GRANTHAM & MAID
[2012] FamCAFC 86
•22 June 2012
FAMILY COURT OF AUSTRALIA
| GRANTHAM & MAID | [2012] FamCAFC 86 |
| FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – material errors of fact or discretion – adequate reasons – appealable error established |
| Family Law Act 1975 (Cth) |
| Abalos v Australian Postal Commission (1990) 171 CLR 167 Bennett and Bennett (1991) FLC 92-191 Devries v Australian National Railways Commission (1993) 177 CLR 472 De Winter and De Winter (1979) FLC 90-605 Kamano & Kamano [2011] FamCAFC 189 Manolis & Manolis (No 2) [2011] FamCAFC 105 Norbis v Norbis (1986) 161 CLR 513 Norbis and Norbis (1984) FLC 91-543 Pettitt v Dunkley [1971] 1 NSWLR 376 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 SS Hontestroom v SS Sagaporack [1927] AC 37 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 160 ALR 588 Tatmar Pastoral Co Pty Ltd v Housing Commission of New South Wales (1984) 54 ALR 155 Voulis v Kozary (1975) 180 CLR 177 |
| APPELLANT: | Mr Grantham |
| RESPONDENT: | Ms Maid |
| FILE NUMBER: | MLC | 11345 | of | 2008 |
| APPEAL NUMBER: | EA | 94 | of | 2011 |
| DATE DELIVERED: | 22 June 2012 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Coleman, May & Ainslie-Wallace JJ |
| HEARING DATE: | 16 March 2012 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 22 July 2011 |
| LOWER COURT MNC: | [2011] FMCAfam 860 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Gillies |
| SOLICITOR FOR THE APPELLANT: | Catherine Henry Partners |
| COUNSEL FOR THE RESPONDENT: | Mr Page SC |
Orders
That the appeal be allowed and paragraphs 1, 2, 3, 4 and 5 of the orders made by Federal Magistrate Harman on 22 July 2011 be set aside.
That the application for property settlement be remitted for re-hearing before a Federal Magistrate other than Federal Magistrate Harman.
The Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) 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 him in relation to the appeal against the property orders.
The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) 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 her in relation to the appeal against the property orders.
The Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) 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 of the parties in respect of the costs incurred by each of them in relation to the rehearing of the application for property settlement.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Grantham & Maid 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 SYDNEY |
Appeal Number: EA 94 of 2011
File Number: MLC 11345 of 2008
| Mr Grantham |
Appellant
And
| Ms Maid |
Respondent
REASONS FOR JUDGMENT
Mr Grantham (“the husband”) appeals against property orders made by Harman FM on 22 July 2011.
The property orders of the learned Federal Magistrate required, inter alia, that the husband pay $70,000 to Ms Maid (“the wife”), and in default, a property owned by the husband be sold and the ordered sum plus accrued interest be paid to her from the proceeds of that sale. According to the findings of the learned Federal Magistrate, this represented a division of 60 per cent of the net assets of the parties in favour of the wife.
Background
The husband and the wife met in March 1993 and began to live together in May 1993. They married in December 1993 and finally separated in October 2005. There was a brief reconciliation between May and October 2007. They have a child who was born in 1996 and who has been living predominantly with the husband since separation.
At the time the parties started living together, each had property. The wife had two pieces of real estate, both of which had been received after a property settlement with her former husband. The wife owned a property at A (“the A property”) which she had purchased for about $90,000, all of which had been borrowed. The learned Federal Magistrate found at [12] that, by the time of the marriage, the A property was subject to “a very modest mortgage”. The wife also owned a property at B (“the B property”).
The husband owned a property at C (“the C property”) which also had been received after a property settlement with his former wife.
It was not in dispute in the appeal (although this had been a matter of some contention during the hearing before the learned Federal Magistrate) that, in about January 1994, the wife had about $236,000 equity in the B property and the husband had about $60,000 in the C property.
The husband sold the C property in 1995 and received about $51,000 from the proceeds, then used to buy a yacht. The yacht was sold in mid 2007 for about $34,000. How the proceeds of sale were disbursed is less than entirely clear, but, as no aspect of the appeal turns on that topic, we need say no more about it.
