H and H

[2006] FamCA 467

FAMILY COURT OF AUSTRALIA

H & H [2006] FamCA 467

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – re-exercise of discretion.

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – contributions – weight to be given to unchallenged affidavit evidence.

Family Law Act 1975 (Cth)

Levinge v Director of Custodial Services (1987) 9 NSWLR 546

APPELLANT:   H  

RESPONDENT:  H  

FILE NUMBER:  CAF 1638 of 2002

APPEAL NUMBER:  EA 73 of 2004

DATE DELIVERED:  9 June 2006

PLACE DELIVERED:  Canberra

JUDGMENT OF:  Bryant CJ, Finn and Coleman JJ

HEARING DATE:  By way of written submissions

LOWER COURT JURISDICTION:                  Family Court of Australia

LOWER COURT JUDGMENT DATE:            27 May 2004

COUNSEL FOR THE APPELLANT: Mr Maurice

SOLICITORS FOR THE APPELLANT: Lessli Strong & Associates

COUNSEL FOR THE RESPONDENT: Ms Tonkin

SOLICITORS FOR THE RESPONDENT: Erlington Boardman Allport

Orders

1. That the appeal against Orders 19 to 25 (being the orders relating to property) of the orders of the Honourable Justice Faulks of 27 May 2004 be allowed.

2. That Order 19 of the orders of 27 May 2004 be varied to provide that within 60 days of these orders, the husband pay the wife the sum $463,373 (less any sum which the husband has already paid the wife pursuant to Order 19 of the orders of 27 May 2004).

3. (a)  That each party be at liberty to file and serve any written submissions in relation to the costs of the appeal within 28 days of the date of these orders.

   (b)  That each party have a further 28 days in which to file and serve any written submissions in answer to any submissions filed by the other party.

   (c)  That each submission have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.

FAMILY COURT OF AUSTRALIA AT SYDNEY

APPEAL NUMBER: EA 73 of 2004

FILE NUMBER: CAF 1638 of 2002

H

Appellant

And

H

Respondent

REASONS FOR JUDGMENT

introduction

1. On 27 July 2005 this Full Court delivered reasons for judgment and made orders dismissing an appeal by the husband against orders made on 27 May 2004 by Faulks J (as he then was) insofar as those orders related to the living arrangements for the children of the marriage of the husband and the wife.

2. Insofar as the orders of 27 May 2004 related to property settlement, the appeal was stood over for further consideration by us pending the receipt of further submissions from the parties.  We directed that such further submissions should address the following issues:

   (a)Whether either party contends that the Full Court should re-exercise the discretion or remit the property settlement matter for re-hearing and the reasons for such contention; 

   (b)In the event that a party contends that the Full Court should re-exercise the discretion:

   (i)What updating evidence, if any, would that party want to put before the Full Court (having regard to the direction of the Full Court that it will only receive evidence agreed by both parties)?

   (ii)What in that party’s submissions should be:

   (A)the net value of the parties’ property (if there is agreement that that value has changed);

   (B)the appropriate assessment of the parties’ contributions in light of the evidence with respect to the husband’s initial contributions of assets and monies; and

   (C)the relevant s 75(2) matters in light of particular evidence and the appropriate adjustment on account of those matters.

relevant background, conclusions of the trial judge and previous conclusions of the full court

1. As we recorded in our judgment of 27 July 2005, the husband and the wife married in November 1989; they had three children, the first born in 1996 and twins born in 1999; the parties separated in March 2002, with the wife remaining with the children on the New South Wales farming property on which the parties had lived for most of their marriage and the husband moving to live first with his mother and then renting accommodation on another farming property.

2. On 24 to 26 May 2004, Faulks J heard the parties’ cross-application for orders concerning the living arrangements for the children and for property settlement.

3. On 27 May 2004, Faulks J made orders that the children should reside with the mother and that she should be permitted to relocate with the children to South Australia.  As we earlier indicated, the husband’s appeal against his Honour’s orders concerning the living arrangements for the children was dismissed by us on 27 May 2005.

