HORRIGAN & JENNINGS
[2018] FamCAFC 206
•2 November 2018
FAMILY COURT OF AUSTRALIA
| HORRIGAN & JENNINGS | [2018] FamCAFC 206 |
| FAMILY LAW – APPEAL – PROPERTY – Where the parties were in a long standing de facto relationship – Where the parties had entered into consent orders in 2011 – Where the consent orders had been fully implemented – Whether dismissal of an application for property settlement constitutes an order under s 90SM of the Family Law Act 1975 (Cth) – Whether the primary judge erred by not considering the s 90SM(4) factors in dismissing an application for property settlement – Adequacy of reasons – Appeal dismissed. FAMILY LAW – APPEAL – COSTS – Where the appellant has been wholly unsuccessful – Application for costs granted. |
| Family Law Act 1975 (Cth) ss 4AA, 79, 90SM Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) ss 2, 86, 86A |
| Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116 Chapman & Chapman (2014) FLC 93-592; [2014] FamCAFC 91 Lenova & Lenova (2011) FLC 93-467; [2011] FamCAFC 114 Mullane v Mullane (1983) 158 CLR 436; [1983] HCA 4 Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52 Tallant & Tallant (2017) FLC 93-789; [2017] FamCAFC 115 |
| APPELLANT: | Ms Horrigan |
| RESPONDENT: | Mr Jennings |
| FILE NUMBER: | NCC | 3264 | of | 2012 |
| APPEAL NUMBER: | EA | 14 | of | 2018 |
| DATE DELIVERED: | 2 November 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ainslie-Wallace, Ryan & Austin JJ |
| HEARING DATE: | 11 July 2018 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 21 December 2017 |
| LOWER COURT MNC: | [2017] FamCA 1084 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Eldershaw |
| SOLICITOR FOR THE APPELLANT: | Byrnes Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms Beck |
| SOLICITOR FOR THE RESPONDENT: | Smallwoods Lawyers |
Orders
The appeal against the orders of Cleary J made on 21 December 2017 is dismissed.
The appellant pay the respondent’s costs of and incidental to the appeal in the sum of $10,000 with such sum to be paid within 28 days of the date of these orders.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Horrigan & Jennings has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 14 of 2018
File Number: NCC 3264 of 2012
| Ms Horrigan |
Appellant
and
| Mr Jennings |
Respondent
REASONS FOR JUDGMENT
Ms Horrigan (“the appellant”) appeals against orders made by
Cleary J on 21 December 2017. The proceedings between the parties concerned property settlement orders pursuant to s 90SM(3) of the Family Law Act 1975 (Cth) (“the Act”) as between the appellant and her former partner, Mr Jennings (“the respondent”). The primary judge determined that it was not just and equitable to make any order for property adjustment as between the parties and dismissed the appellant’s application for property settlement. The appeal challenges her Honour’s application of s 90SM of the Act.
In order to give context and understanding to the issues raised on appeal, it is necessary to set out some of the procedural history and uncontested factual matters as between the parties.
The parties commenced a de facto relationship in 1987 however, the date on which that relationship came to an end was something of a moveable feast.
This Court is seized of jurisdiction in respect of property proceedings between parties to a de facto relationship if there was a de facto relationship which finally broke down after 1 March 2009. While ancillary legislation provided for parties to a de facto relationship to “opt in” in the sense of agreeing to the application of the Act to their relationship notwithstanding that the relationship finally broke down before that date, that was not the case here. Thus for all relevant purposes, the Court only had jurisdiction to make property settlement orders as between the appellant and respondent if their relationship finally broke down after 1 March 2009 (see s 4AA of the Act; ss 2, 86 and 86A of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth)).
In September 2010 the respondent filed an application seeking orders for adjustment of property as between him and the appellant. In that application the respondent asserted April 2009 as being the date on which the de facto relationship finally broke down. The appellant responded to that application in December 2010 seeking different property orders and contesting the date of separation, asserting that the relationship finally broke down on 22 July 2002.