The wife’s B property was sold in December 1993 and the net proceeds of $235,767 were used to purchase a property at D (“the D property”) in 1994 at a cost of $248,500. This property was sold in September 1998 and the net proceeds of $160,000 were applied to purchase vacant land at E (“the E property”). The cost of the E property was $180,000 and a small mortgage of $20,000 was obtained by the parties.
In the time that the parties owned the E property, it was used as security for various borrowings. In February 2002 the parties borrowed about $70,000 to buy a property at F in Tasmania (“the F property”). This property was sold in January 2008 and each party received about $65,000 from the sale proceeds.
In early 2005 the husband purchased a farm at G (“the G property”) from his parents. The purchase price was about $400,000. The purchase price was borrowed.
The husband applied his share of the sale proceeds of the F property to reduce the mortgage on the farm property at G. A point of contention in the hearing before the learned Federal Magistrate was that the husband also received and retained $9,600 from the estate agent after the sale of the F property. As a result of the sale, the husband has a Capital Gains Tax (“CGT”) debt of about $24,000.
The E property was sold in February 2010 and the net proceeds of $225,875 were used by the wife to purchase a property for herself at H in Tasmania (“the H property”) in which she presently lives. There was a surplus of funds after the purchase in the sum of $16,862 which the wife kept. As a result of the sale of the E property, the CGT was said to have been incurred which the wife calculated at $31,910. There was no evidence of an assessment issuing from the Taxation Department and it was suggested that this figure was not a reliable estimate of the actual CGT owing.
Apart from property dealings, the other significant financial matter is that the parties, in conjunction with another person, in 2002, established a property development company, X company. The parties’ involvement was through a company, Y company of which the parties were shareholders. In August 2002 the parties, using the E property as security, borrowed $200,000 to be applied as “start up” capital for X company. These funds were repaid to the parties in February 2005, their loan account with that company then being reduced to nil. In September 2006 X company sold the remaining development properties and paid out $180,000 to the wife which she retained.
The wife, who is a solicitor, worked for X company. The work she did for the company was largely unpaid, although she received money during the relationship from investments undertaken by X company. It was accepted that her work in the company would be rewarded through profits generated by investments made. The learned Federal Magistrate found that the money received by her both during and after the end of the relationship was income earned by her.
In 2007 the husband purchased a property at I (“the I property”) for $710,000 for which he borrowed $70,000 from his mother and the balance from the bank.
During the relationship, the wife worked in her own practice and as a consultant. The husband left practice as a solicitor and joined the bar. After separation, the wife moved to Tasmania where, it was conceded, she had few professional contacts and, as a result, her income is less than it was while in New South Wales.
At the date of the hearing, the learned Federal Magistrate identified the following assets and liabilities, although not in this tabulated form (at [88] to [98] of his Honour’s reasons for judgment):
The I property $845,000 (H) The G property $400,000 (H) The H property $198,500 (W) NAB Term Deposit $23,000 (H) Add Backs Proceeds of sale of the D property $24,090 (W) Proceeds of sale of the F property $64,360 (W) Refund of deposit from the estate agent in relation to the sale of the F property $9,600 (H) Proceeds of sale of the E property $20,000 (W) Total $1,584,550
The learned Federal Magistrate found the following liabilities:
NAB mortgage on the I property $610,000 Debt to the husband’s mother in relation to the I property $70,000 CBA mortgage on the G property $302,000 Loan owed by the wife to Z company $30,000 CGT debt owed by the wife from the sale of the E property $31,910 Total $1,043,910 Net $540,640
Of the liabilities, only the last two mentioned were controversial. The loan owed by the wife was money advanced to her by her present partner’s company in February 2011, many years after separation. The wife used that amount for set up costs for her practice in Tasmania.
As correctly submitted on behalf of the husband, the value of the property as currently held by the parties is approximately 55 per cent held by the husband and 45 per cent held by the wife. It was properly conceded on the part of counsel for the husband that the property presently held by the parties is within the range of a just and equitable division.
The Appeal
Both parties represented themselves before the learned Federal Magistrate. The husband prepared the grounds of appeal and the summary of argument for the appeal although the appeal was argued by counsel on his behalf.
During the appeal, it was conceded that the contributions of the parties during the marriage to separation could properly be regarded as having been equal and that the tipping point to the learned Federal Magistrate’s decision that the wife was entitled to 65 per cent of the assets (save for a consideration of the s 75(2) factors) was referrable to her initial contribution.
