Laska & Garvey (No 2)
[2023] FedCFamC1A 94
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Laska & Garvey (No 2) [2023] FedCFamC1A 94
Appeal from: Laska & Garvey [2022] FedCFamC2F 1780 Appeal number(s): NAA 16 of 2023 File number(s): SYC 2667 of 2021 Judgment of: ALDRIDGE J Date of judgment: 16 June 2023 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Appeal from interlocutory orders – Leave to appeal – Spouse maintenance – Whether the primary judge erred by failing to deal with a property and a dollar for dollar order – Attribution to weight – Where the primary judge’s decision is not attended by sufficient doubt to justify an appeal – Leave to appeal refused – Appeal dismissed – Appellant to pay the costs of the respondent in a fixed sum. Legislation: Child Support (Assessment) Act 1989 (Cth) Pt VII, Div 7
Family Law Act 1975 (Cth) ss 72, 75(2)
Federal Circuit and Family Court (Family Law) Rules 2021 (Cth) Sch 3
Cases cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; [1981] HCA 39
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
Hedlund v Hedlund (2021) FLC 94-065; [2021] FedCFamC1A 84
House v The King (1936) 55 CLR 499; [1936] HCA 40
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Number of paragraphs: 60 Date of hearing: 5 June 2023 Place: Sydney The Appellant: Litigant in person Counsel for the Respondent: Mr Williams KC Solicitor for the Respondent: Barkus Doolan Winning ORDERS
NAA 16 of 2023
SYC 2667 of 2021FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS LASKA
Appellant
AND: MR GARVEY
Respondent
order made by:
ALDRIDGE J
DATE OF ORDER:
16 june 2023
THE COURT ORDERS THAT:
1.The application for leave to appeal from Orders 1, 6 and 8 made on 22 December 2023 is dismissed.
2.The appeal is dismissed.
3.The appellant pay the costs of the respondent fixed in the sum of $16,898.87 at the conclusion of the property settlement proceedings between them.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Laska & Garvey (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE J:
INTRODUCTION
The parties are engaged in property settlement proceedings which are currently listed for final hearing in August 2023. This is an appeal from interlocutory orders made by a judge of the Federal Circuit and Family Court of Australia (Division 2) on 22 December 2022. On that day, the primary judge dismissed an Application in a Proceeding filed on 21 September 2022 by the appellant, Ms Laska.
That application had sought the following orders:
1. That this Application be listed on short notice.
2.Within 24 hours of these Orders, on a without admissions basis, the Respondent shall pay to the [appellant] the sum equal to four weeks rent up to the sum of $10,000 for the payment of a rental bond on new premises with such sum to be categorised by the Trial Judge.
3.Within 24 hours of these Orders, on a without admissions basis, the Respondent shall pay to the [appellant] the further sum of one month’s rent up to the sum of $12,000 being for the first month’s rental payment on the new premises with such sum to be deducted from the [appellant’s] next spouse maintenance payment due in October.
4.Within seven days of the Respondent's compliance with Order 1, the [appellant] shall vacate the property at [AN Street, Suburb AO].
5.The parties shall do all acts and things to direct that any rental bond refund received in respect of the property at [AN Street, Suburb AO] be paid directly to the Respondent.
6.The [appellant] is to direct the removalist to invoice moving costs to the Respondent directly and the Respondent is to ensure that the invoice is paid by the due date.
7.That the Respondent continue to make available to the [appellant] a suitably registered, insured and road worthy [...] motor vehicle together with a fuel card and toll pass.
8. That Order 8 of the Orders dated 2 March 2020 be discharged.
9.That on the first Monday of each month the Respondent pay to the [appellant] the sum of $30,000 per month by way of spouse maintenance.
10.That within 28 days the Respondent pay to the [appellant] the sum of $300,000, to be categorised at trial.
11.The Respondent pay the [appellant’s] costs of and incidental to this application on an indemnity basis.
On 8 December 2022, the appellant filed an Amended Application in a Proceeding which sought the following orders:
Vehicle
7.That the Respondent continue to make available to the [appellant] a suitably registered, insured and road worthy [...] motor vehicle together with a fuel card and toll pass, such vehicle to be no older than five years.
Lump Sum and Spouse Maintenance
8. That Order 8 of the Orders dated 2 March 2022 be discharged.
9.That on the first Monday of each month the Respondent is pay to the [appellant] the sum of $30,000 per month by way of spouse maintenance.
