Lamrock & Lamrock
[2008] FamCAFC 79
•19 June 2008
FAMILY COURT OF AUSTRALIA
| LAMROCK & LAMROCK | [2008] FamCAFC 79 |
| FAMILY LAW - APPEAL – PROPERTY – Whether the trial Judge should have treated the company, of which the husband was sole director and shareholder, as the alter ego of the husband – Whether trial Judge erred in treating the company debts separately from the husband’s personal liabilities - Where unsecured loan to the company from the husband’s family made - Where husband had not given a personal guarantee in respect of company borrowings – Where husband sought to include the company’s liabilities in the parties’ asset pool – Where company’s assets not sought to be included in the parties’ asset pool – Discussion of S & M & Ors [2003] FamCA 1387 and Ascot Investments Pty Ltd v Harper (1980-1981) 148 CLR 337- No error by trial Judge in not including the family loan to the company as a personal liability of the husband. FAMILY LAW - APPEAL – CONTRIBUTION ASSESSMENT - Whether trial Judge erred in assessment of initial contributions – No error by trial Judge – Appeal dismissed. FAMILY LAW - APPEAL - CHILD SUPPORT – LEAVE TO APPEAL - Where s 102 of the Child Support (Assessment)Act 1989 (Cth) requires leave of the Full Court to appeal a departure application determination – Whether trial Judge erred in determination of husband’s financial position – Where payments were being collected by the Child Support Agency and payment of arrears could only be enforced by the Child Support Registrar under s 30 Child Support (Registration and Collection) Act 1988 (Cth) - Where no substantial injustice demonstrated – Leave to appeal child support departure determination refused. FAMILY LAW - APPLICATION TO ADDUCE FURTHER EVIDENCE – Where husband sought to adduce further evidence of the birth of his second child to support application of variation to the existing child support departure order – Where husband concedes the circumstance of the birth is a matter to be raised at first instance - Where husband sought to adduce further evidence to impugn the trial Judge’s determination that the wife had spent $32,000 on legal fees – Where the husband submitted $32,000 spent by the wife on legal fees should be “added back” to the asset pool – Where trial Judge included the payment of the wife’s legal fees in the parties’ lists of assets – Application to adduce further evidence rejected. FAMILY LAW - COSTS – Where appeal against property orders dismissed – Where leave to appeal child support departure determination refused – Appellant husband to pay costs as agreed or assessed. | |
Child Support (Assessment)Act 1989 (Cth) s 102
Child Support (Registration and Collection) Act 1988 (Cth) s 30
Family Law Act1975 (Cth) s 79
First Corporate Law Simplification Act 1995 (Cth)
| Adam P Brown Male Fashions Pty Ltd v Phillip Morris & Anor (1981)148 CLR 170 Tudor & Tudor (1992) FLC 92-273 | ||
| APPELLANT: | Mr Lamrock | |
| RESPONDENT: | Ms Lamrock |
| FILE NUMBER: | SYF | 4445 | of | 2003 |
| APPEAL NUMBER: | EA | 114 | of | 2006 |
| DATE DELIVERED: | 19 June 2008 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Bryant CJ, Finn & Boland JJ |
| HEARING DATE: | 20 August 2007 and 24 August 2007 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 13 October 2006 |
| LOWER COURT MNC: | [2006] FamCA 1018 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Lloyd |
| SOLICITOR FOR THE APPELLANT: | Delaney Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Levy |
| SOLICITOR FOR THE RESPONDENT: | Matthews Dooley & Gibson |
Orders
That the appeal against orders for property settlement made on 13 October 2006 is dismissed.
That the amended application filed 22 December 2006 for leave to appeal the orders for child support is dismissed.
That the application filed 2 August 2007 for leave to adduce further evidence is dismissed.
That the appellant husband pay the respondent wife’s costs of and incidental to the appeal as agreed and failing agreement, as assessed under Chapter 19 of the Family Law Rules 2004.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Lamrock & Lamrock.