Given the concessions, rightly made in our view, that the parties’ contributions during the marriage were equal, it is not necessary to traverse in detail the parties’ dealings with the property.
The Notice of Appeal asserts four grounds of appeal:
1. That, in relation to the findings as to the parties’ respective contributions made by the Learned federal Magistrate (at paragraph 121 of the Judgment), such findings were erroneous in that:-
(i) There is an inadequacy of Reasons in an appellate sense; and
(ii)There are a lack of findings of fact within the Reasons (between paragraphs 99 and 122) to enable the Court to have reached the assessment that it did; and
(iii)To the extent, if at all, findings of “special contributions” were made, such findings are erroneous and the weight that they were given is unable to be discerned.
2.That the Learned Federal Magistrate erred in relation to the assessment of the Credit of the parties in the giving of their evidence in that he, by making blanket findings (at paragraph 13 inter alia), failed to carry out the Courts obligations to weigh and assess and make findings as to such aspects, and such error in approach pervaded the Reasons for Judgment.
3.That, in relation to the findings as to “Section 75(2) Considerations” made by the Learned Federal Magistrate (at paragraph 148) such findings were erroneous in that:-
(i) There is an inadequacy of Reasons in an appellate sense; and
(ii)His Honours treatment of the questions as to whether there was or was not either a “de-facto relationship” between the wife and Mr [H] (s.75(2)(m), or whether Mr [H] represented for the wife a financial resource (s.75(2)(b) was contrary to the evidence and as a result His Honour failed to properly weigh and assess the totality of such factors as was required (and was probably affected by the matters contended in paragraph two (2) supra); and
(iii)His Honours treatment of the wife’s practice (and by implication her income and finances) was erroneous in that His Honour failed to take into account the many trips the wife appears to have had both overseas and within Australia with Mr [H] (and thus not then being available to attend to her Practice) and he erred in that he appears to have found that the wife’s choice (to live and establish a Practice in the smallest legal market in Australia), by inference led to a lower level of income when His Honour should have looked at her capacity generally without reference to such matters.
4.His Honour erred, in relation to the consideration and findings as to the “fourth step” (from paragraph 150 of the Reasons for Judgment), in that such findings were made without being based upon any evidence to support them and as a result His Honours discretion miscarried. (errors as in original)
The written summary of argument sought to advance a further ground of appeal, namely:
Ground 5: That His Honour erred by taking into account as a liability of the parties Ms [Maid’s] loan from [Z company] in the sum of $30,000 and Ms [Maid’s] “capital gains tax liability” in the sum of $31,910 and erred in his determination not to take into account the Appellant’s liability for school fees outstanding to the child’s school in the sum of $27,866.00. (errors as in original)
Although not formally abandoned, counsel for the husband made no submissions on ground 2 of the appeal, the ground relating to the learned Federal Magistrate’s findings of credit as between the parties. While we have had regard to the written submissions on the point, we do not propose to discuss that ground of appeal further, it having in our view little force. The case in the lower court did not materially depend on the learned Federal Magistrate’s findings with respect to credit, nor does the appeal to this Court depend on the correctness of those findings. To the extent that the learned Federal Magistrate’s decision was influenced by findings with respect to the credibility of the parties, nothing to which we have been referred establishes that his Honour “palpably misused” the “advantage” he enjoyed over this Court of having seen and heard the parties give evidence (see SS Hontestroom v SS Sagaporack [1927] AC 37, Voulis v Kozary (1975) 180 CLR 177, Abalos v Australian Postal Commission (1990) 171 CLR 167, Devries v Australian National Railways Commission (1993) 177 CLR 472, State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) (1999) 160 ALR 588 and Kamano & Kamano [2011] FamCAFC 189).
Similarly, counsel did not argue the asserted error that the learned Federal Magistrate found that there were “special contributions” made in the relationship. Having regard to the reasons for judgment and the written submissions on the point, we do not propose to give this asserted error any further consideration. As is not in doubt, the nature and quality of contributions is the issue of importance when proceeding pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”), not how they are labelled.
As the appeal was argued, counsel for the husband, in her careful and persuasive arguments, focussed on the grounds of appeal going to contributions. Given the concessions made by both parties as to the equality of contributions of the parties during the marriage, that focus was apt. We will consider the grounds as they were argued and, as will be shown, they focussed on three broad issues: the learned Federal Magistrate’s treatment of the initial contribution of the wife and the post-separation contributions of both parties; the debts added back into the liabilities of the parties; and the learned Federal Magistrate’s treatment of the husband’s contributions under s 75(2).
