Keating & Keating
[2019] FamCAFC 46
•21 March 2019
FAMILY COURT OF AUSTRALIA
KEATING & KEATING [2019] FamCAFC 46
FAMILY LAW – APPEAL – PROPERTY – Where the parties’ liabilities exceed their assets – Where the husband has significant business assets and income – Where the business will continue to trade - Where the husband has significant director loans – Where both parties are held liable for a failed investment debt and subsequent reduction in the net assets – Failure of the primary judge to engage with the wife’s case – Inadequate reasons – Appeal allowed – Matter remitted for rehearing.
FAMILY LAW – APPEAL – PROPERTY – Family Violence – Where the wife sought an adjustment under the Kennon principles – Where the primary judge declined to make the adjustment sought – Discussion of Spagnardi & Spagnardi [2003] FamCA 905 – Approach to findings of fact - Consideration of discernible impact of the violence – Appeal allowed – Matter remitted for rehearing.
FAMILY LAW – APPEAL – No order as to costs – Costs certificates granted for appeal and rehearing.
Evidence Act 1995 (Cth) s 164(1)
Family Law Act 1975 (Cth)
Amador & Amador (2009) 43 Fam LR 268; [2009] FamCAFC 196
Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337; [1981] HCA 1
Australian Coal & Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621; [1953] HCA 25
B & B (Costs Certificates) (2007) FLC 93-339; [2007] FamCA 1177
Biltoft and Biltoft (1995) FLC 92-614; [1995] FamCA 45
KatsilisvBroken Hill Pty Ltd (1977) 18 ALR 181
Kennon v Kennon (1997) FLC 92-757; [1997] FamCA 27
Minterly & Minterly [2013] FamCA 418
Mitchell v Cullingral Pty Ltd [2012] NSWCA 389
Nominal Defendant v Kostic [2007] NSWCA 14
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 24
Spagnardi & Spagnardi [2003] FamCA 905
Weir & Weir (1992) FLC 92-338; [1992] FamCA 69
APPELLANT: Ms Keating
RESPONDENT: Mr Keating
FILE NUMBER: BRC 1506 of 2012
APPEAL NUMBER: NOA 23 of 2018
DATE DELIVERED: 21 March 2019
PLACE DELIVERED: Sydney
PLACE HEARD: Brisbane
JUDGMENT OF: Ainslie-Wallace, Ryan & Austin JJ
HEARING DATE: 16 October 2018
LOWER COURT JURISDICTION: Federal Circuit Court of Australia
LOWER COURT JUDGMENT DATE: 10 January 2018
LOWER COURT MNC: [2018] FCCA 174 REPRESENTATION
THE APPELLANT: sE In person
COUNSEL FOR THE RESPONDENT: Mr G Shoebridge Mr Shoebridge
SOLICITOR FOR THE RESPONDENT: name Dowd & Co Orders
(1)The appeal be allowed.
(2)The orders dated 10 January 2018 be set aside.
(3)The matter be remitted for rehearing by a judge other than the primary judge.
(4)The Court grants to the appellant a costs certificate pursuant to ss 9 and 8 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by her in relation to the appeal and in relation to the new trial in the matter.
(5)The Court grants to the respondent a costs certificate pursuant to the provisions of ss 6 and 8 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by him in relation to the appeal and in relation to the new trial in the matter.
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 Keating & Keating has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE
Appeal Number: NOA 23 of 2018
File Number: BRC 1506 of 2012
Ms Keating Appellant
And
Mr Keating Respondent
REASONS FOR JUDGMENT
Ainslie-Wallace & Ryan JJ
1.By Amended Notice of Appeal filed 31 August 2018, Ms Keating (“the wife”) appeals property settlement orders made by Judge Baumann (as his Honour then was) on 10 January 2018. Mr Keating (“the husband”) resists the appeal and seeks to uphold the orders.
2.Following the parties’ final separation in 2010, in February 2012 the wife commenced proceedings in the Federal Circuit Court of Australia for property settlement and spousal maintenance. At some stage the issues in dispute extended to parenting matters, which were resolved by orders dated 15 July 2013.
3.On 18 and 19 November 2013 the property settlement proceedings were heard by a different judge who delivered reasons and made orders on 30 April 2014. The wife appealed those orders and in October 2014 the appeal was allowed after hearing submissions from both parties that it should be allowed by consent. The orders of 30 April 2014 were set aside and the matter remitted for re-hearing by another judge of the Federal Circuit Court.
