Gould & Gould
[2007] FamCA 609
•22 June 2007
FAMILY COURT OF AUSTRALIA
| GOULD & GOULD | [2007] FamCA 609 |
FAMILY LAW - APPEAL – PROPERTY – NON-DISCLOSURE – Whether a party’s contribution assessment can be discounted for non-disclosure of assets – Adequacy of reasons as to Section 75(2) adjustment – Appeal allowed
| Family Law Act 1975 (Cth) Federal Proceedings (Costs) Act 1981 (Cth) |
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143
Kannis & Kannis (2003) FLC 93-135
| APPELLANT: | Gould |
| RESPONDENT: | Gould |
| FILE NUMBER: | PT | 4767 | of | 2002 |
| APPEAL NUMBER: | WA | 07 | of | 2006 |
| DATE DELIVERED: | 22 June 2007 |
PLACE DELIVERED: | Perth |
JUDGMENT OF: | Bryant CJ, Finn and Boland JJ |
| HEARING DATE: | 16 October 2006 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 4 April 2006 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Dr Dickey QC |
| SOLICITOR FOR THE APPELLANT: | Linda E Tudori & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Hooper |
| SOLICITOR FOR THE RESPONDENT: | Lewis Blyth & Hooper |
Orders
That the appeal be allowed.
That the orders of the Honourable Justice Tolcon made 4 April 2006 be set aside.
That the parties’ applications for property settlement be remitted for re-hearing.
That the Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of the costs incurred by the appellant husband in relation to the appeal.
That the Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by the respondent wife in relation to the appeal.
That the Court grants to each party a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each party in respect of such part as the Attorney-General considers appropriate of any costs incurred by each party in relation to the new trial granted by these orders.
| FAMILY COURT OF WESTERN AUSTRALIA AT PERTH |
Appeal Number: WA 07 of 2006
File Number: PT 4767 of 2002
| Gould |
Appellant
And
| Gould |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an appeal by the husband against certain orders made by Tolcon J on 4 April 2006 with respect to property settlement and costs in proceedings between the husband and the wife under s 79 of the Family Law Act 1975 (Cth).
The overall effect of his Honour’s orders was to divide equally between the parties the net value of their assets which he had found to be $1,880,235. This value was arrived at after excluding the value of property which the husband had inherited after the parties had apparently separated under the one roof and which was valued at $352,000.
The equal division of the parties’ property was based on an assessment of their contributions (other than to the husband’s inherited land) as equal.
While his Honour made brief reference in his reasons for judgment to certain of the matters contained in s 75(2) of the Act, he said that he did not propose to make any adjustment on account of the s 75(2) matters. However he then went on to say “[i]n passing” that:
27.….if I had reached a decision whereby the husband’s contribution was greater than that of the wife, I would have made an adjustment under s 75(2) so that their entitlements to the pool of assets would be equal.
The scope of the appeal
The husband’s grounds of appeal were limited to challenges to his Honour’s assessment of the parties’ contributions, and to his approach to the s 75(2) matters, although the submissions made in support of the appeal could well be seen as also being directed to the adequacy of his Honour’s reasons as well as to an alleged failure on his part to apply proper principle.
The factual background
By way of background Tolcon J found that the husband, who had been born in 1944, and the wife, who had been born in 1941, had married in February 1973. They had two children who were over 18 and independent at the time of the hearing before his Honour.
His Honour found that the parties separated in May 2001 with their marriage being dissolved in March 2006.
His Honour further found that the husband was a farmer and the wife was an administrative assistant, earning $725 per week on average ($37,700 per annum).
Importantly for purposes of the appeal, his Honour also found with regard to the husband that he:
8.… [h]as not been open and frank about his personal affairs. During the course of the proceedings, he acknowledged that he had moneys invested in a term deposit with the ANZ Bank and held shares that he had not disclosed. Further, he was not open and frank about the number of sheep he had or bales of wool held by him or his agent. In these circumstances, when dealing with the husband’s financial affairs, I propose taking a broadbrush approach and will not be unduly cautious about making findings in favour of the wife. Further, where the husband’s evidence is in conflict with that of the wife, unless corroborated, I propose accepting the wife’s evidence in preference to that of the husband.
