Kipling and Netis (No. 2)
[2020] FamCAFC 184
•28 July 2020
FAMILY COURT OF AUSTRALIA
| KIPLING & NETIS (NO. 2) | [2020] FamCAFC 184 |
| FAMILY LAW – APPLICATION IN AN APPEAL – REINSTATEMENT – Where the husband filed a Notice of Appeal within time appealing from final property orders which provided for a 32.6/67.4 percentage division in favour of the husband – Where that appeal was deemed abandoned – Where the husband now seeks it be reinstated – Principles in Bemert & Swallow (1991) FLC 93-441 considered – Consideration of merits of appeal – Where the husband contends the primary judge gave inadequate reasons, erred in his findings regarding the property pool and erred in finding the husband had wasted moneys – Where the source of the wife’s paid legal fees required disclosure to the husband which necessitated the adjournment of the application – Where that disclosure did not evince an error on the part of the primary judge – Where none of the husband’s grounds of appeal have merit – Where it would be productive of injustice to the wife to permit a meritless appeal to proceed – Application dismissed – Costs order against the husband. |
| Family Law Act 1975 (Cth) ss 75(2), 79(2), 117(2A)(e) Family Law Rules 2004 (Cth) rr 19.04(5), 22.21, 22.44 |
| Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Bemert & Swallow (2010) FLC 93-441; [2010] HCA 100 Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148 Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54 Gallo v Dawson (1990) 93 ALR 479; [1990] HCA 30 Grabar and Grabar (1976) FLC 90-147; [1976] FamCA 105 Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63 Haber & Rufino [2020] FamCAFC 158 Jackamarra v Krakouer (1998) 195 CLR 516; [1998] HCA 27 Jorgensen v Slater & Gordon Pty Ltd [2009] VSCA 39 Kipling & Netis [2020] FamCAFC 79 Kowaliw and Kowaliw (1981) FLC 91-092; [1981] FamCA 70 Lagarna Pty Ltd v Bridge Wholesale AcceptanceCorporation (Aust) Ltd [1995] 1 VR 150 Lenova & Lenova (2011) FLC 93-467; [2011] FamCAFC 114 Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28 Netis & Kipling [2018] FamCA 703 Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146; [1997] HCA 1 Richards and Richards (1976) FLC 90-037; [1976] FamCA 109 Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679; [2016] HCA 22 Sedrak v Carney [1999] 3 VR 95; [1998] VSCA 114 Wellen & Wellen (2018) FLC 93-864; [2018] FamCAFC 192 |
| APPLICANT: | Mr Kipling |
| RESPONDENT: | Ms Netis |
| FILE NUMBER: | TVC | 809 | of | 2015 |
| APPEAL NUMBER: | NOA | 62 | of | 2019 |
| DATE DELIVERED: | 28 July 2020 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Kent J |
| HEARING DATE: | 26 May 2020 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 5 June 2019 |
| LOWER COURT MNC: | [2019] FamCA 363 |
REPRESENTATION
| THE APPLICANT: | Self-represented by telephone |
| COUNSEL FOR THE RESPONDENT: | Mr Lake by telephone |
| SOLICITOR FOR THE RESPONDENT: | Roberts Nehmer McKee Solicitors |
Orders
The Application in an Appeal filed on 9 December 2019 be dismissed.
The Applicant Husband pay to the Respondent Wife her costs of and incidental to the application fixed in the sum of $6,336, such payment to be made within six (6) calendar months of the date of these Orders.
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 Kipling & Netis (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 APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NOA 62 of 2019
File Number: TVC 809 of 2015
| Mr Kipling |
Applicant
And
| Ms Netis |
Respondent
REASONS FOR JUDGMENT
By an Application in an Appeal Mr Kipling (“the husband”) seeks to reinstate his appeal from final property settlement orders made by the primary judge on 5 June 2019 in property settlement proceedings between the husband and Ms Netis (“the wife”).
The husband filed his appeal within time on 3 July 2019 but failed to comply with orders made by the Appeal Registrar on 5 November 2019 that he prepare and file the appeal book on or before 29 November 2019. Pursuant to those orders and by operation of r 22.21 of the Family Law Rules 2004 (Cth) (“the Rules”) the appeal is taken to be abandoned. However, r 22.44 permits an application to have an abandoned appeal reinstated as the husband seeks by his application filed on 9 December 2019.
