Linch & Linch
[2014] FamCAFC 69
•24 April 2014
FAMILY COURT OF AUSTRALIA
| LINCH & LINCH | [2014] FamCAFC 69 |
| FAMILY LAW – APPEAL – NOTICE OF APPEAL – PROPERTY – Where the husband appeals property settlement orders – Where the husband challenges the Federal Magistrate’s assessment of the respective contributions of the parties, before, during and after cohabitation – Where error is demonstrated in the assessment of the initial contributions of the parties – Lack of adequate reasons – Where the orders on appeal include a superannuation splitting order in relation to the husband’s Superannuation Scheme pursuant to s 90MT(1)(a) of the Family Law Act 1975 (Cth) – Where the husband was receiving a pension – Where the Federal Magistrate assessed the wife’s contributions to the husband’s superannuation at 15 per cent – Where the Federal Magistrate did not provide adequate reasons for arriving at his assessment – Where the Federal Magistrate also failed to take into account under FAMILY LAW – APPEAL – NOTICE OF APPEAL – COSTS – Where the appeal is successful on a question of law – Where it is appropriate each party bear their own costs – Costs Certificates granted pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) for the appeal and rehearing. |
| Evidence Act 1995 (Cth) – s 69 Family Law Act 1975 (Cth) – s 75(2) |
Federal Proceedings (Costs) Act 1981 (Cth) – ss 6, 8 and 9
| AMS v AIF; AIF v AMS (1999) 199 CLR 160 |
| APPELLANT: | Mr Linch |
| RESPONDENT: | Ms Linch |
| FILE NUMBER: | SYC | 4257 | of | 2010 |
| APPEAL NUMBER: | EA | 66 | of | 2012 |
| DATE DELIVERED:: | 24 April 2014 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Finn, Strickland & Le Poer Trench JJ |
| HEARING DATE: | 5 September 2013 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court of Australia |
| LOWER COURT JUDGMENT DATE: | 2 May 2012 |
| LOWER COURT MNC: | [2012] FMCAfam 384 |
REPRESENTATION
| THE APPELLANT: | In person |
| COUNSEL FOR THE RESPONDENT: | Mr Gould |
| SOLICITOR FOR THE RESPONDENT: | Solari & Stock Lawyers |
Orders
The appeal be allowed.
The orders made by Federal Magistrate Foster (as his Honour then was) on
2 May 2012 be set aside.
The proceedings be remitted to the Federal Circuit Court for rehearing.
Each party bear their own costs.
The Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of the costs incurred by the appellant husband in relation to the appeal.
The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by the respondent wife in relation to the appeal.
The Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of the parties in respect of the costs incurred by the appellant husband and the respondent wife in relation to the rehearing of the applications.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Linch & Linch has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 66 of 2012
File Number: SYC 4257 of 2010
| Mr Linch |
Appellant
And
| Ms Linch |
Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed on 29 May 2012 Mr Linch (“the husband”) appeals against property settlement orders made by Federal Magistrate Foster (as his Honour then was) on 2 May 2012. The respondent in the appeal is Ms Linch (“the wife”), and she opposes the appeal.
In summary, the orders appealed against provided for the proceeds of sale of a property at W held on trust for the parties to be distributed by way of payment of $243,164 to the wife, $68,836 to the husband, and any remaining balance over $312,000 to be divided between the parties in the same proportions. A splitting order was made in relation to the husband’s Superannuation Scheme pursuant to s 90MT(1)(a) of the Family Law Act 1975 (Cth) (“the Act”), using the base amount of $175,000. The sum of $10,097 held on trust by the husband for the parties’ child was to be transferred to an account jointly operated by the parties, with such funds to be applied by agreement for the welfare, education and benefit of the child.
On appeal, the husband seeks that the orders made by the Federal Magistrate on 2 May 2012 be dismissed, that from the monies held on trust $150,000 be paid to him and the remainder be paid to the wife, that $50,000 be paid from the husband’s superannuation fund to the wife, and that otherwise each party retain all other assets in their respective possession or entitlement.
Background
The husband was born in 1965 and was aged 47 years at the time of trial.
The wife was born in 1968 and was aged 43 years at the time of trial.
The parties commenced cohabitation in April 1996 and separated in October 1999. Following separation, property orders were made by consent at the Local Court in 1999 pursuant to the Property (Relationships) Act 1984 (NSW).
The parties resumed cohabitation in 2003, were married in March 2005, and finally separated in March 2009.
The parties’ only child A (“the child”) was born in 2007 and was aged five years at the time of trial.
The wife’s application for property settlement orders came before the Federal Magistrate on 22 and 23 March 2012 and his Honour made orders and delivered his reasons for judgment on 2 May 2012.