Before us counsel for the husband did not seek to challenge these findings by his Honour concerning the husband’s non-disclosure and credibility (notwithstanding that the husband apparently took great exception to such findings). However counsel did challenge his Honour’s reliance on these findings later in his assessment of the parties’ contributions. We will return to that challenge in due course.
The assets of the parties
After setting out that brief factual background (as we have recorded it), and also setting out the provisions of s 79, together with a passage from the decision of the Full Court of this Court in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143 concerning the application of s 79, his Honour turned to consider the assets of the parties.
Having discussed various assets which were the subject of dispute between the parties, his Honour accepted that the net asset pool was as it appeared in a schedule provided by the wife’s counsel. That schedule was attached to his Honour’s reasons for judgment as Annexure “A”. As his Honour recorded, that schedule showed a total net asset pool which included property inherited by the husband of $2,232,235.
As no issue arises in the appeal concerning the asset pool, it is unnecessary to include in these reasons the lengthy schedule which was Annexure A to his Honour’s reasons. It will however be useful to set out the following brief summary of the asset pool which was contained in the written submissions of counsel for the husband:
“[N] Farm”: 1,357,000.00
[of which land worth
$352,000 was inherited]
“[B]” (bluegums plantation): 550,000.00
Livestock: 38,490.00
Plant and equipment: 12,453.00
Other: 308,986.00
Liabilities: (34,694.00)
TOTAL NET: $2,232,235.00
It will also assist an understanding of his Honour’s decision if we set out the paragraph from his reasons where he explained his approach to the husband’s inherited property:
17. The husband’s inherited properties were inherited at a time when the parties were living at opposite ends of the home and were not living as husband and wife. The wife was generally unsupportive of the husband in the litigation between the husband and members of the husband’s family because of her negative perception of how the husband was dealing with the conflict and litigation. In these circumstances, counsel for the wife sought - and with which I agree - that the properties be quarantined from the pool of assets to be divided between the parties.
The trial judge’s contribution assessment
Having reached his conclusion concerning the assets of the parties, his Honour commenced his assessment of the parties’ contributions by making the following findings concerning their initial contributions:
19. At the commencement of cohabitation the parties had the following assets:
·The wife had modest assets (See paras 18 to 20 of her affidavit sworn 2 May 2005).
·The husband had an interest in farmland known as the [N] property, as well as 2,000 sheep and an encumbered late model Ford motor vehicle (See paragraphs 21 to 28 of the wife’s affidavit and paragraphs 35 to 37 of the husband’s affidavit sworn 16 July 2005). The husband and his brother… had purchased farmland in 1970 for $59,000. Their father provided $24,000 towards the purchase price. The husband and his brother entered into a Deed of Trust, which satisfied me that the husband held two undivided third shares of the land.
Then in relation to the parties’ contributions during their cohabitation to their property and to the welfare of their family, his Honour made the following brief findings (emphasis added):
20.After the parties married, the husband purchased another property in [C] in July 1975 for $60,000. An adjoining property was purchased for $26,000.00 in September 1978 by mortgaging the [N] property. A compensation claim based on future restriction placed on the [C] property by the Water Authority of Western Australia was settled in 1988 with the parties receiving $30,000.
21.The parties’ children attended a boarding school in Perth… for their high school years. The wife commenced part-time work from about 1990 at [a] Primary School. She worked full-time at [a] High School from 1996.
22.In 1994 the husband inherited Locations 241 and 125 – to which I have previously referred – and in 1998 the husband entered into an arrangement to have the plantation of blue gums grown on his property at [C]. I have had difficulty in ascertaining what the true financial position of the parties has been and their respective contributions, due mainly to the husband’s general conduct and his failure to be open and frank. Therefore, as mentioned earlier, I have taken a broadbrush approach and have also taken into account the fact that the husband may still have undisclosed assets. His attitude throughout these proceedings has been, “catch me if you can, and if you can, then I will disclose my interest”. This was evident from the disclosure of the moneys in the ANZ Bank, the sheep and the publicly listed company shares.