The wife opposes the application.
Relevant principles[1]
[1] As recently stated in Haber & Rufino [2020] FamCAFC 158 at [4]–[10].
In Bemert & Swallow (2010) FLC 93-441, the Full Court undertook an extensive consideration of authority including those of the High Court in Gallo v Dawson (1990) 93 ALR 479 per McHugh J at 480; Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146; Jackamarra v Krakouer (1998) 195 CLR 516; Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, as well as a number of Victorian authorities which have considered a similar, but differently worded, rule of practice and procedure as r 22.44 (including Lagarna Pty Ltd v Bridge Wholesale AcceptanceCorporation (Aust) Ltd [1995] 1 VR 150; Sedrak v Carney [1999] 3 VR 95 and Jorgensen v Slater & Gordon Pty Ltd [2009] VSCA 39).
The Full Court concluded (at 84,900) that:
… the discretion to reinstate an abandoned appeal is at large and no attempt should be made to limit the exercise of the discretion nor identify in any prescribed way the matters that should be taken into account …
However, the discussion by the Full Court of relevant statements of principle in the authorities referred to, quoted with apparent approval, provides helpful guidance to the determination of an application for reinstatement of an appeal.
The attainment of justice is the paramount consideration on such an application. Courts ought to protect the integrity of their processes recognising that rules of practice, and principles of case management, are designed as aids to the attainment of justice. However, in some instances too rigorous an application of a procedural rule may work an injustice. That is reflected in the remedial purpose of r 22.44 permitting this application.
The applicant bears the onus of demonstrating that justice is served by granting the application. An important consideration is that when a bona fide appeal has been commenced within time an applicant is usually entitled to have the appeal determined in the usual way. If an appeal is not vexatious and identifies proper grounds of appeal then, unless relevant discretionary considerations such as the extent of delay and its consequences for the respondent are overwhelming, the applicant will usually be able to demonstrate justice being served by the grant of the application.
However, the circumstances of a given case may reveal that the grant of an application will be productive of injustice. If it is apparent on an application for reinstatement that the grounds of appeal have no real merit it would be futile to grant the application as that outcome cannot be productive of injustice.
If it cannot be positively demonstrated that the appeal is devoid of merit (and in some instances the unavailability of relevant material such as the trial transcript – if that be relevant to any of the grounds raised – may not permit of such a definitive conclusion) then discretionary considerations relevant to the case will determine whether the applicant’s usual entitlement is overwhelmed.
The discretionary considerations falling for consideration on an application for reinstatement are not prescribed but generally the following will usually be relevant:
a)The prospects of the applicant succeeding in the appeal;
b) The extent of delay, whether there is an adequate explanation for it, and any relevant consequences of delay;
c)The nature of the litigation and the consequences for the parties of the grant, or refusal, of the application; and
d)Whether the applicant demonstrates that to refuse the application would constitute an injustice.
Background facts
The husband was born in 1969 and is aged 50 years. He obtained a degree and worked as a professional in B Town until 2013 when he suffered a mental breakdown and was assessed as totally and permanently disabled for the purposes of superannuation and workers’ compensation. The husband has not worked since 2013.
The wife was born in the US in 1974 and is 46 years old. She relocated to B Town in 2008 to study.
The parties met in B Town in August 2009 prior to the husband moving to the UK to pursue employment. The wife joined the husband in the UK in October 2009. The parties returned to B Town in January 2010 and married in GG Town in 2011. Their only child, X, was born in 2011.
The parties’ date of separation was the subject of dispute. However, it is clear that they were separated by 6 October 2014. Theirs was, therefore, a short relationship of approximately five years duration.
Central findings of the primary judge
The trial commenced before the primary judge in August 2018 and was heard on
1–3, 6–8 August 2018. At the conclusion of that part of the trial the primary judge made final parenting orders (not the subject of appeal) and interim property orders (also not appealed). His Honour delivered reasons for those orders on 12 September 2018 (“the September reasons”).[2] The interim property orders made provided for:
a)Earlier orders being varied such that the husband was restrained from permitting an investment account he held from falling below a balance of $50,000;
b)The husband to do all things necessary to finalise his last total and permanent disability payment from Y Super; and
c)The husband to authorise that total and permanent disability payment to be held in the wife’s solicitor’s trust account pending the determination of final property orders.
[2]Netis & Kipling [2018] FamCA 703.