Reasons for judgment of the Federal Magistrate
The Federal Magistrate commenced his reasons for judgment by outlining the parties’ applications. In summary, the wife sought that the earlier property orders made in the Local Court be set aside, that the net proceeds of sale from the W property be paid to her, that there be a splitting order in the sum of $316,448 in her favour from the husband’s Superannuation Scheme, that the sum of $10,097 held by the husband on trust for the parties’ child be transferred to an account jointly operated by the parties, and that otherwise each party retain the assets in their respective possession or entitlement. The husband sought that the net proceeds of sale from the W property be divided equally and that otherwise each party retain the assets in their respective possession or entitlement.
In relation to initial contributions, his Honour noted that at the commencement of cohabitation in 2003 the wife was in full time employment earning approximately $50,000 per annum and had accrued $27,300 in a superannuation fund. The wife also had available to her approximately $157,000 from the proceeds of sale of her G property, which she put towards the mortgage registered on the title to the husband’s L property and which the parties later withdrew in part for various purposes, including improvements to the L property. At the commencement of cohabitation the husband was in full time employment with a New South Wales Government Agency and had his property at L. His Honour noted that, according to notations to the orders made on 7 December 1999, the L property was purchased by the parties in 1998 for $315,000 with a mortgage of $252,000, and as at the date of those orders the parties agreed the property had a value of approximately $350,000. The husband had also been accruing superannuation entitlements in his Superannuation Scheme since 1984.
The Federal Magistrate next recorded the parties’ property dealings during cohabitation, which can be summarised as follows:
·In 2004 the parties jointly purchased an investment property for $360,000, with a mortgage of $385,000 (which was collaterally secured over the L property).
·In May 2006 the parties jointly purchased a property in H for $480,000, with a mortgage of $413,650.
·In June 2008 the parties sold the H property with the net proceeds being approximately $170,000.
·In September 2008 the parties purchased the W property for $670,000, with a mortgage of $400,000, a $100,000 gift from the wife’s father, and the remainder being the sale proceeds from the H property.
·In November 2008 the parties sold the investment property with net proceeds of approximately $105,000, which proceeds were applied to reduce the W mortgage.
His Honour also noted that after the parties’ child was born in 2007 the wife took 12 months maternity leave before returning to her previous employment on a part time basis. Furthermore, his Honour noted that in April 2008 the husband transferred to S. The wife and child remained living in the matrimonial home until it was sold some months later and then joined the husband in T. The wife obtained part time employment, which she remained in until separation.
Over the period of cohabitation the husband’s parents provided various funds to the parties totalling approximately $20,000. Between 2005 and 2007 the wife received various sums from her father totalling $119,150, including the $100,000 gift referred to above.
As to post separation contributions, the Federal Magistrate noted that the husband commenced sick leave in 2009 as a consequence of a knee injury and subsequently made a successful application to retire from the Government Agency on psychological grounds. His Honour also recorded that the husband spent little time with the child until his relocation to Sydney in 2011. In November 2011, the parties agreed on final parenting orders which provided for the parties to have equal shared parental responsibility and equal time with the child.
The parties’ relevant post separation financial dealings, as recorded by his Honour, can be summarised as follows:
·Upon separation in March 2009 the wife withdrew $37,500 from the mortgage account and used those funds to re-establish herself in Sydney, where she commenced part time work three days per week.
·It was the wife’s assertion that the husband withdrew funds totalling $40,650 from the mortgage account and the parties’ joint account, however, the Federal Magistrate was not satisfied the evidence relied upon by the wife was sufficient. The husband gave evidence of spending approximately $25,600 on a motor vehicle and a driveway for the W property.
·In March 2010 the husband transferred $10,000 from the parties’ joint funds into a trust account for the child. He later withdrew those funds and then repaid them.
·In May 2010 the parties sold the W property for $710,000 with the net proceeds of $300,748 being held in a trust account on their behalf.
·When the husband relocated to Sydney in 2011 he sold a tractor to his brother for $10,000 and applied those funds in part to the purchase of a van.
·
In August 2010 the wife inherited from her father’s estate cash funds totalling $261,574 and a property in E. In early 2011 the wife applied her inherited cash funds towards the purchase of a property in C for $512,000, with a mortgage of $296,000. At the time of trial the
E property had been on the market since December 2010 listed at $120,000.
·In 2011 the husband began to receive a pension of $70,504 per annum and received a lump sum non-preserved superannuation payment of $50,875, along with accumulated long service and annual leave entitlements of $74,630. As at 2011 the husband held a credit in his Credit Union account of $72,785, which substantially represented these leave entitlements.
The Federal Magistrate then turned to consider the husband’s pension. As at
June 2009 the “withdrawal benefits” payable to the husband by the Superannuation Scheme and the State Authorities Non-contributory Superannuation Scheme were in the sum of $196,573.
