Hunter and Borman & Anor

[2020] FamCAFC 250

FAMILY COURT OF AUSTRALIA

HUNTER & BORMAN AND ANOR [2020] FamCAFC 250

FAMILY LAW – APPEAL – PROPERTY – Where the parties were in a de facto relationship for approximately 34 years – Whether the primary judge intended to make no orders adjusting the existing property interests of either party in favour of the other – Whether it is readily discernible from the reasons for judgment that the primary judge was not satisfied as to the just and equitable requirement of s 90SM(3) or whether the outcome of the application of s 90SM(4) was that no property adjustment orders be made – Whether the primary judge’s reasons for judgment are adequate – Whether the primary judge failed to take account of material considerations – Appeal allowed and proceedings remitted for rehearing – Where costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) are granted.

Family Law Act 1975 (Cth) ss 79, 90SF, 90SM, 117
Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 8, 9

Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
Boensch v Pascoe (2019) 375 ALR 15; [2019] HCA 49
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
House v The King (1936) 55 CLR 499; [1936] HCA 40
Mullane v Mullane (1983) 158 CLR 436; [1983] HCA 4
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Sun Alliance Insurance Ltd v Massoud [1989] VR 8

APPELLANT: Ms Wallace as Case Guardian for Ms Hunter

RESPONDENT: Mr Borman

INTERVENOR: Attorney-General for the State of Queensland

FILE NUMBER: BRC 2660 of 2015

APPEAL NUMBER: NOA 29 of 2020

DATE DELIVERED: 9 October 2020

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Ryan, Kent & Tree JJ

HEARING DATE: 24 September 2020

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 20 December 2019;
Orders made: 16 March 2020

LOWER COURT MNC: [2019] FamCA 1003

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Galloway

SOLICITOR FOR THE APPELLANT: Frigo Adamson Legal Group

COUNSEL FOR THE RESPONDENT: Mr Wilson QC

SOLICITOR FOR THE RESPONDENT: Alex Mackay & Co

SOLICITOR FOR THE INTERVENOR: No appearance

Orders

1. The appeal be allowed.

2. As and from the making of final orders upon the re-exercise of discretion as a consequence of the remitter of these proceedings the orders made on 16 March 2020, save and except for Orders (11) and (12) concerning the J Foundation, be set aside.

3. The proceedings be remitted for rehearing by a judge other than the primary judge.

4. There be no order for costs pursuant to s 117 of the Family Law Act 1975 (Cth).

5. The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.

6. The Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.

7. The Court grants to the appellant and the respondent a costs certificate pursuant to s 8 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant and the respondent in respect of the costs incurred by them in relation to the rehearing ordered.

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 Hunter & Borman and Anor 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 BRISBANE

Appeal Number: NOA 29 of 2020
File Number: BRC 2660 of 2015

Ms Wallace as Case Guardian for Ms Hunter

Appellant

And

Mr Borman

Respondent

And

Attorney-General for the State of Queensland 

Intervenor

REASONS FOR JUDGMENT

1. On 16 March 2020 the primary judge made orders concluding property settlement proceedings brought pursuant to s 90SM of the Family Law Act 1975 (Cth) (“the Act”) after the breakdown of the de facto relationship between Ms Hunter and Mr Borman.

2. The primary judge made a finding, unchallenged on appeal, that the parties were in a de facto relationship “from about 1980 until about September 2014”, a period of 34 years.[1] Notably some five and a half years elapsed between the parties’ separation and the making of the subject orders.

   [1]Reasons at [15].

3. The orders made by the primary judge provided for Ms Hunter (then aged 91 years) to have a life interest in a delineated portion of the residence conveniently referred to as the C Street property owned by a discretionary trust controlled by Mr Borman (“the Borman Family Trust”). Both parties had been living at that residence since 2000 and had continued to live there from the time of the parties’ separation in September 2014.

4. The orders otherwise relevantly:

   a)Caused the surrender and relinquishment of any right of Ms Hunter as a beneficiary of the Borman Family Trust, the discretionary trust controlled by Mr Borman;

   b)Required Ms Hunter to resign as an officeholder in two (2) private companies which were to be retained by Mr Borman;

   c)Preserved to Ms Hunter her pre-existing ownership of three one kilogram bars of gold Mr Borman was ordered to deliver to her by interim orders made on 20 December 2019;

   d)Otherwise preserved to each party respectively the property interests held by each; and

   e)Regulated the administration of the J Foundation, a public charitable trust created by the parties, in which neither party was found to hold any beneficial interest, such that the administration be independent of the parties.

5. The intervenor was a party at the trial because of the involvement of the J Foundation, a public charitable trust. There is no appeal from the determination of the primary judge that neither Mr Borman nor Ms Hunter have any beneficial interest in that trust, nor is there any appeal from the orders made regulating its administration. Thus, the intervenor did not participate in the appeal and has no further interest in these proceedings.

