–4). The appellant argues that first, the concession related only to the contributions after the commencement of the relationship; and secondly, that in any event, the primary judge should not have accepted the concession arguing that it was “obviously wrong” (see appellant’s Summary of Argument filed 22 December 2023, paragraphs 23–24) referring to both initial and post-separation contributions.
At the commencement of the parties’ relationship, the appellant conducted a legal practice and owned a property located at Town S that was encumbered by a mortgage. After the parties separated they remained living under the one roof until the Suburb J property was purchased in 2019 (appellant’s Summary of Argument, paragraph 24). After the Town S property was sold, the net proceeds were held in a solicitor’s trust account (from which the partial property settlement payments were distributed) (appellant’s Summary of Argument, paragraph 25) and applied to meet mortgage payments and outgoings on the Suburb J property (see Order 3 by Judge Willis on 4 February 2022). The value, if any, of the equity in the Town S property at the time of the commencement of cohabitation was not the subject of any evidence other than a bare claim by the appellant which was not accepted by the primary judge (at [34]). The respondent brought $20,000 and her car to the relationship. Each made initial contributions, however, the evidence before the primary judge would not have been sufficient to determine a precise value of the initial contributions of the appellant.
Throughout the relationship, the appellant operated a legal practice until his company was placed into liquidation. The respondent contributed as a homemaker, caring for the children and assisting in the administration of the practice. The parties met their living expenses by withdrawing money from the company that operated the practice, leading to the creation of the director’s loans. After the company was placed into liquidation, the liquidator demanded repayment of the loans (appellant’s Summary of Argument, paragraph 29). The appellant negotiated a reduction in the claim by the liquidator from $811,051.17 to $200,000 (appellant’s Summary of Argument, paragraph 31), which the primary judge took into account as a part of the contributions by the appellant (at [33]). After separation, the appellant met mortgages and outgoings for the properties at Town S (until it was sold) and Suburb J (appellant’s Summary of Argument, paragraph 24). The primary judge erred in identifying the date that the Town S property was sold. Town S was sold two years earlier than the date used by the primary judge, however, this could only have advantaged the appellant as his payments relating to this property ended sooner, thus the primary judge took into account a greater contribution by the appellant than he actually made.
Following separation, the respondent continued to make contributions as a homemaker and carer for the parties’ two children (at [39]). As the primary judge identified, after separation, each party continued to largely fulfil the roles that they had adopted during the relationship: the appellant as the income earner and the respondent as the homemaker and carer.
The appellant’s argument that there should be an adjustment for specific periods, or specific incidents (in this case, the initial contributions, the negotiations with the liquidator, and the post-separation financial contributions) is flawed. First, there is no notional starting point of equality of contributions from which to make adjustments. Secondly, a holistic assessment must be made of the parties’ various contributions. It may be convenient to look to periods of the relationship where circumstances do not change for the purpose of fact finding, however this does not alter the requirement that the discretionary assessment of contributions must be made on a holistic basis. Thirdly, we see no difference in principle between a businessperson earning a significant sum from an astute investment compared to a businessperson successfully negotiating a reduction of a significant debt: to find otherwise would be to allow the shadow of “special contributions” to continue, despite the concept having been expressly disapproved in Fields & Smith (2015) FLC 93-638.
Whether the concession of counsel can be limited by a close reading of the transcript matters little as it is apparent from the exchange that the primary judge had a preliminary view that contributions were equal, as he ultimately found in the judgment. When considering the contributions of the parties on a holistic basis, having regard to the differing contributions each made and the length of the relationship, we are not persuaded that the finding of equality of contributions was unreasonable or plainly wrong (see House v The King (1936) 55 CLR 499 (“House v The King”).
This ground of appeal is therefore not made out.
Grounds Three and Four – Error in the s 90SF adjustment
Ground 3 and Ground 4 are framed as follows:
3.The learned [primary] judge erred in finding that the Appellant’s weekly income (presumably on a nett basis) was $6,568.38.
4.The learned [primary] judge failed to take any, or any proper account of factors that were relevant to the consideration of s. 90SF(3) factors, insofar as they were relevant.
