GT & KW
[2006] FamCA 638
•29 June 2006
[2006] FamCA 638
FAMILY LAW ACT 1975
IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA Appeal No EA87 & 123 of 2005
AT SYDNEY File No PAF3655 of 2003
BETWEEN:
GT
Appellant Husband
- and -
KW
Respondent Wife
REASONS FOR JUDGMENT
CORAM: KAY, COLEMAN & BOLAND JJ
DATE OF HEARING: 29 June 2006
DATE OF JUDGMENT: 29 June 2006
APPEARANCES: Mr Givney of Counsel, instructed by Cynthia Kardell, 94 Copeland Road, Beecroft NSW 2119, appeared on behalf of the Appellant Husband.
Mr Sansom of Counsel, instructed by Watts McCray, Level 4, 17-21 Macquarie Street, Parramatta NSW 2150, appeared on behalf of the Respondent Wife.
GT & KW
EA87 & 123 of 2005
CORAM: Kay, Coleman & Boland JJ
DATE OF HEARING: 29 June 2006
DATE OF JUDGMENT: 29 June 2006
Catchwords: PROPERTY SETTLEMENT – Contributions – Future needs – husband’s initial capital balanced by the wife’s greater post-separation contributions – Early in the marriage the parties moved to Canada to advance wife’s career – Husband had difficulty obtaining secure work upon return to Australia and for a period the wife was the only breadwinner – Wife has a greater earning capacity than the husband – Contributions during the marriage assessed as equal - further 5 per cent adjustment in favour of the husband by way of s75(2)(a) and (j) of the Family Law Act 1975 (Cth) appropriate.
COSTS – Circumstances justifying order – Trial judge found that husband had increased the costs of both parties by conducting a detailed “accounting exercise” rather that using best estimates of property values and contributions – Trial judge ordered husband pay 15% of wife’s costs – Nothing to show this exercise of discretion was inappropriate – Wife’s cross-appeal seeking husband pay a greater proportion of her costs similarly dismissed.
KAY J:
This is an appeal against orders made by Purdy J on 4 July 2005 in property proceedings between the parties of the marriage, who I will continue to call “the husband” and “the wife” although the marriage has now been dissolved.
The orders that are the subject matter of the appeal divided up a pool of assets found by the trial judge to have a value of $1,537,982 on an even basis after an evaluation of contributions and an adjustment then made for what are known as s 75(2) factors. The end result was the requirement of a payment to the wife of $293,575 to effect the equal division of assets.
The husband challenges the equal division of assets suggesting by his amended Notice of Appeal that the assets should have been divided in his favour in a manner that would require only the payment of $72,428. The wife resists the appeal.
There is also an appeal, and a cross appeal in respect of some costs orders made by Purdy J on 15 September 2005 when it was ordered that the husband pay 15 per cent of the wife’s costs incurred between 16 December 2002 and 4 July 2005. The husband seeks to have that order discharged. The wife seeks to have it varied so that she would be paid the entirety of the costs incurred between those dates.
In the course of the wife’s submissions it became apparent that she was conceding that the appeal should be allowed by conceding that there were appealable errors in the judgment that made it appropriate that the matter be looked at afresh by the Full Court. Those errors were not specifically identified once it became apparent the concession was being made, but they included errors in relation to findings of fact as to the extent of each party’s contributions and as to an absence of discernable reasons in relation to one of the key findings in the matter, namely a finding by the trial judge that the contributions by the wife should be assessed at 57.5 per cent of the pool. It is unnecessary for us, in light of the concession, to expand upon the errors that were alleged to exist in the judgment. Before allowing the appeal it is appropriate that we determine that on a re-exercise the discretion, that we would reach a result different to that of the trial judge.
Whilst the material is copious it is quite an inappropriate exercise to investigate each and every item of the contribution that the parties assert has been made on their behalf in determining the manner in which it is appropriate to ultimately divide up this pool of just over $1.5 million.
Background
The parties married in February 1994, separating in July 2002. When the parties married the wife had already completed a degree and the husband was in secure employment.. The husband brought into the marriage assets, ignoring a property off-shore for the moment, to an asserted value of $226,000. He asserted that the wife’s contributions initially were a little under $100,000. In addition he had a property off-shore which was sold at about the time of the marriage and eventually about $85,000, was repatriated to Australia some three or four years after the parties were together.
The wife asserts that the husband’s initial contributions were somewhat less than he has identified. The distinction appears to be because in calculating the husband’s initial contributions he has calculated the money he spent either on the acquisition of assets or towards the joint lives of the parties, such money coming either from capital assets or from income in the period leading up to the marriage, whereas the wife has simply looked at the capital assets that the husband acknowledged he had at about the time the relationship commenced.