The parties were directed to a Court based conciliation conference and there they agreed on orders to be made which effected an adjustment of their then existing property and other interests. Eventually consent orders were prepared reflecting that agreement and the matter came before a Registrar of the Court to make the orders. In the course of that hearing the Registrar was told that the parties agreed to the orders but the appellant contested the date of final separation. Nonetheless the orders were made in March 2011. The orders included a provision for the sale of a property jointly owned by the parties and the distribution of the proceeds.
It was agreed before the primary judge that the effect of those orders was that the property that then existed as between the parties was divided as to 59 per cent to the appellant and 41 per cent to the respondent. It was also agreed that those orders have been fully implemented.
In December 2012 the appellant brought an application seeking to set aside the orders made in March 2011 and seeking an order that the respondent pay to her $375,000.
The respondent replied seeking orders that the application be summarily dismissed. He also sought a separate hearing on the question of whether the Family Court had jurisdiction to entertain the application and further sought an order that in the event that the Court determined it had jurisdiction, that there be a separate hearing as to the appellant’s contention that there was a miscarriage of justice in the entry of the March 2011 orders. At this time the appellant was still contending that the de facto relationship finally broke down in July 2002.
Ultimately the primary judge conducted a hearing on the question of the Court’s jurisdiction to make the March 2011 orders. On 8 October 2015 the primary judge, not being satisfied that the parties’ relationship finally broke down after the relevant date, found that the Court lacked the necessary jurisdiction to make the consent orders in March 2011 and her Honour set the orders aside. She adjourned the proceedings to enable the parties to consider their respective positions.
In August 2016 the appellant further amended the orders she sought namely that the respondent pay her $300,000. At that time she was still asserting that the date of final breakdown of the relationship was July 2002.
However, in around August/September 2016, the appellant conceded that the de facto relationship as between her and the respondent finally broke down after 1 March 2009. The parties agreed that the Court thus had the necessary jurisdiction to determine the appellant’s application for a further adjustment of property. To that end the primary judge directed the parties to file and serve the evidence on which they wished to rely in relation to the application and to file financial statements. Her Honour’s directions to that effect further contained a notation that the parties agreed that the “preliminary issue” would be heard first. The clear implication from her Honour’s reasons and her orders was that she would, if she concluded that it was just and equitable to make an order for property adjustment, later hear and determine what order should be made.
The hearing of the issue of whether it was just and equitable to make any order was conducted by the primary judge on 18 April 2017. At the hearing before her Honour the parties’ positions were that the appellant sought an order that the respondent pay to her a sum of $300,000. The respondent sought an order that the appellant’s application be dismissed on the basis that it would not be just and equitable for the Court to make any order for property settlement as between the parties.
Thus the focus of her Honour’s judgment was the application of s 90SM(3) of the Act.
Her Honour determined that it was not just and equitable to make orders for property adjustment as between the parties finding that there “is no principled reason to adjust the interests of the parties in the assets and liabilities they each currently hold” (at [110]).
The appeal
Section 90SM of the Act is in the following terms:
Alteration of property interests
(1)In property settlement proceedings after the breakdown of a de facto relationship, the court may make such order as it considers appropriate:
(a) in the case of proceedings with respect to the property of the parties to the de facto relationship or either of them-altering the interests of the parties to the de facto relationship in the property; or
(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the de facto relationship-altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c) an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the de facto relationship; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the de facto relationship or a child of the de facto relationship, such settlement or transfer of property as the court determines.
…
(3) The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a) the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last‑mentioned property;
whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last‑mentioned property;
whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them; and
(c) the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent; and
(d) the effect of any proposed order upon the earning capacity of either party to the de facto relationship; and
(e) the matters referred to in subsection 90SF(3) so far as they are relevant; and
(f) any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship; and
(g) any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
…
Error in the application of s 90SM(3) of the Act
The appeal contends that the primary judge erred in determining pursuant to
s 90SM(3) that it was not just and equitable to make an order for property adjustment as between the parties.
Because the parties had been in a de facto relationship, the operative provisions in the Act are in s 90SM, however for all relevant purposes, the provisions of
ss 90SM(1), (3) and (4) mirror ss 79(1), (2) and (4) of the Act and in this case there is no relevant difference in the authorities or principles to be applied as between ss 90SM and 79.