(Amended Notice of Appeal filed 22 December 2023)
The substance of these grounds is a challenge to the primary judge’s finding that the appellant’s weekly income was around $6,568.38, and that as a result, his Honour took into account an irrelevant factor when considering the s 90SF(3) factors.
The primary judge noted the difficulty in determining what the appellant earned, given the poor quality of the evidence provided by the appellant at the trial, saying:
45.The respondent remains a [lawyer]; he swears in his financial statement that he is employed as such; he swears in his affidavit of evidence-in-chief that he is employed as such. He says in his cross-examination that he is not employed as such, but that he is a consultant. There is a difference. Some might say it is more a technical difference than anything else, but there is a difference. Whatever the case might be, the difficulty lies in figuring out what it is that he earns; it is not clear. I have struggled with his evidence about this because it makes no sense. He swears in his financial statement that he earns a wage of something a little over $5,000 gross per week. His cross-examination revealed that he has been banking into a bank account which was only recently disclosed, apparently, a sum over $6,560 per week.
The primary judge ultimately concluded that the appellant’s income was $6,568.38, which was the amount that, most recently, was being deposited into his personal bank account each week for his work as a lawyer, there being no business expenses paid from that account (at [47]).
The appellant focused his argument upon a statement at [47] of the primary judge’s reasons where his Honour said:
47.Nonetheless, even if one takes at face value his financial statement which says that he has an average weekly income as an employed, full-time [lawyer] of $5,404 per week and adds to that the tax that he says he pays of $1,976 per week, as well as the superannuation of $592 per week, the result is well in excess of that which is being banked. The figures are substantially different. Trying to work backwards does not work either …
It was argued that the primary judge failed to understand that the figure of $5,404 (which appears in the appellant’s financial statement filed 4 September 2023) was a gross income figure from which tax and superannuation had to be paid. The appellant placed great weight upon the fact that in earlier periods, when he appeared to be operating a business account, he paid himself a “wage” of around $3,426 per week (appellant’s Summary of Argument, paragraph 42–44) from this account to another account. Read in the context of the judgment as a whole, we are not persuaded that the primary judge was confused about the terms of the financial statement, but rather his Honour was attempting to rationalise the financial statement with the larger amounts being paid into the appellant’s accounts. The passage at [47] merely records the testing of a hypothesis that the difference between the appellant’s income of $5,404 (as disclosed in his financial statement) and the much larger amounts appearing as deposits in his bank accounts may have been because the appellant had deducted the tax and superannuation liabilities to reach the income figure of $5,404, and that their inclusion in the financial statement was double counting those liabilities. However, even this hypothesis did not explain the figures in the bank statements, leaving the primary judge unable to identify a reliable explanation for the different figures provided in the evidence. At the end of [47], the primary judge said:
47.… the conclusion that I have come to, and the finding that I make, is that the respondent’s wage as an [employee] of [Q Company] is $6,568.38 per week – the amount that seems to land in his bank account each week.
We are not persuaded that the primary judge failed to understand the evidence as to the appellant’s income and expenses, rather, that his Honour rejected the appellant’s evidence for the reasons that he gave and adopted the figure that, in recent times, had been regularly deposited into the appellant’s personal account (from which no business expenses were paid). The primary judge took this amount of $6,568 up as a gross income figure, not an after-tax amount. It was open to his Honour to make such a finding on the state of the evidence. Indeed, it is difficult to see what other figure the primary judge could have adopted, given the limited and confusing evidence the appellant placed before the Court. We therefore find that Ground 3 and Ground 4 are not made out.
The appellant’s other complaint relating to s 90SF of the Act is addressed under Ground 5 and Ground 6 below.
Ground Seven – Issues concerning the Suburb J property
It is convenient to deal with Ground 7 prior to dealing with Ground 5 and Ground 6 as the issues identified in Ground 7 are relied upon, in part, in support of Ground 6.
Ground 7 sets out that:
7.The orders made by the learned trial judge made no provision for the payment of expenses pertaining to the [Suburb J] property, and his Honour failed to have any, or any proper regard to how the payment of the balance proceeds of sale to the Respondent would affect the adjustment of the parties’ property, both in percentage and in real terms.
