KD v GB
[2014] WASCA 165
•4 SEPTEMBER 2014
KD -v- GB [2014] WASCA 165
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASCA 165 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:35/2013 | 14 APRIL 2014 | |
| Coram: | BUSS JA NEWNES JA MURPHY JA | 4/09/14 | |
| 26 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | KD GB |
Catchwords: | Family law De facto relationship Application for property settlement Family Court Act 1997 (WA), s 205ZG Whether magistrate erred in failing to take global approach in assessing contributions of parties to property of relationship Whether erred in fact in assessing contributions of respective parties to specific property Turns on own facts |
Legislation: | Family Court Act 1997 (WA), s 205ZG |
Case References: | Bilous v Mudaliar [2006] NSWCA 38; (2006) 35 Fam LR 55 Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152 Dearman v Dearman [1908] HCA 84; (1908) 7 CLR 549 Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 House v The King (1936) 55 CLR 499 In the Marriage of J A and S M Gill (1984) 9 Fam LR 969 In the Marriage of Zyk (1995) 128 FLR 28; (1995) 19 Fam LR 797 Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550 Leeder v The State of Western Australia [2008] WASCA 192 Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359 Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108 T v L [2006] WASCA 46 Williams v The Minister, Aboriginal Land Rights Act 1983 [2000] NSWCA 255; (2000) Aust Torts Reports 81-578 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : KD -v- GB [2014] WASCA 165 CORAM : BUSS JA
- NEWNES JA
MURPHY JA
- Appellant
AND
GB
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram : MAGISTRATE A MORONI
Citation : [2013] FCWAM 34
File No : (P)PTW 3144 of 2008
Catchwords:
Family law - De facto relationship - Application for property settlement - Family Court Act 1997 (WA), s 205ZG - Whether magistrate erred in failing to take global approach in assessing contributions of parties to property of relationship - Whether erred in fact in assessing contributions of respective parties to specific property - Turns on own facts
Legislation:
Family Court Act 1997 (WA), s 205ZG
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
Appellant : Ms E C J Needham
Respondent : Mr M R Berry
Solicitors:
Appellant : Calverley Johnston Lawyers
Respondent : O'Sullivan Davies Lawyers
Case(s) referred to in judgment(s):
Bilous v Mudaliar [2006] NSWCA 38; (2006) 35 Fam LR 55
Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152
Dearman v Dearman [1908] HCA 84; (1908) 7 CLR 549
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
House v The King (1936) 55 CLR 499
In the Marriage of J A and S M Gill (1984) 9 Fam LR 969
In the Marriage of Zyk (1995) 128 FLR 28; (1995) 19 Fam LR 797
Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550
Leeder v The State of Western Australia [2008] WASCA 192
Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359
Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513
Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108
T v L [2006] WASCA 46
Williams v The Minister, Aboriginal Land Rights Act 1983 [2000] NSWCA 255; (2000) Aust Torts Reports 81-578
1 BUSS JA: I agree with Newnes JA.
2 NEWNES JA: This is an appeal from a decision of Magistrate Moroni in the Magistrates Court, exercising its jurisdiction under pt 5A of the Family Court Act 1997 (WA) (the Act) to alter property interests arising out of a de facto relationship.
3 After the breakdown of a de facto relationship lasting some 10 years, the appellant sought a property settlement pursuant to s 205ZG of the Act. By the time of trial, the only substantial surviving assets of the relationship were held by the respondent. The magistrate found that the interests of the parties in the property of the relationship should be altered by the payment by the respondent of the sum of $93,935 to the appellant. The appellant contends that his Honour erred in assessing the amount properly due to her and says that his Honour should have found that she was entitled to the sum of $375,525; that is, an additional amount of $281,590.
4 An appeal from the decision of the magistrate lies to this court pursuant to s 210A of the Act.
5 At the conclusion of the hearing of the appeal on 14 April 2014, the appellant was ordered to file and serve, by 30 April 2014, tables setting out the assets and liabilities of each of the parties as at the date of cohabitation and termination of cohabitation respectively, and submissions in support of the tables. The respondent was to do likewise by 12 May 2014. The appellant's tables and submissions were filed on 13 May 2014 and the respondent filed submissions in response on 17 June 2014.
Background
6 The basic facts are not in dispute and the following account is taken from the reasons for judgment of the magistrate.
7 The appellant and the respondent met in 1995 in the country town in which they were both living. They began to live together in mid-1997. It was common ground that the relationship ended when they ceased living together on 2 September 2007. The relationship therefore extended over a period of slightly more than 10 years. There were no children of the relationship. At the time of trial, both parties were still living in the town. The appellant was then 48 years old and the respondent 57 years old.
8 The appellant had been married before she met the respondent and had received $50,000 as part of a property settlement with her former husband. She had only part of that sum left when she began living with the respondent. At that time the appellant also owned a property in Toodyay (the Toodyay property) and a motor vehicle. While the relevant evidence was far from clear, the respondent conceded at trial that the appellant then had net assets to the value of approximately $270,000.
9 At the date of cohabitation, the respondent was operating a farm machinery business (the business) which he had purchased, together with the land on which it was located (the land), from his parents in 1994. It will be necessary to explore the details of the purchase in more detail in due course. For present purposes, suffice it to say that the respondent agreed to pay his parents $50,000 for the land and for the business he agreed to pay some of his parents' personal debts and to take over the debts of the business, which amounted to $150,000. He borrowed the sum of $150,000 to effect the purchase. The respondent became the sole registered proprietor of the land and he operated the business as a sole trader. There was no evidence as to the value of the land or business at the date cohabitation commenced.