6. Taken from the table appearing at [148] of the primary judge’s reasons for judgment, read with the findings which follow on various disputed issues, it appears that the orders had the effect that Mr Borman retained, or received the benefit of, property worth a total of about $2.1 million, whilst Ms Hunter retained, or received the benefit of, property worth a total of about $1.6 million. These figures do not take account of the ordered life interest for Ms Hunter in the C Street property, which was not the subject of valuation, either in respect of any affect the existence of the life interest had upon the value of the C Street property at $925,000, or the value of the life interest to Ms Hunter.

7. In short, the orders made did not effect any adjustment in favour of Ms Hunter of any property interest held by Mr Borman. In contrast, the property Mr Borman received or retained included the interim property orders that had been made in his favour in the post-separation period totalling $541,229,[2] found by the primary judge to be sourced to funds or investments originally held by Ms Hunter solely.[3]

   [2]$191,229 in March 2018; $250,000 in July 2018 and $100,000 in October 2018 – reasons at [306].

   [3]Reasons at [302]–[304].

8. Whilst there are 12 grounds of appeal contained in Ms Hunter’s Amended Notice of Appeal,[4] the central challenges on appeal from those orders made by the primary judge include, in summary and paraphrased form, that:

   [4]Ms Wallace as Case Guardian for Ms Hunter is the Appellant on this appeal.

   a)In the circumstances of this case, the primary judge erred in principle, and in the exercise of discretion, in declining to make any, or any appropriate, property adjustment orders in favour of Ms Hunter in respect of the property interests as existing at trial;

   b)The primary judge failed to adequately explain in her reasons for judgment, her Honour’s determination not to make any, or any substantial, property adjustment orders in favour of Ms Hunter;

   c)The primary judge failed to have any, or any sufficient regard, to material considerations including:

   i)The disparity between the parties of capital each party held at the outset;

   ii)The capital contributions of Ms Hunter to the C Street property;

   iii)The post-separation use made by Mr Borman of Ms Hunter’s capital of $379,994.55 to pay his own legal fees; and his total post-separation benefit of $541,229 sourced from Ms Hunter’s original capital;

   iv)The post-separation use made by Mr Borman of Ms Hunter’s intellectual property to derive income in a business; and

   v)Ms Hunter’s future needs by reference to relevant matters identified in s 90SF(3) of the Act.

9. The determination of the primary judge was an exercise of a discretionary judgment and the principles governing interference by an appellate court with such a determination are well settled.[5] Likewise well settled are the principles governing appellate interference with a discretionary judgment concerning the weight to be given to evidence.[6]

   [5]House v The King (1936) 55 CLR 499 at 504–505; Norbis v Norbis (1986) 161 CLR 513 at 517.

   [6]Gronow v Gronow (1979) 144 CLR 513 per Stephen J at 519–520.

10. Notwithstanding these constraints, for the reasons which follow we are satisfied that there is substance in those of the appellant’s central contentions on appeal to be discussed as to render the conclusion that the appeal must succeed. Further, and for the reasons which follow, it is not appropriate for this Court to re-exercise the discretion and the proceedings must be remitted for rehearing. Given these conclusions, it is unnecessary, and potentially unhelpful to the trial judge undertaking the re-exercise of discretion, for us to specifically traverse in detail each of the grounds of appeal seriatim.[7]

    [7]Boensch v Pascoe (2019) 375 ALR 15.

Central facts

1. Ms Hunter was born in Country the United States of America (“the USA”) in 1928 and is now 92 years of age. As noted, Ms Hunter has a Case Guardian, Ms Wallace.

2. Ms Hunter enjoyed success in the entertainment industry in the 1950s and 1960s, holding, at times, contracts with major USA companies. Her public profile has subsequently been utilised by her in promoting business endeavours, including as an author and documentary presenter, in the field of alternative health and alternative health management.  

3. Ms Hunter’s marriage to a reportedly wealthy man ended in 1957 after eight years of marriage which produced one child.

4. Mr Borman was born in the USA in 1943 and is now 77 years of age.

5. Mr Borman came to Australia in October 1982 and Ms Hunter joined him here in January 1983. They travelled to and from the USA and Australia for various periods but ultimately they both relocated permanently to Australia in January 1985.[8]

   [8]Reasons at [20].

6. The primary judge found that, as at January 1985, Ms Hunter’s financial situation was “vastly superior” to that of Mr Borman.[9] Ms Hunter was found to own property valued at $673,427, including substantial appreciating investments, whilst Mr Borman had $100,000 in savings but also a $50,000 debt.[10]

   [9]Reasons at [21].

   [10]Reasons at [22].