4.His Honour heard the matter over a number of days in November 2016, January and August 2017, with the final submissions being made on 27 October 2017. His Honour made orders and delivered his reasons ex tempore by telephone on 10 January 2018. The wife seeks that we allow the appeal and remit the matter again.
Background
5.The husband is a tradesman and at the commencement of cohabitation he owned and operated a business utilising what became a complex structure involving corporate and trust entities known as the Keating Group (“the Group”). The Group traded throughout the marriage and since the parties final separation in mid-2010 it is has been managed and operated by the husband. Its value and the dramatic increase in the husband’s director loan account to the Group were pivotal issues in the proceedings.
6.His Honour evaluated the parties’ property in two pools. Pool One comprised non-superannuation assets and property and liabilities, and Pool Two consisted of superannuation. The non-superannuation property was found to be worth $1,784,854, however after the deduction of certain debts (most notably the husband’s indebtedness to the Group and expenses associated with a failed taxation minimisation scheme), liabilities exceeded assets by $804,805. The wife’s contributions were assessed at 30 per cent compared with the husband’s 70 per cent; his greater contribution being attributed to his greater initial contribution, namely the Group. The parties’ superannuation interests were considered separately and valued at $710,824. Their contributions to superannuation was assessed as equal. No adjustment was made pursuant to s 75(2) of the Family Law Act1975 (Cth) (“the Act”) in either pool.
7.In broad terms, the effect of his Honour’s orders was that the wife would retain personal items, her bank account, car and $12,000 previously received by way of partial property settlement. Her superannuation in the amount of $236,599 would be supplemented by a superannuation splitting order in her favour in the amount of $119,000. In the event that the husband was successful in a class action commenced in relation to a failed taxation venture, the wife will receive 50 per cent of the payment received. Relevantly the husband retained the Group, which at that time had an annual turnover in excess of $4 million and which provided him with a standard of living vastly superior to that of the wife’s (and substantial franking credits). He remained personally liable for his loan account and debts due in relation to the tax minimisation scheme.
The Appeal
8.The wife contends seven grounds of challenge to his Honour’s orders and although she appeared for herself during the appeal, her grounds are readily understandable and her summary of argument supports them.
9.On the application of the wife (who is impecunious), this appeal was undertaken without the trial transcript. There is a strong presumption in favour of the correctness of the decision appealed from (see Australian Coal & Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 at 627) and the absence of a transcript could not be permitted to undermine the strength of that presumption. It necessarily adds a layer of complexity for an appellant who attempts to challenge the adequacy of the trial reasons. Similar difficulty may not arise where it is said that the primary judge acted on a wrong principle or failed to apply the statute.
10.However, because the parties were directed to file written closing submissions it is possible to discern the issues which remained outstanding at the close of the evidence and which required adjudication, including where the evidence was contentious and a decision in relation to the facts was required. Thus although the absence of a transcript worked to the wife’s disadvantage in some respects the consequences for the determination of this appeal have not been as confounding as might have been the case.
Grounds 1 and 5: Reasons and engagement with the wife’s case
11.The wife asserts that in coming to a determination of the value of the assets of the parties personally and in the Group, the primary judge failed to give adequate reasons for his conclusions and to support the orders ultimately made. The wife further points to the lack of engagement with the evidence and consideration of her case.
12.Firstly, as to the obligation to give reasons, it is well understood that a judge is obliged to articulate the essential ground or grounds upon which the decision rests (Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247). In so doing the judge must engage with the cases presented by each party (Nominal Defendant v Kostic [2007] NSWCA 14. In this respect, as was explained in Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [116]: “[t]his is not adequately done by setting out the evidence adduced by one side, setting out the evidence on the other side, and saying that the judge prefers one body of evidence to another” (citations omitted).
13.Turning now to his Honour’s consideration of the value of the business enterprises under the heading of “Business interests”.
14.A single expert was appointed to value the Group. He provided two reports, one in 2013 and the other in 2015, the latter of which valued the Group and the parties’ interests in it as at 30 June 2015. The single expert applied the adjusted book value method to determine the value in relation to which he relied on the 2014 fixed assets register and MYOB register and ascribed a value of $1,775,354 to the Group, the value of which was attributed to the discretionary trusts. The parties’ shareholdings, unit holdings and partnership interests had a nil value. From the value ascribed to the Group he deducted $1,648,440 being the director loan account advanced to the husband (his report makes it plain that there were no such loans to the wife) to achieve a net value in the Group of $126,914 (not $136,914 as found at [24] but nothing turns on this minor miscalculation).
