Hearne & Hearne

[2015] FamCAFC 178

FAMILY COURT OF AUSTRALIA

HEARNE & HEARNE [2015] FamCAFC 178

FAMILY LAW – APPEAL – PROPERTY – Where s 79(2) of the Family Law Act 1975 (Cth) does not require an express finding that it is just and equitable to make orders for property settlement, but such a finding can be found by implication, or inferred, from the totality of the trial judge’s reasons – Where taking into account the trial judge’s reasons as a whole the trial judge was satisfied that the orders were just and equitable – Where in any event the husband was bound on appeal by the case argued at first instance – Where the husband’s attempt to raise this issue was also an abuse of process – Where the trial judge’s failure to consider capital gains tax did not warrant appellate interference – Where accumulated service can be taken into account as an initial contribution – Where it was open to the trial judge to find that the wife’s initial contributions were significant and justified an adjustment in the wife’s favour – Where the trial judge did not fail to provide adequate reasons as to the overall contributions of the parties – Appeal dismissed.

FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – ADJOURNMENT – Where the court treated the wife’s presentation of a medical certificate as an application to adjourn – Where the court is satisfied that the wife was aware of the listing of the appeal for hearing, and what she was required to do to prepare for the hearing – Where the court was not satisfied that the wife was unable to file her summary of argument and list of authorities – Where the court was not satisfied that the wife’s non-specific medical certificate provided a basis for the wife not attending the hearing of the appeal – Application dismissed.

FAMILY LAW – APPEAL – COSTS – Where the wife did not appear at the hearing – Where there is no costs application on the wife’s behalf – No costs order made.

Family Law Act 1975 (Cth) – ss 75(2) and 79

Family Law Rules 2004 (Cth) – 22.53

AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175
Batistatos v Roads & Traffic Authority (NSW) (2006) 226 CLR 256
Bevan & Bevan (2013) FLC 93-545
Chapman & Chapman (2014) FLC 93-592
Clives and Clives (2008) FLC 93-385
Crawford & Crawford (1979) FLC 90-647
Lee Steere & Lee Steere (1985) FLC 91-626
Metwally v University of Wollongong (No. 2) (1985) 60 ALR 68
Pierce & Pierce (1999) FLC 92-844
Rogers v The Queen (1994) 181 CLR 251
Stanford v Stanford (2012) 247 CLR 108
Stead v State Government Insurance Commission (1986) 161 CLR 141
Steinbrenner & Steinbrenner [2008] FamCAFC 193
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Waterboard v Moustakas (1988) 180 CLR 491
White & White (1982) FLC 91-246
Williams v Spautz (1992) 174 CLR 509
Zalewski and Zalewski (2005) FLC 93-241

APPELLANT: Mr Hearne

RESPONDENT: Ms Hearne

INDEPENDENT CHILDREN’S LAWYER: Legal Aid NSW

FILE NUMBER: PAC 529 of 2011

APPEAL NUMBER: EA 97 of 2013

DATE DELIVERED: 16 September 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Strickland, Ryan & Austin JJ

HEARING DATE: 26 November 2014

LOWER COURT JURISDICTION: Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE: 19 June 2013

LOWER COURT MNC: [2013] FCCA 562

REPRESENTATION

SOLICITOR ADVOCATE FOR THE

APPELLANT:

Professor Parkinson

SOLICITOR FOR THE APPELLANT: Watts McCray Lawyers

THE RESPONDENT: No appearance

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: Ms Barnett

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Legal Aid NSW

Order

1. The appeal be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hearne & Hearne 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 97 of 2013
File Number: PAC 529 of 2011

Mr Hearne

Appellant

And

Ms Hearne

Respondent

REASONS FOR JUDGMENT

Strickland J

Introduction

1. By Notice of Appeal filed on 17 July 2013, Mr Hearne (“the husband”) appeals an order made by Judge Harman on 19 June 2013.  That order provides that, by way of property settlement, Ms Hearne (“the wife”) transfer 760 of her [Bank] shares to the husband.

2. The Notice of Appeal also challenged parenting orders made by his Honour, however, at the hearing before this court, we granted leave to the husband to withdraw that part of the Notice of Appeal that challenges the parenting orders.  As a result, we also granted leave to the Independent Children’s Lawyer (“ICL”) to withdraw from the proceedings.

3. The wife did not appear at the hearing before this court.  We noted correspondence that passed between the wife and the appeal registry wherein the wife was claiming that she could not attend the hearing due to medical reasons.  The wife also provided a medical certificate to the appeal registry on 25 November 2014.  

4. We indicated that we would treat the sending of the medical certificate as an application by the wife to adjourn the appeal.  After hearing submissions as to that application, we indicated that we were not disposed to grant an adjournment and that the reasons for doing so would be included in these reasons for judgment.  The appeal then proceeded in the absence of the wife.  This court’s reasons for dismissing the application to adjourn the appeal appear subsequently.

Background

1. The husband was born in 1968, and was aged 44 years at trial.  The wife was born in 1969, and was also aged 44 years at trial.

2. The parties commenced their relationship in 1994, began cohabitation in 1996 and were married in 1997.

3. There are three children of the marriage, A (born in 1999), B (born in 2001), and C (born in 2003).

4. The former matrimonial home at W was purchased for $146,000 in October 1996 in the wife’s sole name, however, both parties made contributions to the purchase of this property.

5. The husband was employed as a automotive tradesman and later an army reservist; the wife worked for the X Bank (“the Bank”) after completing high school.

6. The wife was made redundant from the Bank in October 2004, and received a redundancy package of $110,000 net.

7. In December 2009 the husband purchased land at S for $365,000.

8. The parties separated in 2010, but the precise date was disputed by them.

9. Post separation, the wife remained in the former matrimonial home and the husband lived in rental accommodation.

10. The wife suffers from Obsessive Compulsive Disorder (“OCD”) and a hoarding disorder.  It was alleged that the former matrimonial home was kept in a state of disrepair due to the wife’s hoarding behaviours.