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 114 of 2006
File Number: SYF 4445 of 2003
| Mr Lamrock |
Appellant
And
| Ms Lamrock |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an appeal by Mr Lamrock (“the husband”) against orders made on 13 October 2006 by Watts J at the conclusion of property proceedings under s 79 of the Family Law Act1975 (Cth) (“the Act”) between the husband and Ms Lamrock (“the wife”). The trial Judge also determined a departure application under the provisions of the Child Support (Assessment)Act 1989 (Cth) (“the CSA Act”). The husband seeks leave to appeal the orders made in respect of the departure application. The wife resists the appeal against the property orders and the proposed appeal against departure application orders.
The trial Judge also made parenting orders in respect of the parties’ only child, who was aged three years at the date of the hearing. There is no challenge to his Honour’s parenting orders.
The trial Judge found the parties’ net assets of $411,411 should be divided between them as to 65 per cent or $267,411 to the husband and 35 per cent or $144,000 to the wife. He made a departure order the effect of which was to assess the husband’s child support liability from January 2004 to May 2008 at the rate of $20,000 per annum. His Honour stayed the operation of the departure order, subject to the husband paying $100 per week, until 1 June 2008 and thereafter required repayment of any arrears at the rate of $200 per week until extinguished, in addition to any liability assessed under the formula then applicable under the CSA Act.
Although the husband’s Amended Notice of Appeal indicates that he is not appealing all of the orders made by the trial Judge, the Notice does not specify which orders the husband seeks to challenge. However, the orders sought in the husband’s Amended Notice of Appeal, in the event the appeal is allowed, seek the discharge of Orders 6, 7, 8, 12, 13, 15 and 16 of the orders made on 13 October 2006. In his Amended Application in a Case filed 22 December 2006, the husband sought leave to appeal the orders made in respect of the departure application (Orders 12 to 16 inclusive). The property settlement orders and the child support orders in summary:
·provide for the wife to receive by way of adjustment under s 79 part of the husband’s superannuation entitlement by way of a “splitting” order;
·determine the husband’s child support liability from January 2004 to May 2008 at an annual amount of $20,000;
·restrain the husband receiving the sum of $40,000 (being essentially his share of the proceeds of sale of the matrimonial home) pending foreshadowed enforcement proceedings in respect of child support arrears owing by the husband; and
·stay the husband’s child support liability on the terms referred to above.
From the husband’s counsel’s oral submissions on the hearing of the appeal, and the grounds of appeal, it became apparent that the gravamen of the husband’s appeal was his challenge to the trial Judge’s determination of the pool of property available for division between the parties. The husband’s counsel submitted that a number of asserted errors by the trial Judge in his calculation of the net pool of the parties’ assets affected his determination of both the property orders and the departure application.
The husband’s principal challenge was directed to the trial Judge’s treatment of liabilities of Lamrock Pty Ltd (“the company”), which company was the owner of the dental practice operated by the husband. The husband asserted the trial Judge should have treated the company as his “alter ego”, and included as his personal liability in the pool of assets to be divided between the parties, a loan from his family members to the company of $341,570.
The husband sought to adduce further evidence on the appeal, including evidence that he had become the father of another child who was born in March 2007. He also sought to adduce evidence that the wife had not properly accounted for funds withdrawn by her from the parties’ savings, which she had asserted had been used for the payment of legal fees. He asserted he did not know of his second child’s existence at the date of the trial, nor were the wife and her brother’s bank statements, which were produced pursuant to subpoenae, available for inspection by his legal representatives at the date of the trial.
The wife was given an opportunity to respond to the husband’s assertions concerning the withdrawn funds by an adjournment of the hearing of the appeal for a few days.
Background
The husband was born in September 1968 and was aged 37 years at the date of trial.
The wife was born in December 1978 and was aged 27 years at the date of trial.
The parties married in September 2001 and they separated in May 2003.
In February 2003 the parties’ only child N was born.
On 28 June 2006 the trial Judge made orders that N live predominantly with the wife, and until he reaches school age that he live with the husband for gradually increasing periods from one day each week during 2006, and from 2007 for alternate weekends, as well as one Wednesday per month, alternate Easters (being either Roman or Gregorian Easter dates) and for other special occasions. Once N commences school the orders provide for the child to live with the husband for one half of all school holiday periods in addition to the weekend, Wednesday mid-week periods and on special occasions.