10.That within 7 days the Respondent pay to the [appellant] the sum of $300,000, to be categorised at trial.
11.That in the event the Respondent fails to pay the sum of $300,000 above, that within 14 days of the date of orders the parties do all acts and things and sign all documents required to immediately list for sale, and thereafter to sell at the best price reasonably available, the property situated at and known as [AP Street, AQ Suburb], New Zealand being […] and the whole of the land in Certificate of Tile […] and to cause the proceeds of sale to be disbursed as follows:
a)All costs and expenses directly referable to the sale, including but not limited to agent’s fees and commissions, advertising fees, and legal costs directly referable to the sale;
b)The sum of $300,000 plus interest calculated in accordance with the Federal Circuit and Family Law Rules (2021) to be paid to the [appellant]; and
c) The balance to be held in the trust account of [the appellant’s solicitors] pending further Order.
…
Orders 12 and 13 were consequential orders as to the mode of sale of the AQ property and the preservation of its value.
Orders 14–18 were proposed orders for litigation funding which essentially required the respondent to pay to the appellant an amount for legal fees equivalent to the value of his legal fees incurred at, or shortly after, they were incurred – commonly known as a dollar for dollar order.
Orders 1–6 from the original application had already been dealt with by a judicial registrar.
The primary judge declined to hear the applications for the sale of the AQ property and the litigation funding order due to their late inclusion.
The order for the interim property settlement was dismissed because the primary judge considered that the appellant “has not discharged the onus that the sum would not prejudice the respondent’s case on a final basis, nor demonstrated that the lump sum could be recovered” (at [76]).
As to spousal maintenance, her Honour found that the appellant’s income fell short of her weekly needs in an amount of $71.92. However, the appellant has a financial resource available to her which could meet that shortfall.
The parties finally separated in either late 2019 or early 2020. They have six children of whom three are adults and the others were aged 14, 15 and 17 at the time of the hearing. The five younger children were living with the appellant.
The three younger children attend private schools and one is a boarder.
In addition to the AQ property, which was valued at NZD 700,000, the parties’ significant asset was a group of companies known as the B Group (“the Group”). It was not in dispute that the appellant had worked in the business of the Group and had been a shareholder in one or more of the entities but no longer is. The Group is under the control of the respondent.
It could not be disputed, and as I understand it was not disputed, that due to her involvement in the business, advances made by her from sums provided by her parents and her role as the primary carer, the appellant will receive a significant portion of the parties’ assets. The dispute at the hearing was as to the likely value of those assets and the source and effect of any interim payment.
A single expert has assessed the Group as having a value of between $8,109,000 and $10,109,000 as at 30 June 2020. That valuation was thus, effectively, over two years old at the hearing.
The evidence of the Chief Financial Officer (“CFO”) of the Group, coupled with documents from the Australian Taxation Office established that, at the time of the hearing, the Group owed unpaid tax in the sum of $6,321,090 of which $6,150,188 was overdue. The CFO deposed that the debt arose from unpaid PAYG withholding tax between May 2020 and June 2022. He also suggested that a payment plan may be explored.
The tax debt was not taken into account in the valuation because it arose after the relevant date but it clearly has a significant effect on the current value of the Group.
I do not accept the various submissions made by the appellant that the tax debt was not established because it was based on just some pieces of paper and that there had not been proper disclosure of it. The latter, which was properly criticised by the primary judge, does not mean that the tax debt was not properly established by the evidence of the CFO.
I also reject the submission that a large tax debt indicates that the company was very profitable and had to pay so much PAYG tax because it needed to employ so many people. There may be many reasons why such a debt arose. If it was, indeed unpaid PAYG tax, that is concerning because that represents the Group failing to forward tax it has deducted from employee’s wages and may be considered as a sign of insolvency in that it has used those funds for other purposes.
The primary judge took into account the value of the Group, the tax debt, the respondent’s loan account with the Group which was asserted to be a debt of $3.8 million as at 9 November 2022, and the inability of the appellant to point to an account from which $300,000 could be paid from, to dismiss the application for interim property settlement.
THE APPEAL
Whilst lawyers prepared the Notice of Appeal, the appellant has otherwise acted for herself in the appeal. As she acknowledged, her Summary of Argument did not address the grounds of appeal. However, the appellant made oral submissions which did so.
