KOVACS & KOVACS
[2010] FamCAFC 140
•30 July 2010
FAMILY COURT OF AUSTRALIA
| KOVACS & KOVACS | [2010] FamCAFC 140 |
| FAMILY LAW - APPEAL – PROPERTY – From a decision of a Federal Magistrate – Application to adduce further evidence – Whether the Federal Magistrate erred in adding back moneys to the pool of assets – Whether the Federal Magistrate erred in making a s75(2) adjustment – No error – Application to adduce further evidence dismissed FAMILY LAW - COSTS – Section 117(1) Family Law Act 1975 (Cth) – Parties’ financial circumstances – Husband to pay wife’s costs |
| Family Law Act 1975 (Cth) s75(2); s117(1) |
| Abalos v The Australian Postal Commission (1990) 171 CLR 167 Allesch v Maunz (2000) 203 CLR 172 Browne v Dunn (1893) 6 R 67 CDJ v VAJ (1998) 197 CLR 172; (1998) FLC 92-828 Fox v Percy (2003) 214 CLR 118 Gronow v Gronow (1979) 144 CLR 513 House v R (1936) 55 CLR 499 Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624 Kowaliw and Kowaliw (1981) FLC 92-092 MWJ v The Queen (2005) 80 ALJR 329 Rosenberg v Percival (2001) 205 CLR 434 State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (In Liq) and Others (1999) 73 ALJR 306 West v Mead [2003] NSWSC 161 |
| APPELLANT: | Mr Kovacs |
| RESPONDENT: | Mrs Kovacs |
| FILE NUMBER: | SYM | 8453 | of | 2006 |
| APPEAL NUMBER: | EA | 64 | of | 2009 |
| DATE DELIVERED: | 30 July 2010 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | May, Thackray and O’Ryan JJ |
| HEARING DATE: | 20 May 2010 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 9 April 2009 |
| LOWER COURT MNC: | [2009] FMCAfam 323 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Ladopoulos |
| SOLICITOR FOR THE APPELLANT: | H Danalis & Co |
| COUNSEL FOR THE RESPONDENT: | Mr Maiden SC |
| SOLICITOR FOR THE RESPONDENT: | Willis & Bowring |
Orders
The appeal is dismissed.
The application filed 5 May 2010 is dismissed.
The appellant pay the respondent’s costs to be assessed.
IT IS NOTED that publication of this judgment under the pseudonym Kovacs & Kovacs is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 64 of 2009
File Number: SYM 8453 of 2006
| Mr Kovacs |
Appellant
And
| Mrs Kovacs |
Respondent
REASONS FOR JUDGMENT
Introduction
In an amended notice of appeal filed 19 August 2009 the husband appeals against property orders made by Federal Magistrate Baumann on 24 April 2009.
The grounds of appeal are in the following terms:
1.That his honour erred in adding back to the pool of assets as against the Husband the sum of $80,016, was against the evidence and the weight of the evidence.
2.That his Honour erred in making a Section 75(2) adjustment in favour of the wife.
By leave, the notice of appeal was amended to include one further ground as follows:
3.That His Honour erred in finding that the Wife’s contributions exceeded those of the Husband, such finding not being supported by the evidence or, in the alternative, His Honour failed to give adequate reasons for such a finding.
There are some unusual aspects to this matter. As the Federal Magistrate said in the opening paragraphs of his judgment:
1.When the husband, as he admits, essentially burnt the matrimonial home down in February 2006, not surprisingly the marital relationship which began in 1974 came to an end.
2.The property trial before me dealt less with this accepted event and more with allegations of non disclosure; wasted funds on gambling and the disputes as to the future earning capacity of the Applicant wife, now aged 50 and the Respondent husband, now aged 61.
In summary, the orders of the Federal Magistrate were as follows:
·The parties were to sell the property referred to as Property M by listing it at a price of $730,000;
·The parties were to sell the property referred to as Property V by listing it at a price of $280,000;
·Upon receipt of the net proceeds of sale of Property M the husband’s solicitor was to pay:
(a)to the wife, or as she directed, 50 per cent of the net proceeds of sale of Property M, together with the sum of $108,133.00;
(b)the balance then remaining to the husband;
·The proceeds of sale of Property V were to be distributed in the following manner and priority:
(a)real estate agent’s commission and associated expenses;
(b)legal costs and disbursements on sale;
(c)the balance equally between the parties;
·The wife was declared the sole legal and beneficial owner of Vacant Land, Property R to the exclusion of the husband.
The minutes of orders sought by the appellant husband at appeal provided by his counsel made reference to the sale of both Property V and Property M and that there had already been a partial distribution of the combined net proceeds of sale. Another document provided by counsel for the appellant styled "calculation method for figure in order 2 as sought by the appellant" contained the actual net proceeds of sale of the two properties.
The husband filed an application on 5 May 2010 seeking leave to adduce further evidence pursuant to s 93A of the Family Law Act 1975 (Cth) (“the Act”). This application and the evidence is the crux of the appeal. Senior counsel for the wife was granted leave by us to file a response to the husband’s application. The response was supported by an affidavit sworn by Mr Miller, the instructing solicitor. We will deal with this matter in our consideration of the first ground of appeal.