The husband is a dentist and he operates his dental practice through the company of which he is the sole shareholder and director. The company was incorporated in 1994.
On 5 December 1994 members of the husband’s family signed a document in which they agreed to provide funds to the company. We will refer to this document in more detail later in our reasons.
The trial Judge found:
On 9 July 1998 [Lamrock] Pty Ltd purchases a dental practice for the sum of $80,000. The husband purchases the goodwill in the practice for $100,000. (paragraph 9)
Prior to the parties’ marriage and until January 2003 the wife was employed by the dental practice.
During the marriage the parties acquired a town house as their matrimonial home which home was sold after separation with net proceeds of approximately $80,500 being held in a solicitor’s trust account at the date of the trial.
In June 2003 the wife applied for a child support assessment which was reviewed and led to the husband being assessed to pay child support at the top “capped” rate.
In the same month the wife withdrew $32,000 from an account operated by the parties which she asserted she applied to payment of her legal fees.
In May 2004 enforcement proceedings brought in the Federal Magistrates Court against the husband for payment of arrears of child support were stayed on condition the husband pay to the wife child support at the rate of $100 per week.
In February 2005 the husband ceased practising as a dentist on a full time basis and returned to university to undertake studies leading to the degree of Master in Fixed Prosthodontics. The husband’s anticipated income after completion of the post-graduate degree was asserted to be “in time” up to $750,000 per annum.
The husband applied for a departure from the child support assessment on the basis of his income being reduced whilst he completed his post-graduate course. The application, which was filed in the Federal Magistrates Court, was transferred to this Court on 9 April 2005.
The application to adduce further evidence
As we have already noted, the husband’s application sought to admit further evidence on two issues. First, he sought that we should receive the evidence of the birth of his second child. That evidence was sought to be adduced to support the husband’s challenge to the existing departure order. Secondly, he sought to impugn the trial Judge’s determination that the wife had expended $32,000 withdrawn by her from the parties’ savings on legal fees, and submitted that sum should have been “added back” to the pool of assets to be divided between the parties under s 79.
At the commencement of the appeal it was submitted on behalf of the husband that, as a result of the departure application order, the husband was unable to administratively seek a variation of the Court order to take into account the circumstance of the birth of his second child on 6 March 2007. The husband did not adduce any evidence that an application for child support in respect of that child had been made by the child’s mother.
The husband’s counsel did not disagree with the proposition that the circumstance of the birth of the second child was a matter properly to be raised by way of application to vary the departure application order at first instance, and not a matter to be agitated on appeal. Accordingly we do not propose to discuss this aspect of the husband’s application. We are satisfied the appropriate approach is that the husband make an application at first instance.
The husband’s counsel asserted that subpoenaed bank records of the wife’s brother had not been produced until after the hearing. He asserted that inspection of the records after the hearing revealed the wife had withdrawn $32,000 from an account in her name on 27 June 2003, that $32,000 was paid into her brother’s CBA streamline account on 27 June 2003, and on 30 June 2003, $32,000 was withdrawn from that account
The wife swore an affidavit on 22 August 2007, that is, during the period when the hearing of the appeal was adjourned, confirming she had withdrawn the sum of $32,000 and that the funds were deposited into the bank account of her brother “for safe keeping” (paragraph 3 of wife’s affidavit). She deposed to the funds being transferred into her brother’s ING account on 30 June 2003. The wife further deposed to retaining solicitors between May 2003 and May 2004 and that she paid the solicitors amounts totalling $26,178.45 including one payment of $25,428.45 which sum was paid on 4 May 2004. In addition she deposed to payment of counsel’s fees to Mr John Shaw of $7,177.50. The wife’s evidence was corroborated by bank records and correspondence from her legal representatives. Thus the wife said she was responsible for payment of legal fees of $33,335.95 funded from the sum withdrawn, and from funds obtained from her father and brother.
