Larritt & Drover
[2008] FamCAFC 41
•2 April 2008
FAMILY COURT OF AUSTRALIA
| LARRITT & DROVER | [2008] FamCAFC 41 |
| FAMILY LAW - APPEAL – From decision of Federal Magistrate – PROPERTY SETTLEMENT – Mistakes of fact – A failure by the Federal Magistrate to properly address a critical argument by the husband that the wife had enjoyed the benefit of gross assets of his father’s estate and should therefore join in the (contingent) liability arising under French law – No discussion by the Federal Magistrate of the terms and impact of s 75(2) of the Family Law Act 1975 (Cth) – Failure to discuss how the result reached is just and equitable – Error by the Federal Magistrate in the calculation of net assets – Appeal allowed – Remission to Federal Magistrates Court FAMILY LAW - APPEAL – Application in a Case seeking the issue of subpoenae to the wife for the production of documents relating to business and personal financial dealings from around the time of and after separation – Application dismissed |
| Family Law Act 1975, s 75(2), s 75(4)(e), s 79 |
| Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 |
| APPELLANT: | MR LARRITT |
| RESPONDENT: | MS DROVER |
| APPEAL NUMBER: | NA | 82 | L | of | 2007 |
| FILE NUMBER: | TVM | 323 | of | 2005 |
| DATE DELIVERED: | 2 April 2008 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | WARNICK J |
| HEARING DATE: | 25 February 2008 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 18 May 2007 |
| LOWER COURT MNC: | [2007] FMCAfam 692 |
REPRESENTATION
| APPELLANT: | In person |
| RESPONDENT: | In person |
Orders
That the appeal be allowed.
That the order of Federal Magistrate Coates made 17 October 2007 be set aside.
That the application for alteration of property interests be remitted to the Federal Magistrates Court for rehearing by a Federal Magistrate other than Federal Magistrate Coates.
IT IS NOTED that publication of this judgment under the pseudonym Larritt & Drover is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 82 L of 2007
File Number: TVM 323 of 2005
| MR LARRITT |
Appellant
And
| MS DROVER |
Respondent
REASONS FOR JUDGMENT
The property settlement proceedings between Mr Larritt and Ms Drover presented Federal Magistrate Coates with unusual and troublesome circumstances, best described by the learned Magistrate himself in his reasons for judgment.
1.The difficulty of deciding property interests when the litigants are unrepresented and their material is difficult to follow is immense.
…
5.Both parties are French by birth. Their spoken English was satisfactory. The husband’s affidavit was self-prepared and was extremely difficult to understand.
6.The affidavit of the wife, Ms [Drover], was prepared by a solicitor but it was not helpful in informing the Court of many of the current issues which come for consideration under s.79 of the
Family LawAct 1975 (the Act).
7.Although the husband’s original application seemed to be asking for a 50 percent split of the property, at the time of trial he was asking for what amounted to all of the property plus a payment to him of $120,000.00. He said that was the money he put into the marital property and a business, part of the marital property, which ceased trading.
8.In response the wife stated she was not claiming any part of the matrimonial assets and did not wish to be involved with any issue pertaining to the husband’s father’s estate, a matter emanating, apparently, under French law.
9.I still had to ensure that any decision was just and equitable.
…
14.I urged the wife to cross-examine the husband but she refused to do so.
…
16.The husband did cross-examine the wife but it was still the wife’s contention that she wanted no part of the marital property.
The learned Magistrate concluded:
38.On the facts as presented, as unsatisfactory as the evidence was, I am prepared to accede to the wishes of the wife that she receive no part of the marital property. But she should not be responsible for debts attaching to that property.
These reasons are in respect of the husband’s appeal against the order giving effect to the learned Magistrate’s conclusions. The difficulties which the learned Magistrate recognised may have been compounded because the trial took place on 18 May 2007 but judgment was not delivered until 17 October 2007.