The final trial proceeded on 7 and 8 March 2019 and the primary judge made final orders and delivered final reasons for judgment on 5 June 2019.
His Honour noted that the parties had largely agreed upon the identity and value of property interests but noted that there were two significant matters which remained in dispute relevant to the pool of assets of the parties. The first was the extent, and means by which, the wife’s student loan should be taken into account. The second was the extent, and means by which, alleged wastage of moneys by the husband post-separation should be taken into account (at [11]).
The primary judge found that the husband held net assets, including superannuation, worth $186,254 whilst the wife’s net position, including superannuation interests was a deficit of $58,326. Thus the combined assets and liabilities of both parties as found by the primary judge amounted to a combined net total of $127,928 (at [12]).
The primary judge noted some qualifications to some of the items in that “pool”. First, whilst the parties agreed that there should be shares to a value of $50,000, in fact, the shares no longer had that value with his Honour noting that contrary to orders he made on 12 September 2018, the husband had accessed far more than $20,000 from the fund which held the shares and that funds associated with the shares were garnisheed by the Child Support Registrar to meet the husband’s obligations for child support. Moreover, the primary judge noted that funds held in a trust account stated to be an amount of $198,900 were in fact, by virtue of the consent interim orders earlier referred to, reduced by $70,000.
The primary judge, whilst adopting the parties’ agreed items and values of the pool, confirmed that he would take into account the interim distributions that had been made in determining the final orders (at [13]–[15]).
It can thus be understood that whilst, based on the parties’ agreement as to many items to be included, the primary judge found the net pool to be worth $127,928, in fact there were significant deductions to be taken into account with respect to the net pool.
With respect to the wife’s student loan, the primary judge noted the husband’s contention that the wife’s United States student loan in the sum of $116,611 can legally be dealt with by her in a way which might defer repayment of it for perhaps as long as 25 years. The primary judge set out in the reasons as to how that might be achieved (at [16] and [17]).
Whilst noting that contention, the primary judge recorded the unchallenged evidence of the wife (at [18]) and expressed his conclusions (at [21]) with respect to the student loan and on the basis of those findings proceeded to include the student loan as a liability to be taken into account.
In relation to the husband’s alleged wastage in the post-separation period, the primary judge recorded the relevant facts at [24] to the effect that proceedings brought by the husband against Company H settled for a gross sum of $500,000 of which $324,965.41 was the husband’s net immediate entitlement on 17 May 2016. His Honour also recorded that this settlement sum was followed by a later Medicare refund of “approaching $70,000” and that in addition to the compensation payment there was also reimbursement of workers’ compensation past weekly payments of about $250,000, such that the gross figure of settlement was about $750,000. The primary judge also recorded (at [26]) that the parties were agreed that of the settlement sum of $324,965.41 received on 17 May 2016, the $70,000 received thereafter and the $110,000 in total and permanent disability payments, “only $50,000.00 is represented in assets in the balance sheet”. That is, from proceeds totalling $504,965.41 only $50,000 remained.
The primary judge recorded this finding at [26]:
26.… The wife says that the husband has unreasonably and excessively wasted the rest of those funds on discretionary spending. Although the husband broadly denies having done so, no real attempt was made by him to demonstrate where those funds have gone.
At [32] and [33], the primary judge recorded the following findings in relation to the husband’s wastage of assets:
32. I make the following findings:
·In 2016 the husband received, in total, net payments of about $395,000.00 derived from his personal injuries claim settlement, followed by $110,000.00 in TPD payments;
·By 7 March 2019, almost none of those funds remained represented in any extant asset (although the parties are agreed that a now largely non-existent share portfolio derived from the settlement monies should be in the balance sheet at a figure of $50,000.00);
·In late 2016 the husband was living fairly lavishly, with considerable entertainment expenses;
·The husband has spent at least $150,000.00 of the personal injuries settlement monies on his lawyers in other litigation;
·The husband used the personal injuries settlement and TPD funds to meet his reasonable living expenses, which could not have legitimately exceeded $90,000.00 per annum, and were likely less, but I cannot determine their reasonable quantum;
·I am therefore satisfied that there was significant wastage of funds by the husband, but I cannot determine its extent.