However that subsequently changed after events which arose in late October 2004 as part of the husband’s work as a public servant resulted in a series of vexatious complaints against the husband and the wife being stalked. The husband conceded the wife had suffered considerably as a consequence of the stress of those circumstances, which in turn caused the parties to sell the
L home, move to H, move again to northern New South Wales and, ultimately, led to the parties’ separation. As a result of these circumstances the husband made an application in 2009 to commence sick leave and in 2011 was retired from the Government Agency, assessed as suffering “chronic adjustment disorder with some elements of post traumatic stress disorder”. He then commenced to receive his pension, and the lump sums referred to above.
The Federal Magistrate noted the husband had the ability to commute a “prescribed part” of his pension, the maximum of which was calculated in accordance with the workers compensation rates in effect at the date of his retirement pursuant to the Workers Compensation Act 1987 (NSW). However, upon taking into account the relevant considerations, the Federal Magistrate found the husband had a “limited expectation of any significant lump sum by way of commutation”.
The Federal Magistrate went on to consider the issue of superannuation splitting. His Honour noted that only the lump sum value of the husband’s pension scheme (not the income stream itself) could be the subject of a sum certain monetary splitting order, and the agreed value was $1,265,795 as at
22 July 2011.
His Honour also noted the pension payment was referable to an amount equal to 72.75 per cent of the husband’s final salary and that he would be able to make an application for that percentage to be increased by not more than
12.25 per cent of his final salary.
In relation to the husband’s present circumstances, the Federal Magistrate noted the husband’s evidence that he “had not given any thought” to obtaining employment and that he was “not well enough psychologically” to do so, although he was not receiving ongoing assistance or counselling nor taking any medication in relation to his disability. His Honour also noted the husband’s concessions that he was otherwise physically fit and that he would seek psychological assistance once it was clear the wife could not use it against him in parenting proceedings.
The Federal Magistrate then outlined the law as to the “four-staged process” in determining an application under s 79 of the Act, before setting out a table of the parties’ agreed assets of which the non-superannuation pool had a net value of $601,418, and the superannuation was valued at $76,555 for the wife, and $1,265,791 for the husband. His Honour also noted the wife’s “financial resources” from her late father’s estate, comprising the equity in her home of approximately $215,000 and the E property, would be considered in the context of s 75(2) of the Act.
In relation to “add-backs”, the Federal Magistrate was not satisfied the funds allegedly withdrawn from the mortgage account and the parties’ joint account by both the husband and the wife should be added back, nor that the funds arising from the sale of a motor vehicle should be added back, and that only $3,900 of the sale proceeds from the husband’s tractor should be added-back (given $6,100 as used to purchase the van). As there was no valuation of the furniture in the husband’s possession, the Federal Magistrate included it in the asset pool at the asserted value of $5,000. His Honour then set out an adjusted table of non-superannuation assets at [74], totalling $500,168.
As to initial contributions, his Honour proposed to consider the significance of the husband’s initial superannuation contributions in the context of the superannuation pool, but was satisfied that the contributions as at the commencement of cohabitation in relation to the non-superannuation pool “modestly favour” the husband.
Given the husband’s role as primary income earner and the wife’s role as primary homemaker and caregiver to the child (whilst also working part time), the Federal Magistrate found that the parties’ contributions during the relationship were equal. However, his Honour noted that the gift of $100,000 from the wife’s father and the “onerous obligation cast upon the wife as a consequence of the circumstances … leading up to the husband’s [retirement]” from the Government Agency were significant and favoured the wife.
In relation to post-separation contributions, his Honour found the wife’s primary care of the child between her relocation to Sydney (whilst also working part-time) and the husband’s relocation to Sydney, and the fact the husband remained living in the former matrimonial home until its sale, favoured the wife. His Honour also found the $125,505 received by the husband in 2011 by way of accumulated long service leave, annual leave and non-preserved superannuation payments was already reflected in the pool for division.
Thus the Federal Magistrate determined that contributions to the date of trial favoured the wife 55 per cent/45 per cent.
The Federal Magistrate then turned to consider the relevant factors arising under s 75(2) of the Act, and his Honour’s findings as to this can be summarised as follows under the relevant subsections of s 75(2):
(a):In the absence of any evidence from the husband to the contrary,
his Honour was satisfied the husband was capable of some employment.
(b):His Honour noted the wife received $75 per fortnight from the husband by way of child support, that she was working part time, and that she proposed to continue to work part time in the foreseeable future so as to be available for the child. His Honour also noted the husband was in receipt of an ongoing pension, that there may be an opportunity to further increase the rate of pension payable to him, and that he had some capacity for part time employment.
