Hourd & Hourd - [2011] FamCAFC 177

FAMILY COURT OF AUSTRALIA

HOURD & HOURD

[2011] FamCAFC 177

FAMILY LAW – APPEAL – Property – The wife sought an order that she receive 70 per cent of the net proceeds of the sale of the former matrimonial home instead of the 40.62 per cent as provided by the orders – Where issue was taken with the form of the order and whether the orders reflected the intention of the trial judge – Where consent orders were made after the final orders were delivered to account for the wife’s retention of the wine collection – Where the former matrimonial home was sold for an amount greater than expected – Where it was submitted that the sale of the former matrimonial home at a higher price was not properly considered by the trial judge – Where it was said that the wife should receive an additional $35,647 to give effect to the intention of the trial judge’s orders.

FAMILY LAW – APPEAL – Property – Where the concession made at the trial as to the contributions of the parties being 60:40 in favour of the husband is of some significance and difficult to challenge on appeal – Where his Honour’s approach to the contribution of the parties was appropriate in all of the circumstances – Where an adjustment of 15 per cent was made given the income disparity between the parties and the wife’s capacity to earn income and fulfil her role as the children’s primary carer – Where the financial circumstances of the husband’s partner were also considered – Where there was found to be no double dipping of the husband’s income – Where his Honour was aware of the bonuses received by the husband and the likelihood of receiving bonuses in the future –Where no appealable error has been demonstrated.

FAMILY LAW – APPEAL – Property – Where there was an error in the machinery orders made to achieve the substance of his Honour’s judgment – Where should the error not be corrected the just and equitable order intended would not be achieved – Where there is agreement about the correct figures – Appeal dismissed – Orders adjusted and provision for an additional payment to the wife made.

FAMILY LAW – COSTS – Where costs certificates are not available as the appeal is dismissed – Where the husband seeks an order that the wife pay costs on an indemnity basis, or on a party/party basis – Where the discretion of the trial judge was not re-exercised –Where the orders were amended in the interests of justice to reflect the intention of the trial judge – Where although the wife has had limited success the financial circumstances of the parties would not justify an order for costs being made against the wife – No order as to costs.

Family Law Act 1975 (Cth) s 28(1); s 28(2A); s 75(2); s 79; s 94(2)

DJL v The Central Authority (2000) 201 CLR 226
Johnson v Johnson (2000) FLC 93-051
L.Shaddock & Associates Pty Ltd v Parramatta City Council(No. 2) (1982) 151 CLR 590
Milham v Stanford (2001) FLC 93-073
Murray v Director Family Services ACT (1993) FLC 92-416
Russell v Russell (1999) FLC 92-877

APPELLANT:

Mrs Hourd

RESPONDENT:

Mr Hourd

FILE NUMBER:

137

2009

APPEAL NUMBER:

SYC

6841

2007

DATE DELIVERED:

31 August 2011

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Sydney

JUDGMENT OF:

May, Thackray & Johnston JJ

HEARING DATE:

14 March 2011

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

6 August 2009

LOWER COURT MNC:

[2009] FamCA 711

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Johnston

SOLICITOR FOR THE APPELLANT:

Gells Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Lloyd SC

SOLICITOR FOR THE RESPONDENT:

Newnhams Lawyers

Orders

The appeal is dismissed.
Paragraph 18 of the order made by Rose J on 6 August 2009, as later amended, be further amended by adding the following after sub-paragraph (v):
(vi)And the husband shall pay to the wife the sum of $35,647.
In order to give effect to Order (18) as varied, the husband pay to the wife the sum of $35,647 within three months.
There be no order as to costs.

IT IS NOTED that publication of this judgment under the pseudonym Hourd & Hourd 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 SYDNEY

Appeal Number: SYC 6841 of 2007
File Number: EA 137 of 2009

Mrs Hourd

Appellant

And

Mr Hourd

Respondent

REASONS FOR JUDGMENT

May & Johnston jj

Introduction

Orders made by Justice Rose on 6 August 2009 were both final parenting and property orders. The wife now appeals only from the property orders.
The wife initially relied on three grounds of appeal, but abandoned ground 1 being the only ground directed to parenting issues.
The remaining grounds of appeal concern the property orders:
2.That his Honour erred in the exercise of discretion in providing for an adjustment in favour of the Wife of 15% of the asset pool in that his Honour: -
a.was misled by the Husband as to his direct financial contributions from retrenchment monies amounting to a double dipping of the Husband’s income;
b.was misled by the Husband as to his actual income for the 2008/2009 financial year;
c.did not give sufficient weight to the financial resources of the Husband by virtue of his de facto relationship financial circumstances.
3.That his Honour erred in the exercise of discretion in that the adjustment in favour of the wife of 55% of the net asset pool is manifestly unjust and inequitable.
The wife seeks an order that she receive 70 per cent of the net proceeds of sale of the former matrimonial home instead of the 40.62 per cent as provided by the orders.
There were other applications before us as part of hearing the appeal. The wife’s application to adduce further evidence was disposed of with the exception of the contents of paragraph 64 to 69 inclusive of the affidavit filed 10 November 2009, which relates to the husband’s 2008/2009 income and evidence about the sale of the former matrimonial home.
The husband’s tax return to 30 June 2009 was tendered in evidence. It was signed by him on 29 October 2009, after judgment was delivered.
Apart from the issues raised by the grounds of appeal, there was an issue raised about the form of the order. In particular, whether the orders ultimately made by consent reflected the intention of the trial judge. This contention arose from the subsequent sale of the home for an amount greater than expected. It was submitted by the appellant that an adjustment should be made by reason of that fact despite consent orders being made as agreed by the parties after the final orders.

Factual Background

The parties’ relationship began in April 1996, they married in September 1998 and lived together for a period of almost ten and a half years until they separated in August 2006. The youngest child was then three months old. The parties divorced in December 2007.
In January 2008 the wife was admitted to hospital after attempting suicide and subsequently received treatment. It was not suggested at the trial by the husband that the children should not primarily live with the wife.
At trial the wife was aged 37 and employed part time as an academic and consultant. The husband was aged 38 and employed as a company executive.
The parties have two children, C born in June 2004 and L born in May 2006. The children are now seven and five respectively.
The children have lived with the wife, in the former matrimonial home since the parties separated. They also spend substantial periods of time with the husband during both the school term and holidays.
The husband has re-partnered and lives with Ms D in her home, together with her daughter, aged ten. Ms D is in receipt of a substantial income.

Reasons of the trial Judge

At trial the parties agreed that an order should be made requiring them to join in the sale of the former matrimonial home. It was also agreed that the contribution of the parties during the marriage and to the date of trial should be assessed at 60 per cent in favour of the husband. It was the percentage division of the net proceeds of sale of the home, together with the division of the other assets that was for his Honour’s determination.
The issues raised at trial were dominated by s 75(2) considerations, in particular the impact of the husband’s financial circumstances, including those of his present partner.
Under the section characterised as “The Property Settlement Proceedings” his Honour outlined the relevant legal principles pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) and what is commonly termed the four step process. There was no challenge in the appeal to his Honour’s approach to the matter.
His Honour found that the net property, including superannuation was valued at $1,478,866.
In paragraph 172 of the reasons a document described as an “agreed joint balance sheet” was reproduced. The only assets that need, for the purpose of this appeal, to be specifically mentioned are the house with an agreed value of $1,900,000 and the wine collection valued at $45,000. At the time of the trial, the house was yet to be sold.

Contributions of the parties

In considering the contributions of the parties, his Honour noted at paragraph 174 that:
There was little if any challenge to the affidavit evidence of the parties in relation to the financial and non-financial contributions, including contribution in the role of homemaker and parent that each contended had been made by her or him respectively.
It was found that the wife “made direct and indirect financial contributions as well as contribution to the welfare of the family in the role of the homemaker and parent”.
The husband was found to have made a contribution in the role of homemaker and parent and to have made a greater financial contribution. It was said at paragraph 184:
The [husband] was employed on a full-time basis throughout the period of cohabitation, principally in a variety of company executive positions. He has applied his income towards meeting living expenses and liabilities of the parties and the two children.
Commencing at paragraph 185 his Honour outlined considerable direct financial contributions made by the husband, namely, the redundancy payments of $30,000 in 1999, $10,000 in 2001, and $80,000 in 2002, the gift of his parents of $20,000 in 1997 and $7,500 in 1998, and the amount of $113,334 which was advanced by the husband’s parents for the benefit of both the parties in 2004. The last sum “was applied in partial discharge of the mortgage and in satisfaction of outstanding credit card indebtedness”.
In relation to the redundancy payments his Honour inferred, absent evidence and submissions to the contrary, that the amounts were applied by the husband for the same purpose as the use of his income. This purpose, as stated in paragraph 184 was for “living expenses and liabilities of the parties and the two children”.
After the separation the husband “continued his financial contributions by payment of mortgage instalments in relation to the former matrimonial home, monthly deposits into savings accounts and made other financial commitments for the benefit of the two children”.
In assessing the parties’ contributions his Honour said at paragraph 194:
I have assessed the contributions of the parties in the proportions of 60% in favour of the Respondent and 40% in favour of the Applicant, due to the weight that I have given to the Respondent’s financial contributions represented by the funds gifted to him by his parents in 1997 and 1998 and in particular shortly prior to the separation of the parties a very significant amount of money, namely $113,334.00. The use to which those amounts were put was for the benefit of the parties and indirectly, the two children.
As said by his Honour, this assessment was consistent with the written submissions made by both counsel. We observe that his Honour independently assessed the evidence before him. In addition, the trial judge assessed each of the contributions made by the parties to their respective superannuation entitlements. The written submissions of the parties did not suggest that superannuation should be considered separately from the other property of the parties. His Honour was of the view that this approach was “appropriate in all the circumstances”.