11. An ICL was appointed on 16 December 2011.

12. The matter was listed for trial in August 2012, however, the wife did not attend court.  A medical certificate was presented to explain her absence and the hearing was adjourned.

13. The wife then failed to file affidavit material in accordance with directions made on 18 September 2012, and the matter was listed for an undefended hearing on 1 February 2013.

14. At the hearing on 1 February 2013, Federal Magistrate Harman (as his Honour then was) made a costs order against the wife in favour of the husband and the ICL, and made directions that she file her final affidavit material by 13 March 2013.  The wife complied with that order.

15. The matter came before Judge Harman for final hearing from 20 to 23 May 2013, with orders being made and reasons delivered on 19 June 2013.  At trial the wife was legally represented and counsel appeared on her behalf.

The reasons for judgment delivered on 19 June 2013

1. His Honour commenced the reasons for judgment by recording the documents relied upon by the parties, the applications and orders sought. His Honour also provided a detailed chronology as summarised above.

2. Relevantly, both parenting and property matters fell for determination before his Honour, however, as indicated above, the parenting aspect of the appeal is no longer pursued.

3. In relation to the property matters, the trial judge recorded that the parties were agreed on the value of the “four most significant assets of the relationship” being the former matrimonial home, the S property, the Bank shares held by the wife and the superannuation entitlements held by the wife (at [58]).

4. Turning to the evidence as to the assets of the parties, the trial judge noted that the majority of the balance sheet was agreed between the parties and, to the extent that there was any disagreement, his Honour made certain findings (at [201]).

5. Turning to the law as it applies to property matters, his Honour cited the authorities of Ferraro & Ferraro (1993) FLC 92-335, Hickey & Hickey (2003) FLC 93-143, Omacini & Omacini (2005) FLC 93-218, and Stanford v Stanford (2012) 247 CLR 108. On the basis of these authorities, his Honour indicated that he “must commence any consideration by assembling the pool of property available for division and determining the value of those assets” (at [297]).

6. His Honour then set out the pool of assets at [300] and [301] and found the net value of those assets to be $922,548, with the wife having superannuation of $153,932, resulting in the total asset pool being valued at $1,076,480.

7. In relation to “add backs”, his Honour had regard to amounts withdrawn from the wife’s bank accounts and spent on legal fees, and found that these amounts should be included in the asset pool (citing Chorn & Hopkins (2004) FLC 93-204) (at [307]).

8. His Honour also included the total amount of $15,000, received from the sale of the husband’s yacht, and accepted the agreement of the parties to include the mortgage encumbering the S property at $200,000 (at [308] – [309]).

9. In relation to “add backs agitated generally (and specifically with respect to the additional funds withdrawn by the wife from her bank accounts and expended other than on legal fees)” the trial judge found that these should not be added back, citing and adopting the discussion of Murphy J in Challen & Challen [2007] FamCA 1292 (at [310]).

10. Turning to the initial contributions, his Honour noted the wife’s substantial initial contributions of $50,000 in savings, her superannuation, her accumulated service with the Bank, her 958 Bank shares, and an entitlement to a Bank discounted loan interest rate (at [312]).  His Honour thus found that an adjustment should be made in the wife’s favour, to be quantified once other contributions were assessed (at [315] – [316]).

11. In relation to contributions during the relationship, the trial judge traversed the evidence of the wife, who sought a further adjustment of 10 per cent for the redundancy payment received from the Bank, for providing the primary care for the children, for contributing her full earning capacity, and for the maternal grandmother providing substantial home care as a “double contribution” (at [317]).

12. The husband asserted that contributions during the relationship should be assessed as being equal, but if any adjustment was to be made it should be limited to 10 per cent (at [319]).

13. Finally, in relation to post-separation contributions, his Honour recorded the difficulties that beset the parties following separation.  Relevantly, the husband was able to maintain paid employment with reduced hours.  Also, since August 2012 the husband had had the primary care of the children.

14. Overall, his Honour assessed the contributions at 65 per cent in favour of the wife and 35 per cent in favour of the husband (at [323] – [324]).

15. Turning to the matters pursuant to s 75(2) of the Family Law Act 1975 (Cth) (“the Act”), his Honour noted that the concurrent determination of the parenting matters clarified counsel’s submissions in relation to the s 75(2) factors.

16. On the basis of the parenting orders being made, the trial judge found that no adjustment should be made in favour of the wife in this respect (at [327]).

17. Turning to the wife’s diagnosis of OCD, and the disparity in income or earning potential, the trial judge recorded that the husband had been able to maintain himself and the children without assistance (at [329] – [330]).  

18. His Honour found that no adjustment should be made pursuant to s 75(2) of the Act, noting at [332] that “[t]here are factors which favour each party which would warrant an adjustment in their favour but I am satisfied that the factors which favour either party would achieve balance”.

19. Turning finally to whether the orders were just and equitable, his Honour recorded that the husband sought a superannuation splitting order, but no submissions were put to this, and as such found that no order should be made (at [335]).  

20. His Honour noted that, as the asset pool presently stood, the wife held 70 per cent of the assets and the husband 30 per cent, and to achieve the 5 per cent adjustment a payment of $53,824 was required to be made by the wife to the husband (at [338] – [339]).

21. In order to effect this, his Honour determined that a transfer of the Bank shares should occur, saying this at [340]:

    The clearest available means for this to occur is by a transfer of shares from the [Bank] shareholding. On the basis of the value of shares used for the purpose of calculating the pool this would equate to around 760 shares and thus I propose to make an order which requires that this number of shares be transferred by [the wife] to [the husband] and with the consequence that [the wife] will retain 2,000 [Bank] shares and [the husband] will receive 760. This would then achieve the percentage division that is proposed.

22. His Honour then dealt with costs, as the ICL had made an application for the same.  The trial judge dismissed this application (see [342] – [398]), and I note the costs issues are not challenged in the appeal.