33.Because I cannot determine the amount of the wastage, I cannot determine the sum that should be added back in to the pool reflective of the excessive expenditure by the husband. If I were to do it by factoring in a conservative sum, say $50,000.00, I may not do justice to the wife. If I were to add in a significant sum (which could be warranted, particularly given the husband’s failure to put on material explaining his expenditure) I may not do justice to the husband. Therefore it seems to me as though this is a matter which should be taken into account under s 75(2)(o), and I will return to discuss it further when considering s 75(2) factors.
The primary judge ultimately determined that the net property pool of $127,928 ought be divided 67.4 per cent/32.6 per cent in favour of the husband, achieved by the order his Honour made for the husband to authorise a further payment to the wife of funds held in trust of $80,000 with the parties to otherwise retain their property interests (at [59] and [60]). By his appeal, the husband seeks to have the further payment to the wife set aside.
Whilst the husband holds qualifications as a professional he has not worked as a professional for some years now and has no particular experience (beyond his personal matter) in dealing with family law issues. He represented himself in these proceedings.
Merits of the appeal
The husband’s Notice of Appeal filed on 3 July 2019 advances the following four grounds of appeal:
1.The primary judge erred in principle by failing to adequately reveal the process of reasoning in the assessment of contributions; the assessment of future needs and the overall just and equitable outcome.
2.The primary judge erred in finding at [sic] the wife’s student loan was ever likely to be repaid by her and therefore erred in including the wife’s student loan as a liability of the parties.
3.The primary judge erred in finding that there was a significant wastage of funds by the husband having regard to both evidence of the husband’s expenses and the law in in [sic] cases such as Kowali [sic] (1981) FLC 91-092.
4.The primary judge erred in failing to take into account the evidence of the wife that she had expended $280,000 on legal fees, having regard to:
a. from where those funds might have been sourced;
b.the impact of the expenditure of those funds on any order to be made in favour of the wife at the conclusion of the trial; and
c. the wife’s likelihood to repay her student loan.
(As per the original)
Whilst the husband’s written outline (at paragraph 75) flagged possible amendments to the grounds, the postulated amendments lacked sufficient particulars as to constitute them as proper grounds of appeal. It was explained to the husband at the hearing that the Court would proceed to determine the application on the basis of the stated grounds of appeal and the husband confirmed he was content with that approach.
It is readily apparent that by reason of the nature and content of the stated grounds of appeal that reference to the transcript of the trial is not necessary in making an assessment of the merits of the appeal. That is the merits of the subject challenges can be assessed solely by reference to the reasons for judgment of the primary judge.
Ground 1 – Adequacy of reasons
The test for adequacy of reasons is well known and need not be restated here (see Bennett and Bennett (1991) FLC 92-191 and the authorities cited and summarised in Wellen & Wellen (2018) FLC 93-864).
The primary judge set out his relevant findings in relation to the assessment of contributions at [39]–[47] incorporating in that process paragraphs from his Honour’s September reasons. With respect to s 75(2)[3] factors, the primary judge details his findings at [48]–[53] also incorporating paragraphs from his September 2018 reasons. In relation to the justice and equity of making property orders the primary judge records at [38] of his final reasons the determination recorded in his September reasons at [187] that it was just and equitable to divide the parties’ property, and there records that his Honour maintains that view. His Honour specifically noted that neither party contended to the contrary in the trial.
[3] Of the Family Law Act 1975 (Cth) (“the Act”).
When the reasons for judgment are read as a whole the primary judge’s path of reasoning to his conclusions is not only readily discernible but is obvious. His Honour correctly identifies the legal principles to be applied (and there is no challenge to this on appeal) and comprehensively deals with the issues agitated by each party concerning property interests. As already noted, this primarily related to the wife’s student loan and allegations of the husband’s wastage.
After settling those issues, the primary judge (at [38]) clearly acknowledges the requirements of s 79(2) and states that he remains of the view, expressed at [187] of his September 2018 reasons, that it is just and equitable to divide the parties’ property. His assessment of contributions follows.
In essence, the primary judge was satisfied, firstly, that the parties’ initial contributions were equal (at [39] incorporating [175] of the September 2018 reasons) and, secondly, that the husband made a far greater financial contribution to the pool of assets (at [43]) and that the wife made the greater non-financial contributions through her care of the child (at [44]) with his Honour finding that, contrary to the husband’s submissions, his disability “did adversely impact upon many domains of his life, including his contribution to the household”. That finding is not challenged on appeal.