It was also argued that the learned Federal Magistrate failed to provide adequate reasons for his decision in relation to many aspects of the matter.
Section 79(4) Contributions of the Parties
The grounds of appeal agitated on behalf of the husband to which we have earlier referred assert that the learned Federal Magistrate’s reasons for his conclusion with respect to contributions were inadequately revealed (see Tatmar Pastoral Co Pty Ltd v Housing Commission of New South Wales (1984) 54 ALR 155, Pettitt v Dunkley [1971] 1 NSWLR 376, Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 and Bennett & Bennett (1991) FLC 92-191) and/or that his Honour’s discretion was vitiated by material errors of fact or discretion. The challenges overlap to some extent and can properly be considered conjointly, particularly as they were thus agitated.
In essence, it was submitted on behalf of the husband that the learned Federal Magistrate’s reasons for judgment do not adequately disclose how his Honour assessed the various contributions of the parties, nor how he weighed their initial contributions in the light of the evidence of subsequent contributions. It was also argued that the learned Federal Magistrate had given inordinate and erroneous weight to the wife’s initial contribution of the B property and to the initial contribution of equity in property owned by the husband at that time.
When discussing the parties’ initial contributions, the learned Federal Magistrate said:
105. The contributions that were made by each of the parties at the commencement of the relationship are most certainly disparate. Ms [Maid’s] contribution, at the commencement of the relationship and through the introduction of the [B] and [A] properties, if nothing else, substantially outweighs Mr [Grantham’s].
…
108. Initial contributions are part of the matrix of overall contribution. They cannot be seen in a simplistic sense or out of the context of the overall relationship. Property has been introduced to the relationship. It has, at times, provided the matrimonial home, both in terms of [B] and the [A] property.
109. There have been efforts and exertions by both parties towards the preservation, repair or improvement of the properties, although, to that extent and noting the significant factual difference between these parties (and as indicated, I accept Ms [Maid’s] evidence in relation to those endeavours and those contributions) must simply be part of the overall assessment of contribution.
110. To the extent that either of the parties asserts any special or substantial adjustment in their favour in relation to their entrepreneurial endeavours with respect to [X company], such an argument, if accepted, must favour Ms [Maid]. However, the income that was received by Ms [Maid] was also contributed to by the parties jointly, particularly through the loan to that company of start-up capital. Hence, it is not possible to simplistically view any particular contribution without reference to the totality.
…
113. I am satisfied, however, that the initial contributions made by Ms [Maid] through the introduction of the above properties, and ultimately the introduction of the capital derived from them, particularly with respect to the [B] property and its sale which enabled the parties to purchase the [D] property with little or no mortgage, are substantial and must be given some significant weight.
It is of some significance in this appeal to then examine what the learned Federal Magistrate said about the parties’ post-separation contributions:
116. The contributions post-separation similarly, if I were to accept Mr [Grantham’s] argument that the funds derived from the sale of property and in particular from [X company], would most assuredly favour him. However, I do not accept that argument. I am satisfied that the moneys received by Ms [Maid] from [X company] represented her speculative income in the same way that Mr [Grantham’s] income from practice at the Bar, in itself perhaps also speculative, was his income. Each are entitled to earn their income as they choose, although, if the loan from the parties to [X company] had not been repaid as it was, there may well then be some greater basis from which to assert a contribution to those funds whether counted as capital or income, but I propose, as has already been made clear, to count them as income.
117. The post-separation contributions are otherwise somewhat less clear as a consequence of the transactions that occurred. Mr [Grantham], validly, refers to the fact that he has been left to care for himself and the child, and that he has had the very substantial full-time care of the child, at times with little regular financial assistance, although I am satisfied that Ms [Maid] has, within her means and ability at different points in time, provided financial assistance largely without the need for any intervention or assessment by the Child Support Agency. That assistance has come in lump sum payments when funds have been available. Provision has been made, whereas many litigants in the same position would not.
…
121. In any event, overall and having regard to the contributions that were made both prior to, post, and during the relationship, I am satisfied that contributions favour Ms [Maid] and I propose to assess contributions as favouring her 65% and Mr [Grantham] 35%.