Although the wife’s explanation in her affidavit of the manner in which she dealt with the $32,000 is not precisely identical with her evidence in cross examination, we are satisfied that no appealable error has occurred by reason of the trial Judge omitting from the list of assets the cash withdrawn by the wife in circumstances where his Honour included the wife’s paid legal fees of $48,809, and later explained:
The wife has paid $48,800 in legal fees. $16,800 of that has come from a loan from her father. The balance amount of $32,000 is said to have come from the [M] account which the wife took and used after cohabitation. (paragraph 187)
Thus we propose to reject the husband’s application to adduce further evidence.
Should the trial judge have treated the company as the alter ego of the husband?
It is useful to aid understanding of this complaint to set out the assets and liabilities of the parties as found by the trial Judge:
Property Description
Joint/ H/W
Husband’s Value
Wife’s Value
Agreed or Determined
1. Proceeds of sale of [former matrimonial home]
W*
80,503.00
80,503.00
80,503.00
2. BMW
H*
25,000.00
25,000.00
25,000.00
3. Furniture & Personal effects
H
3,500.00
3,500.00
3,500.00
4. Jewellery
H
3,000.00
8,480.00
5,480.00
5. Jewellery
W
10,000.00
Nil
Nil
6. Telstra shares (10,550 @ 3.84)
H
40,512.00
40,512.00
40,512.00
7. IAG shares (247 @ 5.25)
H
1,296.00
1,296.00
1,296.00
8. Shareholding [Lamrock] Pty Ltd
H
Nil
Nil
Nil
9. Savings
H
2,021.00
2,021.00
2,021.00
10. Savings
W
100.00
100.00
100.00
11. Paid legal fees
H
NK
103,706.00
98,000.00
12. Paid legal fees
W
48,809.00
48,809.00
48,809.00
13. Loan account due from [Lamrock] P/L
H
Nil
154,809.00
Nil
14. Renault
H*
17,600.00
Nil
17,600.00
Total Assets
232,341.00
468,736.00
322,821.00
SUPERANNUATION
15. [Lamrock] Superannuation Fund
H*
98,376.00
98,376.00
98,376.00
16. Hesta
H
34,741.00
34,741.00
34,741.00
17. Unisuper
H
195.00
195.00
195.00
18. [Lamrock] Superannuation Fund
W*
12,750.00
12,750.00
12,750.00
Total Superannuation
146,062.00
146,062.00
146,062.00
19. Loan from brother
W
30,690.00
30,690.00
30,690.00
20. Mastercard
H
248.00
Nil
248.00
21. Amex
H
9,725.00
Nil
9,725.00
22. Loan due to [Lamrock] Pty Ltd/Family
H
341,570.00
Nil
Nil
23. Loan from father for legal fees
W
16,809.00
16,809.00
16,809.00
Total Liabilities
399,042.00
47,499.00
57,472.00
SUMMARY OF NET ASSETS
($20,639.00)
$567,299.00
$411,411.00
It was asserted on behalf of the husband that the trial Judge should have, in determining the parties’ net assets, included the husband’s credit loan account with the company ($154,809) and deducted the loan due to the company ($341,570) resulting in net assets of $224,650.
In dealing with the company, the trial Judge explained the contentions of each of the husband and wife about the manner in which they each sought he should deal with the company.