Grounds of Appeal

1. The grounds of appeal in relation to issue of property settlement, set out in the Notice of Appeal filed by the husband, are as follows:

   …

   Property

   1.His Honour did not consider whether it was just and equitable to make any order altering property interests as required by s.79(2).

   2.His Honour failed to take into account that by ordering that certain shares be transferred to the appellant in specie as a way of satisfying his proprietary claim, he would have to incur capital gains tax on the realisation of those shares.

   3.His Honour had no reasonable basis for assessing contributions as being 65% to the Mother and 35% to the Father because of her initial contributions, when the difference in initial contributions between the parties was very modest and their marriage had lasted about 14 years. In particular, His Honour failed to explain how such a modest differential in initial contribution, both in relation to the superannuation and non-superannuation assets, could result in such a major disparity in the assessment of contributions.

   4.His Honour took account of an irrelevant consideration in giving weight to the Mother’s capacity to gain a loan at a discounted interest rate because of her employment with the bank.

   5.His Honour failed to give reasons for treating both superannuation and non-superannuation assets together.

   6.His Honour erred in not applying the relevant s.79 and s.75(2) considerations to superannuation and non-superannuation assets separately, distinguishing between present needs and prospective retirement income. In particular, His Honour failed to properly consider that the appellant has no retirement savings in evaluating the s.75(2) factors as they relate to superannuation.

2. In the husband’s written summary of argument filed on 31 January 2014 he indicated that Grounds 5 and 6 were no longer pursued.

Orders sought

1. The husband sought the following relevant orders in his Notice of Appeal:

   …

   4.That within sixty (60) days of the date of these Orders the Wife pay to the Husband the sum of $218,240.00.

   5.That in the event the Wife fails to make payment to the Husband pursuant to Order 3 the parties shall do all acts and things and sign all documents necessary to place on the market for sale the property known as and located at [W] being the whole of the land contained within folio identifier …./…… by private treaty and that the proceeds of sale be divided as follows:-

   5.1.In payment of any costs associated with the sale of the property including real estate commission and legal fees;

   5.2.Discharge of mortgage secured against that property;

   5.3.In payment to the Husband in the sum of $218,240.00 together with interest calculated pursuant to the Family Law Rules; and

   5.4.In payment of the balance to the Wife.

2. However, instead, at the hearing of the appeal, the husband sought that the orders for property settlement be discharged, “the matter remitted to be heard by a judge other than Judge Harman”, and the husband be granted a costs certificate in relation to the appeal.

Application for Adjournment

1. As indicated above, the wife suffers from OCD, and that has led to difficulties with her attendance at hearings and the preparation and filing of documents, primarily at first instance, but also in these appeal proceedings.

2. This court has noted already, that at first instance, the wife failed to attend court when the trial was first listed in August 2012, she failed to comply with orders requiring her to file her affidavit material, and orders for costs were made against her as a result.

3. In relation to the appeal proceedings, the Appeal Registrar conducted a directions hearing on 2 October 2013, at which the wife appeared without legal representation.  At that hearing, the usual orders were made for the preparation of the appeal, and the wife was ordered to file and serve her summary of argument and list of authorities on or before 28 March 2014.  However, she failed to comply with that order.  She did enquire of the Appeal Registrar about obtaining an extension of time, but she did not pursue that.

4. On 2 September 2014, the Appeal Registrar sent a letter to the parties advising that the appeal would be heard on 26 November 2014.

5. On 13 November 2014, the appeal registry contacted the husband’s solicitors and the ICL to confirm the hearing date, but the wife was unable to be contacted on her mobile telephone.  Accordingly, on 18 November 2014, the appeal registry sent an email attaching the letter of 2 September 2014 to the wife, requesting her to confirm her address and to confirm receipt of that letter.  At the same time, attempts were made to locate an alternative telephone number for her through the husband’s solicitors and through the ICL and eventually contact was made with the wife’s father, and as a result, the wife contacted the appeal registry on 20 November 2014.  Her mailing address was confirmed as correct, but the wife indicated that she could not attend the hearing on 26 November 2014.  She was then informed that she would need to make an application to adjourn that hearing.  Later that same day the Appeal Registrar sent an email to the wife confirming the hearing date, attaching an application in an appeal and affidavit forms, and the summaries of argument filed on behalf of the husband and the ICL, and confirming that any application to adjourn the hearing would be heard on the day of the hearing, and that she would need to attend for that purpose.

6. On 21 November 2014, the wife sent an email to the Appeal Registrar confirming that she had received the email from the appeal registry of 18 November 2014, but not the email of 20 November 2014.  As a result, on 24 November 2014, the appeal registry forwarded the email of the Appeal Registry of 20 November 2014 to the wife.

7. On 24 November 2014, the wife spoke with the assistant to the Appeal Registrar advising that she had not prepared any documents and that she could not attend the hearing due to medical reasons.  Upon being advised that she could attend the hearing by telephone, the wife indicated that she would not be able to do that.  On 25 November 2014, the wife sent a facsimile to the appeal registry attaching a medical certificate.  That certificate is dated 25 November 2014 and reads as follows:

   THIS IS TO CERTIFY THAT I HAVE EXAMINED

   Mrs [Hearne]

   AND IN MY OPINON IS SUFFERING FROM – several concurrent medical conditions – AND WILL BE UNFIT FOR court from

   Tuesday, 25 November 2014 to 9/12/2014

   This Certificate was completed on 25^th November 2014

   Dr [B]

1. On 25 November 2014, the husband’s solicitors sent an email to the wife advising her of the orders that the husband sought and attaching a copy of a Minute of those orders and an outline of oral argument.

2. This court was satisfied that the wife was aware of the listing of the appeal for hearing, and what she was required to do to prepare for the hearing.  This court was not satisfied that the wife was unable to prepare a summary of argument and provide a list of authorities.  This court was also not satisfied that the non-specific medical certificate provides a basis for the wife not attending the hearing of the appeal, at the very least by telephone link. 