The primary judge’s consideration of the s 75(2) factors followed with his Honour relying on [181]–[186] of his September 2018 reasons. His Honour found the wife to be capable of employment (even though she was unemployed as at trial) whereas a question mark was over the husband’s ability to return to work (at [50]–[51]). His Honour also stated that he would take into account the husband’s wastage under s 75(2)(o) (at [33]) which statement translated into [52] and [53] as follows:
52.As has been seen, I am now satisfied that the husband has engaged in significant wastage, but I cannot determine the amount of that, save that it is likely to be at least in some tens of thousands of dollars. However as the authorities make it plain, to the extent those funds were derived from a personal injuries payment, they are taken to have been contributed by the husband, not the wife. In a sense therefore, in part, he was wasting that which he brought into the relationship, although about $110,000.00 was by way of two TPD payments.
53.Although at the interim hearing, I was of the view that s 75(2) factors weighed slightly in favour of the husband, given the wastage which has now been established, even though it is unquantifiable, I am now of the view that s 75(2) factors favour the wife. However the extent of the adjustment in her favour is extremely difficult to assess, but it is nonetheless real.
Finally, as for the justice and equity of the orders, his Honour can be seen to explicitly assess the justice and equity of the proposed orders at [58] and also “reverse engineering” those orders to come to the conclusion that a contribution based entitlement of 72/28 in favour of the husband with a 4.6 per cent uplift in favour of the wife for the s 75(2) factors, resulting in an overall 32.6/67.4 split in the husband’s favour, is just and equitable.
The husband’s ground of appeal as stated does not contain any particulars as to in what manner or respect the primary judge’s reasons are inadequate. In oral argument of the application, the husband was unable to articulate any particulars in support of this ground. That is, the ground remained unsupported by any particulars as to how it can be said the reasons are inadequate.
In my judgment, the primary judge’s reasons are comprehensive and there would be no prospect of success of this ground of appeal.
Ground 2 – Wife’s student loan
The husband contends the primary judge erred in finding that the wife would ever repay her student loan. It is a factual challenge. The law relevant to a factual challenge is well known. An Appeal Court should not interfere with a finding of fact if there was evidence on which that finding could be made; that is, if it was reasonably open on the evidence (Edwards v Noble (1971) 125 CLR 296; Richards and Richards (1976) FLC 90-037; Grabar and Grabar (1976) FLC 90-147; Gronow v Gronow (1979) 144 CLR 513). More recently, the High Court in Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 said this at [43]:
… [A] court of appeal should not interfere with a judge’s findings of fact unless they are demonstrated to be wrong by “incontrovertible facts or uncontested testimony”, or they are “glaringly improbable” or “contrary to compelling inferences”.
(Footnotes omitted)
Here, the relevant paragraphs of the trial judgment in which this issue is discussed are [15]–[23]. Most notably, the primary judge records:
16.The husband contends that the wife’s United States student loan, in the sum of $116,611.00, can legally be dealt with by her in a way which might defer repayment of it for perhaps as long as 25 years. That is because, on the evidence before me, the wife could choose an Income Driven Repayment arrangement (“IDR”) which would not see her liable to pay any sum towards reducing the loan so long as she was not living in the United States, and did not earn more than US$104,100.00 in foreign income. Further, the witness called in this respect by the husband, [Mr DD], said at [14] of his affidavit:
Even if she makes more than the exemption amount, which has been increasing roughly US$1,000.00 per year, a payment above zero does not start until an individual shows approximately US$18,000.00. That means [the wife] would need to show an income of US$122,000.00 to have a payment above zero.
17.Apparently if the IDR goes for 25 years, “any amount remaining is forgiven.”
18.However the unchallenged evidence of the wife was that during the currency of any IDR, interest would be accruing on the loan, and would compound. Further, her unchallenged evidence was that she has in the past discharged her previous student loans and regards it as, in effect, immoral not to meet her obligations of repayment, or to use what she sees as legal loopholes to avoid doing so.
(Emphasis added)
There is no challenge by the husband to the primary judge’s finding that the wife’s evidence was unchallenged in relation to the past discharge of previous student loans.
