Kildea v Kildea
[2007] FamCA 1524
•21 December 2007
FAMILY COURT OF AUSTRALIA
| KILDEA & KILDEA | [2007] FamCA 1524 |
| FAMILY LAW - APPEAL – PROPERTY – CONSTRUCTION OF PROPERTY POOL - Whether trial Judge erred in “methodology” in determining proceedings under s 79 – Where trial Judge constructed asset pool which included share proceeds at value received by husband six years prior to hearing, in lieu of assets purchased with share proceeds together with assets valued at date of hearing – Where both parties contended for and conducted proceedings on the basis of all existing assets valued at date of hearing – Whether “methodology” precluded trial Judge properly assessing post-separation contribution - By using a pool of assets valued at different dates, the trial Judge was unable to properly assess appellant’s post separation financial and non financial contributions, and non financial contributions made on the appellant’s behalf by his new wife – Whether trial Judge’s assessment of contributions outside reasonable ambit of discretion – Whether trial Judge gave sufficient weight to husband’s contributions to role in company established by him, including post-separation contributions – Contributions which were assessed by trial Judge were in reasonable ambit of discretion but overall contribution assessment flawed because of failure to assess all post-separation contributions – Whether trial Judge erred in making adjustment of eight per cent in the respondent wife’s favour for factors relevant to s 75(2) – Whether trial Judge erred in failure to take into account the level of child support, including arrears, payable as a result of departure application orders – s 75(2) adjustment was within reasonable ambit of discretion - Appeal allowed. FAMILY LAW - APPEAL – ADJOURNMENT - REFUSAL TO ADJOURN PROPERTY PROCEEDINGS – Whether trial judge erred in the exercise of discretion in refusing to vacate hearing dates for trial - Where appellant was unrepresented - Where trial Judge found appellant had by his own actions or lack of action, terminated his solicitor’s retainer – Where appellant asserted he would suffer prejudice and have an unfair trial if not legally represented – Prejudice to respondent in not having proceedings determined outweighed prejudice to the appellant - No error in the exercise of discretion by trial Judge – Leave to appeal the interlocutory orders refused. FAMILY LAW - APPLICATION SEEKING LEAVE TO APPEAL – APPLICATION FOR EXTENSION OF TIME - CHILD SUPPORT – Whether trial Judge erred in making a departure order under the Child Support (Assessment) Act 1989 – Whether trial Judge erred in assessing appellant’s income earning capacity – Whether trial Judge failed to take into account necessary expenses incurred by the appellant as a consultant, when assessing his income – Whether trial Judge erred in dissecting expenditure of the appellant from that of other expenditure – Whether trial Judge erred in ordering payment from the date of application – No appealable error – Appellant’s application for leave to appeal the departure orders refused – Not necessary to consider application to extend time. FAMILY LAW - COSTS – Appeal against property orders successful – Certificates granted under the Federal Proceedings (Costs) Act 1981 (Cth) to each party for the appeal and re-hearing. |
| Child Support (Assessment) Act 1989 (Cth) Family Law Rules 2004 |
| Aaron v Knowles (1995) FLC 92-627 Chorn and Hopkins (2004) FLC 93-204; 32 Fam LR 518 In the Marriage of Cozantis (1979) 4 Fam LR 709 Dietrich v The Queen (1992) 177 CLR 292 Gollings and Scott (2007) FLC 93-319 Hendy & Deputy Child Support Registrar & Webb (2001) 27 Fam LR 641 In the Marriage of Howes (1981) FLC 91-044, (1981) 7 Fam LR 650 Townsend and Townsend (1995) FLC 92-569 Zalewski & Zalewski (2005) FLC 93-241; (2006) Fam LR 296 |
| APPELLANT: | Mr Kildea |
| RESPONDENT: | Ms Kildea |
| FILE NUMBER: | BRF | 3699 | of | 2003 |
| APPEAL NUMBERS: | NA NA | 97 16 | of of | 2006 2007 |
| DATE DELIVERED: | 21 December 2007 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Finn, May & Boland JJ |
| HEARING DATE: | 16 May 2007 and by written submissions filed 30 May 2007 and 14 June 2007 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATES: | 7 July 2006 27 November 2006 |
| LOWER COURT MNC: | [2006] FamCA 1525 [2006] FamCA 1255 [2006] FamCA 1256 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Page SC |
| SOLICITOR FOR THE APPELLANT: | McMillan Boylson Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Galloway |
| SOLICITOR FOR THE RESPONDENT: | Christine Vachon |
Orders
That the husband’s application for leave to appeal the orders made by the Honourable Justice O’Reilly on 7 July 2006 (“the adjournment appeal”) be dismissed.
That the husband’s Application in a Case filed 5 February 2007 in relation to the orders with respect to child support made by the Honourable Justice O’Reilly on 27 November 2006 be dismissed.
That the husband’s appeal against the orders with respect to property settlement made by the Honourable Justice O’Reilly on 27 November 2006 be allowed.
That Orders 1 to 8 of the orders with respect to property settlement made on 27 November 2006 be set aside.
That the wife’s application for property settlement be listed for re-hearing in the Brisbane Registry before a Judge other than the Honourable Justice O’Reilly as soon as possible.
That the Court grants to the appellant husband a costs certificate pursuant to s 9 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 him in relation to the appeal.
The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 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 her in relation to the appeal.
The Court grants to each of the parties a costs certificate pursuant to the provisions of s 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 each of the parties in respect of the costs incurred by them in relation to the re-hearing referred to in Order 5 of these orders.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Kildea & Kildea.
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 97 of 2006
NA 16 of 2007
File Number: BRF 3699 of 2003
| Mr Kildea |
Appellant
And
| Ms Kildea |
Respondent
REASONS FOR JUDGMENT
Introduction
This appeal, and the applications filed in it, raise three separate, though interrelated, challenges to orders made by O’Reilly J in July and November 2006. The first challenge is to her Honour’s refusal to adjourn the substantive proceedings between the parties for property settlement under s 79 of the Family Law Act 1975 (Cth) (“the Act”). The second challenge is to the orders made at the conclusion of the property proceedings. Finally, her Honour’s orders made in respect of a departure application for child support are also sought to be impugned.
BK, (“the husband”) is the appellant. By amended Notice of Appeal filed 5 February 2007 the husband appeals orders made by O’Reilly J on 27 November 2006 in proceedings under s 79 between himself and his former wife TK (“the wife”). In those proceedings the trial Judge found the parties’ net property of $1,560,432.00 should be divided as to 52.5 per cent or $819,227.00 in favour of the husband and 47.5 per cent or $741,205.00 to the wife. For convenience, when we refer to this challenge, we will refer to it as the “property appeal”.
By attachment to the Amended Notice of Appeal, which is noted as being “made pursuant to the Order of the Hon Justice BJ Warnick, made on 29 January 2007”, the husband sought to appeal an order made on 7 July 2006 when her Honour refused the husband’s application to vacate the hearing dates of 10 to 12 July 2006 inclusive. For convenience, when discussing this challenge we will refer to it as “the adjournment appeal.”
In addition, the husband, by an application filed 5 February 2007, seeks firstly an extension of time to apply for leave to appeal orders made by the trial Judge on 27 November 2006 under the Child Support (Assessment) Act 1989 (Cth) (“the CSA Act”) and if an extension of time is granted, to seek leave to appeal, and if leave is granted, to appeal those orders. We will refer to this application as “the child support application”. Her Honour made a departure order which in summary, provided that, in lieu of the administrative assessment, the husband pay child support of $375 per week for both children, together with 54.66 per cent of the private health cover referrable to the children, plus 54.66 per cent of their net medical expenses. Her Honour also ordered the husband to pay $36,500.00 which sum represented net arrears of child support for the period January 2005 to December 2006.
The wife resists the husband’s appeals and child support application.
The appeal proceeded in an unusual manner. At the hearing of the appeal, no appeal books had been prepared and filed in respect of the adjournment appeal or the child support application, and we understood, as did the wife, that at least the child support application had been abandoned. However, as we had written submissions from both parties on the adjournment ground, we heard oral argument from counsel directed to the adjournment appeal and the property appeal. We made orders for the filing of written submissions in respect of the child support application, and in respect of adducing of any further evidence relevant to the re-exercise of the discretion by us in the event we found merit in the property appeal, and that we re-exercised the discretion, rather than to remit the proceedings for a new trial.
We subsequently received written submissions from the husband’s senior counsel on 30 May 2007 and the wife’s counsel on 14 June 2007. No submissions have been filed in reply to the wife’s submissions as provided for in Order 3 of our orders. No affidavit material was filed by either party of any relevant evidence to be taken into account on the re-exercise of discretion (see Allesch v Maunz (2000) 203 CLR 172; (2000) FLC 93-033).
Issues raised in the adjournment appeal, property appeal and child support application
In respect of the adjournment appeal, the husband asserts an error in the exercise of the discretion of the trial Judge in refusing his application to vacate the trial dates in circumstances where it was asserted:
·he was unrepresented and unable to obtain legal representation prior to the commencement of the hearing;
·the wife had not made adequate disclosure; and
·there was no prejudice to the wife which could not be remedied by an order for costs.
In the property appeal it is asserted there were errors of principle by the trial Judge in the manner in which she determined the proceedings by failing:
·to determine the parties’ net assets at the date of hearing, but rather by “adding back” to the pool the proceeds of shares sold approximately six years prior to the trial, notwithstanding the proceeds of sale could be traced into existing assets;
·to assess post separation contributions; and
·to take into account the level of child support, including arrears, payable as a result of the departure application orders.
It is further asserted the trial Judge erred in the exercise of her discretion in respect of her assessment of equality of contribution during the parties’ marriage, and in making an adjustment of eight per cent in favour of the wife for relevant s 75(2) factors.