10 The respondent also owned a house in the town against which he had borrowed the sum of $55,000, secured by a mortgage. There was again no evidence as to the value of the house or the amount owing on the mortgage at the date cohabitation commenced, but the respondent acknowledged in his trial affidavit that he did not have 'any significant equity' in it.
11 In the early years of the relationship, the appellant worked for wages in the business and part-time as a teacher at the local school. She had qualified as a teacher earlier in 1997. From about the end of 2002, all of the appellant's income was from wages from working in the business.
12 In 2000, the appellant sold the Toodyay property and purchased 46 acres of land outside the town in which she and the respondent were living (the residential property). The appellant built what was described as a 'substantial executive home' on the residential property [48]. That was the parties' home for the remainder of their relationship. In 2005, the appellant, unbeknown to the respondent, also purchased a property in a suburb of Perth (the city property).
13 As mentioned above, the parties separated on 2 September 2007. Shortly afterwards, the appellant purchased a supermarket business and freehold. The appellant borrowed the whole of the purchase price from a financial institution, secured against the residential property.
14 In or about October 2009, the appellant sold the city property, receiving a net amount of $32,000 from the sale. Some seven months later, in May 2010, the appellant sold the residential property for the sum of $568,700 [182]. After secured debts in connection with the supermarket business were met she was left with a total amount of $173,000.
15 As it turned out, the appellant's supermarket business was entirely unsuccessful and in late 2010 she sold it, and the freehold on which it stood, at a significant loss. Settlement of the sale was effected in January 2011 [60].
16 The appellant has since generated income from share trading and selling jewellery on eBay, the latter activity being classified as a hobby for taxation purposes [64]. At the time of trial, the appellant was still living in the residential property, apparently as a tenant paying rent [59].
17 The proceedings for a property settlement pursuant to s 205ZG of the Act were commenced by the appellant on 25 June 2008. For reasons which are not presently relevant, the trial did not take place until February 2013.
18 At the time of trial, the appellant's only assets, apart from a modest superannuation entitlement, were a motor vehicle valued at $7,500 and household goods valued at $5,000. The respondent's assets comprised the land and business, a similar modest superannuation entitlement, and household goods valued at $7,000. He had continued to work full-time in the business after cohabitation ceased.
The statutory framework
19 Under s 205ZG of the Act, in proceedings in relation to the property of de facto partners the court may make such order as it considers appropriate altering the interests of the parties in the property: s 205ZG(1). The court must not make an order unless satisfied that in all the circumstances it is just and equitable to make the order: s 205ZG(3).
20 Pursuant to s 205ZG(4), in considering what order (if any) should be made, the court must take into account, among other things:
(a) the financial contribution made directly or indirectly by or on behalf of a de facto partner to the acquisition, conservation or improvement of any property of the de facto partners, or either of them, whether or not the property has, since the making of the contribution, ceased to be the property of the de facto partners or either of them (s 205ZG (4)(a)); and
(b) the non-financial contribution made directly or indirectly by or on behalf of a de facto partner to any such property (s 205ZG(4)(b)); and
(c) the contribution made by a de facto partner to the welfare of the family constituted by the de facto partners, including any contribution made in the capacity of homemaker (s 205ZG(4)(c)); and
(d) the effect of any proposed order upon the earning capacity of either de facto partner (s 205ZG(4)(d)); and
(e) the matters referred to in s 205ZD(3) so far as they are relevant (s 205ZG(4)(e)).
21 In the present case, s 205ZD(3) required the following matters to be taken into account:
(a) the age and state of health of each of the de facto partners; and
(b) the income, property and financial resources of each of them and the physical and mental capacity of each of them for appropriate gainful employment; and
…
(d) commitments of each of the de facto partners that are necessary to enable the partner to support -
(i) himself or herself; and
…
(f) … the eligibility of either party for a pension, allowance or benefit under -
(i) …; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and
(g) a standard of living that in all the circumstances is reasonable; and
…
(i) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
…
(m) the terms of any order made or proposed to be made under section 205ZG in relation to the property of the parties; and
…
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account.
The findings of the magistrate
22 The magistrate adopted a four step approach to the determination of the appellant's application, an approach which he described as the preferred approach. That approach required his Honour to:
(1) identify and value as at the date of trial the net property of the parties and their superannuation entitlements;
(2) identify and assess their respective contributions in terms of s 205ZG(4)(a), (b) and (c) and then make a determination as to the appropriate percentage division of the property between the parties;
(3) take into account the matters listed in s 205ZG(4)(d) - (g) and then decide whether it is appropriate to make an adjustment in favour of one party or the other, and, if so, to make the adjustment and set out the practical effect of it;
(4) consider whether the order he proposed to make is 'just and equitable' [71] - [73].
23 The magistrate considered each of those factors in turn.
Net property and superannuation of the parties
24 His Honour found that, as at the date of trial, the net property of the parties and their superannuation entitlements were as follows ([117]):
| |
| $ |
| 700,000 |
| 239,350 |
| 7,500 |
| 5,000 |
| 7,000 |
| (79,323) |
| (85,000) |
| (171,032) |
| |
| 57,288 |
| 59,324 |
25 His Honour observed that the critical assets were the respondent's interest in the land and the business [118]. He considered that the other items could be disregarded [120].
26 His Honour had earlier found that the respondent had purchased the land from his parents in October 1994 for $50,000, payable by calendar monthly instalments of $2,000 [42] - [45] and observed that absent default in making those payments the respondent would have paid for the land by the time his cohabitation with the appellant commenced [45].