Relevant matters pursuant to s 75(2)

As observed by his Honour the parties are in their late thirties. Although the wife has health difficulties, it was considered that her condition has improved in recent times. The husband has good health.
It was found that the wife’s net weekly income from employment was $1,582 per week. His Honour found that the wife “has the physical and mental capacity for gainful employment in her current occupations … engaged in her current hours of part-time employment constrained by the need to provide parental care for the two children”.
The husband was paying $275 per week in child support. The husband’s net income, comprising salary, dividends and interest was found to be $3,111 per week. His financial resources were said to include the indirect financial benefits of residing in the home of Ms D. This benefit, subject to his weekly contribution of $700 per week, was found to include the indirect benefit of the income earned by Ms D of some $5,467 per week gross. The husband also enjoyed the financial assistance “provided from time to time by his parents”. The husband was found to have “the physical and mental capacity to continue in his current employment”, there being no evidence that this position may not continue.
It was recognised that the wife will continue as the primary carer of the two children.
His Honour said:
215.I have concluded that an adjustment of 15% will be made in favour of the Applicant to the proportion of the net property of the parties that she will receive, taking into account also the value of the superannuation entitlements of the parties for the following reasons. No distinction was drawn in counsel’s written submission so far as superannuation is concerned.
216.The Respondent’s income well exceeds that of the Applicant. He holds a secure senior executive position and has the capacity to continue to earn income in that position as well as the other management roles to which I have earlier referred.
217.By contrast, the Applicant’s capacity to earn income reflects her current employment and consultancy which on the evidence before me does not have the potential to achieve proportionally greater income, especially having regard to her ongoing commitment as the primary carer of two young children. That commitment is likely to continue for the foreseeable future.
…
219.In addition, the Respondent has a valuable financial resource due to the benefits that he is able to enjoy by living in a well-situated large and valuable residential property owned by [Ms D], as well as the indirect benefit of the contribution that she can make to their overall lifestyle due to the income that she earns. I take those matters into account, notwithstanding that I accept the submission made on behalf of the Respondent that he does not have a legal or equitable interest in the residential property owned by his partner.
Rose J found that an adjustment of 15 per cent was justified given the income disparity between the parties and also the wife’s capacity to earn income while maintaining her ongoing commitments as the primary carer of the children. Further, he took into account the benefits that the husband will enjoy in Ms D’s “well-situated large and valuable residential property” and her contribution to the husband’s overall lifestyle due to the income that she earns.
The judge appreciated that the husband’s financial position will be “significantly improved following the sale of the former matrimonial home as he will no longer have the commitment to meet mortgage instalments and other outgoings which he has met to date”.
Consideration was also given to the wife’s reasonable needs in securing suitable accommodation for herself and the children.
At the conclusion of his Honour’s judgment it was said:
221.I have concluded that the [wife] should receive 55% of the net property of the parties representing a combination of her contribution-based entitlement of 40% and the adjustment in her favour of a further 15% having regard to relevant matters pursuant to the provisions of s.75(2). I have given weight to the respondent’s contribution of $113,334, rather than his claimed “moral” objection (sic) to repay it. No demand has been made for repayment.
222.The net property of the parties excluding the value of superannuation entitlements is $1,248,588.00. Accordingly, 55% represents $686,723.40.
223.The combined value of the parties’ superannuation entitlements is $230,278. The wife’s proportion being 55% amounts to $126,653. The value of the wife’s superannuation entitlement of $104,973 must be deducted from the last-mentioned amount, leaving a balance of $21,680 to be paid to her.
224.For the purpose of considering whether orders for property settlement reflecting 55% of the net property of the parties, excluding superannuation and the same percentage in relation to the total value of the parties’ superannuation interests are indeed just and equitable, I have considered the practical effect of orders being made on that basis consistent with past Full Court judgments. In applying that approach the practical effect so far as the [wife] is concerned is as follows:-
Assets
·Managed funds  $11,656.00
·Savings  $1,112.00
·Contents and artwork  $32,500.00
·Legal fees paid  $86,677.00
·G Consultants P/L  $352,959.00

$484,904.00

Liabilities
·     CBA Visa  $5,730.00
·     America Express  $15,059.00
·     Loan from mother  $7,200.00
·     G Consultants debt  $92,364.00

$120,353.00

To retain net balance $364,551.00

225.Pursuant to the proposed orders, the [wife] is entitled to have net property amounting to $686,723 excluding an adjustment in her favour in terms of superannuation. Consequently the [wife] is entitled to receive a lump sum of $322,172 ($686,723 – $364,551) plus the adjustment in her favour of an amount reflecting 55% of the total value of superannuation of the parties, namely a balance of $21,680. That results in the [wife] being entitled to receive a final amount of $343,852.
226.However, the only source from which $343,852.00 can be paid to the [wife] is from the net proceeds of sale of the former matrimonial home. The parties final position was that they will join in the sale of that property. I will award the [wife] a percentage of the net proceeds of sale to take into account movements in the marketplace, whether up or down, as not to do so may produce an unjust practical result for each of the parties. The [wife] will accordingly receive 47% of the net proceeds of sale ($1,900,000 – $1,106,660) being $733,340. 47% represents the amount of $343,852.
227.The [husband] for his part will receive an amount equal to 53% of the net proceeds of sale of the former matrimonial home as well as items of personalty. There was no issue having regard to the written submissions that the [wife] should have transferred to her the [husband’s] interest in G Consultants Pty Limited. (footnotes omitted) (our emphasis)

As will be explained later, subsequent to the orders of Rose J the orders were varied by consent on 30 October 2009 to take account of the wife’s retention of the parties’ wine collection. The percentage attributed to the wife in those orders was 40.62 per cent of the net proceeds of the home.

Grounds of appeal

Consistent with how this matter was argued we will deal with each ground of appeal discretely.

Ground 2 – That his Honour erred in the exercise of discretion in providing for an adjustment in favour of the Wife of 15% of the asset pool in that his Honour: -

a. was misled by the Husband as to his direct financial contributions from retrenchment monies amounting to a double dipping of the Husband’s income

Counsel for the wife submits in relation to Ground 2(a) that the finding that the husband applied the redundancy payments for the same purpose as the use of his income suggested that those moneys were in addition to and not part of the husband’s taxable income.
It is said that his Honour was misled by the husband’s separation of the evidence concerning the husband’s income and redundancy payments. The husband’s total income for 1997 to 2007 taken from his affidavit filed 12 February 2009 was said to be $1,579,317. In the same document, for the same period it was accepted that the wife’s income was $1,292,395.
The wife’s uncontested evidence was that for the same period but ending 30 June 2009 (a further two years) her income, including undistributed income from her company was $1,540,854.
It was submitted that the wife “made the major contribution as homemaker and parent” as found by the trial judge, and in addition, contributed an approximately equal income to the husband. Accordingly, counsel submits that “[t]his should have resulted in a greater contribution based entitlement in the [wife’s] favour had both the [wife] and the Court not been led in to error as to the [husband’s] income”.
It was submitted that the manner in which the husband’s material was presented misled the judge and also counsel for the wife, who agreed that the husband’s contribution should be assessed to be greater than that of the wife.
As to the submission that the wife’s lawyers were misled, it was submitted for the husband that it is incomprehensible to assume that those acting for the wife overlooked the evidence that was available.
Although not directly a ground of appeal, counsel for the wife submitted in relation to the contribution argument:
MR JOHNSTON: Firstly, on the basis that his Honour misinformed himself as to the real contributions of the husband on the double dipping that I took your Honours to at first. And had he then weighed the very significant contributions which he only – I don’t say glossed over. But he only paid attention in a sentence or two, to the very significant contributions of homemaker and parent the wife had made, that he would have come up with nothing other than equality. (T’script p.14)
Counsel for the husband in his oral submissions observed that there was no ground of appeal relating to contribution based entitlement. Reference was made to the submissions about contributions made to the trial judge where concessions were made. In addition, it was submitted that the court is not bound by what the parties’ agree, as the ultimate opinion of the trial judge is what is important.
Counsel for the wife at trial proposed that the wife’s contributions should be assessed as to 40 per cent. There was reason for this concession being the husband’s greater financial contributions during the marriage.
We are not persuaded that there has been any “double dipping” by his Honour as submitted. In any event it is clear that the husband made a significantly greater capital contribution than the wife including that via his parents as his Honour found in paragraph 194 of the reasons. It was the moneys from the husband’s parents not the redundancy payments that were given weight by the trial judge in making the assessment of 60 per cent in favour of the husband.
Secondly, after separation the husband made a significant financial contribution by the payment of the outgoings on the house and other payments. Certainly the wife had the responsibility of two very young children and to her credit has been able to continue work.
We are of the opinion that his Honour did not make an error in the assessment of contributions and although not bound by the concession, was entitled to consider counsel’s submissions in this respect and give them considerable weight.
As this is an appeal we are of the view that the concession made at the trial is of some significance and difficult to challenge on appeal.

