LAM & RAM
[2005] FamCA 868
•13 September 2005
[2005] FamCA 868
FAMILY LAW ACT 1975
IN THE FULL COURT OF
THE FAMILY COURT OF AUSTRALIA
AT SYDNEY
Appeal No. EA 101 of 2004
File No. NCF 2619 of 2002
IN THE MATTER OF:
LAM
Appellant/Wife
- and -
RAM
Respondent/Husband
REASONS FOR JUDGMENT
BEFORE:Kay, Holden and Boland JJ
HEARD:6 April 2005
JUDGMENT: 13 September 2005
APPEAL SUMMARY
MATTER:LAM and RAM
APPEAL NUMBER: EA 101 of 2004 (NCF 2619 of 2002)
CORAM:Kay, Holden and Boland JJ
DATE OF HEARING: 6 April 2005
DATE OF JUDGMENT: 13 September 2005
CATCHWORDS:
APPEAL – property – whether contribution based assessment gave insufficient weight to wife’s homemaker and parenting contributions – whether nil adjustment for s 75(2) factors appropriate – whether precise apportionment of husband’s workers’ compensation payment necessary in assessing s 75(2) factors – whether findings about wife’s future earnings as a solicitor were open on the evidence – whether appropriate weight given to wife’s responsibility for the daily care and control of the children – whether the orders were manifestly unjust – whether the sale of the matrimonial home pursuant to the orders resulted in a reduction of the amount available for distribution to the parties and an inability to give effect to trial Judge’s findings – effect of an “all monies” mortgage – practice and procedure – whether medical and other expert reports annexed to the husband’s affidavit should be admitted rather than those reports being subject of individual affidavits – whether evidence should be admitted where no notice given pursuant to s 67 of the Evidence Act 1995 (Cth) – whether evidence should be admitted pursuant to s 78 of the Evidence Act – whether further evidence and submissions permitted on appeal in light of Allesch v Maunz (2000) 203 CLR 172; (2000) FLC 93-300; (2000) 26 Fam LR 237
Mallet v Mallet (1984) 156 CLR 605
Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621
Norbis v Norbis (1986) 161 CLR 513
Pierce v Pierce (1999) FLC 92-844
Ferraro and Ferraro (1993) FLC 92-335
Tsang Chi Ming v Uvanna Pty Ltd (t/a) North West Immigration Services (1996) 140 ALR 273
Clauson and Clauson (1995) FLC 92-595
C and C (2005) FLC 93-220
Allesch v Maunz (2000) 203 CLR 172; (2000) FLC 93-300; (2000) 26 Fam LR 237
G and G [2001] FamCA 1453
Ruscoe and Walker (2003) FLC 93-093
Appeal allowed.
Introduction
This is an appeal by the wife against orders made by Cohen J on 27 August 2004 under s 79 of the Family Law Act 1975 (Cth) (“the Act”) the effect of which was to divide the parties’ modest asset pool of $270,432 in the proportions of 65 per cent to the husband and 35 per cent to the wife. The trial Judge also made parenting orders in respect of contact arrangements for the parties’ two children, A and K, who were aged respectively 14 years and 8 years at the date of the trial. The parenting orders are not subject of this appeal.
The gravamen of the wife’s appeal is that the trial Judge’s assessment of the parties’ contribution based entitlement, and failure to make an adjustment in her favour for relevant s 75(2) factors, resulted in orders which are manifestly unjust. The wife asserts firstly, that the trial Judge’s contribution based assessment gave insufficient weight to her contributions, particularly her homemaker and parenting contributions. Secondly, she asserts that the trial Judge’s findings about her future earnings as a solicitor were not open on the evidence, and that the trial Judge failed to give appropriate weight to her primary responsibility for the daily care and control of the children, whilst in receipt of modest child support from the husband.
We granted leave to the wife to adduce new evidence on the appeal. In summary, that evidence, which comprised an affidavit by the wife’s solicitor, was to the effect that on the sale of the matrimonial home, which was completed on 19 January 2005, the mortgagee, the National Australia Bank (“NAB”), deducted additional sums to those in evidence before the trial Judge to discharge loans secured against the matrimonial home pursuant to an “all monies” mortgage. The wife asserts the result is that the amount available for distribution to the parties was reduced. She further asserts as a result she will not receive the sum of $71,952 as contemplated in Order 5(a) of the trial Judge’s judgment.
Before us, counsel for the husband indicated that, in the event the appeal was successful, the husband would wish to put further evidence before us about sums expended by him to prepare the matrimonial home for sale and the repayment to the NAB of an overdraft account of which there was no evidence before the trial Judge. We will return to this submission later.
Relevant background
The judgment and Court record discloses the following relevant history of the parties.
At the date of the trial the wife was aged 38 years and engaged in full time studies in the Faculty of Arts at university. Pursuant to consent orders made in 2002 the wife was the primary caregiver of the children.
At the date of the trial the husband was aged 46 years. He was engaged in carrying on his profession of occupational therapy through a company (“the company”). The husband was living in a de facto relationship with Ms M.
The parties commenced cohabitation in August 1986. They were married in February 1987 and separated in April 2001. A Decree Nisi of Dissolution of the marriage was pronounced in May 2004.
At the commencement of cohabitation the wife was engaged in full time employment as a nurse. She had assets to a total value of approximately $3,000. The husband was engaged in full time employment as an ambulance officer having commenced such employment in 1979. He had property, excluding his interest in the property in the New South Wales Hunter region (“the matrimonial home”), worth $50,000 including savings of $4,000, an endowment insurance policy worth $10,000 and superannuation of $6,000.