(c): Pursuant to the consent orders of 30 November 2011 the parties agreed to a shared care arrangement in relation to the child.
(d):Both parties had primary obligations to provide for their own needs and those of the child.
(f):His Honour noted the wife was in receipt of an income tested parenting benefit and that superannuation would be considered in the context of the superannuation pool.
(j):His Honour found the wife’s role as homemaker and parent facilitated the husband continuing his employment with the Government Agency.
(k):His Honour found the wife’s prospects of returning to full time employment were limited by the shared care arrangement for the child and the wife’s wish to remain available for the child in the immediate future.
(na): His Honour noted the rate of child support received by the wife may change as a consequence of the shared care arrangement and the parties’ relevant income in the future.
(o):His Honour found the wife’s assets outside of the asset pool for division, namely her present home and the E property, represented a significant “financial resource” to the wife.
At trial, it was the wife’s contention there should be no s 75(2) adjustment and it was the husband’s contention there should be a 5 per cent adjustment in his favour. The Federal Magistrate determined not to make any s 75(2) adjustment in relation to the non-superannuation asset pool, and thus the division of the non-superannuation pool was 55 per cent to the wife and 45 per cent to the husband.
Next, the Federal Magistrate turned to consider the superannuation pool, comprising the wife’s accumulation interest of $76,555 and $1,265,791 being the value of the future income stream of the husband’s pension.
His Honour first set out an extract from Schmidt & Schmidt [2009] FamCA 1386 in which Watts J discussed the difficulty of assessing contribution-based entitlements to a superannuation interest such as a pension.
The Federal Magistrate assessed the wife’s contribution to the husband’s present pension entitlement at 15 per cent, being $189,868. However, given the wife’s own increase in superannuation during cohabitation and post-separation by approximately $50,000, the Federal Magistrate determined that there should be a small reduction in the wife’s entitlement to reflect the husband’s contribution to the wife’s entitlement. Thus, on the basis of contributions his Honour determined to make a splitting order in relation to the husband’s superannuation entitlement in the sum of $175,000 in favour of the wife.
In relation to the s 75(2) considerations, the Federal Magistrate noted in particular the uncertainty about the husband’s future employment. In all the circumstances, the Federal Magistrate was satisfied there was no basis for any adjustment to the superannuation pool on account of the s 75(2) factors.
Lastly, the Federal Magistrate set out the assets the wife would receive, which totalled $31,928, and noted that she would require a further adjustive payment of $243,164 to make up $275,092 (being 55 per cent of $500,168). His Honour found such sum should be paid out of the proceeds of sale from the former matrimonial home, with the balance payable to the husband. Along with a superannuation splitting order in favour of the wife, the Federal Magistrate considered such orders were just and equitable in the circumstances.
Grounds of appeal
In his Notice of Appeal filed on 29 May 2012 the husband, who appeared without legal representation, appeals all orders made by the Federal Magistrate, and set out 21 grounds of appeal. However, at the commencement of the appeal hearing the husband handed up (without objection from counsel for the wife) a document grouping the grounds of appeal into seven topics. Both parties’ oral submissions were made on the basis of this document and we propose to adopt this approach in our reasons. During the course of the hearing the husband also stated he was no longer pursuing Grounds 12 and 20. The remaining grounds of appeal are therefore as follows, in the groupings as set out by the husband, and noting that we are quoting without amendment from the husband’s document and that any errors are in the original:
1.CONTRIBUTIONS
From ‘Grounds of Appeal’;
1.The final judgment is greatly disproportionate to contributions made before, during and after the marriage by the husband
2.Crucial evidence relating to initial contributions by the husband at commencement of cohabitation was denied procedural justice.
2.1A valuation of the [L] property shortly after cohabitation has not been given appropriate weight.
2.2No improvements had been undertaken on the [L] property between November 2003 (commencement of cohabitation) and February 2004 (Valuation of [L] Property)
2.3Appropriate weight has not been afforded to the husband regarding initial contributions.
14. Transfer payments from … (Husbands employer) just prior to separation (October 2008) have not been taken into account or credited to the husband.
15. No consideration was given to the contribution made by the wife’s father towards the husband.
21. The final judgment is disproportionately unjust towards the husband financially.
2. SUPERANNUATION
From: ‘Grounds of Appeal’
3.Dollar amount awarded to wife from husband’s superannuation is grossly disproportionate to the 4 years marriage/ 5yrs 4 months cohabitation of the parties.
4.There has been no consideration of the ongoing permanent impact to the husband’s pension relating to the 15% reduction relating to the $175,000 allocated to the wife.
4.1The husband’s current pension is permanently reduced by approximately $231 per fortnight under the current judgment, drastically reducing his future earnings and borrowing capacity.
