Kingston & Field (No 2)
[2020] FamCAFC 235
•24 September 2020
FAMILY COURT OF AUSTRALIA
| KINGSTON & FIELD (NO. 2) | [2020] FamCAFC 235 |
| FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Where grounds of appeal contend apprehended bias by both conduct and omission – Mistake of fact, assessment of contributions and the application of s 75(2) of the Family Law Act 1975 (Cth) – Where the appellant alleges the primary judge failed to take material considerations into account – Procedural fairness – Where the appellant could not establish discretionary error – Where the appealed orders were not “unreasonable or plainly unjust” or “plainly wrong” – Where the primary’s judges assessment of the parties’ contribution-based entitlements did not miscarry – Where the primary judge’s reasons are adequate – Where the primary judge correctly exercised discretion pursuant to s 75(2) of the Family Law Act 1975 (Cth) – No discretionary error apparent – No denial of procedural fairness – Where the appeal lacks merit – Appeal dismissed. FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – ADDUCE FURTHER EVIDENCE – Where further evidence applies to grounds of apprehended bias by omission – Where only some of the further evidence is received in the appeal. FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – Leave to rely on a summary of argument exceeding the permitted length – Where the longer summary of argument assisted the self-represented appellant – Where there is no detriment to the appellant – Leave granted. FAMILY LAW – APPEAL – COSTS – Where the appeal is wholly unsuccessful – Where the respondent seeks costs – Where all costs are opposed by the appellant – Where the appellant’s financial circumstances are a salient consideration, but the appellant was self-represented and his contentions lacked an evidentiary premise or were plainly wrong – Where application of s 117 of the Family Law Act 1975 (Cth) warrants a cost order – Costs ordered in a fixed sum. |
| Evidence Act 1995 (Cth) s 138 Family Law Rules 2004 (Cth) r 19.18(1)(a) |
| Antoun v The Queen (2006) 224 ALR 51; [2006] HCA 2 Black and Kellner (1992) FLC 92-287; [1992] FamCA 2 CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67 Chorn and Hopkins (2004) FLC 93-204; [2004] FamCA 633 Chang v Su (2002) FLC 93-117; [2002] FamCA 156 Concrete Pty Ltd v Parramatta Design& Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55 De Winter and De Winter (1979) FLC 90-605 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 Graham & Squibb (2019) FLC 93-892; [2019] FamCAFC 33 Harris v Caladine (1991) 172 CLR 84; [1991] HCA 9 House v The King (1936) 55 CLR 499; [1936] HCA 40 Johnson v Johnson (2000) 201 CLR 488; [2000] HCA 48 Kingston & Field [2020] FamCAFC 171 Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17 Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88 Sadasivam & Seshan (2019) FLC 93-899; [2019] FamCAFC 76 Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54 Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173 Vakauta v Kelly (1989) 167 CLR 568; [1989] HCA 44 Weir and Weir (1993) FLC 92-338; [1992] FamCA 69 |
| APPELLANT: | Mr Kingston |
| RESPONDENT: | Ms Field |
| FILE NUMBER: | PAC | 2095 | of | 2014 |
| APPEAL NUMBER: | EAA | 137 | of | 2019 |
| DATE DELIVERED: | 24 September 2020 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Sydney (via video link) |
| JUDGMENT OF: | Strickland, Watts & Austin JJ |
| HEARING DATE: | 8 September 2020 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 21 November 2019 |
| LOWER COURT MNC: | [2019] FamCA 863 |
REPRESENTATION
| THE APPELLANT: | In person |
| COUNSEL FOR THE RESPONDENT: | Ms Harris |
| SOLICITOR FOR THE RESPONDENT: | Michael Jokovic & Associates |
Orders
Pursuant to s 93A(2) of the Family Law Act 1975 (Cth), paragraphs 1 to 13 of the appellant’s affidavit filed on 23 April 2020, together with the annexures referred to therein, be received as further evidence in the appeal.
The appeal be dismissed.
The appellant pay the respondent’s costs of and incidental to the appeal in the fixed sum of $33,000.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Kingston & Field (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EAA 137 of 2019
File Number: PAC 2095 of 2014
| Mr Kingston |
Appellant
And
| Ms Field |
Respondent
REASONS FOR JUDGMENT
Introduction
The appellant husband appeals from property settlement orders under Part VIII of the Family Law Act 1975 (Cth) (“the Act”) made on 21 November 2019 by a judge of the Family Court of Australia. The respondent wife resists the appeal.
The wife’s supplementary claim for spousal maintenance was dismissed, which order is not the subject of the appeal.
The appealed orders reflect findings of the parties’ respective entitlements to their combined property and superannuation interests in proportions of 52.5 per cent to the husband and 47.5 per cent to the wife, when the husband contended the division should have been in proportions of 70 and 30 per cent respectively.
For the reasons which follow, the appeal should be dismissed with costs.
Background
The parties married in 2002 and separated in 2011.
The parties’ three children range in age between 17 and 12 years and the parties share their care. Orders in respect of the children were made consensually under Part VII of the Act in November 2019.
The proceedings were commenced by the wife in May 2015 and progression towards trial in October 2019 was impeded by innumerable interlocutory skirmishes and an unsuccessful appeal by the wife against some procedural evidentiary orders.
Subject to a challenge by the husband under Ground 8 concerning $200,000 he spent on legal fees, which sum was notionally treated as an asset in his hands, there is no challenge in the appeal to the primary judge’s finding that the net assets (including superannuation) were quantified at $2,676,732.
As ordered, the wife’s receipt of cash in the sum of $1,232,616, aggregated with her superannuation interest of $38,831, leaves her with $1,271,447 in total, which is 47.5 per cent of the available property. The husband’s retention of the assets, his superannuation, and the liabilities leaves him with $1,405,285 net, which is 52.5 per cent of the available property. The primary judge set out such computations in the reasons for judgment (at [125]).
To effect the division of property, the orders provide for the husband’s payment to the wife of $1,232,616, the husband’s exclusive proprietorship of the former matrimonial home, the husband’s indemnity of the wife against any liability secured over the former matrimonial home, and the husband’s retention of the private corporation through which he conducts business. In default of the cash payment to the wife, the former matrimonial home is to be sold and the sale proceeds disbursed to achieve the same proportional outcome.
On 30 April 2020, the appealed orders were stayed on the condition that the husband pays the wife the lesser sum of $500,000. The husband appealed from the conditional stay orders, but the appeal was deemed abandoned and his application to re-instate it was refused with costs by Ainslie-Wallace J on 17 July 2020 (Kingston & Field [2020] FamCAFC 171).
The appeal and applications
The appeal, in its latest iteration, was set out in the Further Amended Notice of Appeal filed on 18 March 2020.
The husband filed an Application in an Appeal on 23 April 2020 seeking to adduce further evidence pursuant to s 93A(2) of the Act, which the wife initially opposed but then later partly conceded. According to the terms of the application, the proposed further evidence was germane to the grounds of appeal asserting apprehended judicial bias (Grounds 1, 2 and 14) but, in reality, the evidence was only relevant to the latter two grounds which contend the apprehension of bias arises from the primary judge’s omission to prevent the wife’s solicitor and senior counsel from acting on her behalf in the proceedings. The application to adduce the further evidence is addressed under those particular grounds.