4. The following is the schedule of appeal assets and values which we understood to have been before the trial Judge and which we included in our judgment of 27 July 2005 as representing the pool of property to be divided between the parties:

Property	Size/No.	Sh. Price	Owner	Value
[“C” property]	-	-
[“N” property]	-	-
[“B” property]	952.3	H & W	$945,000
Furniture & Contents	W	$15,000
Furniture & Contents	H	$10,000
Livestock	H	$122,300
Plant & Equipment	H	$6,000
Woolclip	H	$51,599
Motor Vehicle – 1994 Toyota Hilux	H	$10,850
Motor Vehicle – 1999 Holden Jackaroo	W	$22,850
Bank Account – CBA	W	$4,000
Bank Account – Police Credit Union	W	$1,900
Bank Account – Westpac	H	$38,523
Telstra Shares	1000	4.56	W	$4,560
IAG (NRMA) Shares	788	4.75	H & W	$3,743
AMP Shares (H)	210	5.76	H	$1,210
AMP Life Assurance Policy	H	$3,241
Superannuation – Husband	H	$15,929
Superannuation – Wife	W	$2,999
TOTAL ASSETS	$1,259,704
Liabilities
Wife’s Family Allowance Debt	-$13,000
Wife’s 2001 Taxation Debt	-$5,000
TOTAL LIABILITIES	-$18,000
NET ASSETS	$1,241,704

1. Before the trial Judge, the husband had apparently been prepared to concede an equality of contribution during the marriage, but he then sought that because of his initial contributions (being three farming properties and savings of $300,000), the division on account of contributions should be 75% – 25% in his favour.  For her part, the wife had apparently been prepared to concede that the husband had made the larger initial contribution, but she nevertheless sought that her contributions be assessed in the region of 35% – 40%

2. His Honour determined that the parties’ contributions should be assessed at 65% to the husband and 35% to the wife.  On appeal the husband complained that his Honour was in error in assessing his contributions at only 65% and that his Honour had provided “insufficient reasons” for his finding on contributions.

3. We concluded (in paragraph 65 of our judgment of 27 July 2005), having regard to the submissions for the husband concerning his Honour’s failure to mention the savings of $300,000 which the husband had in addition to his rural properties at the commencement of cohabitation, that we could not be satisfied that his Honour did have regard to those savings in reaching his conclusion that the husband’s contributions should be assessed at 65%.  Thus, we found substance in the husband’s grounds of appeal directed to his Honour’s assessment of contributions.

4. Having assessed the parties’ contributions at 65% – 35% in favour of the husband, the trial Judge then made a 15% adjustment in favour of the wife on account of the matters contained in s 75(2) of the Family Law Act 1975. In challenging this adjustment, the husband again relied on the sufficiency of his Honour’s reasons for the adjustment, as well as on his Honour’s apparent failure to have regard to the sums being paid by the husband of $1,300 per month by way of spousal maintenance and $1,500 per month by way of child support, and to have regard to the wife’s earning capacity. Again, we found substance in these complaints and thus in the grounds of appeal directed to his Honour’s s 75(2) adjustment.

5. Our conclusion in relation to the appeal against the property settlement orders was therefore that it would have to be allowed, unless we were to re-exercise the discretion and arrive at the same result at the trial Judge.

6. Although it had been the position of  both parties’ Counsel that if we were minded to allow the appeal, a new trial of the property settlement matter would probably be necessary, we indicated in our judgment that in an endeavour to save costs to the parties and if both parties agreed, we would be prepared to re-exercise the discretion of the basis of:

   (a)the evidence which was before his Honour and concessions made in relation to such evidence;

   (b)any further evidence which the parties agreed should be before us; and

   (c)written submissions on behalf of both parties as to:

   (i)the net value of the parties’ property (if there is agreement that that value has changed);

   (ii)the appropriate assessment of the parties’ contributions in light of the evidence with respect to the husband’s initial contributions of assets and monies; and

   (iii)the relevant s 75(2) matters in light of particular evidence and the appropriate adjustment on account of those matters.