Reasons for judgment
The Federal Magistrate found that the wife’s contribution exceeded that of the husband during the marriage. He concluded that overall 52.5 per cent should be attributed to the wife’s contribution during the marriage.
The impact of the husband’s conduct, including burning down the parties’ home, was an issue at the trial although not directly on appeal. We will refer to the part of the judgment dealing with those facts and the approach of the Federal Magistrate to appreciate its importance to the overall picture.
In relation to this issue, the Federal Magistrate referred to the submissions of the wife that rather than adding back the sum of $175,000, being the assessed loss of value of the house, the Court should deal with the husband’s conduct as a factor under s 75(2)(o). His Honour acknowledged the authorities referred to by the wife, including Kowaliw and Kowaliw (1981) FLC 92-092, which suggest such conduct be dealt with in that manner. However, the Federal Magistrate decided to treat the matter differently for the following reasons:
9.I am aware of the recognition the Full Court has given to the wide discretion exercisable by a trial adjudicator, shaped and depending upon the circumstances of the particular case, in determining the pool of property (including notional items) available for division. See for example Fosbery (2009) FAMCAFC 51 and the authorities referred to at paragraph [70].
10.Clearly the husband’s actions were reckless and wanton, and the parties pursuant to an order of the Court made 2 April 2008 and also in July 2008, were to obtain a single expert opinion relevantly as to the current value of [Property M] ‘in its current fire damaged state’ and an opinion of the current market value ‘if it remained in its current condition prior to its destruction from fire’. [Mr N] swore an Affidavit on 9 July 2008 attaching a Valuation Report covering these aspects of his instructions. The expert was not required for cross examination. The report reveals a disparity in value of $175,000 which accounts for the ‘add back’ conceded by the husband.
11.Often the conduct said to amount to ‘waste’ or behaviour of the nature described and characterised in Kowaliw, is difficult to quantify. In this case, at least, the value of the real property and fixed improvements has been quantified. This provides, in my view, the bridge (often unavailable) to span what would otherwise be the ‘leap’ over the gap between what Coleman J in Steinbrenner (2008) FAMCAFA 193, described as the qualitative evaluation to a quantitative reflection of such evaluation. Although Coleman J was speaking in the context of contributions, I regard his comments as of assistance in adopting the more transparent approach of ‘adding back’ $175,000 rather than an assessment (usually in percentage terms) of assessing the weight for this factor under s.75(2)(o).
12.I do not ignore the wife’s submissions that there were, unquantified losses for the replacement of goods, furniture and possessions that were contained in the house. That impact of the husband’s conduct will be taken into account under s.75(2)(o).
The appeal centred on the pool of assets as found by his Honour. The parties were able to agree at the trial about both the composition of the assets and their value. The contentious matters were whether sums should be added back.
The total value of the pool (including add backs) was found by the Federal Magistrate to be $1,325,334. The add backs were as follows:
Diminution of value to home caused by the fire
$175,000
Legal fees (defending the criminal charges which related to the husband burning down the house)
$13,940
Funds under control of husband
$80,016
Total
$255,000
Ground 1 of the appeal is directed to the add back of $80,016. In relation to the sum of $80,016, the Federal Magistrate said:
20.The entry however that causes me the most concern is a withdrawal of $80,016 on 25 February 2004 from the St George account number [8] controlled by the husband. During this part of the cross examination the husband had previously conceded he had operated a bank account in Greece. He confirmed he had sent some documents to his sister [Mrs V] in Greece. When pressed to explain his failure to produce during discovery any documents relating to his Greek bank accounts, he said he could not get any and didn’t ask his resident sister to do so. He had clearly sent some funds to Greece (see paragraph 68 and his corrected version that he ultimately brought back $20,000), but I found that his attempts to explain a number of transactions unconvincing – especially for a person who had devoted himself to extracting every possible dollar for interest.
21.Seen within this context, the evidence given by [Mr P] at paragraph 19 that his father (the husband) acknowledged the existence of funds in Greece; and also the evidence given by [Mr S] at paragraph 3 of a similar vein exacerbate the Court’s concerns. I am satisfied that it is more likely than not that the husband does have an account with a bank in Greece. The sons were, quite properly and competently cross examined by Counsel for the husband Mr Foster. Whilst it is possible that these conversations, occurring in the psychiatric ward after the husband had burnt down the house, might in such circumstances be treated with significant caution, the husband’s own evidence given under cross examination (and after he had heard and seen both of his sons being cross examined) persuade me, on balance, that the husband still controls an account with a bank in Greece.
22.When Mr Maiden SC specifically put to the husband the withdrawal of $80,016 the husband said he could have deposited it ‘anywhere’ – but he was unable to produce any Australian bank statement (and many where [sic] produced under subpoena) to reveal a similar deposit. When pressed further he said that he had been aware of the withdrawal ‘yesterday’ and can not work out where it went.
23.He conceded that it was possible he had sent it to Greece. The husband’s passport revealed that the last time the husband had visited Greece was in April/May 2001 – well before the withdrawal being discussed in these reasons.