His Honour’s ultimate findings in relation to the parties’ contributions and his conclusion that their contributions should be regarded as equal were then expressed as follows (emphasis added):
23.However, I do take all of those factors into account when dealing with contributions and the general attitude of the husband towards the wife as to her contribution. I was satisfied on the evidence that the husband has made the greater financial contribution – taking into account the assets that he had at the commencement of cohabitation and the inheritance. I have also taken into account that the husband was predominantly responsible for farming the property. As against that, notwithstanding the husband does not agree, I am satisfied that the wife has made a substantial contribution as homemaker in rather difficult circumstances and that she assisted the husband in the farming venture as well as earning income which was utilised for the benefit of the family.
24.When I balance up those contributions and taking into account the husband’s lack of co-operation in satisfying this court as to his true financial position, I would regard the parties’ contributions as being equal – and for the purposes of this exercise, I have not taken into account the inherited property.
The challenge to the contribution assessment
The husband’s first ground of appeal is directed to his Honour’s contribution assessment and (as slightly amended before us) is in the following terms:
1. In assessing the parties’ contributions to property for the purposes of section 79(4)(a), (b) and (c) of the Family Law Act, the Trial Judge:
(a)erred in failing to take into account the fact that the parties resided separately but under one roof from 1995 until physical separation in May 2001, and that during the intervening 6 years the wife made little… contribution either financially to the parties’ property, or as homemaker, or in assisting the husband in the farming venture;
(b)erred in failing to take into account the fact that the wife had made little or no contribution either to property or to the welfare of the family since physical separation in May 2001;
(c)erred in bringing into account an irrelevant consideration, namely the husband’s lack of co-operation in disclosing his true financial position [Reasons for Judgment, para. 24].
The husband’s non-disclosure
In our view there is considerable substance in the third of the husband’s complaints concerning his Honour’s assessment of the parties’ contributions as equal – that complaint being, the taking into account in the contribution assessment of “the husband’s lack of co-operation” in disclosing “his true financial position”.
In endeavouring to establish that it was open to his Honour to adjust the contribution assessment in the wife’s favour because of the husband’s non-disclosure, counsel for the wife relied on the decision of the Full Court in Kannis & Kannis (which is reported in edited form in (2003) FLC 93-135).
In that case the trial Judge, Holden CJ, having considered the parties’ contributions, concluded that:
156. …But for other aspects of this case, I would have assessed contributions as being in the vicinity of 60:40 in favour of the husband.
His Honour then continued:
157.The first of the other factors is the benefits the husband conferred upon [Ms R] (see para. 56 of these reasons). The second, and far more important factor, is the failure of the husband to make a full and frank disclosure.
158.The law to be applied and the approach that may be adopted in a case such as this where, through lack of full and frank disclosure, the court is unable to ascertain the extent of the husband's wealth, is well settled. (See Giunti and Giunti FLC (1986) 91-759; Mezzacappa and Mezzacappa (1987) FLC 91-853, Black and Kellner (1992) FLC 92-287 and Weir and Weir (1993) FLC 92-338). In more recent times, the Full Court has analysed the above cases in Chang and Su [(2002) FLC 93-117].
159.For the reasons given earlier, I am satisfied that the husband has not made a full and frank disclosure. Also, for reasons given earlier, I am unable to quantify in monetary terms the extent of the non-disclosure. I am, however, satisfied that the non-disclosure is likely to be significant and that this is to be taken into account under s 75(2)(o). In those circumstances and in order to do justice to the wife, my view is that the property decision should be adjusted by 10% in favour of the wife.
160.Normally, having made findings as to contributions, I would go on to take the next step which would be to give consideration to the s 75(2) factors. As I understand it, given the extent of the asset pool, neither party claims that there ought to be any adjustment to the parties' contribution based entitlements on account of the s 75(2) factors other than those under s 75(2)(o). It follows that I intend to make orders that result in an equal division of the known assets of the parties.
While it might appear from paragraph 156 of his reasons that Holden CJ proposed to adjust what would otherwise have been a 60:40 contribution assessment on account of the failure of the husband in that case to make a full and frank disclosure (as well as on account of another matter), it is clear from paragraphs 159 and 160 of his reasons that the 10% adjustment in the wife’s favour which his Honour made principally on account of the husband’s non-disclosure, was made pursuant to s 75(2)(o), and not as part of the contribution assessment exercise.