15.As to the wife’s challenges of the single expert, the primary judge said:
20. It would, in my view, be challenging for any experienced Counsel (even with a shadow expert) to cross examine [the single expert] on his report. The wife, although not happy with aspects of the report, did her very best to challenge [the single expert] as to his opinions where she could.
21. However, I have no concerns, despite the vigorous cross examination of the husband and [the single expert] by the wife on business factors, in accepting [the single expert]’s report and opinions as to the net value of the entities and, in particular, the massive inter-entity and parties loans. I accept his evidence in its entirety.
16.There is no doubt that the wife challenged the amounts and purposes of the director loans and complained that the husband did not particularise how those loans were used nor if any repayments were made. She said, and indeed established, that the husband had used those loans to pay his legal fees. Although the primary judge said her cross-examination of the expert on this point was to no effect, it is common ground that as a result of cross-examination of the expert, the husband conceded that $96,000 should be “added back” to the value of the Group to reflect his use of the money advanced to pay his legal fees. The wife disputed the amount and contended that the adjustment should be at least in the order of $370,951.79. Whether the conceded amount was reflected in the value of the Group or the formulation of the property available for distribution does not matter, for the point is that the concession that there should be an adjustment is not reflected anywhere in the reasons. No reasons were given as to why. Although $96,000 might seem to be pettifogging, this is but one example of the general failure to engage with the issues and evidence raised by the parties.
17.On the evidence it is clear that the Group is the alter ego of the husband (see Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337). Accordingly, as the wife contended, it was open to the primary judge to consider whether and how the loan account might be repaid and/or brought to account. There was no suggestion the Group would be wound up and there was evidence from the single expert as to the hundreds of thousands of dollars in franking credits available to the Group and husband, the Group’s significant income and the husband’s considerable drawings over many years. Furthermore, analysis of the evidence given by the single expert of the corporate entities demonstrates (beyond the executive summary attached to the trial reasons) that there were assets of real value in relation to which large adjustments were made for depreciation (see for example Keating Projects Group Pty Ltd). Thus the wife’s claim that the principles which emerge from cases such as Biltoft and Biltoft (1995) FLC 92- 614 were in play and could not be dismissed out of hand. This important integer of her case was given no consideration.
18.The second limb of the wife’s challenges in these grounds concerns the husband’s failed investment, referred to as B Investment and also known as X Investment, which was highly contentious at trial. The entirety of the invested sum together with legal fees borrowed by the husband to take part in a class action to recover the investment of $941,219.38 was attributed jointly to the parties and the debt used to reduce the value of their net assets.
19.The wife’s position at trial was that while she knew of the husband’s proposed entry into the venture she neither approved of nor supported it and, she contended, she should bear no responsibility for the debts resulting from the scheme’s failure.
20.At trial the husband submitted that this venture was undertaken “with the knowledge and support of the wife”. In aid of that contention, the husband relied on the evidence of his accountant, Mr L and his employee, Mr C.
21.Mr L’s affidavit (sworn 8 November 2016) on this point is brief and he said that on or about 12 June 2008 he had a meeting with the husband and the wife and “we discussed and reviewed the investment strategy surrounding [X Investment]”. Mr C’s affidavit (sworn 8 November 2016) refers to and records a Microsoft Outlook Calendar note made by him which entitled the meeting with the husband and wife as “[r]un through the [X] strategy and scenarios” with Mr L and the husband and wife.
22.However, his Honour did not resolve that issue. His Honour’s analysis of this investment is as follows:
31. Often, as seems to be the case here, there are complicated interconnected financial arrangements that came into operation that funded the investment. If the value of the investment dropped, as it has in this case, the debts owed, often to third parties - as it is in this case the Commonwealth Bank - remain.
32. Many people in Australia, in cases that this Court has had to deal with, have been caught by this tax minimisation (not necessarily avoidance) strategy. The evidence before the Court on this issue came both from the husband but in particular [Mr L] and [Mr C], both of whom were cross examined by the wife. I accept their evidence on this issue.
23.Thus although there was evidence that may have enabled the primary judge to make the finding that the husband sought, his Honour went no further than to say that the wife was “aware” that the investment scheme was unsuccessful [30]. Whether or not she was aware that the scheme had failed was irrelevant. The issue was whether she knew of and supported the husband’s investment in the scheme to the extent that she should shoulder half of the resulting debt. In the result, his Honour’s decision to fix both parties with responsibility for the debt was made “…because [the debt] actually exists” [47(g)].