I am satisfied that the arguments on appeal have merit. In the circumstances in which the case presented, perhaps unsurprisingly, some mistakes of fact were made. The most significant of these was as to the amount of net assets, caused primarily by misunderstandings about a mortgage liability, credit card debt and the “liability” referred to next.
Also, I am satisfied that the learned Magistrate failed to properly address a critical argument by the husband, essentially that, with him, the wife had enjoyed the benefit of gross assets of his father’s estate, and should therefore join in the (contingent) liability arising under French law, from the father’s death, and falling on the husband, to support the father’s surviving spouse (this liability is described in the material and the reasons as “alimony”).
The learned Magistrate’s reasons, perhaps because he thought the stance taken by the wife accommodated the husband’s contentions taken at their highest, did not deal with all of those contentions in conclusive ways. Moreover, the judgment does not contain findings about many of the matters which a judgment in respect of property settlement would commonly address. There are no findings about the time at which cohabitation commenced, when marriage took place or separation occurred and there are few findings about contributions during the relationship.
There is no discussion at all of the terms and impact of s 75(2) of the Family Law Act 1975 (Cth) though some factors relevant to a consideration pursuant to s 79(4)(e) and s 75(2) are described. Though, as seen, Coates FM noted that his decision had to be just and equitable, there is no discussion of the way in which the result meets that end.
However, apart from what has been already quoted, in his judgment – which ended with paragraph 38 earlier set out – the learned Magistrate made mention of, though did not in each case decide about, or give weight to, the following matters:
· an argument by the husband that the wife took from the marriage a resource, namely an ability to work;
· an argument by the husband that the wife had started a cleaning business, but neglected it in favour of another business, and needlessly incurred debt;
· post-separation support of the children;
· the wife’s use of a credit card post-separation;
· the prospect of an inheritance by the wife from an uncle and aunt who had adopted the wife;
· the husband’s “alimony” liability and the wife’s attitude in respect of it; and
· assets and liabilities.
Both parties, who also appeared without representation on the appeal, wish to avoid remission for retrial, but in light of what I have already set out and what shortly follows, re-exercise is an awkward prospect, which however, will be further discussed later. Before saying more of the two reasons identified for which I consider the appeal has merit, I will set out firstly, some comment on the husband’s material before the Federal Magistrate and his appeal documents and secondly, a summary of facts pertinent to the dispute, drawn not so much from the judgment as from the husband’s material.
The husband’s material
I cannot see clearly from the transcript what material of the husband was before the Federal Magistrate. Coates FM raised the topic towards the beginning of the hearing, but the next thirty or so pages reflect a question and answer process between the bench and (substantially) the husband, about his case. When the husband was asked to go into the witness box, the following exchange occurred:
FEDERAL MAGISTRATE: Now, Mr [Larritt], you’ve sworn some affidavits in this matter. Do you recall those affidavits?----Most of them. There was a few.
Well, your latest affidavit was filed on 20 April 2007?---Yes.
Is everything in that affidavit true and correct to the best of your belief?---Yes it is.
Do you wish to vary, amend, or change anything?---No.
You’ve also filed a financial statement. Is everything in that true and correct to the best of your belief?---Yes, it is. Just one change in it because it’s an old financial.
What change is that?---I did have to borrow 16,000 from my sister to keep going.
The husband included in the papers for the appeal three affidavits and two financial statements filed in the Federal Magistrates Court preceding the trial. Two of the affidavits concentrate on issues of non-disclosure of documents by the wife, particularly with respect to the interest which the wife held in a travel agency business. In the husband’s mind, financial documents showed that interest to have been worth $32,700.00. However, the affidavits also contain assertions about the value of the husband’s contributions and of assets and liabilities at various times. The husband demonstrates a fondness for spreadsheets mapping various permutations and mathematical representations of contributions and other factors.
In view of the transcript above and for reasons set out later, it is probable that at least the husband’s earlier financial statement was before the Federal Magistrate.
