GLUDAU & GLUDAU
[2013] FamCAFC 112
FAMILY COURT OF AUSTRALIA
| GLUDAU & GLUDAU | [2013] FamCAFC 112 |
| FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – where the appellant husband complains the Federal Magistrate (as his Honour then was) erred in his assessment of the parties’ respective contributions – where the Federal Magistrate assessed contributions at 75:25 per cent in favour of the appellant – where the appellant claims that finding was “plainly wrong” and “unreasonable” – whether the findings in respect of contributions were “plainly wrong” – where the parties had each previously been married – where there were no children of the marriage – where both parties worked during the relationship – where the parties kept their financial resources separate – where the bulk of the property pool available for distribution amongst the parties emanated from the appellant, without any direct financial contribution by the respondent – where the respondent had significant personal debt at the commencement of cohabitation and where the respondent’s liabilities increased during the relationship – where the Federal Magistrate’s assessment of contributions was “plainly wrong” – appeal allowed – matter remitted for rehearing. FAMILY LAW – APPEAL – COSTS – where the Federal Magistrate made an order that the appellant pay the respondent’s costs of the proceedings – where the Federal Magistrate stayed that order pending appeal – where the appellant appeals that order – where the order for costs is directly related to the Federal Magistrate’s assessment of contributions which has been found to be “plainly wrong” on appeal – costs order discharged. FAMILY LAW – APPEAL – REFUSAL OF STAY – where the Federal Magistrate only partially stayed the property settlement orders pending appeal – where the appellant was still required to pay a cash sum to the respondent – where it was highly likely that the respondent wife would use at least a portion of the sum to pay legal fees and various debts – whether the Federal Magistrate’s discretion miscarried in failing to order a stay – where the Federal Magistrate’s discretion did miscarry. |
| Family Law Act 1975 (Cth) Federal Proceedings Costs Act 1981 (Cth) |
| Allesch v Maunz (2000) 203 CLR 172 | ||
| APPELLANT: | Mr Gludau | |
| RESPONDENT: | Ms Gludau |
| FILE NUMBER: | BRC | 7170 | of | 2010 |
| APPEAL NUMBER: | NA | 58 | of | 2012 |
| DATE DELIVERED: | 1 August 2013 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | May, Murphy and Hogan JJ |
| HEARING DATE: | 24 June 2013 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 21 & 27 June 2012 |
| LOWER COURT MNC: | [2012] FMCAfam 603 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Hackett |
| SOLICITOR FOR THE APPELLANT: | Bruce Dulley Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Galloway |
| SOLICITOR FOR THE RESPONDENT: | Nita Stratton-Funk & Associates |
Orders
The appeal be allowed.
The orders made by Howard FM on 27 June 2012 (and amended on 7 September 2012) be set aside.
The matter be remitted to the Federal Circuit Court for re-hearing before a Judge other than Judge Howard.
Pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”), the appellant be granted a certificate that in the opinion of the Full Court it is appropriate for the Attorney-General to authorise a payment under the Costs Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
Pursuant to s 8 of the Costs Act, the appellant be granted a certificate that in the opinion of the Full Court it is appropriate for the Attorney-General to authorise a payment under the Costs Act to the appellant in respect of the costs incurred by the appellant in relation to the new trial ordered by the Court.
Pursuant to s 6 of the Costs Act, the respondent be granted a certificate that in the opinion of the Full Court it is appropriate for the Attorney-General to authorise a payment under the Costs Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.
Pursuant to s 8 of the Costs Act, the respondent be granted a certificate that in the opinion of the Full Court it is appropriate for the Attorney-General to authorise a payment under the Costs Act to the respondent in respect of the costs incurred by the respondent in relation to the new trial ordered by the Court.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Gludau & Gludau has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 58 of 2012
File Number: BRC 7170 of 2011
| Mr Gludau |
Appellant
And
| Ms Gludau |
Respondent
REASONS FOR JUDGMENT
May J
I have had the benefit of reading the Reasons of Murphy J with which I agree. I am also of the view that the appeal must be allowed, the orders set aside and the application remitted for re-hearing. I would also make orders pursuant to the Federal Proceedings Costs Act 1981 (Cth).
Murphy J
On 27 June, Howard FM (as his Honour then was) made orders for settlement of property in respect of the approximately nine and a half year relationship of the parties to this appeal. His Honour determined that the then existing legal and equitable interests in the parties’ property should be altered and that it was just and equitable to effect a distribution of those interests in the proportion 75 per cent to the appellant husband and 25 per cent to the respondent wife. The husband appeals those orders.[1]
[1]The orders were amended on 7 September 2012 in a manner not relevant to this appeal.
The husband’s central contention in this appeal, embraced in Grounds 2 and 4 is that the result just described is not just and equitable by reason of an erroneous assessment of the wife’s contributions pursuant to s 79(4) of the Family Law Act 1975 (Cth) (“the Act”). His Honour assessed those contributions at 22.5 per cent.