24.His Honour’s finding that the wife was “aware” that the investment scheme failed falls considerably short of engagement with the reasons why the wife said she ought not to be fixed with joint responsibility for the debt. The same applies to the finding that the debt “actually exists”. Although parties would ordinarily be expected to take the good with the bad, there was no active engagement by the primary judge with the wife’s case that the husband should bear sole responsibility for the debt and why.
25.The failure to engage with the wife’s case on these material matters is an error of law and Grounds 1 and 5 (which overlap) have been established.
26.Many of the subsequent challenges to his Honour’s conclusions depend on his decision to bring the husband’s indebtedness qua the loan accounts and taxation minimisation to account as liabilities of both parties, rather than solely the husband. Those findings having been effectively challenged, therefore it is not necessary to consider Grounds 2, 3 and the aspects of Ground 4 which relate to the husband’s legal fees.
Ground 4: Family Violence
27.Although the fate of the appeal has been established, it is important to discuss the wife’s claim for an adjustment arising from family violence.
28.The wife contended that she had been exposed to significant family violence by the husband during their relationship as well as after the relationship concluded. Her affidavit is redolent with detail which we do not need to repeat here but which the primary judge summarised in an attachment (Appendix 3) to the trial reasons. His Honour was undoubtedly correct when he said that “[t]he wife asserts many events of family violence” [37]. It was pointed out she cross-examined the husband on some, but not all, of her allegations [38].
29.In the passages discussed below the primary judge identified one of the incidents the wife questioned the husband about but makes no mention of the others. His Honour said:
40. The husband did not suggest there were not tensions in the relationship or that he was a perfect partner. He admitted, when cross examined by the wife that the Queensland Police document (Exhibit 24) of an assault on the wife by him on 26 January 2006 resulted in charges against him, and that the wife suffered a broken wrist and went to the [Suburb D] Hospital that night. Otherwise, generally, he denies the allegations of family violence in all its different characterisations, including coercive and controlling behaviour, levied at him by the wife.
41. It is necessary that I apply the principles which have been identified already. The nature of the allegations and the lack of corroboration (save for the one incident already referred to), coupled with:
a)the way and manner of contributions the parties were able to make during the course of the relationship;
b) the number of separations that occurred between the parties, which reduced the length of the actual relationship cohabitating by some nearly two years; and
c) the lack of evidence offered by the wife, as identified by the Full Court in Spagnardi & Spagnardi [2003] FamCA 905 mean, in my view, I am not able to be satisfied that the circumstances of this case, on the current law, fit within the small number of cases where the Court can be satisfied that the wife’s contributions during the course of the relationship were made more onerous in a Kennon sense.
30.The reference to Kennon above is to Kennon & Kennon (1997) FLC 92-757, which was later considered in Spagnardi. At [39] his Honour incorporated (and adopted) the analysis of Kennon and Spagnardi undertaken by Watts J in Minterly & Minterly [2013] FamCA 418.
31.It should be understood that the husband gave evidence in chief that during an argument he pushed past the wife who fell over and fractured her wrist. This concession was made long before the husband was cross-examined. Relevant to the wife’s claim for an adjustment as a consequence of the family violence she said she endured (pursuant to s 75(2) of the Act but seemingly accepted at trial as being a contribution issue), this meant that her evidence that the husband broke her nose in 2004/2005, that he beat her on an overseas trip till she passed out and suffered serious bruising, on another occasion suffered broken ribs, that the husband frequently directed abuse at her which undermined her sense of self-worth and her being confined to bed because of her injuries, was given no weight.
32.So too her evidence that the husband’s abuse undermined her parenting, the effect his violence and abuse had on her mental health (see Appendix Three to the trial reasons) and that three domestic violence orders were made for her protection. The wife gave evidence of the husband beating her when he was drunk and of her having to clean him after he soiled himself.
33.The fact that the wife gave evidence of family violence during periods when the parties were separated and after they separated for the last time ought not to have minimised the significance of her evidence of that which occurred during the relationship. Nor should Kennon be interpreted (as his Honour seems to have done) as laying down a hard and fast rule that post separation family violence to a spouse who seeks to continue to contribute to the welfare of the family as a parent is irrelevant. As Kennon at 84,295 makes clear, the question of the relevance of post separation violence is that it would not usually be of a sufficient duration for its impact to be relevant to the victim spouse’s contributions.