The challenge which the husband seeks to agitate in the child support application is his assertion that, in assessing his income earning capacity, the trial Judge failed to take into account necessary expenses incurred, or to be incurred by him, in earning his income as a consultant. Further, it is asserted that the evidence did not permit the trial Judge to dissect expenditure of the husband from that of other expenditure in circumstances where the husband derived his income from a company which, in addition to being used by him as a vehicle for the conduct of his consultancy, also carried on rural activities.
We propose to discuss the appeals and the child support application by reference to the issues identified. The husband’s senior counsel submitted in the event we found merit in the adjournment appeal that there would need to be a new trial. We accept that submission, and accordingly propose to deal first with the adjournment appeal.
Counsel for the wife conceded that if the child support application was successful, an error in the assessment of child support may permeate the trial Judge’s determination in the property proceedings. Thus we propose, in the event we do not find the adjournment appeal has merit, to next consider the child support application. Finally, we propose, if necessary, to consider the property appeal grounds in the areas already identified by us above.
Background
The husband was aged 46 years at the date of the trial and the wife was aged 44 years.
The parties commenced cohabitation in January 1985, and they were married in November 1986. The parties finally separated in November 1999, and the marriage was dissolved by decree nisi granted in July 2002.
There are two children of the marriage, K and A. They were aged respectively 12 years and 9 years at the date of the hearing. The children had, since separation, lived with the wife in the former matrimonial home in Brisbane, Queensland (“the matrimonial home”).
The husband commenced cohabitation with his present wife (“Ms K”) in June 2000. The husband and Ms K married in January 2004. They have one child C who was aged 3½ years at the date of the hearing. The husband, Ms K and C were living on a rural property owned by them on the North Coast of New South Wales (“the rural property”) at the date of the hearing.
In about 2002 or 2003 the husband and Ms K caused a company S Pty Ltd (“the company”) to be incorporated. The husband and Ms K are the directors and equal shareholders of the company. The company operates two businesses, a telecommunications consultancy and a cattle breeding business. Both businesses are run from or on the rural property.
Well prior to the parties’ separation, in August 1996 the husband incorporated a company, CT Pty Ltd (“CT”). CT carried on the business of, inter alia, supplying, installing and upgrading large telephone systems. The husband was initially the sole director and shareholder of CT. In September 1997 two other persons each acquired a 20 per cent interest in, and became directors of, CT.
In late 2000 negotiations took place between the parties to finalise a property settlement, and proposed consent orders were prepared, but were not made.
In November 2000, a year after separation, CT had entered into a sales agreement with NS Australia Pty Ltd (“NS”) for the sale of its shares for a consideration of $4.5 million which consideration comprised payment of $2 million and issue of shares in NS. The NS shares subsequently proved to be worthless. The purchase price for CT was paid by NS in instalments, and the cash component of the payment was subject to performance criteria. The husband received $600,399.60 in November 2000. In August 2002 the husband received $180,199.00, and the balance of his entitlement of $150,250.00 in March 2003.
At trial the husband asserted that the two payments made in August 2002 and March 2003 should be treated as his post separation earnings. That assertion was not accepted by the trial Judge who found all payments made to the husband (gross $930,768.00, or after payment of capital gains tax, $857,329.00) formed part of the consideration for the sale. The husband has not challenged that finding of the trial Judge in the property appeal. The husband deposited the payments received from NS into his bank accounts.
In November 2001 the husband purchased, in his sole name, the rural property for a purchase price of $245,000.00. In September 2003 the husband transferred the title of the property into the names of himself and Ms K as joint tenants for a nominal consideration of $1.00.
Between November 2001 and the date of the trial the husband and Ms K extended and renovated a cottage on the rural property and made improvements to the land. At the date of the hearing the rural property was valued at $690,000.00.
The husband purchased a Ferrari motor vehicle shortly after he received the proceeds of the first instalment from NS at a purchase price of $100,000.00 which he subsequently sold in about December 2003 for $62,000.00.
There was no real dispute at the trial that the husband’s then existing assets, including the financial contributions to the rural property, could be “traced” to part of the proceeds of sale of CT, although it was argued on behalf of the wife by her then counsel, that the husband had lived an extravagant lifestyle resulting in unnecessary dissipation of funds received from the sale of CT.
The adjourment appeal
On 22 December 2006, in accordance with the Family Law Rules 2004 (“the rules”) the husband filed an Application in a Case in which he sought leave to appeal the interlocutory order made by the trial Judge on 7 July 2006, and an application to extend time to file such application to 22 December 2006. However, when the matter was before Warnick J for a procedural hearing on 29 January 2007 the husband was granted leave to withdraw the Application in a Case.
Thus there was no application before us for leave to appeal the order made on 7 July 2006, notwithstanding that ground 10 of the Amended Notice of Appeal purports to challenge her Honour’s interlocutory order, nor had an extension of time been granted to file such application.
Notwithstanding the failure to comply with the rules and file an application for leave to appeal the interlocutory order of the trial Judge, and for an extension of time to file such application, we propose to treat the matter as though there had been an oral application before us for leave to appeal and we had granted an extension of time until the date of the hearing of the appeal to file such application. We discern no prejudice to the wife by that course as no objection was taken by her counsel at the hearing of the appeal, and she had the opportunity, which she took, of putting written submissions before us in respect of the ground.
Trial judge’s reasons for judgment – adjournment application
Her Honour delivered ex tempore reasons for judgment in relation to the husband’s application for adjournment of the trial on 7 July 2006.
Her Honour noted that the matter had been fixed for a property and child support trial due to commence on Monday 10 July 2006 for three days.
The trial Judge said “[t]he dates for the trial were allocated and fixed five months ago on 6 February 2006 when the matter, as a then list or reserve matter, was not reached”. Her Honour then said “[t]hus, not only has the husband known for five months of the date for the trial, but the wife who is the applicant in the principal proceedings, has already suffered the experience of being listed for trial and not getting on, with the consequence, as I have said, of the trial date for next week being fixed priority dates”.
The trial Judge then recited the history of the husband’s legal representation, which she noted had ceased on 21 June 2006. She concluded this occurred because “[t]he husband by his own unwillingness or inability to place the solicitors in funds caused the termination of that retainer”.
Her Honour then explained the reason for her conclusion about the termination of the solicitor’s retainer by examination of relevant correspondence. Her Honour set out an extract from correspondence from the husband’s solicitors dated 15 June 2006 wherein the solicitors advised the husband they required him to make arrangements to pay the full amount of the budget allocated for hearing by no later than 23 June 2006 if they were to continue to represent him. Her Honour noted that the husband had responded to the solicitor’s letter and said he was giving them, and counsel they proposed to brief, “as much notice as has been possible of my current inability to meet your payment terms”.
Her Honour recorded that the solicitors responded to that correspondence on 28 June 2006 when they said that they had advised counsel of the husband’s position, and that counsel considered he was no longer retained. The solicitors also said that they also no longer regarded themselves as retained and would file a Notice of Ceasing to Act.
Her Honour concluded:
Thus, as I have said, it was the husband who caused the termination of the retainer of the solicitors and Counsel he had had for some two years and not the solicitors and Counsel who caused the termination of the retainer. (paragraph 11)
The trial Judge then discussed the fact that the husband, in his correspondence with the solicitors, had said that he was unable to obtain required funding, but notwithstanding that assertion, he had immediately set about trying to retain other counsel by way of a direct brief.
Having discussed the fees which would otherwise be payable if counsel was briefed by way of direct access brief, her Honour concluded that the husband, by failure to retain his solicitors, threw away “two years [sic] worth of wealth of knowledge and experience related to his particular case…”
The trial Judge then turned to assertions made in paragraph 19 of the husband’s affidavit wherein he deposed to advice he said he had received to the effect that he would be unfairly prejudiced if he attended the hearing without properly instructed legal representation. The husband asserted a lack of preparation for trial by reason of failure of the wife to provide copies of bank statements for defined periods.
In dealing with the assertion of lack of preparation for trial, her Honour said that the correspondence between the solicitors represented “no more than a quite typical exchange between lawyers in the fortnight preceding the trial and was seeking in some respects updating material”. She concluded that there was nothing in the material which indicated that either the husband’s solicitors or the wife’s solicitors were not fully ready for trial, and concluded a statement by the husband’s former solicitor did not constitute “notice” to him that he (the solicitor) was not ready for trial. Her Honour concluded “[i]n all of the circumstances, it seems to me that this second ground relied upon by the husband as a purported ground of prejudice is a contrivance” (paragraph 22).
Her Honour also referred to what she described as “a fundamental misunderstanding by the husband” of Mr Kent’s (the husband’s counsel) potential availability.
Having dealt with the factual basis on which the husband sought the adjournment, her Honour referred to the relevant legal principles to be applied to such an adjournment and determined, on balance, that “to refuse the adjournment would not seriously prejudice the husband more than would granting the adjournment seriously prejudice the wife in her entitlement finally to have the matter brought on to trial and be resolved” (paragraph 28). She also found that any prejudice the wife would suffer could not be met by a mere costs order, noting that if she made an order for costs, it would be in a similar quantum to the sum which the husband had already said he could not pay his own solicitor.
Her Honour also noted that the husband did not seek an adjournment for a particular period of time.
Her Honour then considered the question of whether the husband could be afforded a fair trial if he was unrepresented, and referred to relevant criminal law authorities, including Dietrich v The Queen (1992) 177 CLR 292 and McInnis v The Queen (1979) 143 CLR 575.
In the exercise of her discretion, the trial Judge concluded that the prejudice to be suffered by the wife if she granted the adjournment would be likely to be greater than any prejudice suffered by the husband and she dismissed the husband’s application.