Section 205ZG(4)(a) - (c) contributions and the percentage division
27 Having identified and determined the value of the parties' property, the magistrate proceeded to assess their respective contributions to it. The magistrate noted that in assessing the parties' respective contributions the court could take a global approach, an asset by asset approach, or a combination of the two [121]. His Honour said he would take the global approach, that being the approach usually adopted by the court. He observed, however, that this case differed from the usual case in that the pool of property available for distribution at trial was very different to the pool of property which would have been available at the date of separation [124].
28 In that context, his Honour noted that at the date of separation the appellant had her interest in the city property and a very valuable asset in the residential property. At the date of trial, however, she had virtually nothing to show for them. That meant the respondent could not counterclaim in respect of those assets [125] - [127]. Nevertheless, his Honour considered that in assessing the parties' respective contributions the court was required by s 205ZG(4)(a) and (b) to consider not only the contributions of the appellant to the acquisition, conservation or improvement of the assets taken out of the relationship by the respondent - the land and the business - but also the respondent's contribution to the assets taken out of the relationship by the appellant - the residential and city properties - even though the appellant had sold those properties in the interim and nothing remained of the proceeds of sale [129] - [131].
29 The magistrate considered that the s 205ZG(4)(c) contributions were not a significant factor [133] - [135]. He found that both parties made contributions to the maintenance of the residential property. The appellant's contribution by way of internal household chores was likely to have been matched by the respondent's contribution in maintaining the substantial household surrounds. The case therefore turned on the respective contributions of the parties to the property of the relationship [135].
30 In making an assessment of the parties' respective contributions to that property, his Honour turned first to the income of the parties over the relevant period. He noted it was common ground that in the early years of the relationship the appellant had worked part-time in the business and part-time as a teacher [138]. However, for the years ended 30 June 2004 ($54,580) to 30 June 2007 ($69,680) the appellant's taxable income was wholly derived from the business [139].
31 The respondent's taxable income for the years ended 30 June 1997 to 30 June 2011 was derived wholly from the business and fluctuated considerably. In the early years of the relationship it was very modest (ranging from $5,755 to $12,891), but in the year ended 30 June 2003 it increased to $76,039. In the years ended 30 June 2003 to 30 June 2005 it was fairly constant (ranging from $69,476 to $76,039) but in the year ended 30 June 2006 it jumped to $157,102. Thereafter it fluctuated wildly. In the year ended 30 June 2007 it was $62,356; in the year ended 30 June 2008, $382,577; in the year ended 30 June 2009, $58,199; in the year ended 30 June 2010, $698,728; and in the year ended 30 June 2011, nil.
32 The magistrate accepted that the business was cyclical, depending upon the vagaries of the agricultural season, commodity prices and other factors [152]. His Honour referred to the respondent's explanation that the unusually high income in 2008 was due to a very good agricultural season, and in 2010 to accounting adjustments relating to his floor-plan financing arrangements [155]. The magistrate accepted that the 2010 income was due, at least in part, to an abnormally inflated income due to abnormal and significant items of a non-recurrent nature, and that his nil income in 2011 was due to a very poor agricultural season [156], [161].
33 His Honour noted that the appellant did not contend she had made a direct financial contribution to the acquisition, conservation or improvement of either the land or the business, and that in that respect the parties kept their finances separate [164]. He found that the appellant did try to expand the business by adding components such as a Harvey Norman franchise and a hardware franchise, but after the breakdown of the relationship the respondent had closed those down. The magistrate concluded that the core operations of the business were substantially administered by the respondent during the relationship and thereafter, and it was those parts of the business which had driven its successful returns [166].
34 The appellant's contention that she had been underpaid for the value she produced for the business was rejected [168] - [171]. His Honour found that the appellant was paid appropriately for the work she did [169], [234]. He considered that the appellant did not add any measurable degree of value to the business and the value of the business is likely to have been the same if the work performed by the appellant had been done by another paid employee [170]. The respondent was the 'key driver' in the business [172], [233].
35 The magistrate found that it was not clear from the evidence whether the increase in the value of the land since the acquisition by the respondent was due to any particular contribution by either party or any other particular circumstances, and concluded that the increase simply reflected the increase in property values generally [175].
36 The magistrate did, however, observe that having regard to the fluctuations in the respondent's income, it may have been that the appellant's earnings supported the business during the lean years [180].
37 In relation to the assets taken out of the relationship property, his Honour noted that the appellant obtained net proceeds of $568,000 on the sale of the residential property, of which some $173,000 remained after the debts of the failed supermarket business were met [182] - [183]. At the time of trial, nothing remained of that sum of $173,000 [183], [186]. Nor did the appellant have anything to show for the sale of the city property, from which she received $32,000 [186]. It was not clear how the appellant came to have nothing left from those sales and from her apparently profitable share market trading, but that outcome had not come about as a result of anything the respondent did or did not do [187].
38 The magistrate then assessed the position of the parties overall. He found that the appellant brought into the relationship assets with a value of $270,000 and took out of it assets worth probably double that value, of which nothing was left [188]. The respondent had the land and the business at the beginning of the relationship, he had them at the end, and he still had them at the time of trial [189]. The appellant had made the greater s 205ZG(4)(a), (b) and (c) contributions to the assets she took out of the relationship, but it was arguable that the respondent contributed indirectly to the appellant's servicing of the mortgage over the residential property. The respondent also made 'not insignificant' contributions to that property by handyman tasks [191] - [192].