b. was misled by the Husband as to his actual income for the 2008/2009 financial year

We return to the matter raised as to whether his Honour misunderstood the husband’s income in the 2008/2009 year. The husband’s financial statement filed 12 February 2009 revealed an average weekly income of $5,366. His tax return reveals an income of $6,429. The difference is the bonus received by the husband from his employer. In a letter tendered to the Court (Exhibit 8) from the husband’s solicitor dated 24 February 2009 the following is said to be an explanation:
As your client is aware, our client has in the past received a bonus each financial year. The bonus is discretionary and for the year ended 30 June 2008 our client received a bonus in October 2008 of $50,000 gross which represented $26,756 net. This bonus was paid into our client’s Commonwealth Bank account in September 2008 and has been used to meet payment of the shortfall of expenses.
We accept the submissions made on behalf of the husband that there was no failure to disclose, nor that the trial judge did not appreciate the husband’s financial circumstances.
In additional support for the arguments related to Ground 2(b), the submission made by counsel for the wife is that post judgment the wife realised that the husband had understated his taxable income for the 2008/2009 financial year. The document provided by the husband at the appeal shows a total income of $334,324, (Ex 1 on appeal), which is approximately $6,429 per week.
To understand this argument we will set out part of counsel for the wife’s submissions:
MR JOHNSTON: … Your Honours, the husband disclosed his income in his financial statement, at page 99 of appeal book 1, at $4862 a week from his income, plus some dividends. I cross‑examined him, at appeal book 3, and that’s where Thackray J reminded me, and I suggested to him that if he included the bonus that he had had the year before, his income would have been an amount of $5589.86 –that’s at line 9 on page 652 - as opposed to $4862 in his financial statement…
…
MR JOHNSTON: … [H]is Honour's finding is to be found at page 67 of appeal book 1 at paragraph 204. His Honour said:
The income of the respondent is set forth in his financial statement sworn 12 February 2009. His average weekly gross income is $5366. This comprises his salary at 4862 gross, dividends and interest of 67, his superannuation benefit $437 and his income tax is $1818.
…
MR JOHNSTON: … Exhibit 1 before your Honour’s today, his income was 333,324, which equates to 6410 a week. Now that’s as far as I would like to take that, your Honours.
THACKRAY J: Because the ground of appeal is that the husband misled his Honour, but the husband appears to have given fairly accurate information about what he was earning, what he had received by way of bonus, so if you add them up it wasn’t far off what he actually declared. You’re saying his Honour made an error because he didn’t pick up that information in paragraph 204 and allow for the possibility of ongoing bonuses?

MR JOHNSTON: Yes, your Honour
(T’script P. 16 & 17)

It is clear from the transcript (27 February 2009 pages 651 to 656) that there was considerable cross-examination about two bonuses each of $50,000 received by the husband during 2008 and 2009. The trial judge also directed questions to the husband about this matter. The husband said that he did not have an expectation about receiving another bonus. He gave an explanation that:
…the [V Company] Board, the chairman committee in particular, changed the nature and structure of the bonuses from something that the participant in that program had visibility to the basis and assumptions of the calculations. Since as of last year they introduced this new discretionary bonus, and it’s weighted based on a whole host of things of which the financial performance is presumably one of them. With the economic-current economic uncertainty, I honestly cannot tell you the basis on which they will be determining that bonus …”.
True it is that his Honour has not referred to these matters in his judgment but his Honour was well aware of the evidence in relation to the likelihood or otherwise of the husband receiving a bonus or bonuses in future. His Honour made his finding about the husband’s income as he was entitled to do. We are not persuaded that any error has occurred in relation to his Honour’s finding about the husband’s income.

c. did not give sufficient weight to the financial resources of the Husband by virtue of his de facto relationship financial circumstances

In addition to the argument about the husband’s income counsel for the wife submits that the trial judge failed to consider the “very significant resources of [Ms D]”, who in cross examination said that she planned to marry the husband (Ground 2(c)). Ms D’s considerable assets include her home which she purchased for $3,500,000 and subsequently renovated, with a mortgage of $1,400,000, $40,000 superannuation, $300,000 in shares, $40,000 contents, a $60,000 motor vehicle and V Company shares worth $165,000.
It was submitted that the 15 per cent adjustment in the wife’s favour is “wholly inadequate” and overall the result is not just and equitable. (See also Ground 3)
In response it was submitted that the trial judge had available to him the evidence of the husband’s income and the answers provided during cross examination of both the husband and Ms D. It is said that the husband made full and frank disclosure.
We are satisfied that, not only was his Honour aware of the details of the financial circumstances of Ms D, but he gave due consideration to these in determining the appropriate adjustment. At paragraph 219 of the judgment his Honour said as follows:
In addition, (the husband) has a valuable financial resource due to the benefits that he is able to enjoy by living in a well-situated large and valuable residential property owned by [Ms D], as well as the indirect benefit of the contribution that she can make to their overall lifestyle due to the income that she earns. I take those matters into account ...
After the assessment of contributions there was left for his Honour’s consideration what may be described as the s 75(2) factors and then the overall consideration of what orders are just and equitable. Having correctly identified the s 75(2) factors and given considerable weight to the husband’s living circumstances with his current partner, his Honour attributed 15 per cent of the total property in favour of the wife. The sum this represents is $221,830 of the original asset pool which is a differential between the parties of $443,660 in an asset pool of $1,478,866. It cannot be said that this is an error. We will deal with these matters at greater length under Ground 3.

Ground 3 – That his Honour erred in the exercise of discretion in that the adjustment in favour of the wife of 55 per cent of the net asset pool is manifestly unjust and inequitable.

It is submitted that his Honour erred in the exercise of discretion in that the decision in favour of the wife of 55 per cent of the net asset pool was unjust. To some extent this ground extends to the subsequent machinery orders and the issue related to the sale proceeds of the house.
As to the question of whether 55 per cent is just and equitable, it is our view that such a result was within the range, no appealable error has been demonstrated. It has not been demonstrated that the attribution to the wife of 40 per cent by way of contribution was an error and it could not be said that the further allowance of 15 per cent is an error.

Submissions – other then those directly related to the grounds of appeal

It was submitted that the sale of the former matrimonial home at a higher price than was expected was not properly considered by the trial judge. It was said that the wife should receive an additional $35,647 to give effect to the intention of his Honour as expressed in paragraph 226 of the reasons for judgment namely:
… I will award the Applicant a percentage of the net proceeds of sale to take into account movements in the marketplace, whether up or down, as not to do so may produce an unjust practical result for each of the parties.
The former matrimonial home had an agreed value of $1,900,000, and subsequently sold at auction for a much higher price than anticipated namely, $2,200,000. It is said in paragraph 42 of counsel’s written submissions:
… Based on the split of the proceeds of the sale of the house being allocated 60/40 in the [husband’s] favour as a result of the amended order made on 28 October 2009 and replacing the $1.9 million in the calculations used in the Reasons for Judgment to $2.2 million this results in an actual 48/52 split of the net assets, rather than the 45/55 as awarded by his Honour…
Consent orders entered into between the parties made on 28 October 2009 and later amended by consent on 30 October 2009 varied the original order under which the wife was to receive 47 per cent of the net proceeds of sale of the former matrimonial home to 40.62 per cent thereof. This was to take into account a transfer of ownership of wine with a value of $45,000 from the husband to the wife. There was some confusion in the orders themselves because they referred to the balance to be received by the applicant who was named as the husband in the document. There was no doubt that the amount expressed as a percentage was to be received by the wife. The reference to the balance can be better understood by repeating order (18) made on 6 August 2009 by the trial judge:
That the parties shall cause the proceeds of sale of the former matrimonial home to be applied in payment of the following:-
(i)Real estate agent’s commission and auction expenses.
(ii)Legal costs of sale.
(iii)Discharge of the mortgage.
(iv)An amount equal to 47% of the balance in favour of the Applicant.
(v)The remaining balance to the Respondent.
The other order to which specific reference need be made is order 22 as follows:
(22)That the Applicant may transfer to the exclusive use of the Respondent all or any of the wine stored in the former matrimonial home upon him simultaneously paying to her the current wholesale market value of such wine as agreed upon in writing or failing agreement as determined by an independent agreed valuer whose fees shall be met by the parties equally.
This order became contentious because no provision was made in the calculations by the trial judge to allow for a sum to be deducted from the overall result by reason of the wine collection and then a percentage applied to the property to be received by the parties for this factor. An inconclusive reference was made to this aspect in the consent order of 28 October 2009 in notations which read as follows:
NOTATIONS:
A.An issue which had arisen in relation to Order 22 made 6 August 2009 has now been informally resolved.
It was submitted that in all the circumstances the later amendment in the consent orders, which reduced the division of 47 per cent to the wife to 40.62 per cent, is a manifestly unjust and inequitable adjustment for the wife.
Counsel for the husband informed us that the order made 30 October 2009 was intended to resolve the wine issue.
Counsel for the husband resisted any adjustment to the percentage attributed to the wife and submitted that because the order was made by consent it is not permissible to subsequently appeal the orders seeking a different result. The husband also contends, should the value of the former matrimonial home which was previously agreed change, all the assets of the parties would have to be revalued. This submission does not accord with his Honour’s reasons and we reject it.
Further, it was said that the error was known since the date of the written submissions filed 16 March 2009 and no attempt was made to correct the deficiencies until some eight months later on appeal. It was said that the wife should have re agitated the matter before the trial judge. The husband submits the appeal is misconceived and arises out of no fault of the trial judge or that of the husband.