The primary judge articulated the following conclusions with respect to the student loan:
21. I am satisfied of the following matters:
•As at the time of the conclusion of the trial, the wife’s student loan was in the sum of $116,611.00, as agreed by the parties;
•She has presently negotiated a deferral of the payment of that loan, which deferral will shortly expire;
•The wife has no interest in engaging in an IDR, and is not likely to do so;
•The wife has in the past always repaid her student loans, and regards doing so as a moral obligation;
•The wife intends, within no more than 10 years, to return to live in the United States, and (for reasons I identified in the first reasons) if she does so, she is likely to have significant earning capacity.
22.To the extent that the husband inferentially argued that, by not entering into an IDR, the wife was acting unreasonably, I reject that argument. That is because the cost of embarking on an IDR (assuming it did not see repayment) is to have compounding interest accruing. The debt would therefore become larger and larger, the longer it was deferred. The wife will inevitably return to the United States to live. When she does so, she will almost certainly be renumerated at a considerably better income than she can earn in Australia. It would therefore be likely that within 10 years, even if the wife did enter into an IDR, she would then commence repaying the student loan, albeit then in a much larger sum.
23.It therefore follows that I am satisfied that, in determining the pool of assets and liabilities in this case, the student loan should be taken into account at its full value. I assess that there is no prospect of the liability being wholly avoided by the wife by having an IDR for 25 years, and I decline to discount it at all to reflect some possibility that some part of it may ultimately may be forgiven in 25 years’ time.
The findings ultimately reached by the primary judge were clearly open to him upon all of the evidence. Nothing to which the husband directs attention on this application supports any contention to the effect that the findings of fact by the primary judge can be demonstrated to be wrong by reference to “incontrovertible facts or uncontested testimony” or is “glaringly improbable” or “contrary to compelling inferences”.
In short, by this ground, all that the husband seeks to do is to re-argue precisely the same arguments he advanced at the trial with respect to this issue which arguments have been comprehensively determined by the primary judge on evidence that was open to be accepted by the primary judge.
This ground of appeal has no prospects of success.
Ground 3 – Husband’s wastage
By this ground, the husband challenges the primary judge’s finding that he engaged in wastage of the funds he received following his TPD in 2013.
It is important to note the law surrounding wastage. In the seminal case of Kowaliw and Kowaliw (1981) FLC 91-092 the Full Court said at 76,644–76,645:
… if a party has either by deliberate act or by economic recklessness reduced the value of assets available for distribution then the economic consequences which flow therefrom including the resultant burden to the other party are directly relevant to a consideration of the respective contributions of the parties …
…
If a party has acted in the manner to which I have referred earlier either by:
(a)embarking upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)acting recklessly, negligently or wantonly with matrimonial assets the overall effect of which has reduced or minimised their value, then such conduct in my view and the economic consequences which flow therefrom are clearly matters to which the Court may have regard pursuant to the provisions of sec. 75(2)(o).
The relevant paragraphs of the reasons where this issue is discussed by the primary judge at some length are [24]–[33]. Most relevantly, his Honour stated:
26.The parties are agreed that of the $324,965.41 received on 17 May 2016, the $70,000.00 received and the $110,000.00 in TPD payments only $50,000.00 is represented in assets in the balance sheet. The wife says that the husband has unreasonably and excessively wasted the rest of those funds on discretionary spending. Although the husband broadly denies having done so, no real attempt was made by him to demonstrate where those funds have gone.
27.In the first reasons I detailed some of the extensive litigation which the husband has engaged in post-separation. In his oral evidence before me, he contended that a conservative estimate of the legal fees that he has expended in relation to those proceedings is $150,000.00. He was not challenged in relation to that by counsel for the wife, who indeed, appears to have herself spent something in the order of $280,000.00 on lawyers, or at least that is the total of her liability. Neither party sought to add-back legal fees into the pool. However it is plain that some part of the expenditure of the personal injury settlement is accounted for by legal fees.
…
31.I have already observed that the husband has not sought to provide any real detail of where the monies which he received from his personal injuries settlement have gone, nor did he contend that the six week period covered by the statement in 2016 was in some way an aberration. Rather, what he sought to do was to justify his expenditure by reference to his financial statements filed in these proceedings from time to time, which indeed do show considerable expenditure. He was not in any significant way really tested as to the truthfulness of those documents.