This is an appeal from a discretionary judgment and the following principles set out in House v The King (1936) 55 CLR 499 at 504–505 apply:
…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 the discretion is reviewed on the ground that a substantial wrong has in fact occurred…
The effect of this is that challenges to weight given to particular matter face a high bar (Norbis v Norbis (1986) 161 CLR 513; Gronow v Gronow (1979) 144 CLR 513) and the appellant needs to show that the application of weight has led to a decision that is unreasonable or plainly wrong (Hedlund & Hedlund (2021) FLC 94-065 at [37]).
The orders sought were interlocutory and leave to appeal is required. The discretion as to leave is unfettered but generally will look to see whether the decision is attended with sufficient doubt to justify an appeal and that a miscarriage of justice would result if leave was not granted, supposing the decision to be wrong (Medlow & Medlow (2016) FLC 93-692).
At the hearing of the appeal, the appellant sought to adduce further evidence in the form of two affidavits that deal with her work history and her shareholding. The application was refused as it could not be established how the affidavits could demonstrate error on part of the primary judge. Ex tempore reasons for judgment were delivered.
The AQ property (Grounds 1 and 2)
The appellant submitted that the primary judge erred by refusing to deal with this property and failed to take into account the fact that the property was unencumbered and was occupied rent free by the respondent’s parents.
Whilst it is true that an order for the sale of the AQ property had been made as early as 14 April 2022, such an order was not sought in the Application in a Proceeding filed on 21 September 2022. It was that application which was fixed for hearing (more accurately, those parts of it that had not already been heard by a judicial registrar). The sale was only raised in the amended application of 8 December 2022.
As I have said, her Honour declined to hear the matters raised by the amendments. The respondent had indicated his objection to all the matters proceeding because he had not been able to adduce evidence regarding the AQ property and its proposed sale or the dollar for dollar order.
The primary judge raised these difficulties with counsel for the appellant who said:
[COUNSEL FOR THE APPELLANT]: Your Honour, can I say that there’s little I can say against it. …
(Transcript 14 December 2022, p.7 line 40)
There was thus no effective opposition to the course taken by the primary judge and it is difficult now to contend that her Honour erred.
In reality, the appellant is asserting that the claim against the AQ property and for the dollar for dollar order should be allowed to proceed or alternatively, should be adjourned. They are matters of practice and procedure and courts are reluctant to grant leave to appeal against such orders as is explained in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177.
I note that the matter is listed for final hearing in August this year. The question as to whether there would be any point in granting leave also arises. The appellant said that she was going to ask for the hearing to be vacated and the matter to be transferred to the Federal Circuit and Family Court of Australia (Division 1). If that occurs, there then may be scope for perusing further interlocutory applications such as these.
The appellant submitted that the AQ property should have been identified as a source for the $300,000 interim property settlement that she sought. In fact, her Honour did so saying:
75.As to the property in New Zealand, with a value of about $700,000, I have considered whether the property might be a source of equity for payment of the $300,000. On an interim basis, I could not reach that view because, for the reasons given, I cannot anticipate the net position of the parties as to be satisfied that the lump sum would not prejudice the final relief sought by the Respondent.
Thus the primary judge accepted that the property could be a source of the funds but was not satisfied that the payment of such a sum could presently be justified for the matters set out. The matter was taken into account and therefore no error has been demonstrated.
The balance of the appellant’s submissions sought to persuade me that I would make a different decision. Even if that were so, that would not demonstrate error on the part of the primary judge because there is often more than one correct answer to the exercise of discretion. The fact that a different judge could or would come to a different view does not demonstrate error.
Did her Honour err by not relying on the valuation of the Group and by relying on “unsubstantiated” submissions as to a tax debt and post COVID-19 trading? (Ground 3)
It is plain that the primary judge relied on the valuation (see [27]–[40]) but was rightly concerned that it was old and predated the tax debt (see [44]–[49], [70]) and that the valuation period included only four months out of the 36 month COVID-19 period (at [71]).
The point being made by her Honour was that it was most unlikely that the valuation reflected the present value of the Group. In the light of the matters noted, that must be so.
Importantly, her Honour did not speculate on whether the effect of COVID-19 on the Group, the business of which is construction was adverse or beneficial but merely that it is likely to have had an effect.
I have already addressed the question of the quality of evidence of the tax debt.
There is no merit in this ground.
