Hackett and Hackett (No. 2) - [2010] FamCAFC 207

FAMILY COURT OF AUSTRALIA

HACKETT & HACKETT (NO. 2)

[2010] FamCAFC 207

FAMILY LAW - APPEAL – from decision of Federal Magistrate – property settlement – section 75(2) factors – whether orders within reasonable exercise of discretion – adjustment by the Federal Magistrate for section 75(2) factors was within the range – appeal dismissed

Family Law Act 1975 (Cth)

House v The King (1936) 55 CLR 499
Norbis v Norbis (1986) 161 CLR 513

APPELLANT:

Mr Hackett

RESPONDENT:

Ms Hackett

FILE NUMBER:

MLC

1738

2008

APPEAL NUMBER:

2010

DATE DELIVERED:

27 October 2010

PLACE DELIVERED:

Perth

PLACE HEARD:

Melbourne

JUDGMENT OF:

Finn, Coleman & Thackray JJ

HEARING DATE:

13 October 2010

LOWER COURT JURISDICTION:

Federal Magistrates Court

LOWER COURT JUDGMENT DATE:

15 January 2010

LOWER COURT MNC:

[2010] FMCAfam 17

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Fernandez

SOLICITOR FOR THE APPELLANT:

TA Fernandez

COUNSEL FOR THE RESPONDENT:

Ms Phelan

SOLICITOR FOR THE RESPONDENT:

Nevett Ford

Orders

The appeal be dismissed.
The husband pay the wife’s costs of the appeal fixed in the sum of $6,000, payable within 28 days.

IT IS NOTED that publication of this judgment under the pseudonym Hackett & Hackett (No. 2) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE

Appeal Number: SA 9 of 2010
File Number: MLC 1738 of 2008

Mr Hackett

Appellant

And

Ms Hackett

Respondent

REASONS FOR JUDGMENT

This is the husband’s appeal against orders made by Federal Magistrate Bender on 15 January 2010 in property proceedings between the husband and the wife.
Her Honour determined that the asset pool, which she found was worth $528,378, should be divided 70 per cent to the wife and 30 per cent to the husband. In doing so, her Honour assessed contributions 55:45 in favour of the wife, and made a further 15 per cent adjustment in favour of the wife on account of s 75(2) of the Family Law Act 1975 (Cth).
The husband did not ultimately challenge the contribution assessment, but submitted there should have been no adjustment for the s 75(2) factors.

Background facts

Given the limited scope of the appeal it is unnecessary to set out the full background.
At the time of judgment the husband was 50 years of age and was working as a technician in the motor vehicle industry. The wife was aged 39 years and was engaged in home duties. (She was also working part time as a kitchen hand, although the Federal Magistrate did not mention this in her reasons.)
The husband and wife were married in 1991. They were originally from Sri Lanka, but commenced living together in Australia in 1992. There were three children of the marriage, aged 16, 10 and 8 years at the time of trial.
The parties acquired the former matrimonial home in 1996 and an investment property in 2002. The matrimonial home was valued at $305,000 and unencumbered at the time of trial, but the other property, valued at $285,000, was encumbered to the extent of nearly $100,000.
The parties separated in January 2008, following which the wife and children took up residence in a refuge. In June 2008 the husband was charged with breaching an intervention order after he attempted to break into the refuge, which resulted in him being incarcerated.
The parties reconciled shortly after the husband’s release from gaol in September 2008, but separated finally in December 2008 when the wife and children again moved into a refuge.

The orders made by the Federal Magistrate

The orders the subject of the appeal required the husband to pay the wife $180,000, whereupon she was to transfer her interest in the former matrimonial home to him. In default, the orders provided for the sale of the property, with the wife to receive $180,000 and the husband to receive the balance.
The orders also provided for the sale of the investment property, with the wife to receive the net proceeds after discharge of the mortgage. Paragraph 8 of the orders provided that “any Capital Gains Tax payable on the sale … shall be paid on the basis the wife shall be responsible for 30% of the same and the husband shall be responsible for 70% of same”.