7. Accordingly, we stood over the appeal against the property settlement orders for further consideration in light of submissions from the parties in relation to the matters to which we have just referred.

the parties’ further submissions

1. Both parties having sought by agreement an extension of time to file further submissions, such submissions prepared by the husband’s Counsel, dated 1 September 2005, were filed on 12 September 2005, and submissions prepared by the wife’s Counsel, dated 8 September 2005, were also filed on 12 September 2005.

2. We will consider the content of those submissions in the context of our consideration of each of the matters on which we invited further submissions.

A re-exercise of discretion by the full court

1. Counsel for the appellant husband clearly stated in his submissions that it was the position of the husband that the Full Court should re-exercise the discretion.

2. There was no such clear statement as to the wife’s position in relation to a re-exercise of the discretion by this Court in the submissions of her Counsel.  However, those submissions are clearly predicated on an assumption that this Court will re-exercise the discretion (see in particular paragraphs 1 and 22 of the submissions for the wife).

3. Accordingly, we propose to re-exercise the discretion.

The evidence on which the discretion will be re-exercised

1. We made it clear in our judgment and orders of 27 July 2005 that we would only re-exercise the discretion on the basis of evidence other than the evidence which was before the trial Judge, if such further evidence was put before us by agreement.

2. Counsel for the husband expressly stated that the husband did not propose to rely on any updating evidence.  (Although he sought leave to make further written submissions in the event that the wife was permitted to inform us about certain interim orders made by the trial Judge on 14 September 2004).

3. Again, there is no express statement as to the position of the wife in relation to further evidence in the submissions of her Counsel.  However, those submissions refer to, and would appear to seek to rely on, a number of new factual matters, although there is no formal application by the wife to adduce further evidence.

4. In these circumstances it cannot be said that there is agreement as to the further evidence that should be put before us.  Therefore, given that we are satisfied that both parties want us to re-exercise the discretion, we propose to do so on the basis of the evidence which was before the trial Judge (as we indicated in our previous judgment and orders that we would do in the absence of agreement as to further evidence).

The net value of the parties’ property

1. As mentioned earlier in this judgment, the net value of the parties’ assets as apparently agreed before the trial Judge was $1,241,704.  Counsel for the husband stated in his submissions (paragraph 5) that “it is understood that the parties agree that the net value of the assets of the parties is $1,241,704”.

2. However, Counsel for the wife stated in her submissions (paragraph 3) that the wife contends that the assets have a value of $1,259,704.  It will be seen from the schedule appearing earlier at paragraph 6 of this judgment that this is the gross value of the property.  Counsel for the wife submitted that this figure should be used because the wife has reduced the debts, although Counsel also submitted that the wife should indemnify the husband in respect of the debts and that “the net effect is the same”.  The precise submission of Counsel for the wife in this regard is as follows:

   “The wife contends the assets have a value of $1,259,704.  Though the net assets at the date of hearing had a value of $1,241,704 (Judgment paragraph 60) the wife has continued to be solely responsible for the repayment of both liabilities and has reduced both debts.  The wife contends that as such the liabilities should not be deducted from the pool and that she should indemnify the husband in respect of same.  The net effect is the same.” [The schedule of property which appears above at paragraph 6 of this judgment is then set out in Counsel’s submissions].

3. However, given that we have no evidence concerning the reduction in the debts by the wife, we propose to re-exercise the discretion on the basis of the original net figure of $1,241,704.  We understand that this would not cause any real injustice to the wife, given her Counsel’s statement that “the net effect is the same”.

Assessment of the parties’ contributions

1. For the purpose of our assessment of their contributions, neither party departed in their further submissions from the position apparently taken by them at trial, being that their contributions during their relationship should be regarded as equal.  Similarly, neither sought any adjustment in our assessment of their contributions for post-separation contributions.  Rather, the contentious issue in relation to the assessment of contributions remained, as it had been at trial, the issue of the weight which should be given to the husband’s initial contribution of rural property and savings.