The articulation of this ground commenced with the contention that the order of the primary judge dismissing the application was an order in property settlement proceedings made pursuant to s 90SM(1) and therefore that by making an order in property settlement proceedings, the primary judge had, per force applied s 90SM(3) and determined that it was not just and equitable for an order to be made. In so deciding her Honour was required to give proper consideration to the relevant matters in s 90SM(4). It was argued that patently her Honour had not considered those relevant matters and her order was affected by this error.
Dealing first with the contention that the order dismissing the application was a property order. No authority was cited to support that foundational proposition and thus leave was given to both parties to deliver a further submission citing any relevant authority.
Counsel for the respondent referred the Court to Mullane v Mullane (1983) 158 CLR 436. That case concerned the question of whether an order granting a party exclusive occupancy of a home was a property settlement order or whether it bore some other characteristic such as whether it was an order for the maintenance of a party pursuant to s 74 or whether it was an injunction made pursuant to s 114 of the Act.
After noting that once a property order has been made there is limited jurisdiction by which to set it aside, namely s 79A, the plurality of the High Court then said at 443 to 444:
The Family Law Act, however, introduces an important distinction between orders altering interests in property and other orders. Each category has its specific provision authorising discharge or variation of an order of the specified description. … As we have noted, the jurisdiction to vary orders pursuant to s. 79A is very limited indeed.
…
On the other hand, the Family Law Act clearly reveals the intention of the Parliament that if the court, in proceedings with respect to the property of the parties to the marriage or either of them, makes an order “altering the interests of the parties in the property”, and the making of that order has not been attended by any circumstance amounting to a miscarriage of justice, then such order is not open to any review or variation.
The Court continued and said at 445:
In our opinion, therefore, s. 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right.
…
It follows, then, that s. 79 does not authorize a mere modification of a liberty to enjoy property. An order which merely excludes one spouse from the enjoyment of property, albeit for many years, in order to permit its better enjoyment by the other does not alter an interest in that property…
(Citations omitted)
This construction of s 79 was adopted by the Full Court as recently as 2017 (see Tallant & Tallant (2017) FLC 93-789 and Lenova & Lenova (2011) FLC 93-467). It cannot be doubted that it is an essential characteristic of a property settlement order that it effects an alteration of the legal or equitable interests of a party or either of them. An order dismissing an application cannot be so characterised.
The appellant further contended that to make no order is tantamount to making an order for property settlement because it acknowledged that the property of the parties or either of them need not be altered and thus the application would be dismissed. We do not accept that contention.
In Bevan & Bevan (2013) FLC 93-545 (“Bevan”) the plurality (Bryant CJ and Thackray J) said at 87,237:
108.Although we accept that the court’s jurisdiction can be extinguished only when its power is exhausted by the making of final orders or by a binding financial agreement, the proper exercise of the jurisdiction can include the dismissal of an application because it is not just and equitable to make any order. Furthermore, a decision to dismiss can be made for reasons not referable to s 79(4) since, as the High Court said in Stanford at [40] (original emphasis):
To conclude that making an order is “just and equitable” only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down in the Act.
Thus the proper exercise of the jurisdiction can be, as here and as in Bevan and Stanford v Stanford (2012) 247 CLR 108 (“Stanford”), declining to exercise the power pursuant to s 79 or, in this case s 90SM of the Act.
We turn to the second aspect of the appellant’s argument, namely that the primary judge erred in not considering the matters to which s 90SM(4) refers in determining the issue of whether it was just and equitable to make any order for property settlement as between the parties.
It was accepted in argument that in accordance with the decision in Stanford, the primary judge was enjoined to consider the existing legal and equitable interests of the parties in property and then by having regard to those existing interests, determine whether it was just and equitable that any order for property adjustment should be made (Stanford at [37]).
Counsel for the appellant contended in her summary of argument:
3. While the Court must, in determining a financial matter, be satisfied that the orders are just and equitable per s 90SM(3), it is plain in the face of the legislation that it must also apply the principles contained in s 90SM(4). The word “must” is critical in this context as it found in the text of both ss 90SM(3) and (4).