This leads to a slight difference between the two assertions as to contribution but not such a difference that in my view it would become material to the very broad discretion that I propose we exercise having regard to the provisions of s 79 of the Family Law Act 1975 (Cth).
The distinction then is whether the husband, as indicated, brought in either $226,000 plus the money from off-shore or brought in something identified by the wife to be $180,000 plus the moneys from off-shore. It does not appear to me in the exercise of a broad discretion to make a significant difference.
The wife, on the other hand, brought in it would appear, on now conceded figures, about $129,000. She did of course come in with a prospectively healthier income earning capacity than the husband.
Very early in the marriage, in order to advance the wife’s career, the parties moved to overseas. That meant that the husband gave up his employment in Australia and found some employment in overseas. The wife had obtained a position in overseas. They stayed there for a while and then the husband returned to Australia before the wife. She was overseas from, it would appear, early 1995 until September 1996, the husband having returned to Australia earlier.
The husband had difficulties re-entering secure work when he returned to Australia and in the search for that work focused upon managing the parties investments and assets. He eventually obtained some full-time employment in August 2000 but fell out of that employment by the time of the trial and was then unemployed, searching for work. At and 49 unemployed, he was seen to have some limitation on his employment opportunities. The wife, by the time of the trial, was again overseas working in her chosen profession.
During the course of the marriage, until the parties returned from overseas, they were both earning similar amounts of money. Once the husband came back from overseas and was unemployed the wife continued with her earnings and there was a period of about 18 months when she was effectively the only breadwinner, but as already indicated the husband was involved in other pursuits endeavouring to raise some money for the parties in the management of their investment portfolio.
The period in which the wife was the only person in employment created an imbalance in relation to the income that they were able to each contribute towards the marital unit and it was accepted that the wife’s gross income overall was about $230,000 more than the husband over the period of the marriage, but much of that could be identified as being for the modestly short period in which the husband was endeavouring to reinvigorate his career after he returned from assisting the wife in pursuing her career overseas.
The post separation period saw a growth in the parties’ assets, significantly a growth in the relative superannuation of the parties. The wife’s superannuation increased by about $120,000 and the husband’s increased by a figure of about $25,000. Effectively there was a growth advantage to the wife’s post separation contributions of about $95,000.
Assessing contributions
In assessing these various stages of contribution, the initial contribution, the disparity in earning capacity during the course of the marriage that was brought about by the husband endeavouring to assist the wife in pursuing her career and in assessing the contribution made post separation to which it is conceded that the husband made no contribution in a direct sense, although he had of course been party to allowing the wife a continuity in her career, I am of the view, at least, that an overall outcome applying the criteria that we need to look at under s 79(4)(a), (b) and (c) is one of equality.
The parties went into some minutiae about what occurred in terms of their relative home making contributions during the course of the marriage, but it seems to me that once it was conceded that basically each was significantly responsible for a fair share of those tasks, they ought to be seen as being equal. The imbalance in the husband’s initial capital is offset by the imbalance in the wife’s post separation contributions and if there is still an imbalance in favour of the husband that is offset by any imbalance in the income during the course of the marriage.
Looking at the marriage as a partnership in which each party had contributed that which was expected of them it seems to me that an outcome of equality would be the just and equitable and appropriate outcome in relation to an assessment of the contributions of the parties.
Other factors
I then turn to the other factors that are to be considered under section 79 in determining whether there should be a further adjustment in this matter and I conclude that there is really only one factor that is of significance. The wife has a significantly greater earning capacity than that of the husband. He remained, at the time of trial at least, out of work and with some shadow over his situation.
The trial judge had said “In summary the husband is unemployed” and he also indicated that there were some shadows over his future employability whilst the wife was in secure employment. At the time of the trial she was in employment overseas, she has now returned to Australia and we have, by consent, evidence that she is in employment that is generating for her $135,000 per annum gross, plus some superannuation contributions being made on her behalf by her employers.
Her economic future in terms of employability is significantly stronger than that of the husband. At his highest he seems to be able to earn maybe $80,000 to $90,000 per annum. As already indicated he has contributed towards the extent of her earning capacity by supporting her in her desire to undergo her studies overseas. I think that this imbalance and having regard to the matters contained in ss 75(2)(a) and 75(2)(j) make it appropriate that there be a further adjustment in favour of the husband in relation to a division of the pool of assets.
Outcome
I would determine that that adjustment should be in the sum of a further 5 per cent of the asset pool which is about $75,000 that comes off the wife’s share and goes on to the husband’s share. That disparity ought to be reflected then in the necessary orders to give effect to the adjustments that need to be made to the trial judge’s orders.