The wife filed an Application in an Appeal on 15 June 2020 seeking leave to rely upon a Summary of Argument exceeding the length permitted by cl 4 of the Family Court of Australia, Practice Direction: No. 1 of 2017 – Conduct of Appeals, which application the husband opposed. We granted such leave to the wife, over the husband’s objection, as it was of ultimate benefit to him. The appeal comprises 14 grounds, some of which comprise dozens of sub-grounds. Since the husband was self-represented, it stood to reason he was assisted by access to the full extent of the wife’s written argument and allied references to the evidence and transcript, which were said to support her defence of his appeal. He had the wife’s lengthy Summary of Argument for nearly two months before the appeal hearing, so he was able to check all of the references in a timely fashion and thereby avoid being harried by having to deal with the wife’s oral submissions on the run during the appeal. Since the wife’s Summary of Argument was in the husband’s hands for so long, it would have been illogical for the Court not to have access to it and the husband suffered no prejudice by it being received.
In keeping with authority, it is necessary to deal first with the various grounds which allege apprehended bias and the denial of procedural fairness as those complaints, if sustained, compromise the integrity of the trial process and require remitter of the dispute for rehearing (Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at 611-612; Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128 (“Royal Guardian”) at [9]-[10]).
Ground 1 – apprehended bias by conduct
The husband’s complaint of apprehended bias comprised several different limbs, but we will separately consider Ground 1 which contends the trial judge’s bias could be reasonably apprehended from his Honour’s conduct during the trial. That conduct was said to amount to “entering the fray” by asking questions of the husband and by interjecting during the wife’s cross-examination to protect her.
Before turning to excerpts from the transcript to which the husband referred in support of his argument, it is as well to recite relevant legal principles.
The cardinal principle of apprehended bias is well known (see Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 (“Ebner”) at 344-345):
… a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide. That principle gives effect to the requirement that justice should both be done and seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle.
(Footnotes omitted)
The application of that principle entails two distinct steps, as was explained in Ebner (at 345):
… First, it requires the identification of what it is said might lead a judge … to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits…
The assertion of apprehended bias remains a bare and unfounded allegation until the connection between the primary judge’s conduct and the possibility of departure from the judicial duty of impartiality is clearly articulated.
When an application for disqualification is founded on judicial conduct, manifest from the nature and degree of intervention in the course of the trial, it will be remembered that reasonable and moderate interjection by the judge must be tolerated.
In Johnson v Johnson (2000) 201 CLR 488 (“Johnson”), the plurality said (at 493):
… At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx…
Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them.
Kirby J said in Johnson (at 505):
… the expressions of preliminary and tentative views [by a judge] may sometimes appear to an outsider to indicate prejudgment. Although some [judges] may be hard to shift from tentative opinions, lawyers know that, in most judicial decision-making, the process is a continuous one. Preliminary inclinations do change.
(Footnote omitted)
In Antoun v The Queen (2006) 224 ALR 51 (“Antoun”), Kirby J said (at [27]):
… it is certainly true that the trial judge’s remarks were strong and forthright. In some circumstances, that will be a permissible expression to adopt, especially where the trial judge is conducting a trial as the sole judge of fact and law and the parties are legally represented by counsel able to respond with clarity and forthrightness. Judicial indignation at a particular course of action, or proposed action, may on occasion be understandable. Couched appropriately, at the proper time and in due sequence, it may give rise to no reasonable apprehension of bias. For centuries in courts of our tradition, judges have been telling parties and their lawyers, sometimes in quite robust terms, that they consider that a particular submission or course of action is hopeless, a waste of the court’s time or doomed to fail. I would not want to say anything that needlessly mollycoddled candid judicial speech addressed to trained advocates.
(Footnote omitted)
The “fair-minded lay observer”, whose objective opinions are the yardstick by which an allegation of apprehension of judicial bias is measured, is taken to be (Royal Guardian at [232]):
…a rational person who is neither complacent nor unduly sensitive or suspicious and…someone who is aware of the oath or affirmation taken by judges and their judicial obligations more generally.
As already noted, the husband’s complaint about how the primary judge’s interventions tended to demonstrate the reasonable apprehension of possible bias fell into two broad categories: asking him questions and interrupting the wife’s cross-examination.
In respect of the questions posed by the primary judge to the husband, we were taken to transcript references where:
a)The primary judge asked clarifying questions of the husband about his receipt of certain cash payments, in circumstances where there was an issue about whether $200,000 was received as a gift (as the husband contended) or rather as commission under an agency agreement, which would then have been income not disclosed for taxation assessment purposes. The primary judge returned to the issue upon completion of the husband’s cross-examination, to confirm whether or not the husband could account for his expenditure of the second tranche of $100,000.
b)The primary judge asked the husband questions about how he envisaged he could re-finance debt of around $1.4 million, as he implied he could, with a declared annual income of only $100,000. The husband responded that he intended to ask the Australian Taxation Office to re-assess his past income tax assessments on new information, which would likely include his undeclared rent receipts. That was against the background of the husband having already admitted he received rent of between $1,400 and $1,600 per month over about 14 years for the wife’s business use of the rural former matrimonial home, having admitted he received rent for five years in respect of another cottage on the property, having admitted he did not declare any of such rent as income in his taxation returns, but having asserted his representations in previous tax returns were truthful.
c)The primary judge interjected to clarify that an application to re-finance a loan was not made by the husband in his personal capacity, and further, the records of the bank to which the application was allegedly made did not corroborate the application was actually made. The issue proved otiose, because the primary judge ultimately found, as the husband wanted, that he had no proprietary interest in a related corporation and the corporation was not a financial resource for him (at [76]).
In respect of interjections during the wife’s cross-examination by the husband’s senior counsel, we were taken to transcript references where:
a)His Honour interrupted to clarify what expenses the wife paid using the money she admitted she had hidden from the husband and the Court.
b)His Honour interrupted to point out to the husband’s senior counsel how it was uncontroversial the wife contributed to the cost of improvements made to the former matrimonial home, regardless of the origin of the money she contributed.
c)When the husband’s senior counsel confirmed with the wife that she sought orders for her payment of $2 million, which the husband’s senior counsel said was an “utterly unbelievably ridiculous” application, the primary judge intervened to point out that the husband’s application to dismiss the wife’s application outright might be regarded as similarly audacious.
d)At one point, when the wife appears to have been upset, the primary judge asked if she wanted some water and enquired of the husband’s senior counsel how much longer he intended to be in cross-examination. The first question asked when the cross-examination resumed elicited an objection by the wife’s senior counsel, which necessitated the primary judge’s intervention, and the husband’s senior counsel was satisfied by his Honour’s assurance that he “needn’t trouble [himself] too much” about the issue then in contention, which was not an issue taken up by any of the current grounds of appeal.
e)His Honour interjected during questions about claimed business expenses to clarify the financial year to which the wife’s attention was then being directed, which evolved into a debate between the primary judge and the husband’s senior counsel about the relevance of the evidence, which the husband’s senior counsel conceded went only to the wife’s credit and her “preparedness to wax and wane”. A little later, while the wife was still being pressed about taxation returns, the primary judge interjected to observe the issue had already been covered and sufficiently demonstrated the wife’s tax returns were “just a sham”.
The primary judge’s tentative views about both parties’ false income tax assessment declarations did not change. In final submissions, his Honour said to the wife’s senior counsel that both parties had been “very cavalier in relation to their attitude to the Australian Taxation Office” and later said to the husband’s senior counsel that the wife was “hiding her income from the tax man”. The husband submitted in the appeal that these particular comments amounted to a “predetermination of the credibility of both parties”, which submission may be met with two incontrovertible propositions: first, his Honour was just as critical of both parties; and secondly, by then it was the end of the trial and his Honour was entitled to hold conclusive views about the parties’ reliability as witnesses.