The net value of the property interests of the parties and the amount of their respective superannuation interests as found totalled $928,853.12. His Honour ordered the husband to pay the wife a cash sum of $133,236.71 and to effect a splitting order rolling out the same amount from his superannuation fund into a fund of the wife’s choice.
Upon application by the husband, the latter order was stayed pending appeal; the former order was not. The husband appeals the order refusing the stay (Ground 7). That order was made on 31 August 2012; this appeal was heard some seven months later in June 2013. The Bench was informed that the cash amount has been paid. As a result, the appeal on this ground is, as was effectively conceded, otiose.
In addition, by Ground 6, the husband appeals against an order that he pay the wife’s costs of the trial fixed in the sum of $35,000.[2]
[2] The original order was amended to replace the sum of $30,000 with the sum of $35,000.
A Challenge to the Exercise of Discretion
The husband challenges a number of factual findings made by his Honour. Examples include findings as to the wife’s net earnings during the course of the relationship and the respective amounts paid by the parties toward their wedding. No factual error founds any ground of appeal. The wife contends that “any errors are trivial and the accumulation of them is trivial”. While I would not be prepared to attribute that description to the asserted errors, I accept (as, implicitly at least, did the husband) that neither any specific factual error, nor the accumulation of them, impeaches any finding relevant to the challenge at the core of the appeal.
The central challenge to his Honour’s assessment is grounded in a challenge to the exercise of the Federal Magistrate’s discretion. Where that is so, the appeal confronts (as counsel for the husband readily acknowledges) the difficulties dictated by authorities of long standing. If the appeal is to be allowed on one or more of the grounds which challenge the exercise of discretion, this court must be well satisfied that the Federal Magistrate was “plainly wrong”, the result being “no proper exercise of his judicial discretion” (Gronow v Gronow (1979) 144 CLR 513 at 519). It is not sufficient that any or all of us, “… faced with the same material, would have reached a conclusion different from that under appeal” (CDJ v VAJ (1998) 197 CLR 172 at [186], per Kirby J).
This court should recognise the difficult task confronting a trial court in a s 79 case where not only is the discretion “very wide” (Mallett v Mallett (1984) 156 CLR 605 at 608, per Gibbs CJ) but where, also, the exercise of that discretion must be framed, ultimately, in a quantitative figure giving expression to an analysis and evaluation of findings expressed qualitatively (see the comments of Coleman J in Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234]).
Equally, however, while “the nature of the error may not be discoverable” readily, the decision should not stand “if upon the facts it is unreasonable or plainly unjust”; the decision “is reviewed on the ground that a substantial wrong has in fact occurred” (Housev The King (1936) 55 CLR 499 at 505, per Dixon, Evatt and McTiernan JJ).
For the Reasons which follow, I am of the view that the Federal Magistrate’s assessment of contributions is “plainly wrong”, that a “substantial wrong” has occurred and the decision cannot stand.
The Parties’ Property Interests and How They Evolved
The parties commenced cohabitation in May 2000, married in June 2003 and separated in December 2009. There are no children of their marriage. Each had been married before and each had effected a settlement of property with their former spouse. As a result, each received property. No specific finding is made by the Federal Magistrate as to the existing legal and equitable interests in property of the parties as at the commencement of their cohabitation.
At [22] of his Reasons, the Federal Magistrate found that the husband brought the property at G Street, Sydney “into the relationship” and made a specific finding that there was a mortgage debt of $50,000. The Reasons do not reveal any finding as to the value of the property or the amount of equity in it nor any findings as to any other property of the husband at the commencement of cohabitation.
In his evidence, the husband estimated the value of the property at $150,000 with a consequent equity of $100,000. That estimate does not appear to have been challenged by any evidence from the wife or in cross-examination of the husband. Further reference to apparently unchallenged evidence of the husband reveals that, at the commencement of the relationship, the husband had owned the G Street property for some three years, having purchased it for $100,000 and that the husband had at that time a 1966 MG motor vehicle, shooting equipment worth about $10,000, and savings of approximately $10,000. The husband also had a superannuation interest, the amount of which he says was $150,000. That amount, too, was unchallenged. The husband was employed and through that employment had the use of a company car.
No findings at all are made by the Federal Magistrate in respect of the property or liabilities of the wife as at the commencement of the relationship.
The wife’s evidence in this respect also appears to be unchallenged. She received from her property settlement (approximately two years prior to the commencement of cohabitation) an unencumbered car, a piece of real property sold in March 1998 for $220,000, furniture, and cash of $5,000 (transcript of proceedings, 23 April 2012, pp 37-38). In cross-examination, the wife said she thought she had received net proceeds from the sale of the real property of about $140,000. She had no credit card debts or any other personal loan debts consequent upon the settlement of property with her former husband.
The G Street property was used as a home for the parties and the husband’s disabled adult child. The wife did not pay “rent” or “board” or contribute to the mortgage or to the outgoings in respect of the home while living there. The wife’s adult daughter, a university student, lived in a self-contained granny flat in the property for approximately three and a half years. The wife’s daughter did not pay board or contribute to the outgoings in respect of the property. The wife was remuneratively employed throughout the majority of the relationship, although there were periods during which she was not employed.