In about 1985 or 1986 the matrimonial home was acquired for a purchase price of $102,000. The husband contributed $75,000 from his accumulated savings and the additional sum of $2,000 towards the cost of the purchase. The balance of $25,000 was obtained by way of borrowings. At the date of trial the matrimonial home had an agreed value of $495,000.
In December 1989 the husband, during the course of his employment as an ambulance officer, sustained a work related injury and commenced receiving weekly payments of workers’ compensation. The husband thereafter engaged in university studies and obtained degrees in occupational therapy and health administration.
The parties’ first child, A, was born in March 1990.
In 1991 the husband received the proceeds of an accident insurance policy of $120,000. He subsequently received workers’ compensation payments totalling approximately $26,000.
In 1995 the husband commenced his own practice as an occupational therapist. The husband also derived income from part time work as a musician/music teacher.
From cohabitation until 1987 the wife engaged in full time employment as a nurse. She thereafter engaged in casual work until 1989. Between 1988 and 1994 the wife commenced her own business as a musician, but her venture was unsuccessful.
The parties’ second child, K, was born in April 1996.
The wife was the primary caregiver of the children after each of their respective births.
In September 1997 husband redeemed his workers’ compensation entitlements and received a lump sum payment of $120,000. In addition the husband received a pay out from his superannuation fund of $48,000 in cash which was partly rolled over to a new fund, and the balance, being the sum accessible to the husband, applied to the family’s living expenses.
At separation the children remained living primarily with the wife, and at the date of the trial they were living with her in rented accommodation in the New South Wales Hunter region.
In March 2003, following a bushwalking accident, the husband’s orthopaedic surgeon diagnosed joint problems with the husband’s knee. He underwent an arthroscopy of his right knee in March 2003.
From separation until July 2003 the husband remained living in the matrimonial home.
Approximately 18 months after the date of separation the husband commenced a de facto relationship with Ms M.
The trial Judge’s judgment
At the commencement of his reasons for judgment relevant to the parties’ competing property applications, the trial Judge set out the parties’ living arrangements at the date of trial, noting the wife was a full time student in the Faculty of Arts at university as well as being the primary caregiver of the two children. His Honour said of the wife “[s]he intends to commence studying law when she finishes her Arts degree and expects to commence practicing as a solicitor at the start of 2008”. He noted that the wife had not re-partnered.
The trial Judge recorded that the husband was an occupational therapist engaged in full time work through the company. He noted that the husband was living in the New South Wales Hunter region with Ms M, who was employed to do secretarial work through the company. He further recorded that Ms M had no significant assets or income.
The trial Judge then set out the parties’ respective circumstances at the commencement of cohabitation, and after recording the purchase price of the matrimonial home, the husband’s contribution to the purchase price of $77,000 and borrowings of $25,000 to complete the purchase, noted “[t]he husband brought other substantial funds into the relationship”.
Thereafter, the trial Judge set out the circumstances of the husband’s industrial accident, his enrolment in tertiary studies and completion of two courses, namely occupational therapy and health administration. He noted the husband initially obtained part time work after his graduation “but he was soon able to increase his working hours to the point where he sometimes worked as much as 80 hours each week”.
His Honour also recorded the effect of the husband’s injury on his ability to work and said “[a]bout 2 ½ years ago he was advised by his doctors that, to limit his pain and extend his working life and put off the inevitable operation, he should not work for more than 40 hours each week”. The trial Judge noted the dispute between the parties as to hours worked by the husband in his business. The trial Judge carried out calculations about the husband’s earnings and concluded:
“My calculations show that, if it is assumed in accordance with the husband’s evidence that he worked 49 weeks each year, he worked a little more than 35.6 hours each week.. (sic) In fact, he worked fewer than 49 full 5 day weeks and only worked more than 40 hours a week on 3 or 4 occasions.”
Thereafter, the trial Judge set out the history of the wife’s employment noting in 1988 the wife attempted to start her own business mainly as a musician. His Honour said “[i]t is quite unlikely that the wife worked much in other employment or earnt much once she became pregnant with [A]. She has provided no details of her earnings to 1994. It is likely that, once she left full-time nursing, they were quite modest”. Having noted that A was born shortly after the husband’s industrial accident, the trial Judge recorded his acceptance of the wife’s evidence that she had always been the primary caregiver of the parties’ children.
His Honour recorded the wife “did a little work” for the husband’s company, and accepted the husband’s evidence that her contribution in this regard was not significant, although he noted that “the wife did contribute by being a director and secretary of the company until early 2002, thereby allowing the tax benefits of the husband’s practise (sic) to be operated through the company”. His Honour concluded “[h]er contribution in this respect was no greater or less than that of the husband for the same period for the same type of contribution”. The trial Judge concluded that the incomes received by the parties from the company were “primarily the result of the husband’s efforts”.
Having concluded that the parties’ homemaking contribution until the date of the husband’s industrial accident were shared, his Honour said “[i]t is likely that the wife then did nearly everything involved in homemaking and, after each child was born, in parenting”. He further said “[i]t is highly likely that from the time of his accident until separation the husband did very little by way of homemaking and left this to the wife”.
At paragraphs 43 and 44 the trial Judge set out his findings in respect of the parties’ assets and liabilities, concluding that the parties had property having a net value of $270,432.
The trial Judge dealt with submissions made on behalf of the wife that a share portfolio previously worth $48,000 should be included in the pool of assets to be divided between the parties. His Honour rejected that submission. The wife also asserted that a nil value should be attributed to the company and that the debts of the company totalling $60,000 should be ignored. The trial Judge made a finding that the sum of $10,000 borrowed by the husband from Citibank should be included as a liability of the husband. The trial Judge further found that a debt of the company of $50,000 to the NAB secured over the matrimonial home should be discharged. He thus included this debt in the list of assets and liabilities available for distribution between the parties. There is no challenge before us as to his Honour’s treatment of the share portfolio or the company valuation. As has already been referred to by us, subsequent to his Honour’s judgment, the debt of the parties to the NAB crystallised on the sale of the matrimonial home, with the debt exceeding figures provided to the trial Judge.
