ISAACSON & ISAACSON
[2019] FCCA 522
•6 March 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ISAACSON & ISAACSON | [2019] FCCA 522 |
| Catchwords: AFFIDAVITS – Not admissible – not a matter of weight – review of authorities. |
| Legislation: Evidence Act 2008, s.79(1) Family Law Rules2004, O.16, r.10 |
| Cases cited: Corrigan v Commvault Systems (Australia) Pty Ltd(2011) 192 FCR 71 Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 Dunne v English(1874) LR 18 Eq 524 Goodridge & Beadle [2017] FCCA 3219 GPI Leisure Group Ltd v Herdsman Investments Pty Ltd (No 3) (1990) 20 NSWLR 15 In the Marriage of Chang & Su (2002) FLC 93-117 Manson v Ponninghaus (1911) VLR 239 |
| Other materials: John Levingstone, The Law of Affidavits (Federation Press, 2018) Justice Arthur R Emmett, ‘Practical litigation in the Federal Court of Australia: Affidavits’ (2000) 20 Australian Bar Review 28 Justice John Bryson, “Affidavits” (1999) 18 Australian Bar Review 166 The Honourable Justice Alan Robertson, “Affidavit Evidence” (FCA) [2014] Federal Judicial Scholarship 3 |
| Applicant: | MS ISAACSON |
| Respondent: | MR ISAACSON |
| File Number: | MLC 10723 of 2017 |
| Judgment of: | His Honour Judge J D Wilson QC |
| Hearing date: | 7 February 2019 |
| Date of Last Submission: | 28 February 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 6 March 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr D Sweeney |
| Solicitors for the Applicant: | Lander & Rogers |
| Counsel for the Respondent: | Ms E Johnson |
| Solicitors for the Respondent: | Zenith Lawyers and Consultants |
DIRECTION
By 4pm on 7 March 2019 the parties submit a minute of proposed orders that give effect to these reasons.
ORDER
The parties are at liberty to apply for a further hearing 10am on Friday 8 March 2019.
IT IS NOTED that publication of this judgment under the pseudonym Isaacson & Isaacson is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 10723 of 2017
| MS ISAACSON |
Applicant
And
| MR ISAACSON |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to this proceeding were married between 2010 and 2016. In October 2017 the applicant commenced this proceeding for orders dividing property.
When distilled to their essence, the issues between the parties were few. In no particular order, they were –
a)the value of the husband’s book collection and whether orders should be made for the sale of the collection;
b)in what percentages the sale proceeds of the book collection should be divided;
c)whether the husband’s expectant inheritance should be included in the assets to be divided; and
d)the financial contributions of the parties.
Synopsis
For the reasons that follow, in my judgment the issues set out above should be resolved in the following manner –
a)an order should be made for the sale of the book collection and once sold the proceeds derived therefrom should be divided on a 50/50 basis;
b)the inheritance interest of the husband should be included; and
c)financial contribution of the parties should be assessed in the amount of 75% by the applicant and 25% by the respondent.
Short relevant factual narration
A significant number of affidavits was admitted into evidence and the parties were cross examined in depth yet this case was dealt with during a trial that lasted for one day only. May I at once acknowledge the cooperative approach by all legal practitioners in conducting the trial of this proceeding in such a way as to enable the real issues to be exposed, debated and considered with expedition.
The applicant is 11 years younger than the respondent. They commenced a relationship in 2006. At the time, the applicant worked for the Employer earning a salary in the order of $60 000 plus superannuation. The respondent at the time worked casually as a customer service officer while undertaking a degree at University.
In 2008 the parties commenced living together. They purchased the property that later became the former matrimonial home for a little over $400 000 funded as to $20 000 from the wife, $70 000 from the husband, a first home-owner’s grant and mortgage finance. The wife assumed sole responsibility for meeting the mortgage repayments as she was in regular employment whereas the husband’s employment was sporadic and his income was modest.