The husband’s home, furniture and gun collection are included among the property interests to which his Honour’s s 79 orders pertain. Of the property received by the wife from her property settlement, about $5,000 in furniture is included in the property interests divided by his Honour. The approximately $140,000 in cash which the wife had received from her property settlement and subsequent sale of her real property was spent (while she and her daughter lived in Sydney) prior to the commencement of the relationship. When the wife left Sydney and entered the relationship with the husband she had (and brought to the relationship) a credit card debt of about $2,000 and a loan owing to Westpac of about $20,000 (transcript of proceedings, 23 April 2013, p 49, lines 20-24; p 51, line 1). It does not appear to have been disputed by her that the furniture earlier referred to was the wife’s sole asset brought to the relationship (noting that she also had an existing superannuation interest).
By the end of their nine and a half year relationship, the interests of the parties in property, their liabilities and the amounts of their respective superannuation interests, as found by his Honour, totalled $928,853.12 and was comprised as follows:
Husband
Wife
G Street $550,000
Bank accounts (total) 4,200.88
M P/L $45,000
Honda vehicle $3,300
Toyota vehicle $3,000
Furniture $5,000
Peugeot vehicle $30,000
Shooting equipment $10,000
Furniture $7,000
Bank accounts
(rounded total) $45,494.57
Legal fees (term deposit) $20,000
Liabilities
Liabilities
(Credit Card) ($2,144.33)
Credit cards (x 4) ($59,013)
Personal Loan ($33,000)
Total $708,350.24
(Total) (79,512.12)
TOTAL PROPERTY
$628,838.12
Superannuation Interests:
Husband
Wife
M Super $244,004
MLC $45,252
G Fund $10,759
Total $254,763
Total $45,252
TOTAL SUPERANNUATION
$300,015
The Relationship and Contributions – Nature and Characteristics
Although not referred to at all in his Honour’s reasons, it is important to appreciate that the “express and implicit assumptions that underpinned”[3] this particular marriage included, as the unchallenged evidence before his Honour reveals, that the parties would keep their finances, including their debts and property interests separate during the course of the relationship (albeit that the parties’ arrangements included the common use of the real property earlier referred to).
[3] Stanford v Stanford (2012) 293 ALR 70 at [42].
Those separate arrangements included an arrangement whereby the wife’s income was spent essentially on herself and on her (adult) daughter. In her affidavit of evidence-in-chief (at [11]) the wife deposes that apart from one joint account used briefly for travel:
… We did not pool our incomes and maintained our own separate accounts. In the 9 years and 7 months of our relationship [the husband] never gave me any housekeeping money. Throughout our relationship I contributed all of my income to support myself and [her daughter] and towards the needs of the household including towards [the] purchase of groceries and household items on a weekly basis…
However, the wife went on to depose in the same paragraph:
… [The husband] also purchased groceries and household items for the household from his earnings on a weekly basis. [The husband] met all the outgoings on the home being the rates, insurances, mortgage, electricity. The telephone landline was paid for by his employer until approximately 18 months after his redundancy…
During cross-examination the wife conceded that she retained for her own use “predominantly all of [her] earnings” and that “on occasions” she would buy groceries and household items with the money she had available to her being spent on “supporting [herself] and [her daughter]”(transcript of proceedings, 23 April 2012, p 95, lines 11-42). Further cross-examination of the wife pointed to an extract from her own diary (written during the relationship) where the wife says “I was doing grocery shopping … (which I must say is a rarity for me as [the husband] does most of the grocery shopping)” (Exhibit C, Affidavit of Mr D filed 10 April 2012).
Two other aspects of the nature and form of the financial characteristics of this particular marriage are important. Neither is referred to in the Federal Magistrate’s reasons.
The first matter pertains to the issue just discussed. The wife deposed in her affidavit of evidence-in-chief:
… I offered to contribute to these [household] expenses on a number of occasions but [the husband] always said to me that he did not expect this from me and that I should use my earnings to reduce my Westpac personal loan referred to above.
Yet, it was uncontroversial before his Honour that the wife did not reduce the Westpac debt and that her overall indebtedness increased from about $22,000 at the start of the relationship to about $92,000 at its end, comprising four credit card debts and a personal loan. That circumstance can be seen to have particular importance in light of the finding by the Federal Magistrate (at [44]) that the wife:
… does appear to acknowledge that her management of her own personal finances has been less than ideal. The wife appears to have been unable to get on top of her credit card debt.
The second matter of importance is related to that issue. As will shortly be discussed, the wife received an inheritance of about $130,000 during the relationship. The increase in the wife’s indebtedness (which occurred separate to any financial activities involving the husband) occurred despite the receipt of that inheritance. None of that inheritance is represented by any property interests divided by his Honour’s orders.