Prior to the closure of the evidence, none of the primary judge’s interjections, either as to content or tone, was remarkable or unjustified. Indeed, his Honour was no more critical of the husband than he was of the wife. None of the primary judge’s comments could be said to rise above description as a “certain tendency of mind”, a “tentative opinion” or an expression of “judicial indignation”, as discussed in Johnson and Antoun. No hint of partiality is apparent. It would take someone with “undue sensitivity or suspicion”, as discussed in Royal Guardian, to discern any reasonable possibility of bias by the primary judge.
Ground 1 fails because the husband failed to demonstrate any connection between the primary judge’s interjections and the reasonable possibility of his Honour’s deviation from the judicial duty of impartiality.
Grounds 2 and 14 – apprehended bias by omission
Unlike Ground 1, which complains of the primary judge’s active conduct, these two grounds assert an apprehension of bias which arises from the primary judge’s omission to act, and more specifically by permitting the wife to be represented:
a)in the proceedings generally, by a solicitor who had formerly been a registrar of the Court in the same registry where the proceedings were being litigated (Ground 2); and
b)at the trial, by senior counsel in circumstances where senior counsel’s spouse was employed as a registrar of the Court in the same registry where the proceedings were being litigated (Ground 14).
These two grounds were the focus of the husband’s application to adduce further evidence which establishes the following facts.
In March 2019, the husband became aware that the wife’s solicitor was formerly employed as a registrar of the Family Court of Australia in the registry where the proceedings were being litigated. From April 2019 onwards, the wife rebuffed the husband’s requests to terminate her solicitor’s retainer.
In September 2019, the husband filed an Application in a Case seeking an order from the Court to restrain the wife’s use of her solicitor as a legal representative in the proceedings, but he withdrew the application before it was heard. The application was not renewed by the husband at trial in October 2019.
After the trial, the husband learned that the senior counsel retained by the wife’s solicitor to appear for the wife at trial is married to a registrar of the Family Court of Australia, who actually made procedural orders in these proceedings in 2015 and 2017 before senior counsel accepted his brief to appear. With the benefit of that knowledge, the husband remembers seeing the wife’s solicitor, the wife’s senior counsel, and the registrar, who is the senior counsel’s spouse, having lunch together on the second day of the trial.
Once the appealed orders were pronounced and the appeal was lodged, the husband applied to stay the orders pending the determination of his appeal. Before the stay application was heard, in February 2020, a different registrar of the Court returned the husband’s telephone call and advised him the evidence filed in support of his stay application was most probably deficient and invited him to file a supplementary affidavit.
The last fact, regardless of the husband’s belief about the impropriety of the registrar’s helpful advice in February 2020, is irrelevant to the complaints in Grounds 2 and 14 about orders made in November 2019 and so, on any view, could not satisfy the test for admissibility in the appeal established by CDJ v VAJ (1998) 197 CLR 172 (“CDJ”). We therefore feel no need to address the quite separate questions of the probable illegality and inadmissibility of the evidence of the conversation between the husband and the registrar in February 2020, by reference to s 138 of the Evidence Act 1995 (Cth), which conversation the husband admitted recording without the registrar’s permission, contrary to either s 6(1) of the Telecommunications (Interception and Access) Act 1979 (Cth) or s 11 of the Surveillance Devices Act 2007 (NSW).
With respect to the wife’s representation by her solicitor, the husband’s point was, inferentially: the primary judge was aware of the solicitor’s former employment as a registrar of the Court in the same registry; the solicitor was acting in contravention of legal professional standards by appearing for the wife in the proceedings before the Court; the primary judge must or should have known of that breach; even though the husband consciously abstained from pursuing his application to restrain the wife’s retainer of the solicitor, his Honour should still have restrained the solicitor’s appearance; and, his Honour’s failure to voluntarily do so gives rise to an apprehension of bias.
With respect to the wife’s representation by senior counsel at the trial, similarly, the husband’s point was, inferentially: the primary judge was aware of senior counsel’s marriage to a registrar of the Court who works in the same registry; senior counsel was acting in contravention of legal professional standards by appearing for the wife before the Court; the primary judge must or should have known of that breach; despite the husband’s ignorance of the breach at the time, his Honour should have voluntarily restrained senior counsel from acting for the wife at trial; and, his Honour’s failure to do so gives rise to an apprehension of bias.
Pivotal to the husband’s contentions in respect of the wife’s solicitor and senior counsel is the proposition that they were both acting unethically in contravention of legal professional standards, promulgated under the Legal Profession Uniform Law (NSW), being the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (“the Solicitors’ Rules”) and the Legal Profession Uniform Conduct (Barristers) Rules 2015 (“the Barristers’ Rules”).
Relevantly, r 38 of the Solicitors’ Rules provides:
38 Returning judicial officers
38.1 A solicitor who is a former judicial officer must not appear in:
(i)any court if the solicitor has been a member thereof or presided therein, or
(ii)any court from which appeals to any court of which the solicitor was formally a member may be made or brought,
for a period of two years after ceasing to hold office unless permitted by the relevant court.
The term “former judicial officer” is not defined within the Solicitors’ Rules. While the husband correctly pointed out that the term “judicial officer” is defined within the Dictionary under the Family Law Rules 2004 (Cth) (“the Rules”) to include “Judge, Judicial Registrar and Registrar”, he incorrectly assumed the definition of “judicial officer” would be identical under both the Rules and the Solicitors’ Rules. The assumption does not follow because the definition is liable to differ when used in different contexts. The Rules are a Commonwealth regulatory instrument, while the Solicitors’ Rules are a uniform State regulatory instrument, and the two instruments are directed to quite different objectives. The Rules specifically regulate the conduct of litigation before the Family Court of Australia, whereas the Solicitors’ Rules are intended to regulate the conduct of solicitors in all its variant forms.
Registrars are “judicial officers” under the Rules because, when they are exercising delegated judicial power under the Act as officers of the Family Court of Australia, they are required to act judicially. They are not judges, but they must act as if they are. That registrars remain subject to judicial oversight when they exercise delegated power and, unlike judges, do not enjoy judicial independence (Harris v Caladine (1991) 172 CLR 84 at 95, 120-122, 145, 150-151, 160, 163-164) powerfully implies that former registrars should not be regarded as “former judicial officers” under the Solicitors’ Rules.
Rule 38 of the Solicitors’ Rules is designed to prevent solicitors, for a closed period of two years and without permission, from “appear[ing]” in any court of which bench they were once a member or over which they once presided.
Even if the rule were to be interpreted so broadly by incorporating registrars within the definition of “former judicial officer” (which we consider doubtful), so as to catch the wife’s solicitor in this instance, the solicitor did not breach the rule by “appear[ing]” before the Court during the trial of the proceedings. The “appearance” on behalf of the wife before the Court was made by senior counsel, briefed by the solicitor. Accordingly, there was no breach of the rule by the wife’s solicitor and no ethical deviation to which the primary judge could be expected to have reacted. Hence, no apprehension of the primary judge’s bias could arise from his acquiescence to the wife’s representation by her chosen solicitor.