The parties married in 2010. Costs of the wedding in the vicinity of $60 000 were met by drawing down that sum and correspondingly increasing the parties’ liability to the mortgagee. The wife’s income, solely, was applied to meet amounts owing to the mortgagee. The wife’s parents provided a $40 000 gift to the wife to assist meeting the wedding costs. The husband’s parents provided a gift of $5 000 to assist meeting honeymoon costs. Cash given to the parties as wedding gifts was applied by the husband towards his acquisition of books in which he had a considerable focus throughout his marriage to the applicant.
The parties did not have children. That was despite their participation in expensive IVF treatment in an attempt to conceive. The wife’s family contributed sums in the order of $30 000 to assist in meeting the costs associated with IVF treatment.
In 2014 the husband’s father’s health deteriorated in response to which the husband began spending three days a week with his father. While at his father’s house, the husband began to store his book collection there, spending some of his time cataloguing the collection.
In 2014 the wife’s aunt left the wife $123 000 by way of inheritance. Of that sum $20 000 was applied towards meeting a liability the husband owed in relation to taxation and the balance was applied towards meeting the couples’ day‑to‑day living expenses.
In 2015 the relationship between the parties was in decline. They travelled to Country A in an endeavour to repair their relationship. The wife’s parents gave the wife a gift of $10 000 to enable her to salvage her marriage. While on that vacation, the husband spent $2 000 purchasing books.
Later in 2015 the wife’s employment with the Employer came to an end and she commenced employment in the field of customer service. At the time, the husband insisted on storing his book collection at the former matrimonial home. The wife disagreed. The husband insisted upon the wife paying for renovations to the former matrimonial home for the purpose of creating storage facilities for the husband’s book collection. The wife refused. Their relationship by that time was seriously strained.
On 21 March 2016 the parties separated. The wife left the former matrimonial home and the husband continued to reside there. Between March and November 2016 (eight months in all) the wife met all instalments due under the mortgage in respect of the former matrimonial home. After November 2016 the husband met some interest payments under that mortgage.
Slightly earlier, on 18 August 2016 the husband’s father died leaving the husband with a one-third interest in his father’s estate made up of cash and real property in which the husband’s brothers also had an interest.
In … 2017, the wife commenced employment with an Employer .
In this litigation the parties agreed that the former matrimonial home was valued at $850 000. They were in dispute about the value to be attributed to the book collection, the wife contending it was worth $384 421 whereas the husband contended that it was worth $183 905. The parties otherwise agreed on the value of a motor vehicle 1 being $5 000, a motor vehicle 2 valued at $27 000, the wife’s cash at bank of $19 264 and a distribution received by the husband from the estate of his late father of $66 496. The parties disagreed about the value to be attributed to certain crockery and a ring, the wife contending the value was $500 whereas the husband contended the value was $5 500.
So far as assets were concerned, the wife contended the value to be divided was $2 072 316 whereas the husband said the value to be divided was $1 178 695, a difference of almost $900 000.
Both parties agreed that the sum of $33 000 had to be added back, being money from an estate that was given to the wife.
A little over $13 000 separated the parties in respect of liabilities. Each agreed $401 000 was owed to the mortgagee in relation to its debt over the former matrimonial home. The applicant attributed a sum of a little over $13 000 in respect of one or more credit card debts. The parties were agreed in their respective values of superannuation, that item totalling $106 419.
One of the larger issues to be determined in this case related to the contributions each party made. The wife said the husband contributed $75 000 being $70 000 in savings and a $5 000 gift from his parents. The husband was cross examined at length and with force about the subject of his and the wife’s contributions. At least one important aspect of the husband’s evidence emerged in the following terms –
[Mr SWEENY]
And you heard me outline this morning to his Honour what your case amounts to in dollar terms. You recall that?‑‑‑Yes, I recall that.
And I’m right in saying, am I not, that you say you will transfer the home to the wife for her taking over the mortgage and paying you $250,000?‑‑‑Yes, that’s right.
You want to keep your interest under your late father’s will. Right. And that’s the share in the house at Property B. You have got two brothers and under the will you get a third. Correct? Don’t – the microphone won’t ‑ ‑ ‑?‑‑‑Yes.
‑ ‑ ‑ pick up a nod, [redacted]?‑‑‑Yes. That’s correct.
Yes. You have already received $66,496 already under the ‑ ‑ ‑?‑‑‑Yes, that’s correct.