3. The hearing of the appeal had been set for some time, the husband had prepared and lodged the appeal books and filed a summary of argument, as had the ICL (in relation to the appeal against the parenting orders), and both the husband and the ICL were ready to proceed with the hearing. 

4. Further, as the authorities recognise, on an application to adjourn proceedings a court is required to take into account not only the individual circumstances of the parties, but the effect on the court as a publicly funded resource, the effect on other litigants, the court’s case management principles, and “the need to maintain public confidence in the judicial system” (AON Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, per French CJ, at [5]).

5. Taking all these matters into account, this court dismissed what this court treated as the wife’s application to adjourn the hearing of the appeal.

6. Before leaving this aspect of the appeal though, it is necessary to comment on the position taken by the husband’s solicitor advocate in relation to this matter and the subsequent course that the appeal against the parenting orders took

7. Although counsel for the ICL was content for this court to treat the sending of the medical certificate as an application to adjourn the hearing, the husband’s solicitor advocate opposed this course, and sought that the hearing proceed “undefended”, relying on a history of the wife allegedly avoiding service of documents, including the Notice of Appeal and the appeal books.

8. As indicated above, this court determined to treat the sending of the medical certificate as an application to adjourn, but then dismissed that application and proceeded with the appeal in the absence of the wife. 

9. However, the husband’s solicitor advocate then sought to have the ICL view a number of videos taken, apparently by the husband, since the decision of the trial judge, which allegedly demonstrated a significant change of circumstances in relation to the children the subject of the proceedings.  The purpose of this was to persuade the ICL to alter her opposition to the appeal.  It was entirely unclear though what was to then happen, and particularly given the absence of the wife.  It was also unclear whether the intention was to seek to present those videos as further evidence in the appeal.  There was of course no application to do that, and in any event, neither the ICL nor the wife had seen the videos sought to be relied upon, and that would certainly have rendered the process procedurally unfair to the wife.  In addition, the husband’s solicitor advocate sought to hand up to the court a 20 page “outline of oral argument” addressing both the property settlement and the parenting issues, despite there being no application to provide a further summary of argument in addition to the written summary of argument filed on 31 January 2014. 

10. In these circumstances this court determined to briefly stand the appeal down to enable counsel for the ICL to consider the ICL’s position, and in particular to determine whether the ICL’s opposition to the parenting appeal would be maintained.

11. Upon the resumption of the hearing this court was informed that the husband would be withdrawing that part of the appeal against the parenting orders and there would be fresh proceedings instituted in the Federal Circuit Court.  That was not opposed by the ICL, and this court then gave leave to the husband to withdraw the parenting appeal, and for the ICL to withdraw.

12. That outcome rendered it unnecessary this court to formally address the issues referred to above.

Discussion

Ground 1

1. In his written submissions on behalf of the husband, the husband’s solicitor advocate suggests that “unless a finding is made as to whether it is just and equitable to alter property interests, the court has no power to make such an order.”

2. It is said that that proposition emerges from the High Court decision in Stanford v Stanford (2012) 247 CLR 108. However, I do not accept that it is as straightforward as that, despite the husband’s solicitor advocate citing himself as authority for the same.

3. Unsurprisingly, given the terms of s 79(2) of the Act, the plurality in Stanford said that “[i]n every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order” (at [35]).

4. However, as the plurality itself emphasised, “[t]he expression ‘just and equitable’ is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations.  It does not admit of exhaustive definition” (at [36]), and “[i]t is not possible to chart its metes and bounds” (at [36]).

5. That said, the plurality identified three fundamental propositions, namely:

   a)it is first necessary to identify the existing legal and equitable interests of the parties in the property;

   b)secondly, the question presented by s 79 of the Act is whether the rights and interests of the parties should be altered; and

   c)thirdly, it is not open to conclude that making an order is just and equitable only because of and by reference to the various matters set out in s 79(4).

6. Importantly, the plurality recognised that these propositions “require that a court have a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage and whatever may have been their stated or unstated assumptions and agreements about property interests during the continuance of the marriage” (at [41]).  Thus, as the plurality said at [42]:

   In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).

7. It is readily apparent from what the plurality said in Stanford, that “satisfaction of the s 79(2) requirement can be inferred, at least in part, from the issues joined, and importantly, not joined, between the parties” (Chapman & Chapman (2014) FLC 93-592 at [22]). Further, there need not be an express finding that the hurdle of s 79(2) has been overcome; it can be by necessary implication from the totality of the trial judge’s reasons for judgment.

8. That was one of the major thrusts of the decision of the plurality of the Full Court in Bevan & Bevan (2013) FLC 93-545. The plurality also rejected the notions that s 79(2) forms a threshold issue or that the separate requirements of s 79 must be dealt with in a particular order.

9. Thus, where, as in this case, there is no express finding by the trial judge that it is just and equitable to make orders altering property interests, the question becomes, can it be implied from the totality of the reasons that the trial judge has considered this to the extent necessary, depending always on the facts and circumstances of the case.  For example, as the plurality said in Bevan (at [82]), the separate s 79(2) issue will, “… in many cases … [be] … effectively answered in the affirmative by the way the parties present their cases.” However, although that will truncate a trial judge’s consideration of the sub-section, it does not render the trial judge’s obligation to decide for him or herself that it is just and equitable to make the orders proposed.

10. Plainly, these issues must be the focus of my consideration of this ground of appeal.

11. As to how the parties presented their respective cases, they each contended for an order to be made pursuant to s 79. Neither party raised any issue before his Honour in respect of s 79(2). Thus, implicitly, each party must have conceded that the making of orders pursuant to s 79 was just and equitable, and each party must be taken to have known that the orders sought could not be made unless that was so. There was no contrary submission by either party.

12. Those circumstances lessened the need for the trial judge’s express consideration of s 79(2), but as I have said, they do not relieve the trial judge of the obligation to decide for himself that the orders proposed are just and equitable.