Even if the wife’s solicitor had been in breach of the Solicitors’ Rules, the husband withdrew his interim application for the solicitor to be restrained from acting for the wife and he did not press the application at trial, in which case his present complaint of apprehended bias by reason of the judge failing to actively respond to those facts should be regarded as waived (Vakauta v Kelly (1989) 167 CLR 568 at 577-579, 586-588; Ebner at 344, 357, 360).
Even if the wife’s solicitor “appeared” before the Court at interlocutory events on occasions prior to the trial, in breach of r 38 of the Solicitors’ Rules, such appearances could have no possible bearing upon the impartiality of the trial in October 2019.
In respect of the wife’s senior counsel, the husband asserted an alleged breach of r 101(j) of the Barristers’ Rules, which provides:
A barrister must refuse to accept or retain a brief or instructions to appear before a court if:
…
(j)the brief is to appear in a contested or ex parte hearing before the barrister’s parent, sibling, spouse or child or a member of the barrister’s household, or before a bench of which such a person is a member, unless the hearing is before the High Court of Australia sitting all available judges,
…
The wife’s senior counsel only appeared at the trial before the primary judge; not before the registrar to whom he is married. Unlike the primary judge, the registrar spouse is not a member of the bench of the Family Court of Australia because she does not hold a judicial commission. The Barristers’ Rules did not therefore apply and so the wife’s senior counsel was not in breach of the Barristers’ Rules when he appeared before the primary judge.
In any event, as the wife submitted in the appeal, the husband’s legal representatives at the trial were aware of the marriage between the wife’s senior counsel and the registrar and willingly abstained from making any application to either restrain the wife’s senior counsel from acting for the wife or to disqualify the primary judge. Without commenting further upon the apparent lack of merit in either application, the husband is constructively bound by the forensic decisions of his lawyers and cannot now, in the appeal, complain of apprehended bias arising from the primary judge’s failure to voluntarily make either of those orders at or before the trial.
This was an issue the husband ventilated with the primary judge in April 2020, when his application to stay the appealed orders was being considered. The following discussion then transpired:
[THE HUSBAND]: But may I just put on the record also that that senior counsel for the wife … is also in contravention of the Rules, being the Legal Professional Conduct Rules, by appearing in the … Registry while his spouse Deputy Registrar … is a judicial officer there, your Honour, and that severely compromises my case.
HIS HONOUR: No, it doesn’t… So if you have a complaint about that, go somewhere else about it, because this [c]ourt has a protocol where none of the matters involving [the] Registrar … are matters that involve a matter in respect of which [the wife’s senior counsel] is involved. So you can bleat as much as you like about that, but it’s not something that concerns me…
(Transcript 1 April 2020, p.5 lines 37–47)
Given the proven facts, it is not something that concerns us either.
Far from proving appealable error, the further evidence upon which the husband wants to rely tends to demonstrate the primary judge was correct to abstain from any voluntary intervention at trial to restrain either the solicitor or senior counsel from acting for the wife and so the further evidence can be admitted in the appeal to confirm the probity of his Honour’s conduct and the lack of merit which attends these grounds of appeal contending an apprehension of bias (CDJ at [103], [107], [109]). Paragraphs 1 to 13 of the husband’s affidavit filed on 23 April 2020, together with the annexures referred to therein, are received in evidence in the appeal pursuant to s 93A(2) of the Act.
On the whole of the evidence, Grounds 2 and 14 are rejected.
Ground 6 – denial of procedural fairness
By way of pertinent background, the former matrimonial home comprises a house and another cottage built upon a rural property. It was purchased contemporaneously with the formation of the parties’ relationship (at [12]-[14]), but the husband was registered as the sole legal proprietor.
During the litigation, there was an interlocutory dispute over the husband’s entitlement to extend the loan secured by mortgage over the former matrimonial home in order to raise money to pay his legal fees. An order was made preventing him from doing so. On 15 July 2019, the primary judge made an order restraining the husband from further encumbering or charging the former matrimonial home. In passing, it may be noted his Honour made that order following a concession by the husband in open court that he no longer had any need to raise money to pay his lawyers (who had already withdrawn some days before) and he withdrew his application to extend the mortgaged loan over the former matrimonial home.
The husband asserted in his Summary of Argument filed on 5 May 2020 (at [46]) that his then solicitors discontinued their representation of him in the proceedings because he was unable to pay them. Regardless of the reason for the termination of the retainer, the husband then secured his legal representation by alternate solicitors and by senior counsel for the trial in October 2019.
Against those facts, this ground of appeal asserts the husband was denied procedural fairness because the interlocutory order made on 15 July 2019 denied him “the opportunity to access the equity in [his] property to continue the legal representation [he previously] had”.
There are obvious insurmountable obstacles to the success of this ground.
First, this appeal concerns only the orders made on 21 November 2019. There was no appeal from the interim order made on 15 July 2019 and it cannot be attacked in this appeal because it had no bearing upon the result embodied within the appealed orders (Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478 at 482-484, 494-497).
Secondly, the husband erroneously conflates two different concepts: the actual procedural fairness of the trial in October 2019 and the perceived fairness of an interlocutory decision made in July 2019. If the curial decision to restrain the husband’s diminution of the equity in the former matrimonial home was correctly made in July 2019, and there is no reason to now doubt it, then it could not be contended the consequences of the decision caused procedural unfairness at the trial in October 2019, even if the husband perceives it to be so.
Thirdly, in any event, the husband was not disadvantaged by the orders made in July 2019 because he obtained alternate, competent legal representatives in time for the trial several months later.
Lastly, even if the husband did experience some tangible disadvantage by losing the solicitors of his choice and having to secure alternate solicitors to represent him at the trial, there is no indication at all from the husband’s submissions in the appeal as to how the disadvantage was so pronounced that the integrity of the proceedings was ruptured. Not every departure from the rules of natural justice entitles the aggrieved party to a new trial (Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145).
The husband wrongly submitted in his Summary of Argument (at [47]) that the appealed orders made in November 2019 did not discharge the interlocutory injunction made in July 2019. He believes the injunction therefore continues to apply, impeding his ability to comply with the appealed orders by raising further debt against the former matrimonial home in order to meet the required cash payment to the wife. He is mistaken. The injunction made in July 2019 was terminated by the appealed orders, even though the orders did not expressly say so. Interlocutory orders are ipso facto discharged upon determination of the action, since such orders are only intended to regulate the parties’ conduct in one form or another until the action between them is finally determined according to law (Sadasivam & Seshan (2019) FLC 93-899 at [26]).
Grounds 3, 4 and 11 – mistaken findings
The grounds of appeal allege a multitude of mistaken findings but, given the difficulty reconciling the husband’s written submissions with the pleaded particulars of these grounds, there is no sensible option but to consider the complaints seriatim as the husband has done in his Summary of Argument.
At [17], the primary judge found the wife paid monthly amounts directly to the “home loan mortgage account” between 2001 and 2015, which payments the wife then wrongly claimed as business expenses to reduce her tax liability (at [20]) and, although the husband preferred to characterise the payments as rental income, he then wrongly failed to disclose such income to thereby reduce his tax liability (at [19], [54], [55]).
