JOHNSON & JOHNSON
[2020] FamCAFC 93
•22 April 2020
FAMILY COURT OF AUSTRALIA
| JOHNSON & JOHNSON | [2020] FamCAFC 93 |
| FAMILY LAW – APPEAL – PROPERTY – Where the appellant’s grounds of appeal generally missed the point and demonstrated a misunderstanding of his Honour’s reasons for judgment – Where this Court was not assisted by the appellant’s summary of argument which was a jumble of disparate comments and references to the evidence – Where there is no merit in any of the grounds of appeal – Appeal dismissed. |
| Family Law Act 1975 (Cth) ss 75(2) and 81 |
| Gronow v Gronow (1979) 144 CLR 513 Lovell v Lovell (1950) 81 CLR 513 |
| APPELLANT: | Ms Johnson |
| RESPONDENT: | Mr Johnson |
| FILE NUMBER: | PTW | 4553 | of | 2016 |
| APPEAL NUMBER: | WEA | 10 | of | 2019 |
| DATE DELIVERED: | 22 April 2020 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 3 October 2019 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 8 March 2019 |
| LOWER COURT MNC: | [2019] FCWAM 29 |
REPRESENTATION
| THE APPELLANT: | In person |
| THE RESPONDENT: | In person |
Order
The appeal be dismissed.
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 Johnson & Johnson 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 APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
APPEAL NUMBER: WEA 10 of 2019
FILE NUMBER: PTW 4553 of 2016
| Ms Johnson |
Appellant
And
| Mr Johnson |
Respondent
REASONS FOR JUDGMENT
Introduction
On 5 April 2019, Ms Johnson (“the wife”) filed a Notice of Appeal from final property settlement orders made by Magistrate Moroni in the Magistrates Court of Western Australia on 8 March 2019.
Mr Johnson (“the husband”) opposes the appeal.
The orders the subject of the appeal are quite lengthy, and need not be set out, given the relevant issue for the purposes of the appeal, is that those orders were made to effect an equal division of the property interests and superannuation of the parties. On appeal, the wife seeks that the orders be discharged, and in lieu thereof, there be orders effecting a 60 per cent/40 per cent division of the assets and the superannuation interests, in her favour.
I note that, importantly, neither party had legal representation, and that was quite telling from the wife’s point of view; her grounds of appeal generally missed the point, and demonstrated a misunderstanding of his Honour’s reasons for judgment. Further, her summary of argument did not assist, given it comprised a narrative containing a jumble of disparate comments and references to the evidence.
Relevant Background
The wife was aged 55 years at the time of the trial, and was unemployed [and] living in the former matrimonial home and receiving Centrelink benefits.
The husband was aged 58 years at the time of the trial, and was a company director living with his new partner in rental accommodation.
The parties commenced a relationship in 1991, began living together in 1995, married in 1999, and separated in December 2015.
The husband was previously married, and for a time he was paying child support for the two children of that marriage.
In October 1998, the parties purchased a property at Suburb A (“the former matrimonial home”). The wife has lived in that property since separation.
There are two children of the marriage, X born in 2000 and Y born in 2003. The youngest child lives with the husband and does not spend any time with the wife.
During the marriage there was a family trust formed, and several companies incorporated through which the husband operated his businesses. There have been two further companies incorporated by the husband since the separation.
The parties also bought and sold various investment properties during the marriage, but not all of these investments were successful.
In 2006 the parties established a self-managed superannuation fund of which each party was a trustee and member. In 2008 a company of which the husband and the wife are the directors and shareholders was substituted as trustee. The parties are still the only members of the fund.
Since the proceedings commenced in 2016, certain assets have been sold, and certain cash distributions have been made to each of the parties.
The Appeal
The wife asserts six grounds of appeal, and I will address each in turn.
Ground 1
The learned magistrate erred in law in finding that the late contribution of $100,000+ received by the Wife for the purposes of a cancer trauma payout, but utilised for the parties’ joint benefit ultimately represented an equal contribution by the parties to the property of the marriage.
With due respect to the wife she has misunderstood how his Honour has treated the contribution by the wife of her insurance settlement payment of approximately $100,000 relating to her cancer.
That amount was received by the wife in 2012, i.e. three years prior to separation, and was put towards the housing loan secured over the title to the former matrimonial home.
His Honour acknowledged that contribution at [195], and took it into account along with all of the other contributions of each of the parties in reaching his conclusion at [224], that those “contributions overall should be found to carry equal value.”
Thus, it was not a case of his Honour finding that the contribution of the insurance payment “represented an equal contribution by the parties to the property of the marriage”.
Although the ground of appeal asserts that, it may be that the wife was wanting to suggest that his Honour failed to give sufficient weight to this contribution. However, the authorities recognise that there are significant hurdles to such a weight challenge, and I do not consider that those hurdles could be overcome here. It could not be established that the Magistrate was plainly wrong, his decision being no proper exercise of his discretion (Gronow v Gronow (1979) 144 CLR 513, per Stephen J at 519-520; Lovell v Lovell (1950) 81 CLR 513 per Latham CJ at 519).