In their reasons for judgment in relation to the husband’s appeal against Holden CJ’s orders, the Full Court (Nicholson CJ, Buckley and Kay JJ) discussed at considerable length, and ultimately dismissed, the husband’s challenge to the 10% adjustment made in favour of the wife on account principally of the husband’s non-disclosure.
Because that discussion by the Full Court contains a useful analysis of earlier decisions of this court relating to the approaches open to the court where there has been a failure by a party to make full and frank disclosure, and because that discussion is not included in the edited version of the Full Court decision which has been reported, we will here set out that discussion:
46. Chief Judge Holden concluded that the order that was just and equitable to be made in these proceedings was that the ascertained pool of $34 million be equally divided between the parties, taking into consideration not only the greater contribution made on behalf of the husband but also the benefits the husband conferred upon [Ms R] and the failure of the husband to make a full and frank disclosure which his Honour was unable to quantify in monetary terms but was satisfied was “likely to be significant”.
47. There have been a series of reported cases in which the Full Court has discussed the task of a trial judge in a property case where the trial judge is unable to ascertain the extent of the pool of assets due to a lack of full and frank disclosure on behalf of one of the parties. Those cases were most recently summarised in the decision of Chang and Su [(2002) FLC 93-117]. Mr Chang was a Taiwanese businessman who, in an application to immigrate to Australia lodged in 1991 indicated that his net assets exceeded A$4.55 million. After his marriage to Ms Su broke down and she brought property proceedings in Australia he asserted that his financial position had deteriorated. He was eventually ordered by Moore J to transfer a home to the wife and to discharge an encumbrance upon it. He asserted that there was no evidence before the trial Judge of his capacity to discharge the mortgage. The trial Judge had said:
“I am satisfied that the husband has not made a full and proper disclosure of his financial position and I could make no finding as to the extent of his assets now…but it is likely he remains a person of substantial means in Taiwan.”
48. In the course of dismissing the appeal the Full Court quoted extensively from a line of cases discussing how the Court can make orders where there is no visible pool of assets. The Court said:
“Ground 2 - no visible pool of assets.
57. The submissions put to us were that as a necessary prerequisite to making an order under the provisions of s 79 of the Act the Court must determine that there exists adequate property to meet the order and make the order appropriate in the circumstances of the case. An order can only be seen to be appropriate or just and equitable if it can be measured against the whole of the available assets of the parties.
59. Counsel acknowledged that there exists a class of cases where the Court cannot be satisfied as to the extent of the property and can thus be less cautious than might otherwise be the position when making an order. Particular reference was made to Mezzacappa v Mezzacappa (1987) FLC 91-853; 11 Fam LR 957. In that case the trial Judge held that the husband had failed to adequately account for $200,000 which had been in his possession some 15 months earlier. The trial Judge said:
‘I can only conclude that the husband has the vast bulk of that money and has invested it wisely over the last two years since he removed it from the parties' bank accounts.’
…
67. The law to be applied and the approach that may be adopted in cases where, through the lack of a full and frank disclosure, the Court is unable to fully ascertain the extent of a party's wealth, is well settled (see Stein v Stein (1986) FLC 91-779; 11 Fam LR 353; Mezzacappa v Mezzacappa (1987) FLC 91-853; 11 Fam LR 957; Black and Kellner (1992) FLC 92-287; 15 Fam LR 343 and Weir v Weir (1993) FLC 92-338; 16 Fam LR 154).
68. In Black and Kellner (supra) the appellant had submitted that, absent findings as to the extent of his wealth, the order made by the trial Judge was plainly unjust. The key finding of the trial Judge was:
‘...the failure on the part of the [husband] to disclose his financial position to the court and his attempts to conceal this matter from the court, which has left the court in the position of not knowing what the [husband’s] financial position is, except that he deliberately underestimated it.’
69. Chief Justice Nicholson (with whom Ellis and Cohen JJ agreed), said in dismissing the appeal:
‘As senior counsel for the wife pointed out, the first step in proceedings for a property settlement is for the court to ascertain the wealth of the parties and in this regard it is of interest to note the remarks of the Full Court in the case of Giunti and Giunti (1986) FLC 91-759, particularly at 75,555 where the court commented:
“It is obviously desirable as a general principle that the court should first of all identify the pool of assets available and evaluate it. If each party complies with his or her obligation to make a full and substantive disclosure of their financial affairs- see Briese and Briese; (1986) FLC 91-713, affirmed by the Full Court in Oriolo v Oriolo (1985) FLC 91-653, there is no problem, although there may be disputes as to valuation.