5.In written judgment the husbands accruing interests in the Superannuation Scheme were assessed at 9 years contribution prior to cohabitation, when in fact it was 19 years prior to cohabitation.
6.The husband is not been afforded the same access to the full superannuation amount as assessed at Family Law.
8.The Schmidt case referred to in judgment nominates a 21 year career with cohabitation of 7.5 years, with a final decision of only 10%. Yet the current [Linch] case is a 28 year career with only a 5.3 year cohabitation resulting in a final allocation INCREASED to 15%.
3.LONG SERVICE
From: ‘Grounds of Appeal’
7. Allocation of husband’s Superannuation Basic Benefit and Long service/annual leave payouts has been disproportionately assessed considering time of actual cohabitation. Direct evidence was disregarded in this matter.
4. HUSBANDS FUTURE NEEDS
From: ‘Grounds of Appeal’
9.Appropriate consideration to husband’s future employment chances has not been afforded considering his age, lack of tertiary qualifications, psychological health, and single parent responsibilities towards the parties 5 year old [child].
18.Regarding provisions of 75(2) factors (future needs of the parties). – The court has not appropriately considered the current circumstances of both parties, and the financial position of the husband resulting from this final judgment.
19.The future needs of the party’s [child] have not been taken into account by placing the husband in such a precarious financial situation.
5.LEDGER IMBALANCE
From: ‘Grounds of Appeal’
10.[Childs] Bendigo Bank Account has been weighted solely against the husband.
11. Funds withdrawn from the mortgage at time of separation disproportionately favoured the wife and were not taken into consideration.
6. CARS
From: ‘Grounds of Appeal’
13.Allocation of monies attributed to Motor vehicles at time of separation has not been proportionate.
7.HUSBAND SINCE SPERATION [SIC]
From: ‘Grounds of Appeal’
16.Appropriate weight has not been considered relating to husbands financial position, and maintenance of mortgage, at time of separation.
17.Husband has been denied the role of equal (primary) carer of the party’s [child], despite having shared care custody.
Discussion
1. Contributions
Ground 1 clearly comprises a general complaint without any detail, and as such is not a proper ground of appeal. It seems though that Ground 2 is a specific example of the complaint being made, and we will thus move to address that ground.
Ground 2 relates to the refusal by the Federal Magistrate to admit a valuation of the L property obtained in March 2004. However, Ground 2 is not specifically directed to this issue, and thus at the commencement of the hearing we granted leave to the husband to amend his Notice of Appeal to include the following ground:
His Honour erred in refusing to receive into evidence the valuation of the
[L] property as at … March 2004.As to this new ground, his Honour refused to admit the valuation on the basis that it was not a business record that could be admitted pursuant to s 69 of the Evidence Act 1995 (Cth) as an exception to the hearsay rule (transcript 22.3.12, page 36, line 39 and page 68 line 11).
The wife’s counsel argued that there was no error here by the Federal Magistrate. He submitted, as he did before the Federal Magistrate, that the document was not a business record, and in any event it was commissioned for mortgage purposes and not for the purpose of ascertaining market value. Further, he pointed out that it was undertaken approximately four months after the commencement of cohabitation, and that in any event, the wife would be prejudiced by the late tender of the valuation, and her resultant inability to test it. As a consequence of all of these factors, Mr Gould had suggested to his Honour that this valuation was of no assistance to him.
Whether the document was a business record, and whether there was any prejudice to the wife by the late tender, go to the issue of admissibility of the document, but the other arguments go to the issue of the weight of the document once admitted. In determining admissibility, and as explained above, his Honour refused to admit the document on the basis that it was not a business record. Nothing was said by his Honour as to the other possible ground on which the tender of the document could have been rejected, namely prejudice to the wife. However, we are persuaded that the business record exception does apply and we find that his Honour erred in refusing to admit the document. The document clearly formed part of the records of the mortgage lender for the purposes of their business, and contained a “previous representation made or recorded in the document in the course of, or for the purposes of, the business” (s 69(1) Evidence Act 1995 (Cth)). Further, the representation was made “by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact”
(s 69(2) Evidence Act 1995 (Cth)).
That said, the question then becomes what weight this valuation should be accorded, and in that regard we consider that it could have no weight for the reasons put forward by Mr Gould. Thus, although there was error by the Federal Magistrate in this instance, that would not lead to appellate interference.
Another related complaint about his Honour’s findings as to the initial contributions of the parties is his Honour’s inconsistent statements at [76] and [79] of his reasons for judgment. At the conclusion of his discussion of the property at L, his Honour said this (at [76]):
… However the property does represent a significant contribution by the husband at the commencement of cohabitation.