Having regard to the paragraphs to which we have referred, we are not persuaded that the learned Federal Magistrate inadequately revealed the process of reasoning which led to his conclusion with respect to the parties’ contributions. It remains to be considered whether that determination was erroneous.
In the course of the appeal, it was said, without dissent, that the learned Federal Magistrate erroneously characterised the wife’s equity in the D property at the time the parties commenced cohabitation. At [11], the learned Federal Magistrate said that the wife had retained that property on settlement with her former husband and that it was subject to a “small mortgage”. The evidence of the wife, as we have previously noted, was to the contrary. The whole of the purchase price was borrowed by her in order to produce a negative gearing. The property was rented after purchase. The parties did live in the property from 1997 until 1999. They effected renovations and then sold it in December 2007, after separation. To the extent that the learned Federal Magistrate took into account, in the wife’s favour, an initial contribution of significant equity in the D property, he was in error.
Error too was demonstrated in the learned Federal Magistrate’s finding at [17] that the husband had “little equity” in the D property. The evidence demonstrated that the property was sold in 1993 for around $160,000 and that it was subject to a mortgage which, at the time the husband acquired the property, was approximately $93,000. After selling costs and expenses, the husband’s equity was about $60,000.
Notwithstanding that the learned Federal Magistrate’s conclusion with respect to the parties’ contributions was clearly not based upon a “simplistic” view of their initial contributions, and that, properly, his Honour had regard to the parties’ contributions during their cohabitation, we cannot accept that the errors of fact to which we have referred were not material to his conclusion that contributions favoured the wife by 65 per cent to the husband’s 35 per cent (see De Winter and De Winter (1979) FLC 90-605). The errors of fact in relation to initial contributions necessarily influenced the learned Federal Magistrate’s determination of the significance of the subsequent impact of those contributions.
On behalf of the husband, it was submitted that a reading of the reasons shows that the learned Federal Magistrate gave no weight to the receipt and retention by the wife of significant sums of money which were referrable to assets acquired during the marriage and to which the husband contributed. In particular, it was argued that the wife received funds from X company other than those mentioned in the reasons. It was said that she received about $30,000 from the company in addition to the $180,000 paid to her when X company sold the final properties. Although it is not strictly necessary that we deal with this complaint in view of our conclusion with respect to earlier challenges, it is convenient and potentially helpful in relation to the re-exercise of the learned Federal Magistrate’s discretion, by this Court or a Judge at first instance, that we do so.
The husband argued that, in characterising the funds paid to the wife after separation by X company as her income from her work in the company, the learned Federal Magistrate gave no or no sufficient weight to his contribution to that income. We are unable to accept that it was not reasonably open to the learned Federal Magistrate to conclude as he did in relation to this issue, although other conclusions were also open to him. We have earlier recorded the basis of the learned Federal Magistrate’s conclusion (at [116] of his Honour’s reasons for judgment). At [110], his Honour also recorded:
110. To the extent that either of the parties asserts any special or substantial adjustment in their favour in relation to their entrepreneurial endeavours with respect to [X company], such an argument, if accepted, must favour Ms [Maid]. However, the income that was received by Ms [Maid] was also contributed to by the parties jointly, particularly through the loan to that company of start-up capital. Hence, it is not possible to simplistically view any particular contribution without reference to the totality.
It was argued that the wife retained a BMW car that was subsequently written off after an accident, she retaining the $32,000 paid by the insurance company, and that the learned Federal Magistrate had erroneously failed to take that into account. Although strictly unnecessary, for the reasons suggested above, it is convenient to consider this challenge. At [56], the learned Federal Magistrate said:
56. Again, much was made by Mr [Grantham] of the fact that Ms [Maid] had, at separation, owned a motor vehicle, being a BMW. She had, in fact, driven away from the home in that vehicle and continued to drive it to Tasmania. The motor vehicle was subsequently written off in a motor vehicle accident which, from Ms [Maid’s] description, would have been very distressing. $16,000 or thereabouts was ultimately received by Ms [Maid] as a consequence of the write-off of that vehicle and those funds expended by her on a variety of things.