(Amended Notice of Appeal filed 22 December 2023)
The primary judge made orders for the respondent to receive the net proceeds of the sale of the Suburb J property. His Honour expressly acknowledged the commonsense point that the valuation figure (which had been agreed between the parties) of $925,000 was unlikely to be the precise sale price (at [59]). The property ultimately sold for $910,000, slightly less than the valuation figure. This had the effect of reducing the amount that the respondent received as the orders provided for her to receive the net sale proceeds from the property. The respondent makes no complaint about these issues, no doubt because there was no other substantive property that could be settled upon her and no superannuation splitting order had been sought by either party.
In the particular circumstances of this case, there was no need for an order dealing with the difference between the actual sale price and the valuation evidence.
The appellant also argues that the final orders made 28 September 2023 did not adequately deal with monies in a trust from the sale of the Town S property. The sum held in trust was specifically dealt with by the primary judge at Order 26, which requires $110,000 be paid to the liquidator, the school fees debt to be paid, and the remaining balance given to the respondent. As it transpires, there was nothing left to pay to the respondent after meeting the two debts. It was also argued that the orders were inadequate to deal with the outstanding outgoings and mortgage payments with respect to the Suburb J property. Whilst a judge had previously made interim orders on 4 February 2022 for the mortgage payments and outgoings on the Suburb J property to be met from the trust monies, not all of the amounts were paid. The outstanding amounts were paid from the settlement proceeds upon the sale of Suburb J: an almost inevitable outcome to achieve settlement of the sale contract (see the respondent’s Summary of Argument filed 19 January 2024, paragraph 30). This reduced the amount ultimately received by the respondent, however, this is not the subject of complaint by the respondent, no doubt for the reason set out above.
Ground 7 must therefore fail.
Grounds Five and Six – Orders were unjust and without proper reasons
Ground 5 and Ground 6 challenge the finding that an adjustment for the factors contained in s 90SF of the Act of 30 per cent was warranted, in the following terms:
5.The adjustment of 30% in the Respondent's favour was unreasonable and unjust.
6.The [primary] judge’s reasons for making an adjustment of 30% were inadequate.
(Amended Notice of Appeal filed 22 December 2023)
As the appellant identified in his Summary of Argument at paragraph 55, “his Honour’s adjustment of 30% is really based on the disparity in income earning capacity of the parties”. The grounds of appeal relating to the assessment of the appellant’s income by the primary judge have not been made out.
The primary judge identified the relevant matters bearing upon the s 90SF factors at [43]–[48]. Whilst counsel raised that the primary judge referred to s 75 of the Act rather than s 90SF of the Act, this leads nowhere as, first, the parts of the provisions relevant to this case are effectively identical; and secondly, this was an obvious slip in ex tempore reasons which, when read in context, gave no indication of any error of principle by the primary judge.
The enormity of the difference in income of the parties is apparent from the appellant’s income (as found by the primary judge) of around $6,568.38 (which comes to around $315,000 annually, if one assumes there are four weeks of unpaid leave) saying:
54.Thirty per cent of this property pool is about $210,000, give or take a few dollars. The [appellant], on his own evidence earns $280,000 a year; on the findings I have made about his income it is much higher than that. The [respondent] earns nothing at the moment. In those circumstances the differential will be expunged by the [appellant] after a year of work – hardly an impost on him and notwithstanding that he will have the personal responsibility for some of the liabilities to which I have earlier referred.
The primary judge took into account the potential sanction against the appellant from a professional body (at [48]); that the appellant had paid $400 per week in child support (at [51]); and that the respondent was re-training and expecting to soon qualify as a healthcare professional (at [44]).
The primary judge took into account that a significant part of the assets of the parties in this case were held in superannuation. Neither party sought orders to split superannuation, nor provided notice to the relevant superannuation funds, leaving the primary judge without the option of making superannuation splitting orders when effecting the property settlement. In the submissions at trial, counsel for the appellant addressed the difficulty of effecting the property settlement, saying that it could only be done:
… by the cash or the amount resulting from the sale of the house, in my submission, and unless my learned friend can come up with some other proposal … there is no way that that could otherwise be achieved.