However if, as here, one party fails to fulfil that obligation, is it open to that party then to rely on the absence of satisfactory evidence to prevent the making of an order against him or her which otherwise justice and equity would require? It would be simple, if that were the case, to evade the jurisdiction of this court, not by outright refusal which would attract sanctions but by obfuscation and evasion.”
The Full Court in Oriolo and Oriolo, supra, referred with approval to the remarks of Smithers J in Briese and Briese, and it is perhaps worth reiterating a portion of his Honour's statement at 75,181 where he said, after referring to the decision of the House of Lords in Livesey v Jenkins (1985) All ER 106:
“... I believe that the conclusion of the House of Lords in the case of Livesey v Jenkins… is apposite, namely that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of discretion. This is quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations would only exist in so far as statute or court rules required.
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred.”
Regard also may be had to the decisions of this court in Stein and Stein (1986) FLC 91-779 at 75,676 and Mezzacappa and Mezzacappa (1987) FLC 91-853.
In the present case a similar situation arose. The assets of the parties could not be ascertained in full because of obvious non-disclosures.
It is apparent that if his income was more substantial than he claimed, then this would be reflected in the value of his practice and in this regard it is perhaps of interest to note that the wife's former husband's practice of a similar nature, was capable of being sold for a figure in 1973 terms which would if reflected in 1991 terms, represent a very substantial asset indeed. Finally, another part of a judge's obligation in cases of this nature in considering s 75(2) factors is to consider the respective incomes of the parties. Again, through the behaviour of the husband, this was something which the learned trial judge could not do.
It follows from what I have said that I do not believe that his Honour's judgment can be attacked upon the basis relied upon by the husband.’
70. In Weir v Weir (1993) FLC 92-338;16 Fam LR 154 the Full Court (Nicholson CJ, Strauss and Nygh JJ) dealt with an appeal against the refusal by the trial Judge to make orders in respect of unascertained property because he could not quantify it. The Court said at 79-593:
‘This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black and Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs. See also Giunti and Giunti (1986) FLC 91-759, and Mezzacappa and Mezzacappa (1987) FLC 91-853. It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
It is true that in the case of Monte and Monte (1986) FLC 91-757, the Full Court said that to found jurisdiction under s. 79 in relation to property other than that which had been identified, the trial judge was obliged to make a finding as to the existence and value of other undisclosed property, even though the unsatisfactory nature of the evidence made it necessary to express that finding in the most general terms both as to identify and value.
We confess to some difficulty with this proposition. We should have thought that the Court's jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.
The difficulty then arises as to what order should be made. However, we are troubled by the proposition which seems to arise from Monte and Monte that if a party is either cunning enough or vague enough to cover his or her tracks sufficiently to prevent a Court making a finding as to the amount that has not been disclosed, then the other party fails. We do not believe this to be the law and in so far as the decision in Monte and Monte supports such a proposition, we do not believe that it should be followed.’
71. It was clearly open to Moore J to apply these principles to the matter before her. Her Honour concluded that the extent of the husband's wealth, whatever it might have been, was sufficient to justify the order she was proposing to make. This is not an appeal based upon the lack of reasons why her Honour concluded it would be just and equitable to put the wife in a position of having an unencumbered home. It is an appeal which is based upon the inability of the trial Judge to make any order under s 79 without first ascertaining the pool of assets.
72. For reasons which we have explained, we conclude that her Honour made findings sufficient to indicate that the husband was a man of substantial wealth and well able in the circumstances to meet the order made and still retain for himself adequate assets so as to make the outcome in the proceedings just and equitable, having regard to the matters highlighted by her Honour that she was obliged to give consideration to under s 79. These were issues of contribution and factors that could be identified under s 75(2). She was extremely hampered in the exercise of that discretion by the non-disclosure by the husband of his financial position and in those circumstances was entitled to take the more robust view that she did. Accordingly this ground of appeal has not been established.”