39 Taking into account:
(i) the contributions which the respondent made to the property taken out of the relationship by the appellant;
(ii) an amount of $8,800 previously paid to the appellant; and
(iii) the motor vehicle and household items taken out of the relationship by the appellant;
the magistrate assessed the contributions of the appellant as having a value equal to 10% of the value of the land and the business [193] - [194]. He calculated that to be an amount of $93,935 [198].
The s 205ZG(4)(d) - (g) matters and any necessary adjustments
40 His Honour noted that s 205ZG(4)(f) and (g) had no application on the facts of this case [199]. He concluded there should be no adjustment under s 205ZG(4)(d) [207], or on the basis of the s 205ZD(3) matters [222]. That finding is not challenged.
The 'just and equitable' requirement: s 205ZG(3)
41 Finally, the magistrate concluded that the order he proposed to make was 'just and equitable' as required by s 205ZG(3). His Honour noted that the appellant's net worth had increased significantly during the relationship and she had taken out of it property of much greater value than she had brought in. Through the failed supermarket venture she had lost almost everything. The respondent had not been involved in any of the financial decisions made by the appellant after the separation.
42 The respondent was the key person in the operation of the business and from his years in the business would have built up significant personal rapport with his customers [172], [233]. The appellant had been paid for her work in the business and her earnings enabled her to service the mortgage over the residential property, the whole of the proceeds of sale of which she had retained [169], [234]. She had also retained all of the profit from the city property [125], [232].
43 The magistrate rejected the appellant's contention that she should have half of the property the respondent retained from the relationship, without any adjustment to take into account either the value of the property she had taken out and dissipated or the contributions the respondent had made in relation to the that property [235]. His Honour concluded that the orders he proposed to make were just and equitable [238].
44 He ordered that the respondent pay to the appellant the sum of $93,935, subject to the deduction of any amount previously paid by the respondent pursuant to an order of the court of 19 June 2009. That order had required the respondent to pay the sum of $8,800 to the appellant [196].
The grounds of appeal
45 The appellant relied upon the following amended grounds of appeal:
1. The court at first instance erred in law by applying the wrong approach to determining the contributions of the parties in that:
a. His Honour incorrectly applied the asset by asset approach or a hybrid approach rather than the global approach to determine the contributions of the parties; and/or
b. His Honour incorrectly added back the loss suffered by the appellant in the supermarket business when taking the 4 step approach to determining contributions of the parties.
and thereby reaching a conclusion as to the contributions and distribution to the parties that was unfair and unreasonable to the appellant.
2. The court at first instance erred in fact by
a. finding that the respondent was in a debt-free position at the time of co-habitation;
b. failing to find that the respondent was in significant debt at the time of co-habitation,
and thereby degraded the resultant contributions by the appellant in directly and indirectly assisting the respondent to reduce or wipe out that debt.
3. The court at first instance erred in fact by
a. finding that the appellant was merely an employee of the business operated by the respondent; and
b. failing to find that the appellant's income from the business was used to contribute to the household and wellbeing of the parties,
which resulted in the degrading of the resultant contributions found to be made by the appellant to the overall wellbeing of the parties or to the development and maintenance of the business.
4. The court at first instance erred in fact by finding that the increase in value to [the land] on which the business is operated was solely from the uplift in the market over the period from purchase to February 2013.
5. The court at first instance erred in law in the exercise of its discretion when determining that an award to the appellant of either 10% of the value of the business, or in effect 17% of the total property of which the parties had real benefit was just and equitable in all the circumstances in accordance with s 205ZG(3) of the Family Court Act 1997 (WA).
The disposition of the appeal
Ground 1
46 On the hearing of the appeal, counsel for the appellant conceded that ground 1(b) could not be made out (ts 15). Accordingly, the only question that remains is that contained in ground 1(a).
47 In making orders under s 205ZG of the Act, the court is exercising a judicial discretion: Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513, 517; T v L [2006] WASCA 46 [126]. It is not an unguided discretion, but a discretion to be exercised in accordance with principle: Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108 [38]. In exercising the discretion, the court is not required by s 205ZG to use either the global approach or the asset by asset approach to the exclusion of the other. While in most cases the global approach is more convenient, the application of one approach rather than the other approach does not of itself amount to an error of law: Norbis (523 - 524); T v L [35], [128], [150].
48 As the appellant challenges the exercise of a discretion, it is necessary to show an error of the kind described in House v The King (1936) 55 CLR 499, 504 - 505. As I understand the appellant's case as it was put on the hearing of the appeal, it was contended, in effect, that as a result of taking an asset by asset approach, instead of a global approach, the magistrate had erred in assessing the contribution of the appellant to the property of the relationship and arrived at a finding which was plainly unjust or unreasonable, in that it greatly understated the appellant's contribution.
49 Counsel for the appellant submitted that the global approach required 'snapshots' to be taken of the value of the property of the relationship at the time cohabitation began, at separation, and at trial, respectively. While his Honour had made findings as to the value of the property at trial, he should also have made such findings as at the date cohabitation began and when it finished, and made findings as to each party's contribution to the increase or diminution of the overall asset pool. The appellant's counsel accepted that the assessment of contributions included contributions to property which at trial no longer existed (ts 6 - 7).
50 As mentioned earlier, pursuant to orders made on the hearing of the appeal, the appellant has since filed tables setting out the assets and liabilities of each party as at the date of commencement and termination of cohabitation respectively, and submissions in support of the tables. I do not, however, consider those tables to be of any assistance. That is because there is no basis in the evidence for the values which the appellant has ascribed to the critical assets and liabilities of the respondent at either the commencement or the termination of cohabitation.