34.It follows that the wife gave evidence about a course of significant family violence which was prolonged, had a significant adverse effect on her and undermined her parenting and her ability to contribute.
35.Turning then to Kennon, the rationale for a contributions adjustment as a consequence of family violence was explained by Fogarty and Lindenmayer JJ at 84,294:
Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party’s contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties’ respective contributions within s.79. We prefer this approach to the concept of “negative contributions” which is sometimes referred to in this discussion.
36.And at 84,294 – 84,295:
It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions).
(Emphasis added)
37.In Spagnardi the Full Court referred to Kennon and the necessity to show that the conduct had a “discernible impact” on the party’s contributions but noted that, there was an “insufficiency of evidence” [47]. Their Honours then continued:
As Kennon has established, it is necessary to provide evidence to establish:
·The incidence of domestic violence;
·The effect of domestic violence; and
·Evidence to enable the court to quantify the effect of that violence upon the parties [sic] capacity to "contribute" as defined by section 79(4).
(Emphasis added)
38.Their Honours further noted at [48] that there was a “complete absence of evidence as to how the husband’s conduct affected her ability to contribute”. At first blush the reference in Spagnardi to “quantification” seems to elevate the need for an evidentiary nexus or “discernible impact” between the conduct complained of and its effect on the party’s ability to make relevant contributions, requiring expert or actuarial evidence of the effect of the violence. That impression is reinforced by their Honour’s reference to and comparison with the husband’s failure to adduce evidence to demonstrate the impact on the value of the house by his renovations and improvements at [50] where their Honours said:
An absence of quantification was also apparent in the appellant’s case. While the husband went to great lengths to identify each of the tasks undertaken by him in connection with renovations and improvements to the matrimonial property, he failed to provide evidence of the direct effect of his endeavours upon the value of that property.
39.This uncomfortable analogy does not illuminate what “quantification” of the effect of violence on contributions might look like. It suggests something more than the evidence by the victim spouse. We struggle to understand what that “quantification” evidence might be beyond that given by the victim spouse as to the incidence and effect of the violence as identified in Spagnardi in the first two dot points at [47]. Furthermore, we fail to see how this third step accords with the decision in Kennon which the Full Court in Spagnardi said governed the situation. Perhaps the use of the word “quantification” is infelicitous and has unintentionally added a gloss to the ratio in Kennon when, in truth, the Court in Spagnardi was merely reinforcing the need for there to be an evidentiary nexus between the conduct complained of and the capacity (and or effort expended) to make relevant contributions. And, depending upon the nature of the violence established, in the absence of express evidence about the effect that violence had on the victim spouse’s contributions, how difficult it might be for the Court to draw inferences which would establish the evidentiary nexus (see Spagnardi at [42]). But we did not have the benefit of argument on the point (nor it seems did the primary judge) and prefer to express no final view about it.
40.In any event, the primary judge gave no consideration to the inferences that might properly be drawn from the wife’s albeit limited evidence as to the effect on her of the husband’s violence taken in conjunction with her evidence of the severity of the violence. In this respect although there was evidence about violent behaviour by the wife, it was not the husband’s case that this warranted an adjustment in his favour. Perhaps this is why there is no reference to this evidence in the trial reasons.
41.Turning then to the frequency and severity of the violence, we are troubled that the primary judge seems to have dismissed all incidents of violence towards the wife except that which resulted in the wife’s wrist being broken by the husband, apparently because her evidence was uncorroborated.
42.It is well settled that a party does not require his or her evidence to be corroborated before evidence of family violence can be accepted. A decade ago the Full Court said in Amador & Amador (2009) 43 Fam LR 268 at [79]:
Where domestic violence occurs in a family it frequently occurs in circumstances where there are no witnesses other than the parties to the marriage, and possibly their children. We cannot accept that a court could never make a positive finding that such violence occurred without there being corroborative evidence from a third party or a document or an admission. We have not been referred to any authority in support of such a proposition.
43.The primary judge’s approach to the wife’s claim for an adjustment as a consequence of family violence was undoubtedly affected by the confused approach she adopted at trial and as reflected in her summary of argument filed in the appeal. Nonetheless it seems to us that his Honour’s approach to the issue of family violence as demonstrated in his reasons is persuasive of the conclusion that he misdirected his attention from the “discernible impact” of the husband’s violence on the wife’s capacity to make contributions focussing instead on there being no evidence allowing “quantification” of that effect. However, for an abundance of caution given the absence of a transcript, we cannot conclusively say that his decision to make no “Kennon” type adjustment was wrong. That argument and its ultimate determination must await the remitted trial.