24.I am satisfied that the husband, on the balance of probabilities, has not fully and frankly disclosed the existence of a bank account in Greece. I am satisfied that there are funds in Greece but the amount of those funds is difficult to ascertain.
25.A long line of authority supports the Court being more robust with the evidence of the husband where the findings as to non disclosure have been made (Weir (1993) FLC 92-338; Black & Kellner (1992) FLC 92-287 for example), and therefore should not be ‘unduly cautious’ in making an order in favour of the ‘innocent party’ – in this case the wife.
26.At paragraph 22, the wife’s Counsel invites the Court to find that the husband did have monies invested in Greece of possibly $100,000 at around the time of the fire. At paragraph 10 of the submissions as to contributions, it is contended that ‘…this matter of non-disclosure can only be reflected in the changing of the percentage to which the wife is entitled.’
27.Because of the clear evidence that $80,016 was withdrawn by the husband in February 2004 from an Australian bank account and was not otherwise credited to another account or otherwise satisfactorily accounted for by the husband, I regard the most transparent manner in which to deal with the evidence is to:-
a)Notionally ‘add back’ as funds still retained by the husband in places unknown (but probably in Greece), the sum of $80,016; and
b)Consider within the context of s.75(2)(o) the husband’s conduct in having access to those funds including likely accrual of interest – without the wife being able to share in those accruals. (emphasis added)
Ground 3 of the appeal relates to the Federal Magistrate’s conclusions in relation to the parties’ contributions during the marriage. We will refer to this ground prior to dealing with ground 2 as those considerations need logically to be appreciated prior to the relevant factors pursuant to s 75(2) being considered.
The parties were married in Greece in 1974 when the wife was 15 years old and the husband was 26 years old. The Federal Magistrate observed the husband’s assets were superior to the wife prior to the marriage, as she immigrated to Australia after the marriage with no assets. The husband had purchased Property C in which the parties lived during the early years of their marriage.
There are three children of the marriage. The eldest son, Mr P, was born when the wife was 16 years old. The Federal Magistrate found she “devoted herself to the role of mother and homemaker”. His Honour continued:
32.The traditional roles of the husband being the “breadwinner” and the wife “the homemaker” were established early in the marriage and generally maintained throughout this long relationship which spanned 32 years to separation in 2006.
The Federal Magistrate recorded that the wife commenced work outside the home as a domestic in 1985 and worked consistently throughout the marriage. He noted the husband’s employment was interrupted by an injury at work which caused him to receive compensation payments mixed with employment income until the husband’s employment was terminated in 1991.
The Federal Magistrate observed the husband was a “very competent (if somewhat strict and frugal) money manager”. He then set out the significant financial transactions which occurred during the marriage, noting there was “no significant controversy” in relation to them. They were as follows:
a)In 1986 the parties purchased the property at … [Property M] for $103,000 with a loan of approximately $70,000. This home was subsequently renovated and improved.
b)In 1987 the husband sold [Property C] for a net return of $78,000 with the proceeds used to discharge the debt on [Property M]. A small balance may have been available to the parties.
c)In 1988, the parties acquired a property essentially as an investment/holiday home at … [Property V] for $90,000 with a mortgage from St George Bank in the region of $74,000. The balance of the funds came from savings including some residual funds from the sale of [Property C]. This home was, for the most part, rented although between gaps in tenants the parties spent time in the home and also maintained the home.
d)In about 1987/1988 the wife inherited [Vacant Land, Property R].
e)In May 1991, just prior to the husband’s termination of employment, he shared in a lotto win – his share being $174,000. I accept this was a “windfall” but as the ticket was purchased during the relationship with funds from the husband’s earnings, it is not a windfall for which he is entitled to claim extra weight as an extraordinary contribution by him.
f)By late 1991, although the husband was then essentially unemployed (he also received a small HIC refund), the parties had funds available of approximately $265,000 at their disposal. Documentary evidence about a number of the transactions at that time – some 17 years ago – appears to have been destroyed in the fire. Although the husband, at paragraph 61 of his Affidavit seeks to explain the use of $234,000, the wife in her submissions at paragraph 11 challenges much of the husband’s evidence. On balance, considering how long ago these transactions occurred, I find that the funds available to the parties from these sources were used to:-
i)Discharge the remaining balance of the mortgage on [Property V];
ii)Purchase a motor vehicle for the wife;
iii)Pay for renovations on [Property M];
iv)Invest $80,000 into a unit trust venture in Melbourne;
v)Transfer some funds, perhaps approximately $20,000 to a bank account in Greece.
Not surprisingly, the wife has little confidence that the husband has totally accounted for all the funds available to the husband at that time, which he managed. It is not disputed that the husband travelled to Greece with [Mr S] in 1993 and stayed for two months. Funds transferred to Greece were used to support hat [sic] holiday. The parties travelled to Greece in 1998 and funds still available in Greece were expended during that holiday.
The Federal Magistrate accepted the funds received from the lotto payment, worker’s compensation and the husband’s termination payment were used for the joint benefit of the husband, the wife and the family. In relation to the unit trust, the Federal Magistrate accepted the funds were returned to the husband’s account in 2001. After summarising the husband’s evidence, his Honour noted there was “no useful purpose in the circumstances… by trying to ‘audit’ the further use of these funds” given the position taken with respect to the add back of $80,016. He continued:
I am satisfied that fairness to both parties has occurred in respect of a number of confusing and challenging financial transactions by the approach I have adopted.