The Federal Magistrate’s reasons

Having recorded the background, the Federal Magistrate summarised the evidence of both parties. She made no credit findings and did not identify at this stage of the reasons which parts of the evidence she had accepted.
Her Honour then referred to the relevant statutory provisions and the “four step approach” explained in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervenor) (2003) FLC 93‑143 at [39]. She then identified the assets and liabilities. She found the matrimonial home was worth $305,000 and the equity in the investment property was $185,378.
The only other assets included in the pool were:
·    the wife’s motor vehicle worth $3,000;
·    $5,000 from the proceeds of a motor vehicle sold by the husband;
·    the husband’s superannuation, which he had estimated was worth $30,000.
We pause to record that the Federal Magistrate had foreshadowed during the closing address of counsel for the wife that she would not have regard to the motor vehicles: Transcript, 1 December 2009, pages 89, 93 and 95. Notwithstanding these indications, two vehicles were ultimately included in the pool. A third vehicle, the existence of which was drawn to her Honour’s attention during the closing address, was not included. Nor was an order made for transfer of that vehicle to the husband, as her Honour had foreshadowed: Transcript 1 December 2009 pages 95 and 96. The failure of her Honour to make such an order was not raised before us.
Her Honour next turned to the assessment of contributions, the result of which was that she decided there should be a “loading” of 5 per cent in favour of the wife. The basis for that decision is not entirely clear from the reasons; however, it seems to have been based on an unstated finding that the parties’ contributions were equal, save for two factors. The first of those was acceptance of the proposition that the wife’s contributions had been made “more difficult” because of violence perpetrated by the husband. The second was because of the wife’s role as primary carer of the children after separation, during which time she received no child support from the husband.
Given that the only ground of appeal directed to the contribution findings was abandoned, it is unnecessary to say more about her Honour’s treatment of contributions, except to observe that in paragraph 77 she said:
Whilst children’s matters remain to be determined, the reality is that the wife will continue to have the primary care of the parties’ three children into the future and some question has to remain as to what, if any, level of financial support she will receive from the husband in relation to the children.
It seems her Honour found it convenient to make these observations at this point of her judgment, rather than when discussing the s 75(2) factors, because she had just completed discussion of the contribution the wife made in maintaining the children, without assistance from the husband, after separation.
Her Honour then turned to consider the s 75(2) factors. Given that the sole remaining challenge to the judgment relates to the assessment of those factors, and as the findings are brief, we will set them out in full.
79.The husband is aged 50 years and, other than some initial depression arising from the breakdown of the relationship and the estrangement from his sons, is in good health. He is an experienced technician in the motor vehicle industry and has a history of ongoing employment in that industry.
80.It was difficult to ascertain the husband’s precise earning capacity, but it must be noted that during the course of the marriage the parties were able to purchase a matrimonial home and discharge the mortgage, and purchase an investment property and service the mortgage on that property at the same time. This was funded from the husband’s earnings in the motor vehicle industry.
81.The wife is 39 years of age and is in good health. She has no formal training, and other than for a very brief period, has never been in paid employment since coming to Australia in 1990.
82.As set out earlier in this judgment, the wife has the primary care of the parties’ three children and is currently in receipt of no child support from the husband in relation to those children, and has not been so since separation.
83.It was argued on behalf of the wife that because of the husband’s greater earning capacity and because of the wife’s responsibilities as the children’s primary carer, there should be a loading in her favour of some 15 per cent.
84.I am satisfied that such a loading in the wife’s favour of 15 per cent in these circumstances would be appropriate.
The Federal Magistrate next foreshadowed she would make orders to give the husband the option of retaining the former matrimonial home.
Her Honour also noted the submission of counsel for the wife that in the event the investment property was transferred to the wife, and subsequently sold, it would be the wife who would incur capital gains tax. The Federal Magistrate noted that the wife had provided no evidence about the likely amount of the tax, but her Honour did not go on to provide reasons for the order she ultimately made apportioning liability for the tax.
Her Honour finally considered whether the proposed orders were “just and equitable”. She noted that the husband would be given the opportunity to retain the matrimonial home, but said that if he was unable to obtain the necessary finance then all of the real estate would be sold. In that event she said there would be a division of the net proceeds on the basis that the wife would receive 70 per cent of “all of the real estate” and the husband 30 per cent. She also noted that the orders would provide for the husband to retain his superannuation, with the wife to retain her motor vehicle and the husband to retain the proceeds of the vehicle he had sold.
Her Honour’s summary of the effect of her orders was not entirely accurate, in that it is clear she intended the wife would receive not only 70 per cent of the proceeds of the real estate but also 70 per cent of the value of the husband’s superannuation. It is less clear whether her Honour intended to include the motor vehicles in her calculations. If they were included, then the figure the wife should have received from the husband was $181,487; but if they were excluded the figure should have been $178,887. It therefore appears her Honour either rounded down or rounded up the settlement figure to arrive at the payment of $180,000. No issue was taken with this aspect of her Honour’s judgment.