…
(Emphasis added)
In his Honour’s September 2018 reasons, the primary judge observed at [167] that the husband was entitled to spend the settlement monies to meet his reasonable living expenses, even though he could not calculate what they were. To meet that statement, in the second stanza of the trial, the wife attempted to formulate an argument to the effect that because the husband’s income (net of tax) during the relationship was approximately $90,000, it could be assumed that that figure represented his reasonable living expenses. Therefore, the wife argued, during the three years after settlement of those proceedings, the husband’s reasonable expenses could be no more than $90,000 per annum. That then, on her case, represented $270,000 over three years and, after considering the husband’s legal fees, left around $85,000 in wastage unaccounted for (at [29]).
The primary judge recorded the following findings on this issue at [32] as follows:
32. I make the following findings:
·In 2016 the husband received, in total, net payments of about $395,000.00 derived from his personal injuries claim settlement followed by $110,000.00 in TPD payments
·By 7 March 2019, almost none of those funds remained represented in any extant asset (although the parties are agreed that a now largely non-existent share portfolio derived from the settlement monies should be in the balance sheet at a figure of $50,000.00);
·In late 2016 the husband was living fairly lavishly, with considerable entertainment expenses;
·The husband has spent at least $150,000.00 of the personal injuries settlement monies on his lawyers in other litigation
·The husband used the personal injuries settlement and TPD funds to meet is reasonable living expenses, which could not have legitimately exceeded $90,000.00 per annum , and were likely less, but I cannot determine their reasonable quantum;
·I am therefore satisfied that there was significant wastage of funds by the husband, but I cannot determine its extent.
The primary judge, because he was unable to determine the precise amount of the wastage, did not add back any notional sum to the pool of assets. Rather, the primary judge determined that this was a matter which should be taken into account under s 75(2)(o).
By reference to [59] of the primary judge’s reasons for judgment where his Honour refers to s 75(2) factors, and as discussed in the course of argument of the application, it cannot be seen that any more than about 5 per cent of the wife’s entitlement was referable to the husband’s wastage. In real money terms, 5 per cent of the net pool as found by the primary judge is approximately $6,400. It is de minimis in the scheme of things.
Nothing to which the husband directs attention in argument of the application demonstrates that it was not entirely open to the primary judge to make the findings of fact he did with respect to the husband’s wastage and to reflect those findings in the method in which the primary judge did.
In short, the husband was unable to identify anything at all in argument of the application as would suggest that this ground of appeal has any merit.
In my judgment, this ground of appeal is entirely lacking in merit.
Ground 4 – The wife’s legal fees
This ground of appeal, or more particularly the arguments sought to be agitated by the husband in support of it, resulted in the orders made by consent on 24 March 2020 on the initial hearing of this application for the wife to make detailed disclosure of various identified documents as to her expenditure of legal fees in the substantive proceedings. The orders made on 24 March 2020 included an order (Order (2)) that the wife provide a statement in accordance with r 19.04(5) of the Rules as to the source of funds for any costs paid by her.
As the reasons for judgment provided for those orders identified,[4] the husband sought to agitate on his appeal, should it be reinstated, an application for further evidence on appeal in an effort to demonstrate that the wife had a source or sources of income or financial resources allowing her to pay significant legal fees which sources or financial resources were not disclosed in the primary proceedings, and thus not taken into account by the primary judge.
[4]Kipling & Netis [2020] FamCAFC 79 at [4]–[6].
The documents the subject of the order were disclosed in advance of the further hearing of this application, as was the wife’s statement pursuant to r 19.04(5). These are annexed to the husband’s further affidavit filed on 25 May 2020 for the further hearing of this application.
However, what is readily apparent from a review of them is that even if these documents were admitted into evidence as further evidence on appeal they would not establish any relevant non-disclosure by the wife in the primary proceedings, nor that she in fact has any undisclosed source or sources of income or financial resources. As set out in the wife’s statement at paragraphs 8 and 9:
8.The total amount of legal fees that was I was charged by Roberts Nehmer McKee, inclusive of the invoices issued prior to February 2017, is $208,053.72. With the agreed cap on professional fees, this amount was reduced to $197,106.69. An amount of $61,568.58 remains outstanding to Roberts Nehmer McKee.