Did her Honour fail to give sufficient weight to:
·The economic disparity between the parties;
·The fact that the respondent has significant income resources, whereas the appellant’s financial circumstances are very limited and that
·There was no extant order for spousal maintenance?
(Grounds 4, 5 and 6)
It is implicit throughout the reasons that her Honour was well aware that the respondent was the person in control of the Group and therefore its income. He was able to and did ensure that he had a significant income. However, disparity in income of itself, is not a basis for either an interim property settlement or spousal maintenance. It is a consideration to be taken into account because s 75(2)(b) of the Family Law Act 1975 (Cth) (“the Act”) requires the court to take into account the parties “income, property and financial resources”. As I have explained, the applications failed for other reasons.
Spousal maintenance is governed by s 72 of the Act. It does not extend to child maintenance which is governed by Div 7 of Pt VII and the Child Support (Assessment) Act 1989 (Cth) (“Child Support (Assessment) Act”). Specific provision is made for the maintenance of adult children.
The appellant did not seek orders for child maintenance or orders under the Child Support (Assessment) Act. Her claim, therefore, was rightly limited by the primary judge to the needs of the appellant herself (at [79]).
The primary judge identified the needs of the appellant by taking the rent of the property the appellant previously rented (which, of course includes the rent for the children) and added to it the personal expenses of the appellant. No challenge was made to that approach.
It is to be noted that the respondent was paying the school fees.
All but $71.92 per week of the amount so identified was paid by the Group in payments to the appellant. As I have said, her Honour considered that the shortfall could be met by financial resources.
In her oral submissions, the appellant was very critical of the finding of access to a financial resource. She submitted that just because the drawer of a cheque was a family trust an inference could not be drawn that she was a beneficiary of the trust and that, in any event, it could not be regarded as a source of future payments.
In response, the respondent sought to adduce evidence on the appeal as to the creation of the trust and its terms. Ultimately, it was agreed between the parties that the appellant was in fact a primary beneficiary of the trust, which is a discretionary trust. Thus, any future payments to the appellant are entirely up to the trustee or trustees.
It follows from the above that her Honour did not err in finding that the trust was a financial resource which had provided significant funds to the appellant as can be seen from the previous solicitors’ trust account statements.
Thus, as no relevant need was established, the application failed. There was no need to consider the disparity in income. In any event, spousal maintenance is not based on evening out incomes. The same may be said of property settlement orders.
The appellant submitted that the payment arrangement gave her no certainty, that she had to issue invoices, at times beg for payment, had no peace of mind, all of which would be resolved if orders had been made.
Again, that is not the way the Act approaches the assessment of spousal maintenance.
None of the matters raised by the appellant point to the decision being unreasonable or plainly wrong.
Did her Honour fail to take into account or give sufficient weight to:
·The respondent’s failure to disclose relevant financial information;
·The obligation of the appellant to pay legal fees for the final hearing;
·The appellant meeting the bulk of the children’s expenses;
·The needs of the appellant and the children and
·The appellant being a potential beneficiary of a discretionary trust?
(Grounds 7, 8, 9, 10 and 11)
The primary judge discussed the issue of non-disclosure at [51]–[57] and found that neither party’s disclosure had been satisfactory. At [74] her Honour declined to infer from the lack of disclosure that the respondent was able to make the payment sought by the appellant because the evidence had not been tested and no final findings could be made.
The matter was taken into account.
The interim property settlement was not based on the existing or proposed legal costs. This was not surprising given the application for litigation funding orders, which her Honour declined to hear as discussed above.
I have already referred to the children’s needs in the context of the spousal maintenance grounds. The appellant’s support of the children could be relevant to the property settlement but that application failed because the primary judge was not satisfied that it could properly be paid, although otherwise appropriate.
Again, the weight given to these matters cannot be regarded as erroneous.
CONCLUSION AND COSTS
I am not persuaded that the grounds have sufficient merits to justify leave. As there was no application for leave the appropriate order is that the appeal be dismissed.
The appeal has been wholly unsuccessful. The appellant presently has no access to any funds to enable her to meet any costs order, but the property settlement proceedings between the parties are yet to be determined. No issue was taken as to the amount sought by the respondent which was calculated in accordance with Sch 3 of the Federal Circuit and Family Court (Family Law) Rules 2021 (Cth).
The appellant is to pay the costs of the respondent fixed in the sum of $16,898.87 at the conclusion of the property settlement proceedings between them.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Aldridge. Associate:
Dated: 16 June 2023
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