His Honour then commenced his assessment of the parties’ respective contributions. His Honour set out the lump sum payments received by the husband as a result of his industrial accident, and his findings about the superannuation payment received by the husband.
The trial judge concluded that the husband received a total sum of $314,000 as a result of his back injury, and found that such sum “must be regarded as part of his contribution to the marital property now available for division”.
The trial Judge thereafter assessed the wife’s contributions, noting her predominant contribution in her homemaker and parenting role, and said:
“I am also conscious that for much of the relationship the husband could contribute little to homemaking and parenting because of his physical impairments. I regard the wife as having made very substantial contributions as a homemaker and parent and relatively small financial contributions.”
The trial Judge then set out his assessment of the husband’s financial contributions, which he summarised at paragraph 55 as follows:
“The husband’s financial contribution from the work he has actually performed has been less than might ordinarily be the situation, despite his original attempts once he started working as an occupational therapist, to make up for lost opportunities by working up to 80 hours per week for a year or more. But his contributions by way of lump sum income together with what he virtually brought into the marriage have been quite substantial, especially by comparison to what is left for division.”
The trial Judge then made a finding that, weighing up the relevant contributions, “the husband has contributed 65% and the wife 35% to the parties’ current net property”.
His Honour then turned to consideration of relevant factors under s 75(2) of the Act. His Honour made a finding that the “husband will need a discectomy and / or a spinal fusion at some time in the future”. He further found that the operation “will cost a substantial amount” and that the husband would not be covered by medical and hospital benefits. His Honour referred to evidence in the husband’s case that, in April 2003, he received a quotation of approximately $18,500 for theatre fees, hospital accommodation, physiotherapy and a possible prothesis associated with a discectomy and possible spinal fusion.
The trial Judge also referred to the husband’s likely loss of earnings before and after surgery. He also referred to a knee injury sustained by the husband whilst bushwalking, and its sequelae.
The trial Judge assessed the nature of the husband’s work as an occupational therapist and found limitations on the type of work the husband could undertake. His Honour concluded at paragraph 61:
“The husband’s physical problems together with his age produce extremely poor prospects of retaining his current earning capacity for more than a few years.”
The trial Judge noted that the husband’s recent earnings were approximately $75,000 gross per annum, and that after the proceedings were completed and his liabilities were discharged, he would be able to pay himself a higher wage. His Honour said that the husband would have to re-house himself, have expenses associated with contact, and his working life would be interrupted by his medical problems “and will not, in any event, be lengthy”.
The trial Judge noted that the husband’s de facto partner, on completion of her studies, would be in a position to share living costs with the husband.
The trial Judge then compared and contrasted the wife’s position with that of the husband and made the following finding at paragraph 64:
“By comparison with the husband, the wife is likely, after graduating in law as I think is quite likely in a few years, to have a long and increasingly lucrative working life. It will commence at about the time when the parties’ older child will be about 18 years or more and the younger child will be about 13, so they will be sufficiently independent to present little impediment to the wife’s ability to work in paid full-time employment as a lawyer. The wife’s health is not said to be anything but good. She should have about 20 years or more to engage in income earning activities.”
The trial Judge noted that the wife’s current earnings were derived from social security payments and that she had a liability to pay rent of $210 per week. His Honour also noted that the children attended private schools, and that the responsibility for the fees incurred would be probably met by the wife.
The trial judge considered the wife’s need for housing and concluded “[h]er need for appropriate accommodation is immediate and strong”.
The trial Judge thereafter considered the wife’s responsibility for parenting the parties’ two children and concluded:
“This does not appear to me to be very great because of the ages of the children and their likely increasing levels of self-reliance.”
The trial Judge then considered the issue of child support, noting the wife’s claim that the husband was in arrears to the extent of $6,804, the husband’s assertion that he had challenged the assessment, and even if the assessment was not changed the arrears, as asserted, were incorrect because he had made substantial payments.
The trial Judge concluded his findings about child support and said:
“In section 79 proceedings it is my view that past payment or non-payment of child support is relevant only to decide how the actual cost of caring for the children will be met in future; that is, to decide to what extent the actual cost of child care is likely to be borne by each party and, therefore, whether an adjustment should be made to the division of property to make it just and equitable with regard the situation with each party’s income, assets, costs of child rearing and other relevant circumstances such as the fact that the children attend a private school.
…I expect that the husband will meet whatever sum he is assessed to pay for child support, despite what appears to be a tendency to artificially reduce his earnings and, therefore, his child support liability.”
Having discussed the parties’ legal costs incurred in respect of the proceedings and the advantages and disadvantages of each of the parties’ superannuation entitlements, the trial Judge concluded “that, if there is no adjustment for the section 75(2) factors referred to, a just and equitable division of the parties (sic) property will be achieved”.
His Honour said:
“The main factors which have exercised my mind in reaching this conclusion are the husband’s and wife’s respective earning capacities and working lives, the prospect of the husband having to pay substantial unclaimable costs for back surgery, the husband’s current higher earning capacity and the need for both parties to house themselves and the children. The latter need in the wife’s case is immediate and greater because the children will be living with her but will be more like casual visitors to the husband. It is also in the face of a lower entitlement based on contributions and her current very low earnings and immediate earning capacity.”
His Honour concluded his assessment of contribution based entitlements and relevant s 75(2) factors and said “[a] weighing of all the matters I have referred to above leads to the conclusion that the husband has contributed 65% and the wife 35% to the parties’ current net property”.