51 It is unnecessary to reproduce the tables. The major difficulties can be readily stated. In the appellant's tables, the value of the land and business as at the commencement of cohabitation are shown as being $50,000 and the respondent's liabilities in respect of it are stated to be $200,000. The respondent is shown as having a mortgage of $55,000 over his home which is valued at $50,000. The result is that the respondent is shown as having a net liability of $155,000. By contrast, the appellant is shown as having net assets of $259,000 (agreed at trial at $270,000).
52 As at the termination of the relationship, the business is shown in the appellant's tables at a value of $600,000 and the land at $700,000 and the respondent is shown as having no liabilities. The result is that the respondent is shown as having net assets of $1,305,000. The appellant is shown as having net assets of $623,000.
53 Those values, while very favourable to the appellant's case, are not borne out by the evidence. There is simply no evidence which is capable of supporting a total value of $50,000 for the land and business as at the commencement of cohabitation. Nor is there any evidence which supports the values asserted at the termination of cohabitation. The only valuation of the business produced at trial was that provided in the report of an expert valuer, in which the business was valued as at 30 June 2011 [87]. Based on that valuation, the parties agreed the value of the business as at trial at $239,350. No reason is given, or is apparent, for its inclusion in the appellant's tables at a value of $600,000 as at the date cohabitation ceased, 2 September 2007. Nor is it apparent upon what basis the land, agreed at a value of $700,000 as at trial (February 2013), is included in the table as an asset of the respondent at a value of $700,000 as at 2 September 2007. There was no admissible evidence as to the value of the land at any point. In addition, it is most unlikely that, as the table sets out, the respondent was free of debt at the date cohabitation ceased [80].
54 The most that can be said about the appellant's tables is that they highlight the lack of crucial evidence at trial. That is dealt with in more detail below in relation to some of the other grounds of appeal.
55 Turning to the appellant's contention under this ground, it is the case that the magistrate did not strictly apply a global approach. I am not, however, persuaded that in not doing so he fell into error.
56 In In the Marriage of Zyk (1995) 128 FLR 28; (1995) 19 Fam LR 797, the Full Court of the Family Court explained in relation to s 79 of the Family Law Act 1975 (Cth) (a provision comparable to s 205ZG of the Act), the reason that the global approach is usually more convenient:
The global approach enables the Court to assess the contributions aspect of the s 79 exercise in an overall way by considering the parties' contributions to their property as a whole although factoring into that exercise the circumstance, if it be so, that they may have made varying contributions to the total property at trial or which formed part of the history of their property during the marriage. It is the generally preferred and the generally adopted approach. It enables a broad approach to be taken to the varying contributions of the parties over the years of their marriage and in particular it usually has the advantage of more easily dealing with and giving proper recognition to pars (b) and (c) contributions. However, where the contributions to the components of the total property are disparate, caution needs to be exercised in this approach and the overall conclusion tested against the requirement that the orders be 'just and equitable'. …
The asset by asset approach enables the Court to assess separately the parties' contributions to particular assets or groups of assets. It is the less preferred approach largely because it can at times be an artificial exercise and also because it can create difficulties in the proper evaluation of pars (b) and (c) contributions. But there are a number of circumstances where it may be appropriate to do so, for example an inheritance received post separation, or where the financial relationship of the parties during the marriage was such that they treated some property as exclusively the property of one party to which the other party made no, at least no par (a), contributions to it. It may be convenient in cases like that to treat that property separately rather than assess the overall contributions of the parties to the totality of their property.
However, the trial Judge has a discretion as to which course to adopt and does so having regard to what appears more suitable to the circumstances of the particular case (32 - 33).
57 If the global approach is adopted, the origin and nature of the different assets ought still to be considered: In the Marriage of J A and S M Gill (1984) 9 Fam LR 969, 981. But it is clear that some situations do not lend themselves either to a pure global approach or to a pure asset by asset approach. Thus, for instance, as was explained in Bilous v Mudaliar [2006] NSWCA 38; (2006) 35 Fam LR 55 [43], in some cases the judge may decide to have regard to the particular contributions made to individual assets, weigh up the overall respective contributions of the parties and make differing apportionments in relation to the interests of the parties in different assets. And as the court said in Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550, 'in the necessarily inexact exercise involved in discretionary matrimonial or … property adjustment, judicial reasoning can be aided by the use in any case of more than one approach, so that one serves as a check method for the result reached by the other' [53].
58 As the magistrate observed, the unusual feature of this case was that the pool of property which remained for distribution at trial was very different to the pool of property which would have been available for division at the date of separation. In the five years or so between separation and trial, the appellant had dissipated entirely the substantial property she had taken out of the pool at the date of separation - the residential property (to which the respondent was found to have made a significant non-financial contribution) and the city property. The only significant property of the relationship which remained - the land and the business - was held by the respondent. As mentioned above, it was common ground, however, that the assessment of the parties' contributions must include contributions to the property which the appellant had taken at the date of separation and which was no longer available.
59 In addition, the magistrate found that throughout the relationship the parties had kept their financial affairs separate in relation to the significant assets of the relationship [164]. The appellant had made no direct financial contribution to the land or business ([164]) and the respondent had made no direct financial contribution to either the residential or city property [190] - [191]. I note in passing that those findings are not challenged. The magistrate therefore appropriately focussed on non-financial contributions, the 's 205ZG(4)(b) contribution'.
