Jabara & Gaber
[2021] FedCFamC1A 26
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Jabara & Gaber [2021] FedCFamC1A 26
Appeal from: Gaber & Jabara [2021] FCCA 210 Appeal number(s): EAA 22 of 2021 File number(s): PAC 106 of 2019 Judgment of: AINSLIE-WALLACE J Date of judgment: 5 October 2021 Catchwords: FAMILY LAW – APPEAL – FINANCIAL – Interim spousal maintenance – Where the primary judge made an order that the wife pay the husband weekly spousal maintenance – Partial property distribution – Where the primary judge made an order that the wife pay the husband a sum by way of partial property settlement – Leave to appeal granted – Appeal allowed in part – The order for a partial property distribution is set aside and remitted for rehearing – No order as to costs. Legislation: Family Law Act 1975 (Cth) ss 75, 79 Cases cited: Carlson & Carlson (2019) FLC 93-934; [2019] FamCAFC 245
CDJ v VAJ (1998) 197 CLR 172
Marchant & Marchant (2012) FLC 93-520; [2012] FamCAFC 181
Medlow and Medlow (2016) 306 FLR 183; [2016] FamCAFC 34
Shepherd v The Queen (1990) 170 CLR 573; [1990] HCA 56
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 ; [2009] FamCAFC 166
Number of paragraphs: 56 Date of hearing: 20 July 2021 Place: Sydney Counsel for the Appellant Mr Grew Solicitor for the Appellant Coleman Greig Lawyers Counsel for the Respondent Mr Fowler Solicitor for the Respondent Watts McCray ORDERS
EAA 22 of 2021
PAC 106 of 2019FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS JABARA
Appellant
AND: MR GABER
Respondent
ORDER MADE BY:
AINSLIE-WALLACE J
DATE OF ORDER:
5 OCTOBER 2021
THE COURT ORDERS THAT:
1.Leave to appeal order 4 made on 9 February 2021 is granted.
2.The appeal against orders made on 9 February 2021 is allowed in part and Order 4 is set aside the appeal is otherwise dismissed.
3.The application for partial property distribution is remitted to the Federal Circuit and Family Court of Australia (Division 2) for rehearing by a judge other than the primary judge.
4.The application to adduce further evidence filed on 19 July 2021 is dismissed.
5.There be no order as to costs.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Jabara & Gaber has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AINSLIE-WALLACE J:
Ms Jabara (“the wife”) seeks leave to appeal and if leave is granted to appeal against an interim spousal maintenance order made by a judge of the Federal Circuit Court on 9 February 2021. The order requires the wife to pay spousal maintenance of $500 per week to Mr Gaber (“the husband”). The wife further seeks leave to appeal an order that she pay the husband $100,000 by way of partial property distribution. This order has been stayed pending the disposition of the appeal.
The parties married in May 1997 in Country D and moved to live permanently in Australia in 2008. They have four children, the youngest of whom is aged 16 years. The parties separated in 2017.
After separation all four children remained living with the husband at the parties’ former marital home. In March 2018, the second oldest child, Mr F, moved to live with the wife.
The wife is a health care professional. The husband is a qualified professional. There appears to be a dispute between the parties as to the extent to which the husband worked as a professional while they were living in Country D.
In May 2008, the wife moved to live in Australia and took up practice as a health care professional in rural NSW. The husband and children arrived in Australia shortly afterwards in 2013.
Following the family’s permanent relocation to Australia, the husband cared for the children and managed the running of the household. He worked occasionally as a driver but was mainly engaged in caring for the children and the domestic responsibilities. The wife deposes that the husband was disinclined to work outside the home, however it seems clear enough, that the roles adopted by the parties involved the wife working in paid employment and the husband being the primary homemaker.
During the relationship and while the wife was working as a health care professional, she was employed through a company established by the parties, J Pty Ltd into which her professional fees were paid and the company paid her and the husband a salary. In 2010, the parties established a self-managed superannuation fund of which both are trustees. The asset of the superannuation fund is cash in a bank account. At the time of the hearing before the primary judge the wife’s superannuation entitlement was approximately $128,000 and the husband’s was approximately $100,000. The wife said that she made all of the contributions into the fund.
The parties’ each own property in Country D. There is a dispute as to the extent and value of the husband’s interest in a property inherited from his father and whether any income is received from that property.
In Australia, the husband owns a property in Suburb C purchased in his sole name.
There is an issue between the parties about money the husband withdrew money from the parties’ joint bank account at separation and whether the sum should be added back into the pool of assets to be considered in the final property settlement hearing.