This was clearly based on the obvious fact that despite there being no valuation as at the commencement of cohabitation, the equity in the L property would have increased well beyond the $100,000 or thereabouts that was the position approximately five years before. Yet, at [79] his Honour concluded as follows:
At cohabitation the court is satisfied that contributions modestly favour the husband.
His Honour gives no reasons for this change, and accordingly we accept that there is error here by his Honour. This points to his Honour not affording appropriate credit to the husband for his initial contributions (Ground 2.3).
Turning then to Ground 14, it is correct that his Honour did not specifically mention in his reasons for judgment the removal or transfer costs paid by the husband’s employer in 2008 when the husband was transferred to S, but we are not persuaded that this is an appealable error on his Honour’s part. The assessment of the respective contributions of the parties is not a mathematical exercise (Norbis v Norbis (1986) 161 CLR 513, at 521-523), and further, it is not necessary that a trial judge “mention every fact or argument relied on by the losing party as relevant to an issue” (Whisprun Pty Ltd formerly Northeast Exports Pty Ltd v Dixon (2003) 200 ALR 447 at [62]). It is also well to remember the words of Kirby J in AMS v AIF; AIF v AMS (1999) 199 CLR 160 at [150], that:
… [a]n appellate court, invited to review the exercise of discretion at first instance will avoid an overly critical, or pernickety, analysis of the primary judge’s reasons, given the large element of judgment [sic], discretion and intuition which is involved. Only if a material error of the kind warranting disturbance of a discretionary decision is established is the appellate court authorised to set aside the primary decision, to substitute its own exercise of discretion or to require that it be re-exercised on a retrial.
(Footnotes omitted)
We consider this ground of appeal to be in that category.
As to Ground 15, the complaint here is that the Federal Magistrate allegedly failed to recognise that the gift received from the wife’s father was a gift to the parties jointly, and not just to the wife. However, as we pointed out to the husband, the weight of authority was against him in this regard. In simple terms, a gift is treated as a contribution on behalf of the person who is the relative of the donor, unless there is evidence of the donor’s intention otherwise (Kessey & Kessey (1994) FLC 92-495). Here the wife’s father was deceased, there was no evidence as to his intention to the contrary, and his Honour was entitled to treat the gift as he did. Thus there is no merit in this ground of appeal.
Finally, there is Ground 21, but as was recognised by the husband during the hearing before us this is in effect a repeat of Ground 1.
In summary then, in respect of the issue of contributions, one of the grounds of appeal is made out and that is as to his Honour’s treatment of the husband’s initial contributions. There are inadequate reasons by his Honour in support of his finding in paragraph 79, and that creates significant doubt as to the weight his Honour afforded to the husband’s initial contributions.
2. Superannuation
We propose to address Grounds 3, 4 and 8 together, and Grounds 5 and 6 separately.
First, as to Ground 5, there is no merit in this complaint. It is quite apparent that there was a typographical error in paragraph 77 of his Honour’s reasons where he referred to nine years before cohabitation. Everywhere else in his reasons, his Honour referred to the husband joining the Superannuation Fund in 1984 having commenced with the Government Agency in 1983.
With Ground 6, we still do not understand what the error the Federal Magistrate is alleged to have committed is, and thus we do not propose to say anything more about this ground.
Grounds 3, 4 and 8 effectively raise weight challenges to his Honour’s finding that the wife’s contributions to the husband’s “present pension entitlement” should be assessed as 15 per cent. However, as is often the case with weight challenges, the adequacy of his Honour’s reasons in making the finding that he did is also brought into question. Ground 8 could also be said to go to
his Honour’s assessment of the s 75(2) factors in relation to the superannuation pool.
The hurdles standing in the path of a successful weight challenge on appeal are well known, and we will not repeat them here; nor will we recite the equally well known principles that apply to the adequacy or otherwise of a trial judge’s reasons. Suffice to say that with the former, it needs to be demonstrated that his Honour’s decision was “plainly wrong”, the decision being no proper exercise of the judicial discretion, and with the latter, the pathway to his Honour’s conclusion must be apparent in his reasons for judgment.
The incontrovertible facts are that the husband commenced in the Superannuation Fund in 1984, approximately 19 years prior to the commencement of cohabitation. The parties cohabited for less than six years, and then there was another two years or so of the husband being a member of the Fund before, in 2011, he received a lump sum non-preserved superannuation payment of $50,875 and commenced to receive a pension of $70,504 per annum.
At about the time of separation his Honour correctly found that the husband’s “withdrawal benefits” were in the amount of $196,573, although there was no evidence as to the “value” at the time of the commencement of cohabitation. The agreed value of the husband’s current pension as a future income stream is $1,265,791.