(Transcript 27 September 2023, p.247 lines 36–39)
On appeal, the substantive argument of the appellant was that it was unjust for him to receive $318,862 of property, of which $262,300 is superannuation, with the burden of $173,549 of debt (appellant’s Summary of Argument, paragraph 59). In this case, we are not persuaded that the findings of the primary judge were unreasonable or plainly unjust having regard to the circumstances which included: the appellant being in considerable arrears in his spousal maintenance payments (if he had paid any at all); the respondent having the primary care of the parties’ children; the very significant difference in income between the parties; the appellant having chosen not to seek superannuation splitting orders; and the appellant’s income being sufficient to allow him to repay the debt.
The effect of the sale price of the real property being lower than the valuation amount was to reduce the proportion of the assets received by the respondent to a little over 77 per cent. Indeed, had the two interim distributions been included in the list of assets (as the appellant contended on the appeal) the respondent would have received around 70 per cent of the assets, in circumstances where the appellant contended that the respondent should have received 65 per cent of the assets.
The appellant’s claim that the primary judge’s reasons were inadequate must fail as we are able to “ascertain the reasoning upon which the decision is based”, and we are not persuaded that it can be argued that “justice is not seen to have been done” in this case (see Bennett and Bennett (1991) FLC 92-191 at 78,266, adopting the test articulated by Gray J in Sun Alliance Insurance Ltd v Massoud [1989] VR 8 at 18).
The remaining argument in support of this ground is that the adjustment of 30 per cent was “unreasonable or plainly unjust” (House v The King at 505). The function of the appeal court is “not to offer … ‘a second opinion’” as “[i]t cannot be too strongly said that a mere difference of opinion ... does not indicate error on the part of the primary judge” (Sharman vEvans (1977) 138 CLR 563 at 565). Rather, an appellant must show that the primary judge was “plainly wrong” (CDJ v VAJ at 230–231 per Kirby J). We are not persuaded that the primary judge’s findings were unreasonable or unjust in the circumstances of this case.
The appellant has not established appealable error on either of these grounds of appeal.
Ground Eight – The spousal maintenance order
Ground 8 is set out as follows:
8.The learned [primary] judge erred in law and in fact in making an order for spousal maintenance in terms of Order 37.
(Amended Notice of Appeal filed 22 December 2023)
The primary judge made a spousal maintenance order in the following terms:
37.Until further order or until the applicant obtains full-time employment or its equivalent, the respondent pay the applicant spousal maintenance in the sum of $583 per week in the manner prescribed by the order of Austin J made on 19 July, 2022.
The appellant argues that despite the order being expressed as an order “until further order” it was intended as a final order. We reject that submission as the order is clear on its face and the appellant has not sought to have the primary judge amend the order pursuant to the slip rule. Given that the order was only contemplated to last for a short period (until the respondent completed re-training and obtained full-time employment), and that due to the paucity of evidence before the primary judge, it was open to his Honour to make an interim order.
To the extent that the challenge to the spousal maintenance order relied upon the challenge to the primary judge’s findings as to the appellant’s income, this ground must fail, for the reasons set out above.
The argument that the term “full-time employment” is not capable of clear interpretation should be rejected as the term is not so vague as to be incapable of being interpreted by the Court. In the context of this case, where the respondent is expected to become a healthcare professional, the term is likely to be easily interpreted by reference to the relevant industrial award for healthcare professionals.
The appellant argues that the parties’ circumstances have changed since the earlier interim spousal maintenance orders that were made by Austin J on 19 July 2022. However, the primary judge was well aware of the financial circumstances of the parties, having analysed the circumstances for the purpose of making property settlement orders. As the order is an interim order, the primary judge was not required to provide as detailed an analysis as would be required in final orders (Keymer & Keymer [2020] FamCAFC 70 at [38]).