The husband had also filed a series of “Notice to Admit Facts”. They contain some asserted facts, but much of the content is further calculations, accompanied by spreadsheets and graphs, produced by the husband, of contribution, financial and non-financial, on various premises, such as with or without inheritance and “Alimonie”. I can locate no express reference in the transcript to these documents. However, one of the notices related to the inheritance from the husband’s father and the alimony and had annexures in French. During the “discussion” between bench and litigants, the Federal Magistrate asked the husband if he had filed any material about the French law beside what was in his affidavit. The husband answered “yes, I find it”, but I see no further mention of such material.
As to his appeal documents, each of the husband’s notice of appeal and summary of argument is mysterious, full of cryptic references to parts of documents, and assertion of “facts” of unidentified status – ie. as to whether evidence of them was before the learned Magistrate or not.
At least insofar as the identification of error in the judgment is concerned, the forbidding nature of these documents may not matter so much, because of the two deficiencies earlier referred to, but again, the content of them raises fears that a retrial may be necessary to identify and sift the numerous issues which the husband apparently wishes to agitate.
In the appeal proceedings, the husband also filed an application in a case seeking the issue of subpoenae to the wife for the production of documents relating to business and personal financial dealings from around the time of, and after separation. I dismissed that application and gave an outline of reasons, which I stated I would reiterate and possibly expand upon in this judgment.
The wife had also filed an affidavit seeking orders in respect of delivery of photographs of the children, but I declined to deal with that application and informed the wife that enforcement was a matter to be pursued initially at first instance.
Summary of facts (found or alleged)
The husband was born in 1957, the wife in 1964. Both parties told me at the appeal that their relationship commenced in 1986 and that is consistent with some of the material. The Federal Magistrate found that:
11.It appears that both parties agree that at the time of marriage there was no property pool and little each party brought to the relationship.
The parties cohabited in England where their first child was born in 1988, emigrated to Australia in 1989, where their second child was born in 1991, and married in 1994 or 1995.
In his material, the husband says that, up to 1996, “participation” was “50/50 one was working while the other was looking after the children and vice versa”. He says that at that time their combined assets totalled about $4,000.00.
The husband’s father died in 1996. The husband received an inheritance for which he gives various figures, generally around $240,000.00 - $275,000.00. The former matrimonial home was purchased partly (or wholly) using the inheritance, for $179,000.00. Money, including borrowings, was spent on restoration and renovations. The learned Magistrate found:
37.It was also apparent that part of the money from the father’s estate had been used to buy the marital property.
It seems that a sum ($75,000.00) from the estate remains in France, against alimony for the step-mother.
As seen, later in the parties’ relationship a window cleaning business, mainly operated by the wife, was set up and later still, a venture with another person in a travel agency.
The parties separated in April/ May 2003. Initially, care of the children was shared three days with the husband and four days with the wife, but then by June 2003 became equal.
At separation the husband had some superannuation of about $27,000.00. The wife took some furniture which the husband says was worth $1,620.00. He kept $7,650.00 worth.
The wife entered into a de facto relationship in June 2004. The husband remarried in 2006.
The husband is a chef earning about $964.00 per week; the wife now works as an employee for the travel agency, earning about $770.00 a week.
The husband says that since separation he has paid all the children’s schooling expenses, medical, clothing and paid child support, including an advance on child support to allow the wife to repay part of a business loan and Visa card debt.
As to events post-separation, the learned Magistrate found:
12.The husband’s evidence was that when the wife left the marriage she left him with a house on which renovations were incomplete and he was forced to pour money and his personal effort into it so that it was in a fit state to sell.
13.He gave evidence that he paid for and undertook most of the renovations to the house, evidence which the wife did not dispute.
…
25.The husband became quite emotional at one stage telling the court that when the wife left the marriage he had basically supported the two children one of whom is now 19 and the other is 15. I do not think that is quite correct because it appears that the 15 year old travels weekly between the two households, but the wife did not disagree that the husband shouldered a lot of the financial responsibility for the children.