The husband asserted it was a mistake to find such monthly payments were made by the wife directly to the home loan mortgage account because there was no evidence of it and the finding was contrary to his evidence of how the payments were made directly to his personal bank account. The submission is rejected. The husband first said in cross-examination that the wife paid such amounts “directly into the mortgage account”, though he later corrected himself to say he was mistaken and the payments were made directly to him. The wife gave evidence that the money she paid was used by the husband to meet the mortgage repayments, about which there was no dispute, so the finding about whether the money was paid directly to the bank or directly to the husband was immaterial anyway. Factual mistakes which are immaterial to the result do not sustain an appeal (De Winter and De Winter (1979) FLC 90-605).
At [25], the primary judge found that significant improvements were made to the former matrimonial home about three months prior to the settlement of its purchase in October 2001. The husband said the finding was “absurd”, implying such improvements would not have been made prior to completion of the contract for purchase. He might be right, but it is immaterial because there was no dispute the property was actually improved in that way.
At [27], the primary judge found the husband received rent of $400 per week for the lease of the cottage located on the grounds of the former matrimonial home, which rent was not disclosed as income in his tax returns. The husband submitted in the appeal that was because he did not receive the first rent payment until 31 July 2018 and his 2018/2019 tax return was not complete at the time of trial in October 2019. The submission is rejected. In cross-examination, the husband admitted he received such weekly rent from 2009 until April 2014 and did not declare any of that rent as income in his tax returns.
At [28], the primary judge found renovation and improvement work was done to the former matrimonial home by the parties and by family members, including by the wife’s father, who was a builder. His Honour found that some work done in 2006 was done by the wife’s father “at his cost”, which the husband submitted in the appeal was a mistake because there was “no evidence” to support the finding. At [29], the primary judge found the wife’s father did “significant works” on the former matrimonial home, which the wife’s father estimated to be worth about $461,000, the cost of which was covered by the wife and her father, but not by the husband, who only contributed his labour. The husband submitted in the appeal those findings were mistaken because there was “no evidence” to support them.
The husband’s submissions in respect of the findings at [28] and [29] are rejected. The wife gave evidence of the work done by her father and the materials she bought, but her father was not reimbursed for all of his expenses and he was paid nothing for his labour. The wife was not challenged about that evidence, which is unsurprising because the husband admitted the parties only paid the wife’s father “for the cost of materials”. The wife’s father, who was deceased at the time of trial, deposed in an earlier affidavit to the work he did and the approximate cost of it, which evidence was admitted at trial over the objection of the husband’s senior counsel. The wife’s brothers also gave evidence of the work they did on the property, over the objection of the husband’s senior counsel, about which they were not challenged in cross-examination. The subject findings were consistent with such evidence.
At [30], the primary judge made a series of findings, which the husband submitted were mistaken. Relevantly, they were: the parties’ refinanced debt secured over the former matrimonial home in May 2003; they borrowed an additional $150,000 by way of overdraft; the money was used to buy a ride-on mower and was otherwise put towards the renovations of the property; the wife made repayments of $1,000 per month to service the overdraft until 2018; and the debit balance of the overdraft was still about $150,000 at trial.
As the husband submitted in the appeal, the overdraft facility was granted to and used by the wife, but was secured by encumbrance over the former matrimonial home. The husband guaranteed the facility and, as the sole legal owner of the property, his consent to its use as security was essential and so the parties agreed upon those arrangements. The wife deposed to the creation of the loan, the manner of its use, and her responsibility for the repayments until March 2018, when the husband evicted her from the former matrimonial home and she closed her business. The overdraft was certainly used to buy the ride-on mower and to finance renovations to the former matrimonial home. The renovation work inferentially helped enhance the overall value of the property, because the husband deposed its value more than doubled between 2001 and 2010 from $905,000 to $1.9 million. The findings at [30] were therefore consistent with the evidence. The husband’s evidence was really not inconsistent at all and, in final submissions, his senior counsel agreed the wife “spent the overdraft on the improvements [to the property]”.
While the appealed orders require the husband to assume responsibility for the debit balance of the overdraft, he also retains exclusive proprietorship of the former matrimonial home, improved by the overdraft expenditure. According to the final submissions made by the husband’s senior counsel, that was his preference, so long as the quantum of the liability was factored into the calculations of the cash payment ultimately payable to the wife.
At [31], the primary judge found that, due to the husband’s diagnosis with a medical ailment in 2007, his capacity for full-time work was reduced for a period of months in the early part of that year. The husband submitted in the appeal the finding was erroneously made because there was “no evidence” his capacity for full-time employment was reduced. The submission is rejected. The husband gave evidence that his income decreased from $86,611 for the 2005/2006 financial year to $72,698 for the 2006/2007 financial year, which coincided with the wife’s unchallenged evidence about his ill health over several months in 2007, when he worked less. There was no mistake.
At [31], the primary judge also found the wife sold one of her business assets for $55,000 at about that time and the proceeds of sale were applied by the parties to meet family living expenses. The husband submitted in the appeal there was no evidence the wife even owned the business asset, let alone that she sold it and used the sale proceeds for the benefit of the family. His submissions are rejected. The wife gave detailed evidence-in-chief on that issue and, while she was challenged in cross-examination, she firmly adhered to her evidence. The finding was open on the evidence.
At [32]-[34], the primary judge made findings of fact about the husband’s expenditure on legal fees in these proceedings. Although these particular grounds of appeal allege mistakes of fact, that was not the husband’s complaint in respect of the reasons contained in [32]-[34]. Rather, he complained in his Summary of Argument about the primary judge’s failure to make a particular finding, and further, failing to take the unmade finding into account when deciding to add back the paid legal fees as a notional asset in his hands. The submissions are rejected because they do not align with these grounds of appeal, but the husband’s complaints on that topic are addressed under Ground 8.
At [35], the primary judge found that a business operated by the husband through a private corporation was opened in September 2008. The husband submitted in the appeal the finding was wrong because the business was opened in July 1991. The submission is rejected. The husband deposed that he was self-employed in the retail industry from 1991 until 2000, when he moved into different work, but returned to the retail industry and set up business via the corporation at a new location in September 2008. The finding was therefore consistent with the husband’s evidence.
At [36], the primary judge found the wife’s income in the period between 2005 and 2015 varied between about $150,000 and $247,000 per annum, at least according to her tax returns, which it later transpired were false. Despite the husband’s complaint that the finding was wrong, it was entirely concordant with the evidence of the wife’s tax returns, which he adduced in evidence. That the wife’s declared income was inaccurate was ultimately uncontroversial because, in cross-examination, she admitted hiding money she derived from her business. That was why the primary judge interjected in the wife’s cross-examination to describe her tax returns as a “sham”, said during final submissions that she had hidden money from the “tax man”, and commented in the reasons for judgment about the unreliability of her evidence concerning her true income (at [50]-[52], [79]).
At [39], the primary judge found the wife sold livestock and equipment and then used the sale proceeds to meet living expenses and to invest. The husband submitted the finding was wrong because there was “no evidence” of it. In fact there was. The wife gave extensive evidence-in-chief about it, so the finding was open on the evidence.
Although the husband addressed the findings at [41] and [42] concerning his exhaustive attempts to finally discover the wife’s hidden business income under these grounds of appeal, which allege mistaken facts, he actually agreed with and endorsed the subject findings, which are correct. The husband apparently only wanted to emphasise the wife’s breach of her duty of full and frank disclosure, about which there could be no argument.