Relevant law
Principles – application for leave to appeal an interlocutory order
The circumstances in which leave to appeal an interlocutory order will be granted are well known. An applicant seeking leave to appeal from interlocutory orders must demonstrate that there has been an error of principle, and/or that a substantial injustice to one of the parties will occur if leave is not granted (Rutherford and Rutherford (1991) FLC 92-255), or that the issue is one of general importance: Aaron v Knowles (1995) FLC 92-627 (see also Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177).
Discussion
The husband’s challenge is set out in paragraph 2.10 of his senior counsel’s written submissions as follows:
In determining the application the trial judge:
(i)misrepresented to the appellant the listing procedures of the Brisbane Registry of the Family Court and in particular their relevance to this matter;
(ii)misconceived the prejudice that would have been suffered by the appellant in his inability to prosecute a line of argument based upon bank statements then not produced or inspected;
(iii)failed to take into account the complexity of the issues that would arise in the case, which complexity was apparent upon the face of the material given the authorities that were later referred to by the trial judge in the course of her judgement;
(iv)failed to take into account the fact that whilst the respondent appeared to oppose the adjournment no submission was made that showed any real prejudice to the respondent if such adjournment were to be granted;
(v)failed to take into account the period between the termination of the retainer and the commencement of the trial and the reasonable expectation by the appellant that the solicitors might reconsider their indication to terminate the retainer;
(vi)failed to take into account the reasonable efforts made by the appellant to obtain legal representation in the short period to trial without success.
In his written submissions, the wife’s counsel argued that the husband’s submissions overlooked a number of essential matters, including that:
·trial dates were allocated as early as 6 February 2006;
·the application was not made in a timely way;
·the wife had little to disclose, save some updating bank statements which could have been obtained on subpoena;
·the trial Judge afforded procedural fairness to the husband throughout the hearing and followed the guidelines in the case law;
·the husband was not unsophisticated and was apt in the conduct of his own case, including making lengthy submissions with resort to authority; and
·none of the asserted errors particularised in the husband’s written submissions had been made out.
In the State of Queensland & Anor v JL Holdings Pty Ltd (1996-1997) 189 CLR 146 Kirby J discussed the principles to be applied in applications involving proposed appeals against interlocutory procedural orders. Kirby J noted the restraint upon appellate interference with an interlocutory order. His Honour said at 163-164:
…[p]rocedural orders frequently involve considerations upon which minds can differ. They concern the evaluation of multiple considerations to which differing weight may readily be attached. As the function of judicial directions to control substantial and complex litigation increases with new techniques of case management, it is appropriate that appellate courts should pay more than lip service to the primacy of the trial judge in such matters. They should do so out of a recognition that the pressures on appellate courts, and the techniques available for their decision-making, will often deprive them of a full appreciation of all the factors which have led the primary judge to his or her conclusion… [footnotes omitted]
His Honour further said at page 173-174:
The bases for appellate intervention to set aside a discretionary interlocutory order have been stated many times. They include the demonstration of an error in point of legal principle which is apparent on the face of the reasons or implicit in its result; misapprehension of a fact important to the decision; failure to give weight or sufficient weight, to a relevant fact; or reaching a result which is plainly unreasonable or unjust and which demands appellate intervention. The appellate court must be careful not to convert a conclusion that the order appears to it to be unjust into a conviction that it must therefore be based upon an error of the primary judge in assigning inadequate or excessive weight to particular circumstances of the case. Special restraint will be exercised where the interlocutory order challenged is one concerned with practice or procedure. But even such orders have a capacity to affect substantive rights. The appellate court will be slow to intervene. But if it is convinced that the primary judge’s discretion has miscarried and that this has resulted in an injustice, it will be its duty to do so. [footnotes omitted]
In this case, we are not persuaded that there was any error in the exercise of discretion by her Honour, and we find much substance in the wife’s counsel’s written submissions. In particular, we accept her Honour’s finding that the husband’s own actions, or lack of action, which resulted in the termination of his lawyer’s retainer, was open on the evidence. We also accept her Honour was entitled to take into account, in the exercise of her discretion, that the husband’s assertions about his financial position meant a costs order in the wife’s favour for her costs thrown away was not a practical remedy.
In these circumstances, we discern no error of principle by the trial Judge, thus we do not find it appropriate to grant leave to the husband to pursue a challenge against her Honour’s orders of 7 July 2006. We are also satisfied there is no substantial injustice to the husband, given his own actions, to warrant a grant of leave to appeal.
The child support application
The trial Judge had before her a departure application filed by the wife which she heard concurrently with the parties’ property proceedings. Unusually, her Honour delivered separate reasons for judgment in respect of the departure application on the same day as she published her reasons for judgment in the property proceedings, although in paragraph 231 of the property judgment her Honour expressly incorporated her reasons in the child support judgment.
The wife’s departure application was in respect of three assessment periods (7 January 2005 - 6 April 2006, 1 December 2005 – 30 June 2006, and 1 July 2006 – 28 February 2007). Her Honour noted “[t]he second assessment had the effect of replacing the first assessment for the period 1 December 2005 to 6 April 2006, so that for the purposes of these proceedings the first assessment should be regarded as 7 January 2005 to 30 November 2005”.
The husband relies on proposed grounds of appeal annexed to the affidavit of his solicitor filed 16 February 2007.
Those grounds are as follows:
1.The learned Trial Judge erred in finding that the husband had property which included either cash in the amount of $857,329 or the [rural property] at $690,000 when it was the uncontested evidence of the appellant that:-
(a)the appellant purchased the property for $210,000;
(b)the appellant and his current wife significantly improved the property since its purchase in November 2001;
(c)the appellant owned property jointly with his current wife.
2.The learned Trial Judge’s finding that the appellant’s decision to operate the business of cattle breeding at the [rural property] was a “lifestyle” choice was against the evidence and the weight of the evidence.
3.The learned Trial Judge’s conclusion that the appellant’s gross income from his telecommunications consultancy fees would have been $139,321 in the year ended 30 June 2005 and $160,614 in the year ended 30 June 2006, was not open to her on the evidence and failed to take account of the finding at paragraph 50 of the Reasons that the appellant’s current wife assisted the appellant in relation to the telecommunications consultancy.
See attached page
We note that the application located in the Court file does not have any attached page.
Although her Honour delivered, on the same day, separate judgments in respect of the property proceedings and the child support departure application, it is clear from paragraph 231 of her Honour’s reasons for judgment in the property proceedings, that she incorporated into those reasons the child support judgment.
Notwithstanding the husband’s grounds of appeal, his senior counsel particularised the challenges to her Honour’s orders as being directed to her Honour’s findings at paragraphs 49 to 68 of her reasons in the child support judgment. Those paragraphs were concerned only with the husband’s income earning capacity. Thus, it is apparent that there is no challenge to her Honour’s exposition of the relevant law, the details set out by her of the wife’s grounds for departure, her findings about the children’s expenses, and the income and capital position of the wife following the determination of the property proceedings.
The whole of the focus of the husband’s challenge is to her Honour’s findings about the husband’s income earning capacity. Thus, we conclude that the principal attack on her Honour’s reasons is essentially the challenge set out in proposed grounds 2 and 3.
Senior counsel’s submissions attack the trial Judge’s reasoning and findings about the husband’s income derived through the company. In his written submissions senior counsel asserted:
…the income of the company is derived theoretically rather than actually by [the company] from two sources, namely consultancy fees and farming income. The company pays expenses. No evidence was adduced that would enable the trial Judge to dissect the expenses as between the expenses incurred in deriving income from the consultancy business and the expenses incurred in deriving income from the farming enterprise. (husband’s submissions on leave to appeal child support orders, filed 30/05/07, page 2, paragraph 5)
It is further asserted that the trial Judge was in error in finding “that there was ‘…little deductible expenditure’ that related from [sic] the applicant’s own gross income from his telecommunications consultancy fees in the year ended 30 June 2006.” (husband’s submissions, page 2, paragraph 5)
The trial judge’s child support judgment
The trial Judge, having recorded that the company ran two businesses, namely cattle breeding and telecommunications, said that the husband and Ms K appeared to draw “the modest salary of about $30,000.00 each per year from [the company]”. Her Honour then examined and discussed the company’ financial statements and banking records as follows:
52.[The company’s] profit and loss statement for the year ended 30 June 2005 (ex 9) showed income from consultancy fees of $139,321 (nil from cattle breeding) and, after expenditure of $121,168 (including $60,000 salary for himself and [Ms K]), and a loss of $252 on livestock trading, a net operating profit of $17,950 which, after taking into account accumulated losses, showed an accumulated loss of $49,523. The list of expenditure, however, showed an extraordinary item of “relocation expenses” of $33,486; and otherwise expenditure largely related to [the company’s] cattle and rural enterprises, for example, $14,535 depreciation, $509 land clearing/weed clearing; $578 fuel and oil; $1,319 insurance; $762 repairs and maintenance; $613 seed, lucerne and molasses; and $4,909 slashing. The list of expenditure showed also $2,700 employee superannuation contributions although, it may readily be observed, this item of expenditure may well relate to the compulsory superannuation levy.
53.[The company’s] balance sheet for the year ended 30 June 2005 (also ex 9) showed a deficiency of $49,521, represented by the accumulated loss, less $2.00 issued capital.