Conclusion

As indicated above, we are not persuaded that any error has occurred in his Honour concluding that the wife enjoy 55 per cent of the net assets.
But we are satisfied that in the preparation of the machinery orders to achieve the substance of his Honour’s judgment an error has occurred. If not corrected, the just and equitable order intended in substance by his Honour will not be achieved.
It was submitted on behalf of the husband that the subsequent (machinery) order was made by consent and therefore ought not be changed. But in our view, the fact that the subsequent order was made by consent does not change the fact that an error occurred.
Dealing then with the mathematical issues related to the wine and sale proceeds of the home we are of the view that the orders require some adjustment.
Mr Lloyd explained that the house went to auction the day after the variation orders were made. It is his submission that there should be no adjustment for this fact because in fairness there would need to be a revaluation of other assets. We have already rejected that submission as the answer to this is that the parties are retaining the other assets.
We are of the view that there is no doubt that an appeal court should correct an error to avoid injustice especially as here there is agreement about the correct figures.
We are of the view that a proper result is that the wife should receive 55 per cent of the parties’ net assets, taking into account the net sale proceeds of the home and the retention by her of the wine.
It was submitted by counsel for the wife that the increased sale price of the house resulted in the net asset pool increasing from $1,478,866 to $1,726,971.
It was intended, we accept, by the trial judge that the wife receive 55 per cent of those assets. That sum we are informed should now be $949,834.
Applying the same sums and method as contained in the reasons the wife’s entitlements would be satisfied as follows (as per para 224):

Assets less liabilities to be retained by the wife $365,551
Wine $45,000
$410,551

In addition (moneys received by wife at settlement): $398,663
Wife’s super $104,973
$914,187

The balance outstanding to the wife is therefore $35,647.

Costs

At the conclusion of the hearing counsel for both parties made submissions as to costs.
Counsel for the wife submits that should the appeal be allowed on the discretionary issue, costs certificates should be granted to each party. As we have determined not to allow the appeal costs certificates are not available. Should different orders be made despite the husband’s opposition to the adjustment by reason of the sale proceeds of the house, the wife seeks costs.
Counsel for the husband submits that should the appeal be allowed on the adjustment issue no order for costs should be made.
In the event that the appeal is dismissed the husband seeks an order that the wife pay costs on an indemnity basis, or in the alternative on a party/party basis. The indemnity order is sought on the basis that there is no substance to the appeal.
We have determined that there should be some alteration to the orders in the interests of justice although this order is made without re-exercising the discretion of the trial judge.
The provisions of the Act in relation to costs require some justifying circumstances before a costs order can be made. Although it may be said that the wife has had limited success, such that she would not be entitled to costs against the husband, and perhaps the wife should pay the costs of the husband, the significant disparity in the financial circumstances of the husband and wife would prevent an order for costs being made against the wife. There are no circumstances in this appeal which would justify any order for costs.

thackray j

I have had the benefit of reading the judgment of May and Johnston JJ. I agree the appeal should be dismissed, provided the orders are rectified to give effect to the trial Judge’s express intention. My reasons follow.

Ground 2 – error in making the s 75(2) adjustment

By Ground 2 the wife asserts that the trial Judge erred by making an adjustment in her favour of only 15% of the value of the asset pool on account of the factors in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”). The wife considers the adjustment should have been 25%.
This ground contains three assertions of error by his Honour in making the s 75(2) adjustment. Two relate to findings about the husband’s income. The third relates to the husband’s de facto relationship. These matters are encompassed by Grounds 2(a), (b) and (c). I will address each separately, as they raise discrete issues.

Ground 2(a) – “double dipping” of husband’s income

This ground asserts that the trial Judge was “misled by the husband as to his direct financial contributions from retrenchment monies amounting to a double dipping of the husband’s income”.
The assertion of “double-dipping” arises from what the trial Judge found in the following paragraphs of his reasons:
184.[The husband] was employed on a full-time basis throughout the period of cohabitation, principally in a variety of senior positions. He has applied his income towards meeting living expenses and liabilities of the parties and the two children.
185.[The husband] made financial contributions as a result of receiving redundancy payments of $30,000 in 1999; $10,000 in 2001; and $80,000 in 2002. I infer that those amounts were applied by him for the same purpose as the use of his income [to] which previous reference has been made absent evidence and submissions to the contrary.
It will be observed that in making these findings the trial Judge was directing his attention to contributions made during cohabitation. It is therefore curious that this part of the judgment should be attacked under the guise of a Ground of Appeal directed to the adjustment made for the factors set out in s 75(2) of the Act. The rationale for this collateral attack on his Honour’s contribution finding becomes apparent when it is noted there was no issue at trial concerning the assessment of contributions. Both counsel submitted that contributions should be assessed 60:40 in favour of the husband.
Notwithstanding there was agreement concerning the assessment of contributions, the trial Judge conducted his own assessment of the contributions and concluded they favoured the husband in a ratio of 60:40. It is true that his Honour observed, at [195], that his assessment was “consistent with the written submissions made by counsel for each of the parties”, but there is nothing to indicate he was influenced by that fact. On the contrary, his Honour explained, at [194], that the disparity was due to the weight given to the husband’s contributions in the form of gifts from his family, particularly the significant amount the husband had received from his parents shortly prior to separation.
In the course of his oral submissions before us, counsel for the wife submitted he himself had been misled at trial by the way the husband had given his evidence concerning the receipt of income and the receipt of the retrenchment moneys. Counsel for the wife said that had he realised that the retrenchment moneys referred to in the husband’s trial affidavit were included in the income figures stated in the same affidavit, he would have submitted that the parties’ contributions were of equal value.
Given that the trial Judge conducted his own assessment of contributions, and gave no indication of being influenced by the “concession” made by the wife’s counsel, I do not consider that any misunderstanding by counsel is of any relevance in this appeal. The only issue is whether the trial Judge himself inaccurately assumed that the retrenchment moneys detailed by the husband in his trial affidavit were in addition to the income figures the husband gave in that affidavit.
The evidence given on this topic appears at paragraphs 377, 378 and 394 of the husband’s affidavit. In the first two of those, the husband said:
377.Over the course of the marriage I was made redundant 3 times, each time being paid redundancy payments approximately as follows:
1999 – [R] Limited:  $30,000
2001 – [N] Limited:   $10,000
2002 – [O] Limited:  $80,000
378.At no point was I out of work at all following these redundancies, as I have been able to time the commencement at a new job almost immediately.
The husband later went on to testify, at [394], that “the incomes, according to documents provided by [the wife] to me in October 2007, of [the wife] and I have been as follows…”. He then recited their incomes for each of the years ended 30 June 1997 to 30 June 2007 which, if totalled, demonstrated that the husband had earned income of $1,579,317 and the wife had earned income of $1,292,395.
Although counsel for the wife initially claimed that the trial Judge had expressly referred in his reasons to the husband having received income totalling $1,579,317, as well as referring specifically to each of the redundancy payments, counsel later acknowledged he was in error. The trial Judge did not at any stage refer to the dollar amount the husband and wife had earned during the marriage. In his own defence, counsel said that in making his erroneous submission he had in mind what counsel for the husband had submitted to the trial Judge.
I accept that, at [44] of his written submissions at trial, counsel for the husband did refer to the specific amounts received from the redundancy payments, and that, at [48], he also noted that “the total earnings of the husband have amounted to $1,579,317.00 and the wife’s total earnings have amounted to $1,292,395.00”. However, I am unable to discern any basis upon which it could have been reasonably thought that either the husband in his trial affidavit, or his counsel in his submissions, was asserting that the husband’s “total earnings” excluded his redundancy payments. Indeed, counsel for the wife properly conceded before us that a party stating their income for a period would be presumed to have included in that income any redundancy payments received in that period (Appeal transcript, p.7).
I am also unable to discern any basis upon which it could be reasonably inferred that the trial Judge himself was of the view that the husband’s redundancy payments were additional to the husband’s “total earnings”. In paragraphs 184 and 185 of his reasons, the trial Judge was doing no more than finding that not only had the husband been “employed on a full-time basis throughout the period of cohabitation”, but that he had also received redundancy payments. This finding did no more than mirror the husband’s evidence at [378] of his affidavit.
Further, I accept the submission of senior counsel for the husband that, even if the trial Judge had considered the $120,000 received by way of redundancy payments was in addition to the husband’s income, this would not have made any material difference to the outcome in circumstances where the combined incomes of the husband and the wife during the relationship fell not far short of $3 million.
Before moving from this ground, I should observe that counsel for the wife placed much emphasis on what he said was the similarity in the incomes of the husband and wife. The purpose of that argument was to suggest that as the parties had earned similar amounts, the husband’s greater contributions in the form of the gifts from his family should have been offset by the wife’s greater contributions in the care of the children, leading to an overall finding of equality of contributions. This proposition was supported (at least in the wife’s written summary of argument) by reference to the husband’s uncontested statement of his total income as being $1,579,317 and the wife’s uncontested statement of her income as being $1,540,854. In making this submission, counsel for the wife asserted that the incomes of both parties were stated for the years 1997 to 2009 inclusive. In fact, while the wife’s income was stated for those years, the husband’s income was stated only for the years 1997 to 2007 (i.e. for the period of cohabitation). Had the same years been compared it would have been seen that the husband’s income exceeded that of the wife by nearly $287,000.
Accordingly, even if there had been a direct, rather than collateral, attack on his Honour’s contribution finding, it would have lacked merit, since the ultimate finding was well within the range of discretion.
There is therefore no merit in Ground 2(a).