The evidence before the learned Federal Magistrate was that the wife received $32,000 from the insurance on the car. Part of that sum was used by her to buy another car, and the balance was retained. In her submissions, the wife asserted that the car was subject to a “mortgage” which was, it seems, to be repaid from the insurance pay out. Nothing to which we have been referred demonstrates that it was not reasonably open to the learned Federal Magistrate to find as he did in relation to this issue, or to reach the conclusion he did in reliance upon that finding.
Even if, contrary to our conclusion, the learned Federal Magistrate was in error as to the whole amount received by the wife from the insurance pay out on the car, we would not, on that basis alone, interfere with the exercise of his discretion.
On behalf of the husband it was also argued that of the assets existing at the date of the hearing, two of them, the I property and the G property, had been acquired by the husband after separation and to which the wife had made no financial or other contribution. These properties comprised approximately 45 per cent of the assets considered by the learned Federal Magistrate in his determination. The husband submitted that the learned Federal Magistrate failed to adequately recognise their being acquired by the husband post-separation and without contribution from the wife.
Senior counsel for the wife pointed to the wife’s evidence of contribution to those assets. As to the G property, the wife asserted a contribution to it during its ownership by the husband’s father. That contribution does not seem to us to be such as to require recognition pursuant to s 79(4). Although in her affidavit, the wife referred to re-organising the farm house and cutting out a piece of verandah railing after purchase, neither of those matters looms large as a contribution.
The wife said that the purchase price of the farm, $400,000, was wholly borrowed and secured against the farm with a secondary mortgage over the F property in Tasmania. When that property was sold, the wife said that she and the husband agreed that, of the sale proceeds, $64,359 be applied in reduction of the mortgage on the farm. Whether this was by agreement or not, it was the husband’s share of the proceeds of that property that was applied to the reduction of the debt on the farm, not the share received by the wife.
The wife argued that, during the period of the parties’ reconciliation, she deposited $20,000 to the husband’s bank as security for his business overdraft. Through this she asserted a contribution to both properties, arguing that, without the overdraft, the husband could not have made the mortgage payments. The husband was at the relevant time earning a superior income to the wife through his practice as a barrister. There was no finding by the learned Federal Magistrate that the lodged security had the effect of being a contribution in the relevant sense to either property and, in our view, rightly so. The husband spent the $20,000 security on expenses for the child and his household, and the learned Federal Magistrate took that money into account as an “add back” to the assets to be divided, and referred to by the learned Federal Magistrate as being $23,000.
Neither of the properties to which we have referred appears to us to have had a connection with the marriage.
The learned Federal Magistrate was not obliged to differentiate between the nature of the assets considered nor apportion them according to their ownership. As Wilson and Dawson JJ said in Norbis v Norbis (1986) 161 CLR 513 at page 533:
…
To say as much is to say no more than that the legislation confers a discretion upon the court which, provided the required matters are taken into account, does not dictate the employment of any particular method in the formulation of an appropriate order for the alteration of property interests. The matters which are to be taken into account will sometimes require the division of the assets, or some of them, upon the basis of their individual values, but in other cases no more than an overall division will be required. In some cases either approach may be adopted in part or in whole…
Justice Brennan said at page 541:
…There is no logical foundation for concluding that one approach should produce, at the end of the day, an order different from, or preferable to, the order which the other approach would produce. Either approach is capable of producing a just and equitable order…
Finally, as Strauss J said in Norbis and Norbis (1984) FLC 91-543 at page 79,404:
…
In this particular case the real questions were (1) what was the property which the parties owned jointly and separately at the time of the hearing; and (2) what alteration in the property rights of the parties was required in the light and by reason of sec. 79(2) and 79(4) in order to do financial justice between them? The answer to the second of these questions must be the result of a broad and commonsense assessment.
We are not persuaded that the learned Federal Magistrate’s global assessment of the parties’ contributions was erroneous, but it was conducive to appellate error having regard to the quantum of the assets acquired after the parties’ separation in comparison with those acquired during the marriage.
Having included in the “pool” of assets for distribution those acquired post-separation, to which the wife had made no contribution, the learned Federal Magistrate ought to have reflected that to the husband’s advantage. When the net asset pool as found by the learned Federal Magistrate is considered, the post-separation assets account for approximately 45 per cent of the whole. To then, as the learned Federal Magistrate did, determine that the wife was entitled to 65 per cent of the entire pool, fell well outside the reasonable range of the exercise of his discretion.