There is no merit in this ground of appeal.
Ground 2
The learned magistrate erred in law and in fact in finding that the reduced value of the parties’ joint property pool was not caused by the Husband’s unilateral significant spending of marital funds during and post separation and in taking that matter into account in his consideration of s75(2)(o).
Again, the wife has misconstrued what his Honour has said.
His Honour did not find that “the reduced value of the parties’ joint property pool was not caused by the Husband’s unilateral significant spending of marital funds during and post separation”, and nor did his Honour take “that matter into account in his consideration of s75(2)(o) [of the Family Law Act 1975 (Cth) (“the Act”)]”.
The wife did allege that the husband’s spending was profligate, but as to that, his Honour said this at [199]:
Although the evidence does establish that the [husband] had a less frugal attitude to personal spending whilst the marriage was intact than that displayed by the [wife], such evidence falls well short of proving that the [husband] was profligate. As noted above, for several years the [husband] operated a highly successful business. In those circumstances, it is not surprising that a person might be inclined to spend on non-essential items and pastimes at a level which would seem excessive to a person earning an average weekly income.
There is no error here.
Then there was the claim by the wife that the husband’s failed investment strategies caused substantial financial loss. As to that, his Honour said this at [209]:
…it is found to be more than likely that the [husband] was the chief driver of most of the investment decisions, but that the [wife] had either actual knowledge of most of the important decisions and strategies or otherwise could have easily enough obtained such knowledge had she chosen to do so. It is most likely that the [wife] was content to trust the judgment (sic) of the [husband] in financial matters. The [wife] is likely to have been aware of how successfully the [husband] was conducting his business whilst the licensing agreement referred to above was in place. The [husband] presented as an intelligent and street-wise individual. He has experience running a successful business. It is likely that during the marriage the [wife] knew that he would not act foolishly and it is likely that, like most people, she was open-minded to the prospect of investing to gain future financial security.
His Honour then concluded as follows at [213]:
The key question is whether or not the [husband] acted recklessly, negligently or wantonly. The evidence adduced by the [wife] falls well short of establishing that fact. It is the [wife] who carries the burden of proof. The evidence she has led falls well short of the standard necessary to discharge the burden of proof. Indeed, the evidence provided by the [husband] demonstrates that he did not act recklessly, negligently or wantonly.
Again, there is no error here.
As to s 75(2)(o) of the Act, the only two matters his Honour took into account were first, the adjustment in the husband’s favour as a result of the wife having sole occupation of the former matrimonial home since separation, whereas the husband had to meet the costs of rental accommodation, and secondly, the husband’s exposure to an increased personal income tax liability in 2018/2019.
Thus, not as the wife seems to contend.
There is no merit in this ground of appeal.
Ground 3
The learned magistrate erred in failing to consider the contribution made by the Husband to the taxation debt arising as a result of the husband’s unilateral actions one month prior to the final hearing of this matter.
The husband did have a personal income tax liability for the year ended 30 June 2018, payable in March 2019, being the sum of $291,057.
His Honour spent considerable time in his reasons for judgment addressing and considering this liability, and whether it should be the responsibility of the husband, or the parties jointly ([144] – [169]).
The liability arose as a result of the husband drawing money out of a company through which a very successful business was operated by him. The evidence was that that money went to support the family and service the cost of acquiring negatively geared assets (amongst other things).
Indeed, his Honour said this at [160] and [161]:
160When cross-examining the [wife] the [husband] secured a number of admissions from her regarding the benefits she has received both pre-separation and post-separation from the operations of [the company] and those benefits received by the family as a whole. For example, the [wife] conceded that at the time of separation she took out about $17,000 in cash. This money is likely to have derived from [the company’s] operations. Other substantial amounts of money have been spent in payment of the children’s school fees, telecommunications expenses, medical insurance premiums and spousal maintenance received by the [wife]. Additionally, [the company] paid $12,500 to the [wife’s] lawyers on account of her legal costs pursuant to an order made on 14 September 2016 and that figure has not been added back.
161Money borrowed from [the company] by the [husband] over the years has been used to service the debt incurred by the parties in pursuit of financial gains from investment activity.
And his Honour concluded as follows:
164Having had an opportunity to reflect on the relevant evidence as a whole, it would not be just and equitable to make a determination which would result in one party taking out of a marriage a substantial income tax liability related to earnings generated whilst the marriage was intact and earnings which have been to a significant degree used for family benefit.
The contention that the debt arose “as a result of the husband’s unilateral actions” just prior to the final hearing, relates to the fact that the drawings from the company became what is known as Division 7A loans, which then had to be repaid. Accordingly, the husband had the company declare a single fully franked dividend in his favour, sufficient to clear all of those loans at once. That then led to the personal income tax liability of $291,057.