54.However, [the company’s] bank account for the period 22 July 2005 to 2 June 2006 (ex 10) showed deposits related to one of its consultancies, [..] Technology, of $176,676 which the father said is inclusive of GST, representing $160,614 net of GST, which is $21,293 more than in the financial year ended 30 June 2005. Thus, it may be anticipated that [the company’s] results for the year ended 30 June 2006 may be considerably improved not only by this circumstance but also on the assumption that, at least, the extraordinary expenditure item of $33,486 may be unlikely to be a repeated expenditure in the financial year ended 30 June 2006. If these observations are accurate then, assuming ordinary expenditure at a similar level to that in the financial year ended 30 June 2005, it may be anticipated that [the company’s] net operating profit for the year ended 30 June 2006 may be healthier (although, by application of the accumulated losses the result “on paper” would be reduced for distribution and taxation purposes).
55.The father, in his evidence, was quick to point to the circumstance that the […] Technology contract, which provided [the company] with $176,676 inclusive of GST ($160,614 net of GST) in the year ended 30 June 2006 (ex 10) is at an end, and that [the company] may not have such a lucrative contract in the current year. However, there is no present reason to think, having regard to the father’s considerable skill and experience in the telecommunications industry that he, on behalf of [the company], would not be able to generate similar lucrative contracts so as to maximise [the company’s] income earning capacity and thus, his own income earning capacity via [the company], by way of increased salary payments to him.
It is asserted her Honour’s finding about the husband obtaining further contracts “is inconsistent with the finding of fact set out in the first part of paragraph 55” (husband’s submissions p 2 paragraph 8). We reject that submission. It is clear on reading paragraph 55 of the trial Judge’s reasons that she was, in the beginning of paragraph 55, setting out the husband’s assertions about consultancy fees, and in the balance of the paragraph rejecting those assertions. We find no inconsistency in her Honour’s rejection of the husband’s assertions. There was ample evidence before the trial Judge of the husband’s expertise and skill in the telecommunications area, including obtaining consultancies, which evidence supported her Honour’s finding.
In his written submissions, senior counsel for the husband argued that if the husband had a hypothetical income earning capacity of $160,614.00 the disposable income available to him would be $74,952.00 or $1,441.00 per week. He deducted from that sum an amount of $126.00 per week to represent borrowing costs to pay the amount due to the wife pursuant to the trial Judge’s property orders, and concluded that the husband would have “property costs and reasonable living expenses of $1,000.00 a week”. Thus it was argued “as a minimum, it would be appropriate for the Court to consider those costs at $1,000.00 leaving a surplus of $214.00 a week on that calculation”. In arriving at a “notional” disposable income of $74,952.00, senior counsel deducted the sum of $53,538.00 for expenses and tax of $32,124.00 (calculated at the rate of 30 per cent).
The husband’s senior counsel also submitted that a sum of approximately $35.00 per week should be deducted from the husband’s available income to take up borrowing costs incurred to pay the lump sum representing arrears of child support ordered by the trial Judge.
It appears to us that there are at least two flaws in the arguments made on behalf of the husband based on these hypothetical calculations.
First, there is no basis to support a deduction of $53,538.00 for “expenses”. In considering the husband’s earnings in paragraph 52 of her reasons, the trial Judge carefully examined the financial statements of the company. Her Honour’s reasons disclose that she carefully and appropriately noted expenses relating to the company’s expenditure in relation to the rural enterprise which she found was conducted by the husband and Ms K as a “lifestyle” choice. The financial statements, other than the item called “relocation expenses”, disclosed modest sums for accountancy fees, office supplies and superannuation. No relocation expenses at all were disclosed in the financial statements for the year 30 June 2004. Other expenses were clearly identified as relevant to the rural property.
At paragraph 88 of the child support judgment and paragraph 237 of the property judgment, her Honour referred to the husband moving to Sydney to take up employment to pay an outstanding tax bill. Her Honour concluded “[t]his demonstrates, I think, that the father is capable of earning extra income when required for his own purposes.” This move by the husband and Ms K provides an explanation for the extraordinary item of “relocation expenses”.
Secondly, we were not referred to any material to support the claimed expenses and taxation liability. By contrast, the trial Judge’s findings were based on her careful examination of both the financial statements and banking records.
We have some difficulty, in light of the proposed grounds of appeal, with the submissions made by senior counsel for the husband in paragraph 16 of his written submissions which are in the following terms:
Had the trial judge considered a departure appropriate from a date that preceded the date of the order, the failure to pay the amount assessed to be appropriate might well have been reflected in terms of s.75(2)(na). The trial judge created an inability to do this herself by delivering a judgment in relation to child support separately from the issues of property settlement. Likewise, had the trial judge considered that the earning capacity of the applicant was greater than he had asserted and thus the level of child support not paid at an appropriate level, the trial judge may have made a similar adjustment using the same provisions. Such adjustment would have been an alternative to the departure order that was subsequently made. It is submitted that such means of effecting the same result would have been the appropriate approach in the absence of evidence that justified a finding that consultancy fees at the level of the 2006 estimates would continue and/or that the expenses claimed were not possible of [sic] dissection.
As we have already explained, we do not accept any difficulty or appealable error has arisen by reason of her Honour delivering separate child support and property judgments on the same day as she clearly incorporates into the property judgment the child support reasons in paragraph 231 of that judgment.
The trial Judge’s order for payment of a lump sum was for arrears of child support for the period commencing from 1 January 2005, based on “income earned prior to the end of the 2006 tax year, that is, income which had demonstrably been obtained by the Father” (wife’s submissions p 16 paragraph 41). The evidence before the trial Judge was that during the period 22 July 2005 to 2 June 2006 the company had deposited to its bank account the sum of $176,676.00, inclusive of GST, paid by one of the husband’s consultancies.
We do not find any appealable error by the trial Judge ordering payment from the date of the application, rather than making an adjustment under s 75(2)(na) in circumstances where there was evidence of receipt during the relevant year of substantial consultancies fees by the husband.
Further, it is noteworthy that the trial Judge, in her overall assessment of relevant factors under s 75(2) in arriving at an adjustment of eight per cent:
· took into account the wife’s lesser earning capacity and primary responsibility for the care of the parties’ children; and
· balanced these factors against the husband’s obligations under the departure order she proposed to make (which included the lump sum payment for arrears) and the husband’s responsibility for Ms K and their child.
Application for leave to appeal - conclusions
An appeal from a single judge of the Family Court exercising jurisdiction under the CSA Act lies only with the leave of the Full Court (s 102). The relevant principles to be applied and authorities dealing with such applications are extensively reviewed in the Full Court’s decision of Hendy & Deputy Child Support Registrar & Webb (2001) 27 Fam LR 641.
We are satisfied no error of principle by the trial Judge has been demonstrated in our examination of the husband’s proposed grounds of appeal and in his written submissions in support of those grounds. Further, we do not find the husband has had substantive rights significantly affected. As noted in the wife’s submissions, her Honour’s findings about the husband’s capacity to pay child support, the sharing of the burden of the children’s expenses almost equally with the wife, for a limited three year period, do not demonstrate a substantial injustice.
We would refuse the husband’s application for leave to appeal the departure orders. Therefore it is unnecessary for us to consider the application filed 5 February 2007 to extend time.
Property appeal
Conduct of the property proceedings
In order to understand the complaints raised in relation to the property settlement judgment it is necessary that we refer to some aspects of the conduct of the property settlement proceedings.
In her Further Amended Application for Final Orders filed 22 September 2005 the wife sought orders pursuant to s 106B of the Act that:
…the transfer of the real property situated at [the rural property on the North Coast of NSW] from the husband as transferor to the husband and his wife [Ms K] as transferees, be set aside and that the transferees do all things and sign all documents necessary to effect transfer to the Husband.
Ms K was not named as a party to the proceedings, nor was the Amended Application served on her. The wife further sought that she receive an amount equal to 65 per cent of the “net” matrimonial assets, and that the matrimonial home be included in the assets to be retained by her.
The husband relied on an Amended Response filed on 8 July 2005. The husband sought that he retain the rural property, his motor vehicle and motor cycle, the company, and transfer to the wife all of his right title and interest in the matrimonial home. He sought that the wife’s Application under s 106B of the Act be dismissed.
At the commencement of the trial, the trial Judge had the benefit of a joint case summary document in which it was noted “Both the husband and the wife are in substantial agreement in respect to the value of all property”.
During the course of the hearing the trial Judge raised with the wife’s counsel procedural difficulties in respect of the wife’s application under s 106B of the Act whereupon the wife’s counsel withdrew that application.
At the conclusion of the trial, neither party made oral submissions. However, the trial Judge made provision for the parties to file written submissions. Extensive written submissions were subsequently filed by each of the parties.
The wife submitted that the rural property should be included in the pool on the basis that the interest acquired by Ms K should be treated as an “add back” as she (Ms K) had made no financial contribution to that property. It was also asserted that a credit loan account in favour of the husband in the company should be included in the pool. In summary, the wife contended that the pool of assets, including the parties’ superannuation, at the agreed values, should be divided between them on the basis their contributions were equal, with the increase in value attained for the CT shares being regarded as a windfall, and that she should receive a further adjustment of 20 per cent for
s 75(2) factors.
In his written submissions, the husband conceded that the property pool should include the full value of the rural property. The husband asserted, however, that Ms K had made contributions to the rural property prior to the transfer to him and his new wife as joint tenants. The husband asserted he had effected the transfer in reliance on an informal earlier agreement between the husband and wife to effect a property settlement in 2000.
The husband disputed the submissions made on behalf of the wife that contributions to the date of hearing should be regarded as equal and said “[m]ore than half the value of the assets identified in the Wife’s submission have been acquired since separation.” The husband asserted the wife’s entitlements should be quantified at $558,119.00, and submitted that even if Ms K’s contributions were regarded as nil over the preceding six years, the wife should be receiving her entitlements from an asset pool of $1,007,187.40 or $1,007,332.20. The husband calculated the former sum by removing the performance payment components of the consideration paid for the CT shares from the total assets on the basis this was payment of income to him.