60 In that connection, the magistrate concluded that in the early years of the relationship the appellant's earnings may have assisted the respondent to maintain the business and meet its liabilities but she had not added any measurable value to the business by the work she had done as an employee [170] - [171]. On the other hand, his Honour took into account that the respondent had made non-financial contributions to the residential property, including indirect assistance to the appellant's servicing of the mortgage over the residential property [191]. He considered that the s 205ZG(4)(c) contributions were not significant as, although the relationship had lasted about 10 years, it had produced no children [133].
61 Having done that, the magistrate then looked at what he described as 'the big picture' [188]. It is evident that he did so as a form of cross-checking. His Honour reiterated that the appellant had assets valued at $270,000 when cohabitation began and that she took from the property of the relationship assets of about double that value when it ceased. The latter was obviously a reference to the residential property, which the appellant sold some two years later for a net sum of $568,700, and the city property, from which she received a net amount of $32,000. The magistrate also reiterated that during the relationship the appellant had made the greater contribution to the assets she took out of it, but it was arguable the respondent contributed indirectly to the appellant's servicing of the mortgage over the residential property [191].
62 The magistrate did not put a value on the land and business held by the respondent when cohabitation began or when it ceased. He could not do so because there was no evidence from which such values could reasonably be derived. That of itself prevented a simple global assessment. As at the time of trial, the agreed value of the land and business was $939,350 [118].
63 It was in the light of all those considerations that his Honour assessed the contributions of the appellant to be to the value of 10% of the land and business; that is $93,935.
64 In my view it has not been shown that the magistrate erred in the approach he took or in the result at which he arrived. While counsel for the appellant contended that the use of the global approach would have resulted in the appellant receiving a much greater sum, a total amount put at $375,525, she did not demonstrate how such an approach would have produced a different result to that arrived at by the magistrate and it is not evident that it would. Nor did the appellant explain how such an approach could properly have been adopted in the circumstances of this case and in the absence of proper valuations of the critical assets and liabilities at the commencement and at the termination of cohabitation. No error has been made out.
65 I would dismiss this ground of appeal.
66 It is necessary then to turn to the grounds of appeal which challenge his Honour's findings of fact.
Ground 2
67 Under this ground of appeal, the appellant alleges that the magistrate erred in fact in finding that the respondent was in a debt-free position at the time of cohabitation and says that he should have found the respondent was in significant debt at the time of cohabitation. The effect of that error, it was submitted, was to substantially reduce the appellant's contribution to the property of the relationship.
68 The principles which apply to an appeal against findings of fact are well-established. This appeal is by way of a rehearing based on the evidence before the magistrate. On such an appeal, it is necessary to bear in mind the limitations inherent in a rehearing on the basis of the written record, where the appellate court does not always have the advantage of matters such as the 'feeling' of the case or considerations which may not be adequately reflected in 'cold type': Dearman v Dearman [1908] HCA 84; (1908) 7 CLR 549, 561; Fox v Percy [2003] HCA 22; (2003) 214 CLR 118 [23].
69 The onus which lies on an appellant goes beyond merely showing that an alternative finding was available on the facts. The appellant must show that the judgment of the magistrate is erroneous. The court may be satisfied there has been an error if it reaches the conclusion that the trial judge failed to draw inferences that should have been drawn from the facts established by the evidence, but it is unlikely to be so satisfied if all that is shown is that the trial judge made a choice between competing inferences, being a choice the court may not have been inclined to make but not a choice the trial judge should not have made: Minister for Immigration, Local Government and Ethnic Affairs v Hamsher (1992) 35 FCR 359, 369; Williams v The Minister, Aboriginal Land Rights Act 1983 [2000] NSWCA 255; (2000) Aust Torts Reports 81-578 [60]; Leeder v The State of Western Australia [2008] WASCA 192 [84].
70 In addition, as Lord Wright pointed out in Caswell v Powell Duffryn Associated Collieries Ltd [1940] AC 152:
Inference must be carefully distinguished from conjecture or speculation. There can be no inference unless there are objective facts from which to infer the other facts which it is sought to establish. … [I]f there are no positive proved facts from which the inference can be made, the method of inference fails and what is left is mere speculation or conjecture (169).
71 The evidence as to the respondent's financial position at the commencement of cohabitation was appropriately described by the respondent's counsel as 'muddled and confused'. That is perhaps not surprising, based as it was entirely on the respondent's recollection of matters which had occurred some 16 years previously. For reasons which are not entirely clear, no relevant contemporaneous financial or banking records were produced. The respondent's recollection of matters of any detail as to his financial affairs was understandably limited and the transcript of his evidence reflects considerable confusion about his financial affairs. No doubt the difficulties with the evidence were not assisted by the fact that the respondent did not have legal representation at trial.
72 On the hearing of the appeal, counsel for the appellant submitted that based on the respondent's evidence the total indebtedness of the respondent at the commencement of cohabitation was an amount in the order of $300,000 to $350,000. We were taken to a number of passages in the respondent's cross-examination where he referred to various figures which together amounted to that sum. However, the respondent's oral evidence seemed to reflect a considerable degree of confusion as to whether, in addition to the cost of $50,000 for the land, he had both obtained a loan of $150,000 to purchase the business and assumed business debts of $150,000 (with the land, a total of $350,000), or whether he had an incurred single liability of $150,000 (with the land, a total of $200,000): [see ts 4 - 6, 15/2/13; ts 2, 18/2/13]. The latter was consistent with the evidence in his trial affidavit in which he said he had agreed to pay $50,000 for the land and take over trade debts of $150,000, which he had financed by a loan of $150,000 from a bank (GAB 25 [14] - [16]). In addition, the respondent's oral evidence appeared to relate to the time of acquisition of the business rather than when cohabitation began (ts 4 - 6, 15/2/13).