Importantly in that respect, the husband’s evidence – again, apparently unchallenged – is that upon receipt by the wife of her inheritance (which was received in a number of tranches) he offered to make the wife a joint owner of the G Street real property if the funds from her inheritance were used to discharge the mortgage. That evidence is not at all referred to in his Honour’s reasons. That evidence is important in evaluating the respective contributions of the parties because, as will shortly be discussed, when the husband received a lump sum redundancy, he discharged the mortgage and invested a sum into his post-redundancy business, M Pty Ltd. Both the resulting equity in the real property and the agreed value of the husband’s business are included in the property to which his Honour’s orders pertain and in which, as a result, the wife shares.
Capital Contributions
As has already been referred to, each of the parties received a significant capital sum during the course of the relationship. The wife received an inheritance; the husband a lump sum redundancy payment. The use made of each is important in assessing whether the ultimate assessment of contributions is just and equitable.
The Wife’s Inheritance and Its Use
The wife received distributions from her father’s estate commencing in February 2003. Distributions were received at a time when the husband had increased his mortgage liability to pay for renovations to the home in which the parties (and their respective (adult) children) were residing. The Federal Magistrate found that the husband “… extended the mortgage periodically over three years from $50,000 to $100,000 in order to finance some improvements to the house” (at [22]). As has been observed, the husband met all mortgage payments from his own income and subsequently discharged the (increased) mortgage.
The Federal Magistrate found that “various works” were paid from the wife’s inheritance and that the monies “at least in part” were used “for the benefit of the household”. The Federal Magistrate went on to find (at [26]) that:
… Even if the wife spent part of the inheritance on personal items for herself – this does not in any way diminish the fact that part of the funds were either directly or indirectly contributed by the wife for the benefit of the household. The wife directly used some of her inheritance money as outlined in respect of improvements to the property but also, I accept (at the very least by inference) that the wife accessed some of those funds from her bank account in order to buy groceries and other essential discretionary items needed for the benefit of the family. I do not accept that the wife spent the entirety of her inheritance money upon herself alone.
A number of observations need to be made. The general expressions used by his Honour – “various amounts”, “at least in part”, “part of the funds”, “some of her inheritance money” – are not quantified or further qualified in the Reasons.
Neither the direct findings nor the inference referred to is referenced to specific evidence of the wife, although the Federal Magistrate specifically accepts the wife’s evidence contained at paragraphs [14], [15], and [16] of her trial affidavit. Those paragraphs reveal expenditure of about $12,000 on the house and unspecified amounts for “many plants and for the gardens to be cleared and prepared for river stones to be laid” and unspecified amounts in respect of “items of furniture and white goods including some cane furniture and clothes dryer”. There is no evidence by the wife to which the court has been taken, nor can I myself find any evidence, to support a finding or inference that the wife “accessed those funds from her bank account” or that any inheritance monies were used for the purpose specified.
The court has been taken to no evidentiary basis for the inference drawn by the Federal Magistrate that the wife “accessed some of those funds … to buy groceries and other essential discretionary items needed for the benefit of the family”. The specific evidence referred to above in respect of contributions to household expenses pertains, as does, more generally, the non-specific answers given by the wife during the course of her cross-examination. When asked to tell the court what she had spent her inheritance money on, she replied “[a]nything and everything I had to buy … On everything that I had to buy for myself or I bought for my grandchildren, my daughter” (transcript of proceedings, 23 April 2012, p 115, lines 26-29, emphasis added).
That evidence also occurs in the context of assertions as to the lack of proper disclosure by the wife as to expenditure related to her inheritance monies. The issue of disclosure is not at all addressed in his Honour’s Reasons.
While the specific finding in the concluding sentence of the passage from the Reasons quoted above refers to not spending “the entirety of her inheritance money upon herself alone”, no finding by his Honour references the apparently uncontroversial fact that the wife cannot account for more than $110,000 of the $130,000 which the wife admits receiving by way of inheritance. Nor does the wife provide disclosure in respect of that expenditure.
The Husband’s Lump Sum Redundancy Payment and Its Use
At [22] of the Reasons, his Honour refers to paragraphs 57 through 60 of the husband’s affidavit of evidence-in-chief and says he accepts the evidence of the husband contained in those paragraphs. As a result, the Federal Magistrate found, in accordance with the evidence of the husband, that the husband received a lump sum redundancy of about $230,000.
Exhibit E to the Affidavit of Mr D filed 10 April 2012 reveals that the husband’s termination payment was calculated by reference to the commencement of his employment in 1982, some 18 years prior to the commencement of the relationship with the wife. The parties resided together for some seven of the 25 years (1982 – 2007) to which the termination payment relates. Such (indirect) contribution as the wife made to its acquisition should also be seen against the accepted facts that the wife worked remuneratively and the parties kept their finances separate.
By accepting the husband’s evidence in the paragraphs specifically referred to, the Federal Magistrate also accepted that the husband’s redundancy payment was used to pay off the mortgage in respect of the G Street property; to buy the car which had previously been given to him as a company car; and, in setting up an office so as to establish a business as a consultant which he did effectively immediately after the cessation of his employment.
It is again important to observe that the equity in the G Street property and the business each form part of the property interests in which the wife shares by reason of orders made by the Federal Magistrate. In evaluating the contributions of each of the parties, the contrast in the use made by the wife of her inheritance and the use made by the husband of his redundancy payment is a powerfully important matter.