As to the husband’s non-financial and financial contributions, the Federal Magistrate accepted the husband also assisted with the children and maintained and painted the houses owned by the parties and assisted with renovations. Reference was made to the husband’s “modest income” between 1982 and 2005 after his employment was terminated. It is not controversial that the husband has not worked since 2005.
The Federal Magistrate in finishing his consideration of this topic said:
37.Had I not ‘added back’ a sum for the unaccounted withdrawal of $80,016 and also included an allowance for the valuation disparity for [Property M], the wife’s submission for a significant adjustment in her favour for the contribution based entitlements would have had some merit.
38.However when I consider the totality of the evidence and the many and varied contributions made by each party, of both a financial and non-financial character of the length of this long marriage, I regard a slight adjustment to the wife is indicated by a factor of 2.5% - or a disparity of 5% of the pool between the parties. In circumstances where, of course, the husband will be regarded as having received the benefit of $255,000 of the pool for the two major add backs, if I adopted the wife’s contended approach this would amount to an adjustment of greater than 10% (on the smaller pool) in any event in her favour.
Ground 2 of the appeal concerns his Honour’s treatment of the provisions of s 75(2)(o). In particular, it is submitted that his Honour erred in making a s 75(2) adjustment in favour of the wife.
On this topic, after referring to the parties’ current health and employment capacities, the Federal Magistrate concluded:
42.This disparity in positions between the parties would justify in my view an adjustment of not less than 5% in the husband’s favour as contended for by his Counsel.
43.Apart from a consideration of the matters earlier alluded to in these reasons under s.75(2)(o), the other s.75(2) factors would not disturb an adjustment in the husband’s favour. For completeness I find that:-
a)The parties’ current entitlements to superannuation is quite modest. The husband does continue to enjoy the benefits of an allowance from Centrelink;
b)The parties will each, as result of the contribution based assessment have available a reasonable capital sum, and little debt, to either reaccommodate themselves or invest as they wish;
c)The adult children are all self supporting.
The Federal Magistrate rejected the wife’s claim that some allowance should be made for the husband’s gambling.
Acknowledging that he had already “added back” the sum of $175,000 by reason of the husband causing the house to be burned down, his Honour made a further allowance for the value of the contents lost in the fire. He fixed the sum at $33,000 being between 2 to 3 per cent of the pool. (Reasons, [46] – [49])
The Federal Magistrate conclusions in relation to s 75(2) were as follows:
49.In my view the conduct of the husband calls for an adjustment to the wife in the order of 2-3% - which on a pool calculated at $1,325,334 amounts to a payment by the husband to the wife of about $33,000.
50.On the basis that I regarded the adjustment to the husband for the findings under s.75(2)(a) and (b) to be slightly higher than 5% and allowing the wife some adjustment for s.75(2)(o) findings, I would regard an adjustment to the husband of 2.5% on balance as reasonable.
51.This adjustment creates a disparity between the parties of 5% or approximately $65,000.
Discussion
Ground 1 – add back of $80,016
In the submissions on behalf of the husband it was emphasised that the husband at trial denied he had moneys currently deposited in Greece. Further, that the Federal Magistrate relied on the evidence of the parties’ sons but their evidence was not put directly to the husband.
It was submitted by counsel for the husband that there were five matters upon which the Federal Magistrate relied to add back the sum. These were:
· the undisputed evidence that a sum of $80,016 was withdrawn from a St George Bank account controlled by the husband on 25 February 2004;
· the husband’s concession that he had previously operated a bank account in Greece. This was not disputed on appeal;
· the evidence of Mr P;
· the evidence of Mr S; and
· the husband’s inability to provide documentation or give a clear account as to what happened to the funds previously sent to Greece.
A preliminary argument raised by counsel for the husband was that there had been no indication the wife planned to argue that the husband had money in Greece until the affidavits of the two sons were filed, one month before the trial. This, it was submitted, accounted for the failure of the husband to produce any evidence before the Federal Magistrate about bank accounts in Greece.
The parties’ sons gave evidence in their mother’s case at the trial. In an affidavit filed on 24 June 2008 Mr S deposed:
3.After my father was arrested for setting fire to our family home [Property M], my father spent two to three weeks in [Hospital G]. Whilst he was in hospital I visited him approximately every second day for about an hour. On one of my visits to see my father I had a conversation with him to the following effect:
He said:“My lawyer needs a payment of $10,000.00 odd to proceed with the criminal case”
I said: “Do you have the funds?”
He said:“Yes. But I need to transfer the funds from an account in Greece”
He said:“Can you give me the funds and I will give it to you when you need it”
I said: “Yes”
I said:“What funds do you have to cover your legal expenses?
He said:“I have around $100,000.00 in an account in Greece. The funds were in an account that your mother’s sister and your grandma know about, but because your aunty used to work at that bank I transferred the funds to another bank so that they would not know that they were still there and I told them that I had no more money in Greece”
…
11.Approximately two weeks after my father burnt down the house I visited him at S Gaol and had a conversation with him to the following effect:
I said“Dad I need to talk to the insurance company about the fire”
He said“Do whatever you like I don’t care. Tell your mother to deal with it, and make sure she pays the rates as I do not have any money”
I said“What about the money in Greece?”