7. Relevant to capital disparity between the parties, Mr Borman went bankrupt on 28 May 1997[11] and was not discharged from bankruptcy until May 2000.[12] In comparison, Ms Hunter’s evidence at trial, which was unchallenged in this respect, included that by the year 2000 she had received some nine separate inheritances and her personal property interests then totalled $2,144,965 in value.[13] In short, some 20 years into the 34 year period of the parties’ de facto relationship Mr Borman was a bankrupt whilst Ms Hunter retained substantial property interests including investments.

   [11]Reasons at [61].

   [12]Reasons at [87].

   [13]Paragraph 43 of Ms Hunter’s affidavit filed on 28 September 2018.

8. Prior to the parties’ permanent relocation to Australia in January 1985, Ms Hunter purchased a property at N Street, D Town from her own resources. Mr Borman made no financial contribution to that acquisition. That property was sold in 2000 for net proceeds of about $400,000.

9. In September 1985, Mr Borman purchased a property at O Street, D Town with borrowings. Ms Hunter made no financial contribution to that acquisition. When sold in 1991, Mr Borman received $100,000 which he applied toward the mortgage on the C Street property now to be discussed.[14]

   [14]Reasons at [29].

10. The vacant land for the C Street property was purchased by Mr Borman in April 1987 for $78,000 with no direct financial contribution by Ms Hunter.[15] The residence was subsequently constructed on the land in 1990 with, it seems, no financial contribution by Ms Hunter.[16] However, it was accepted by Mr Borman that Ms Hunter spent approximately $400,000 renovating that part of the residence on the C Street property in which she lives to meet her medical needs.[17]

    [15]Reasons at [34]–[35].

    [16]Reasons at [37]–[38].

    [17]Reasons at [45].

11. In 1998, during the period of Mr Borman’s bankruptcy, Ms Hunter paid $105,000 from her funds to the mortgagee of the C Street property in order to avert the mortgagee’s exercise of its power of sale of the property. The primary judge found that such payment was a direct financial contribution to the conservation of the C Street property; that without this payment the mortgagee would have exercised its power of sale; and the aversion of that was “directly causative of the present-day retention of the C Street property”.[18] As at trial, the C Street property was valued at $925,000.

    [18]Reasons at [78].

12. Mr Borman operated a business known as the “J Centre” in his own name from about 1985 until in 1989 when the company J Pty Ltd was incorporated. Thereafter the business was operated through J Pty Ltd.[19] The primary judge accepted that the subject business had not done well financially prior to Mr Borman’s bankruptcy in May 1997.[20]

    [19]Reasons at [31] and [46].

    [20]Reasons at [48].

13. The primary judge set out in the reasons the conflicting versions of the parties as to the extent of the respective role each party claimed to undertake with respect to the J Centre business.[21] At [319], the primary judge recorded findings to the effect that Mr Borman undertook the day-to-day operations of the J Centre. The primary judge recorded:[22]

    … [Ms Hunter] contributed to the success of the [J Centre] by virtue of the fact that the book she authored created a certain amount of custom for the [J Centre] and I think it highly likely that she was “a presence” at the centre. I am not persuaded that [Mr Borman] was only able to achieve what was achieved from the operation of the [J Centre] and the business operated from the [C Street property] because of [Ms Hunter’s] inspiration, encouragement and enterprise; I accept that he brought his own energy to the creation and operation of the [J Centre].

    [21]Reasons at [49].

    [22]Reasons at [319].

14. The primary judge accepted that in the period following 1989, until Mr Borman’s bankruptcy in 1997, the J Centre business had not “done well”. Moreover, that its taxable income in the years of Mr Borman’s bankruptcy (1997 to 2000) was “nominal”.[23]

    [23]Reasons at [48].

15. Notably, the primary judge found that over a number of years J Pty Ltd reduced its taxable income by making substantial donations to the J Foundation, a charitable trust created by the parties. The primary judge found that over the years such donations totalled $790,000.[24]

    [24]Reasons at [51]–[52].

16. We interpolate here that, in circumstances where, as already noted, neither party was found to have any beneficial interest in the assets held by the J Foundation (found at [155] to be worth $2,004,657), neither party could claim with respect to the donations made any “contribution” within the meaning of s 90SM(4), as the property of the J Foundation never constituted “property of the parties to the de facto relationship or either of them”. The corollary is that other contributions to other property within the meaning of s 90SM(4) fell to be considered, and assessed, in the context that the earnings of J Pty Ltd had substantially been applied to property not belonging to either party.

17. In July 2002, the parties opened a joint overseas bank account. Ms Hunter transferred $550,000 from her personal overseas bank account (these funds originating from her pre-relationship property) into the joint account.[25] These funds later (in 2007) facilitated a “scheme” whereby J Pty Ltd as trustee of the Borman Family Trust (a discretionary trust controlled by Mr Borman) ultimately became the owner of the C Street property. The primary judge recorded a finding that, in about October 2014, Ms Hunter returned to her own bank account the sum of $550,000 from the joint account.[26]

    [25]Reasons at [95]–[96].