Income and Contributions
The Federal Magistrate found that “the wife’s gross annual income during [the relationship] ranged between $40,000.00 – $53,000.00” (at [19]).
This is said to be one of the factual errors made by his Honour. The evidence (which does not appear to have been controversial at the trial) reveals gross earnings by the wife in the years 2001-2010 of $387,896 – that is an average of $38,790, with average net earnings of $31,002. The husband’s net income during the period of the relationship was not controversial. It was more than double that of the wife ($765,403 as opposed to $310,020).
Reference has earlier been made to the respective uses made of the parties’ income, again noting that the parties’ finances were kept separate from each other. The husband’s income paid the mortgage, outgoings and utilities in respect of the home where the wife and her daughter lived without contribution by them.
Indirect Contributions and Contributions to the Welfare of the Family
“Homemaker” Contributions
The Federal Magistrate found, essentially by accepting the evidence of the wife, that “it was the wife who had the major responsibility for the housework”. His Honour “notes” (at [28]) that:
… [A] cleaner was engaged by the husband on a weekly basis. That was the situation when the relationship began. But that situation was changed so that the cleaner attended once per fortnight. I agree that it was the wife who bore the major responsibility for the housework in between the fortnightly visits of the cleaner.
The Federal Magistrate also “notes” that an ironing lady did the ironing for the husband and that “the parties appeared to have shared the cooking duties”.
No specific challenge is made to the findings just outlined. His Honour’s Reasons do not, however, refer to other evidence directly relevant to those findings. For example, it was not in dispute that the husband met all expenses associated with a cleaner, the ironing lady and a gardener.
“Contributions” Made to the (Adult) Child of the Other Party
The husband has a son, P, from his first marriage. P suffers from autism. The evidence reveals his disability to be significant. P was about 16 when the parties commenced residing together and 25 when they separated. The wife’s daughter of her first marriage was aged about 20 years when the parties commenced residing together. She lived with the parties for about three and a half years until she left to live with her now husband.
The Federal Magistrate nominates 11 paragraphs of the wife’s affidavit of evidence-in-chief and, at [37] of the Reasons, finds that the wife “… made significant contributions to assist with the care of [P] during the time that [P] spent at the former matrimonial home during the relationship.” That topic is considered by reference to “contributions”. That is an error (see, Robb & Robb (1995) FLC 92-555). However, no ground relies upon that error. Counsel for the husband acknowledges that issue but points out, correctly, as it seems to me, that a consideration of the issue by reference to principle may well amount to an assertion of error in the assessment of the so-called “s 75(2) factors” (i.e. s 79(4)(e)). The argument proceeded on the basis that it was more convenient to deal with the issue as the Federal Magistrate had in his Reasons given that the thrust of the appeal was a challenge to the assessment of contributions and his Honour had (erroneously) dealt with the issue in that manner. I am content to proceed on that basis.
In addition to the findings referred to above, his Honour accepted the evidence of the wife “… in relation to assisting [P] when [P] began soiling himself. This was undoubtedly a difficult task when undertaken by the wife on many occasions” (Reasons at [38]). His Honour went on to find that “… the husband sought to downplay the extent of the wife’s assistance that she provided [P] …” in that respect, and that “[t]he wife did contribute in a substantial way (as she has claimed) to the cleaning of [P]” (Reasons at [40]).
However, once again, these unchallenged findings also fall within the context of other evidence not the subject of challenge. His Honour found that the wife’s adult child from her previous relationship lived with the parties for about three and a half years until March 2005 (Reasons at [20]) but no finding was directed to the uncontroversial fact that she did so rent-free in a self-contained granny flat within the property owned and paid for by the husband.
The evidence of the wife’s assistance with P must also be seen in the context of the fact that P’s time as a member of the husband and wife’s household varied during their relationship. P lived with his mother on alternate weekends and with his father and the wife for the balance of the time from the commencement of their relationship until about August 2004. He then lived week about between his parents until about 2007 when he commenced living with the husband and wife on alternate weekends and with his mother for the balance.
Very importantly, it was uncontroversial that, as each of the husband and wife worked remuneratively outside of the home, P was looked after by a carer in the mornings until attending either school or time with a “disability support services provider”. It was also uncontroversial that the carer provided P with his breakfast, lunch (when he was in her care during the day) and dinner. Following the completion of his school years, he was collected by the husband on his way home from work.
I can see no evidence in the Reasons that his Honour considered these important facts when assessing the respective “contributions” of the parties to their respective adult children.
Post-Separation Contributions
The Reasons contain no reference to post-separation contributions made by either party despite the fact that the parties separated more than two years prior to the trial – a timeframe that can be seen to have significance considering the length of the parties’ relationship.
During that time, the husband remained living in the former matrimonial home, paid outgoings in respect of it and preserved it.
Conclusions as to Contributions – Grounds 2 and 4
Given the wide ambit of the discretion and the concomitantly wide range of conclusions upon which reasonable minds can properly differ, I must be well satisfied that the Federal Magistrate’s assessment of contributions falls comfortably outside of the range postulated by any such differences.