Leave to appeal
This being an appeal against interim property orders, leave is necessary. It is accepted that the test for leave is two-fold. First, that the decision in question is attended with sufficient doubt to warrant the grant of leave. The second requirement is that a substantial injustice will result from a refusal of leave to appeal (Medlow and Medlow (2016) 306 FLR 183).
For the reasons that follow, I am satisfied that in respect of the appeal against the partial property order, leave should be granted.
Application in an Appeal
The wife sought leave to adduce further evidence on the appeal, the basis of which was that there had been a change of circumstances in the husband’s household.
The Full Court may admit further evidence in an appeal. The applicable principles emerge from CDJ v VAJ (1998) 197 CLR 172. At [109], McHugh, Gummow and Callinan JJ observed that the exercise of the power is remedial in nature, to give the Full Court discretion to receive further evidence where “that evidence, if accepted, would demonstrate that the order under appeal is erroneous”.
The evidence sought to be adduced is that since the making of the orders, the child who was then living with the husband has moved to live with the wife. There was no dispute as to the fact although the husband suggested that, perhaps, it was not a permanent move.
It was argued that, given the husband’s evidence that he had been unable to seek work outside the home because of his need to care for the children of the marriage, that impediment no longer existed.
As will become apparent, that the husband felt that he could not seek work because of the needs of the children, was but one factor which the primary judge took into account in concluding that he was unable adequately to support himself. Thus, there is no utility in admitting the evidence, and the application will be dismissed.
Spouse Maintenance
The wife contended that the husband was able adequately to maintain himself and was not therefore entitled to an order for spousal maintenance. There was no issue that the wife had the capacity to pay an order for spousal maintenance. There is an issue between the parties as to the husband’s earning capacity.
The husband deposed that from the time the parties moved to live in Australia, he was primarily dependent on the wife for financial support and contended that he could not work outside the home because of his care of the children. He also said that he gives assistance to his elderly mother. The husband also deposed that he had a number of medical conditions including high blood pressure, kidney stones and back pain. The wife deposed and it does not appear to be controversial that after separation the husband worked as a driver and continued in that occupation at least until after he moved to live in his mother’s property in September 2017.
However at the time of hearing before the primary judge, the husband’s source of income was a government benefit together with child support and family allowance. The husband assessed his reasonable expenses for this purpose at $1,899 per week.
The primary judge concluded that because of the husband’s age and his physical incapacity for appropriate gainful employment and his care of the parties’ youngest child, he was unable to support himself adequately.
The primary judge observed that of the husband’s claimed weekly expenses, $450 of that was referrable to his household expenses and needs, and the primary judge included half of the cost incurred in maintaining two cars, thus assessed his weekly reasonable needs at $500 (at [32]).
THE APPEAL
Ground 1
The wife contended that her Honour erred in concluding that the husband was unable to adequately support himself. The ground of appeal is supported by a number of particulars which, it was argued, pointed to her Honour’s error.
It was asserted that the primary judge failed to take into account that there was no evidence of the husband attempting to find work or failed to take into account that the husband was in receipt of a Jobseeker allowance from which she should have inferred that he had some earning capacity (particulars (a) and (b)).
Next it was argued that the primary judge erred by taking into account the husband’s age as part of a consideration of whether he had a capacity adequately to support himself, it being argued that age, of itself does not speak to incapacity to undertake employment (particular (c)).
Particular (d), argued that the primary judge erred in not taking account the evidence that the husband could walk up more than two flights of stairs, such that that his hip discomfort does not affect his mobility and ability to work.
Particulars (e) and (f) argue that the husband’s medical history of having had two heart attacks had no bearing on his ability to work or, in the alternative, that her Honour erred in taking it into account because that fact was irrelevant to her determination.
Particular (g) merely repeats the basic contention that her Honour erred in finding the husband was not physically capable of gainful employment.
Particular (h) concerned the child then living with the husband and asserts that the primary judge was wrong not to take into account that the child was then 16 years old and that she had no special needs.
Particular (i) contends that the primary judge acted on a wrong principle when she referred to the amount of child support paid by the wife being less than their needs which is irrelevant to a determination of the husband’s needs. The primary judge said:
28. The child support scheme aims to ensure that children receive an appropriate level of financial support from parents, and the payments which the [husband] receives are geared towards meeting the costs of the children (to be differentiated from the costs of the spouse or former spouse).