    [26]Reasons at [138].

18. Ms Hunter conducted business activities through the entities FF Pty Ltd and GG Pty Ltd. The primary judge recorded findings concerning Mr Borman’s acquisition of shares in FF Pty Ltd and the period of his common directorship of that company with Ms Hunter. There was a dispute between the parties as to the transfer of the business of FF Pty Ltd to GG Pty Ltd with Ms Hunter’s case being that Mr Borman misappropriated the business she previously operated via FF Pty Ltd into GG Pty Ltd, a business which Mr Borman ultimately operated and controlled. The primary judge recorded her acceptance of Ms Hunter’s contention that, from 2014, Mr Borman took over the business she had previously run through GG Pty Ltd.[27] Moreover, the primary judge recorded a series of findings to the effect that Mr Borman had exploited the intellectual property of Ms Hunter since the parties’ separation in 2014 without any recompense to Ms Hunter.[28] Mr Borman retained all of the income earned by GG Pty Ltd since then and her Honour found that he applied that income for his own purposes. The primary judge recorded:

    131.I also accept that [Mr Borman] has caused [GG Pty Ltd’s] use of [Ms Hunter’s] intellectual property to continue on an ongoing basis since 2014; he accepted that, as at the date of the hearing in 2018, he continued to use [Ms Hunter’s] image and name on the website used by [GG Pty Ltd] to promote its business and sell its products; he accepted that, despite his evidence being that [Ms Hunter] had nothing to do with the operation of [GG Pty Ltd] or the business operated through it since 2014, its website continues to refer to her by name: for example, customers are told to confirm their request to receive “[Ms Hunter] free ezine enabling you to keep posted on [Ms Hunter’s] latest research, health tips and more” – a message that is signed “[Ms Hunter’s] team”.

    132.Whilst [Mr Borman] said, when cross-examined, that he thought that they should perhaps delete these messages, it is clear he has not done so since assuming control of [GG Pty Ltd] and its business in 2014. Given his actions and the contents of the website, I do not accept his rejection of the proposition that, since he took over the business operated through [GG Pty Ltd] in 2014, he has simply been trading off [Ms Hunter] in every conceivable way and exploiting her image, her reputation and/or her intellectual property. I also accept, as more likely than not that [Mr Borman] caused the staff who work for him to change the PayPal account operated by [GG Pty Ltd] from one over which [Ms Hunter] had control to one over which he has control and, by so doing, ensured that she did not receive any payments from the sale of products as had previously been the case prior to 2014.

    133.A proper appreciation of [Mr Borman’s] attitude to his stewardship of the businesses operated through [J Pty Ltd] and [GG Pty Ltd] can be appreciated by considering his answer to why, given that each of these entities continued to trade and earn income after the September 2014 separation, he did not remit any of the income they earned to [Ms Hunter]: he said, in essence, “why would I want to do that? She has treated me abominably.” He also said that he knew she had a source of funds and would not be “starving in the street.”

    [27]Reasons at [122]–[128].

    [28]Reasons at [129]–[133].

Adequacy of reasons

1. It is convenient to deal with this topic as the challenge to the adequacy of the primary judge’s reasons for judgment permeates most of the challenges advanced on appeal.

2. The principles applicable to a challenge as to the adequacy of reasons for a discretionary judgment are well-established and are often repeated by this Court (see Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 (McHugh JA); Bennett and Bennett (1991) FLC 92-191 (“Bennett”) at 78,266. See also the reference to Sun Alliance Insurance Ltd v Massoud [1989] VR 8 in Bennett at 78,266). They need not be restated here.

3. It is not open to doubt that the High Court’s statement of principle in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) as to the proper interpretation and application of s 79(2) and s 79(4) of the Act apply equally to the interpretation and application of s 90SM(3) and s 90SM(4) of the Act respectively.

4. It follows from Stanford that a determination not to make any order altering the existing property interests of parties in a particular case may rest on the conclusion that in the circumstances of the case the just and equitable requirement (s 79(2) or s 90SM(3)) is not satisfied. Alternatively, application of the mandatory considerations required (s 79(4) or s 90SM(4)) may result in the conclusion that no property adjustment order should be made.

5. In other words, there will be cases, such as Stanford itself, where it is concluded that the just and equitable requirement (expressed in s 79(2) or its equivalent in s 90SM(3)) for the making of any adjusting order is not satisfied. There will be other cases where, whilst the just and equitable requirement may be satisfied by the circumstances of the case, the outcome of the application of the mandatory considerations (s 79(4) or its equivalent in s 90SM(4)) is that no adjusting order to existing property interests ought be made. This latter category of case is embraced by the High Court’s statement at [42] of Stanford, with reference to the term “if any” appearing in each relevant section, as follows:

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

   (Emphasis added)

6. A significant part of the argument on appeal, on both sides of the record, centred upon whether the primary judge had determined, pursuant to s 90SM(3), that it was not just and equitable to make any order under s 90SM(1) or whether, alternatively, no property adjustment order in Ms Hunter’s favour was made by reason of the primary judge’s application of the s 90SM(4) considerations. Queen’s Counsel for Mr Borman argued forcibly, in both his written and in his oral argument on appeal (at least initially) that the primary judge had applied s 90SM(3) in concluding that it was not just and equitable to make property adjustment orders.