2. In his further submissions, Counsel for the husband submitted that the real estate brought into the marriage by the husband had an agreed value at trial of $945,000 and thus represented 75% of the value of the assets available for division ($1,241,704), and that the savings of $300,000 which the husband claimed to have brought into the marriage represented 25% of the assets available for division.  Thus it was submitted that a proper assessment of the husband’s contributions overall would be 75%.  In other words, on the basis of an equality of contribution during the marriage, there would be an adjustment of 25% in the husband’s favour on account of his initial contributions of the rural properties and savings of $300,000.

3. Counsel for the wife sought to persuade us that the assessment of the husband’s contributions should remain at 65% as determined by the trial Judge, on the basis that there was “no evidence” that the husband had $300,000 in savings in addition to the unencumbered properties at the commencement of cohabitation (paragraph 10 of Counsel’s submissions).  Counsel had earlier in her submissions (at paragraph 5) acknowledged that the husband had given affidavit evidence of savings of $300,000, but Counsel’s contention was that the husband had not supported this claim with documentary evidence (see in particular paragraphs 5, 8 and 11 of the submissions for the wife).

4. However, a reading of the entirety of the cross-examination of the husband reveals that he was never challenged concerning his affidavit evidence that he had $300,000 at the commencement of the relationship.  Moreover, there is nothing inherently improbable about his evidence in this regard and thus, in our view, his affidavit evidence should be accepted.  Support for our conclusion is to be found in the following passage from the judgment of McHugh JA (as he then was) in Levinge v Director of Custodial Services (1987) 9 NSWLR 546 at 560:-

   The rule in Browne v Dunn (1893) 6 R 67 at 76-77 prevents a Court from refusing to act on or disbelieving evidence which has not been the subject of cross-examination. However, one exception to the rule in Browne v Dunn is the case where the evidence is inherently improbably: cf Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362 at 371.

5. We agree with the submissions made by Counsel for the husband that, given the significance of the husband’s initial contribution of the rural properties and savings relative to the value of the property now available for distribution, his contributions should be assessed at 75%. 

the s.75(2) adjustment

1. It is clear from the submissions of his Counsel (paragraph 17) that the husband concedes that some adjustment in favour of the wife on account of the s.75(2) matters would be appropriate, but he contends that that adjustment should not be more than 10% (which would be represented by a sum of, or assets to the value of, approximately $124,000).

2. As we understand the submissions on behalf of the husband, the reason for an adjustment of no more than 10% to the wife, is the fact that her income earning capacity, having been permitted to move to South Australia, has materially improved, while the husband will be faced with the costs of contact between Southern New South Wales and South Australia. 

3. It was further submitted on behalf of the husband that while the we could conclude that the husband’s child support will vary over time, the wife has administrative and judicial remedies available to her to seek additional support if she wishes, and thus it is not appropriate to make an adjustment in the property settlement proceedings on account of child support matters.

4. It is difficult to ascertain from the submissions on behalf of the wife exactly what adjustment she seeks on account of the s 75(2) matters, particularly in circumstances where those submissions do not appear to canvass the possibility that the husband’s contribution entitlement might be assessed at 75%. It is, however, reasonably clear from the submissions on her behalf that she continues to rely on the two matters which influenced the trial Judge to make a 15% adjustment (to a 65 – 35% contribution-based entitlement), being her role as a primary carer and the vagueness of the husband’s income and other financial contributions.

5. As mentioned earlier, the wife also sought to rely on orders made on 14 September 2004 in relation to the husband’s child support assessment.  In the event that the wife was permitted to rely on that matter, the husband’s Counsel wanted an opportunity to make further submissions. 

6. However, as Counsel for the husband recognized in his submissions at paragraph 22, an assessed child support liability will vary from time to time, particularly, we would observe, in the case of a parent who derives his or her income from the land. In these circumstances, we see no point in concerning ourselves with one particular assessment or order made in light of an assessment.  We propose to proceed on the basis that given the husband’s occupation, his child support liability will be likely to vary significantly from time to time.