In assessing the wife’s contributions to the husband’s superannuation interests his Honour referred to and cited a lengthy passage from a decision of Watts J in Schmidt & Schmidt [2009] FamCA 1386, and found that “[m]any of the court’s observations in Schmidt are apposite to these proceedings”. His Honour then said this at [116]:
… The factual matrix relating to the various aspects of the wife’s contribution during cohabitation and thereafter particularly in the strained circumstances since early 2005 have been set out above.
His Honour then concluded that the wife’s contribution should be assessed at 15 per cent.
It must first be acknowledged that the pension that the husband now receives is different from the pension he would have received if he had not been retired from the Government Agency on the basis that he was. The pension he would have received was apparently valued at approximately $500,000 when he was a contributing member and not in receipt of a pension (transcript 22.3.12, page 56, lines 8-24), but became a pension valued at in excess of $1,200,000 as a result of his retirement. Importantly, the latter is not primarily based upon the amount of time the husband has been a member of the Fund. As was referred to in the passage from Schmidt cited by his Honour at [114], it is based on three factors, namely:
…
· the husband being [injured]
· the circumstances in which the husband was [injured]
·the amount of the husband [sic] salary at the time that he was [injured]
…
However, as was also said in Schmidt, and applying that here, it is beyond doubt that “the amount of the husband’s salary has a significant connection to the amount of time the husband has been with the [Government Agency]”. Thus, the length of time that the husband was a member of the Fund, and particularly the length of the period pre-cohabitation as compared with the period of cohabitation, is still highly relevant.
There is no doubt that the wife made relevant contributions during cohabitation, and his Honour correctly referred to them. There is also no doubt that the wife was affected by the events post-2005 which led to the husband commencing sick leave in May 2009, but when that is balanced against the fact that it was the husband who was injured and the circumstances of that, and the husband’s total period of membership (and contribution) to the Fund, which included 19 years pre-cohabitation membership compared with less than six years of membership during cohabitation, it is difficult, if not impossible, to discern how his Honour arrived at 15 per cent as the wife’s contribution-based entitlement to the husband’s pension entitlement.
We appreciate that there is a broad discretion reposed in his Honour, and it is no easy task to explain the move from a “qualitative evaluation of contribution to a quantitative reflection of such evaluation” (Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234]), but here there is almost a complete absence of reasons for arriving at the figure of 15 per cent. Accordingly, there is merit certainly in at least Ground 3.
Turning to Ground 4, as we have said, this can also be treated as part of the complaint by the husband outlined above of a lack of adequate reasons in arriving at 15 per cent as the wife’s contribution-based entitlement. In other words, nowhere in his Honour’s reasons does he refer to, and more importantly, take into account the impact on the husband of that finding of 15 per cent. That impact is the permanent reduction of the husband’s future income.
However, even if we are wrong about a lack of adequate reasons in making the finding of 15 per cent, that finding becomes relevant to the assessment of the
s 75(2) factors. As submitted by the husband, the effect of a 15 per cent reduction in the value of the pension is to permanently reduce the fortnightly pension by a significant amount, thereby affecting the husband’s future income. However, to repeat, his Honour does not refer to this in his reasons let alone appear to take it into account.
Equally, there is a lack of any consideration by his Honour of the other side of the coin. In other words, the 15 per cent entitlement of the wife (less an amount to take into account the husband’s contribution to the wife’s accumulated superannuation interest) results in the wife being entitled to $175,000. There is no doubt that what the husband is receiving is in effect an invalidity pension in the payment phase and it is considered an unrestricted non-preserved fund (transcript 22.3.12, page 53, lines 11-14). As such, the husband submits, and this is supported by the evidence of Mr K (transcript 22.3.12, page 53, lines 16-22, page 58, lines 31-33), that the wife can receive her entitlement in “cash”, and the amount does not have to be paid into or, more importantly, be retained in a superannuation fund of her own. His Honour of course made a traditional splitting order, but this was explained by Mr K as a requirement of the trustee of the fund (transcript 22.3.12, page 55, line 41 – page 56, line 3). In any event, the fund is able to pay out the wife directly in “cash”, and the point is that the husband does not have the same opportunity; as his Honour found at [52] “… the husband has a limited expectation of any significant lump sum by way of commutation.”
Accordingly, we also find merit in Ground 4.
3. Long Service
When the husband commenced to receive his pension in 2011 he also received his lump sum non-preserved superannuation payment of $50,875 and his accumulated long service leave and annual leave entitlements of $74,630 net of tax.
His Honour referred to this in his reasons for judgment and said this at [37]:
… These funds totalling $125,505 represent accumulated entitlements of the husband since his commencement with the [Government Agency] 1983 and the commencement of his membership with the Superannuation Scheme in 1984. Whilst there is no evidence as to the extent of the husband’s entitlements to these benefits in 2003 at the commencement of cohabitation there is no doubt that the receipt of these funds after such a short cohabitation represent a significant contribution by the husband deserving of appropriate weight.