After the learned Federal Magistrate’s adjustment, the effect of ordering the wife to receive 60 per cent of that net pool of assets identified by him was to give the entirety of the net assets acquired during the marriage and a further amount from the post-separation assets to the wife.
We accept the argument that, had the learned Federal Magistrate approached s 79(2) in the way discussed by the Full Court in Manolis & Manolis (No 2) [2011] FamCAFC 105 at [66], he would have come to the conclusion that the orders he proposed were neither just nor equitable. The Full Court there said:
66. … It is difficult to discern specific matters impacting a consideration of s 79(2) which are not articulated in either s 79(4) or s 75(2) of the Act. The section does however oblige the court to “stand back” from its preliminary determination, and consider its impact. So doing may inform the terms of the orders appropriate to produce a just and equitable outcome in those terms. It may result in a re-consideration of s 79(4) and or s 75(2) factors, and a different outcome. Whatever the scope of s 79(2), the court’s determination with respect to it cannot be dependent upon findings or conclusions which are irreconcilable with those recorded in the context of a consideration of s 79(4) or s 75(2)…
We are of the view that the challenge to the learned Federal Magistrate’s treatment of post-separation contributions as it affected the overall result is made out.
Findings as to “Add Backs”
As we have indicated, the husband challenged the learned Federal Magistrate’s approach to the liabilities of the parties. It was argued that the learned Federal Magistrate erred in including in the joint liabilities of the parties the loan made to the wife by Z company, a loan advanced so long after separation that it could not properly be included as a liability of the parties.
Senior counsel for the wife argued that the circumstances in which the wife borrowed money from Mr H were that she was unable to borrow money in her own right from her bank. Senior counsel argued, correctly it seems to us from the evidence before the learned Federal Magistrate, that it was a genuine loan obtained to meet her commitments. He argued that there was: “…no reason… that that should not be included as a liability and subsidised in the course of these proceedings by the husband…” Certainly, the learned Federal Magistrate gave no reason as to why he included a debt, incurred so long after the end of the marriage, in the calculation of the parties’ liabilities. However, while other minds might reasonably differ as to whether it should be included, we are not persuaded that to do so fell outside the ambit of the proper exercise of the learned Federal Magistrate’s discretion. The real question is not the inclusion of the liability in the “pool” but how its impact was assessed. In that, there may be error in the ultimate percentage revealed.
It was also asserted that the learned Federal Magistrate erred in taking into account the wife’s assessment of potential CGT payable by her on the sale of the E property because the contended amount, $31,910, came not from a proper assessment but by her use of an on-line calculator. The learned Federal Magistrate had before him the calculations done by the wife using the on-line provision. The acceptance of that figure, based on the document tendered by the wife, in the absence of any other evidence, was a matter for the learned Federal Magistrate and not one which speaks of error. While other findings may have been open to the learned Federal Magistrate, it has not been demonstrated that the finding he did make was not reasonably open to him on the evidence.
Finally, the husband argued that the learned Federal Magistrate was wrong not to have included in the liabilities of the parties outstanding school fees for the child. While the evidence did support the husband’s contention that the child’s attendance at a private school was a matter jointly agreed by the parties, it seems to us, given the evidence about the husband’s shouldering of virtually the whole of the burden of the child’s care, and the allowance made in his favour because of it, to continue the child at the school was a matter over which the husband could have exercised some control had he believed it was not appropriate. Whether the wife was called on to pay some of that outstanding liability was squarely a discretionary matter for the learned Federal Magistrate. We do not accept that error in this regard has been demonstrated.
Our conclusion with respect to the husband’s challenges to the learned Federal Magistrate’s assessment of the parties’ contributions necessarily means that we are of the view that the husband’s entitlement was materially greater than found by the learned Federal Magistrate. In those circumstances, our conclusions with respect to the husband’s s 75(2) challenges have limited implications.
The Parties’ s 75(2) Contributions
Various challenges were asserted in relation to the learned Federal Magistrate’s treatment of these contributions.
The husband had argued before the learned Federal Magistrate that the wife was in a relationship with a Mr H, a man of some financial substance, and that Mr H was providing for the wife in terms of paying for holidays and the like.