At paragraphs 77 and 78 of the judgment the trial judge set out his calculation of the parties’ entitlements noting that the wife’s entitlement of 35 per cent of the net assets was $94,652. His Honour found that the wife retained property to the value of $22,700 and that the husband should make a cash adjustment to her of $71,952. This finding was predicated on the basis that the husband paid the sum due to the wife within two months. Thereafter, the trial Judge proposed that the matrimonial home should be sold, and after discharge of “both mortgages and payment of all expenses of and associated with the sale the husband should be able to take $65,412 to meet his debts”.
The trial Judge found that the husband would retain assets, excluding the balance of proceeds of sale of the home, of $63,790. His Honour then carried out a calculation which, taking the parties’ retained assets into account, required a further payment to the wife of $11,648 from the proceeds of sale of the matrimonial home, and the balance then remaining to be divided between the parties as to 35 per cent to the wife and 65 per cent to the husband.
Grounds of appeal
The wife relies on the grounds set out in her Amended Notice of Appeal filed 2 December 2004.
In his written summary of argument, counsel for the wife deals with the appeal grounds seriatim. Counsel for the husband groups grounds 2 and 4, and 7 and 8. There is some overlap between the grounds to which we will refer later. We have found it convenient to group grounds 5 and 6, and 7 and 8.
Relevant law
The law governing this appeal is not in doubt. In Mallet v Mallet (1984) 156 CLR 605 at 634, Wilson J, quoting Kitto J in Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621, said:
“...the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance: House v. The King (1936) 55 CLR 499, at pp 504, 505.”
In Norbis v Norbis (1986) 161 CLR 513 at 540, Brennan J said:
“The ‘generous ambit within which reasonable disagreement is possible’ is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.”
Ground 1
That the learned trial judge (sic) erred in failing to give sufficient weight to the wife’s contributions pursuant to s.79(4)(a), (b) and (c) of the Family Law Act 1975 as amended.
In the written submissions prepared by counsel for the wife at trial he sets out the factual background history as recorded by the trial Judge, including his Honour’s finding of the substantial contribution by the wife as homemaker and parent. He submits “[a]dditionally and significantly from December 1989 to early 1995 the wife cared for the husband whilst he was incapacitated following his work related accident”. He also notes the necessity for the wife to manage household finances on a reduced income, and finally, that from separation until the date of trial, a period of approximately three years and three months, the wife continued her role as primary caregiver of the children. He asserts “[e]ven taking into account the husband’s various countervailing contributions such finding as to contributions failed to give sufficient weight to the wife’s various contributions made from August 1986 to July 2004”.
Discussion
There is no dispute about the parties’ initial contributions. The husband’s total initial financial contribution as found by the trial Judge, and which is not subject to challenge, was approximately $125,000. This must be compared and contrasted with the wife’s modest assets of $3,000 at the commencement of cohabitation. The husband’s pre-cohabitation assets provided the substantial equity in the matrimonial home at the time of its acquisition.
The weight to be given to disparity in initial contributions is subject of decided authority, see Pierce v Pierce (1999) FLC 92-844 at paragraph 28 where the Full Court said:
“In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.”
In our discussion of ground 3 we deal with the issue of the challenge to evidence admitted by his Honour in respect of the husband’s injury sustained during his employment as an ambulance officer. However, it is not in dispute that the husband made very significant financial contributions by way of his insurance payout, redemption of his workers’ compensation entitlements, and superannuation entitlements.
The essential thrust of the submissions made by counsel for the wife before us was that the trial Judge had failed to give sufficient weight to the contributions of the wife as homemaker and parent, and her assistance to the husband after his industrial accident.
The weight to be given to disparate contributions, particularly in a very long term marriage, is subject of well known authority (see Mallet; Ferraro and Ferraro (1993) FLC 92-335). In Ferraro the Full Court at 79,572 noted the difficulty in comparing parties’ respective contributions, albeit not having regard to, as in this case, significant disparity of initial contributions as follows:
“The task of evaluating and comparing the parties’ respective contributions where one party has exclusively been the breadwinner and the other exclusively the homemaker, is a most difficult one to perform because the evaluation and comparison cannot be conducted on a ‘level playing field’. Firstly, it involves making a crucial comparison between fundamentally different activities, and a comparison between contributions to property and contributions to the welfare of the family. Secondly, whilst a breadwinner contribution can be objectively assessed by reference to such things as that party’s employment record, income and the value of the assets acquired, an assessment of the quality of a homemaker contribution to the family is vulnerable to subjective value judgments as to what constitutes a competent homemaker and parent and can not be readily equated to the value of assets acquired. This leads to a tendency to undervalue the homemaker role.”
In Mallet Gibbs CJ said that the balancing of financial and homemaker contributions depends “entirely on the facts of the case”. The High Court rejected equality as a starting point, with Mason J (with whom Deane J concurred) noting instead that:
“…the Court must in a given case evaluate the respective contributions of husband and wife under para. (a) and (b) of subsec. [79](4), difficult though that may be in some cases. In undertaking this task it is open to the Court to conclude on the materials before it that the indirect contribution of one party as homemaker or parent is equal to the financial contributions made to the acquisition of the matrimonial home on the footing that that party’s efforts as homemaker and parent have enabled the other to earn an income by means of which the home was acquired and financed during the marriage. To sustain this conclusion the materials before the Court will need to show an equality of contribution – that the efforts of the wife in her role were the equal of the husband in his.