Grounds 6 and 7: Other matters
44.Otherwise, the wife has not established that there has been a miscarriage of justice because the primary judge failed to give greater weight to inconsistencies in the husband’s evidence about wages paid to the wife by the Group. His Honour did not overlook the issue [42(e)] and his description of the issue as minor is apt. Ground 6 is not made out.
45.The final ground to consider is Ground 7, in which the wife complains that there was a want of disclosure by the husband and the primary judge should have found accordingly. As we understand her oral addresses, the implication is that this would have seen the principles derived from cases such as Weir & Weir (1992) FLC 92-338 as to the consequences of non-disclosure being brought into play. In making this argument the wife failed to appreciate that the provision of documents to her (then) solicitor amounted to the provision of documents to her and that she was bound by her solicitor’s concession that the single expert had access to all relevant documents. Merely because the wife had not examined the same documents does not amount to a failure of disclosure by the husband. There is no merit in this ground.
Conclusion and Costs
46.Tragically, this appeal too will succeed and the orders made on 10 January 2018 will be set aside and, again, the matter will have to be remitted to the Federal Circuit Court to be reheard. Although the husband previously opposed the wife’s application to transfer the proceedings to the Family Court, the parties ask that we recommend that course of action, which we do.
47.It is common ground that in the event the appeal is allowed, there should be no order as to costs. We agree. In these circumstances before orders pursuant to ss 6, 8 or 9 of the Federal Proceedings (Costs) Act 1981 (Cth) may be made three matters must be established (see B & B (Costs Certificates) (2007) FLC 93-339). They are:
·The existence of a federal appeal;
·That the appeal has succeeded on a question of law; and
·That the court concerned should have heard the appeal.
48.In addition, there must be no order as to costs.
49.Each matter is established. It is appropriate that the parties receive certificates for the appeal and rehearing.
Austin J
50.I concur generally that the primary judge’s reasons failed to comprehensively engage with or satisfactorily explain the resolution of the parties’ dispute over the identification and valuation of their respective assets and liabilities.
51.The primary judge recognised that two of the “three major forensic issues” for determination at trial were the net value of the Group and whether the husband should bear exclusive liability for a large debt arising out of a failed investment venture. It was not enough for the primary judge to decide those two issues by, in effect, merely expressing preference for the reliability of the single expert’s opinion evidence over the wife’s complaints about the legitimacy of the debt owed by the husband to the Group, which debt the primary judge described as “massive inter-entity and part[y] loans” (at [21]) in the context of the Group’s annual turnover of $4 million, nor to simply find the liability arising out of the failed investment should be “shared in the pool as a liability, because it actually exists” (at [47(g)]. The intensity of the conflict, the volume of evidence, and the large sums of money at stake over the resolution of those two issues required more thorough forensic analysis and reasoning.
52.I cannot, however, concur that the primary judge erred in his consideration of the evidence concerning “family violence”, which was the third “major forensic issue” identified by his Honour.
53.The proceedings between the parties were confined to the adjustment of their proprietary interests and the wife’s entitlement to spousal maintenance under Part VIII of the Act. The evidence about the husband’s perpetration of family violence was elicited by the wife in an endeavour to substantiate a claim that her contributions should be accorded more weight in the assessment process because she made them under more arduous conditions on account of his violent conduct (for which purpose she relied on Kennon).
54.Having found that the parties’ liabilities exceeded their assets by $804,805, they had no net equity in alienable assets which was usefully available for division between them, so the assessment of their proportional entitlements to net assets was entirely academic. No matter how much more onerous the wife’s contributions were found to be on account of her sufferance of family violence, it could not result in any tangible increase in her share of the net assets. The parties did, however, have the combined sum of $710,824 invested in their self-managed superannuation fund, so the wife’s share of the superannuation interests could conceivably have been increased to reflect her overall more arduous contributions in accordance with Kennon principles. Although the wife did not actually seek a superannuation splitting order, one was made in response to the husband’s proposal, so the possibility of her increased share of superannuation required the primary judge to adjudicate her Kennon claim. In my view, his Honour did so satisfactorily. To explain that conclusion, some relevant background is first required.