His Honour found that the loans were a matter of joint responsibility given what the money was used for ([158]), and that it was reasonable for the husband to clear those loans in one financial year ([165]). The alternative would have been for the husband to pay down those loans over a period of seven years, resulting in the tax liability being slightly less. However, his Honour referred to s 81 of the Act and proceeded on the basis that:
167As far as practicable, courts should make orders in Pt VIII proceedings which effect a “clean break” so that each party leaves behind the joint financial past and embarks on a new financial life with certainty and with independence from the other party.
Thus, in the circumstances, his Honour found that it was not “reasonable to expect the [husband] to carry such a long trail liability out of the marriage” ([168]) as proposed by the wife.
It has not been demonstrated by the wife that his Honour erred in how his Honour dealt with this liability, or the husband’s actions in crystallising the liability in one financial year. Thus, there is no merit in this ground of appeal.
Ground 4
The learned magistrate erred in fact in finding that the Wife benefited equally from the Division 7A loans obtained by the husband unilaterally post-separation and the impact on the Wife.
The issue raised in this ground has effectively been addressed by this Court in the discussion in relation to Ground 3.
Again, the wife has misconstrued what his Honour found. His Honour made no finding that “the wife benefited equally from the Division 7A loans obtained by the husband”. What his Honour found was that the wife benefited from those loans, allowing for the fact that the husband may have spent more of that money than the wife.
His Honour identified in [160] some of the specific benefits received by the wife and then said this:
161Money borrowed from [the company] by the [husband] over the years has been used to service the debt incurred by the parties in pursuit of financial gains from investment activity.
162Whilst it is arguable that the [husband] spent more on himself during the marriage than the [wife] spent on herself, there was no evidence that the [husband] unreasonably restricted the [wife’s] access to the family wealth. The [wife] described herself as a quite frugal person. It would appear that the [husband] is not quite so frugal in his spending. It is understandable that as the parties’ net worth has reduced substantially in recent years the [wife] has placed the [husband’s] spending habits under the spotlight.
163However, it is not the task of a court to conduct what would amount to an audit of the retrospective spending habits of each party during a long marriage. It needs to be remembered that the reasonableness or otherwise of a person’s spending habits needs to be judged by reference to his/her financial circumstances generally. The evidence shows that [the company] produced some very significant profits over several years. That circumstance is likely to have encouraged the [husband] to spend more than he might have otherwise done. The earnings figures leading up to the loss of the licensing agreement are most impressive. The business was producing income at a level which would likely have put the parties’ household in the top bracket of household incomes Australia wide.
Thus, for the wife in her summary of argument to attempt to suggest that some of the monies obtained did not benefit her personally, misses the point, and does not demonstrate error by the Magistrate. Indeed, nowhere is error demonstrated in his Honour’s treatment of the Division 7A loans, and there is no merit in this ground of appeal.
Ground 5
The learned magistrate erred in failing to consider significant income disparity between the parties in his consideration of section 75(2).
His Honour plainly recognised “the significant income disparity between the parties”, but his Honour was more concerned with their respective earning capacities ([232]).
However, after identifying those capacities his Honour said this:
237Comparing the earning capacities of each of the parties respectively presents some difficulties. However, given how successful the business of [the company] became, even if the [husband] generated half the profit under his new structure as he did when he was running [the company] in its best years, he would be earning much more than the [wife] will earn as a salaried senior [professional]. It is difficult to be any more precise.
Importantly, and what is overlooked by the wife in just referring to one factor to be taken into account, is his Honour put this factor into the mix in assessing what if any adjustment should be made pursuant to s 75(2) of the Act. In other words, as his Honour should, his Honour holistically considered all of the relevant factors, and determined that there should be no adjustment in favour of either party, finding that those that favoured the wife were “more or less” balanced out by those that favoured the husband ([258]).
There is no error here by the Magistrate, and there is no merit in this ground of appeal.
Ground 6
The learned magistrate erred in failing to give reasons that are adequate to illuminate the relative significance, in his overall determination of the parties’ entitlements, of the findings that; the Husband was the cause of the reduced value of the property and that the wife’s contributions were made in the face of adversity.
The simple answer to this ground is that again the wife is mistaken. His Honour made no finding that the husband was “the cause of the reduced value of the property” or that, “the wife’s contributions were made in the face of adversity”.
They may have been the findings that the wife wanted his Honour to make, but they were not established on the evidence.
The nearest his Honour came to addressing the first issue was his Honour’s consideration of whether the husband had acted recklessly, negligently, or wantonly, and his Honour found that the evidence fell well short of establishing that, and indeed, demonstrated that he did not so act ([213]).
There is no merit in this ground of appeal.
Conclusion
Having found no merit in any of the grounds of appeal, the appeal must be dismissed.
I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 22 April 2020.
Associate:
Date: 22 April 2020
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