7. It is evident that throughout the reasons the primary judge gave some emphasis to what might be termed the financial independence in the conduct of each party, and what consequence might follow from that. The following extracts from the reasons demonstrate this feature:

   16.I have arrived at my conclusion about the existence of a de facto relationship despite the following:

   a)that, save for one joint [overseas bank account], [Mr Borman] and [Ms Hunter] maintained separate bank accounts during the course of their relationship; and

   b)that [Mr Borman] never declared [Ms Hunter] to be his “spouse” on any tax return he submitted; and

   c)that, on 29 September 2015, [Ms Hunter] filed an Amended Response in which she sought a declaration that their relationship had broken down on or before 31 December 1999 and that, therefore, the Court did not have jurisdiction to make the orders [Mr Borman] sought in the Initiating Application he had filed on 26 March 2015; and

   d)the matters discussed in paragraphs 67 and 68.

   17.The conclusion that [Mr Borman] and [Ms Hunter] were in a lengthy de facto relationship does not, though, axiomatically mean that their respective contributions of whatsoever nature during that time were equal or that each should be taken to have any, or any equal, interest in property owned solely by the other. Whilst said in the context of parties to a marriage, there is no presumed community of ownership of property in Australia; nor should it be assumed, simply by virtue of a determination that the parties were in a de facto relationship – even one of significant duration - that their respective legal and/or equitable interests in property should be other than what they are.

   18.Whilst most cases are best considered by assessing the relevant statutory considerations globally, this case is one in which I consider that the requirement to determine whether it is just and equitable to make any orders altering the interests of [Mr Borman] and [Ms Hunter] in property owned by each of them (and/or property which it is accepted is subject to their control by virtue of their control of corporate entities or trusts) is best discharged by analysing, as chronologically as possible, their respective contributions (of all natures) to property. Such analysis will, in my view, also expose the underlying reality of their relationship since early 1980 and demonstrate the rationale for the decision I have reached about the existence of their de facto relationship and its duration and also about whether it is just and equitable to make orders and the nature of the same. 

   …

   311.I consider that, even though I have been persuaded that [Mr Borman] and [Ms Hunter] were in a lengthy de facto relationship, they actually approached their respective financial positions within the same in a manner more akin to that of business partners or associates: each was involved in various real property transactions to the exclusion of the other; each maintained separate bank accounts save for the sole joint account with [K Bank]; each used the other as a protective shield when facing “attack” from parties external to their relationship where such “attack” involved risk to the property each owned individually; whilst  they lived together at the [C Street property] and, I think both contributed in different ways to the operation of the [J Centre] business operated from there,  each later ran their own separate business, albeit a business that was complimentary of the business run by the other, using staff each individually employed; their financial situations remained largely separate – whilst [Ms Hunter] helped [Mr Borman] to retain the [C Street property] by providing him with $105,000.00 at what I consider to be a vital time, the [J Centre] thereafter supported [Mr Borman] and, via its profits, enabled him to cause himself to receive significant personal superannuation entitlements – entitlements that were not made available to [Ms Hunter] despite the fact that, on both parties’ accounts, she at least lectured at the [J Centre] on a regular basis and, as a result, would (had the parties wanted to act to achieve this) have been in a position to receive superannuation contributions from [J Pty Ltd] in the same manner in which [Mr Borman] received them.

   …

   315.Insofar as it was asserted by [Mr Borman] that he and [Ms Hunter] applied their financial resources for mutual benefit, the same could almost be said of any occupants of a share house. That another, including one with whom a party is in a de facto relationship, obtains benefit from financial resources does not, it seems to me, mandate that justice and equity will only be achieved if there is a change ordered to the existing legal or equitable ownership of the resources from which that benefit is derived.

   …

   317.I am not persuaded on the evidence before me that, other than in relation to the specific matters to which I have particularly referred in these Reasons, either of [Mr Borman] or [Ms Hunter] supported the other financially. I consider that both chose to live very much separately financially; save for the situation in respect of [GG Pty Ltd] from 2014 onwards, both assisted the other to deal with real or anticipated threats to their ongoing ownership or control of property each owned or controlled individually and both did so from the perspective of assisting the other to maintain control of the threatened entity or business.

8. There is, therefore, some force in the argument of Queen’s Counsel for Mr Borman that the primary judge’s determination rested upon a conclusion that s 90SM(3) applied with the effect that no order adjusting the existing property interests of either party ought be made.