13. Can it then be said that his Honour has so decided here? Certainly, his Honour was aware that each party sought orders pursuant to s 79 because he identified the husband’s Amended Initiating Application filed on 20 June 2012, and the wife’s Amended Response filed on 7 April 2011 as being before him (at [5]). His Honour also effectively satisfied the first fundamental requirement specified by the plurality in Stanford, namely, by identifying the assets of the parties and who owned each of them (at [300]). His Honour then discretely assessed the respective contributions of each of the parties and the relevant s 75(2) factors. Significantly, his Honour then turned to consider the issue of “Justice and equity”, and it is necessary to set out in full what his Honour said under this heading:

    Justice and equity

    333.There is some real doubt, following the High Court’s decision in Stanford v Stanford, as to whether there remains (or ever was) a clear and separate fourth step requiring the Court to step back from the findings made as to the pool, contribution and section 75(2) adjustments and determining whether such factors are just and equitable.

    334.I am satisfied that no such fourth step exists but, for the purpose of abundant caution, I propose to examine the arrangements which I would propose to order and which would result in a 65%/35% division of the total pool in favour of Ms [Hearne].

    335.Mr [Hearne] has purported, by his Application, to seek a superannuation splitting order. However, no submission has been put in support of that particular order and, in any event, no evidence of procedural fairness afforded to the Trustee of the fund which would be effected by the order is before the Court.  Thus I am not satisfied that such an order could be made and thus superannuation will need to remain in specie (and noting that Mr [Hearne] does not have superannuation and is not required to make contributions as a self-employed sole trader).

    336.There is potentially some injustice in the retention by Ms [Hearne] of all superannuation funds (and notwithstanding that some portion of those funds, substantial or otherwise, was accumulated prior to the relationship). However, absent procedural fairness to the Trustee or more specific evidence or submissions, I do not consider that I am in a position to make any such order and must divide tangible assets which can be realised if necessary.

    337.Overall I am satisfied that the percentage adjustment proposed is an adequate reflection of the contributions made by the parties at various points of time and including an adjustment with respect to initial contribution and the peculiar arrangements which pertained within the relationship for the children’s care at least between [A’s] birth and 2003/2004.

    338.As regards the structure of settlement, I note that the asset pool presently identified (with all assets being held in the name of either Mr or Ms [Hearne] and no asset in joint names) is held as to 70% of assets by Ms [Hearne] and 30% by Mr [Hearne].

    339.To achieve a 5% adjustment (so that Ms [Hearne] remains 65% and Mr [Hearne] 35% of that pool) a payment of $53,824 is required.

    340.The clearest available means for this to occur is by a transfer of shares from the [Bank] shareholding. On the basis of the value of shares used for the purpose of calculating the pool this would equate to around 760 shares and thus I propose to make an order which requires that this number of shares be transferred by Ms [Hearne] to Mr [Hearne] and with the consequence that Ms [Hearne] will retain 2,000 [Bank] shares and Mr [Hearne] will receive 760. This would then achieve the percentage division that is proposed.

    341.Counsel for Ms [Hearne] had submitted that there is potentially some benefit of orders being made which allowed assets to remain “where they presently lie” and I am satisfied that this is the best means by which same can be achieved.

14. I consider that, albeit nowhere expressly making the necessary finding, when his Honour’s reasons are taken as a whole, it can still be seen that his Honour was satisfied that the proposed orders were just and equitable in the sense emphasised by the plurality in Stanford.  Thus, this ground cannot succeed.

15. However, even if there may be some doubt about that, there are other considerations here which render this ground of appeal without merit.

16. First, it was not the husband’s case before the trial judge that it was not just and equitable to alter property interests.  Indeed, as identified above, the husband, as much as the wife, was seeking from his Honour an order for property settlement altering the interests of the parties.  Thus, can this point be raised on appeal?

17. It is beyond doubt that a party is generally bound on appeal by the case argued below (Metwally v University of Wollongong (No. 2) (1985) 60 ALR 68), with the exception being if the point agitated on appeal is a pure question of law (Waterboard v Moustakas (1988) 180 CLR 491 at 497). It can be argued that the issue raised here is a question of law, but as the authorities also recognise, where that question is one that, if it had been raised below further relevant evidence might have been tendered for example, or more specifically, if it is a matter that is one peculiarly for the trial judge, and the trial judge should have been given the opportunity to address it as part of the husband’s case, then it will still be too late to raise on appeal (Suttor v Gundowda Pty Ltd (1950) 81 CLR 418). For example, in Metwally, the appellant’s counsel was prevented from arguing on appeal that the Racial Discrimination Act 1975 was unconstitutional, where his argument at first instance had proceeded upon the premise that the Act was valid. That of course has striking similarities to the argument in this case.

18. Secondly, I consider that to seek to raise this issue is an abuse of process.  As already identified, it was not the husband’s case at trial that it was not just and equitable for the trial judge to make an order altering the property interests of the parties, and if the appeal is successful, and the property settlement proceedings are remitted to the Federal Circuit Court of Australia for rehearing, the husband does not intend to argue before the new trial judge that it is not just and equitable for that trial judge to make an order altering the property interests of the parties; indeed, the husband will seek that such an order be made.  Thus, it does not behove the husband’s solicitor advocate on behalf of the husband to seek to pursue Ground 1 in the way that he has.  This is not an academic exercise, but a process that is costly for all concerned, and directly affects the rights of the parties.

19. For all of those reasons I find that Ground 1 has no merit.

Ground 2

1. This ground can be dealt with shortly.  It was his Honour’s decision to transfer 760 of the wife’s Bank shares to the husband to achieve the result that his Honour arrived at.  It was not the husband’s case that he receive those shares; he sought a payment of $100,000 from the wife.  Thus, his Honour has plainly erred in failing to consider the issue of capital gains tax when making the order, or at the very least, in failing to raise with counsel the order that he had in mind so that issues such as the imposition as capital gains tax could have been raised.

2. However, I consider the error by his Honour to be de minimus given that the quantum of potential capital gains tax must be modest and not requiring of appellate interference.