At [43] and [77], the primary judge found the wife was then residing with her mother and had borrowed money to meet her needs and those of the children. The husband submitted the findings were wrong because the wife was actually then renting separate accommodation and there was “no evidence” of her having borrowed money. The first finding was wrong because, although the wife deposed in her trial affidavit to living with her mother, she said in cross-examination she was by then renting accommodation for herself and the children, but the mistake was immaterial. The second finding was correct because the mother deposed her parents had advanced money to her and she disclosed in her financial statement receiving money from and owing liabilities to her family and friends. The primary judge also found the wife had not re-partnered, which the husband contended was wrong, but his submission is rejected. The wife admitted she had a boyfriend, but she denied being in a de facto relationship and she was certainly not remarried.
At [44], the primary judge found the wife felt unsafe attending the former matrimonial home to conduct her business after the parties’ separation, which finding about the wife’s feelings was completely consistent with her evidence. The fact the husband does not believe the wife had reasonable grounds to feel unsafe does not mean she could not have honestly felt that way, let alone that the primary judge was wrong to accept her evidence.
At [45], the primary judge made findings about the gradual breakdown, over the period between May 2015 and February 2016, of the parties’ ability to cooperate over the wife’s continued attendance at the former matrimonial home to tend her business. His Honour did not find the wife had good cause to complain about the husband’s conduct; only that there was animosity between them, which is undoubtedly correct. The facts are recited merely to explain chronological events, it being noted by his Honour (at [46]) that the dispute did not culminate until early 2018, when the husband demanded the wife cease further attendance at the former matrimonial home. There was no mistake.
Incontrovertibly, the husband locked the wife out of the former matrimonial home in March 2018 when she failed to pay him money he alleged she owed him. At [48], the primary judge found the wife then had no funds with which to meet the husband’s demand, which the husband submitted was a mistake of fact. While the husband believes the wife had money spirited away, to which she could have resorted, that is idle speculation. It transpired that she hid money she earned from her business from 2013 onwards, but there was no evidence from which to reasonably infer it was saved in sufficient sums to meet the husband’s large lump sum demands. It hardly suited the wife to be locked out of the former matrimonial home because it precluded her from running her business and, hence, deprived her of income.
At [49], the primary judge records how the husband locked the wife out of the former matrimonial home in March 2018, which required the wife to close her business, move her livestock, and sell some of her business assets to meet expenses. The husband does not really challenge the accuracy of those facts. His complaint is simply that the facts do not tell the whole story as to why he felt compelled to act as he did. The findings were not made in error, even though they are not embellished with an explanation of the husband’s perception of the events. In any event, those bare facts had no influence on his Honour’s critical findings as to why the parties should share their property interests in the proportions ordered.
At [52], the primary judge found the wife’s evidence about her past income was “blatantly false” and, although she had instructed an accountant to prepare amended income tax returns by the time of trial, there was no guarantee they would ever be lodged once the trial was complete. His Honour also said the husband could not assert any contribution by him to the income the wife derived from conducting her own business after their separation in 2011. The husband took issue with the findings at [52] on two counts: first, he said he did make a contribution to the wife’s derivation of post-separation income by allowing her to use the former matrimonial home to conduct her equine business up until March 2018; and secondly, the primary judge failed to take into account the wife’s “lack of credibility” when assessing their respective entitlements, though that is not of course an attack upon the validity of the factual findings at [52].
As to the first argument, the wife paid rent to the husband as consideration for the use of the former matrimonial home up until November 2015, so he treated the arrangement commercially. The primary judge elsewhere acknowledged that the wife ceased making the rent payments in November 2015 and the husband’s subsequent demand for repayment of the arrears (at [45], [46]). In any event, the husband’s senior counsel submitted that the parties’ overall contributions were equal, save for the husband’s introduction of the former matrimonial home to the relationship, which concession also annuls the second argument.
At [81], the primary judge relevantly made findings about the husband’s self-employment through a private corporation and his income in 2018, which income did not include rent from the cottage located on the grounds of the former matrimonial home. As the husband correctly asserts, the latter part of that finding was wrong. The husband gave unchallenged evidence the cottage was vacant from 2014 to 2018 and the first rent payment made upon its re-occupation was not received by him until July 2018, which income could only then be declared in the 2018/2019 financial year. However, the mistake made no difference. The primary judge did not find the omission to declare such income in one financial year depreciated the husband’s overall contributions or affected the assessment of factors under s 75(2) of the Act. The primary judge found both parties were unreliable witnesses and neither experienced any comparative advantage or disadvantage on that count.
Ground 11 provides:
That the [primary] judge was wrong in accepting there had a [sic] full and frank financial disclosure by the … wife in determining the asset pool.
In the husband’s Summary of Argument (at [60]), he submitted in relation to Ground 11:
…the [primary judge] was wrong in accepting there had [been] a full and frank disclosure by the [wife] in determining the asset pool.
In the husband’s Summary of Argument (at [42] and [43]), he submitted under Grounds 3 and 4:
His Honour should have made clear findings of Non Disclosure on behalf of the wife…
The failure of the wife to give proper disclosure under the Rules related only to her failure to truthfully disclose the income generated by her business. It was not contended at any point during the trial that she failed to disclose assets which would otherwise have featured as components of the “property pool”, as found by the primary judge (at [111]).
In respect of the wife’s failure to truthfully reveal her business income, in fact, his Honour’s findings could hardly have been clearer, since it was found: there was no evidence of the wife’s real income from her business in the period between 2005 and 2015 (at [37]); “undisclosed turnover” of the wife’s business was eventually revealed by the husband’s efforts (at [41]-[42]); the wife diverted some of her income from 2013 onwards to a bank account conducted in her mother’s name (at [50]); the wife conceded her deception in cross-examination (at [51]); some aspects of the wife’s oral evidence was “blatantly false” (at [52]); and the wife’s evidence about her income had to be treated with caution (at [79], [134]).
Ground 11 must be rejected because it was prosecuted on a false premise. The primary judge did not accept the wife had given full and frank disclosure.
Ground 8 – mistake of law
This ground contended the primary judge erred by adding back to the combined pool of property the sum of $200,000 spent by the husband on legal fees in the proceedings. In effect, the husband contended the error was patent because he incurred greater legal costs than were ordinarily necessary in order to uncover the wife’s financial deception and to resist her multiple interim applications for financial relief, made at times when she deceitfully failed to disclose her true financial position and so her evidence in support of such applications was deliberately false.
That was the argument made on the husband’s behalf by his senior counsel during final submissions. The argument was not accepted and his Honour explained the decision to add back, notionally as an asset in the husband’s hands, the sum of $200,000 he spent on legal fees in this way:
32.The husband borrowed funds from the Commonwealth Bank after the establishment of his retail business. This Viridian Facility was in the sum of $300,000. His oral evidence is that the facility was used for the purposes of his business and to pay his legal fees for these proceedings. In oral evidence the husband disclosed that the balance owing on the Viridian Facility late 2015 was down to $72,000 following funds in the total sum of $200,000 received by him by way of gift from a Mr EE in 2014. By January 2016 the Facility was in credit of $5,000. As at trial the facility was in debit $264,192. His Costs Statement (Exh “E”) is clearly indicative of those funds being drawn for his legal expenses in that it asserts that his costs paid were drawn from the Viridian Line of Credit and, otherwise, funded by his father’s advances that totalled $161,133.
…
34.These funds totalling $294,000 he expended on his legal fees save for a portion of the $85,691 drawn from the home loan. His oral evidence also is that the remaining $100,000 from Mr EE paid into his Commonwealth Bank account in October 2014 was most probably expended on legal fees.