We have been told by counsel that they can do the calculations for us and we would be grateful if a minute can be prepared and provided to the Appeals Registrar in the next day so that we can make orders appropriately.
One issue that arises as a result of the reduction in the sum that will be payable by the husband which should come down by about, as I have indicated, $75,000, is an issue of when interest should run in relation to the moneys that are payable. It seems to me that this is a case which involved simply the payment of money the wife who has been kept out of her fair share of the asset pool. She was entitled to receive that share in accordance with the orders of the trial judge as and from a date in October 2005. Whilst the sum payable will be reduced as a result of these orders I can see no reason why the liability to meet that sum should not be backdated to the date the trial judge required the money to be paid and accordingly I would make no alteration to par 1 of the orders, that is the date on which the obligation arises but the effective alteration will be in par 3 as to the sum to be paid and in par 4 (i) in relation to a percentage that will be required to be met in the event of default.
Costs
As to the costs appeal and cross appeal this is an appeal against a discretionary judgment. The judgment was based upon the trial judge’s assessment of the conduct of the husband in relation to the preparation for the trial and his Honour said at par 35:
“Now to look a the matter overall. The husband throughout has undoubtedly increased the costs of both parties by the detail he has chosen to go into in relation to all aspects of the parties’ financial affairs. In addition, he has frustrated the genuine wish of both parties to reach a settlement without litigation. He has done this by his clear unwillingness to simply make the best estimate of values, contributions and so on in a variety of situations. In addition, or possibly just expressing the same thing another way, he has wished at all stages to conduct an accounting type of operation which, as pointed out in early in the proceedings by [the wife’s solicitors] it is quite contrary to the correct approach in s79 applications.”
He went on to say in paragraph 40:
“In this case it is the conduct of the husband in relation to the proceedings but in particular, it is the approximately six months prior to the filing of the initial application by the wife which causes me to feel a costs order is the proper consequence.”
His Honour then made what is a very modest costs order of 15 per cent of the wife’s costs relating to the trial.
The power to award costs is set out s 117. The general rule is that in family law proceedings costs do not follow the event, however if the Court is of an opinion there are circumstances to justify it so doing the Court may make such order as to costs as it considers just.
In this case, the trial judge found there were circumstances that made it appropriate to make an order. It was an exercise of discretion. I cannot say that anything that has been drawn to our attention would indicate that the exercise of discretion was outside of the proper exercise of that discretion in an appealable sense. As was said by Nicholson CJ and Maxwell J in McAlpin (1993) FLC 92-411; (1993) 16 Fam LR 888:
“In Harris v Harris (1991) 15 Fam LR 26; [1991] FLC 92-254; at Fam LR 37; FLC 78,711 the Full Court emphasised the long held principle that: ‘orders for costs are peculiarly a matter which are within the discretion of the trial judge and it is only in the rarest of cases that the Full Court should interfere with a costs order’. See also Penfold v Penfold (1980) 144 CLR 311; 5 Fam LR 579; [1980] FLC 90-800; In the Marriage of Kelly (No 2) (1981) 7 Fam LR 762; [1981] FLC 91-108.”
Similar considerations apply to the cross appeal. Whilst it is urged upon us that the trial judge should have been more critical of the husband in the manner in which he conducted the proceedings so as to justify an order entirely in the wife’s favour, the trial judge paid attention to the extent of the wife’s claim and the fact that she failed to meet any of the bases upon which she indicated it would be appropriate to settle the claim.
In the circumstances, again I can see no reason to interfere with the trial judge’s costs order in favour of the wife although one can have some sympathy to the wife’s position in light of the manner in which the husband’s case was presented. I do not say that in any criticism of the presentation before us or at trial, but in terms of the sheer volume of material and the minutiae of detail that accompanied a case in support of what was basically a very broad discretion.
The parties have spent far more in relation to this litigation than could rationally be seen to be in dispute between them. This is a grossly unfortunate position and one that I hope ought not be repeated and ought to be avoided wherever possible.
The order that I would make would be as outlined namely to decrease the amount of money paid by the husband to the wife by the sum of approximately $75,000. I would ask the counsel to do the calculations and provide a minute accordingly, otherwise the appeal, the costs appeal and the cross cost appeal will be dismissed.
COLEMAN J:
Yes, I agree and have nothing to say.
BOLAND J:
I agree with the reasons of Kay J and the orders proposed by him and have nothing further to add.
KAY J:
The Court will grant the usual order for cost certificates.
I certify that the 36 preceding
paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.
Associate
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