55.The wife alleged the husband’s commission of family violence in her affidavits. Save for one incident recounted by the husband in his own affidavit, he denied all of the wife’s allegations. The solitary incident the husband conceded occurred in January 2006, but the parties gave different accounts of it. It was common ground they engaged in an argument, he pushed past her, she fell over and fractured a wrist, the police were called, and a restraining order was thereafter made against him. Although he was initially charged with assault, the charge was withdrawn. The incident precipitated one of their numerous separations. Of course, those facts alone are shameful enough, but it is necessary to bear in mind the primary judge was being called upon to consider the whole of the evidence and whether the whole of it was sufficient to attract application of the Kennon guidelines. Other evidence could not be overlooked once one episode of violence was found established, as indeed it was.
56.The parties began their relationship in 1997 and finally separated in 2010. They separated several times along the way, for about two years in total, so the wife ably demonstrated her willingness and ability to leave and remain away from the relationship when intolerant of the conditions within it. Significantly, the wife admitted she also perpetrated family violence upon the husband. Those pivotal facts could not simply be ignored or discounted in the scheme of things. For example, she conceded:
In 1995 I suffered an episode of psychiatric illness. I have for many years suffered from depression which was diagnosed in 1996. I did spend time in 1998 in [a private hospital] after a suicide attempt.
(Wife’s Affidavit filed 7 June 2013, paragraph 7)
…
In 2008, I was put in a psychiatric ward at the [a public hospital] for 3 days. I also had a domestic violence order taken out against me.
This incident came about after… [we argued] …and I ended up obtaining a large knife and chased him around the house with the knife threatening to put the knife in him.
…I did not have suicidal tenancies; I had homicidal intentions against the [husband]
(Wife’s Affidavit filed 11 October 2013, paragraphs 64 – 66)
…
…The [husband] was aware of my psychological illnesses…
…The [husband] would usually call the police who attended, finding me in a very irrational state. In one incident when I broke a dust pan… He called the police and I had a DVO placed on me that night.
(Wife’s Affidavit filed 11 October 2013, paragraphs 68 – 69)
57.The wife’s admissions of her psychological ill health over more than 20 years, of her irrationality, of her violence towards the husband, of her feeling homicidal towards him on at least one occasion, of him having to summon the police for help to contain her on numerous occasions, and of multiple restraining orders being made against her for his protection, all tended to give the issue of family violence in these proceedings a quite different complexion from the paradigm of a beaten, coerced and controlled wife, as she sought to portray. That is not to say her evidence was false; only that there were two sides to the story and the evidence needed to be carefully evaluated before findings were made.
58.I cannot agree the primary judge gave “no consideration” to the inferences which might properly be drawn from the wife’s evidence. His Honour was faced with two irreconcilable versions of past events. Factual findings about those past events and the inferences which could fairly arise from them depended upon how the inconsistent evidence was tested at trial.
59.In the absence of any transcript, it is impossible for this appellate court to independently analyse the parties’ respective challenges of one another in cross-examination. However, it would seem the wife’s challenge of the husband was relatively innocuous and unsuccessful, since the primary judge observed:
38.The wife did cross examine the husband on a few of these incidents [of family violence], but not many. I do not know why that is the case…
60.The wife seems to have assumed her allegations were proven facts. If so, it was a mistake. The husband’s counsel squarely tackled her over the allegations of family violence in cross-examination, since he submitted to the primary judge the wife’s evidence should be rejected for unreliability, not least because:
80. The wife, for example, makes an assertion that she was beaten black and blue days before her wedding [to the husband]. She concedes that photographs were taken of the husband and the wife as a couple on the day of their wedding and she produces no photographs that suggest that there was any bruising to her face, or anywhere for that matter.
61.Although the primary judge did not ultimately comment adversely on either party’s credit, it is plainly apparent his Honour did not accept the wife’s allegations as being any more reliable than the husband’s denials. With the evidence relating to the Kennon issue in such a balanced state, corroboration was liable to be persuasive. But there was none.
62.One of the reasons (among others) given by the primary judge for the rejection of the wife’s Kennon argument was the lack of corroboration of her contested evidence, but not so as to imply the essentiality of corroboration. Any need for evidence to be corroborated was abolished long ago (s 164(1) of the Evidence Act 1995 (Cth)). Logic alone dictates that a lack of corroboration does not mean uncorroborated evidence is false or inaccurate, so Amador takes the debate no farther, but the absence of corroborative evidence when it would ordinarily be expected and there is no reasonable explanation proffered for the failure to adduce it gives rise to a permissible inference that the evidence would not have advanced the party’s case. The inference makes it safer to accept the other party’s contradictory evidence.