29. In any event, it appears from the [husband’s] evidence, in particular his financial statement, that the child support amount he receives falls short of the costs he has to meet with respect to the children.
Her Honour’s comments in context do not support the contention that she took into account any shortfall in child support (if there was one) in determining whether the husband was able adequately to support himself.
The primary judge’s determination that the husband was not able adequately to support himself was a conclusion which rested on the evidence to which she referred at [16]–[24]. In effect, the submissions on this ground take each of the matters on which the primary judge relied, and in relation to each, contend that that matter, of itself it is insufficient to prove the point. To do so fails to understand the process by which conclusions based on the facts are drawn. It might properly be said that none of the individual matters referred to in the particulars alone would support a finding that the husband was unable to support himself adequately, however it is their combined effect on which the primary judge relied in coming to that conclusion (see Shepherd v The Queen (1990) 170 CLR 573).
The conclusion reached by the primary judge on these unchallenged facts was open to her and no error is shown. This challenge is not made out.
Partial property settlement order
The husband sought an order in the nature of a partial property settlement so that he could use the money to pay his anticipated legal costs. Her Honour ordered the wife to pay to the husband the sum of $100,000.
The considerations necessary to making an order for partial property settlement pursuant to
s 79 derive from Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”).
Two separate steps are involved. The first requires whether in the circumstances it is “appropriate” to make the order. In Carlson & Carlson (2019) FLC 93-934, the Full Court said at [26]:
It is well established that in considering what, if any, order should be made to alter property interests, the Court is first required to identify and value the parties’ legal and equitable interests (see Stanford v Stanford (2012) 247 CLR 108 … Bevan & Bevan (2013) FLC 93-545 …; Chapman & Chapman (2014) FLC 93-592)…
What follows then is that the court must consider the matters relevant to the making of a final order by reference to the matters referred to in s 79(4) and, by reference to s 79(4)(e) the relevant aspects of s 75(2) (Strahan at [137]).
That second step, per force, involves a consideration of the nature of the property, the parties’ respective contributions and the effect of the application of any matters to which s 75 refers.
As the Full Court said in Marchant & Marchant (2012) FLC 93-520 at [27]:
It also follows from Strahan that if the first question is answered affirmatively, and the second or substantive stage is reached, because the jurisdiction under s 79 of the Act is being exercised, the provisions of that section must be considered and applied, but with limitations given that it is not the final hearing ([135]). As their Honours Boland and O’Ryan JJ noted at [136], because the discretion conferred by the power in s 79 is to make such order as the Court considers appropriate, provided it is just and equitable to make the order in circumstances where the power will not be exhausted by the interim order, the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal, and must be capable of alteration at any time prior to, or as part of, a final exercise of the s 79 power.
It is also to be borne in mind as the majority said in Strahan that because the determination is not made in the context of a final hearing, the judge is unlikely to be in a position to make final findings and it will be, of necessity a “somewhat imprecise” exercise. Thus, the majority counselled a conservative approach to the question and said that “the Judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties and the final hearing, or that the order which is contemplated is capable of being reversed or adjusted if it is subsequently considered necessary to do so” (at [99]).
Ground 2
Here, the challenge to the order is threefold. It was argued that the primary judge failed to assess the parties’ ultimate entitlements on a final hearing and whether the order sought was capable of being taken into account in the final property settlement.
There appears to be dispute between the parties as to their respective initial financial contributions and the extent of the husband’s financial contributions during the relationship. The wife raises the issue of loans advanced to her by her father over time. The wife says and it does not appear to be disputed that on his father’s death, the husband inherited a share of a property in City K, country D as well as a share of an adjoining property. Further, the husband purchased a property in Sydney in 2001 which is registered in his name. While his affidavit is silent on the point, in his financial statement, the husband asserts that he holds that property on trust for himself, his mother and his five siblings. He assesses the value of his interest at $92,860. The husband assesses the value of his share in one City K property at $35,714. The values attributed to the husband’s holdings of those properties is in dispute.
Both parties have interests in a superannuation fund commenced during the relationship. The property of the fund is cash at bank and, at the time of hearing, the wife’s entitlement was $128,990 and that of the husband $100,953.
As mentioned above, in 2009 the wife established J Pty Ltd into which her professional fees were paid and which, in turn paid to her and the husband a salary. Both parties were shareholders in the company. The wife was the sole director. At separation, there was about $300,000 in that company account. From that account, the husband removed $143,129. Shortly afterwards, the wife removed the balance of the account and redeposited into another account. The wife contends that the money removed by the husband should be considered a partial property payment and treated as such. This position is resisted by the husband.