In issue before the learned Federal Magistrate was whether the wife was in a de facto relationship with Mr H and/or whether Mr H represented a “significant financial resource” for the wife. The learned Federal Magistrate could not find on the evidence that a de facto relationship existed and, turning to a consideration of s 75(2), while his Honour found that the wife was in a relationship with Mr H, the learned Federal Magistrate said:
127. …I know little other than what I have referred to by concession from Ms [Maid] of his financial circumstances and even if he were significantly wealthy, there is no evidence to suggest that Ms [Maid] has the benefit of that largesse.
The learned Federal Magistrate noted that the husband too was in a relationship with another lawyer.
Although counsel for the husband took this Court to the evidence before the learned Federal Magistrate that established the extent to which Mr H apparently paid for the wife’s holidays both in Australia and overseas, nothing was argued which suggested that the wife, or for that matter the husband, was in a relationship that would entitle her, or him, to compel financial support. Nor do we find that the associations to which the evidence referred to be of a nature that would require an adjustment to the parties’ entitlements. We would not interfere with the learned Federal Magistrate’s exercise of discretion in relation to this matter.
Further, it was argued that the learned Federal Magistrate failed to take into account or give proper weight to the fact that the wife’s relatively lower income resulted from her decision to live and try to establish a practice in Tasmania. The evidence revealed, as the learned Federal Magistrate said at [126], that the husband was earning an “acceptable… income” at the bar and was in a financially superior position to that of the wife. That evidence was undisputed and it was open to the learned Federal Magistrate to find that this factor favoured the wife, albeit a position of her own choosing.
While it was undisputed that the husband has taken the burden of the care of the parties’ child, it was argued that the learned Federal Magistrate paid insufficient regard to it when assessing contributions pursuant to s 79(4)(c). After again noting at [144] that the wife has contributed to the child through the payment of child support, the learned Federal Magistrate said it was “…a modest amount in the circumstances of the child’s education and the like, it is as assessed and it is paid…”
His Honour adjusted his earlier findings as to contributions by 5 per cent in the husband’s favour and, in satisfying himself that the proposed order was just and equitable, said at [151]:
151. However, I am satisfied that the overall division that I propose is just and equitable as it reflects the contributions that each has made, the income that each can generate now and into the future and once Ms [Maid’s] practice becomes more established, her income will improve but I suspect nowhere in the order that it might if she were in a larger market. This finding also reflects, importantly, the significant contributions that were made at the commencement of the relationship whilst also reflecting the assets and the use of assets that have been available to each of these parties post-separation.
Similarly, although there was no dispute that after separation in May 2005 the husband had the lion’s share of the responsibility for the care of the parties’ child, that was considered by the learned Federal Magistrate and resulted in an adjustment in the husband’s favour of 5 per cent when his Honour came to consider s 75(2) factors. Nothing was put to the Court that persuades us that, in the context of the facts as found as to the parties’ respective financial positions, the learned Federal Magistrate’s discretion miscarried.
Finally, as was noted by senior counsel for the wife, although the learned Federal Magistrate purported to provide the wife with 60 per cent of the ascertained net assets, the figure which the husband was ordered to pay her was some $9,300 short of that figure, rendering the adjustment in favour of the husband on account of the s 75 (2) factors slightly to his advantage.
Conclusion
Although the appeal asserted insufficient reasons to support the decision, the husband sought that the matter not be remitted for rehearing in the Federal Magistrates Court given the relatively small asset pool. While usually an appeal asserting a failure to give reasons would not be a matter in which this Court could re-exercise the discretion of the lower court, it was said that there was evidence in the trial before the learned Federal Magistrate on which the Full Court could re-exercise.
We indicated that, should the appeal be successful, after the decision and reasons for it were delivered, the parties would be given an opportunity of making further submissions on whether the matter should be remitted to the Federal Magistrates Court or whether it was capable of re-exercise by the Full Court. On reflection we see that this task could lead to an unfairness to one or both of the parties. First, it would be necessary to have some updated financial evidence including valuations. If that proved to be controversial, the matter should be dealt with by a trial Judge. Secondly, we would need to make our own assessment of contributions beyond that which is conceded. In our view, the parties would need to file substantial material, lengthy submissions including those in reply which may well lead to an unwieldy situation as expensive as a new trial. The better course is to order a new trial with certificates for the appeal and the further hearing.
I certify that the preceding seventy two (72) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Coleman, May & Ainslie-Wallace JJ) delivered on 22 June 2012.
Associate:
Date: 22 June 2012
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