His Honour recorded that the wife asserted the husband could realise $154,809 from the company. In so asserting his Honour said she relied on the opinion of the single expert who asserted “…if his assumptions [were] accepted then that amount could be treated as an amount being owed by the company to the husband” (paragraph 124). His Honour further noted:
As part of that calculation Mr [P] assumes that the “Loan – [Lamrock] family” on his balance sheet of $221,477.28 is not a loan that has to be repaid by the company to anybody other than the husband. (paragraph 125)
Having recorded that the husband had updated the sum claimed as owing to his family members by the company at date of trial to $341,570 his Honour concluded:
If I accept the amount of $341,570 is outstanding by the company to the husband’s father, mother and sister, then the assumption upon which Mr [P] has assessed a value of an amount owed by the husband [sic] to the husband in a sum of $154,809 fails and that amount would not be added to the pool as an asset in the husband’s hands. (paragraph 128)
The trial Judge then explained that if he found the company did in fact owe monies to the husband’s family members “…there is a further question as to whether or not there is any personal liability for the husband to repay those monies.” (paragraph 129)
His Honour then turned to examine whether there was a genuine debt owed by the company to members of the husband’s family. Having recorded the history of the husband’s provision of details of the loan account, and the lack of corroboration in respect of a number of transactions asserted, his Honour said “…I have some significant disquiet as to why those records are not available at the hearing.” (paragraph 142)
The trial Judge also recorded an admission made in cross-examination by the husband’s father that it was “…his view that [the company] owed him the money not his son.” (paragraph 151). Notwithstanding a number of difficulties with the evidence in the husband’s case his Honour concluded:
On balance I have to place greatest weight on the sworn evidence of the husband and his father which was not sufficiently shaken in cross examination to cause me, on balance, to disbelieve it. (paragraph 157)
His Honour determined the issue of the loan accounts as follows:
158.What flows from that is that [Lamrock] Pty Ltd does not currently have sufficient assets to repay any debt that might be owing to the husband and I will disregard the amount asserted by the wife as an asset in the husband’s hands being a loan owed to him by the company in the sum of $154,809 as calculated by Mr [P].
159.I also disregard, as a liability to the husband, a loan due by [Lamrock] Pty Ltd to his family in the sum of $341,570. This is clearly not a personal liability of the husband (although I accept he may feel some moral obligation to repay the amounts to his parents and to his sister). They are debts however owing by [Lamrock] Pty Ltd under the line of credit arrangement the family members entered into in 1994.
160.There is clearly a flexible arrangement with family members to allow the husband to fulfil any moral obligation that he has for the repayment of these monies once he has finished his current university course and is in a position to generate significant income from his new qualifications. It follows then that the loan of $341,570 will be disregarded.
(a) The parties’ submissions
The husband asserted before us that the trial Judge was in error in treating the company, of which the husband is the sole director and shareholder, as a separate legal entity, and that his Honour should, by reason of the very nature of the directorship and shareholding of the company, have regarded it as the “alter ego” of the husband. He submitted that this consequence flowed from the amendments introduced by the First Corporate Law Simplification Act 1995 (Cth) which amendments permitted the incorporation of single director, single shareholder companies.
Counsel for the wife asserted the trial Judge was not in error in treating the company, and its debts, separately from the husband’s personal liabilities in the circumstances of this case. He referred us to the terms of the loan agreement dated 5 December 1994, and to the husband’s response to questions in cross-examination.
The loan agreement is annexed to the expert report. The relevant provision is in the following terms:
5/12/1994 Line of Credit
This is an agreement between [LAMROCK] P/L and [LAMROCK] family members: [A], [I], [P] and [L] [Lamrock].
[LAMROCK] P/L can borrow from family members monies for the running of [LAMROCK] P/L on a “revolving line of credit” with the view that when the company is profitable or the family members request their credit back, the monies (equity) should be paid back, interest to be set at the discretion of the family member involved and calculated to the correct accounts.
Borrowed monies should be used for the company purposes only, unless permission is given otherwise from the lenders.
The following exchange occurred between the trial Judge and the husband during the course of the husband’s cross examination
HIS HONOUR: …
So are you saying that as at December 2003 - - - ?---Mm.
- - - you personally owed your parents some money?---Through the company account, yes.
Do you understand that the company is a different legal entity to you?---I now understand that, your Honour, yes, and this is why I’m saying that the information was incorrect and the financial statement that I’ve tendered ---
Well is it the case then, 2003, you were just treating the company and yourself as the one legal entity in effect?---No.
So that anything owed to the company was owed to you and anything owed by the company was owed by you?---No.
Well, the line is other personal liabilities, Mr and Mrs [Lamrock] personal loan such and such an amount?--- Yes.