3. I also observe that capital gains tax would only be payable if the husband sold the shares, yet he is not obliged to do that; it will not only be up to him whether he retains the shares, but also the timing of any sale to minimise any capital gains tax, or to offset it with a capital gain.

4. In these circumstances I find no merit in this ground of appeal.

Ground 3

1. This ground attacks his Honour’s overall assessment of the respective contributions of the parties at 65 per cent / 35 per cent in favour of the wife on the basis that his Honour erred in his assessment of the initial contributions of the parties.

2. As can be seen, it is suggested that the disparity in the overall assessment arose because of his Honour’s assessment of the initial contributions of the parties.  Certainly, his Honour found at [315] that “an adjustment can and should be made with respect to the initial contribution of [the wife]”, but his Honour did not quantify that adjustment, correctly, in our view, saying that “[t]he extent of the adjustment cannot be quantified until all other contributions are assessed” (at [316]). 

3. His Honour’s uncontroversial approach to the assessment of contributions was to identify the respective initial contributions of the parties, then identify the respective contributions during the relationship, and finally identify the respective post-separation contributions.  His Honour then made his overall findings as to the contributions of the parties as follows:

   323.Overall, I am satisfied that:

   a)The initial contributions of Ms [Hearne] are significant;

   b)The period of the relationship (1996 to 2010 and with the possibility of a period of up to four years but in all probability a lesser period of separation occurring between 2005 and 2009) is a not insubstantial relationship;

   c)The arrangements made by the parties for their own care and that of the children during the relationship are such that I am satisfied that Ms [Hearne’s] contributions would, during the relationship, slightly outweigh those of Mr [Hearne];

   d)Post separation I am satisfied that each of the parties has made a substantial and significant contribution, has been re-establishing themselves in difficult circumstances and thus that no further adjustment would be warranted.

   324.Overall, I am satisfied that contributions should  be assessed, having regard to the above matters, as 65% in favour of Ms [Hearne] and 35% in favour of Mr [Hearne].

4. Thus, it can be seen that it was not only the more “significant” initial contributions of the wife which resulted in his Honour’s overall assessment, but it was also her “slightly” greater contributions during the relationship.  At least to that extent the ground of appeal is flawed.

1. It is further suggested in the ground of appeal that “his Honour failed to explain how such a modest differential in initial contribution, both in relation to the superannuation and non-superannuation assets, could result in such a major disparity in the assessment of contributions”; in other words, a complaint of a lack of adequate reasons.

2. I reject this claim and consider that his Honour’s reasons were adequate.  However, before I take this any further, I need to address a complaint which was raised for the first time in written submissions before us, and which was not the subject of this or any other ground of appeal. 

3. The wife worked for the Bank for 10 years prior to the commencement of cohabitation, and after a further eight years of service during the relationship, she received a redundancy payment of $110,000.  His Honour took that period of service prior to the commencement of cohabitation into account when assessing the wife’s initial contributions (at [312]). 

4. The husband submits that his Honour made an error of law in treating this service as an initial contribution to the redundancy payment.  The basis of this submission can best be understood by reference to paragraphs 44 and 45 of the husband’s written submissions, as follows:

   44.Accumulated service with an employer represents at most a potential financial resource in the sense that it might lead to a redundancy payment (Burke and Burke (1993) FLC 92-356, per Fogarty J). It does not become property under s.79 unless and until the condition for its payment arises (Burke and Burke at 79,763).  Prior to the condition arising, it is not a chose in action of any kind, for as Fogarty J explained in Burke and Burke at 79,763, “until an offer of redundancy is made and accepted, no chose-in-action arises and the entitlement is not property of the parties within s.79”. Had the Wife left the [Bank] immediately prior to marrying the husband, then that so called initial contribution of her service with the bank would have had no value.

   45.It follows that his Honour was incorrect to describe this as an asset or resource (para 312). Until the right to a redundancy payment crystallised through offer and acceptance, it was neither. Nothing in the Family Law Act authorises the Court to take account of a potential financial resource. The will of a living person who has the mental capacity to change his or her will could be said to be a potential financial resource of a legatee under that will; but it is not taken into account under s.79. The redundancy payment was a payment received in the course of the marriage as a consequence of employment during the marriage. It should be seen as a normal contribution of income during the marriage because a major purpose of a redundancy payment is to compensate the person for loss of future income.  The redundancy payment should be treated in family law terms then as a contribution to the marriage partnership of income earned from employment during the marriage partnership, not as (even partially) an initial contribution.

5. However, in my view this submission is misguided, and does not demonstrate error by the trial judge. 

6. There is no doubt that when a trial judge comes to identify the property of the parties, accumulated service cannot be treated as an item of property, but, that is not what the trial judge is doing here.  He is assessing the initial contributions of the parties which can comprise items of property such as real estate or chattels or bank accounts, but which are not limited to items such as that.  Relevant contributions can equally be the bringing of benefits by a party to the relationship, and those benefits need not be crystallised as at the commencement of cohabitation.  Thus, it was quite open to his Honour here, and indeed it has been a common occurrence throughout the entire operation of the Family Law Act 1975 (Cth) for accumulated service, which ultimately leads to a redundancy payment, to be taken into account as an initial contribution of a party. The only rider to this is that “double dipping” cannot occur, namely, in this instance by also taking into account the pre-cohabitation service when assessing the receipt of the actual redundancy payment subsequently.

7. True it is that his Honour commenced the relevant paragraph of his reasons for judgment by referring to “assets and resources”, but it cannot be taken that his Honour was thereby suggesting that the wife’s accumulated service was property.  Thus, albeit this challenge was not properly before us, nevertheless, I find that it has no merit.