He said“You don’t tell your mother about that money”
I Said“Ok”
He said“[Mr S], make sure that nobody changes you”
I believed my father thought I was siding with my mother so I said to him words to the effect:
“Dad nobody can influence me. Right now we need to deal with what is at hand and we will talk about what you have done once everything has blown over”
In an affidavit filed on 24 June 2008, Mr P, the parties’ other son, deposed:
18.When my father appeared in a [Sydney Local Court] shortly after the fire I was present with him as was my brother [Mr S]. My father was denied bail and remanded to [S Gaol]. Over the next 3 weeks I visited him 3 times in the gaol. On the first occasion I spoke with him at the gaol, after discussing the retention of a solicitor for his criminal matter, I had a further conversation with him to the following effect:
I said:“Dad, before I go, I want to know one thing – where’s the money?”
There was a pause and my father did not answer. I then said:
“Mum and [Mr J] have no food, no clothes, no blankets, no anything. I need money so they can get by.”
He said:“I can’t get you any money until I get out of here. I will have to transfer it from overseas.”
I said: “So, all the money’s in Greece?”
He said: “Yes.”
I said:“All right, we’ll sort something out and get you out of here”
He said:“By the way, I sent all the title deeds and other important paper work to [Mrs V] (my father’s sister who resides in Greece) three days ago. Can you ring her and make sure she received them.?”
19.After approximately 2 to 3 weeks in [S Gaol] my father was moved to [Hospital G] at the request of his legal advisers. I visited my father at least twice in the hospital. On one of those occasions I had a conversation with him to the following effect:-
I said:‘Dad, did you manage to transfer the money from Greece?’
He said:‘I can’t do it from here. You’ll have to wait until I get out.’
I said:‘You’ve got a fair amount of solicitors’ costs and other major costs. You will need the money soon.’
He said:‘Once I get out I’ll get to my brother’s place and I’ll be able to access the money then.’
Counsel for the husband argued the allegations in the sons’ affidavits were never directly put to the husband in cross-examination, referring to the decision of Browne v Dunn (1893) 6 R 67.
In response to this, senior counsel for the wife referred us to a number of cases where courts have held that a cross-examiner is not required to put “chapter and verse” all matters to a witness when the issues are clear (see MWJ v The Queen (2005) 80 ALJR 329; West v Mead [2003] NSWSC 161; and Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624).
Reference to the transcript of the hearing disposes of the Browne v Dunn argument. We will repeat part of the cross-examination of the husband by Mr Maiden of counsel, which appears at pages 45 and 46 of the transcript:
And you arranged to have moneys sent to Greece at various times? - - - Not correct.
In a way that [the wife] wouldn’t know? - - - Not correct.
And despite that you had been asked by a series of questions by my instructing solicitor … previously, for disclosure of the amounts in various Greek bank accounts, you have never told anyone about what moneys were deposited in the accounts, save for what you’ve put in your affidavit, have you? - - - I don’t understand.
You haven’t produced any documents from any bank account, from any bank account in Greece, save what you now assert to be the position operating moneys in Greece, have you? - - - Because I don’t have them there. Because I do not have them. Because when I set the fire, I didn’t took everything, everything was left in house.
…
And, sir, you could have made contact [with] those banks in Greece? - - - Where?
To get copies of the accounts for this Court if you had chosen to do so hadn’t you? - - - Where? Where?
…
You could have, and I suggest to you should have, made contact with the banks in Greece to obtain documents, copies of documents, to show what moneys you had or didn’t have in accounts operated by you in Greece. That’s what I’m suggesting to you? - - - You mean when, now?
Yes, before we came to Court? - - - Because first of all there’s no accounts there. But another thing you’ve known, I’m a very sick man, and if you are aware of things for the depression, in - - -
FEDERAL MAGISTRATE: You don’t need to ask the question again. You’re not - you’re evading the question. You’ve been asked it a few times and you’re not answering it. Move on, Mr Maiden.
Counsel for the husband submitted the Federal Magistrate failed to take into account the late stage in the proceedings when the assertion was made and therefore the lack of opportunity for the husband to obtain documentation to disprove the allegations.
In response, senior counsel for the wife referred to the wife’s first affidavit in the proceedings, filed on 7 December 2006, some two years prior to the hearing. In paragraph 21 the wife stated:
In the early 1990’s [sic] the husband travelled to Greece to see his family and took $25,000 with him from our bank accounts to invest there because the interest rates on bank deposits were higher than in Australia. To the best of my knowledge and belief at least this amount remains in Greece as I believe the husband has transferred further funds to Greece throughout the marriage.
It was submitted that this was sufficient to put the husband on notice that the wife would be raising this issue at trial. Although the second sentence of the paragraph was excluded by his Honour during the hearing, the husband still had notice of the wife’s assertion that he had monies under his control in a Greek bank account.