We disagree. There is no “requirement” or obligation to consider the matters to which s 90SM(4) refers in the determination of the issue of whether it is just and equitable that an order be made. So much is clear from Stanford where, after discussing the necessity not to conflate the two considerations, that is the consideration as to whether it is just and equitable that an order be made with the consideration as to what order should be made, the plurality said:
36. The 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. It is not possible to chart its metes and bounds. And while the power given by s 79 is not "to be exercised in accordance with fixed rules", nevertheless, three fundamental propositions must not be obscured.
(Footnotes omitted)
The Court further said:
42. … 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).
Finally the plurality said:
46. As has already been emphasised, nothing in these reasons should be understood as attempting to chart the metes and bounds of what is "just and equitable". Nor is anything that is said in these reasons intended to deny the importance of considering any countervailing factors which may bear upon what, in all the circumstances of the particular case, is just and equitable.
The very issue of whether it is mandatory to consider the matters referred to in
s 79(4) in determining the issue in s 79(2) was addressed by the plurality in Chapman & Chapman (2014) FLC 93-592 (“Chapman”) who said, rejecting the submission that, as part of the s 79(2) consideration a Court was “required” to consider the terms of s 79(4).26. The judgment in Stanford points, in our view, to the opposite conclusion. In particular:
·The “ …range of potentially competing considerations” and the consequent impossibility of charting the “metes and bounds” of what is just and equitable (at [36]);
·The ready satisfaction of the s 79(2) requirement in “many cases” by the fact of separation (at [42]);
·The statement that “it will be just and equitable” to make an order in “many cases” by reason of the “...choice made by one or both of the parties...” to end the marriage (at [42]);
·Equally, the statement that “it will be just and equitable” to make an order “in many cases” because “…there is not and will not thereafter be the common use of property by the husband and wife” (at [42], emphasis in original);
·The reiteration that: “…nothing in these reasons should be understood as attempting to chart the metes and bounds of what is ‘just and equitable’ (at [46]); and,
·The further reiteration that nothing in their Honours’ reasons is “…intended to deny the importance of considering any countervailing factors which may bear upon what, in all the circumstances of the particular case, is just and equitable” (at [46]).
27. Further, and crucially, in “applying s 79 in this case” the Justices of the High Court did not themselves take into account the matters in s 79(4). Indeed [51] of the judgment suggests they eschewed those s 79(4) matters relating to contribution.
The plurality in Stanford referred to the same point referred to in Chapman as follows:
51. Section 79(4)(a)-(c) required that the contributions which the wife made to the marriage should be taken into account in “considering what order (if any) should be made” under s 79. It may readily be assumed that the length of the parties’ marriage directly affected the extent of the contributions the wife had made. But, as already noted, the inquiries required by s 79(4) are separate from the “just and equitable” question presented by s 79(2). The two inquiries are not to be merged. And neither the inquiry whether it would have been just and equitable to make a property settlement order if the wife had not died, nor the separate inquiry whether it was still just and equitable to do so, was to be merged with or supplanted by an inquiry into what division of property should be made by applying the matters listed in s 79(4).
(Emphasis in original)
We agree and therefore reject the contention underpinning these submissions that her Honour was required to consider the matters contained within s 79(4) in coming to her determination of whether, in all of the circumstances it was just and equitable to make an order for adjustment of property. Not only was her Honour not required to consider the matters referred to in s 90SM(4) but was entitled to take into account other “countervailing” circumstances in her consideration of whether it was just and equitable to make an order for property adjustment.
Thus this ground is unable to be sustained.
Insufficient reasons
Turning then to the challenge in this ground, in something of a bootstraps argument, the appellant contended that since the primary judge was required to consider the matters contained within s 90SM(4) and, it was argued, made no reference to any of those matters, a fortiori she failed to give sufficient reasons for her decision to make no order.
It is then useful to commence a discussion of this ground by exposing the matters to which the primary judge referred in coming to her decision.