Ground 2(b) – misleading evidence concerning husband’s income

By this ground it is asserted that in making an adjustment of only 15% on account of s 75(2) factors, the trial Judge had been “misled by the husband as to his actual income for the 2008/2009 financial year”.
The husband’s taxation return for 2008/09 (which was received in evidence on the hearing of the appeal) showed that the husband had a gross income in that year of $334,324 or $6,429 per week. Counsel for the wife contrasted that level of income with that disclosed by the husband in his Financial Statement, sworn 12 February 2009 (i.e. partway through the 2008/09 financial year). In that document the husband disclosed a “total average weekly income” of only $5,366, of which $4,862 was “salary or wages”.
The trial Judge’s findings concerning the husband’s income were contained in paragraph 204 of his reasons, which was part of his discussion of the s 75(2) adjustment. It is important to keep in mind that the matters falling for consideration under s 75(2) are largely prospective in nature. In other words, they primarily focus on the future, rather than the past. In paragraph 204 his Honour found:
204.The income of [the husband] is set forth in his Financial Statement sworn 12 February 2009. His average weekly gross income is $5,366. That comprises his salary of $4,862 gross; dividends and interest $67. His superannuation benefits amount to $437 per week. [The husband’s] income tax is $1,818 per week leaving him with a net income of salary, dividends and interest of $3,111 per week.
It is apparent that in making these findings, the trial Judge was referring to, and accepting, the husband’s evidence in his Financial Statement. However, the husband’s evidence of his income was not confined to what was stated in his Financial Statement, since he was firmly challenged on the content of that document in cross-examination. Given that this ground asserts that the husband misled the Court, it is important to record not only what the husband said in his Financial Statement, but also what he admitted when he was cross-examined.
The relevant passages of cross-examination by counsel for the wife are set out below (the emphasis is mine):
MR JOHNSTON: Now, sir, your financial statement that you've sworn to be true for the purposes of the hearing was sworn on 12 February, do you recall that?---Yes.
You gave your weekly income at $4862, do you remember that?---Yes.
Well that's not true, is it?---I believe it to be correct.
Sir, it doesn't accord with your income tax return last filed, 30 June 2008, does it?---I know it doesn't, and I can explain that, if you'd like.
You've had a drop in income, have you? You've had a drop in income?---The 2008 number includes a bonus, and that weekly figure that you've got there does not include a bonus. I believe we clarified that position subsequently.
I see. So you agree, then, that your gross income from wages or salary was $290,673 for the year ended 30 June 2008?---Sounds correct.
And that equates, I want to suggest to you, to an amount of $5589.86 a week, as opposed to $4862, as disclosed in your financial statement?---I accept that, if those calculations are correct.
What is the basis of the bonus that you received?---Purely discretionary at the discretion of the [V Company] Chairman's Committee.
As it’s chief financial officer, the [V Company] accounts are as healthy as they were on 30 June last year ‑ that is, in terms of current turnover?---As of today's date, yes.
Yes. There's no reason to suggest that it's going to be any less on 30 June 2009 as opposed to what the turnover was on 30 June 2008, is there?---There is nothing to suggest that.
In fact, [V] is booming, is it not?--- [V Company] or the industry?
The industry as a whole, but, in particular, [V Company]?---The industry is probably doing better than [V Company], but [V Company] is doing well.
Doing very well, expanding overseas?---It's doing well.
…
Sir, it's booming down there, isn't it, with a waiting list for [clients] to come in?---I think the waiting lists ‑ there are waiting lists, and there always are waiting lists in the medical business, yes.
There's no reason to suggest that you wouldn't get a discretionary bonus this year, is there?---I disagree with that statement.
How much was your bonus last year?---$50,000.
$50,000?---Yes.
You're telling his Honour honestly?---Yes.
That you don't expect any bonus this year?---I can say absolutely honestly that I have no expectation as to a bonus. It may well get paid. I have no visibility as to how it's calculated.
HIS HONOUR:  Can I just ask you this?---Yes.
Given that you had a bonus last year?---Yes.
You're holding the same executive position this year as last year, right?---Yes.
The company is still doing well?---Yes.
Leaving aside for the moment that it's not within your discretion to decide the bonus?---Yes.
Why is it that you don't have an expectation of receiving a bonus this year?
‑‑‑The last calendar year the [V Company] board, the chairman committee in particular, changed the nature and structure of the bonuses from something that the participant in that program had visibility to the basis and assumptions of the calculations. Since as of last year they introduced this new discretionary bonus, and it's weighted based on a whole host of things of which the financial performance is presumably one of them. With the economic ‑ current economic uncertainty, I honestly cannot tell you the basis on which they will be determining that bonus. I am well remunerated for the job that I do. That incentive is, as I understand it, they are not explicit from conversations, to share the overall result, both operationally and financially, of the people that contributed to it. There's been a significant rationalisation in the industry by private equity players, which has occurred in the last 12 months, give or take. I believe there is significant uncertainty as it relates to [V Company], and I certainly, from an accounting and financial perspective, do not sit here and accrue that income.
You certainly do not which?---Accrue it notionally in my own mind.
Well ‑ ‑ ‑ it is quite possible it will get paid, but I have no, absolutely no insight into it, no certainty that attaches to it.
So you don't even have an expectation, regardless of what the amount might be?---As a general rule, I would have had an expectation. In the last couple of years there's been effectively an incorporation of base salary to market, I believe that under the current economic climate, the current industry‑related climate that I honestly have no expectation of getting a bonus.
Even though the current climate, for what you said a few minutes ago, hasn't adversely impacted on the business?---To this point it hasn't. Some of those transactions I referred to have occurred in the last six months and it takes a little time for new participants in the market to work out what it is they're doing. Our major competitors have all been bought by private equity firms. They, in most instances, have come in and put in place their management team and their structures. I really believe there is sufficient uncertainty as to what's likely to occur in the next six months that I can't rightfully say I have a genuine expectation to get it.
Right, thank you.
MR JOHNSTON: Did you get a bonus just before Christmas, sir?---I was paid a bonus in September, I think it was.
September. Was it $55,000?---I thought it was $50,000.
HIS HONOUR:  That was the $50,000 for the prior year, but it wasn't actually paid until September, is that the position?---The executive's bonuses are paid annually based on the year end, the financial year end. It is usually assessed, we as individuals are assessed, by the chairman's committee over the course of August‑September. They are usually paid in September but referable to the prior year.
But it's included in your taxable income?---No, that one's not, because ‑ ‑ ‑
So this is another bonus?---That's a subsequent bonus, which I have not had to lodge a tax return for.
So, despite all these changes that you've been telling me about, you got another bonus last year, after 30 June 2008?---Yes.
MR JOHNSTON:  Which is yet to go into a tax return?---Yes.
HIS HONOUR:  How much was that bonus?---$50,000.
$50,000?---Yes.
MR JOHNSTON:  Sir, your financial statement is just not correct, is it, because what you put in is your base salary of $4862, and you know at 30 June 2009, when you file your tax return, you will increase that by an additional $50,000 or about $2000 a week ‑ $1000 a week I mean?---In my discussions with Glen ‑ ‑ ‑
Please don't tell us your discussions with your solicitor?---I accept that. It became apparent to me that I had incorrectly determined that ‑ I had calculated those figures referable to a point in time, being now. I did not realise I needed to accrue historical amounts with respect to what I understood to be the position as of today moving forward.
All right. Just have a look ‑ I'm sorry?---And that yes, on that basis, it is why we notified [the wife] and her solicitors of the fact that a bonus had been paid.
Last week?---Yes.
This is a copy ‑ this is the original, I think, or a copy of the letter which was sent on 24 February. Do you say it's clear from that letter that the $50,000 referred to received in, I think, October is referable to the 2009 tax year, or do you think, and including from what you told his Honour 5 minutes ago, that it was part of the 2008 year?---No, no.
HIS HONOUR:  No, he didn't ‑ ‑ ‑?---I didn't say that.
He said that the bonus received in October was not related back to the ‑ ‑ ‑
MR JOHNSTON:  Yes, I understand that what's [sic] he said, your Honour, but earlier when I asked him about business gross income he said it included a bonus of $50,000, and he didn't think he'd get one this year, but he's already got one?---No, sorry ‑ ‑ ‑
HIS HONOUR:  I don't think so ‑ ‑ ‑?---No, sorry ‑ ‑ ‑
Just a minute?---Sorry.
The way it went, Mr Johnston was the income disclosed for tax purposes at the end of ‑ as at 30 June 2008 included a bonus.
MR JOHNSTON:  Yes.
HIS HONOUR:  That bonus in turn was $50,000, I think. Then in October last year you received another bonus of $50,000, and that wasn't the same bonus that was included for tax purposes at the end of 30 June 2008.
MR JOHNSTON:  I understand that, your Honour.
HIS HONOUR:  Now, it's a second bonus, and given that it's not part of the previous financial year disclosure, it could only be for this current year.
MR JOHNSTON:  Yes. That means that the deposition of $4862 contained in your financial statement sworn to be true on 12 February is absolutely wrong. It would add almost another $1000 a week?---I prepared that on the basis of my understanding of the current amount that I receive ‑ the predictable amount I receive, what I am likely to receive for the remainder of the current financial year. It was only in discussions subsequently that I was aware ‑ made aware of the fact that that number should have been included, and it was advised to the other side. It's the same basis on which I did the last financial statement. It hadn't been picked up. I did not realise that it was supposed to be retrospective. I thought it was at a point in time. I accept that on the basis of that, the bonus is not included, and I accept, equally, that it should be.