‑ ‑ ‑ estate? You want to keep your book collection?‑‑‑Yes.
You want to retain all of the collectables, whatever you’ve got?‑‑‑Yes.
You want to retain your motor vehicle?‑‑‑Yes.
You want to retain the cash that you’ve got in the bank?‑‑‑Yes.
And what your wife should get, after making the payment to you from the house, is that she should keep her savings?‑‑‑Yes.
And what else? Her superannuation?‑‑‑Her superannuation.
Yes. What else?‑‑‑Money in the bank.
I’ve dealt with that?‑‑‑And the house itself.
The husband was challenged about his household contributions. He was shown a table that recorded his and his wife’s income from 2010 to 2017. It was as follows –
Year
Wife
Husband
2010
$61 893
$8 029
2011
$65 439
$4 434
2012
$65 576
$15 971
2013
$71 406
$12 154
2014
$70 530
$18 736
2015
$72 242
$18 082
2016
$75 339
$4 311
2017
$47 066
$19 131
Total
$529 491
$100 848
The husband said he agreed he was not working to his optimum but there was a reason for that. He cited his caring for his elderly parents. He said that on average he worked six to 10 hours each week undertaking casual employment activities for which he was paid at the rate of $100 per hour. He said he had not applied for full time employment. The husband agreed with the proposition put in cross examination that in terms of respective proportions, he made 25% of the financial contributions to the marriage whereas the wife made 75% of the financial contributions to the marriage. The husband volunteered in his cross examination that he did not actually see the money the wife applied as the husband and the wife maintained separate banking accounts and the husband did not see sums deposited by the wife into the wife’s account. That seemed to me to have been a perfectly logical and rational explanation for the husband’s position when he said he was unable to verify certain deposits having been made. That rendered more likely the wife’s proposition in relation to amounts that Mr Sweeney of counsel described as lump sum contributions. On the balance of probabilities, I find that it was more likely than not that the wife’s version of the lump sum contributions was correct and is to be preferred over the version given by the husband.
Book collection
One of the biggest points in dispute in this case related to the value to be ascribed to the husband’s collection of books. The value was the subject of differing views. For the husband a man called Mr C purported to give evidence about the valuation to be attributed to the book collection. Early in the trial, Mr Sweeney of counsel raised an evidentiary objection about Mr C’s so‑called valuation. Debate ensued. I delivered a ruling on point. It is useful to record the ruling in terms. This is what I said.
“One of the issues in this case relates to the value of a book collection that is among the assets to be divided in this proceeding. The valuations given about the book collection vary in their amounts depending on whose version of the valuation one accepts. There is approximately $200 000 differential between the two. The collection is said to be valued on one version amounting to upwards of $384 000 and at the lower end the value is said to be upwards of $183 000.
A significant dispute has been identified in this proceeding about the value to be given to the books. After hearing from both counsel by way of opening it became apparent that an evidentiary ruling loomed in respect of the respondent’s valuation in this proceeding about the book collection. The respondent relied on an affidavit of a witness whose name was Mr C, whose affidavit dated 21 January 2019 purported to express or attribute valuations to a number of books in an affidavit running 97 pages.
Mr C gave as his occupation the following which he said entitled him to express an expert opinion in the case –
I am the owner/proprietor of Company where I sell books and collectables. I specialise in old bookss. I opened my first book store in Suburb D in 1995 and have been selling and grading books for nearly 23 years. I currently hold a second-hand dealer’s licence.
He then deposed to the manner in which the respondent retained him to prepare what he described as a valuation of a collection of books. In a detailed document made 21 January 2019, Mr C provided what he said was a “valuation of a book collection for [redacted] valued on a market value for existing use and auction use and realisation basis.” Unlike the manner in which expert evidence is customarily given in this court, it being a practice reflected across Supreme and District Courts in the State jurisdiction as well as in federal courts in the Commonwealth, Mr C did not file a document in the nature of an expert report certified as one sees under order 44 of, for example, the Supreme Court Rules and its equivalent in the State of Victoria with its counterpart in the Commonwealth jurisdictions.