It is clear that her Honour’s principal focus was that in 2011 the parties, having already voluntarily severed their relationships and having consensually adjusted their then existing interests in property, implemented their agreement. She took into account that from 2011 the parties had what they believed to be valid orders effecting an adjustment of their interests and acted on them in the clear expectation that each was entitled to do so (at [106]).
Her Honour’s reasons note that in 2011 the husband entered into a relationship and, using the funds he received from the adjustment of the property, purchased a property with his then partner. When that relationship ended in 2013, he and that partner entered into orders which effected a division of their property including the sale and division of proceeds of the property purchased between them using the proceeds from the sale of the property with the appellant. Further, her Honour noted from [44] - [46] that using the proceeds from that last sale, the respondent purchased his present accommodation.
Her Honour concluded at [97] that the husband had intermingled his finances with those of his subsequent partners.
Her Honour was criticised in the appellant’s submissions for observing that for many years both before and after the making of the March 2011 orders, the appellant maintained that separation took place in 2002 (with the clear effect that the Family Court had no jurisdiction to make any orders for property adjustment as between the parties). It was argued in submissions by the appellant that adherence to that date of separation “could not be used against [the appellant]” in her Honour’s determination. To the extent that it was submitted that her Honour had “used it against” the appellant, we reject it.
However, in the years after the March 2011 orders were made, the appellant sought the exercise of the Court’s jurisdiction in making further property orders while at the same time asserting a date of separation before March 2009 (at [49] – [50]). In October 2015 the Court determined that it had no jurisdiction based on the appellant’s contention as to the date of separation, and set aside the property orders. Notwithstanding what one might regard as the clearest indication that the Court lacked the necessary jurisdiction, the appellant filed an application on 5 August 2016 seeking further property orders. Some days or weeks later, the appellant conceded the date of separation was after March 2009 and thus the jurisdiction of the Court was engaged. Her Honour took into account the delay in resolution of the issue by reason of the appellant’s contention about the date of final breakdown of the relationship when considering the justice and equity of making an order. Delay of the magnitude of six years, even in circumstances where applications (albeit ostensibly without any jurisdictional basis to bring them) were being filed in the Court. All the while the respondent was altering his financial position with his partners, intermingling his funds with theirs, and, ultimately purchasing the property in which he now lives. Clearly the consequences of that delay were relevant to her Honour’s consideration.
Her Honour had before her the parties’ evidence as to their present financial and other circumstances. Counsel for the appellant addressed the primary judge on the financial position of the parties and drew her Honour’s attention to matters contained in the respondent’s affidavit as to how he used the funds resulting from the agreement with the appellant (see Transcript of proceedings of 18 April 2017 at page 33, beginning at line 32).
The primary judge made unchallenged findings that the circumstances of each party had changed since the March 2011 orders were made. She found that those of the respondent had not improved, finding that he was earning less than he was at the time orders were made, and further he suffered from ill health. On the other hand, the primary judge found that the appellant’s circumstances had improved both in terms of her income and in relation to her net assets.
Her Honour’s reasons for her determination are plain as the above summary demonstrates and we do not accept the argument that she furnished insufficient reasons.
During the appeal hearing counsel for the appellant agreed that, in effect, this challenge rested on the acceptance of the earlier ground, namely her Honour’s asserted error in determining the issue of s 90SM(3) and the obligation to take into account the relevant matters in s 90SM(4).
As we have already said, the submission that there is a requirement to consider the matters in s 90SM(4) and evaluate them in the determination of the
s 90SM(3) issue is misconceived. Clearly then, no error in reasoning can rest in the primary judge not referring to those matters and this challenge is not made out.
Although the appellant asserted a third ground of appeal, it was withdrawn during argument.
None of the contended grounds having been made out, the appeal will be therefore dismissed.
COSTS
As usual we took submissions as to costs at the end of the hearing. Counsel for the respondent sought costs of the appeal in the sum of $10,000 in the event that the appeal failed. It has and we are of the view that the sum sought should be ordered.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Ryan & Austin JJ) delivered on 2 November 2018.
Associate:
Date: 2 November 2018
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