It will be noted that the husband readily conceded he had not referred to the receipt of the $50,000 bonus in his Financial Statement. However, it had been disclosed in the letter from his solicitors to the wife’s solicitors dated 24 February 2009 (prior to trial). It should therefore have come as no surprise to the wife that, when the husband lodged his taxation return for 2008/09, his total income would significantly exceed the figure given in his Financial Statement. (Indeed, counsel for the wife submitted at trial – incorrectly in my view – that the husband’s evidence was that his income from employment in 2008/09 would be $396,000, inclusive of a $90,000 bonus).
Analysis of the husband’s 2008/09 taxation return shows that if he did receive a further bonus in that year it could not have been more than $11,212, calculated as follows:
Income from salary disclosed on tax return       $314,036
Less income in Financial Statement  ($252,824)
Less bonus disclosed  ($50,000)
Discrepancy  $11,212
It is possible this discrepancy represented a further, relatively small, bonus, or more likely an increase in periodic income. Either way, the receipt of $11,212 more income than might have been predicted on the basis of the husband’s evidence is not a sufficient basis for appellate interference – especially given it represents less than 4% of the husband’s gross income.
There is, accordingly, no substance in the proposition advanced by this ground that the trial Judge was misled as to the husband’s income for the 2008/09 financial year.
In my view, the only complaint that might have been made about his Honour’s treatment of the husband’s income was his failure, when discussing the s 75(2) adjustment, to refer to the fact that the husband had received bonuses in the past, and might therefore receive bonuses in the future. If that was the wife’s complaint then it ought to have been clearly articulated in her Notice of Appeal. In any event, the husband gave evidence of the considerable uncertainty associated with the continuation of bonus payments, particularly in what he described as the prevailing “economic climate”. In this regard, it is to be remembered that he was being cross-examined in February 2009, when the world was in the grip of the Global Financial Crisis.

Ground 2(c) – weight given to “resource” of de facto relationship

This ground asserts the trial Judge erred in giving insufficient weight “to the financial resources of the husband by virtue of his de facto relationship financial circumstances”.
His Honour dealt with the husband’s de facto relationship when discussing the s 75(2) adjustment. There is no challenge to any of the findings of fact he made in dealing with that issue. His Honour found:
206.[The husband]’s financial resources include the indirect financial benefits of residing in the home of [Ms D], subject to his weekly contribution to expenses of $700, the indirect benefit of the income earned by her being an average of $5,467 per week gross and the history of financial assistance provided from time to time by his parents, there being a lack of evidence to suggest that such discretionary financial assistance may no longer be forthcoming regardless of [the husband’s] financial circumstances.
His Honour returned to this issue later in his reasons, when assessing the s 75(2) factors. He found as follows:
219.In addition, [the husband] has a valuable financial resource due to the benefits that he is able to enjoy by living in a well-situated large and valuable residential property owned by [Ms D], as well as the indirect benefit of the contribution that she can make to their overall lifestyle due to the income that she earns. I take those matters into account, notwithstanding that I accept the submission made on behalf of [the husband] that he does not have a legal or equitable interest in the residential property owned by his partner.
As already noted, his Honour determined there should be an adjustment of 15% in favour of the wife on account of all of the s 75(2) factors, which brought about a 30% disparity between the parties. The value of the asset pool was $1,478,866. The 30% disparity accordingly amounted to $443,660. This is a significant sum and, in my view, adequately takes into account the difference in the parties’ earning capacities, the wife’s need to secure accommodation for herself and the children and the advantages to the husband associated with living with his de facto wife.
In my view, there is no basis for the contention that his Honour failed to give adequate weight to the financial benefits associated with the husband’s de facto relationship.

Ground 3 –manifestly unjust and inequitable outcome

By this ground it is asserted that the trial Judge “erred in the exercise of discretion in that the adjustment in favour of the wife of 55% of the net asset pool is manifestly unjust and inequitable”.
The first point to be made is that there was not an “adjustment” of 55%. There was a finding that contributions favoured the husband in proportions 60:40. As previously recorded, not only was this his Honour’s assessment, but it was also the position of both counsel at trial. The only “adjustment” was the 15% made on account of the s 75(2) factors. For the reasons I have given in discussing Ground 2(c), there is no basis for asserting that such an adjustment brought about a “manifestly unjust and inequitable” result.
There is therefore no substance in this ground.

The error in the orders and the “slip rule” correction

It was apparent from the submissions in support of Ground 3 that part of the wife’s complaint was that she had ultimately received only 52% of the asset pool, not 55% as foreshadowed in the reasons for judgment. Although the husband conceded the wife had not received 55% (at least as the pool, apart from the home, was valued at trial), it was his contention that it would be inappropriate for the Full Court to intervene.
The wife’s complaint can be traced back to the way in which the orders made by the trial Judge were drafted. The drafting difficulty was compounded by errors in his Honour’s reasons, which led to a mathematical error in the orders he pronounced on 6 August 2009 (“the original orders”).
The husband or his advisors recognised the mathematical error in the orders (which worked to his considerable disadvantage). The error was drawn to the attention of the wife, who properly consented to the husband’s application for the amendment of the original orders pursuant to the “slip rule”. However, the underlying drafting error went undetected until after the auction of the former matrimonial home, which sold for $300,000 more than the value on which the trial Judge had made his calculations.
In order to determine whether there is scope for intervention by the Full Court, it is necessary to appreciate the sequence of relevant events. This requires an understanding of:
·the part of the trial Judge’s reasons containing the errors;
·the original orders which brought about a result other than the one the trial Judge intended;
·the order(s) made under the slip rule designed to rectify the error.