No doubt a conclusion in favour of equality of contribution will be more readily reached where the property in issue is the matrimonial home or superannuation benefits or pension entitlements and the marriage is of long standing. It will be otherwise when the property in issue consists of assets acquired by one party whose ability and energy has enabled the establishment or conduct of an extensive business enterprise to which the other party has made no financial contribution and where the other party’s role does not extend beyond that of homemaker and parent.”
Counsel for the wife conceded that, before the trial Judge, the wife’s then counsel submitted the parties’ contribution based entitlements should be assessed as to 45 per cent by the wife and 55 per cent by the husband.
We are satisfied that the initial contributions of the husband, together with his lump sum contributions by way of his disability insurance payout, his workers’ compensation payments and redemption of workers’ compensation rights, were matters entitled to substantial weight in the husband’s favour by the trial Judge. The trial Judge balanced those contributions against the wife’s significant homemaking and parenting contributions both pre and post separation and gave recognition to those contributions.
In his assessment of contribution it has not been demonstrated before us that the trial Judge relied upon any extraneous fact or circumstance in his assessment of the parties’ respective contributions, nor has it been demonstrated that he failed to have regard to any relevant fact or circumstance.
Whilst the assessment of contribution based entitlements may be regarded as favourable to the husband, nothing before us leads us to the conclusion that assessment of contributions was outside the exercise of the “generous ambit within which reasonable disagreement is possible”. Accordingly we find no merit in ground 1.
Ground 2
That the learned trial judge (sic) wrongly admitted into evidence, evidence relative to the husband’s health, earning capacity, income and the need for and the costs of future operative treatment.
The challenge before us in respect of admissibility of evidence relates principally to the trial Judge’s admission, over objection of the wife’s counsel, of medical and other expert reports annexed to the husband’s affidavit, rather than those reports being subject of individual affidavits by the relevant medical practitioners and other experts. It is not in dispute that no notice was given, pursuant to the provisions of s 67 of the Evidence Act 1995 (Cth) (“Evidence Act”), to the wife’s solicitors prior to the trial. The wife’s counsel did not seek to lead any medical evidence in her case.
Having overruled the objections raised by the wife, the following exchange took place between the trial Judge and counsel for the wife at trial:
“[COUNSEL FOR THE WIFE AT TRIAL]: Yes and then we object to each of the annexures, annexures L and M to that paragraph on the basis they’re hearsay your Honour.
HIS HONOUR: Yes, I’ll overrule those objections.
[COUNSEL FOR THE WIFE AT TRIAL]: Yes thank you your Honour. Your Honour, paragraph D---
HIS HONOUR: And it would be too expensive to require these doctors when there’s no real dispute about the situation.
[COUNSEL FOR THE WIFE AT TRIAL]: Yes your Honour.
HIS HONOUR: And there is no evidence to the contrary.
[COUNSEL FOR THE WIFE AT TRIAL]: Your Honour, there will be cross-examination of the husband in relation to his earning capacity.
HIS HONOUR: In the event that something occurs that allows you to make an application to have those doctors or any of them available to be cross-examined, I’ll hear such an application.
[COUNSEL FOR THE WIFE AT TRIAL]: Yes, thank you your Honour.”
There is no dispute that no subsequent application was made by counsel for the wife to cross-examine the doctors.
Although the transcript appears to indicate that the trial Judge upheld the objection in respect of a letter from the Hospital dated 7 April 2003, being annexure Q to the husband’s affidavit sworn 8 July 2004, following examination of the husband’s affidavit from the Court file, it was not disputed before us that the letter was admitted into evidence, and the husband’s own evidence about his condition and lack of availability of hospital and medical benefits for future surgery was struck out.
The trial Judge overruled an objection by the wife’s counsel that the words “partially…disabled” should be struck out from paragraph 21 of the husband’s affidavit. The trial Judge admitted the evidence pursuant to s 78 of the Evidence Act.Similar objections were raised about parts of paragraphs 32 (in addition to objection about annexures referred to in that paragraph) and 38, the latter objection being upheld. We are satisfied that the basis for the admission of the evidence of the husband was reasonably open to the trial Judge.
Counsel for the husband submits that the trial Judge’s decision in admitting the medical and other expert reports was a proper one, notwithstanding that no notice was given under s 67 of the Evidence Act, the decision being one based on proportionality, having regard to the parties’ modest asset pool, and costs involved in obtaining expert evidence. He relies on the observations of Hill J in Tsang Chi Ming v Uvanna Pty Ltd (t/a) North West Immigration Services (1996) 140 ALR 273 at 282.
Notwithstanding that formal written notice was not provided to the wife’s solicitors, we are satisfied that no prejudice was caused to the wife by the trial Judge’s ruling in respect of the medical and other reports relevant to the husband’s injury. We find merit in the submission made by counsel for the husband. Accordingly this ground is not established.
Ground 3
That the learned trial judge (sic) erred as he made a mistake as to the facts relative to the “compensation” moneys received by the husband consequent upon his 1989 work related accident and its apportionment as to past and future wages loss and future medical expenses.
The counsel for the wife submits that the trial Judge was in error in his finding in respect of funds received by the husband during the parties’ cohabitation as a result of his work related injury. His Honour said:
“In relation to the monies the husband received as a result of his injuries, although they have all been submerged in current property or spent on living or for other marital purposes, some of those monies were paid to meet future loss of earnings, to compensate the husband for future costs of medical treatment and for future pain and suffering. I cannot say precisely what proportions have been intended for these purposes. Certainly, the insurance and redemption monies and the payments for loss of use of his legs and his partial back disability involve such elements. I am quite satisfied that the husband will need a discectomy and / or a spinal fusion at some time in the future. Such an operation, while not likely to effect a compete cure, will cost a substantial amount. The husband will not be covered by medical and hospital benefits. He is likely to lose much time from work because of it but, because it will have become necessary, is likely to have suffered much lost working ability beforehand.”