The husband pointed out that the rural property had been included at its full value, together with farming equipment valued at $31,355.00. The husband particularised contributions he asserted had been made to the rural property which he noted was acquired more than two years post separation. The husband included in those submissions an assertion that the acquisition and improvement of the rural property had been funded from the sale of the CT shares including the performance based earnings of the husband. The husband also particularised his contributions to CT post separation, including his sole responsibility for the payment of all capital gains tax incurred as a result of the sale of the CT shares. The husband submitted:
4.10Even putting the Wife’s contributions at their highest, including her contribution as homemaker and parent for the children, her contribution-based entitlement to the present overall property pool could not possibly exceed 30%, and is arguably far less. No better result obtains for the Wife by application of an asset-by-asset approach, given the foregoing.
The husband submitted to her Honour that no adjustment should be made in the wife’s favour under s 75(2).
As recorded by the trial Judge in her reasons for judgment, her Honour caused her associate to write to the parties whilst her judgment was reserved in the following terms:
…
If Her Honour should conclude, on the evidence, that the parties did not make a property settlement agreement in 2000, or one to which she should give effect, and if Her Honour should conclude, on the evidence, that the capital consideration received by the husband for the sale of the [CT] shares was:
1.Clause 4.1(a)(i): $600,399.60 and
2.Clause 4.1(b)(i): $330,369
(plus the 16956 shares)
is there any reason why Her honour [sic] ought not, properly, “add back” against the husband $930,768.60, instead of including in the pool the [rural property], the [rural property] farm equipment, [the company’s] loan account amount and any other items purchased or potentially purchased out of the $930,768.60?
The parties then forwarded additional submissions to the trial Judge. The wife’s counsel pointed out the potential difficulty with the proposed course if the trial Judge found parts of the husband’s post separation expenditure was reasonable and referred to the decision in Chorn and Hopkins (2004) FLC 93-204; 32 Fam LR 518 at paragraph 46 [semble paragraph 24 where the Full Court quoted from paragraph 46 of Townsend and Townsend (1995) FLC 92-569]:
46.Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. (C & C [1998] FamCA 143, 8 October 1998, per Nicholson CJ, Ellis, Kay JJ.)
It was however submitted on behalf of the wife that the husband had not lived a reasonable lifestyle post separation but had “…lived an indulgent and extravagant lifestyle which resulted in the unnecessary dissipation of the funds received from [CT]”. It was further submitted by the wife’s counsel that the husband had engaged in a premature distribution of the proceeds of sale to himself and Ms K which could not be characterised as reasonable.
In his additional submissions the husband reiterated his earlier submissions about his contributions to CT, and he referred to appropriate dates for valuing assets (either date of hearing, or date of separation). He finally referred to the current asset pool being “far greater than that at the time of separation” which increase he attributed to post separation contributions of himself and Ms K. (submissions paragraph 8.5)
The trial Judge’s reasons for judgment
We turn then to consider her Honour’s reasons for her property settlement orders, but only in so far as they are relevant to the issues raised by the appeal, which as we recorded earlier in paragraphs 9 and 10, were her Honour’s inclusion in the net assets of the parties the proceeds of shares in CT sold 6 years prior to the trial, asserted inappropriate weight to contributions during the marriage and her alleged failure to take into account certain post separation contributions, as well as the failure to give appropriate weight to the husband’s child support liabilities, and relevant matters in making the adjustment made under s 75(2).
At an early stage in her reasons her Honour set out what she described as a “preliminary schedule as to the nature and value of the property and assets of the parties”, saying (original emphasis included):
19.It is convenient to set out a preliminary schedule as to the nature and value of the property and assets of the parties and then to set out my determination as to the matters in issue.
20.In relation to some items, there is a value in the left column and nil in the right column. As will be seen, this circumstance is to avoid double counting in relation to items purchased by the husband from the funds referred to item 1.
21.In the schedule, the letters H and W denote assets which the parties agreed each should have, with the exception of item 1 which, as will be seen, is a notional add back against the husband determined by me.
SCHEDULE
1 Cash received by the husband net of capital gains tax for the sale of his shares in [CT] (add back - H) $857,329 2 The value of [the rural property], NSW, (agreed value $690,000) (H) nil 3 [the matrimonial home], Brisbane (W) 525,000 4 Holden Zafira motor vehicle (W) 19,250 5 Wife’s household chattels (W) 9,155 6 Husband’s household chattels (H) 1,560 7 Husband’s and [Ms K’s] household chattels (agreed value $2,770) (H) nil 8 Farm equipment (agreed value $33,355) (H) nil 9 Husband’s motor cycles (H) 18,000 10 Jeep Grand Cherokee (agreed value $31,500) (H) nil 11 Wife’s NAB a/c (W) 762 12 Wife’s ING a/c (W) 912 13 Wife’s CBA a/c (W) 6 14 Wife’s NAB cheque a/c (W) 34 15 Husband’s CBA a/c (H) 1,908 16 Wife’s jewellery (W) 3,000 17 [The company] – one ordinary share (H) 1 18 [NS] BVI shares (8,478 shares) (H) Nominal 19 [NS] BVI shares (8,478 shares) (W) Nominal 20 Coates Myer & Co Pty Ltd shares (W) Nominal 21 Husband’s superannuation
· Commonwealth Super Option $51,284 (H)
· BT Lifetime Super $19,605 (H)
70,889 22 Wife’s superannuation
· Sunsuper $21,527 (W)
· MLC $31,099 (W)
52,626 23 Husband’s loan account with [the company] $69,654 (as at October 2005) (H) nil TOTAL $1,560,432 Less:
Debt to the husband’s mother20,000
TOTAL $1,540,432
Ultimately after a lengthy and comprehensive discussion of all 23 items in the schedule, her Honour determined that item 1 would be included in the schedule, but items 2, 7, 8, 10 and 23 would not be included. Put simply, the effect of this determination was that the net proceeds of the sale some 6 years earlier of the CT shares were included in the pool of property while presently existing items which could be traced to those proceeds were not included.
Later in her reasons, and after referring to the fact that she had afforded the parties procedural fairness by inviting them to provide additional written submissions following receipt of her associate’s letter, the trial Judge noted the overall effect of the adjustments she proposed to make to the list of assets and liabilities resulted in a monetary increase from $827,279.00 to $857,329.00, that is, a difference of approximately $30,000.00. Her Honour summarised her approach as follows:
103.In my view, in this particular case, the real issue in relation to the application of the Townsend principle is not “what is left” but “what did the husband receive” being the amount which, correctly, should be brought back into the pool on the notional basis.
Her Honour rejected the approach proposed by the wife’s counsel saying:
135.As to Ms Sweetapple’s Additional Submissions, I do not find that there should be a reduction from the share sale proceeds received by the husband on the basis that some part of it may have been reasonably disposed of (in the sense used in GPC v HPC) for the husband’s, [Ms K’s] and [C’s] reasonable support, for the following reasons. First, between the final separation and March 2003, the husband earned income sufficient for that purpose. See at par 36 above. Secondly, between March 2003 and the date of the trial, apart from a period of employment in Sydney to earn income to pay a taxation liability of over $70,000 (see Mr [B’s] affidavit, par 32), the husband has preferred to adopt a rural lifestyle with [Ms K] at the [rural property] and to operate two businesses through [the company], namely telecommunications consultancy and cattle breeding, each run from the [rural property]. Thus, to the extent that the husband has “lived on capital” for part of the period since March 2003, rather than continuing in full time employment consistent with his expertise, in my view this has been a lifestyle choice so that it is not the case that it has been reasonably necessary for the husband to have disposed of part of the capital which he received for the sale of his [CT] shares in order to support himself, [Ms K] and [C]. Thirdly, to the extent that some of the husband’s [CT] share sale proceeds have been invested in the [rural property] (since transferred by the husband to himself and [Ms K] as joint owners), and in [the company] (including cattle and rural equipment), the moneys have not, in the relevant sense, been “disposed of”, but converted to other assets of which the husband still has the benefit.
136.Thus, in my view, there is no reason to “apply” as it were, part of the [CT] sale proceeds as being reasonably disposed of (in the relevant sense) by the husband on his own proper maintenance or support or that of [Ms K] or [C]. To the extent that the husband may have done so has been a lifestyle choice rather than a matter of reasonable necessity or reasonable disposition. [original emphasis]
Thereafter, the trial Judge assessed each party’s contributions during the course of their cohabitation, and then turned to deal with post separation contributions. Her Honour carefully analysed the parties’ contributions and submissions in respect of their contributions to CT. Her Honour accepted the husband’s case that the expansion of the business to Sydney, his hard work and talent, together with his co-directors’ contributions affected the “inflated price” achieved for the sale. However, her Honour found this represented only a short period in CT’s history. Her Honour concluded:
179.…[h]aving carefully considered all of the relevant evidence, in my view there is no rational explanation for the “inflated price” which the husband agreed [NS] paid for [CT’s] shares, between the time of Mr [B’s] valuation in February/March 2000 (although a retrospective valuation to 31 October 1999) and the Memorandum of Understanding signed on 18 August 2000 (the period of 9 months), being the dramatic rise from $339,000 to $4.5million, otherwise than on the basis, as the husband candidly admitted, of [CT] “riding the wave of the dot com boom” which apparently suffered a downturn soon after [NS’s] acquisition of [CT’s] shares, although, as is plain, but for the Sydney expansion and the other matters I have mentioned (husband, co-directors and staff relocating to Sydney), [CT] would not have been “positioned” to be a target in the boom. [original emphasis]
Her Honour also assessed what she described as “[o]ther post separation contribution” by examining each party’s role in the care of the children. She thereafter examined the husband’s contributions by way of child support and contributions to the wife’s motor vehicle and the mortgage secured over the matrimonial home.