Now, tell me what is wrong with that entry as at December 2003?---I was assuming – I was under the impression that any money that I was liable as a director of a company I was liable to a loan.
So what you’re telling me is that the entry “personal liability” is incorrect?--- Yes.
And “personal loan” is incorrect?--- Yes.
All right, thank you.
(Transcript 28 February 2006, p 36, lines 22 to 49)
Discussion
We accept that many cases are conducted in this Court on the basis of a concession that net assets of either a company or a trust, which is effectively controlled by a party to a marriage, will be regarded as the property of that party.
However, in S & M & Ors [2003] FamCA 1387 the Full Court (Ellis, Coleman and O’Ryan JJ) discussed, amongst other matters, the issue of unsecured creditors of a company, such as the husband’s family members are in this case, and said:
97.A basic premise of company law is that a company is a legal entity separate from its shareholders and directors: Salomon v Salomon & Co Ltd (1987) AC 22. Thus, even where a company has only one shareholder and director, the company nevertheless retains its rights, privileges, duties and liabilities separate from those of its constituent director(s) and shareholder(s), as the case may be. A necessary consequence of this principle is that company property remains separate from that of its director(s) and shareholder(s).
98.However, the alter ego concept for the purposes of proceedings under s 79 of the Act, recognised in Ascot Investments (supra), does not mean in the case of a company that the separate entity doctrine is abandoned. The company remains a separate legal entity and its rights, privileges, duties and liabilities are separate from those of its sole member. It does not mean that a party to the marriage can deal with the interests of the company in a way that is contrary to the general law or the Corporations Act…
The Full Court’s reference to Gibbs J’s judgment in Ascot Investments Pty Ltd v Harper (1980-1981) 148 CLR 337; (1981) FLC 91-000 was, it appears, to the following passages at 354-355:
The position is, I think, different…if a company is completely controlled by one party to a marriage, so that in reality an order against the company is an order against the party, the fact that in form the order appears to affect the rights of the company may not necessarily invalidate it.
Except in the case of shams, and companies that are mere puppets of a party to the marriage, the Family Court must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it...
In the present case the husband could not be said to be personally liable for the funds lent by his family to the company for company purposes in circumstances where he had given no personal guarantee in respect of such company borrowings. Nevertheless he sought to include the liability of the company in the pool of assets to be divided between the parties whilst ignoring the company’s assets and also ignoring the protection afforded to him in conducting the dental practice through a corporate vehicle which shielded him from personal liability for the debts of the company.
In these circumstances, we discern no error by the trial Judge in disregarding as an asset the husband’s loan account in the company on the basis that the company had insufficient assets to repay that sum to the husband, and failing to include the company’s liability to his family as a personal liability of the husband.
The contribution ground
The husband’s appeal also involved a challenge to the trial Judge’s assessment of the husband’s contributions at 80 per cent rather than 86 per cent as submitted to be appropriate by the husband’s counsel. The precise terms of the ground of appeal which contained this challenge were as follows:
His Honour erred in determining the Wife’s assets at cohabitation to be 18% of the parties’ combined assets by ascribing a value to the Husband’s motor vehicle at $25,000.00 in paragraph 200 of the Judgment and omitting the Husband’s furnishings.
The wife’s counsel argued that the trial Judge’s overall assessment of the parties’ contributions did not disclose error, and that the husband’s furniture had not been valued and was retained by him.
This challenge is directed to the exercise of discretion by the trial Judge in assessing contribution. The limit on appellate interference with such discretion is subject of well known authority. In House v The King (1936) 55 CLR 499 Dixon, Evatt and McTiernan JJ said at 504-5:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.
The trial Judge determined to evaluate the parties’ respective contributions on a global basis. There is no appeal ground which challenges the trial Judge’s approach, notwithstanding the husband at trial urged an asset by asset approach.