Senior counsel for the wife further referred to correspondence between the wife’s solicitors and the husband’s former solicitors seeking particulars of his financial affairs. A copy of this correspondence was annexed to the affidavit filed by leave in response to the application to adduce further evidence.
We note that in a letter dated 20 February 2007, the wife’s solicitors sought particulars in relation to the husband’s financial affairs, specifically whether the husband conducted a bank account “either in Australia or any overseas country” or if the husband transferred any money from Australia to another country during the course of the marriage. The response, dated 20 March 2007, relevantly included the following:
2. We are instructed that our client holds or has held -
(a)St George Bank Account number … in the name of [Mr Kovacs] [sic]. The account remains open.
(b)St George Bank Account number … in the name of [Mr Kovacs] [sic]. The account remains open.
(b)St George Loan Account … in the name of [Mr & Mrs Kovacs] [sic]
(c)St George Loan Account … in the name of [Mr & Mrs Kovacs] [sic] in respect of [Property V]. …
(d)Commonwealth Bank Term Deposit Melbourne Account number unavailable.
(e)National Bank of Greece
(f)[L Bank] Greece.
…
13.We are instructed the parties transferred the sum of $20,000.00 in 1993 to Greece. Those funds were part of the husband’s lotto distributions. We are instructed that part of those funds were utilised by the parties and the parties children in 1998 for a holiday in Greece. The husband further instructs the money was bought back to Australia sometime later deposited to the parties joint account.
In a letter dated 29 March 2007 the wife’s solicitors sought further information, including information regarding the accounts with the National Bank of Greece and the Bank L. In particular, they sought the name and number of the accounts, the period the accounts remained open and any bank statements in relation to those accounts. The husband’s former solicitors responded by letter dated 14 May 2007 but did not elaborate further on the Greek bank accounts. This was noted in a letter from the wife’s solicitors dated 24 May 2007, which stated:
Your client has ignored or failed to provide details in respect of the bank accounts he has disclosed in the National Bank of Greece and [Bank L]. Please provide details of these accounts as requested together with a current balance. Please ensure your client brings the latest statements from those financial institutions with him to the conference on 30 May, 2007.
We have also been referred to a notice to produce directed to the husband which was prepared by Mr Miller and dated 19 July 2008. Included in that is a requirement to produce any documents relating to bank accounts “in any Country” for the preceding five years. In the affidavit sworn 19 May 2010, Mr Miller stated he was not aware of any document relating to the Greek accounts being produced by the husband in response to this notice.
We find no merit in counsel for the husband’s submission that the allegations about the money held by the husband in Greece came late in the proceedings. The matters referred to by senior counsel for the wife, in particular the correspondence, clearly indicates the husband had notice the wife may raise the issue of monies kept in Greece as early as February 2007 when the letter seeking particulars was sent.
Turning to the substantive argument, in relation to the further evidence, we have regard to the principles set out by the High Court in CDJ v VAJ (1998) 197 CLR 172 relevant to the admission of further evidence on appeal in the Family Court of Australia. We refer to a number of key paragraphs of the decision in CDJ v VAJ per the reasons of McHugh, Gummow and Callinan JJ:
104.In the exercise of the discretion conferred by a power such as s 93A(2), the critical factor is the subject matter of the proceedings with which the appeal is concerned. This is because the purpose of the power to admit further evidence is to ensure that the proceedings do not miscarry.
…
109.One consideration in construing s 93A(2) is its remedial nature. Its principal purpose is to give to the Full Court a discretionary power to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors which cannot be otherwise remedied by the application of the conventional appellate procedures. A further, but in practice subsidiary, purpose is to give the Full Court a discretion to admit further evidence to buttress the findings already made.
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111.Still another consideration is that the discretion is given to an appellate court hearing an appeal against an order made in the exercise of original jurisdiction. No doubt it is true that, because the appeal is by way of rehearing, the Full Court's jurisdiction is neither purely appellate nor purely original. … Nevertheless, it is highly unlikely that Parliament in conferring jurisdiction on the Full Court to hear appeals intended that s 93A(2) should be construed in a way that would have the practical effect of obliterating the distinction between original and appellate jurisdiction. Nor can the availability of further evidence relevant to the issues in the appeal be treated as equivalent to a ground of appeal, proof of which prima facie entitles the appellant to a new trial. The power to admit the further evidence exists to serve the demands of justice. Ordinarily, where it is alleged that the admission of new evidence requires a new trial, justice will not be served unless the Full Court is satisfied that the further evidence would have produced a different result if it had been available at the trial. Without that condition being satisfied, it could seldom, if ever, be in the interests of justice to deprive the respondent of the benefit of the orders made by the trial judge and put that person to the expense, inconvenience and worry of a new trial. (endnotes omitted)
Whilst not unfettered it is clear that the discretion to allow evidence to be admitted on appeal is a wide one. As their Honours said:
113.In any event, we cannot accept that the discretion to receive further evidence is so wide that the Full Court can admit further evidence merely because it is useful. Such a criterion is inconsistent both with the nature of the appellate jurisdiction exercised by that Court and with the perceived purposes of s 93A(2).