Her Honour set out her overall conclusions as to contribution at paragraph 216 - 217 of her reasons as follows:
216.The net result of my assessment of contribution having regard to the pool as a whole is:
·5% in the husband’s favour for the husband’s greater initial contribution
·8.5% in the husband’s favour for his greater contribution to the difference between Mr [B’s] valuation of his [CT] shares as at the date of the final separation and the net cash amount the husband received pursuant to the share sale agreement
·3% in the wife’s favour in relation to her greater post separation contribution for her care of the children from 31 December 2002 onwards.
217.The result is that, based upon contribution, the husband should have a net 10.5% contribution weighting in his favour. [original emphasis]
Her Honour thereafter assessed relevant s 75(2) factors and found an adjustment should be made in the wife’s favour of 8 per cent resulting in the parties’ overall entitlements of 52.5 per cent to the husband and 47.5 per cent to the wife.
Relevant law
The “preferred approach” to determination of a case under s 79 is well known. It is described in detail at paragraph 39 of Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; (2003) 30 FamLR 355:
…[t]hat approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC 92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEJ and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.
[Our emphasis]
Whilst it is accepted that generally a trial Judge will identify and value relevant assets at the date of hearing, in unusual cases another date may be chosen as more appropriate (see In the Marriage of Cozantis (1979) 4 Fam LR 709; In the Marriage of Hayne (1977) FLC 90-265; In the Marriage of Howes (1981) FLC 91-044, (1981) 7 Fam LR 650; In the Marriage of Mackie (1981) FLC 91-069, (1981) 7 Fam LR 365; In the Marriage of James (1978) FLC 90-487, (1978) 4 Fam LR 401).
The essential task of a trial Judge in determining a just and equitable division of parties’ property under s 79, as it then was enacted, is discussed in Mallet v Mallet (1984) 156 CLR 605; (1984) 52 ALR 193; (1984) 58 ALJR 248, where Mason J referred to a trial Judge’s task in the following terms:
18.…[t]he section contemplates that an order will not be made unless the court is satisfied that it is just and equitable to make the order (s.79(2)), after taking into account the factors mentioned in (a) to (e) of s.79(4). The requirement that the court “shall take into account” these factors imposes a duty on the court to evaluate them. Thus, the court must in a given case evaluate the respective contributions of husband and wife under pars.(a) and (b) of sub-s.(4), difficult though that may be in some cases… [our emphasis]
Discussion
The asserted incorrect pool grounds
In this case the trial Judge did not determine that she should substitute a date, other than the hearing date, to value all of the parties’ assets and liabilities. Rather, as we have said, the effect of her Honour’s determination was to delete certain assets which the husband had acquired with the proceeds of the CT shares, and to substitute the actual proceeds of those shares received between 2000 and 2003 resulting in a “mix” of assets, that is, assets valued at different dates, including the matrimonial home valued at the date of hearing.
Her Honour explained her rationale for including the share proceeds, rather than other existing assets, at paragraphs 43 to 47 of her reasons. She quoted from Townsend at 81,654 and said:
44.In this case, similarly, the husband has “distributed to himself an asset in which the wife had a legitimate interest”, so that “the correct way” in which to deal with the husband’s receipt of those moneys is to “bring them into the pool of assets on a notional basis and make a distribution accordingly”.
45.In this regard, it is important to bear in mind that [CT] was established by the husband in August 1996, some 3¼ years before the final separation in November 1999, and that the shares in it were sold by the husband and his two co-directors one year after the final separation, by the share sale agreement dated 24 November 2000. However, before the execution of the share sale agreement, the parties to it had executed a Memorandum of Understanding on 18 August 2000 and a Heads of Agreement on 27 October 2000 (each of which comprises ex 6) and a document styled Interim Trading Arrangements dated 27 October 2000 (ex 7), so that in reality the share sale process had commenced at the latest by 18 October 2000, only 9 months after the final separation.
46.I appreciate that there is a point of factual distinction between the taxi licence in Townsend and the shares in the present case in that the sale price of the taxi licence may well have reflected a stable market price for it, whereas in the present case if the husband and his co-directors had not by their own skills successfully negotiated the share sale agreement at the time they did (as will be seen later, the husband described the market as “riding the dot com wave”), then after December 2000 the shares may have had only the value attributed by Mr [B], namely $339,000 for the 100% holding and $203,400 for the husband’s 60% holding (I will refer in more detail below to Mr [B’s] valuation). However, this is a matter which I must take into account in relation to contribution, rather than in relation to the “correct way” to deal with the sale proceeds by notionally bringing them back into the pool.
47.The reality is that the shares were an asset of the husband at the time of the final separation and they no longer exist. In my view it is not appropriate to treat the husband’s receipt of the proceeds from the sale of his shares under s 75(2) nor upon the principle in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644 (discussed in Omacini and Omacini (2005) FLC 93-218 at pars 30-31) because the husband’s course of conduct was not one designed to reduce or minimise the effective value or worth of the shares nor to deal with them recklessly, negligently, wantonly or in a wasteful way. Moreover, his use of the sale proceeds is, at least to some extent, reflected in available assets which he now holds (in particular, as will be seen, items 2, 7, 8, 10 and 23 of the schedule). [original emphasis]
Her Honour determined, notwithstanding the husband had not dissipated (that is, he had not “lost”) the whole of the share sale proceeds, that she should apply “the principles” espoused in Townsend and “add back” those proceeds to the pool of assets to be divided, and to delete from the pool those assets whose purchase price and improvements could be traced to the share proceeds.
Before us it was asserted by the husband’s senior counsel that the trial Judge fell into error in this approach. It was asserted that the approach was erroneous because:
·an “add back” should be limited to circumstances where an asset no longer existed;
·by including the “add back” the trial Judge had failed to take into account, or was unable to properly take into account, post separation contributions in circumstances where Ms K had made contributions to the rural property.
It was further submitted the trial Judge’s approach was in error because neither party conducted their case on the basis of such an “add back” being made.
The Full Court has had cause to consider on a number of occasions the question of so called “add backs” and has established guidelines to facilitate consistency in decision making (see for example Chorn and Hopkins (2004) FLC 93-204, Townsend and Townsend (1995) FLC 92-569 and Kowaliw and Kowaliw (1981) FLC 91-092). In Gollings and Scott (2007) FLC 93-319 at paragraph 65 the Full Court said as follows:
In Omacini and Omacini (2005) FLC 93-218; (2005) 33 Fam LR 134 the Full Court identified three clear categories of cases where it was appropriate to notionally add back to the pool assets which were said by the Full Court to “no longer exist”.Those three categories were:
(a)monies spent on legal fees;
(b)monies disbursed by way of premature distribution of matrimonial assets; and,
(c)monies lost by one party either during or after the marriage as a result of a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or as a result of reckless negligent or wanton behaviours which had the effect of reducing or minimising the value of assets. [our emphasis]
In this case the trial Judge, in our view mistakenly, felt constrained because of the withdrawal of the application under s 106B, from dealing with the rural property otherwise than having regard to its legal ownership, notwithstanding the husband conceded the value of the whole of the property should be included in the pool of assets available for division.
Her Honour also expressed concern that she could not, on the evidence before her, properly assess the husband and Ms K’s non financial contributions to the rural property after its acquisition.
There was no dispute that the rural property was purchased for a purchase price of $245,000.00 which purchase price included a tractor and farm implements valued at $35,000.00 (judgment paragraph 55) and that the cottage erected on the property was renovated and improved with financial expenditure being provided by the husband from his share of proceeds of sale of the CT shares. We accept there was no evidence before the trial Judge, such as evidence from a quantity surveyor, which provided evidence of the value of physical work undertaken by the husband and Ms K. However, judges are frequently called upon to assess and weigh non financial contributions without such evidence.
We conclude therefore that, as acknowledged by Mason J in Mallet, the task of assessing non financial contributions would have been difficult, but not impossible, for the trial Judge in the factual circumstances of this case, and in particular, having regard to the way both parties conducted their cases.
We turn then to the question of whether her Honour’s failure to adopt the “preferred approach” (that is, the valuing of assets at date of hearing) in determining the orders to be made was available to her in the exercise of her discretion.
It should be noted that there is no complaint that any asset of the parties was not identified or valued. As we have already observed, the complaint is twofold:
·the inclusion into the asset pool of the share price when other assets purchased with the share price existed; and
·that the inclusion of the share price rather than existing assets constrained evaluation of post separation contributions.
As we will now explain, we do not accept that this was an appropriate case for the application of the Townsend “guidelines”. There was no dispute that the present assets of the husband and Ms K had been acquired with the CT proceeds. The trial Judge found CT proceeds had not been “dissipated” - in the sense the asset had disappeared. They were not lost, but substantially transformed into other assets.
Further, it appears to us that the methodology adopted by her Honour has other flaws. First, as will readily be seen by examining the pool of assets as found by her Honour (see paragraph 99), she assessed contribution in respect of what may be described as a “hybrid” pool of assets and liabilities, with the CT shares included at their value some six years prior to the trial, and the remaining assets valued at date of trial. Such a course has inherent potential unfairness when assessment is conducted as her Honour did, on a global basis. This “flaw” further becomes apparent when examining how her Honour assessed the parties’ contributions, particularly their post separation contributions.
There was evidence the husband had purchased a Ferrari motor vehicle with part proceeds of sale of the shares and had sustained a loss on its sale. There was no dispute as to the quantum of that loss ($38,000) which could have been “added back” to the pool of assets available for distribution. The husband had also used some capital for living expenses, which expenses the wife asserted were not reasonable living expenses having regard to his income. Although her Honour found the husband’s expenditure was a “lifestyle” choice, and that it was not reasonable for the husband to expend capital to support himself, Ms K and their child when he earned income “sufficient for that purpose” (paragraph 135), these findings appear inconsistent with the finding at paragraph 47 (which we have previously set out) of her Honour’s reasons.