The errors in the trial Judge’s reasons

To appreciate the mistakes in his Honour’s reasons, it is first necessary to record some of the findings he made when determining the pool of assets for division (no issue is taken with any of these):
·The pool had a net value of $1,478,866;
·The home was valued at $1,900,000;
·The mortgage balance was $1,166,660;
·No allowance was made for the costs of sale of the home, although it was common ground that it had to be sold;
·The wine collection, which remained with the wife, was worth $45,000;
·The wife’s paid legal fees totalled $87,677, and were included in the pool.
After discussing the contributions and the adjustment to be made for the s 75(2) factors, his Honour very properly went on to consider the “practical effect” of the 55:45 division at [224] to [226]. It was at this stage that the errors were made. The paragraphs are set out below (footnote omitted):
224.For the purpose of considering whether orders for property settlement reflecting 55% of the net property of the parties, excluding superannuation and the same percentage in relation to the total value of the parties’ superannuation interests are indeed just and equitable, I have considered the practical effect of orders being made on that basis consistent with past Full Court judgments. In applying that approach the practical effect so far as [the wife] is concerned is as follows:-
Assets
·Managed funds  $11,656.00
·Savings  $1,112.00
·Contents and artwork  $32,500.00
·Legal fees paid  $86,677.00
·G Consultants P/L  $352,959.00
$484,904.00
Liabilities
·CBA Visa  $5,730.00
·America Express  $15,059.00
·Loan from mother  $7,200.00
·G Consultants debt  $92,364.00
$120,353.00
To retain net balance  $364,551.00
225.Pursuant to the proposed orders, [the wife] is entitled to have net property amounting to $686,723 excluding an adjustment in her favour in terms of superannuation. Consequently [the wife] is entitled to receive a lump sum of $322,172 ($686,723 – $364,551) plus the adjustment in her favour of an amount reflecting 55% of the total value of superannuation of the parties, namely a balance of $21,680. That results in [the wife] being entitled to receive a final amount of $343,852.
226.However, the only source from which $343,852.00 can be paid to [the wife] is from the net proceeds of sale of the former matrimonial home. The parties final position was that they will join in the sale of that property. I will award [the wife] a percentage of the net proceeds of sale to take into account movements in the marketplace, whether up or down, as not to do so may produce an unjust practical result for each of the parties. [The wife] will accordingly receive 47% of the net proceeds of sale ($1,900,000 – $1,106,660) being $733,340. 47% represents the amount of $343,852.
The three errors (two typographical and one of substance) were these:
·    Although the equity in the home was correctly recorded as being $733,340, the mortgage should have been shown as $1,166,660 not $1,106,660 (nothing turns on this as the final calculations were based on the correct figure);
·    The figure for the wife’s legal fees should have been shown as $87,677, not $86,667;
·    As the orders involved the wife retaining the valuable wine collection, the wine should not have been excluded from the list of assets to be retained by her.
Recognising these errors, the husband correctly calculated that the amount the wife needed to receive from the sale of the home in order to achieve a 55:45 division of the entire asset pool was not $343,852 as his Honour found, but rather $297,852. This represented 40.62% of the equity in the home, not 47% as his Honour determined.

The undetected error in the original orders

Before turning to describe how the parties sought to rectify the errors discussed above, it will be helpful to identify the underlying error in his Honour’s orders, which was not understood by the parties at the time.
It will be recalled that in giving his reasons his Honour said (footnote omitted):
226.… I will award [the wife] a percentage of the net proceeds of sale to take into account movements in the marketplace, whether up or down, as not to do so may produce an unjust practical result for each of the parties. [The wife] will accordingly receive 47% of the net proceeds of sale ($1,900,000 - $1,106,660) being $733,340. 47% represents the amount of $343,852.
This calculation was reflected in Order 18, in the following terms:
(18)That the parties shall cause the proceeds of sale of the former matrimonial home to be applied in payment of the following:-
(i)Real estate agent’s commission and auction expenses.
(ii)      Legal costs of sale.
(iii)     Discharge of the mortgage.
(iv)An amount equal to 47% of the balance in favour of the Applicant.
(v)      The remaining balance to the Respondent.
The difficulty with Order 18 being expressed in this way is that it could only bring about the proposed 55:45 distribution if the net proceeds of sale of the home came to $1,900,000. If the home sold for more, the wife’s overall settlement would be less than the intended 55%. Conversely, if the home sold for less, she would receive more than 55%.

The slip rule order(s)

The husband made a formal application for the correction of the error the trial Judge had made in determining that the wife needed to receive 47% of the sale proceeds of the home to bring about the intended 55:45 overall division.
On 28 October 2009, with the consent of both parties, the trial Judge made an order which relevantly provided as follows:
2That Order in terms of paragraph 1 of the Application in a Case of the Husband filed 31 August 2009 in relation to the Slip Rule as set out hereunder.
“1.That pursuant to Rule 17.03 order 18(iv) of the Orders made by the Honourable Justice Rose on 6 August 2009 be amended by deletion of 47% and the insertion of 40.62%.”
The order carried the following notations:
A.An issue which had arisen in relation to Order 22 made 6 August 2009 has now been informally resolved.
B.That the Husband’s solicitor will email the Associate to Justice Rose by close of business 29 October 2009 with a minute of a signed consent order reflecting a variation of Order 18 made 6 August 2009.
It will be seen that the first notation contains reference to “Order 22”. This was an order containing a mechanism for the wife to sell the wine to the husband, if she so elected. The wife did not exercise this option.
The Minute of Consent Orders which was foreshadowed in the second notation was duly provided, and, on 30 October 2009, orders were made in terms of the Minute reflecting the agreed amendment to Order 18 concerning the division of the proceeds of sale of the home.
On the following day, 31 October 2009, the former matrimonial home was sold at auction for $2,200,000.

The scope of the “slip rule”

The orders made by consent on 28 October 2009 were expressly made “in relation to the Slip Rule” and “pursuant to Rule 17.03”. Ironically, the reference to Rule 17.03 was itself a slip, since the “slip rule” is to be found in Rule 17.02. That Rule is expressed as follows:
17.02 Errors in orders
(1)   If a party claims that there is an error in an order issued by the court, the party must give written notice of the error to the Registry Manager and all parties.
(2)   A Registrar may rectify an error that appears obvious on reading the order.
Example
A kind of amendment that a Registrar may make under subrule (2) is the correction of a typographical error.
(3)   If the Registrar:
(a) is in doubt about whether there is an error in an order; or
(b)    believes that an error in an order has, or may have, arisen from an accidental slip or omission;
the Registrar may take action under subrule (4).
(4)   If subrule (1) or (3) applies, the party or Registrar may, after giving reasonable notice to each party, refer the order to the judicial officer who made it.
Note   If the judicial officer who made the order is unavailable, it may be referred to another judicial officer (see rule 1.13).
(5)   A judicial officer may, after giving each party a reasonable opportunity to be heard, rectify a suspected error referred to the judicial officer.
Note   An amendment of an order may be made under this rule only if it is an error obvious when reading the order. Any other amendment must be remedied by appeal or consent.
It will be noted that Rule 17.02 contains one “example” and two “notes”; however, it is important also to record that Rule 1.17 provides that examples and notes found in the Rules are “explanatory only and are not part of these Rules”.
Given the concession made by senior counsel for the husband it is unnecessary to discuss in any detail the power of the Full Court to correct obvious errors, either pursuant to the slip rule or the implied or incidental powers of the Court (see DJL v The Central Authority (2000) 201 CLR 226 (“DJL v The Central Authority”), which dealt with the question of the Full Court setting aside its own orders, rather than orders the subject of an appeal).
The relevant principles may be summarised as follows:
·    rectification of an order that does not correctly reflect the court’s decision, as contained in its reasons, is properly “viewed as nothing more than a mechanical task” (see DJL v The Central Authority¸ at 263 per Kirby J and the authorities there collected);
·    the power to rectify an error in an order could not be confined to making an amendment “only if it is an error obvious when reading the order”, to use the expression contained in the “note” to Rule 17.02. If that “note” were to be read literally, even the order made on 28 October 2009 could not have been made, since the error could only be appreciated by reference to the reasons for decision;
·    rectification can only occur where the proposed amendment is one upon which no real difference of opinion can exist; therefore an omission or error is not to be treated as accidental if the proposed amendment requires the exercise of an independent discretion (see Russell v Russell (1999) FLC 92-877 and Milham v Stanford (2001) FLC 93-073 and the authorities there collected);
·    the power to rectify an order is discretionary and the court may decline to exercise the discretion “if something has intervened which would render it inexpedient or inequitable that [the amendment] be made” (see L.Shaddock & Associates Pty Ltd v Parramatta City Council(No. 2) (1982) 151 CLR 590 at 597);
·    although, as a general rule, the person best equipped to determine a request for rectification is the judicial officer who made the order, if that judicial officer is unavailable then another judicial officer can deal with the request (see Johnson v Johnson (2000) FLC 93-051 at 87,795);
· the power to rectify an order can be exercised by the members of a Full Court since, apart from the power expressly conferred on the Full Court by s 94(2) of the Act, s 28(1) of the Act provides that “the original jurisdiction of the Court may be exercised by one or more Judges” and s 28(2A) relevantly provides that “nothing in this Act prevents a Judge who is a member of the Appeal Division from exercising the jurisdiction of the Court that, under subsection (1) … may be exercised by one or more Judges” (see Murray v Director Family Services ACT (1993) FLC 92-416)

The parties’ submissions

Counsel for the wife originally rolled up his complaint about the practical result of the drafting of Order 18 into his complaint under Ground 3 that the outcome was manifestly unjust and inequitable. After some prompting from the bench, counsel for the wife ultimately submitted that even if there was no merit in Ground 3, it was open to the Court to rectify the claimed error by a further application of the slip rule (Appeal transcript, p.23). It was submitted that the orders made by the trial Judge did not reflect his clearly stated intention that the assets would be distributed 55:45 in favour of the wife.
Senior counsel for the husband submitted it was not open to the wife to complain about the outcome because she had consented to the orders made in October 2009, by which the original orders were amended. It was also submitted that the appeal was against the original orders and not against the subsequent consent orders. It was further submitted that it was potentially unfair for the value of the home to be adjusted, since the value of other assets would also be likely to have changed in the period between trial and the sale of the home.