63.As was said by Barwick CJ in Katsilis v Broken Hill Pty Ltd (1977) 18 ALR 181 at 197:
…it can properly be said that the failure of a party to give or produce evidence which, in the circumstances of the case, that party in its own interest would be expected to give or produce, warrants the conclusion that, if given or produced, the evidence would not support that party’s case. Indeed, in some circumstances it might be inferred that it would support the opponent’s case; but, if so, it must depend very much on the circumstances. But, in any case, the inference would depend upon some element of conscious repression or withholding of the evidence. The warrant for the inference must depend upon the deliberation with which the evidence is withheld and the appreciation or likely appreciation of the party of its significance in the case. In my opinion, these propositions are in accord with the decided cases which I have taken occasion to examine.
64.In this instance, aside from the incident in January 2006, which was more than 10 years before trial and was followed by more marital separations, none of the wife’s evidence was corroborated and all of it was refuted. That is significant when the wife well knew the husband denied all of her other allegations of his violence, she must have known her case would be buttressed by corroborative evidence, and she gave no explanation for why she did not adduce it. Had her allegations of pervasive and heinous violence been principally true it is likely some documents would have been available to corroborate her – for example: the photographs of her bruising at the wedding, or of any other visible injuries she sustained at any other time; contemporaneous notes made by doctors or hospital staff documenting her injuries or even her complaints of mistreatment; or contemporaneous notes made by the police officers verifying her complaints of mistreatment, even if no criminal charges resulted. Such contemporaneous records must have existed because the wife acknowledged the police had often been summoned by them and she alleged her injuries included fractures, which must have necessitated her medical treatment. Not only were there no documents to corroborate the wife, nor did she call any witnesses to confirm their observations of her alleged injuries or of her making any complaint to them about her mistreatment by the husband. In the circumstances of this case, it was open to the primary judge to remark upon and take into account the lack of corroboration of the wife’s evidence.
65.It is now known and well accepted that, for a variety of reasons, victims of family violence often do not report their experiences, either at all or in a timely way. The failure to do so cannot mean their victimisation is not real but, when they make allegations of family violence in litigation, the veracity of their contentious allegations must be tested and evaluated by the same forensic techniques as apply to all other contested issues of fact. In the adversarial process, procedural fairness demands that such allegations are not insulated from challenge.
66.In rejecting the wife’s Kennon claim, the primary judge did not overlook the medical evidence adduced by the wife. His Honour extracted the evidence given by the wife’s doctor in the reasons for judgment and accepted the doctor’s opinion that the wife suffered from major depressive disorder, post-traumatic stress disorder and anxiety. The doctor did not express any opinion at all about the cause of the wife’s conditions and certainly did not express an opinion connecting her sufferance of those conditions to her allegedly violent and disrespectful treatment by the husband. Linking the two would be mere conjecture, not valid inference, particularly since the wife’s psychological fragility extends back at least as far as 1995 and was, even then, before the parties met, serious enough to make her feel suicidal. Her psychological conditions, which still now persist more than eight years after the parties’ final separation, may have little or no connection at all with the husband’s past conduct. The absence of any evidentiary basis for the causal link was critical, if not fatal, to the acceptance of her claim (Kennon at 84,289 - 84,290; Spagnardi at [41]-[48]). That would be so even if an inference was available that her psychological condition did make her contributions more arduous, which finding was not made in this instance.
67.The primary judge, as was well open, rejected the wife’s Kennon argument. I am unable to discern material error in his Honour’s treatment of the evidence, the findings made, or the reason given. Without in any way trivialising the serious repercussions of family violence, the wife needed to do more than allege her victimisation by the husband and express her distress about it before her contributions could have been accorded greater weight under Part VIII of the Act. If that were the test, Kennon would be commonly invoked, since the definition of “family violence” is very wide (s 4AB of the Act) and most people would be saddened by their partner’s violent or disrespectful behaviour, sufficient to meet that definition. Whilst ever Kennon remains good law, its guidelines are reserved for what the Full Court called a “relatively narrow band of cases” (at 84,294). I am unwilling to join in any analysis of the correctness of Spagnardi, absent reasoned argument about it, and there was no argument at all, either at trial or in the appeal.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Ryan & Austin JJ) delivered on 21 March 2019.
Associate:
Date: 21 March 2019
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