49. On 5 November 2002 the High Court dismissed an application by Mr Chang seeking Special Leave to appeal from the Full Court’s decision. In the course of argument Callinan J observed:
“It does not matter what the principle might be said to be, a court has to do the best it can. It does the best it can, having regard to the evidence that is adduced and if the parties are not frank then naturally there is going to be a measure of imprecision about any findings that the court can make.”
50. Mr Ackman submitted that the cases discussed above were authority for the proposition that where there was a finding of deliberate non-disclosure the Court could act more robustly in making findings adverse to the party who had actively misled it. We do not see that the principle should be so confined.
51. Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour. This is the course the trial Judge adopted. It was a course clearly open to him and one that does not merit appellate interference.
52. As indicated at the commencement of our discussion on this ground of appeal Mr Ackman submitted that on the findings by the trial Judge adverse to his client in respect of non-disclosed assets and in respect of monies that had otherwise been applied to [Ms R’s] benefit, an adjustment in favour of the wife should not have exceeded $1.5 million. He submitted that the adjustment of $3.4 million made in this case (10 per cent of the pool) was unsustainable on any view of the evidence.
53.As already discussed, we think that this is a misunderstanding of the process that was ultimately adopted. Chief Judge Holden concluded that it was just and equitable that the wife should receive one-half of the assets. He concluded that such an order was appropriate having regard to the various contributions each of the parties had made within the meaning of s 79(4)(a), (b) and (c) and having regard to the fact that the husband had spent monies on [Ms R] and had not properly accounted for the totality of the assets that he had in his control. …
While the decision of the Full Court (and indeed also of Holden CJ) in Kannis confirms the earlier decisions which were cited by the Full Court and which establish that a robust approach can be taken by the court in cases of non-disclosure, neither that decision, nor any of the earlier decisions cited, would, in our view, support the approach which the trial Judge in this case took in paragraph 24 of his reasons for judgment, being to reduce his assessment of the husband’s contributions of account of the husband’s non-disclosure.
Rather the appropriate approach for his Honour to have adopted in this case would have been to have increased the asset pool to take account of non-disclosure by the husband, and indeed his Honour had already done this to some extent in accepting the schedule of assets prepared by the wife’s counsel (see also paragraphs 12 and 14 of his Honour’s reasons). Alternatively, or even in addition, had his Honour been persuaded that on the balance of probabilities there existed assets other than those contained in the asset pool contained in his reasons, his Honour could have made some adjustment in favour of the wife on account of the husband’s non-disclosure pursuant to the provisions of s 75(2)(o), as did Holden CJ in Kannis.
We do not say that there will never be a case in which it might not be appropriate to take into account in the contribution assessment, a party’s non-disclosure in a manner unfavourable to that party. But it would need to be established that the non-disclosure related in some way to the matters concerning the parties’ contributions which are referred to in ss 79(4)(a), (b) and (c). In the present case no such relationship or link between the husband’s non-disclosure and the contributions of either party appears to have existed. It is true that a reading of paragraph 22 of his Honour’s reasons (see paragraph 16 above) might suggest some link between the parties’ contributions and the husband’s non-disclosure. But, with respect to his Honour, he needed to explain that link if in fact it existed.
The fact that his Honour took into account what was in effect an irrelevant consideration, being the husband’s non-disclosure, in his assessment of the parties’ contributions, is a matter which within the established principles for appellate interference with discretionary judgments (see for example House v The King (1936) 55 CLR 499), requires our intervention.
The parties’ contributions since 1995
The husband also challenges his Honour’s assessment of the parties’ contributions on the basis that his Honour failed to take into account the alleged fact that the wife made little financial contribution either financially or as a home-maker both in the period 1995-2001 when the parties remained in the same house but occupied separate bedrooms, and in the period after physical separation in May 2001.
Having regard to the submissions made by counsel for the wife and the evidence upon which he relied, it may well be that little would have turned in the ultimate assessment of the parties’ contributions on their respective contributions in the two periods in question.
The difficulty is, however, that his Honour appears to have made no reference to events in either of the periods in question when considering the parties’ contributions. We consider his Honour’s failure to refer to the parties’ contributions in these not insignificant periods of time, to be a substantial omission from his reasons for judgment, and again consider that is a matter which would require appellate intervention.