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115.Other limitations on the exercise of the power arise from the fact that the discretion which s 93A(2) confers must be exercised judicially. In most cases concerned with parenting orders that means that it should only be exercised in favour of the receipt of the further evidence if that evidence is not only relevant to the welfare of the children but is also admissible according to ordinary principles or by statute, and if there is no reason apparent to the Full Court of the Family Court for believing that the evidence is not credible.
Counsel for the husband submitted the further evidence to be adduced indicated that at the time of the hearing before the Federal Magistrate there was no money in the bank account in Greece. To a significant extent, the success of this argument, and indeed this ground of appeal, depends on whether the further evidence should be permitted to be adduced on appeal.
The further evidence is contained in an affidavit of the husband sworn 3 May 2010. Annexed to that affidavit are statements and letters from the Bank M in Greece and copies of two “Inward Telegraphic transfers” from the Bank L in Sydney. A second affidavit containing evidence to be adduced was sworn by an accredited Greek translator. It provides the English translation of some of the Greek phrases contained in the statements from Bank M in Greece.
The bank statement from Bank M is an account in the husband’s name. The statement sets out transactions from 1 January 2004 until the account was closed on 9 August 2006.
Of some significance, we note the phrase “TRANSACTION HISTORY ENQUIRY” appears at the top of the statement followed by the date “02JUL07”. This suggests the statement was at the least prepared in July 2007, more than a year prior to the hearing before the Federal Magistrate. We accept the submission of counsel for the husband that there is no evidence available to the Court that would indicate who had possession of the statement. The husband provided no evidence as to when the document came into his possession. However, we think it reasonable to infer that the date on the document is indicative that this evidence was available well prior to the proceedings in July 2008.
Leaving to one side the question of whether the evidence could have been reasonably available at the trial, counsel for the husband submitted the further evidence sought to be adduced would demonstrate what happened to the $80,016 which was withdrawn from the St George Bank account on 25 February 2004, being funds which the husband did not properly account for.
The statement from Bank M indicates that on 8 March 2004 the sum of $80,000 was deposited in Greece. This, it was submitted by counsel for the husband, was the same money as was withdrawn from the St George Bank account.
The statement also indicates that a number of large withdrawals were made from the Greek account. These were: $30,070 withdrawn on 23 June 2004, $30,064 withdrawn on 27 July 2005, $9,066 withdrawn on 3 May 2006, and $9,567 withdrawn on 22 May 2006. The sum of these figures is $78,767.
Counsel for the husband directed us to statements from the Bank L in Australia which were in evidence before the Federal Magistrate. Those statements show corresponding deposits to the first two withdrawals from the Greek bank account with matching transaction references. These are recorded as $30,000 deposited on 24 June 2004 and $30,000 deposited on 27 July 2005.
Also annexed to the husband’s affidavit of further evidence are copies of two inward telegraphic transfers which indicate that the sum of $9,000 on 3 May 2006 and $9,500 on 22 May 2006 were deposited in the Bank L as well.
The further evidence sought to be adduced indicates that the money withdrawn from the parties’ bank account was transferred to an account in Greece and then largely transferred back to Australia. However, the husband has not adduced any evidence explaining what became of the money once it was deposited in the Bank L bank account. The line of inquiry into the disbursement of the funds does not end merely by demonstrating that the money was transferred back to Australia.
Counsel for the husband submitted that there was evidence before the Federal Magistrate which explained how some of the funds were expended. There was evidence of a gift to the parties’ eldest son of $10,000 contained in the son’s affidavit filed 24 June 2008. In his affidavit, Mr S stated he received approximately $10,000 from his father as repayment for legal fees which Mr S had previously paid. The Federal Magistrate added back the sum of $13,940 on account of legal fees in paragraph 16 of his reasons. Counsel for the husband further submitted there was an “explanation” in respect of $21,940, although he did not provide any further elucidation in respect of this sum.
It was submitted on behalf of the wife that this is an appeal from findings of fact. Reference was made to the well known principles to be found in Allesch v Maunz (2000) 203 CLR 172 and State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) and Others (1999) 73 ALJR 306. We were also urged to consider that line of authority attributing to the Federal Magistrate the advantage of hearing and seeing the witnesses (see Fox v Percy (2003) 214 CLR 118; Rosenberg v Percival (2001) 205 CLR 434; and Abalos v The Australian Postal Commission (1990) 171 CLR 167).
There has been no evidence produced by the husband to explain what happened to the funds once they were transferred from Greece to Australia. No documentary evidence has been adduced to independently verify the submissions of counsel for the husband. Even if we allowed the further evidence to be adduced, it would merely demonstrate that the husband had transferred $80,016 to an account in Greece, then back to an account in Australia, when the monies were somehow disbursed.
We repeat what the Federal Magistrate concluded at paragraph 27 of his reasons:
Because of the clear evidence that $80,016 was withdrawn by the husband in February 2004 from an Australian bank account and was not otherwise credited to another account or otherwise satisfactorily accounted for by the husband, I regard the most transparent manner in which to deal with the evidence is to:-
a)Notionally “add back” as funds still retained by the husband in places unknown (but probably in Greece), the sum of $80,016; … (emphasis added)
We agree with the approach taken by the Federal Magistrate based on the evidence before him. The evidence contained in the further affidavits of the husband would not have produced a different result had it been before the Federal Magistrate.