The grounds of appeal

The husband’s solicitor abandoned portion of the grounds of appeal at the hearing before us. The sole remaining ground of appeal read as follows:
The Learned Magistrate erred by failing to consider, in depth, all relevant sect 75(2) factors relevant to this case and in particular the state of health of the husband, his depression occasioned by non contact with 2 of his children and his future earning capacity and on the other hand the good health of the wife, resulting in an order that is not just and equitable in all of the circumstances.

Appellate principles

The principles enunciated by the High Court concerning the limitations on appellate interference with judgments involving exercise of judicial discretion do not require restatement: House v The King (1936) 55 CLR 499 at 504-5.
It is instructive, however, to recall the following observations of Brennan J in Norbis v Norbis (1986) 161 CLR 513 at 539‑540:
The difficulties in the way of developing guidelines beset an appellate review of the exercise of a discretion under [the property settlement provisions of the Family Law Act 1975]. Unless the primary judge reveals an error in his reasoning, the Full Court can intervene only if the order made is not just and equitable. How does the Full Court arrive at that conclusion? In Bellenden (formerly Satterthwaite) v. Satterthwaite [[1948] 1 All ER 343 at p 345], Asquith L.J. stated the rationale of an appellate court’s approach:
“It is, of course, not enough for the wife to establish that this court might, or would, have made a different order. We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable. It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.”
The “generous ambit within which reasonable disagreement is possible” is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.