We consider his Honour’s failure to make any finding regarding the parties’ contributions in the period between 1995 and 2001 particularly puzzling given that, as can be seen from paragraph 17 of his reasons (which we set out in paragraph 14 above), he appears to have indeed accepted that there was a separation under one roof, although we understood counsel for the wife to assert that the situation from 1995 to 2001 did not amount to separation under the one roof.
The trial judge’s approach to the s 75(2) matters
Having determined that the parties’ contributions should be regarded as equal, his Honour turned to the s 75(2) matters, saying only:
25.The Wife –
·Is aged 64 years
·I am aware of her state of health, as set out in the documents
·Has a work history and it is her intention to continue to work until at least 65 years of age, when she will be entitled to a pension
·As a result of my determination, will receive a substantial settlement.
26.The Husband –
·Is aged 62 years
·Has some medical problems, as set out in his documentation
·It is his wish to continue farming.
27.For the purposes of the proceedings before me, and having regard to the division I deemed appropriate when dealing with contributions, I do not propose making any adjustment for the s 75(2) factors. In passing I do say this: if I had reached a decision whereby the husband’s contribution was greater than that of the wife, I would have made an adjustment under s 75(2) so that their entitlements to the pool of assets would be equal.
The husband’s second ground of appeal is in the following terms:
2.In assessing the parties’ respective section 75(2) factors, the Trial Judge erred in law and/ or in the exercise of his discretion in his alternative justification for an equal division of property, namely that if he had concluded that the husband’s contribution was greater than that of the wife, he would have made an adjustment under section 75(2) so that their entitlements to the relevant pool of assets would be equal [Reasons for Judgment, para. 27]. His Honour did not identify any section 75(2) factor that would justify such a conclusion.
As we indicated during the hearing of the appeal, it would not be unusual for a court to make an adjustment pursuant to the matters contained in s 75(2), in favour of a party, who is to receive less than the other party on account of his or her contributions, simply on account of that disparity. However in the present case, while his Honour identified various s 75(2) factors apparently favouring each party, he did not explain why these factors would have ultimately favoured the wife in the event that she did not receive an equal share of the property on account of her contributions. The matter is made even more complicated and uncertain by the fact that the husband’s inherited property was to be “quarantined’ from the pool of assets to be divided between the parties.
However it is unnecessary that we say more regarding his Honour’s approach to the s 75(2) matters given our conclusions in relation to his Honour’s errors in his assessment of the parties’ contributions.
Conclusion
For the reasons we have given the appeal against his Honour’s property settlement orders must succeed and those orders must be set aside.
It was accepted by both counsel before us that there were not sufficient findings made by his Honour (either in relation to the parties’ contributions or the s 75(2) matters) to permit us to re-exercise the discretion, particularly given the adverse credit findings made by his Honour against the husband. Accordingly, and again as was accepted by both counsel, there will have to be a new trial of the parties’ applications for property settlement.
The costs order made by the trial judge
At the conclusion of his reasons for judgment, his Honour turned to the issue of the costs of the trial, saying:
32. This is an appropriate case to order costs as from and including the first day of trial, when I addressed both parties. I informed them of what the basic legal principles were and I made it clear to each of them that if they got it wrong, they would be paying costs. I am aware that offers have been made to settle the matter, but as from the date on which I addressed the parties they ran the risk of costs. In this regard, the husband has been unsuccessful. I have made reference to his conduct being unacceptable. In these circumstances, he should pay the costs of and including the first day of trial until today, and if not agreed, to be taxed.
Order 8 of his Honour’s orders then required the husband to pay the wife’s costs of the proceedings with effect from 30 March 2006.
That order was also stated to be the subject of the appeal in the husband’s notice of appeal, although no written or oral submissions were made in support of an appeal against the costs orders.
Nevertheless given that the appeal has succeeded against the property settlement orders and that those orders are to be set aside, we consider that the costs order must also be set aside having regard to the fact that one of the reasons for that order was the husband’s lack of success.
Costs of the appeal and the re-hearing
In light of the submissions made concerning the costs of the appeal at the conclusion of the hearing of the appeal, we consider it appropriate to grant costs certificates to both parties both in relation to the appeal and the re-hearing.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 22 June 2007
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