At paragraph 170 of his reasons, the trial Judge set out the husband’s contentions about his pre-cohabitation assets including the BMW motor vehicle and household items. The assets listed by the trial Judge accord with the husband’s evidence (paragraph 14 of his affidavit sworn 19 January 2005) although no value is included for the BMW motor vehicle. The husband did not assert he had furniture, but rather household items. There was no admissible evidence before the trial Judge of the value of the BMW motor vehicle or his furniture. The trial Judge at paragraph 185 of his reasons noted that the wife had contributed approximately $22,000 from her pre-cohabitation savings to the encumbrance on the BMW motor vehicle.
At paragraph 200 of his reasons, the trial Judge explained how he evaluated the parties’ initial contributions. His Honour said:
Adopting a pseudo mathematical analysis and giving no value to [Lamrock] Pty Ltd at the date of the cohabitation, the husband had approximately $209,000 in assets (25 + 54 + 70 + 60) and the wife had approximately $46,500 worth of assets (22 + 8.5 + 5 + 1.5 + 9.5). The wife consequently had about 18% of the assets at the commencement of the cohabitation (46.5/255.5).
We were not taken by the husband’s counsel to any evidence of value of the BMW motor vehicle at the date of commencement of cohabitation; rather we note the parties agreed that the motor vehicle had an agreed value of $25,000 at the date of trial (transcript 2 March 2006 at p 175). There does not appear to be any contest that the motor vehicle was subject to an unknown encumbrance of at least $22,000 at commencement of cohabitation.
In these circumstances we are satisfied the trial Judge was entitled to have regard to the agreed figure for the BMW motor vehicle at the date of hearing as a guide to his assessment of initial contribution which assessment was incorporated into his Honour’s overall contribution assessment.
We do not discern that his Honour’s assessment of the parties’ contribution based entitlements was outside the reasonable exercise of his discretion. Accordingly we find no merit in this ground.
The departure application
Ground 4 (which is incorrectly included in the Amended Notice of Appeal) is in the following terms:
That as a consequence of 1 and 2 above, His Honour erred in his application of the Husband’s Departure Application.
In light of the Amended Application in a Case seeking leave to appeal the child support orders we have treated ground 4 as a proposed ground of appeal. As we have already discussed, grounds 1 and 2 were directed to his Honour’s refusal to take into account in calculating the parties’ property, the debt owed by the company to the husband’s family members.
In his written submissions it was asserted that the trial Judge “erroneously took into account a picture of the husband’s financial position which was not accurate” and hence it would be just to provide that the sum to be received by the wife from the proceeds of sale of the matrimonial home be applied to the husband’s outstanding child support arrears.
We perceive at least two difficulties with this argument, the pivotal matter being our rejection of the husband’s assertions about the pool of assets. Further, we note that the statutory assessment obtained by the wife was being collected by the Child Support Agency, hence payment of arrears could only at the relevant time be enforced by the Child Support Registrar (see s 30 Child Support (Registration and Collection) Act 1988 (Cth)).
Section 102 of the Act allows a party to appeal to the Full Court from a decree of the Family Court only with leave of the Full Court. In Gyselman & Gyselman (1992) FLC 92-279 and Tudor & Tudor (1992) FLC 92-273, the Full Court reaffirmed the Full Court decision in Rutherford & Rutherford (1991) FLC 92-255. In Rutherford the Full Court adopted the principles in relation to the granting of leave as set out by the High Court in Adam P Brown Male Fashions Pty Ltd v Phillip Morris & Anor (1981)148 CLR 170. These principles were that the appellant must show an error in principle and/or the fact that the decision appealed from caused the appellant a substantial injustice. Notwithstanding the comments of the Full Court in Bassingthwaite v Leane (1993) FLC 92-410 to the effect that the principles enunciated in Rutherford may be too restrictive in appeals against substantive rather than interlocutory orders, the appellant has neither demonstrated that there has been an error in principle nor that substantial injustice has been caused to him. We are in fact satisfied that this ground has no merit and therefore refuse leave.
Costs
At the conclusion of the appeal we sought submissions from each party’s counsel about costs of the appeal. The husband’s counsel conceded that if the appeal was dismissed the husband would not be able to resist an order for payment of costs. We propose to so order.
I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court of the Family Court of Australia.
Associate:
Date: 19 June 2008
2
10