73 In her subsequent written submissions of 13 May 2014, the appellant's counsel relied upon the figure of $200,000. It was there submitted on behalf of the appellant (for the first time) that at trial the respondent had acknowledged that at the date of cohabitation he had an outstanding loan of $50,000 to purchase the land and business debts in the sum of $150,000. Accordingly, it was argued, the magistrate should have found that at that date the respondent had debts in an amount in the order of $200,000.
74 In my opinion, however, it is far from clear that there was any such acknowledgment by the respondent. The acknowledgment is said to have occurred in the course of the respondent's cross-examination as follows:
NEEDHAM MS: [GB], I just want to go back to the initial resources that you had at the time that you purchased your parents' interest in the business. At that time you had your house in …, did you?---No. I didn't. I purchased the house in 95.
In 1995. So about two years after you purchased your parents' interest in the business?---Yes.
Correct?---Correct.
When you purchased that property, you had a mortgage over that property for the purchase?---I put a $5,000 deposit on a $55,000 investment.
So you had a mortgage over the property?---Yes.
Yes. That was for $55,000, was it?---Yes.
By the time you entered into the relationship you had your … house with a mortgage over it. Yes?---Yes.
You had another loan for the moneys to pay out your parents, their personal debt and the $50,000 cash. Correct?---Yes.
And you also had the loans that the business had that you'd taken over from your parents. Yes?---I can recall - that is as good as I can recall. Yes (ts 2, 18/2/13).
75 Having regard to the way in which counsel prefaced that line of questioning, it is not clear whether the respondent's evidence about the two loans relating to the business was intended to refer to the date of cohabitation or to the time at which he purchased the land and business.
76 In any event, I do not accept the appellant's submission that the magistrate found the respondent was debt-free. While his Honour found that the sum of $50,000 for the land is likely to have been repaid by the commencement of cohabitation, it is not the case, as I read his Honour's reasons, that he found the respondent to be free of debt. Rather, it is evident his Honour considered that was not the case. Thus, at [179] his Honour noted that the appellant's taxable income for each of the financial years ended 30 June 1998 to 30 June 2002 (the first five financial years of cohabitation) was significantly higher than the taxable income of the respondent for the corresponding period. His Honour went on:
The parties were living together and sharing their lives over the whole of this period and it would appear that if the taxable income figures of the parties were to be looked at in isolation, then there is a case for suggesting perhaps that the [appellant's] earnings were supporting the [respondent's] maintenance of his business during the lean years and enabled him to meet the liabilities of the business and otherwise to reinvest in it. These liabilities would have included the mortgage or mortgages registered against the title to [the land] [180]. (emphasis added)
77 No evidence as to the amount of the indebtedness secured by the mortgages at the commencement of cohabitation, or the terms of the mortgages as to repayment, was adduced by either side and counsel for the appellant did not cross-examine the respondent about it.
78 There was also no evidence as to the extent of the respondent's indebtedness at the date cohabitation ceased or whether, or the extent to which, it had been reduced over the period of cohabitation. In the course of argument on the appeal, counsel for the appellant referred in relation to the former to the report of the expert valuer of the business who had conducted a valuation of it as at 30 June 2011 (ts 18), but that report contains no admissible evidence of the indebtedness.
79 While the magistrate accepted that the respondent was not debt-free at the commencement of cohabitation, it was not possible on the evidence before him for any finding to be made as to the level of the respondent's indebtedness. No reasonable inference could be drawn about the level of debt still owing some three years after the respondent had purchased the business. Nor could any inference be drawn as to the extent, if any, to which any such indebtedness had been reduced over the period of cohabitation.
80 I would dismiss this ground of appeal.
Ground 3
81 Notwithstanding ground 3(a), on the hearing of the appeal counsel for the appellant did not seek to challenge the magistrate's finding that the appellant was merely an employee of the business. That is hardly surprising. At trial, the appellant acknowledged that she was an employee (ts 42 - 43, 77, 14/2/13).
82 The appellant's real contention was that the magistrate had failed to take into account the contributions made by the appellant to the overall welfare of the parties after she ceased teaching, when the whole of her income came from the business. Counsel argued that on the evidence the only reasonable finding was that the appellant had used her wages from the business to pay for consumables (including groceries and utilities) and personal items for both herself and the respondent (ts 27 - 28).
83 Like much of the evidence in respect of the issues on appeal, the evidence as to the respective contributions of the parties to household and personal expenses was unsatisfactory and scanty almost to the point of non-existent.
84 In her trial affidavit, the appellant said that she did the majority of the housework (appellant's affidavit, 11/6/10, [78], [83]), but she did not say that she paid for household and personal items. Nor was the subject of household and personal expenses touched upon in her oral evidence at trial. It is, however, relevant to note that there were other significant demands on her income. The appellant says in her trial affidavit that from her income she paid all of the mortgage payments on a loan of $160,000 for the residential property ([75]) and, from 2005, part of the mortgage payments on a loan of $232,000 on the city property, the balance being met by rental income from the property ([76] - [77]).