The trial court’s task is to weigh all contributions of whatever type and whenever made so as to arrive at an ultimate assessment of how the parties’ respective contributions can be assessed. “Substantial and not merely … token” weight must be given to contributions made by the wife in the role of homemaker and so, too, to any indirect contribution (Mallett at 623, per Mason J). In that respect, the “contributions” made to P as found by his Honour are a significant matter, as his Honour recognised.
However, when all of the contributions directed by s 79(4) of the Act are taken into account in a holistic way as the section requires, I am well satisfied that the conclusion reached by his Honour is manifestly unjust.
While a failure to take account of relevant evidence is not a ground of appeal, I consider the evidence to which I have referred, of which no reference is made by his Honour in the Reasons, underscores significantly the conclusion I have reached.
His Honour found (at [42]) that:
… In terms of financial contributions – the husband made the overwhelming majority of those contributions. When one looks at the pool itself (as found and stated earlier herein in these Reasons for Judgment) it is the husband who has made the overwhelming financial contributions to that pool of property …
In the following paragraph ([43]) his Honour found:
By utilising her income and resources during the course of the relationship to fund her own (and her daughter’s) lifestyle the wife enabled the husband to utilise his income otherwise for the benefit of the family and in order to build and preserve his asset base (including superannuation).
It is not at all clear what is meant by the expression “resources”. That matter aside, while I acknowledge freely the importance of non-financial contributions of all types made by the wife as found by his Honour, I cannot see any sound evidentiary basis for the finding that, in the circumstances of this case earlier discussed, the wife made any contribution of significance to the husband “build[ing] and preserv[ing] his asset base (including superannuation)” (Reasons at [42]).
Despite the finding at [42] of the Reasons quoted above, I consider that his Honour undervalued significantly the contributions of all types made by the husband (including the financial contributions to which his Honour refers).
I consider that his Honour’s assessment of contributions is plainly wrong and produces a result in favour of the wife that is manifestly unjust. Grounds 2 and 4 are made out and the appeal should succeed.
Reasons – Grounds 3 and 5
Grounds 3 and 5 assert, respectively, inadequacy of reasons in arriving at a conclusion that contributions should be assessed at 22.5 per cent in favour of the wife and as to “… why [his Honour] was satisfied that it was just and equitable to make a property settlement order.”
As argued by counsel for the husband, these grounds were essentially embraced by the arguments in respect of the essential challenge as earlier described. (For example, the husband’s written outline contends “Grounds 2 to 5 relate [to] the proper assessment of contributions and whether the order resulting from that assessment was just and equitable.”)
In those circumstances and in light of the conclusion I have reached in respect of Grounds 2 and 4, I do not propose to further consider these grounds.
Costs – Ground 6
At the conclusion of the Reasons given by the Federal Magistrate on 21 June 2012, the Federal Magistrate required the parties to forward to the court orders reflecting the Reasons by no later than 4:00pm on 25 June 2012. On that date, the wife made application for her costs of the trial. On 27 June 2012 the Federal Magistrate delivered ex tempore Reasons relating to that issue. His Honour ordered that the husband pay the wife’s costs in the total sum of $30,000 within 30 days.[4]
[4] That order was subsequently amended to replace the sum of $30,000 with the sum of $35,000.
Whilst his Honour’s Reasons in respect of costs reveal the factors considered by his Honour to be relevant pursuant to s 117(2A) of the Act, it is plain from his Honour’s Reasons that considerable importance was, understandably enough, attached to an offer to settle made by the wife. The husband, too, had made an offer to settle to the wife.
It was said by this court in Lenova & Lenova (Costs) [2011] FamCAFC 141:
10.In this jurisdiction, costs do not “follow the event”; the Act prescribes, relevantly, that “subject to subsection (2) … each party to proceedings under this Act shall bear his or her own costs” (s 117(1)). As a result, a litigant, or prospective litigant, cannot rely upon a costs order following upon success in the action as a means of dissuading the other party from pursuing unmeritorious litigation or as a means of seeking to persuade the other party from pursuing litigation.
11.A timely offer in writing genuinely made might, then, be seen as an important part of a limited armoury available to prospective litigants seeking to avoid the costs of litigation. Conversely, where, consequent upon success in an action, a litigant can point to the making of a genuine and timely offer having been made, that offer might be seen as an important (albeit not the only) matter in the exercise of the discretion as to the ordering of costs.
12.That consideration must, of course, be balanced against a litigant having a limited capacity to meet a costs order, as well as any other relevant considerations. But, a limited financial capacity to meet an order cannot be determinative; if it were, a party would always be able to plead impecuniosity as a means of avoiding a costs order in circumstances where pursuit of the litigation has continued in the face of a reasonable offer to cease that litigation and the incurring of its attendant costs.