Further, by excluding some of the husband’s assets at the date of trial, her Honour was unable to properly assess all of the husband’s post separation financial and non financial contributions, and non financial contributions made by Ms K on his behalf to the rural property and other post separation assets.
The second “flaw” we identify in the trial Judge’s methodology was that it disregarded the manner in which both parties presented their cases at trial, and how they continued to present their respective cases in their written submissions provided after the hearing, and essentially continued in their further submissions after receipt of her Honour’s associate’s letter.
Consistent with authority, in the final written submissions received from the wife’s former counsel, (which we have referred to in paragraph 96), it was clear the wife did not assert the trial Judge would find all the husband’s post separation expenditure was unreasonable, thus acknowledging that he was entitled to get on with his life and retain the benefits of his post separation earnings (see Chorn and Hopkins).
Using the conventional approach to determining property proceedings, her Honour could have determined the pool at the date of hearing by “adding back” as a notional asset funds unreasonably spent by the husband if she considered it appropriate to do so, then assessed contribution to the existing assets, and made an appropriate s 75(2) adjustment, including any adjustment under s75(2)(o) (if she determined the latter course was a more appropriate one than “adding back” to the pool a notional asset).
We are satisfied that use of the “hybrid” pool of assets, which led to a failure to assess all contributions, constitutes appealable error, and there is merit in grounds 5 and 7.
Attack on her Honour’s contribution based assessment
The husband’s contribution challenge (grounds 2, 4, 6, 8 and 9) is principally focused on the assertion that the trial Judge failed to afford appropriate weight to the husband’s contributions to CT, both pre and post separation. On behalf of the husband it was conceded that other than “questions of contribution relating to the acquisition of the shares in CT there is no issue that the other contributions in the marriage were equal” (husband’s submissions paragraph 4.6).
It is further asserted on behalf of the husband that her Honour did not afford sufficient weight to the husband’s actions during the marriage in obtaining the primary consultancy contract for CT, the seed capital provided by his mother, the obtaining of co-venturers with their particular skills, and the husband’s own particular entrepreneurial skills in obtaining capital for the company.
Senior counsel for the husband expanded these submissions in his oral argument before us and asserted that “instead of the 5 per cent only disparity in [sic] the during marriage portion that it should be 7.5 per cent, not 5, giving 2.5 per cent on account of the acquisition and growth of [CT] till [sic] 1999” (transcript 16/05/07 page 38, line 42). He further submitted that “8.5 per cent should be added to that as relating to the increase in the value of the shares which would make it 16 per cent”.
He submitted that the parties’ contributions would be adequately represented if the wife received a three per cent adjustment “for the primary care-giving role of the mother, as the Judge determined” (transcript 16/05/07, page 39, line 3), resulting in a 13 per cent adjustment in the husband’s favour for contribution factors, with the wife receiving a three per cent adjustment for s 75(2) factors so that the overall pool should be divided between the parties as to 60 per cent to the husband and 40 per cent to the wife.
In the written submissions filed on behalf of the wife, her counsel submitted that the husband could not assert any error of fact by the trial Judge (we note however, the husband asserts an error of fact by the trial Judge in respect of the care of the parties’ elder child whilst the husband was in Indonesia, but we are satisfied, if this is in reality an error, that it is not a material fact which would vitiate the exercise of discretion).
The wife’s counsel further submitted that the trial Judge’s reasoning was orderly, that it examined the financial history of the parties and their contributions, and “[i]mportantly, her Honour pays considerable attention to the question of the value of the [CT] shareholding post separation” (wife’s submissions, paragraph 43).
In summary, the wife’s counsel submitted that the trial Judge had not taken into account any extraneous facts, nor had she omitted any relevant matters in assessing the parties’ contribution entitlements. In particular, reference was made to her Honour’s findings in paragraph 211 of her reasons and her assessment of the husband’s post separation contribution to the value of CT at paragraph 213 as follows:
Doing the best I can, in all of the circumstances, and in particular taking into account the husband’s concession that after he moved to Sydney the wife carried an increased burden in relation to the children which released him to devote his time to [CT’s] Sydney expansion and thus its “position” as a takeover target; and that her primary care of the children extended (relevantly) from then until 31 December 2002, being the end of the (extended) Performance Criteria period, I would nonetheless assess the weight to be given to the husband’s greater contribution to the difference between Mr [B’s] valuation and the cash amount received by the husband, that difference being $653,929 (there being no realistic basis to choose another figure), at 70% of that sum. In my view, this is an appropriate assessment in acknowledgement of the matters in the husband’s favour which I have mentioned. The matter is thus quite unlike a post separation windfall caused solely by an “outside circumstance” such as a rezoning or lottery win. The assessment which I have made in the husband’s favour, namely 70% of $653,929, is the cash equivalent for item 1 of (rounded) of $457,750 for the husband and $196,179 for the wife, a difference of $261,571 in the husband’s favour, which converts roughly to an 8.5% adjustment in the husband’s favour in relation to the value of the pool as a whole, or roughly a 17% differential in relation to the value of the pool as a whole. [original emphasis]
Her Honour’s detailed recitation of the history of the parties’ marriage and recording of their financial transactions was meticulously carried out. Her Honour also conducted a very thorough and detailed examination of the parties’ respective contributions, including post separation contributions, albeit the husband’s post separation contributions to CT, and to the welfare of the family, rather than to the rural property and other post separation assets.
Although senior counsel for the husband challenged as being erroneous the trial Judge’s finding that the rural property should not be added to the pool, he did not in his submissions, either written or oral, indicate how it was asserted the trial Judge should have assessed contributions to that property, plant and equipment, and the husband’s loan account, if they had been included in the pool in lieu of the CT shares. In fact, his submissions were squarely centred on the husband’s asserted superior contributions to the CT shares. We will return to this aspect of his submissions when we consider the re-exercise of the discretion.
We accept her Honour’s contribution based assessment in respect of the parties’ initial contributions, contributions during the marriage, and post separation contributions to CT and to the welfare of the family were open to her on the evidence, and the weight afforded to those contributions was within the reasonable ambit of her discretion. Her Honour did not however assess the husband and Ms K’s post separation contributions and that omission constitutes appealable error.
Challenge to the adjustment made under s 75(2)
In her assessment of relevant s 75(2) factors, the trial Judge noted that the wife suffered from depression and endometriosis but otherwise neither party had any particular health difficulties.
In dealing with the parties’ respective earning capacities, the trial Judge referred to her analysis of those capacities in her separate child support judgment. She concluded that the husband had “…a considerably greater income earning capacity than the wife, in particular if he were to receive his income as a telecommunications consultant in his own right, rather than through the vehicle of [the company].” (paragraph 222) Her Honour found that the wife’s opportunities to increase her earning capacity were constrained by reason of her role as primary caretaker of the children.
Having analysed how each party had contributed to the earning capacity of the other, the trial Judge then turned to the question of child support and again referred to her separate reasons in the child support judgment. Her Honour said:
…I am able to take into account, as a fact, the past child support provided by the parties and am able to consider the assessment I have made in the separate child support proceedings as to current child support and, to the extent possible, the child support which the parties may be liable to provide in the future. (paragraph 234)
The trial Judge noted that the wife had had the benefit of sole occupation of the matrimonial home whilst the husband had the benefit of the proceeds of sale of the CT shares. Her Honour concluded the matters requiring an adjustment in the wife’s favour were the husband’s considerable earning capacity, the wife’s primary care of the children, balanced against the husband’s obligation to pay child support and his responsibilities for Ms K and C. Her Honour found that an eight per cent adjustment should be made in the wife’s favour for these factors.
Before us, senior counsel for the husband asserted, having regard to the factors considered by the trial Judge in making the eight per cent adjustment, that her Honour had “double dipped” in taking into account the wife’s contributions to the husband’s earning capacity.
It was submitted on behalf of the husband that a provision of three per cent as an adjustment for relevant s 75(2) factors or $42,825.00 “would be within a reasonable range” (husband’s submissions, paragraph 6.1).
In paragraph 230 of her reasons for judgment, the trial Judge considered the extent to which each party may have contributed to the income earning capacity of the other. Her Honour found each had contributed to the earning capacity of the other and that “…to some extent at least, the wife’s traditional role as the children’s primary carer has enabled the husband to become the party with the greater income earning capacity”.
The application of s 75(2)(j) in property proceedings was considered by the Full Court in Zalewski & Zalewski (2005) FLC 93-241; (2006) Fam LR 296 where Coleman and Boland JJ (with whom Finn J agreed) said at 184:
The inclusion of the words “whose maintenance is under consideration” in ss 75(2)(j) and (k), prima facie, indicates the subsections relevance to spousal maintenance applications. However s 79(4)(e) does not limit consideration in proceedings under s 79 to any specific s 75(2) factors. The criterion to be applied under s 79(4)(e) is that the matters in s 75(2) must be relevant. It is necessary that assessment of contribution exercise under ss 79 (4)(a), (b) and (c) is not confused with the word “contributed” in s 75 (2)(j), the latter requiring the consideration of a contribution to a financial resource. We accept caution is required to avoid the possibility of “double counting” of an indirect non financial contribution by a spouse as homemaker and parent to the development of a business, and, in addition, making an adjustment relying on s 75(2)(j). However, it follows from our discussion that we do not accept counsel for the husband's submission that ss 75(2)(j) and (k) were irrelevant factors which the trial Judge should not have taken into account. In this case the trial Judge did not “double count”. His assessment of factors under s 75(2) was directed to relevant matters under ss 75(2)(j) and (k). It was relevant in the circumstances of this case for the trial Judge to have regard to the wife's contribution to the husband's earning capacity acquired during the course of a lengthy marriage.