We would also observe that there was no explanation as to why this evidence could not have been before the Federal Magistrate other than the argument which we have rejected, that this was not an issue of which the husband was aware.
Ground 3 – contributions
The Federal Magistrate dealt with the issue of contributions in paragraphs 29 to 38 of his reasons and ultimately found that the wife’s contributions exceeded those of the husband by 5 per cent. It was submitted by counsel for the husband that there is no apparent basis upon which his Honour could have concluded the wife’s contributions exceeded those of the husband within the reasons.
Counsel for the husband correctly observed that the Federal Magistrate has a broad discretion in determining the parties’ contributions. However, he submitted that there “has to at least be something that somebody can point to to say in this respect, on of the parties’ contributions exceeded the other”.
Senior counsel for the wife submitted this ground challenges the exercise of discretion and thus the Court is bound by well settled principles in this regard (see House v R (1936) 55 CLR 499 and Gronow v Gronow (1979) 144 CLR 513).
The Federal Magistrate might have determined that the contributions of the parties were equal but to attribute a small percentage in favour the wife in the circumstances of this case could not be seen to be outside the range.
Ground 2 – s 75(2) adjustment in favour of the wife
It was submitted on behalf of the husband that his Honour erred in reducing the overall adjustment of “not less than 5%” in favour of the husband to 2.5 per cent because of his conduct.
Counsel for the husband first set out the matters which the Federal Magistrate discussed. They are set out in paragraph 22 and 25 of these reasons.
Counsel first submitted that the Federal Magistrate did not place any weight on allegations regarding the husband’s gambling, the husband’s conduct in burning down the matrimonial home had been dealt with by adding back $175,000 to the pool, and no significant weight was placed on the husband’s non-disclosure. It was submitted, therefore, that the only matter upon which the Federal Magistrate placed any weight in his consideration of s 75(2) was the loss of the household contents after the matrimonial home was destroyed.
The Federal Magistrate stated at paragraph 47 of his reasons that the value of the items lost by the wife in the fire was “not known.” Counsel for the husband referred us to a valuation report prepared by Mr H, a Member of a valuation association. This report was exhibit 15 before the Federal Magistrate.
There was, it seems, a dispute between the parties as to the exact contents in the home at the time. Both the husband and the wife submitted lists of items and separate valuations were carried out on each list. On the wife’s evidence, the total fair market value of the household contents was $21,970. Based on the husband’s list it was $8,145. This meant there was a $13,825 discrepancy between the two valuations.
The report was prepared pursuant to an order made on 2 April 2008, some two years after the matrimonial home was burned down. To that extent, its value is limited. Mr H never viewed any of the items and the valuation is to that extent speculative.
It was submitted by counsel for the husband that if the adjustment in favour of the wife was to compensate her for the loss of the household contents then based on the valuation report at the highest, the wife should have been compensated in the amount of $21,970. It was submitted the adjustment of 2.5 per cent was in fact nearly three times that amount and therefore beyond his Honour’s discretion.
Senior counsel for the wife submitted the Federal Magistrate’s adjustment was discretionary and within the range available to him. It was submitted that his Honour made the allowance to the wife to compensate her for possessions lost in the fire caused by the husband and this fell within the concept of “waste” as set out in Kowaliw.
As to the probative value of the report, senior counsel for the wife acknowledged that the evidence showed there were items lost by the wife which the wife was unable to take with her, and they had a value.
We are of the view that the Federal Magistrate has properly accounted for the adjustment in paragraph 48 of his reasons when he said:
The replacement cost of [the household] items is likely to be greater than the market value of the items at the time of the fire. Some items are, distressingly, unable to be replaced such as family photographs and articles inherited or handed down.
The Federal Magistrate had a broad discretion. We are not persuaded that the adjustment of 2.5 per cent in favour of the wife went beyond the reasonable range available to him.
Conclusion
In view of our conclusion that the further evidence would not produce a different result, we will not allow the application. In the absence of any further evidence to explain the transactions, we are of the view that the approach taken by the Federal Magistrate was correct. As to the other grounds of appeal, no error has been demonstrated in the exercise of discretion.
Costs
At the conclusion of the hearing we heard submissions as to costs.
Senior counsel for the wife submitted that if the appeal was unsuccessful, an order for costs should be made against the husband. We are informed the wife’s costs in the appeal are in the sum of $24,200 (inclusive of GST), including $11,000 for counsel and $13,200 for the solicitor.
The appeal and the application to adduce further evidence have been wholly unsuccessful. Section 117(1) of the Act requires the Court to consider a number of matters. There must be factors relevant to the appeal that would justify an order for costs. In this case an order should be made, primarily because the appeal was unsuccessful and was reliant on adducing further evidence. As we have said, there was no explanation as to why this evidence could not have been presented at trial when there clearly was an issue about moneys held by the husband in Greece. Secondly, the evidence as now tendered by the husband did not provide an explanation of the use of the funds under the husband’s control.
Taking into account the parties’ respective financial circumstances, the husband should pay the wife’s costs.
I certify that the preceding seventy-nine (79) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date: 30 July 2010
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