85 In his trial affidavit, the respondent said that while the appellant paid their day-to-day household expenses using her credit card 'for the most part', 'the business' paid her credit card bill each month. The respondent said that he drew about $500 in cash each week from the business and the appellant would bank this money in her account (respondent's affidavit, 14/6/10, [98] - [99]). In cross-examination, the respondent accepted that he did not have regular drawings of a set amount but said that he had always drawn about $350 per week from the business (ts 22 - 23, 18/2/13). It was not put to him that all their household and personal expenses were met by the appellant from her own income. Counsel put to the respondent only that the appellant paid for her personal items and some of the respondent's personal items, a proposition which the respondent rejected, contending that his weekly drawings were paid to the appellant to meet such expenses (ts 12, 20 - 21, 18/2/13). It was not in issue that household utilities were paid by the respondent (ts 39, 18/2/13).
86 The magistrate made no specific finding as to the parties' respective contributions to their everyday living expenses. His Honour concluded that such expenses were not a significant factor in the case, which he considered turned on the contributions referred to in s 205ZG(4)(a) and (b) [133], [135].
87 On the evidence, such as it was, that finding was clearly open to his Honour. On the very limited evidence before his Honour it could not be concluded that the appellant's income from the business made a material contribution to the household expenses or the well-being of the parties. I would dismiss this ground of appeal.
Ground 4
88 This ground, as framed, begs the question whether, if or to the extent the increase in the value of the land was a result of factors other than simply the increase in property values generally, the appellant contributed to the increase in value. The appellant's contention, as developed by her counsel on the appeal, was that the magistrate should have found that the increase in the value was due, or due in part, to improvements to the property in which the appellant had played a significant role. I will deal with the ground of appeal on that basis.
89 In relation to the improvements, counsel for the appellant relied upon the appellant's trial affidavit in which the appellant set out, in general terms, the improvements she said had been made to the business premises during the period of cohabitation. They included the addition of a large machinery workshop, a chemical storage shed, brick retail premises, office and ablution blocks, and the landscaping of the site (appellant's affidavit, 11/6/10, [58] - [60]).
90 It was not in issue that the improvements had been paid for by means of a loan obtained by the respondent from a financial institution (ts 31 - 34). There was, however, no evidence as to the cost of the improvements. There was also no valuation or other evidence as to the extent to which the improvements had increased the value of the land or the business. Nor did it appear from the evidence when the improvements were carried out.
91 The appellant's own contribution to the improvements was said to be twofold. First, in her trial affidavit the appellant said she had 'significant input into the planning of the new buildings and organising finance for those developments' (appellant's affidavit, 11/6/10, [58]). The matter was not touched upon in her oral evidence.
92 Second, it was said that the appellant had provided her own property by way of security for loans to effect the improvements (ts 34). On the hearing of the appeal, counsel for the appellant accepted that it would be necessary to amend the grounds of appeal to raise this contention (ts 46). An order was made that the appellant file and serve any proposed amendment by 30 April 2014 (ts 47). No such amendment was filed and served.
93 In any event, I do not consider there is any substance in it. The evidence on which counsel relied was contained in the appellant's trial affidavit, in which she said:
As well as the physical work that I did in the business, I also used my assets to guarantee loans for the business. [The residential property], … was used as security to secure loans for the business.
94 That, again, was not touched upon in her oral evidence. In particular, there was no evidence as to when that security was provided, the form of security given, the duration of the security, or the amounts secured. There was also nothing to connect the security provided to the loans obtained to pay for the improvements. The affidavit evidence that she provided security for loans 'for the business', was in such vague and general terms as to be of no significant probative value.
95 It might be possible to draw an inference that the improvements to the property played some, albeit unquantifiable, part in the increase in the value of the land. But no inference could properly be drawn as to the extent to which they contributed to that increase. Nor could any inference properly be drawn as to the extent, if any, that the appellant made any relevant contribution to the improvements. In the first place, the evidence as to the work the appellant did was in such vague and general terms as to be of no significant probative value. Secondly, such work as she may have done by way of 'planning of the new buildings and organising finance' was apparently done as an employee and, on the magistrate's finding, she was adequately compensated for the work she did as an employee.
96 In my opinion, even if the magistrate erred in disregarding the effect of the improvements and in finding that the only reason for the increase in the value of the land was the general increase in property values, the error was not material. On the evidence it could not be found that the appellant made any material contribution to the improvements and, accordingly, to the increase in the value of the land.
97 I would dismiss this ground of appeal.
Ground 5
98 As this ground challenged the exercise of a discretion, it is necessary for the appellant to show an error of the kind described in House v The King. It was submitted on behalf of the appellant, first, that the magistrate had made the errors of fact asserted in the previous grounds of appeal and, second, that error is to be inferred because the result is plainly unreasonable or unjust. Counsel for the appellant argued that in light of the length of the relationship, the contributions made by the appellant and the respondent respectively to the asset pool, and to the inability of the appellant now properly to support herself, the order was unjust and inequitable.
99 I would dismiss this ground. If the magistrate erred at all, the only error might have been a failure to take into account the improvements to the land as a factor arguably relevant to the increase in the value of the land over the period of cohabitation. But as I have said, even if his Honour erred in that respect, the error is immaterial as the appellant has failed to establish that she made any material contribution to the improvements.
100 I do not accept that the order made by the magistrate was plainly unreasonable or unjust. There is no evidence that the appellant is unable to support herself and having regard to his Honour's findings as to the property of the relationship and the parties' respective contributions to it, the order that his Honour made was one that was properly open to him. There is no basis upon which this court would be entitled to interfere.
Conclusion
101 I would dismiss the appeal.
102 MURPHY JA: I agree with Newnes JA.
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