The wife’s counsel also refers to the trial Judge’s finding at paragraph 76 of his reasons where he set out his conclusions for his determination that there should be no adjustment under s 75(2) in favour of either party.
It is submitted on behalf of the wife:
“…there was no admissible evidence…as to:
· the precise apportionment of these monies between past and future wages loss and future medical expenses;
· whether the husband as to future operations, presumably as he had already received such monies, would not be covered by medical and hospital benefits.
…However such findings were intrinsic to the learned trial Judge’s conclusions as to section 75(2) factors”.
Counsel for the husband submits:
“There is no issue on the evidence that the husband received $266,000 in compensation payments for his injury and $48,000 for a superannuation payout”. Whether his Honour was mistaken or not as to how the compensation monies were broken down makes no difference to the outcome of the case”.
There is no dispute that the husband suffered a serious back injury and received the insurance pay out, workers’ compensation payments and redemption of workers’ compensation rights. The medical evidence of Dr B disclosed the need for surgical intervention “in the next 10 - 15 years”. The husband’s ongoing back disability was corroborated by a radiological report dated 14 April 2004 which concluded:
“Comment
Moderate disc degenerative change at L5/S1. Broad based posterior bulging at L5/S1 with associated posterior osteophytes projecting into the intervertebral foramina. Bilateral bony foraminal stenosis with bilateral nerve root compromise. A central disc protrusion is noted at L4/5 without neural compromise.”
There is no dispute that the breakdown of lump sums received by the husband pursuant to s 66 of the Workers Compensation Act 1987 (NSW) are as set out in the trial Judge’s judgment.
The letter from the Hospital to the husband dated 7 May 2003, set out estimated costs for an L4/5 discectomy and possible spinal fusion, as between $18,574.30 and $18,154.30. These estimated costs did not include costs for rehabilitation, surgeon, assistant surgeon, anaesthetist, transport and occupational therapy.
We are satisfied that there was evidence before the trial Judge of the amounts received by the husband as a result of his industrial accident. There was also evidence, supported by radiological findings, of the husband’s ongoing back disability and need for future surgery. That evidence was relevant to his Honour’s assessment of factors under s 75(2) favouring the husband. We do not accept that a precise apportionment of the funds received by the husband was necessary to underpin the trial Judge’s findings under s 75(2), particularly as it was clear that those funds had been applied for the benefit of the family.
We accept that there was no admissible evidence before the trial Judge to support his finding that the husband would not be covered by medical and hospital benefits for future surgery. We conclude that the trial Judge properly took into account the husband’s medical condition and his need for future surgery. His Honour may have given excessive weight to these matters by reason of his finding about lack of medical benefits cover for future surgery.
Ground 4
That the learned trial judge (sic) erred as he made a mistake as to the facts relative to the husband’s health, earning capacity, income and the need for and the costs of future medical treatment.
We have already referred to the evidence relevant to the husband’s back injury.
We have dealt with the submissions in relation to ground 3, which in part overlap with ground 2 and this ground.
On behalf of the wife it is submitted that “[t]he husband called no admissible evidence in his case as to his disabilities, the impact such disabilities had on his future earning capacity and income or his future medical expenses”.
Having regard to our findings in respect to the challenges to the admissibility of medical and other reports, and the failure of such challenges, we find no merit in this ground, save and except his Honour’s finding the husband would not have medical benefits cover for his surgery.
Ground 5
That the learned trial judge (sic) erred as he made a mistake as to the facts relative to the wife’s future career, earning capacity and income.
Ground 6
That the learned trial judge (sic) erred in failing to give sufficient weight to the appropriate adjustment to the wife pursuant to s.79(4)(e) of the family (sic) Law Act 1975 as amended for s.75(2) factors.
We find it convenient to deal with issues raised under grounds 5 and 6 together.
The criticism of the trial Judge’s assessment of factors requiring adjustment in the wife’s favour under s 75(2) is subject to the following three areas of challenge:
·the trial Judge’s finding that the wife would graduate in law and thereafter “have a long and increasingly lucrative working life” which would “commence at about the time when the parties’ older child will be about 18 years or more and the younger child will be about 13, so they will be sufficiently independent to present little impediment to the wife’s ability to work in paid full time employment as a lawyer”;
·the trial judge’s assessment that the wife’s responsibility for the daily care and control of the children did “not appear to me to be very great because of the ages of the children and their likely increasing levels of self reliance”; and
·the modest amount of child support being received and likely to be received by the wife.
The undisputed evidence was that the wife was in her third year of studies leading to an arts degree at university. When cross-examined by the husband’s then counsel at trial, the following exchange occurred:
“[COUNSEL FOR THE HUSBAND AT TRIAL]: [The wife], with the degree you’re studying at the moment, is that full-time?---Yes.
And whereabouts is that?---… University.
The fees associated with that, are you receiving any aid as regards to those? ---Only through Centrelink, it’s about $31 a week.
And there’s a HECS component for that?---Yes, I have a HECS debt, I’ve deferred all my HECS payments.
You’re going to study law?---Thinking about it.
When do you think you might be taking up law when you finish the degrees or?---Yes, I suppose, yes.”
The trial Judge recorded at paragraph 16 of his reasons “[s]he intends to commence studying law when she finishes her Arts degree and expects to commence practicing as a solicitor at the start of 2008”. The wife’s additional evidence on this topic was elicited in a response to a question from the trial Judge, that she was “hoping for - aiming for a Law Degree”. There was no evidence that the wife would be admitted into the Faculty of Law, or that on completion of a law degree she would practise as a solicitor. We are satisfied that his Honour’s finding that the wife would be able to engage in full time paid work as a lawyer and have “a long and increasingly lucrative working life” was not supportable on the evidence before him.