Instead his report opened with a statement in paragraph 1 as follows –
My name is Mr C. I am the owner/proprietor of Company at Suburb E where I sell used books and related collectibles. I specialise in older books. I don’t sell new books unlike almost all other book stores in Australia. I opened my first book store in Suburb D in 1995. I have been selling and grading books for nearly 23 years. I hold a current second-hand dealer’s licence.
That was the extent of Mr C’s statement of his training, study or experience in the field of valuing second-hand books.
Ms Johnson of counsel who appeared for the respondent in this proceeding urged me to accept Mr C and the information he gave in his 21 January 2019 affidavit as being that of an expert properly so-called, and that Mr C’s purported attribution of values to books to which he deposed in his affidavit as being “expert evidence” for the purposes of the Evidence Act, especially s 79(1).
Let me say at once that I do not accept Mr C as an expert properly so-called or that the information he deposed to is that in the nature of expert evidence. Following the decision of the Court of Appeal of the Supreme Court of New South Wales in Makita (Aust) Pty Ltd v Sprowles,[1] the High Court in Dasreef Pty Ltd v Hawchar[2] opined on the elements which an expert, properly so called, must depose to if that person’s evidence is to be accepted as being evidence in the nature of expert evidence. Section 79(1) of the Evidence Act makes provision for the elements that a person must depose to and prove so as to ground that person’s qualifications as an expert. It must not be forgotten that a person cannot purport to give evidence on a matter that is not within the common knowledge of any other member of the community unless that person is accepted as being an expert by reason of that person’s training, study or experience. In my opinion the information by Mr C has not been demonstrated to be that arises by reason of Mr C’s specialised knowledge based on his training, study or experience, nor has he given evidence to the effect that the opinion expressed is wholly or substantially based on that knowledge.
[1] (2001) 52 NSWLR 705
[2] (2011) 243 CLR 588
Mr C did not depose to any study of books especially second-hand books that would take him into the realm of a specialist. Ms Johnson from the bar table submitted that there is no particular field of training or expertise that would enable a person to be accepted as a qualified specialist by reason of training or expertise in the field of book valuation. Whether or not that is true is something else as no evidence was adduced to the point. At all events Mr C did not depose to training or study that enabled him to express specialised knowledge in the value of books. Instead Ms Johnson relied on the third criteria expressed in Dasreef Pty Ltd v Hawchar, namely, Mr C’s experience.
Ms Johnson contended Mr C’s many years in the field of selling and collecting books enabled him to express a view as to their value, and, relevantly for me to accept the 97 pages of his affidavit as validly supporting the values given by him to the books in issue in this case. I do not read paragraph 1 of his affidavit in those terms. It is true that Mr C deposed to opening a book store in Suburb D in 1995 and that he owned a book store. He then said he had sold and graded books for 23 years. He gave no information as to what he did in the course of selling or grading books. He gave no experience as to the method, technique, skills, requisite criteria or anything else by which he could assert that his “experience” set him apart from any other member of the community and thereby enabled me to receive his evidence as that of an expert, properly so‑called.
So far as the second limb of s 79(1) was concerned there was no information expressed by Mr C, he being the only person capable of giving it, that the expressions in the nature of opinions he gave were wholly or substantially based on whatever knowledge he had. In those circumstances I am not persuaded that Mr C, despite his assertions of the number of years of work that he performed, set him apart from any other member of the community so that he could give dollar‑specific attributions to books that he said he valued. In the body of his report Mr C detailed the steps that he took in valuing the collection of books. He said that he used his past experience of what people are actually prepared to pay for that book in its current condition. To my mind that reflects no more than ordinary market forces that tell the value of an item, whatever it may be, and is little more than the value that a person is willing to pay for an item. That is a skill possessed by almost every member of the community whether referable to books or otherwise and it did not enable me to be satisfied that that fact alone put him in the category of persons having an expertise of a specialist nature such that I should receive his evidence as that of an expert.
Mr C then purported to depose to the way in which persons purchased books overseas, especially in the Country F. He spoke of purchases through eBay. Again, that seemed to me to reflect no more than commonplace occurrences engaged in by any member of the community who buys and sells items on an online platform such as eBay. In the circumstances I was not persuaded that Mr C had the necessary expertise to express the views that he purported to express in his valuation with the consequence that I do not receive his information as that of an expert.