8. To return to the challenge of the adequacy of his Honour’s reasons.

9. It is claimed by the husband that there was in fact a “modest differential in the initial contributions” of the parties, and his Honour has given no explanation for how that translates into a major percentage difference.  However, it is simply not correct to suggest that there is a “modest differential”.  In terms of cash, the husband introduced $10,000 and the wife $50,000, and I consider that alone to be significant.  Separate to that though, the wife had also accumulated superannuation, and accumulated service at the bank, as well as having 935 Bank shares, when all the husband brought into the relationship in addition to his cash was equity of $2,000 in a motor vehicle.

10. His Honour also took into account an entitlement of the wife to a discounted staff interest rate, but this is the subject of Ground 4 and I will leave any discussion about this until I address that ground.

11. Plainly, on any view of these respective contributions, it was open to his Honour to find that the wife’s initial contributions were significant and justified an adjustment in the wife’s favour for the reasons set out at [315].

12. In his written submissions, the husband’s solicitor advocate on behalf of the husband suggests that “the longer a marriage lasts the more that initial contributions erode over time”, citing the Full Court decision in Crawford & Crawford (1979) FLC 90-647 and Lee Steere & Lee Steere (1985) FLC 91-626. In this regard, the husband’ solicitor advocate appears to be suggesting that where, as here, the marriage lasted 14 years, then the effect of other contributions over that period will be to erode the significance of the initial contributions. However, I consider that once again this submission of the husband’s solicitor advocate is misguided. The approach of a trial judge should be to identify the respective contributions of the parties including their initial contributions, their contributions during the relationship, and their contributions post-separation, and to attach appropriate weight to all of those contributions in arriving at an overall assessment of the respective contributions of the parties, usually in percentage terms. It has long been held by the Full Court that it is not “a matter of erosion of contributions but a question of what weight is to be attached” to the various contributions (Pierce & Pierce (1999) FLC 92-844 at [28]). In this case his Honour clearly recognised that in [314].

13. Next, in his written submissions, the husband’s solicitor advocate suggested that error by the trial judge in the exercise of his discretion could be demonstrated by comparing the value of the initial contributions with the value of the “eventual pool of net property”, or by calculating “what value the introduced assets had as a proportion of the value of the property at the end of the marriage”, for example by calculating the present value of the shares and other assets brought in by the wife, then calculating what the result would be of returning that value to the wife and dividing the remainder of the net asset pool equally between the parties.

14. However, once again, this is a completely misguided submission by the husband’s solicitor advocate.  This court has traditionally eschewed utilising a mathematical or accounting approach to the assessment of contributions (Zalewski & Zalewski (2005) FLC 93-241 at [165]; Clives & Clives (2008) FLC 93-385 at [41]), and thus, it is not open to look to apply such an approach in attempting to demonstrate error by a trial judge. The process required of the trial judge is to exercise a broad discretion, not to carry out a mathematical exercise. Indeed, in relation to the specific proposition put by the husband’s solicitor advocate, I need do no more than refer to the Full Court decision in White & White (1982) FLC 91-246, where the Full Court held that it is not open to carry forward an original contribution as a mathematical proportion.

15. His Honour of course, after identifying all of the contributions of the parties, assessed the same at 65 per cent / 35 per cent in favour of the wife.  How his Honour translated his assessment of the contributions into that percentage division is certainly not spelt out expressly in his Honour’s reasons, but that is not unusual given the recognised difficulty in doing so.  For example, Coleman J said this in Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234]:

    Given that the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion, whether it be in the assessment of contributions in the matrimonial cause, assessment of damages in a personal injuries case, or determination of compensation in a land resumption case. In some cases, the “leap” is so great, and so unheralded by the discussion which precedes it as to render the reasoning process defective. In this Court’s view this is not such a case.

16. Here, his Honour has clearly laid the groundwork for his “leap” from words to figures, and I am not persuaded that his Honour’s reasons in that regard are inadequate.  Indeed, what Coleman J said in Steinbrenner at [236] is equally as apt here, namely:

    With respect to learned Counsel for the husband, what more his Honour could constructively have added to his Reasons for Judgment is difficult to imagine. Whether or not such conclusion was reasonably open to him, the learned Federal Magistrate adequately “spelt out” why he concluded as he did. The reader is not in any real doubt as to why the wife’s contributions were assessed as they were. The Court is not persuaded that the learned Federal Magistrate’s Reasons for Judgment were inadequate.

17. Accordingly, I find no merit in Ground 3.

Ground 4

1. This is a similar challenge to one of the initial contributions of the wife taken into account by his Honour, as the challenge addressed above, to his Honour taking into account the accumulated service of the wife with the bank pre-cohabitation.  I consider that the husband has made the same error in relation to this challenge as he did in relation to the other challenge, and I do not need to repeat what I have said about that.  Thus, I find no merit in this ground of appeal.

Conclusion

1. Given that I have found no merit in any of the grounds of appeal, the appeal must be dismissed.

Costs

1. The wife of course did not appear at the hearing, and thus, I have no costs application from her consequent upon my proposed dismissal of the appeal. However, I observe that the wife did not file any documents, and she appeared at the directions hearing without legal representation. Thus, I proceed on the basis that she would not have any legal costs or disbursements to claim. Of course, if I am mistaken about that, pursuant to r 22.53 of the Family Law Rules 2004 (Cth), the wife is able to make an application for costs, if appropriate, within the next 28 days.

Ryan J

1. I agree with Strickland J that the appeal should be dismissed and his analysis of the challenges raised in the grounds of appeal.

Austin J

1. I agree with the order to dismiss the appeal proposed by Strickland J, but not with all of the reasons given for that outcome.

2. First, I wish to add weight to the rejection of Ground 1. The totality of the trial judge’s reasons, in the context of how the litigation was contested, inferentially reveals his Honour resolved the inquiry posited by s 79(2) of the Act. Even if that were not so, the husband should not now be able to press this ground of appeal.

3. At trial, the husband contended for the exercise of power under s 79 of the Act, which entailed implicit, if not explicit, acceptance that it would be just and equitable to do so. Now, in an attempt to succeed in the appeal, the husband asserts the trial judge fell into error by not making any preliminary finding that it was just and equitable to exercise the power urged upon him. If successful with such submission, upon remittal and re-trial, the husband freely admits he would again contend for property settlement orders to be made, on the basis that adjustment of the parties’ property interests is just and equitable. In such circumstances, the husband’s prosecution of the ground of appeal amounts to an abuse of process.