9. In the course of argument of the appeal, we raised with counsel whether the orders made for Ms Hunter to have a life interest in a portion of the residence of the C Street property owned by Mr Borman’s trust fell to be characterised as property adjustment orders made pursuant to s 90SM(1). We referred counsel to the High Court’s decision in Mullane v Mullane (1983) 158 CLR 436 at 445 where it was held, with reference to the equivalent s 79 of the Act, that s 79 refers only to orders which work an alteration of the legal or equitable interests in property. An order which “merely excludes one spouse from the enjoyment of property”, even for many years, was held not to work such an alteration.

10. Queen’s Counsel for Mr Borman argued that the subject order could be characterised as being made pursuant to the power to grant injunctions.

11. Whilst we are inclined of the view that an order conferring a life interest registerable on the title of land may properly be characterised as effecting an alteration of the legal or equitable interest, and thus as a property adjustment order, without the benefit of considered argument we decline to express a concluded view. It suffices to observe that we are satisfied, on balance, that the primary judge clearly had in mind the power under s 90SM in making the orders for the life interest. Certainly, no other juridical source of power for the orders made was identified by the primary judge.

12. In argument of the appeal we raised with Queen’s Counsel for Mr Borman that at [415] of the reasons, under the heading “Conclusion and justice and equity of the proposed orders” her Honour expressed “[f]or the reasons outlined above, I am satisfied in all the circumstances of this case that it is just and equitable and appropriate that orders be made to ensure that…”. In other words, that the use of the word, in particular, “appropriate” reflected the making of orders under s 90SM(1).

13. In this context, it is to be noted that whilst her Honour delivered reasons for judgment on 20 December 2019, a period was allowed for the parties to formulate orders in conformity with the reasons delivered. The orders were made on 16 March 2020. Those orders included an order that Ms Hunter surrender or relinquish her right as a beneficiary of the Borman Family Trust (Order 2). At least that order, and arguably others, would appear to constitute a property adjustment order.

14. Moreover, Queen’s Counsel for Mr Borman was afforded the opportunity to submit as to the power the primary judge relied upon to make orders for Ms Hunter to be granted a life interest in the C Street property, if it be that the primary judge was purportedly not to make that order pursuant to s 90SM(1).

15. In the end result, we took it that Queen’s Counsel for Mr Borman resiled from the contention that the primary judge relied upon s 90SM(3) in determining not to make any property adjustment orders at all but we consider that the fact that there can exist any debate about this aspect supports the conclusion that the path of reasoning of the primary judge is not readily discernible.

16. That aspect aside, we consider that there are more fundamental difficulties in terms of the adequacy of the primary judge’s reasons.

17. At [18] of the reasons, already quoted in full above, it appears that the primary judge proposed to take an asset by asset approach in considering contributions, rather than a global approach. However, whilst the primary judge’s reasons contain detailed references to the chronology of events concerning assets and business undertakings of the parties, the reasons do not contain much at all in the way of quantitative or qualitative assessments, or comparisons, of the contributions of one party vis à vis the contributions of the other. For example, reference has already been made to the capital contribution of $105,000 Ms Hunter made which, on the primary judge’s findings, was directly causative of the retention of that asset in the face of Mr Borman’s bankruptcy. There is no discernible path of reasoning to the conclusion that, notwithstanding that capital contribution, Mr Borman should retain effectively 100 per cent of the C Street property, via his discretionary trust, subject only to the life interest granted in Ms Hunter’s favour of a portion of the residence on the property.

18. Further, at [305] to [308] of the reasons, the primary judge dealt with the use of funds post-separation and in particular, at [308], whether there ought be a notional add-back of funds drawn by Ms Hunter from her B bank account. These drawings included the drawings in favour of each party to the extent of $541,229 each received by way of partial property settlement orders post-separation.

19. Paragraph 308 of the reasons is, with respect to the primary judge, somewhat difficult to follow but it is expressed as follows:

    308.Given: my conclusion that [Ms Hunter’s] pre-cohabitation property was the original source of the funds held in the [B Bank] account; and my conclusions about the manner in which these two people managed their finances during their relationship and the consequence of that on the determination of those orders which are just and equitable; and the absence of evidence to enable me to quantify [Mr Borman’s] total contribution to the funds previously held in the joint [K Bank] account; and my conclusion about the ownership of the funds from which she has drawn; and [Ms Hunter’s] personal circumstances and her relatively long-standing need for care; and that I accept the contention that, since 2014, [Mr Borman] has had the benefit of receiving all of the income generated by [GG Pty Ltd] (in the circumstances discussed earlier); and my acceptance of the principles that parties are not required to go into a state of suspended economic animation pending the resolution of proceedings such as this and that the notional adding-back of property which I accept has, in the majority, been spent on meeting the reasonable care needs of a person in [Ms Hunters] circumstances (given the manner in which she has historically arranged for her personal care needs to be met since 2014) ought be the exception rather than the rule, I decline to exercise the discretion to notionally add-back those funds which [Ms Hunter] has drawn from the [B Bank] account.