Out of fairness to senior counsel for the husband, I should record that he had properly not anticipated having to deal with a slip rule issue. He was therefore required to make his submissions “on the run”, albeit the matter was stood down for some time to allow him to consider the matter and obtain instructions on relevant factual matters. It was only then that he learned, for example, that the consent orders made in October 2009 had been made before the sale of the former matrimonial home, not afterwards as he had understood.
I do not accept the submissions advanced on behalf of the husband on this issue. The trial Judge clearly intended that the wife would receive 55% of the assets, calculated by reference to the amount ultimately received on sale of the former matrimonial home. This can be seen from his reasons where he said that the wife should receive “a percentage of the net proceeds of sale to take into account movements in the marketplace, whether up or down, as not to do so may produce an unjust practical result for each of the parties”. It was clearly not his Honour’s intention that the husband would benefit to a much greater extent than the wife in the event the former matrimonial home sold for more than the value agreed for the purposes of the trial.
I also do not accept the submission that the appeal was against the original orders of 6 August 2009, and not against the October 2009 consent orders. Although, in Part D of the wife’s Notice of Appeal, the date of the orders appealed was stated as being 6 August 2009, the orders actually appealed were described as being “Order (1) and order (18)(iv) as amended by his Honour on 28 October 2009” (my emphasis). It is true that there was a subsequent consent order made on 30 October 2009, but this was an order giving formal effect to what his Honour had already ordered on 28 October 2009. Properly construed, there was only one order, namely that pronounced on 6 August 2009. The later order(s) merely rectified that original order.
In my view, the fact the slip rule order was made by consent is in no way fatal to the argument now mounted on behalf of the wife. When it first became apparent that the original orders did not reflect the trial Judge’s stated intention it was entirely proper for the wife to consent to their amendment. Had the wife not consented, there is no room for doubt the trial Judge would have rectified the orders. The basis upon which the orders were amended was made clear by the aide memoire presented at the time by the husband’s solicitor (a copy of which was provided on the hearing of the appeal). The only basis for the amendment was the correction of the errors that had then been identified.
There is also no merit in the submission that the orders relating to the proceeds of sale of the home should not be revisited because the other assets may also have changed in value after the trial concluded. Save for the wine collection, there was no issue between the parties that each of them would keep (and was therefore free to dispose of) all of the assets they had in their respective possessions. If they chose to retain those assets after trial, rather than liquidate them for the values agreed at trial, that was their choice.
Quite different considerations applied to the former matrimonial home. First, it was by far the most valuable asset. Secondly, it was jointly owned and neither party could therefore realistically dispose of their half interest prior to the sale. Thirdly, and most significantly, the trial Judge’s express intention was to ensure the settlement took account of fluctuations in the value of the home. No such intention was expressed in relation to any of the other assets.
His Honour’s statement of his intentions about the division of the proceeds of sale of the home was in accordance with the well accepted practice in this jurisdiction that when an asset is to be sold, the division of the proceeds should generally be expressed in percentage terms (see Bell and Bell (1993) FLC 92-347 at 79,683). His Honour did, of course, express his order in percentage terms (as did the orders pursuant to the slip rule). The difficulty is that the percentage chosen would only bring about the intended division if there was no variation in the value of the home.
Senior counsel for the husband succinctly identified what should have occurred when he said in his submissions (Appeal transcript, p.32):
It would have been easier, had his Honour moved the house to one side in the judgment and said everything else is going to be adjusted 45/55, adjust all of that, when the house sells, 45/55 on it, but that didn't happen.
Subject to one issue associated with delay, I can see no basis upon which it could be suggested that an injustice is worked if the orders are recast to do what senior counsel for the husband said should have been done in the first place. By this means, each party will receive their share of the former matrimonial home in the same proportions as they received the balance of the property, and in the proportions the trial Judge intended.
The issue of delay is an important one, given that the power to grant rectification of an order is discretionary. In my view, it should have been appreciated much earlier that it was unnecessary to utilise the appellate process in order to deal with the underlying error in the original orders. The matter ought to have been raised by further application to the trial Judge under the slip rule. Instead, the matter has been allowed to drag on, while in the meantime the proceeds of sale of the home have been distributed to the parties. The husband is now in a position where if the original orders are rectified, he will have to find the funds required to pay the wife the amount needed to bring about the 55:45 division.
The amount the husband will be required to pay to the wife is $35,647. I consider the prejudice the wife would suffer if she does not receive that amount would be no less than the prejudice the husband will suffer from having to make the payment. The prejudice to the husband can be partly ameliorated by giving him time in which to make the payment, and I would propose three months. The husband is a high income earner and should be able to make arrangements to obtain the required funds in that time.
The way in which the figure of $35,647 has been calculated can be seen from the table below. The amounts stated for the parties’ respective shares of the proceeds of sale come from the information provided to us at the hearing of the appeal. The other figures are taken from the table of assets and liabilities at paragraph 172 of the trial Judge’s reasons, which contained no errors.

Wife	Husband
Assets
Proceeds from sale of matrimonial home	398,663	582,782
[V Company] shares: 5,000 at $33	165,000
NAB shares – 835	15,364
Westpac shares 1,838	31,246
Managed funds W	11,656
2002 […] motor vehicle	13,800
CBA account	4,608
Savings	1,112
[G] Consultants Pty Ltd (joint)	352,959
Contents and artwork (matrimonial home)	32,500
Wine	45,000
Funds in trust	15,400
Legal fees paid	87,677	73,271
MLC superannuation	57,419
BT superannuation	67,886
AMP superannuation	51,590
[P] superannuation	53,383
Total assets	1,034,540	1,026,776
Liabilities
[V Company] loan	99,500
Loan from parents for legal fees	85,000
Loan for car from parents	20,000
[G Consultants] debt	92,364
CBA Visa	9,492
CBA Visa	5,730
American Express	15,059
Loan from mother for legal fees	7,200
Total liabilities	120,353	213,992
Net assets received by each party	914,187	812,784
Balancing payment required	35,646.79	(35,646.79)
Final outcome	949,833.79	777,137.21
Percentage division	55%	45%

Orders

The appeal should be dismissed for the reasons I have given, which accord with those given by May and Johnston JJ.
Order 18 of the original orders (as amended) should be further amended. The matter cannot be remitted to the trial Judge for this to be done, as his Honour has recently retired from office. In any event, as was properly conceded by senior counsel for the husband, the Full Court has a supervisory role which extends to correcting obvious errors in what he aptly described as an otherwise “impeccable judgment”.
The amendment to Order 18 should provide for the net proceeds of sale of the former matrimonial home to be divided in proportions 55:45 in favour of the wife, and for the wife to pay to the husband from her share of the proceeds the sum of $105,485. This formula would bring about a 55:45 division of all assets in favour of the wife, as his Honour intended.
The proceeds of sale of the former matrimonial home have, of course, already been distributed. The husband received more than he would have been entitled to receive under the formula I have proposed. For the avoidance of doubt, and to give effect to the amendment of Order 18, there should be an order requiring payment by the husband to the wife of the sum of $35,647 within three months.
The formal orders I would propose are these:
1         The appeal be dismissed.
2         Paragraph 18 of the orders made by Rose J on 6 August 2009, as      subsequently amended, be further amended pursuant to the slip       rule to read as follows:
(18)     That the parties shall cause the proceeds of sale of the            former matrimonial home to be applied in the manner following:-
(i)payment of real estate agent’s commission and auction expenses.
(ii)      payment of legal costs of sale.
(iii)     the discharge of the mortgage.
(iv)payment of 55% of the proceeds of sale to the Applicant wife;
(v)payment of the balance of the proceeds to the    Respondent husband;
(vi)     from her share of the proceeds of sale the Applicant     wife shall pay to the Respondent husband the sum of $105,485.
3         In order to give effect to Order (18) as varied, the husband pay to   the wife the sum of $35,647 within three months of the date of   these orders.

Costs

Senior counsel for the husband submitted that each party should pay their own costs in the event that the appeal succeeded only to the extent that the error made in the drafting of the formal orders was corrected (Appeal transcript, p.34). In my view, that is the proper outcome, since the wife’s appeal has otherwise been wholly unsuccessful, and the error could have been corrected by means other than by appeal.

I certify that the preceding one hundred and sixty seven (167) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Thackray & Johnston JJ) delivered on 31 August 2011.

Associate:

Date: 31 August 2011