…
96.Otherwise, it was contended by the wife that the husband’s paid legal fees in the sum of $426,155 should be added back notionally to the asset pool for division.
…
105.The husband’s legal fees: Doing the best on the evidence as it is, the husband’s costs statement reveals paid legal fees totalling just over $500,000. In addition, his evidence reveals that he has drawn down funds secured against the equity of the matrimonial property to pay other legal fees totalling about $37,000 and Single Expert fees of $10,000. His paid legal fees are thus about $550,000. Leaving aside funds received by way of gift from Mr EE ($200,000) as discussed above and funds received from his father of about $161,000 the balance of about $200,000 was funded mostly by way of capital drawing against his home loan and the Line of Credit thus further encumbering the Suburb B property. Should such sum not be added back to the pool for division the result is that the wife will pay a portion of the husband’s legal fees.
…
108.In such circumstances, and doing the best on the evidence as it is, the sum of $200,000 will be added to the pool for division.
(Emphasis removed)
In coming to that conclusion, his Honour discussed relevant authorities (Chorn and Hopkins (2004) FLC 93-204; Trevi & Trevi (2018) FLC 93-858) and it was not asserted in the appeal the primary judge misapplied the guidelines developed in those cases. Rather, the husband’s complaint is only that his submission at trial for a different conclusion to be reached should have been accepted, but he could not articulate why.
His Honour found the husband set up an overdraft facility from which to pay his legal fees (at [32]). By the time of trial, the husband had spent some $550,000 on legal fees but, of that sum, the payment of only around $200,000 was sourced back to the overdraft (at [105]). At the time of trial, the overdraft facility was in debit by $264,192 (at [111]). The overdraft facility was secured over the former matrimonial home and therefore decreased the value of the husband’s equity in that asset. Had the sum of $200,000 not been notionally added back as an asset in the husband’s hands, the practical effect would have been the wife bearing liability for 47.5 per cent of that portion of the husband’s costs, given her assessed percentage entitlement to the net assets. The guideline authorities establish that such an outcome, in the face of s 117(1) of the Act, which ordinarily requires parties to proceedings under the Act to bear his or her own costs, would have been unusual.
The manner in which the husband’s expended legal fees should be treated was entirely within the primary judge’s discretion, which was exercised regularly and conformably with established guidelines. No discretionary error is apparent and this ground fails. Error is not demonstrated by showing an argument made at trial for the discretion to be exercised in a different way was not accepted.
Grounds 5 and 7 – failure to take material considerations into account
Grounds 5 and 7, stripped of their particulars, provide:
5.The [primary] judge erred by failing accept and factor the admissions made under cross examination and thus handed down a judgement that was unfair and unjust and goes against the relevant doctorates…[sic]
…
7.The [primary] judge erred in his [Honour’s] findings of fact in respect of contribution handing down and unfair and unjust property settlement...[sic]
As can be seen, the common theme of both grounds is that the appealed orders are “unfair and unjust”, which alleged unfairness arises from the primary judge not giving sufficient weight to two factors: first, the wife’s admissions of her deception in cross-examination; and secondly, the husband’s capital contribution of the former matrimonial home.
In his Summary of Argument, the submissions made in support of these two grounds simply repeat the submissions made in respect of Grounds 3, 4, 5 and 6, which we have already covered.
The wife’s admissions of non-disclosure of business income and her falsification of the contents of documents she filed in the proceedings have already been traversed. The primary judge was acutely aware of it. As much as the wife should be deprecated for her dishonesty, her entitlement under Part VIII of the Act is not gratuitously diminished on account of that alone by way of some moral sanction. We reject any implication by the husband that the wife should have been penalised for her misconduct in some way, such as by the outright dismissal of her application for relief or by the arbitrary reduction of her otherwise proper entitlement by application of the provisions of the Act.
Under well established guidelines (Black and Kellner (1992) FLC 92-287 at 79,133-79,134; Weir and Weir (1993) FLC 92-338 at 79,592-79,595; Chang v Su (2002) FLC 93-117 at [28]-[32], [57]-[72]), property settlement orders may make more generous provision for one party if it is inferred the other party improperly failed to fully disclose his or her financial affairs. However, when a trial court infers a party’s failure to disclose, it is worthy of consideration whether the failure relates to assets or income, because the receipt of undisclosed income over a period of time, without more, does not necessarily permit an inference to be drawn that the money is stashed away and available at will to the recalcitrant party. Just because an inference may be drawn does not mean it always must or should be drawn.
In this case, the wife’s proven failure of disclosure relates to business income she earned over many years. She did not fail to disclose assets. The point was well made by his Honour during the wife’s final submissions, as the transcript reveals, with which analysis the husband’s senior counsel did not take issue:
[COUNSEL FOR THE WIFE]: … I ascertain the husband’s complaint is that your Honour ought find or – that there’s some other property hidden away somewhere.
HIS HONOUR: Not one jot of evidence.
…
HIS HONOUR: But, of course, it appears that the inquiry hasn’t so much been as to undisclosed assets but as to the true level of her income.
(Transcript 17 October 2019, p.324 lines 7 to 41)
To the extent the husband asserted or implied in this appeal that the wife deceitfully moved a total of some $400,000 from her business through the bank account kept in her mother’s name, meaning she had that sum readily available to her at the time of trial, the implication cannot be accepted. There was no evidence to suggest it, either at trial or in the appeal. The husband orally submitted in the appeal how evidence to that effect was given by the wife’s accountant, either in her affidavit or in cross-examination, but we cannot find any mention of that sum anywhere in the evidence. Even if the wife did siphon off that amount of money over a period of years, there was no demonstrated basis upon which to infer it was saved rather than spent. The bank account kept in the name of the wife’s mother was closed in 2017 and the wife’s business was closed in early 2018. The wife’s ability to draw upon an undisclosed reserve of cash at the time of trial in October 2019 would have been a guess, not a valid inference.
As for the husband’s contribution of the former matrimonial home at the commencement of the parties’ relationship, it was the only reason by which his senior counsel sought to differentiate the parties’ otherwise equal contributions and it featured prominently in the primary judge’s reasons.
The particulars of Ground 7 allege the former matrimonial home was valued at $1.3 million at the time the parties commenced cohabitation and, at that time, the husband’s equity in the property was worth $919,393. The husband gave inexpert opinion evidence to that effect without formal objection, but it was admittedly given in reliance upon a hypothetical valuation report which the parties’ senior counsel agreed was flawed and ought not be adduced in evidence. Consequently, the husband’s evidence about the value of the former matrimonial home at the time the parties commenced cohabitation did not carry any weight at all. Importantly, the primary judge made different findings which were not challenged as being incorrect under Grounds 3 or 4.
Relevantly, the primary judge found: the parties commenced their relationship some years before they began cohabiting (at [11]); the husband contributed capital of about $400,000 to the purchase of the former matrimonial home in May 2001 (at [13(b)(i)]); the parties began cohabitation at some point between October 2001, when the purchase of the former matrimonial home was complete, and February 2002, when they married (at [14]); thereafter, the wife made monthly payments to the husband until December 2015, totalling $180,800 in all, which were used towards repayment of the loan secured by mortgage over the former matrimonial home (at [17]-[18]); the parties made substantial renovations to the former matrimonial home, with considerable unpaid assistance from the wife’s family members (at [25]-[29]); the wife obtained an overdraft, guaranteed by the husband and secured over the former matrimonial home, which was largely used to fund the renovations to the former matrimonial home (at [22], [30]).