In May/June 2004 the wife transferred her interest in the former matrimonial home to the husband and he took over the mortgage liability.
The error in calculation of net assets
The learned Magistrate did not set out a table of assets and liabilities nor a resultant value of net assets. However, he did identify assets, values and liabilities, having said:
10.As far as I could determine from the material the property pool at the time of trial was:
Put (by me) in tabular form, and the calculations done, what he then identified was:
Assets
House 399,000.00 Antique furniture (part of husband’s father’s estate) 18,500.00 Shares 1,500.00 Household Furniture 9,200.00 Motor vehicle 5,000.00 Husband’s superannuation 50,000.00 483,200.00 Liabilities
Mortgage on house 96,000.00 Credit cards 4,000.00 Loans 6,123.00 Car finance 8,151.00 “Alimony” 75,000.00 189,274.00 $293,926.00
Without losing sight of the potentially blinding torrent of calculations that poured down on the Federal Magistrate, as an explanation for the mistake, the entries in each of the two financial statements of the husband as to the amount of the mortgage liability highlighted above demonstrate that the figure of $96,000.00 was significantly wrong.
Item 46 of the husband’s Financial Statement filed 23 June 2005 was:
46 Home mortgage/s AMOUNT OF YOUR SHARE
| FULL NAMES OF ALL BORROWERS Mr Larritt A Bank |
| YOUR % SHARE 42.5% |
$ 96 000.00
Item 46 of the husband’s Financial Statement filed 20 October 2006 was:
46 Home mortgage/s AMOUNT OF YOUR SHARE
| FULL NAMES OF ALL BORROWERS Mr Larritt A Bank |
| YOUR % SHARE 38% |
$ 86 000.00
It seems that the learned Magistrate took into his list of debts, as the total of mortgage debt, the share of the mortgage debt identified in the first financial statement of the husband. That document identifies $96,000.00 as being 42.5% of the mortgage debt.
The figures in the later financial statement meant that the true mortgage liability at trial was in the order of $226,000.00.
A similar error has apparently occurred in relation to the husband’s contentions about the alimony debt. Later, I will set out the learned Magistrate’s discussion of that debt but for present purposes, it is obvious from that discussion that the learned Magistrate did not arrive at his own assessment of a value that should be ascribed to it.
The likelihood is that the figure was taken from the husband’s 2005 financial statement. Item 53 was:
53 Other personal liabilities AMOUNT OF YOUR SHARE
| SPECIFY ALIMONIE Mme P.H. Larritt |
$ E 75 000.00
| FULL NAMES OF ANY OTHER LIABLE PERSON Ms Drover, Master T Larritt, Master Y Larritt |
| YOUR % SHARE 50% TBA |
In the husband’s 2006 financial statement the equivalent entry was:
53 Other personal liabilities AMOUNT OF YOUR SHARE
| SPECIFY ALIMONIE Mme P.H. Larritt |
$ E 120 000.00
| FULL NAMES OF ANY OTHER LIABLE PERSON Mr Larritt, Master T Larritt, Master Y Larritt |
| YOUR % SHARE 100% |
Again, the learned Magistrate seems to have taken a figure for only half the alleged liability.
As earlier seen, Coates FM included credit card liabilities of $4,000.00. In his later financial statement the husband stated that credit card debt was $68,500.00 and a breakdown of that sum was annexed.
Again, it seems that the learned Magistrate looked at the earlier financial statement, which showed a $4,000.00 debit entry for a Mastercard.
The husband points to other items identified by Coates FM. The house was included at $399,000.00. During the exchange that took place before the husband entered the witness box, he told the learned Magistrate that the house had been sold for $382,000.00; that settlement was to be shortly after the trial; that he had costs of sale; that since he filed his later financial statement he had borrowed from his sister $16,000.00 to “keep going” and that he expected to receive net sale proceeds of $30,000.00 to $40,000.00.