At the time of the trial the wife was dependant on social security payments and payments of child support. She had a liability to pay rent of $210 per week. She was also paying private school fees for the children.
Consequently we conclude that his Honour did not properly assess the wife’s present circumstances and her realistic future earning capacity.
The trial Judge found the wife to be the primary caregiver of the children and to have the major responsibility for parenting. He properly recognised that this responsibility “entitled [her] to have, as an element which adds to her entitlement, credit for the differential burden of parenting she will carry”. However, the trial Judge further found that this factor “does not appear to…be very great because of the ages of the children and their likely increasing levels of self reliance”. At the date of the trial the children were aged respectively 8 and 14 years.
The wife was found by the trial Judge to be the undisputed primary caregiver of the children. Her responsibilities for the children were significant and ongoing and in the case of K would continue for the next ten years.
The wife’s evidence at trial was that child support paid by the husband was in arrears to the extent of $6,804. The wife’s assertion was disputed by the husband.
In Clauson and Clauson (1995) FLC 92-595 at 81,911 Barblett DCJ, Fogarty and Mushin JJ said:
“In addition, it should not be forgotten that the payment of child support in no way compensates the custodial parent for the loss of career opportunity, lack of employment mobility and the restriction on an independent lifestyle which the obligation to care for children usually entails: see Langford (16 January, 1995, Full Court, not reported).”
We find these comments apposite in this case.
In Clauson their Honours also said at 81,911:
“In addition, by s. 79(4)(g) the Court is required to take into account in considering what property order to make ‘any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, or is to provide, for a child of the marriage’. This provision is in terms which are identical to paragraph (na) of s. 75(2).
Because of this overlap it is generally convenient to consider these two sets of provisions at the same time. The weight to be attached to a child support assessment will vary with the circumstances of each case, including the amount of the assessment, the financial circumstances of the parties, the needs of the children, whether the assessment is being paid regularly, and whether it is likely that it will continue to be paid at a regular and adequate rate in the future.”
We consider the trial Judge’s finding that the husband’s physical problems produced “extremely poor prospects of retaining his current earning capacity for more than a few years” must impact on his ability to pay child support.
The trial Judge’s contribution based assessment resulted in a 30 per cent differential between the parties, that is, the husband’s contribution based entitlement exceeded that of the wife by $81,130. Having regard to:
·the differential between the parties’ contribution based entitlements;
·the husband’s present superior income, and ability to “income split” with Ms M to derive a tax benefit;
·the wife’s present dependence on social security, and lack of recent workforce skills;
·the wife’s responsibility for the children continuing in the case of K for another 10 years; and
·the likely reduction in child support to be received by the wife,
on careful consideration it appears to us that the trial Judge’s weighing and assessing of relevant s 75(2) factors does not give sufficient recognition to factors favouring the wife, and is outside the “reasonable ambit of discretion”.
On the evidence before the trial Judge, we would assess the appropriate adjustment to be made having regard to the relevant s 75(2) matters including the husband’s health and income earning capacity, and the factors identified by us above, that an adjustment of 15 per cent or $40,565 should be made in the wife’s favour. This would result in the parties’ net assets and liabilities being divided equally, or each receiving assets to the value of $132,216.
Ground 7
That the learned trial judge (sic) erred in failing to make an ‘order’ pursuant to s.79(2) of the Family Law Act 1975 as amended as part of the ‘fourth step’, see In the Marriage of JEL & DDF (2000) 28 FamLR 1 at paragraphs 140, 141 and 142 and In the Marriage of Phillips (2002) 29 FamLR 128 at paragraphs 66, 67 and 74, that was ‘just and equitable’.
Ground 8
That the resulting orders were ‘manifestly unjust’.
We find it convenient to deal with these grounds at the same time.
The Full Court recently in the decision in C and C (2005) FLC 93-220 set out the appropriate approach to be adopted in hearing proceedings under s 79 of the Act. Bryant CJ, Finn and Coleman JJ said:
“63.…we consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in s 4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise). This of course is the approach which the trial Judge adopted in this case.
64.Then for the reasons we earlier gave, whether or not a splitting order is sought on either party’s application, the parties’ contributions to both the property (as defined in s 4(1)) and also to the superannuation interests should be assessed. The other factors in s 79(4)(d), (e), (f) and (g) would then need to be considered. Specifically in the context of s 79(4)(e), that is the s 75(2) factors, any division of the property (as defined in s 4(1)) and any “division” of any superannuation interest (in the sense of an allocation of the base amount) based respectively on the assessments of the parties’ contributions to the property and to any superannuation interest, would then be considered. Similarly, the parties’ future superannuation prospects (be they in capital or income form) would also need to be considered. The overall justice and equity of the ultimate award (including any proposed splitting order or the need for such an order) would then be considered.
65.In summary, then, the trial Judge has a discretion as to how superannuation interests will be treated in a particular case. If superannuation is not included in the list of property but rather made the subject of a separate pool, it will be necessary where a splitting order is sought, or extremely prudent where no such splitting order is sought (in order to ensure that justice and equity is achieved) to:
(a) value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);
(b) consider and make findings about the types of contributions referred to in s 79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;
(c) consider the other factors in s 79(4) being the matters in s 79(4)(d), (e), (f) and (g); and
(d) ensure that pursuant to s 79(2) the orders in relation to the parties’ property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.”