Discussion

It will be observed from our recitation of her reasons, that the Federal Magistrate’s decision to give the wife a “loading” of 15 per cent on account of s 75(2) factors was made on the basis that:
•    the husband has a greater earning capacity than the wife;
•    the wife has the primary care of the three children; and
•    there was “some question … as to what, if any, level of financial support she will receive from the husband in relation to the children”.
The submissions advanced on behalf of the husband primarily attacked the weight the Federal Magistrate placed on the disparity in earning capacities. However, it was also submitted that her Honour erred in finding that, save for “some initial depression”, the husband was in good health. It was further submitted that in assessing the husband’s income earning capacity her Honour had erred by having regard to past capacity rather than his future capacity.
It is important to record that the husband failed to file any affidavit evidence in the substantive proceedings. It appears the only affidavit he swore was a very brief one, provided in support of an adjournment application on the day of the trial, in which he said inter alia, “I have acquired all these properties through my sweat and blood. The wife has never worked and therefore I will strongly oppose any sale”: Transcript, 1 December 2009, pages 31 and 32.
If it was part of the husband’s case that his earning capacity was affected by his depression, we consider it was encumbent upon him to have provided affidavit evidence to that effect. By this means the wife would have some notice of his case and would thus have had an opportunity to address it. In the absence of such evidence, her Honour had no alternative than to proceed on the basis of the husband’s oral evidence and on other material properly before her.
We have considered the portions of the husband’s oral evidence to which we were taken, but we are not satisfied they provide any basis for concluding that the Federal Magistrate erred in determining that the husband was in good health save for “some initial depression …”. The evidence does establish that the husband felt he was not “very well” following the separation [Transcript, 1 December 2009, page 34], but his own evidence also established that by the time of trial he was working between 24 and 30 hours a week [Transcript, 1 December 2009, page 23].
Counsel for the wife submitted that in arriving at her finding concerning the husband’s health it was open to the Federal Magistrate to have had regard to what was said in the Family Report (which we note was commissioned for use in concurrent proceedings concerning the children). In the report the Family Consultant noted that the husband had said at an interview in September 2009 that he was in “good health”, and was working 38 hours per week. The Family Consultant also recorded that she had spoken with the husband’s general practitioner who had advised that whilst the husband had been prescribed anti-depressant medication, he was “quite capable of being employed”.
The Federal Magistrate did have some regard to the Family Report, since she observed in paragraph 73 that “the family report writer was not questioned in relation to her report in the property proceedings”. In the absence of any complaint, we make no comment on the propriety of taking the Family Report into account in circumstances where the husband was self represented and gave evidence through an interpreter – and was not, so far as we are aware, informed that the report might be considered in the property dispute (which was heard separately from the issue relating to the children).
In any event, the Federal Magistrate did not specifically refer to the Family Report in making her findings concerning the husband’s health. In our view there was no need to do so, since the husband’s own evidence was sufficient to support the findings. We are therefore not persuaded that by the time of trial the husband’s earning capacity was affected by any depression he may have still been experiencing.
The submissions advanced on behalf of the husband also referred to the “slump” in the motor vehicle industry. Once again, the husband had failed to provide any affidavit evidence about this, although he made reference to it in his oral evidence. The Federal Magistrate recorded the husband’s evidence (at paragraph 41) but made no express finding as to its accuracy, albeit she had said in the course of the hearing she thought she could take judicial notice of the fact that the “motor car industry is not in great shape in this country at the moment”: Transcript, 1 December 2009, page 91.
In any event, her Honour recorded in her reasons that it was “difficult to ascertain the husband’s precise earning capacity”. This is unsurprising given the husband’s failure to provide an affidavit and his failure to comply with orders to provide a statement of financial circumstances and copies of his last three income taxation returns: Transcript, 1 December 2009, pages 2 and 39.
In the absence of reliable evidence from the husband concerning his present (and recent past) income, and having only his self-serving evidence concerning his likely future income, her Honour was left with little alternative than to have regard to the husband’s proven ability to earn income over the lengthy marriage. She did so by referring to the assets the parties had managed to acquire from funds derived from his employment, including an investment property.
It should also be noted that even if the Federal Magistrate erred in accepting that the husband would continue to earn an income similar to that he had previously enjoyed, this would mean there was an increased likelihood that the wife would not receive adequate levels of support for the younger children, who were aged 10 and 8 years at the time of trial. This in turn would impact on the assessment of the s 75(2) factors.
There was no ground of appeal or submission directed to the Federal Magistrate’s finding that the wife was engaged in home duties at the time of trial, when in fact her affidavit and statement of financial circumstances filed shortly before trial confirmed she was employed as a part time kitchen hand, earning $250 per week (as confirmed by her counsel in closing submissions): Appeal Book 67 and 85 and Transcript, 1 December 2009, page 92. In any event, there still remained a significant disparity in earning capacities, given the husband’s evidence that his average take-home pay for working on a part time casual basis was about $600 per week: Transcript, 1 December 2009, page 23.