4. This Court has power to make orders that prevent an abuse of its process and protect its own functions (see Williams v Spautz (1992) 174 CLR 509 at 518). What amounts to abuse of court process is insusceptible of a formulation comprising closed categories (see Batistatos v Roads & Traffic Authority (NSW) (2006) 226 CLR 256 at 265), however, one established category is where the use of the court’s procedures would bring the administration of justice into disrepute (see Batistatos at 267; Rogers v The Queen (1994) 181 CLR 251 at 286). The abuse of the court’s process may be apparent, not just from the institution or prosecution of the proceedings, but from procedural steps taken in the litigation, in which case the power to deal with the procedural abuse extends to the exclusion of the particular vexatious issue from the litigation (see Batistatos at 267).

5. It would certainly bring the administration of justice into disrepute if the husband was permitted to argue one thing at trial, take a conveniently contradictory position merely to sustain an appeal, and then revert to his initial position upon re-trial.  He should not be permitted to do so.  Litigation is serious; not a game.

6. My disagreement relates to the treatment of Ground 2, in relation to which Strickland J found the trial judge erred, albeit not in a manner that required appellate interference.  I do not agree the trial judge erred in ordering the wife to transfer a tranche of her shares in a public corporation to the husband without taking into account the capital gains tax implications.

7. Both parties proposed that they retain their existing property interests and receive a cash payment from the other by way of property adjustment.  The parties did not have any large sums of cash, so their respective proposals necessarily entailed the sale or encumbrance of a valuable asset.  The trial judge ultimately concluded the just division of the parties’ property interests required the husband’s receipt of extra property worth $53,824.

8. It was not suggested the trial judge was in error to conclude (at [340]) that “the clearest available means” to achieve the adjustment of $53,824 to the husband was by transferring to him some of the wife’s shares to that value.  Given the earlier findings about the parties’ existing property interests (at [300]), the shares were indeed the most obvious source of the property adjustment between the parties.  The only other asset of significance owned by the wife was her home, which both parties proposed she retain, and the trial judge found it was not amenable to encumbrance (at [375(c)]).

9. Importantly, in the exercise of power under Part VIII of the Act, the trial judge was obliged to adjust the parties’ interests in property. The husband may have preferred to receive cash, but there was nothing overtly wrong with ordering the wife to transfer to the husband some of her shareholding, which was property, in specie.  The order achieved an adjustment of the parties’ rights, title, and interest in property in a way that satisfied the statutory imperative to sever their financial interests.  The order did not require either party to incur capital gains tax, but both will probably now do so if they later choose to sell the shares they each now retain.

10. What could the trial judge have otherwise done?  If he ordered the wife to sell shares and pay the cash proceeds to the husband it would have crystallised a capital gains tax liability for the wife and she would then have received less than her proper entitlement.  The trial judge could not have ordered the wife to transfer an arbitrarily greater proportion of her shares to the husband to take account of a prospective tax liability because the quantum of his potential capital gains tax on subsequent sale of the shares was impossible to predict.  In any event, the transfer of even more shares to the husband would again have unfairly reduced the wife’s share of the parties’ property.

11. The wife took into the marriage about one-third of the shares and the remainder were acquired during the marriage so, for the purpose of calculating any future capital gains tax upon sale, the shares have different cost bases.  The order required the wife to transfer to the husband about one-third of the shares, which enabled her to choose to transfer to the husband those shares with the lowest cost base and the propensity to attract more capital gains tax, but that aspect of the order was of such little significance it can be disregarded.

12. It might have been better had the trial judge raised the idea of the share transfer so the parties could both be heard about it, but his failure to do so did not render the process procedurally unfair, because the order treats them both equivalently.  The concept of procedural fairness is not binary: either unfair or not.  The distinction is not so stark.  The conduct of judicial proceedings may occur in a manner that falls along a continuum, the polar opposites of which are assiduous fairness and egregious unfairness.  At some point along the continuum it must be difficult to discern whether or not the process was sufficiently unfair to one of the parties that the integrity of the process was ruptured.  That is why, despite procedural fairness being an essential characteristic of any judicial proceeding, “not every departure from the rules of natural justice at a trial will entitle the aggrieved party to a new trial” (see Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145).

13. Finally, I express concurrence with the reasons given by Strickland J in respect of Ground 3.  The husband attacked the trial judge’s assessment of his overall entitlement to only 35 per cent of the parties’ property interests, but the attack was baseless when compared to his submissions at trial.

14. The husband contended for the trial judge’s assessment of equal contributions by the parties, but conceded it was open for the trial judge to find the wife’s entitlement was greater and quantifiable at 60 per cent.  He additionally contended there should be no further adjustment to the parties’ contribution-based entitlements.  The orders ultimately resulted in the wife’s receipt of 65 per cent of their property interests: only 5 per cent more than the husband admitted.

15. Given the husband’s concession that it was open for the trial judge to find the wife’s contributions exceeded his by half, it was hollow for him to complain on appeal about a “very modest” differential in their contributions and a “major disparity” in their eventual entitlements.

16. The wife vacillated about the assessment of her entitlement, but ultimately settled on 67.5 per cent, and she submitted for an additional adjustment on account of future needs of not less than 5 per cent, making for a total entitlement of 72.5 per cent.  The trial judge’s determination of the wife’s entitlement to 65 per cent of the property fell between and was closer to the husband’s concession than it was to the wife’s proposal.  The 5 per cent differential between the husband’s concession and the ultimate result could not, therefore, be characterised as manifestly unjust or without “reasonable basis”.

I certify that the preceding One Hundred and Twenty Eight (128) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ryan & Austin JJ) delivered on 16 September 2015.

Associate: 

Date:  16 September 2015