Whilst the appellant claims there is no incentive for the respondent to obtain full-time employment, we are not persuaded that, in the absence of submissions to this effect at trial, on the facts of this case it was unreasonable for the primary judge to rely upon the respondent continuing in her endeavours to re-train in order to obtain employment. In any event, as this is an interim order, the appellant may apply to vary or discharge the order in the future. The complaint that the order contains no mechanism requiring the respondent to notify the appellant upon obtaining full-time employment was similarly not requested at the trial, nor necessary for an interim order.
We are not persuaded that the appellant has shown appealable error with respect to this order.
As the appellant has failed to establish appealable error, the appeal must be dismissed, and we make orders accordingly.
COSTS
Costs in family law matters are governed by the provisions of s 117 of the Act. There is no presumption that costs will follow the event (see s 117(1) of the Act) as both parties require orders, unlike ordinary civil cases where one party is pursuing a remedy against the other. However, it is open to the Court to make a costs order if “there are circumstances that justify it” (s 117(2) of the Act), having regard to the factors set out in s 117(2A) of the Act.
The parties’ financial circumstances are set out in the primary judge’s reasons and discussed above. Neither party was in receipt of legal aid. The parties have conducted the appeal proceedings without unnecessary costs and neither party failed to comply with orders or directions. There were no written offers to settle the appeal.
That an appellant is entirely unsuccessful following a trial or hearing where reasons for judgment had been given, is a powerful factor in favour of a party and party costs order. In the present appeal, the appellant was entirely unsuccessful.
When considering other matters relevant to the costs discretion (s 117(2A)(g) of the Act), regard should be had to s 67 and s 68 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) which require parties to conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose. The overarching purpose is set out in s 67 of the FCFCOA Act and includes facilitating “the just resolution of disputes … as … inexpensively … as possible”, and includes the objective of “the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute”. These principles are particularly poignant in property settlement cases where one party (in this case the respondent) has a lower income earning capacity and little prospect of accumulating significant assets in the future.
In order to pursue this appeal, the appellant incurred costs (described in his costs notice as “PARTY / PARTY BASIS”) of $71,679.98 (comprised of barrister and solicitors’ costs of $64,104.55 together with $7,575.43 for filing fees and the transcript). The appellant’s costs represent a little more than 10 per cent of the assets as found by the primary judge. The respondent has incurred costs in responding to the appeal of $65,897, which her representatives estimated would be assessed at around $31,780 on the party and party scale under the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
If the appellant had succeeded in having the pool adjusted to take account of the minor error in school fees, the slight difference between the valuation and the sale price of the real property, the interim payments being notionally included in the asset pool, and in having the split adjusted to 65 per cent and 35 per cent in the respondent’s favour, he would have retained an extra amount less than the cost he has incurred in pursuing the appeal. On any view, the costs to the appellant of pursuing an appeal were always likely to result in little or no net gain to him (even if certificates were issued pursuant to the Federal Proceedings (Costs) Act 1981 (Cth)), but significantly deplete the limited assets of the respondent. It is not suggested that the reasons for judgment in this case contained findings of fact or law that would otherwise explain pursuing such an uneconomic appeal. The appeal (and the costs associated with it) made the resolution of the dispute more expensive and disproportionate to the issues in dispute.
We are persuaded that the appellant should pay the respondent’s costs of the appeal.
The appellant, in setting out his “party and party” costs, effectively represented that the amount is the costs for work “reasonably required to be done for the proceeding” (see r 12.47(3)(b) of the Rules). That amount (ignoring the disbursements that the respondent has not had to pay) would also represent a guide to the reasonable costs incurred by the respondent (after adjustment for the work a respondent is not required to undertake, such as drawing grounds of appeal). It could hardly be said by one party that the other party’s “party and party” costs ought to be significantly less than their own, save where there are real differences in the work undertaken. The appellant’s “party and party” costs exceed the respondent’s actual costs; however, some adjustment must be made for the additional work required of an appellant. It is also important to note that costs orders are purely compensatory for reasonable costs actually incurred and not some form of punishment.
In the circumstances of this case, we are persuaded to make a lump sum costs order fixed in the sum of $45,000 in favour of the respondent, and make orders accordingly.
I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Aldridge, Riethmuller and Brasch. Associate:
Dated: 22 February 2024
4
10
4