    (As per the original)

20. We accept Ms Hunter’s contention on appeal that the reasons for judgment provided do not adequately explain the conclusion that despite Mr Borman receiving, post-separation, $541,229 of essentially Ms Hunter’s capital accumulated from her pre-cohabitation resources and, for example, then supplemented by her inheritances received during the relationship, that no further account was to be taken of this. That is, if the capital Mr Borman received was not to be added-back, that there nevertheless was to be no adjustment whatsoever made in Ms Hunter’s favour in respect of it.

21. To like effect, we have earlier referred to the topic of Mr Borman’s use of Ms Hunter’s intellectual property in the lengthy post-separation period after September 2014 and the findings the primary judge made concerning Mr Borman’s exploitation of Ms Hunter’s intellectual property and his retention of all income earned by the business operated by GG Pty Ltd.

22. We are unable to see anything in the reasons for judgment explaining how, notwithstanding Mr Borman’s post-separation benefit in this respect or, put differently, Ms Hunter’s post-separation contribution in this respect, that is properly balanced out in the conclusion that no property adjustment order of consequence be made in Ms Hunter’s favour.

23. We are satisfied that the primary judge’s reasons for judgment do not contain a discernible path of reasoning to support the orders made and that the inadequacy of the primary judge’s reasons is an error of law sufficient of itself for the appeal to succeed.

Material considerations overlooked

1. In addressing the question of adequacy of the primary judge’s reasons, reference has already been made, in that context, to a number of material considerations which in our judgment are not adequately addressed by the primary judge.

2. As earlier referred to, the fact that such a significant proportion of the earnings of J Pty Ltd over a period of years were donated to the J Foundation brought particular focus to the parties’ respective contributions otherwise. It does not appear from the reasons for judgment that the primary judge gave consideration to this material consideration.

3. If we are correct in the conclusion that her Honour’s determination rested upon the application of s 90SM(4) considerations, then an obvious material consideration which fell for consideration were the matters referred to in s 90SF(3) of the Act, as required by s 90SM(4)(e).

4. At [323] and [324], the primary judge recorded:

   323.I accept that [Mr Borman], who is about 15 years younger than [Ms Hunter], enjoys significantly better health than [Ms Hunter]. I accept that her health could easily be described as relatively poor; however, it also seemed to me that, whilst [Ms Hunter] requires 24 hour care and, as [Mr Borman] said, has done so for at least the last few years, the carers and associated service providers she has been able to employ to care for her appear to have ensured that she continues to enjoy her life.

   324.Given my conclusion about the ownership of the funds held in the [B Bank] account referred to above, [Ms Hunter] has that as well as the gold bullion to be returned to her possession by [Mr Borman] from which to support herself financially in the future; as well as the property under his control (which includes the gold bullion in his safe after the return to [Ms Hunter] of three one kilogram bars of gold), the evidence is to the effect that [Mr Borman] receives about $300.00 gross per week as a consequence of his employment by [J Pty Ltd] and about $500.00 per week from his US pensions; in addition, he continues to run the business operated through [GG Pty Ltd].

5. Apart from later addressing that Ms Hunter ought be able to continue to reside in a portion of the premises located on the C Street property, the above paragraphs appear to be the only observations of the primary judge contained in the reasons for judgment which are referable to s 90SF(3) matters.

1. However, s 90SF(3) requires that, for example, account be taken of inter alia, the income of both parties and the necessary commitments of each party.

2. In the course of argument of the appeal, Queen’s Counsel for Mr Borman submitted that Ms Hunter was expending $7,000 per week in meeting her needs. Whilst Queen’s Counsel raised that in the context of discussing any

   
   

   re-exercise of the discretion in this case, and the respondent having the opportunity to test the reasonableness of that expenditure, the point of emphasis for present purposes is that Ms Hunter obviously has very significant commitments to support herself. This was not apparently considered by the primary judge.

3. We find force in the submission that the primary judge simply averted to Ms Hunter’s existing property and resources as sufficient for her needs as if no further consideration was required to be given to relevant s 90SF(3) matters, or how these balanced out. In any event, it is clear that the primary judge’s reasons for judgment do not reflect that her Honour gave any, or any sufficient, consideration as is required to the s 90SF(3) matters.