9.The legal fees I have paid to date have been sourced by a combination of the following:
a.My employment income before I stopped working including tax refunds, as can be seen in my bank account statements which have already been provided to [the husband] as part of the discovery process prior to the trial;
b.I drained my US bank account and 401K account, as is clear from my Financial Statements;
c.I maxed out my credit cards in the amount of $16,000 and received a $14,338 payout following a car accident; and
d.The $4,000 costs order which [the husband] paid as a result of Contravention Proceedings in 2017, the $20,000 which was released to me by consent from [NN Legal] in March 2019 and the approximately $25,000 which the Child Support Agency garnisheed from [the husband] and paid to me.
(As per the original)
As that statement reveals, over an extended period of years the wife has actually paid a total of about $140,000 in legal fees from the specific sources she discloses in her statement with about $60,000 remaining outstanding. In passing, this appears to be consistent with the wife’s earlier affidavit filed on 23 January 2020 in this application.
The husband did not advance any case at trial to the effect that the wife’s capacity to pay legal fees was relevant to any assessment of her financial standing or the financial resources available to her. That was so when it was already well known to the husband that the wife had spent or incurred significant liability for legal fees. The primary judge made reference in the reasons (at [27]) to evidence of the wife having spent or incurred a liability for legal fees of as much as $280,000. That amount is obviously significantly overstated in light of the detailed documentation now available, but the critical point is that notwithstanding knowledge by the husband of significant legal fees incurred by the wife no case was agitated at trial to the effect that there was any consequent finding to be made as regards the wife’s disclosure or her financial capacity.
Obviously, a party is bound by the conduct of the party’s case at trial and cannot raise for the first time a new argument on appeal (see Metwally v University of Wollongong (1985) 60 ALR 68).
That aside, the point sought to be mounted by the husband is illusory. The documents reveal, as noted, that rather than a figure like $280,000 the wife’s paid legal fees are in fact no more than about $140,000 (net from the sources identified over a period of years) with an outstanding liability of about $60,000.
In these circumstances, the husband cannot possibly succeed in establishing error on the part of the primary judge or that there is any substance to this ground of appeal. That is so whether or not the husband were to succeed on an application to adduce further evidence on appeal. In fact, the further evidence referred to defeats the husband’s contention concerning the amount expended by the wife on legal fees or the liability she has incurred for legal fees.
It follows that this ground of appeal is devoid of merit.
Conclusion
For the reasons identified the husband’s grounds of appeal are devoid of merit.
In my judgment, it follows that the husband does not discharge the onus he bears on this application to demonstrate that refusal of his application to reinstate his appeal would be productive of injustice. In my opinion, to the contrary, it would be unjust to the wife to allow a meritless appeal to proceed involving as it would the wife incurring significant further legal costs as well as the stress, anxiety and inconvenience involved in her having to defend herself in a meritless appeal.
For these reasons, the application ought be dismissed and no purpose is served by analysing any other discretionary considerations given that none of these overcome the conclusion that this appeal has no merit and ought not be reinstated as that outcome cannot be productive of any injustice.
Costs
In the event the application was to be dismissed, the wife sought costs fixed in the sum of $6,336 as particularised in her Schedule of Costs filed on 18 May 2020.
Those costs include the costs thrown away occasioned by the adjournment of the application on 24 March 2020.
The husband opposed any order for costs primarily on the contention that he is impecunious. If costs are ordered the husband contended that he would require more than three months to make payment. As to that, counsel for the wife submitted that no more than six months ought be allowed for the husband to make payment.
It is clear that the financial circumstances of both parties are modest. As noted, the primary judge concluded that the combined property and superannuation interests of the parties was to be valued at $127,928, but as his Honour also noted there had been significant reductions to that total (at [13] and [14]).
The husband has been wholly unsuccessful in these proceedings within the meaning of s 117(2A)(e). Not only was the wife called upon to defend a meritless appeal, but she was also required to make significant disclosure on the issue of her legal fees, all of which ultimately proved to be unproductive in terms of the husband demonstrating any substance to his complaint.
I am satisfied that there exists justifying circumstances for an order for costs and I am satisfied that the amount of $6,336 is a reasonable and just amount for costs. The husband’s modest financial means ought not operate to deny the wife a meritorious claim for costs in the circumstances (Lenova & Lenova (2011) FLC 93-467; Northern Territory v Sangare (2019) 265 CLR 164).
The husband’s financial circumstances make it reasonable to allow him the six months proposed by the wife from the date of orders for him to make payment of costs to the wife.
For these reasons, I make the orders set out at the commencement of them.
I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 28 July 2020.
Associate:
Date: 28 July 2020
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