We do not discern any “double dipping” by the trial Judge in this case. It is clear from the trial Judge’s reasons that the adjustment made under s 75(2) was substantially based on relevant factors under s 75(2)(b)(c)(d) and (na). Whilst her Honour’s adjustment in the wife’s favour, having regard to the substantial child support to be paid by the husband, may be described at the generous end of the reasonable ambit of discretion, we are not satisfied that the adjustment fell outside the generous ambit of discretion available to the trial Judge.
re-exercise of the discretion
As we noted at the commencement of these reasons, senior counsel for the husband submitted that if we found error by the trial Judge (as we have done) we should re-exercise the discretion, although in his oral argument before us, to which we will refer to shortly, he acknowledged we may need to remit the matter for retrial. He submitted in both his oral and written submissions that should we re-exercise the discretion, an appropriate result would be at an overall division of the assets as to 60% to the husband and 40% to the wife.
Although we afforded the parties the opportunity to put updating material before us neither party took up that opportunity.
At paragraph 3.17 of his written submissions senior counsel referred to the presentation of the parties’ respective cases at trial, and said:
Each of the parties to these proceedings prepared and presented their cases before the trial judge on the basis that the asset pool would be determined in accordance with the issues that arose and were addressed in the course of the trial:
(a)the inclusion of the whole of the [rural property];
(b)the inclusion of the assets of [the company] and the value to be attributed to the interest of the husband in that company;
(c)the special contributions alleged by the husband;
(d)the question as to whether the interest of the husband in [CT] and thus in [the rural property] should be treated as a separate consideration in relation to the contributions on an asset by asset basis.
(e)Whether the expenditure of the husband from capital and income after separation was reasonable or whether it constituted “waste” in terms discussed in Kowalii [sic].
Senior counsel concluded his submissions on the re-exercise at paragraph 3.18 in the following terms:
Because these were the matters addressed it is thus possible for this court to come to its own conclusions in relation to the questions of contribution without the necessity of a retrial even if limited only to the evidence of contributions post sale of the shares in [CT].
As we have noted, his oral submissions before us senior counsel for the husband departed somewhat from the position that there were sufficient factual findings on which we could re-exercise the discretion. He said:
MR PAGE: …[h]ow should this Court then deal with that matter. And I have anticipated both in relation to the appeal against the adjournment application, as I do against this, and very reluctantly, that because there is a large body of evidence between 2002 and 2005 from both of the parties that relate to contributions and there are some cogent, and I don’t say valid but cogent assertions by the wife as to the misuses of the monies which she wasn’t able to air, that this matter would have to go back for retrial.
…
MR PAGE: The fall back is that if the body of evidence is, as the trial just found, not clear or confusing or the Court is not satisfied that it was tested giving justice to both of the parties, then it would have to order a retrial. (transcript 16 May 2007, p 26 lines 3-9 and 46-48)
Before us, in dealing with a potential re-exercise of the discretion, senior counsel for the husband agreed that the list of assets and liabilities which the trial Judge should have used were those set out in the wife’s submissions which we now reproduce:
SCHEDULE
No.
Description
Judgement (sic)
Alternative
1.
Cash received by the husband net of capital gains tax for the sale of his shares in [CT] (add back – H)
$857,329.00
Nil
2.
The value of [the rural property], NSW (agreed value $690,000.00) (H)
Nil
$690,000.00
3.
[The matrimonial home], Brisbane (W)
525,000.00
525,000.00
4.
Holden Zafira motor vehicle (W)
19,250.00
19,250.00
5.
Wife’s household chattels (W)
9,155.00
9,155.00
6.
Husband’s household chattels (H)
1,560.00
1,560.00
7.
Husband’s and [Ms K’s] household chattels (agreed value) (H)
Nil
2,770.00
8.
Farm equipment (agreed value) (H)
Nil
33,355.00
9.
Husband’s motor cycles (H)
18,000.00
18,000.00
10.
Jeep Grand Cherokee (agreed value)
Nil
31,500.00
11.
Wife’s NAB Account
762.00
762.00
12.
Wife’s ING Account (W)
912.00
912.00
13.
Wife’s CBA Account
6.00
6.00
14.
Wife’s NAB cheque account (W)
34.00
34.00
15.
Husband’s CBA Account (H)
1,908.00
1,908.00
16.
Wife’s jewellery (W)
3,000.00
3,000.00
17.
[The company] – one ordinary share (H)
1.00
1.00
18.
[NS] BVI shares (8,478 shares) (H)
Nominal
Nominal
19.
[NS] BVI shares (8,478 shares) (W)
Nominal
Nominal
20.
Coates Myer & Co Pty. Ltd. shares (W)
Nominal
Nominal
21.
Husband’s superannuation
· Commonwealth Super Option $51,284.00 (H)
· BT Lifetime Super $19,605.00 (H)
70,889.00
70,889.00
22.
Wife’s superannuation
· Sunsuper $21,527.00 (W)
· MLC $31,099.00 (W)
52,626.00
52,626.00
23.
Husband’s loan account with [the company] (as at October 2005) (H)
Nil
69,654.00
TOTAL C/F
$1,560,432.00
$1,530,382.00
Less:
Debt to the husband’s mother
20,000.00
20,000.00
TOTAL
$1,540,432.00
$1,510,382.00
[Original emphasis]
Noting that no updating evidence was provided to us, we agree that the table of assets and liabilities produced by the wife’s counsel would be, subject to any adjustment for unreasonable expenditure by the husband, the appropriate list of assets and liabilities to determine the property pool.
Senior counsel’s oral submissions about how we should arrive at our contribution assessment were somewhat unclear, based as they were, on the trial Judge’s unusual breakdown of aspects of contribution in percentage terms in arriving at her overall a global contribution assessment. Mr Page QC said in dealing with the contribution grounds, as well as appropriate assessment for the re-exercise of the discretion that:
· he accepted the trial Judge’s assessment of a 5 per cent weighting in the husband’s favour for his initial contribution of his pre-cohabitation property;
· the husband should have received a 10 per cent weighting (rather than the 8.5 per cent as found by the trial Judge) for the increase in value of the CT shares from date of separation to date of sale;
· the trial Judge’s assessment of a 3 per cent weighting in favour of the wife for her post separation care of the children was valid (if based on property at date of hearing);
· the trial Judge’s assessment of contribution of equal of contribution during the marriage was in error and that the husband should have received an increase in contribution entitlement of 2.5 per cent (7.5 per cent overall up to date of separation); and
· the husband should receive an additional 8.5 per cent for his post separation contributions.
Ms K’s affidavit filed 4 August 2005 discloses her asserted non financial contributions to the rural property including work on pasture improvement and painting and renovations to the cottage erected on the property. The husband in his affidavit of 17 October 2005 set out his contributions to the rural property, including the use of funds sourced from CT for capital works. He also deposed to non financial contributions by Ms K.
By contrast the wife asserted in her affidavit dissipation of assets by the husband post separation including the sale of the Ferrari motor vehicle and application of the proceeds to reduce debt on a Jeep Grand Cherokee, the sale of a motor bike and application of the proceeds to purchase of another bike. Her counsel at trial and in her written submissions raised issues about the husband’s loan account with the company, and that the husband had “wasted the money on non-essential items like the Ferrari and an overseas trip for his current wife and daughter, and on school fees and support for his wife’s son, [J]” (Wife’s submissions, paragraph 7.29, Appeal Book 5:937)
The trial Judge acknowledged, but did not make findings about:
· Ms K’s non financial contributions;
· the “apportionment” of the husband’s post separation earnings and the proceeds of the CT shares applied to improvements to the rural property;
· the increase in value of the rural property from its purchase price, attributable to improvements carried out by the husband and Ms K;
· whether the farm equipment was purchased by the husband from CT proceeds or post separation earnings;
· whether the husband’s loan account with the company had been repaid to him or spent; and
· the chattels owned by the husband and Ms K which may have been purchased from CT proceeds or post separation earnings.
Whilst senior counsel for the husband provided extensive submissions on the husband’s contributions to CT, he did not detail findings of the trial Judge which support his assertion of an 8.5 per cent adjustment in the husband’s favour for other post separation contributions.
We are very reluctant having regard to the expense, time and emotional distress involved with a re-hearing to remit this matter back for re-trial. However the difficulty involved in re-exercise of the discretion in view of contentions raised by the wife, and lack of findings on those issues by the trial Judge, was properly and appropriately recognised by senior counsel for the husband.
We regrettably are of the view that there are a lack of findings in respect of significant matters relevant to post separation contributions which preclude us from re-exercising the discretion and that the property proceedings must be remitted for rehearing.
Costs
At the conclusion of the hearing we sought submissions from each party’s counsel on the issue of costs. The wife’s counsel submitted that, in the event the appeal and/or the application for leave to appeal were dismissed, the husband should pay the wife’s costs. The husband’s senior counsel opposed any order for costs and drew our attention to the provisions of
s 117(2A). In support of that submission he referred to the parties’ respective positions after the trial Judge’s orders, and noted the elements of risk associated with the husband maintaining his income at the rate of $160,000.00 per year.
As we have found error of law by the trial Judge in respect of the property settlement orders we are satisfied it is appropriate to grant the relevant certificates pursuant to the Federal Proceedings (Costs) Act1981(Cth) for the appeal and re-trial.
I certify that the preceding one hundred and sixty-one (161) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court of the Family Court of Australia.
Associate:
Date: 21 December 2007
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Appeal
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Jurisdiction
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Costs
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Remedies
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Procedural Fairness
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