There is one further matter. Ms Johnson urged me to receive his affidavit and then permit her to adduce viva voce evidence either being adduced by her or by cross examination, with a view to enhancing and thereby demonstrating the necessary expertise that is presently bereft of detail in his affidavit. To my mind that inverts the process of expert evidence. An expert should be capable of being understood upon reading that person’s report without more and thereby understanding the nature of the person’s training, qualifications and expertise, thereby leading a reader to deduce that the person has specialist knowledge based on his or her training, study or experience such that the opinion expressed is wholly or substantially based on that knowledge. That should be the touchstone that enables an expert report to be received. That is very far from the circumstances set out in Mr C’s report.
In those circumstances I will not receive his report 21 January 2019. Where that leaves the case in the overall is yet to be ascertained but I will not receive his evidence.
In the upshot, I did not receive Mr C’s evidence.
The applicant’s evidence about the valuation of the books was likewise unsubstantiated. In debate with Mr Sweeney it became apparent that the applicant’s witness who was earmarked to be called to give evidence about the valuation of the respondent’s book collection was not in Australia to enter the witness box during the trial of this proceeding. Mr Sweeney said he relied on that witness’s evidence. A robust debate ensued about the legal entitlement of a party to rely on a witness whose evidence is controversial and who fails to appear at court so as to adopt his or her affidavit. Mr Sweeney argued that the affidavit on which his client wished to rely should be received in evidence and that I should then accord the matters addressed in it such weight as I considered appropriate. To my mind that submission conflated several steps in the evidentiary process. Let me state my reasons.
First, the mere fact that the affidavit has been sworn and filed at the interlocutory stage of this litigation did not render it, per se, evidence in the trial of the case. For example, if the affidavit contained scandalous material, was an abuse of the process of the court, if it contained wholly objectionable material or, put most innocuously, if the party for whose benefit the affidavit had been sworn chose not to rely on it, then the mere fact that the affidavit had been sworn and filed told nothing of its evidentiary status as at the date of the trial of this proceeding or of its forensic provenance. In this case Ms Johnson identified soon after the case was opened that the evidence on which the applicant sought to rely was controversial. She said she wanted to cross examine the deponent of the affidavit about his evidence of the book valuation. Mr Sweeney perfectly candidly explained that his client’s witness whose evidence would go to valuation was not in Australia nor would he be entering the witness box.
That led me to inquire of Mr Sweeney how he intended to proceed. I pointed out that a large volume of authority that bound me spoke in terms of, absent consent, it being undesirable for a court to receive evidence that is untested in cross examination. A good deal of learning on point exists.
In Goodridge v Beadle[3] I wrote extensively about the admissibility of affidavits. Writing extra-judicially the Honourable Justice Bryson made an array of observations in Affidavits[4] as did the Honourable Justice Emmett in Practical litigation in the Federal Court of Australia: Affidavits[5] regarding the utility of and permissible boundaries of affidavit evidence. The starting point in the analysis of the use to which an affidavit may be put is s 64 of the Federal Circuit Court of Australia Act. Subsection 64(1) of Federal Circuit Court of Australia Act provides that evidence (called “testimony” in the section) in a proceeding in the Federal Circuit Court of Australia is to be given using one of two methods – orally or by affidavit. The trial judge is empowered to direct which of those two methods is to be used, as is the gravamen of s 64(2) of the Federal Circuit Court of Australia Act. Subsection 64(3) of the Federal Circuit Court of Australia Act provides that the method chosen by the trial judge is subject to any other stipulation in the Federal Circuit Court of Australia Act, the rules of the Federal Circuit Court of Australia and any other law of the Commonwealth of Australia. Relevantly, r 1.06 of the Federal Circuit Court Rules provides in substance that the operation of the entirety of the rules is subject to any direction by the trial judge. Therefore, unless mandated to the contrary, none of which was the case in this litigation, I was empowered in this case to direct that evidence be given both orally as well as by affidavit.