Obviously enough, the order for costs was directly related to the relationship that each of the offers made by the parties bore to the ultimate result arrived at by his Honour. It is not possible for me to discern from the Reasons any other factor or factors relevant to s 117(2A) that would permit the order for costs to stand given the central place of the offers for settlement in the making of the order for costs and my conclusion that his Honour’s assessment of contributions and, consequently, the result of his Honour’s orders, was manifestly unjust.
The order for costs should be discharged.
Ground 7 – Stay Pending Appeal
An application for stay was filed on 7 August 2012 and was “partially granted” by the Federal Magistrate on 31 August 2012.
By Ground 7 of the Notice of Appeal, the husband appeals that order, the effect of which was that the husband was required to pay $133,236.71 in cash to the wife. (The reference to the “partial” granting of the stay refers to the fact that the Federal Magistrate stayed the operation of the order effecting a splitting order in favour of the wife.)
I again recognise that his Honour’s order involved the exercise of a discretion; the principles earlier outlined apply equally to an appeal against the decision to refuse a stay. I am, however, well satisfied that his Honour’s decision was “plainly wrong” and should not stand.
Having said that, it was common ground that the ordered sum had been paid although there was no evidence before the Court as to the source of the payment or how it was applied. As counsel for the husband readily conceded, that circumstance, together with the fact that this appeal was heard some seven months after the order was made, renders the appeal on this ground effectively otiose. The arguments as to error are, nevertheless, pressed and I will briefly outline my reasons for holding that error is established in respect of this ground.
It is contended that the Federal Magistrate “… failed to apply the well-established principles in relation to stays pending appeals”. Reference is made to the decisions in Scarborough v Lews Junction Stores Pty Ltd [1963] VR 129 at 130, Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Ltd (1986) 160 CLR 220 at 230 per Dawson J, and Bulleen & Bulleen (No. 4) [2010] FamCA 1088 at [10] and [11] per Coleman J. Reference might also be made to the recent decision of Full Court in Jackson & Balen [2009] FamCAFC 131 where the principles applicable to stay pending appeal were summarised by the Full Court.
It is argued that a number of bases properly founded the application for stay and were overwhelmingly persuasive of granting it, such that the Federal Magistrate’s discretion miscarried in refusing it.
The wife’s financial position was argued to be a very important matter relevant to a finding that the appeal would be rendered nugatory if the amounts ordered to be paid to the wife were paid and dissipated in the payment of her debts prior to the appeal. In addition, it was argued before the Federal Magistrate that those same financial circumstances rendered it very unlikely that the wife would be able to repay to the husband any amount resulting, ultimately, from a successful appeal.
In that respect, it was argued additionally that no undertaking was offered by the wife to preserve the judgment amounts pending the appeal. To the contrary, the wife swore that she wished to use part of the funds to discharge amounts in excess of $65,000 owing to her legal advisers in respect of the trial and to pay her credit card debts.
The principles relevant to applications of this type and the constant emphasis in the authorities on the importance of an appeal being rendered nugatory in the exercise of the discretion in considering a stay, when balanced against the prima facie right of the wife to the appeal to enjoy the fruits of a judgment, have been well-traversed in the authorities.
Here, it ought to have been plain that the husband had an arguable case on appeal. There was no issue that his application was brought for the purposes of delay or brought otherwise than bona fide.
The order preventing the wife from giving effect to the ordered superannuation split was not highly relevant to the question of whether an appeal would be rendered nugatory; on the findings made by his Honour, the source of funds available to the husband to meet the order were not apparent. Further, his Honour’s own findings and the evidence of the wife would have, or should reasonably have, given pause for thought that if cash was paid by the husband it would have been spent in the discharge of debts or otherwise and, as a result, be unavailable to meet any order consequent upon a successful appeal.
Nothing to which this court has been referred, nor anything otherwise apparent from the evidence before me, suggests any good reason why the interests of justice and, in particular, the prima facie right of the wife to have the judgment carried into effect ought have outweighed these compelling considerations.
I consider that the Federal Magistrate’s discretion miscarried in failing to order a stay in all of the circumstances of this case.
Re-exercise or Remitter?
A submission is made by both parties that, in the event that the appeal is allowed, this court should exercise for itself the s 79 discretion. That position is perfectly understandable and is born of a proper desire to save the parties costs (and, not insignificantly, the stress) of proceedings consequent upon remitter to the Federal Circuit Court. For the same reasons, this court is anxious to exercise for itself the discretion if the circumstances so permit.
However, this court’s capacity to do so is circumscribed by applicable legal principle.It is, I think, important to again set out what was said by the High Court in Allesch v Maunz (2000) 203 CLR 172 (per Gaudron, McHugh, Gummow and Hayne JJ):
[30] Although, on an appeal by way of rehearing from a discretionary judgment, an appellate court may, itself, exercise the discretion in question by reference to circumstances as they then exist, it is not bound to do so. It may, instead, set aside the order under appeal and remit the matter for rehearing or, in terms of s 94(2) of the Act “order a re-hearing, on such terms and conditions, if any, as it considers appropriate.” And where circumstances have or are likely to have changed between the original hearing and the disposition of the appeal, it is not uncommon for an appellate court to remit the matter for rehearing rather than, itself, exercise the discretion in question.