This company was deregistered in December 2017, after the parties separated, and another company established which fulfilled the same function, that is as a vehicle into which the wife’s professional fees were paid and from which she receives a salary. The wife also established a trust for the assistance of her parents. It seems that the Trust owns a 20 per cent interest in a business at which the wife works although no value is ascribed to that interest.
At the time of the hearing before the primary judge, the wife’s bank account held $312,545 from which a loan repayment and PAYG tax instalments of $23,000 per quarter were paid. It was contended for the wife that one half of that amount was accumulated from the wife’s post separation earnings. The balance being the money she removed from the business account shortly after separation.
Thus, before the primary judge, the value of the parties’ property was in dispute. For example, the wife estimated the value of the property in Sydney owned by the husband to be $650,000. The husband claims that he holds that property on trust for his family and rendered the value of his share at $105,833. Apart from that property, all real estate owned by the parties is in City K, and the property sought to be divided is the cash in the wife’s bank accounts of about $400,000.
The orders sought by the husband as final property settlement are that the wife pay him spouse maintenance of $500 per week and an amount in a sum to be determined by the court which “causes an equal division of the non-superannuation assets” of the wife and husband.
In considering the husband’s application for partial property settlement, the primary judge identified the issues in dispute and the parties’ respective positions. The wife’s general position is that the husband has already received 50 per cent of the relevant assets and thus no further property adjustment is appropriate. The husband contends that he holds 25 per cent of the overall assets of the parties and seeks a further distribution.
Her Honour turned to consider the husband’s stated purpose in seeking the partial property settlement and observed that he was not in a position to pay the costs of a defended hearing and said:
46. The parties, should as far as possible, have a level playing field in terms of their financial capacity to conduct family law litigation. This is particularly so after a relatively long marriage, and where on one party’s case the other party holds not only the majority of the assets but has a much higher earning capacity and financial resources.
47. There is presently sufficient cash in the bank accounts held by the [wife] (or bank accounts which are within her control) to satisfy the partial property distribution order the applicant is seeking.
48. Even if the [wife’s] contentions are proven correct, and she is able to satisfy the Court as to the value of the assets as she asserts, and if she is able to satisfy the Court that the final orders she seeks in her Amended Response filed 21 August 2020 ought to be made, there are sufficient assets available for judgement to be satisfied in her favour.
49. If what the [wife] says is correct, and that is that the [husband’s] legal interest in the [Suburb C] property stands (and he does not hold the property on trust) then there is capacity for the partial property distribution to be in essence reversed, by for example, a sale of the [Suburb C] property and an adjustment back to the [wife] in the amount of the partial property distribution made pursuant to these interim orders. …
Grounds 3 and 4
Turning again to the grounds of appeal, it was argued that the primary judge failed to make any assessment of the husband’s entitlement to an order pursuant to s 79 and thus erred in concluding that it was appropriate to make the order sought by the husband.
It is clear from her reasons that her Honour made no assessment of the nature and quality of the husband’s claim to an order for property, she made no assessment of the various contributions whether financial or otherwise, nor did she turn her mind to what adjustment, if any, might be made pursuant to s 75. Thus, the primary judge had no basis or reference point by which she could be satisfied that the amount sought by the husband was within what he will likely receive by way of final property settlement.
Aligned to that argument was the contention that the primary judge erred in failing to give consideration to if the husband’s assertion that he does not hold the whole of the beneficial interest in the Sydney property, is established. This is especially acute where, as here, the order is to pay legal costs and once paid are gone and the court would have to look to other sources or entitlements of from which there could be an adjustment or payment back of some or all of those funds if it is necessary when the final property orders are made.
While it was accepted that if the husband did hold the legal and beneficial interest in the Sydney property, it would provide him with a means by which the contemplated order could be reversed or otherwise taken into account. If, on the other hand, he, as he assert, holds only a 1/6 interest in that property, there is no source of funds or other entitlement from which that necessary adjustment could be made.
These challenges to the partial property order are made out and that order will be set aside and the application remitted for hearing by a judge other than the primary judge.
Costs
Relevantly, the husband sought costs against the wife in the event that the appeal was unsuccessful. Here the appeal has succeeded in relation to one order and failed in relation to the order for maintenance. In those circumstances I am of the view that there should be no orders as to costs and each party pay his or her own costs of the appeal.
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Ainslie-Wallace. Associate:
Dated: 5 October 2021
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