[3] [2017] FCCA 3219
[4] Affidavits (1999) 18 Australian Bar Review 166
[5] (2000) 20 Australian Bar Review 28
The practice of witnesses using affidavits sworn or affirmed by them to stand as their evidence in chief has at its core the obvious desirability of time efficiency, convenience and economy of which the Honourable Justice Robertson wrote in his paper Affidavit Evidence.[6]
[6] (FCA) [2014] Federal Judicial Scholarship 3
An affidavit may become part of the proceeding in the manner described in Manson v Ponninghaus[7] without its maker being challenged. In my experience that is a less frequent occurrence than is a deponent being required to attend court. Mostly, deponents are requested to attend court in person. Once their affidavits become part of the proceeding, they are cross-examined on aspects of their affidavit evidence. Under s 64(4) of the Federal Circuit Court of Australia Act, a party to a proceeding may request a person who has made an affidavit that some party proposes to adduce to appear as a witness to be cross-examined. If the person who was requested to appear for cross-examination does not appear as a witness to be cross examined, then s 64(5) of the Federal Circuit Court of Australia Act provides that the court “is to give the matter in the affidavit such weight” as the court considers fit.
[7] [1911] VLR 239
If notice requiring attendance for cross examination is given to the maker of an affidavit, authority in the Federal Court of Australia has held that the deponent must attend as a mandatory obligation (Sheahan v Joye)[8] consistent with the overarching purpose of civil practice and procedure (see Corrigan v Commvault Systems (Australia) Pty Ltd).[9]
[8] (1995) 57 FCR 389
[9] (2011) 192 FCR 71
A strong line of authority has held that the inability to cross-examine a deponent is a matter going to weight, not admissibility. In that camp are cases such as GPI Leisure Group Ltd v Herdsman Investments Pty Ltd (No 3)[10] and Curley v Duff.[11] But a different body of equally strong authority of considerable antiquity has held an affidavit is unlikely to be allowed where the deponent has absconded, is overseas or is temporarily ill. In that camp are The Parisian[12] and Dunne v English.[13] A very useful discussion on point is to be found in the textbook by John Levingstone, The Law of Affidavits.[14] Similarly, in the decision of the Full Court of the Family Court of Australia in In the marriage of Chang & Su[15] the court held that no error was made by the trial judge in that case excluding affidavit evidence where the deponent was not available for cross examination. The Court relied on order 16 rule 10 of the Family Law Rules for that result.
[10] (1990) 20 NSWLR 15
[11] (1985) 2 NSWLR 716
[12] (1887) 13 PD 16
[13] (1874) LR18Eq 524
[14] (Federation Press, 2013) ch 18
[15] (2002) FLC 93-117
Mr Sweeney’s witness was not available for cross examination. His witness was not in a position to formally adopt the affidavit he swore. In my view that went to a matter anterior to weight. It went to admissibility.
Then there was the issue of the contents of the affidavit on which Mr Sweeney wanted to rely. It seemed to me to be arguable that it was not materially different to the affidavit of Mr C in relation to that witness’s qualification to give evidence in the first place. In debate with both counsel I raised with them the possibility that neither of the so‑called expert witnesses’ evidence was admissible. The exchange was as follows –
HIS HONOUR: Well, so what? That might be the consequence of you proving your case, and if you haven’t proved, you do so at your peril. Sounds like there’s a very big lacuna in the expert evidence in this case. Do the parties want a moment to assess their positions? Mr Sweeney?
MR SWEENEY: Your Honour, we’ve addressed that lacuna, and can I say that’s why I’ve included the authorities of Smith. And if – I won’t take you to the tabs now, but they’re very much on that point. If your Honour can’t make up your mind because there’s no expert evidence, or it’s so disparate, you sell – you sell.
HIS HONOUR: Both parties fail on that point.
MR SWEENEY: Absolutely. If both parties fail on that point, they get sold.
Mr Sweeney was there referring to the observations of the Full Court (Fogarty, Baker and Rourke JJ) in In the Marriage of Smith.[16] In that case the learned trial judge was confronted with valuation evidence from both parties that was defective for various reasons rendering the trial judge’s task of satisfactorily determining the value impossible. The Full Court said the learned trial judge did not turn his mind to the question of ordering a sale because such a sale would have determined the true value in the marketplace. The relevant holding of the court for present purposes was as follows –
More relevantly here, where the state of the evidence makes the process of valuation hazardous or uncertain, or where there are wide differences between legitimate valuations because of a volatile market or peculiarities relating to specific property or otherwise, the ascertainment of value by judicial process may become too uncertain and the preferable course is to order the sale of the property so that its real value can be revealed by market forces. The proceeds of sale are then divided in appropriate proportions between the parties.