The husband complains, with some justification, that none of this information was taken into account by the Federal Magistrate.
If all assets and liabilities as claimed by the husband were included, net assets would have been only around $20,000.00
That is a radically different context to that in which the learned Magistrate considered, so far as he did, the claim by the husband that he should receive all the tangible assets and the wife should assume half of the alimony liability.
The learned Magistrate’s treatment of the “liability” of the husband’s step-mother
As seen at the outset, the husband’s case on point was essentially that the parties had enjoyed the benefit of the husband’s father’s estate, that that benefit had been substantially eroded by all of the debt which the parties acquired, both before and after separation and that in those circumstances, the wife should bear half of the liability for the alimony.
The references by Coates FM to this “liability”, including those earlier set out, are:
8.In response the wife stated she was not claiming any part of the matrimonial assets and did not wish to be involved with any issue pertaining to the husband’s father’s estate, a matter emanating, apparently, under French law.
…
10.As far as I could determine from the material the property pool at the time of trial was
…
Other liabilities were debts including … and apparently what was called alimony in France estimated at $75,000.00 to the applicant husband’s (French) step-mother. While both parties referred to this the details of what is apparently French law was very unclear, but both agreed that the debt attached to their marriage.
…
35.I think the reason that the wife did not want any of the husband’s father’s estate was because apparently the husband is responsible for the payment of what he referred to as “alimony” to his deceased father’s second wife, should she survive beyond the point when all monies in the father’s estate would be exhausted in supporting her.
36.Both the husband and the wife gave evidence that they understood French law and that French law required children to support a surviving parent or step-parent whose partner died and no estate monies were available for that support. The wife wanted no part of such an imposition.
Unfortunately, as seen, the discussion set out does not include any consideration of the probabilities or contingencies in respect of the “liability”, or assessment of a value for it, having regard to those prospects. Nor is there any consideration of whether the wife ought share in such liability as might accrue, just a bare conclusion that she ought not.
This deficiency is compounded by the absence of the usual “step by step” approach to determination of property settlement applications, namely; calculation of the asset pool, the identification and assessment of contributions, the assessment of factors relevant under s 75(2) and finally a consideration of whether the proposed orders are, in all the circumstances, just and equitable. (see Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143).
The husband’s application that subpoena issue
To permit the issue of the subpoena would either have produced nothing, because the wife said she had no further documents or, and perhaps in any event, would have delayed the hearing of the appeal. The husband ultimately said he did not want that to occur.
There were other reasons for refusing the application: it was not clear that any further evidence would show that the order appealed from was wrong or even likely to be wrong; the question of production could have been pursued at trial.
Conclusion as to appellable error
In my view, the mathematical errors and the failure to properly consider the husband’s arguments constitute appellable error. The question then is whether I can determine if the actual orders are right or wrong or whether the order ought, because I am unable to re-exercise the discretion vested in the Federal Magistrate, be set aside anyway.
Remission or re-exercise
I consider that, notwithstanding the wish of each party that the matter not be remitted for rehearing and the obvious desirability of avoiding that course, that the process in the Federal Magistrates Court was so flawed that I am not in a position, other than in an arbitrary way, to determine the litigation between the parties. I say this because of the lack of fact-finding by the Federal Magistrate, the doubt about the material that was before him, the doubt about the status of the information conveyed to the court by the husband prior to his entry into the witness box, obvious difficulties with the quality of the evidence about the alimony debt which are best dealt with at first instance, insufficient findings and consideration of the alleged alimony liability, and the absence of any structured approach by the Federal Magistrate to determination of a just and equitable alteration of property interests.
The husband may well ultimately do no better than the order made by Coates FM – I told the husband so during the hearing – but he is entitled to a proper disposition of his application.
I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date: 2 April 2008
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