In arriving at his finding that the parties’ net property comprised assets to the value of $270,432, his Honour took into account the following liabilities totalling $295,646 due to the NAB:
Mortgage secured by the former matrimonial home $152,000
Second mortgage secured by the former matrimonial home $93,646
NAB $50,000The affidavit of the wife’s solicitor sworn 5 April 2005 discloses that the matrimonial home, which was agreed before the trial Judge to have a value of $495,000, was sold for a price of $530,000 and that on settlement a total sum of $329,486.11 was drawn in favour of the NAB. That sum was made up as follows:
Business cheque account $32,114.98
Flexiplus mortgage account $151,831.18
Personal loan account $23,563.25
National tailored home loan $98,921.00
National flexi account $22,785.70Bank charges $270.00
__________
$329,486.11
In the wife’s solicitor’s affidavit he deposes:
“Deduction by the bank from the gross proceeds of sale of the home of the husband’s personal debts, namely those other than the two mortgages referred to by his Honour in Order 5(b) will result in the wife receiving less than the 35% contemplated by the trial Judge”.
The trial Judge’s orders were firstly predicated on the basis that the husband should retain the matrimonial home, and the sum of $71,952 (representing the wife’s 35 per cent entitlement of $94,652 less property retained by the wife to the value of $22,700) should be paid to the wife. In the alternate order 5(b) provided that the husband:
“on or before 31 January 2005 shall do all things necessary to sell and shall sell the [matrimonial home] and shall, after payment of all debts secured by mortgage over the said property and all costs of and associated with such sale, including agents commissioner, advertising expenses and solicitors fees distribute the balance:-
(i)firstly by payment to himself of $64,412.00,
(ii)secondly by payment to the wife of $11,648.00,
(iii)thirdly by payment of 35% of the remainder to the wife and 65% to himself.”
It is apparent that, as a result of the sale of the matrimonial home and the bank’s action in requiring discharge of all liabilities secured by its “all monies” mortgage, the scheme contemplated by the trial Judge to give effect to his findings has been unable to be carried out.
Before us the husband indicated that in the event the appeal was allowed he wished to have the opportunity to put material before us in respect of costs he asserts were incurred to prepare the matrimonial home for sale and otherwise relevant to the sums paid to the NAB. In the light of the decision of Allesch v Maunz (2000) 203 CLR 172; (2000) FLC 93-300; (2000) 26 Fam LR 237, we propose to allow the husband to put further material before us, limited to matters relating to the costs incurred for the sale of the house and in respect of the sum deducted by the NAB, principally the business cheque account debt in the sum of $32,114.98 and the flexi account in the sum of $22,785.70.
We have already indicated, on the evidence presently before us, and without binding a trial Judge should the matter be remitted in whole or in part, that an adjustment in the wife’s favour of 15 per cent or $40,565 appears an appropriate adjustment pursuant to s 75(2). However, it would only be after receipt of the husband’s submissions that the Court could properly determine the appeal.
In G and G [2001] FamCA 1453, a case determined before the special leave application to the High Court in Ruscoe and Walker (2003) FLC 93-093 was dismissed, the Full Court canvassed the options open at the conclusion of a successful appeal when admitting further evidence, and considering appropriate determination of a matter.
In G and G the Full Court had set out its conclusions on the parties’ contributions and relevant s 75(2) factors on the evidence before the trial Judge, as modified by the Full Court’s decision on the pool. The Full Court noted the following options, in the factual circumstances of the case, before it:
·the parties could present to the Court an agreed statement of relevant facts which had occurred since the judgment of the trial judge to be taken into account by the Court in re-exercising the discretion;
·the Court might allow the appeal, make such orders as flowed from a re-exercise of the discretion on the basis of their conclusions about contributions and s 75(2) factors and their conclusions about the pool of assets, designating the orders as either “partial final” or “interim” and remit for the determination of a single Judge as to whether any further adjustment should be made in respect of contribution or s 75(2) factors which had subsequently arisen; or
·the Court could uphold the appeal, set aside the trial Judge’s orders and remit the proceedings for a limited rehearing.
We discern, in some limited cases, a matter regrettably may be required to be remitted for a complete rehearing.
In addition to our decision that the husband should be permitted to place limited material before us in respect of the two areas we have identified, we also propose to provide that the wife may make submissions in relation to whether or not we should re-exercise the discretion, or remit the matter in whole or part for further rehearing.
Ideally, given the parties’ relatively modest assets, to reduce costs and bring finality, a sensible course would appear to be presentation to us of an agreed statement of relevant facts in respect of the sale of the matrimonial home and liabilities deducted by the NAB and thereafter that we re-exercise the discretion.
Costs
At the conclusion of the appeal the husband’s counsel submitted that in the event that the appeal was dismissed the husband sought an opportunity to make written submissions in respect of costs. Otherwise, both parties sought certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth). We propose to deal with the issue of costs of the appeal when we have received the further submissions from the parties.
Orders
That within 21 days of the delivery of this judgment the parties do all things necessary to prepare and file with the Appeals Registrar an agreed statement of facts relative to the sale of the matrimonial home, including details of sale price, expenses incurred in preparing the home for sale, and sums deducted by the NAB on settlement.
In the event the parties are unable to reach agreement for the purposes of order 1, then:
(a) within 30 days of the delivery of this judgment the respondent husband file with the Appeals Registrar and serve upon the appellant wife any further submissions and affidavit material in support thereof upon which the husband seeks to rely in respect of:
(i) any monies expended by him preparing for the sale of the matrimonial home;
(ii) liabilities deducted by the NAB on the sale of the matrimonial home; and
(iii) the question of the re-exercise of the discretion or remission of the whole or part of the matter to a single Judge.
(b)within 14 days of the receipt of such submissions and affidavit material the appellant wife file and serve any response thereto.
I certify that the preceding 118 paragraphs
are a true copy of the reasons
for judgment delivered by
this Honourable Full Court.
Associate
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