[16] (1991) FLC 92-261
Applying the holding of the court from that case, it seemed to me that the preferable course is to order the book collection to be sold with the proceeds being divided in a proportion that I consider is just and equitable in accordance with s 79 of the Family Law Act.
The evidence was imprecise about –
a)the extent and value of the book collection as at date of cohabitation;
b)contributions made by each party towards the book collection during their marriage; and
c)the extent and value of the book collection as at the date of the trial of this proceeding.
The husband said in cross examination he owned 90% of the book collection prior to the parties’ cohabitation. That figure was largely an estimate – more properly, a guess – because the evidence in this case about the precise identification in number and identity of the book collection at every stage of this proceeding was extremely poor. It fell to the husband to verify the precise details of his book collection. He failed to do so, despite several requests from the solicitors for the wife. In cross examination of the husband Mr Sweeney pointed out that after 17 months of litigation during which a list of the items making up the book collection was sought, the list was supplied only as recently as January 2019. It must be emphasised that in this case an Anton Pillar order made in February 2018 was executed and thereafter the husband was required to provide an updated database. In my view the husband was cavalier in the extreme in his compliance with his obligations towards discovery in this case, especially in relation to his producing a list (or database) of the books comprising his collection until January 2019. His cavalier approach in that regard adversely impacted upon the wife’s approach towards a proper preparation for the trial of this proceeding.
In those circumstances it was not possible for me to accept the husband’s statement that he owned 90% of the book collection as at the date of cohabitation. In the course of this litigation, the husband had ample opportunity to substantiate his contentions in that regard. He failed to do so.
During the course of the parties’ relationship, the wife paid the husband $1 200 per month that he applied, at least in part, towards the acquisition of books. That was the wife’s money – not his. The wife estimated that she provided between $100 to $250 per week to enable the husband to purchase books. It seemed that Mr Sweeney was content to use an amount of $1 200 for those purchases.
In ascertaining an appropriate figure by which the sale price for the book collection is to be applied, the foregoing enabled me to proceed on the basis set out below. First, I do not accept the husband’s evidence that 90% of his book collection existed and was owned by him prior to his cohabitation with the wife. His assertion in that regard was wholly unsubstantiated. Second, I accept that throughout their relationship the wife made regular significant direct financial contributions to enable the husband to acquire books so as to enlarge his collection. The husband was unable to say, and he did not say, whether and if so to what extent he purchased items for the book collection from his own resources during the period of the parties’ relationship.
In my view, once the book collection is sold, the proceeds should be divided between the husband and the wife on a 50/50 basis. Such an approach is consistent with the approach taken by the Full Court in Chang & Su.
Husband’s inheritance
It will be recalled that the husband claimed a one third interest in real property, the other two thirds being interests asserted by the husband’s brothers. The husband’s one third interest in that real property was agreed. No specific valuation evidence was adduced. However, the parties’ agreed position was that the one third interest represented the sum of $600 000. Probate of the father’s will was granted in late 2018, but no evidence was adduced to the effect that in the ordinary course of events any challenge to the husband’s father’s will would be launched.
The husband’s expectant interest of $600 000 was a significant sum. The question in this case was whether that amount should be brought to account as an item to be divided between the parties. The wife said it was. Conversely the husband said it was not “property” within the meaning of s 79 of the Family Law Act.
In my judgment the value of $600 000 referable to the husband’s one third interest in real property is, in fact and in law, property. It must be kept in mind that the husband had received an equal distribution of $96 000 to each brother and in no instance had any of the husband or his siblings contended that such a partial distribution was defective in any way.