In reliance upon those basal factual findings, the primary judge concluded the parties’ contribution-based entitlements favoured the husband by a 10 per cent differential, which finding was reasoned as follows:
116.Having regard to the evidence above, contributions will be assessed as favouring the husband as to 55 per cent and as to the wife 45 per cent. Such will create a disparity of about $267,000 between them. Such adjustment acknowledges his initial equity in the home at the commencement of the relationship; an equity that has increased over the years but is offset in part by the wife’s business assets brought in and later disposed of as discussed above and improvements to the property.
We are not persuaded the differential gave insufficient weight to the husband’s introduction of the encumbered former matrimonial home to the relationship when weighed against the wife’s countervailing contributions.
The considerations referred to by the husband were, therefore, taken into account by the primary judge and, having done so, the husband could not establish discretionary error due to the result embodied in the appealed orders being “unreasonable or plainly unjust” (House v The King (1936) 55 CLR 499 at 505) or “plainly wrong” (Norbis v Norbis (1986) 161 CLR 513 at 539-540).
Grounds 9 and 10 – mistakes in the assessment of contributions
These two grounds contend the primary judge’s assessment of the parties’ contribution-based entitlements at 55 and 45 per cent respectively miscarried because his Honour quantified the 10 per cent differential by equating it to the numerical value of the husband’s capital contribution to the purchase of the former matrimonial home (Ground 10), but regardless, his Honour failed to give adequate reasons for the finding (Ground 9).
The grounds are simply addressed. The finding of the differential of 10 per cent between the parties’ respective contribution-based entitlements was explained by balancing the husband’s greater capital contribution of the encumbered former matrimonial home at or about the commencement of the parties’ relationship against the wife’s use of her income and assets to improve the former matrimonial home, which benefit the husband will retain (at [116]). The parties otherwise agreed their contributions should be assessed as equal (at [114]).
The primary judge did not, as the husband asserted, “equate” the differential to the value of his equity in the former matrimonial home. The 10 per cent differential computed to about $267,000, when the primary judge accepted the husband contributed capital of about $400,000 to the acquisition of the former matrimonial home in 2001 (at [13(b)(i)]).
The primary judge noted and rejected the wife’s contention that the parties’ contribution-based entitlements should be equal, notwithstanding the husband’s introduction of the former matrimonial home to their relationship (at [112]).
The primary judge also noted and rejected the husband’s contention that his initial contribution of the former matrimonial home, as a single distinguishing feature of the evidence, meant his contribution-based entitlement should be measured at 70 per cent (at [113]). In effect, the husband contended his contributions were qualitatively more than double those made by the wife in the period between 2001 and the trial in October 2019.
As can be seen, the husband’s submission gave no credit to the wife for her payments of about $180,000, which were used to defray the mortgage, or to the capital she injected to improve the former matrimonial home, or to the unpaid labour provided by members of her family to improve the home. On the other hand, the wife placed too much emphasis on those contributions.
So explained, the primary judge’s assessment of contributions fell between, but closer to, the wife’s submission of equality than the husband’s submission of rank inequality. In our view, the reasons satisfactorily illuminate the finding.
Grounds 12 and 13 – mistakes in the application of s 75(2) of the Act
These two grounds attack the exercise of discretion under s 75(2) of the Act. First, it is contended the primary judge failed to have proper regard to the provisions of that sub-section (Ground 12), and secondly, that insufficient weight was given to the wife’s dishonest failure of disclosure and its import with regard to her future income-earning capacity (Ground 13).
The husband’s Summary of Argument did not elaborate the bald contention of Ground 12 and so, as no more than a bare proposition, it is rejected. The wife sought an adjustment in her favour of 10 per cent, whereas the husband contended for no adjustment at all (at [117]-[118]). The relatively small adjustment of 2.5 per cent in the wife’s favour upon consideration of the factors prescribed under s 75(2) of the Act was open and not plainly unjust.
For reasons already explained, the primary judge was rightly wary of the wife’s evidence about the quantum of her income, both before and after the parties’ separation. However, the husband was unable to establish that, after he locked her out of the former matrimonial home in March 2018, she was able to conduct her equine business somewhere else. Nor could he rebut her evidence that she sold off and gave away the business assets. The primary judge found she closed the business then (at [49]). After that, she worked only part-time in various capacities, earning only $34,000 in 2018 (at [78]). By the time of trial, the wife had no funds or premises to re-establish her previously successful business (at [80], [120]). By comparison, the husband’s taxable income in 2018 was $101,000 (at [81]) and, in late July 2018, he began receiving an extra $400 per week income by way of rent from the cottage on the former matrimonial home.
The findings made by the primary judge about the wife’s unreliability concerned her failure to truthfully reveal her business income over many years spanning between 2005 and her lock-out from the former matrimonial home in Mach 2018. The fact she had a substantially inferior income to that earned by the husband at the time of trial was, on the evidence, unarguable. Since the wife gave no evidence of having explored any prospects for her full-time employment (at [78]), there was some room for argument about the extent of her future income-earning capacity, but that is all.
Contrary to the husband’s contention, the mere established fact of the wife’s dishonesty about her past business income did not oblige the primary judge to assume she had the continuing capacity to generate the same level of income into the future. The contention offends the undisturbed finding made by the primary judge that the wife did not have the means to re-establish her business, which at the very least would require access to a rural property.
Conclusion and costs
The appeal is dismissed for lack of merit.
In that event, the wife sought an order that the husband pay her costs of and incidental to the appeal. In accordance with procedural orders made by the Regional Appeals Registrar, the wife filed a schedule of her costs. Although the schedule itemised the wife’s scale costs at $80,184, she sought an order in the sum of $55,000, or such other sum as the Court directs.
The husband opposed any costs order, regardless of its quantum. He contended his “financial duress” militated against a costs order, as evidenced by his lack of legal representation in the appeal. Indeed, that is a salient consideration, but there are other more compelling considerations. The appeal was wholly unsuccessful and the husband conducted it in such a way as to increase the wife’s costs of resisting it. The multiple grounds and sub-grounds of appeal did not correlate easily with the husband’s Summary of Argument and many of the husband’s contentions either lacked an evidentiary premise or were plainly wrong. It was a tedious exercise for the wife to meet the husband’s arguments by resort to the voluminous evidence and lengthy transcript. The wife also had to meet the husband’s application to adduce further evidence in the appeal, even though it transpired some of the evidence affirmed the decision of the primary judge.
We are satisfied the application of s 117 of the Act warrants a costs order in the wife’s favour, but we are far from satisfied it should be for the amount sought by the wife. While scale fees may have been applied to the work done by her lawyers in the appeal, it seems the wife’s claim is for work done by her lawyers on a solicitor/client rather than a party/party basis.
It is well settled that the purpose of r 19.18(1)(a) of the Rules, which enables the Court to order costs in a specific amount, is to avoid the expense, delay and aggravation involved in protracted litigation arising out of an assessment of costs (Graham & Squibb (2019) FLC 93-892 at [92]-[94]). To avoid any further contest between the parties over the quantification of costs at an assessment before the registrar, we shall order the husband to pay the wife’s costs in the fixed sum of $33,000, which is 60 per cent of the wife’s claim.
I certify that the preceding one hundred and thirty-one (131) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Watts & Austin JJ) delivered on 24 September 2020.
Associate:
Date: 24 September 2020
5
16
9