[31] If on an appeal by way of rehearing from a discretionary judgment an appellate court is minded to exercise the discretion in question by reference to circumstances as they exist at the time of the appeal, it is necessary that the parties be given an opportunity to adduce evidence as to those circumstances. It is not entirely clear that that happened in the present case, particularly as the Full Court indicated that it could only speculate as to the likely outcome of a fresh application of the principles governing property settlement to the property then owned by the parties.
[32] Whether or not the parties were afforded an opportunity to lead evidence as to the circumstances as existing at the time of the Full Court’s decision in this matter, the Full Court erred in its exercise of the discretion to set aside the property settlement orders. The matters taken into consideration by the Full Court were relevant to the question whether a rehearing would occasion the wife some injustice that could not be remedied by the imposition of terms, but that question was not answered. Nor did the Full Court determine whether a rehearing might result in some different outcome. These were issues which should have been determined if the Full Court was, itself, to exercise the discretion to set aside the property settlement orders by reference to circumstances as they then existed. They are not questions which this Court can now determine. Accordingly, the matter must be remitted to the Full Court.
(Emphasis added, footnotes omitted).
It should also be pointed out that very significant practical difficulties attend this court re-exercising the relevant discretion where it is attended by factual disputes which need resolution in order to re-exercise the discretion. This court of three cannot, in the usual course of events, sit as a trial court where findings as to credit and assessments as to the weight of evidence must be made.
Thus, a submission that, consequent upon a successful appeal, this court should re-exercise for itself the relevant discretion must be attended by further submissions as to how, if needed, the opportunity to give evidence might be provided and, if provided, how as a matter of practical reality and justice the issues just referred to can be met.
By way of corollary, consideration might be given to submissions in support of conditions that might attach to an order of this court remitting the matter to the lower court which such conditions are designed to both meet the requirements of justice and limit significantly the costs to the parties. In parenting proceedings, Division 12A of the Act might be seen to potentially play a significant role in that respect.
Of course, the necessity for a re-hearing might also seek to focus reasonable minds upon the prospect of resolving the matter without further court intervention.
This matter was determined in the court below over 12 months ago. There is no evidence by which this court could comfortably come to a conclusion about the current financial circumstances of the parties or what relevant matters may or may not have occurred in the time between trial and the hearing of this appeal. These are not idle questions; each is potentially directly relevant to the matters that must be considered pursuant to s 79. Evidence at the trial suggested an inheritance might be received by the husband and the financial circumstances of the parties have, at the least, altered by reason of the payment of a substantial cash sum by the husband to the wife pursuant to those orders of the Federal Magistrate which were not stayed.
Reference to the principles just discussed reveals clearly that, unfortunately for the parties, this matter must be remitted to the Federal Circuit Court for re-hearing.
Costs of the Appeal
The parties each made submissions in respect of costs at the conclusion of the appeal.
The appellant husband has been wholly successful. Neither party submitted that submissions as to costs should be made consequent upon the delivery of Reasons and I infer as a result that neither party seeks to make submissions as to any relevant offers made in respect of the appeal.
The evidence before the Federal Magistrate as to the wife’s financial circumstances has been referred to above. In the circumstances of this case, I consider that, pursuant to s 117(1) of the Act, each party should bear their own costs.
Costs Certificate – Appellant Husband
As is plain from these Reasons, the appeal has succeeded on a question of law and, as just discussed, I consider, in accordance with s 117 of the Act, that each party should bear their own costs.
In the exercise of discretion as to whether to grant to the husband a costs certificate pursuant to s 9 of the Federal Proceedings Costs Act 1981 (Cth) (“the Costs Act”) I take account of the fact that nothing to which I have been taken suggests any unreasonableness in respect of the position adopted by the husband or in his conduct of the appeal. In addition, the costs impost of the appeal is significant having regard to both the husband’s financial circumstances as revealed at trial and the “maximum prescribed amount” under the Costs Act (see, for example, Kudelka & Kudelka (1986) FLC 91-719 and Tyson & Tyson (No 2) (1993) FLC 92-401).
I consider it appropriate to grant to the husband a costs certificate pursuant to s 9 of the Costs Act in respect of the appeal and, pursuant to s 8 of that Act, a certificate in respect of the remitted new trial.
Costs Certificate – Respondent Wife
In respect of the wife, I repeat that the appeal has succeeded on a question of law and, in my view, each of the matters just referred to apply equally to the wife in respect of her conduct in and about the appeal.
I consider it appropriate that the wife also be granted a certificate pursuant to s 6 of the Costs Act in respect of her costs of the appeal and pursuant to s 8 of that Act in respect of the remitted new trial.
Hogan J
I too have had the benefit of reading the Reasons of Murphy J with which I agree. I also agree with the Orders proposed.
I certify that the preceding ninety-nine (99) paragraphs are a true copy of the Reasons for judgment of the Honourable Full Court (May, Murphy and Hogan JJ) delivered on 1 August 2013.
Associate:
Date: 1 August 2013
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