Mr Sweeney contended, correctly in my view, that the husband’s expected payment under his father’s will is “property” because the husband is a legatee, calling in aid the observations of Kitto J in Livingston v Commissioner of Stamp Duties.[17] In my view, it could scarcely be denied that the husband’s interest as a legatee under the will, a part distribution of which had already been made, conferred upon the husband an interest in the asset. That interest constitutes “property” in the manner explained by Kitto J.
[17] (1960) 107 CLR 411
In those circumstances, I find that the husband’s one third interest in the real property must be brought into account in the division of assets in this case.
Assets of smaller value
Some debate emerged about the correct approach to be applied in the division of assets of comparatively minor value. Mr Sweeney reminded me of my own observations in Noakes v Fadden[18] concerning the complications associated with the valuation of ridiculously small assets. Mr Sweeney submitted that High Court authority sanctions a global approach to property adjustments under s 79, citing Norbis v Norbis.[19] There is a great deal of attraction in that approach especially in respect of assets where the evidence concerning the asset itself or its value was deficient.
[18] [2016] FCCA 3134
[19] (1986) 161 CLR 513
Wife’s contributions
The wife adduced evidence about certain gifts she received. Some has been addressed above. No serious challenge was advanced on behalf of the husband about those gifts. They may be catalogued as follows –
a)the sum of $40 000 received by the wife as a gift from her parents in 2008;
b)the sum of $20 000 received by the wife as a gift from her grandmother on some date between 2011 and 2013;
c)the sum of $20 000 received by the wife as a gift from her mother in the period of 2011 – 2013;
d)the sum of $120 000 received by the wife by way of inheritance from her aunt; and
e)the sum of $10 000 received by the wife from her parents as a gift for a holiday in Country A.
The asset pool, as found by me
So far as disputed assets were concerned, the upshot of my determination about the value may be shortly stated.
The value of the former matrimonial home was agreed at $850 000 and the mortgage was owed $401 000. The wife reduced the mortgage herself to the extent of a further $13 043. Hence in my view the value to be attributed to the further matrimonial home is to be taken as being $435 957.
The husband’s interest in the real property under his father’s will is “property” in the sum of $600 000 that must be included in the asset pool.
The husband’s receipt of $66 496 as a part distribution must be taken into account.
The book collection –
a)must be sold; and
b)the proceeds of sale must be distributed as to half to the wife and the other half to the husband.
The motor vehicle 1 value of $5 000 and the motor vehicle 2 valued at $27 000 are part of the pool of assets.
The wife’s cash at bank of $19 264 must be brought to account.
The husband’s cash at bank of $13 500 must be brought to account.
Contributions
The husband asserted that the financial contributions of the parties were equal. He maintained that position right up to and during the trial of this proceeding. Counsel for the wife said the husband’s assertions on that issue were erroneous and that the husband made lifestyle choices about working for very few hours per week (mostly six) and not actively pursuing other employment beyond his customer service activity. It seemed to me that there was real force in that argument.
In my view the financial contributions were not equal. As mentioned elsewhere, they were in the ratio of 75% from the wife and 25% from the husband.
Of course, even though the financial contributions were in those proportions, the husband did in fact receive the inheritance from his late father’s estate. That inheritance to him should be undisturbed. In so doing, on a global approach to property division the husband retains amounts that more closely approximate a just and equitable outcome. Further, doing so is consistent with the observations of the High Court in Livingston that an inheritance is “property” capable of division.
In making the observations set out above I have specifically taken into account other factors. Those include –
a)that the husband adduced no medical evidence to show that his health was anything but favourable;
b)that the husband’s income earning capacity was bright as he has masters level qualifications and could seek work in areas beyond customer service activities in full time employment; and
c)the husband had not sought other employment for a seriously lengthy period.
So far as superannuation was concerned, in my view no adjustment should be made. The wife had superannuation. The husband did not. The wife’s superannuation entitlement was created and improved well prior to the parties’ marriage and the husband did not seek orders splitting superannuation.
Conclusion
It is for those reasons that I direct the parties to bring in minutes that reflect these reasons by 4pm on 7 March 2019. If complications arise I will hear the parties at 10am on Friday 8 March 2019.
I certify that the preceding seventy-six (76) paragraphs are a true copy of the reasons for judgment of his Honour Judge J D Wilson QC
Date: 6 March 2019
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