It was further submitted on behalf of the husband that the orders made were not just and equitable because the husband had been unrepresented at trial and was therefore unable to “elicit from the wife both section 75(2) and 79(4) criteria and [was] unable to engage in any submission before the court at the close of evidence, as did the wife’s counsel”.
We accept that it is unsatisfactory for litigation to be conducted in circumstances where one party is represented and the other is not, especially where the unrepresented party is able to participate only with the assistance of an interpreter. In the present matter, however, the husband was represented at the outset of the hearing, but discharged his representative after his adjournment application was dismissed: Transcript, 1 December 2009, pages 13 and 14.
It appears the husband’s legal representative had been engaged to appear at the trial only to renew an application for an adjournment that had already been refused the previous day, albeit we observe that, prior to the legal representative being discharged, the Federal Magistrate had made a number of blunt remarks which would not have led the husband to have any confidence that he would be assisted by continuing to engage his representative.
In any event, no submission was made to indicate what were the s 75(2) “criteria” that might have been “elicited” from the wife had the husband been represented. Nor were we told what counsel might have said in a closing address which would have had any material impact on the outcome of this fundamentally simple matter. That said, we accept that the Federal Magistrate provided no more than a perfunctory invitation to the husband to make a closing address, which he declined: Transcript, 1 December 2009, page 100.
On the other hand, it might be said the husband was fortunate to have been given the opportunity to take part in the proceedings to the extent he was, given what her Honour described as his earlier “failure to engage in the proceedings” and her indication that she would have entertained an application for the matter to proceed undefended in light of the husband’s failure to comply with orders for the production and filing of documents: Transcript, 1 December 2009, pages 6 and 10.
Counsel for the husband finally submitted that “if the orders are not set aside the nett result will be that the husband finds himself on the streets resulting in a division that is far from just and equitable”. We take that somewhat emotive submission to contain what is really the gravamen of the husband’s complaint, namely that the outcome exceeded “the generous ambit within which reasonable disagreement is possible”.
Whilst we accept that the adjustment made by her Honour on account of s 75(2) factors was pitched at the uppermost end of the range of possible outcomes, we are not persuaded the assessment was outside that range, hence there is no basis upon which we can interfere with the exercise of her wide discretion.
For the sake of completeness we note that in his oral submissions, counsel for the husband drew attention to the potential impact of Order 8, which it will be recalled concerns apportionment of the capital gains tax on the investment property. We have already recorded that no evidence was led at trial concerning the possible quantum of such tax, nor was any application made to us to adduce evidence on this issue, notwithstanding it was common ground that the investment property has been sold.
We do have some misgivings concerning the order relating to payment of the capital gains tax. In the absence of reasons explaining her decision, it seems her Honour may have intended that it would be the wife, not the husband, who would assume liability for 70 per cent of the tax (given that it was the wife who was receiving 70 per cent of the assets). Given there was no ground of appeal directed at Order 8, and given the absence of evidence of the practical effect of the order, we do not consider we can take the matter further. It remains open to the husband to seek to have the Federal Magistrate apply the “slip rule” to ensure that the outcome reflects the 70:30 division of the net assets which her Honour considered was appropriate.

Outcome of the appeal and costs

There being no merit in the husband’s complaint, the appeal will be dismissed.
Counsel for the wife submitted that the husband should pay the wife’s costs in the event the appeal was dismissed. She advised that the costs were in the region of $9,000, of which $3,500 was counsel’s own fee.
The husband’s solicitor conceded that costs should “follow the event”. He did not comment on the quantum of costs sought by the wife, but noted that in the event the appeal succeeded he would seek costs of $6,000 (albeit he conceded he had not engaged counsel).
Given the narrow compass of the appeal (even prior to the amendment of the grounds) and the modest share of the assets to be retained by the husband, we propose to fix costs in the sum of $6,000. In doing so, we have in mind the expense that would otherwise be associated with an assessment of the costs.

I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 27 October 2010.

Associate:

Date: 27 October 2010