7. In determining what is an appropriate adjustment to make in the wife’s favour on account of the s 75(2) matters, significant weight must now, in our view, be placed on the significant capital disparity between the parties on account of the 75% – 25 % division which we have made on account of their contributions; in real terms that disparity will be in the order of $930,000 to $310,000 in the husband’s favour.

8. In addition, the wife will have the primary responsibility for the care of their children, all of whom are still under 10 years of age.  It can be assumed that such a responsibility will have some impact on her income-earning capacity (notwithstanding any improvement that that capacity might have sustained because of the move to South Australia).  It should be clear from what we have said earlier in relation to child support, that we can only conclude that the amount paid is likely to vary from time to time, and indeed as Counsel for the husband appeared to recognize in his submissions (paragraph 22), the wife may find it necessary to resort to administrative and judicial proceedings to obtain appropriate child support.  These uncertain circumstances surrounding the financial support for the children also deserve recognition.

1. Having regard to these matters, including the capital disparity between the parties, the wife’s primary responsibility for the children, and the uncertainties surrounding the amount of future child support, we consider an appropriate adjustment in favour of the wife would be 15% (which in monetary terms is $186,255). 

2. This adjustment would result in an overall division of the net value of the property of $1,241,704 in the proportions of 60% – 40% (or $745,022 - $496,682) in favour of the husband.

calculation of amount to be payable to the wife

1. Adapting the schedule contained in the submissions of Counsel for the husband, the wife’s 40% entitlement can be calculated:

   Her furniture and contents            15,000

   Her Holden Jackaroo  22,850

   Her bank savings  4,000

   Her credit union savings                1,900

   Her Telstra shares  4,560

   Her Superannuation  2,999

   Less

   Family Allowance debt                  (13,000)

   2001 tax debt  (5,000)

   Net33,309

   Amount required to be paid  

   by the husband to the wife

   (496,682 – 33,309)   463,373

   Total496,682

2. We will therefore now make orders allowing the appeal and varying the trial Judge’s orders to provide that the husband pay the wife the sum of $463,373 in place of the $592,102 ordered by the trial Judge.

other matters

1. In his Counsel’s submissions, the husband also sought that this Court make an order providing for the transfer to him of 788 IAG shares in joint names valued at $3,743.  The submissions on behalf of the wife (paragraph 22) proceed on the basis that the wife will retain half the IAG shares.

2. However, Order 24 of the trial Judge’s orders of 27 May 2004 already requires that each party will do all things necessary to ensure that the IAG shares are transferred into the sole name of the husband.  It is unnecessary therefore that we make any further order concerning those shares.  Our calculations of the amount to be paid to the wife take into account that she will not retain an interest in those shares.

3. The husband also seeks in his Counsel’s further submissions the discharge of the orders of the trial Judge providing for the creation of a travel fund (that is, Orders 11 to 15 of the orders of 27 May 2004).  The only reason given by Counsel for seeking the discharge of those orders is that such orders were not part of the husband’s case.  Counsel for the wife’s submissions do not refer to this matter.

4. It is true that in his Notice of Appeal against the trial Judge’s orders of 27 May 2004, the husband stated that he appealed all those orders.  However, no ground of appeal addressed the orders concerning the travel fund, nor was any challenge to those orders referred to in the husband’s summary of argument prepared for the hearing of the appeal.  In these circumstances we do not propose now to entertain a challenge to the orders concerning a travel fund.

costs of the appeal

1. It will be necessary for us to provide the parties with an opportunity to file further submissions in relation to the costs of the appeal (as it was directed both to parenting and property matters).  We will make the necessary directions for such submissions.

2. It may assist the parties if we were to indicate that for purposes of the operation of the Federal Proceedings (Costs) Act 1981 and the availability of certificates under that Act, we would be prepared to regard to the successful appeal against the property settlement orders as a separate appeal from the unsuccessful appeal against the parenting orders. In other words, we would be prepared to grant costs certificates in respect of the appeal against the property settlement orders if the parties were to apply for such certificates. 

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of this Honourable Full Court

Associate:  JT

Date:  9 June 2006