4. In this context, we also note that as is recorded at [400] and following of the reasons for judgment, Ms Hunter contended at trial for an order that Mr Borman transfer his shareholding in GG Pty Ltd to Ms Hunter so that she might utilise that entity and the business operated through that entity to provide her with income. The primary judge recorded:

   401.Given [Ms Hunter’s] personal circumstances, it seems to me that [Ms Wallace] (or someone employed by her on behalf of [Ms Hunter]) would be required to operate this business on her behalf. [Ms Wallace’s] evidence was, in effect, that she projected that, if [Ms Hunter] took over the operation of the business operated through [GG Pty Ltd], the same could provide her with an income of about $60,000.00 per year. She said she arrived at this figure using the figures in the tax returns prepared on behalf of the company and on the assumption that, if [Ms Hunter] achieved the orders in respect of [GG Pty Ltd] that she sought and also received the [C Street property], there would be no need for the company to pay rent for its occupation of the premises at [C Street] and, therefore, would, she thought achieve a profit. She sad that she believed that [GG Pty Ltd] could produce an income of about $60,000 per annum for [Ms Hunter], taking into account the fact that she would have to pay someone to run the business for her.

5. In the result, the primary judge did not address or answer this contention by the provision of reasons. By the orders ultimately made, Mr Borman retained this business and the reasons for judgment do not descend to any explanation for this. Whilst this adds to the complaint about adequacy of reasons, it also serves, for present purposes, to emphasise that the primary judge did not give proper consideration to the capacity of each party to derive income nor to their respective necessary commitments, which in the case of Ms Hunter, were obviously a material consideration to the making of orders.

6. When the primary judge’s reasons for judgment are read as a whole it appears that the primary judge’s emphasis upon what her Honour characterised as financial independence in the conduct of each party, was a decisive consideration in the determination that no property adjustment order be made in Ms Hunter’s favour. We consider that the characterisation of financial independence with this consequence reflects some degree of failure to take account of the following material considerations.

7. First, it is not possible to characterise relevant post-separation events as reflecting financial independence. Mr Borman received the benefit of $541,229 in interim property distributions essentially sourced to funds or investments of Ms Hunter. Mr Borman also exploited, over the five and a half year period between separation and orders, the intellectual property of Ms Hunter without account to her for that use.

8. Second, reference has already been made to the primary judge’s observation at [315] as follows:

   315.Insofar as it was asserted by [Mr Borman] that he and [Ms Hunter] applied their financial resources for mutual benefit, the same could almost be said of any occupants of a share house…

9. To accept that the characterisation of these parties as equivalent to share house occupants overlooks numerous of the primary judge’s own findings as to the extent to which each party contributed to the finances or business interests of the other including by directorships and the like. The application by Ms Hunter of $105,000 of her own capital to prevent the mortgagee sale of the C Street property which thereby preserved that property for Mr Borman’s benefit can hardly be characterised or equated to the conduct of the occupants of a share house.

10. More significantly, the fact that these parties were in such a lengthy de facto relationship means that each had the benefit of the mutual comfort, society and support derived from such a relationship, quite apart from financial aspects.

11. In summary, the primary judge’s approach reflects, in our respectful view, failure to properly consider the non-financial aspects of the parties’ respective contributions; their joint participation in various business enterprises and consequent intermingling of finances; and such things as, by way of simple example, that whilst each employed staff those staff at times undertook work for both parties.

12. We are satisfied that there is substance in the complaints on appeal that the primary judge failed to take account of material considerations.

Conclusion

1. For these reasons the appeal is to be allowed.

2. Given the respective ages of these parties and the feature that they have been involved in litigation since 2015, we were at some pains to explore the prospects of this Court re-exercising the discretion in the event of the appeal’s success rather than the proceedings be remitted for rehearing.

3. In the result, we were persuaded that it is not feasible for this Court to re-exercise the discretion. First, each party ultimately sought the opportunity to present evidence of current circumstances for the purpose of the re-exercise. Moreover, the findings of the primary judge which remain undisturbed on appeal would not be sufficient to enable this Court to adequately re-exercise the discretion, particularly as regards s 90SF(3) matters.

4. For these reasons, it is necessary that the proceedings be remitted for rehearing.

5. As the subject orders made on 16 March 2020 include orders securing Ms Hunter’s continued occupation of the C Street property, we will order that the subject orders be set aside only as and from the making of final orders upon the re-exercise of discretion. Orders 11 and 12, dealing with the J Foundation, were not the subject of challenge on appeal and ought remain undisturbed.

Costs

1. Given the bases upon which the appeal is to be allowed and the proceedings remitted for rehearing, we are not persuaded that there ought be an order for costs in favour of Ms Hunter to be met by Mr Borman.

2. Rather, we are satisfied that relevant costs certificates should be granted pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) to both parties both in respect of the appeal and in respect of the rehearing.

3. As the issue which concerned the intervenor has been determined and was not challenged on appeal, nor is it to be revisited on the rehearing, there will be no need for the intervenor to be involved in the remitted proceedings.

I certify that the preceding seventy six (76) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ryan, Kent & Tree JJ) delivered on 9 October 2020.

Associate: 

Date:  9 October 2020