One aspect of the husband’s challenge here is that there was in fact “evidence” of the extent of the husband’s entitlements to long service leave and annual leave as at 2003, and also as at 2009, namely at separation. The husband in paragraph 10 of his affidavit filed on 12 March 2012, and which was before his Honour, says he was able to calculate from his pay slips that in 2003 his annual leave entitlement was $6,311.26 gross, and his long service leave entitlement was $33,259.49 gross. He also annexed an email from “an accountant friend” who confirmed these figures.
Thus, if admissible, there was this information available to his Honour. However, what this ground appears to be about is that his Honour did not adequately take into account the husband’s annual leave and long service leave entitlements, but we reject that argument. Even though his Honour did not consider that he had the relevant amounts as at the commencement of cohabitation, he determined that the payouts ultimately received represented a significant contribution, and we are satisfied that his Honour took that contribution into account.
In the circumstances we can find no merit in this ground of appeal.
4. Husband’s future needs
The grounds of appeal placed under this heading are Grounds 9, 18, and 19.
The central complaint here relates to the alleged failure by his Honour to adequately address the relevant s 75(2) factors, and in particular his alleged failure to take into account the husband’s personal circumstances such as his employment prospects, his health, his parental responsibilities, and his financial position. To an extent some of this complaint is a repeat of the complaints made in Ground 4, and in respect of which we have found merit. However, outside of that we are not persuaded that his Honour erred by failing to take into account the husband’s circumstances. It is plain that his Honour addressed these issues in his consideration of the relevant s 75(2) factors (e.g., see in particular paragraphs 86, 89, 91, 92, and 93 as to the non-superannuation pool, and 121 and 122 as to the superannuation pool).
In relation to the husband’s health we observe that the husband conceded before us that there was no medical report addressing that issue put before his Honour, although medical reports were subpoenaed by the wife’s solicitors.
Thus, to repeat, apart from what we have said when addressing Ground 4, there is no merit in these aspects of this challenge.
However, we do find that his Honour erred in his assessment of the relevant
s 75(2) factors by failing to give the weight that he correctly recognised in paragraph 107 of his reasons for judgment to the assets held by the wife representing her inheritance. The value of those assets was approximately $400,000, and his Honour found (at [107]) that they “represent a significant financial resource to the wife in respect of which the court must have regard”. However, we cannot see where in the reasons for judgment his Honour then takes this into account. Mr Gould submitted that it offsets the fact of the husband having a lifetime pension, and that may be valid to some extent, but the point is that is not apparent from his Honour’s reasons.
Accordingly there is merit in the husband’s claim that his Honour gave inadequate reasons in finding that there should be no adjustment to the contribution-based entitlement of the parties by reason of a consideration of the s 75(2) factors.
5. Ledger imbalance
As was explained by the husband in his oral submission to us, the complaint in Ground 10 is that his Honour should not have included the money held in trust for the parties’ child in the asset pool because by doing so the wife became entitled to 55 per cent of that money and the husband 45 per cent.
Further, that this account was to be taken out of the pool because it was held jointly by the parties was confirmed by his Honour during the course of the hearing (transcript 22.3.12, page 24, lines 1-2), and his Honour made an order that this money be placed in an account in the joint names of the parties on trust for their child.
Accordingly, to include this amount in the net asset pool for distribution between the parties is plainly an error by his Honour, and this was appropriately conceded by the wife’s counsel. He suggested though that this was de minimus and does not call for appellate interference. We do not agree, and we find merit in this ground of appeal such that it should be corrected.
As to Ground 11, his Honour addressed the withdrawal of funds by both parties from the mortgage account and determined that none of this money should be notionally added-back to the asset pool (at [69] and [70] of his Honour’s reasons for judgment). We can see no error here by his Honour.
6. Cars
In his oral submission to us the husband explained that he was complaining about his Honour not using the values of the motor vehicles at separation and instead using the values at the time of the hearing. We informed the husband that the weight of authority was against him in this complaint, and there was no error by the trial judge. Thus, we can find no merit in Ground 13.
7. Husband since separation
As to Ground 16, we had difficulty in understanding the husband’s challenge, but it is not the financial position of the parties, or either of them at separation which takes precedence; it is the position at the time of the hearing. That is not to say that the financial position at separation is not relevant, but we have not been taken to anything by the husband that persuades us that his Honour erred in his treatment of the respective financial positions of the parties at separation. Thus, this ground must fail.
With Ground 17 that is not a ground of appeal that we can countenance in the present context. As his Honour recorded at [92] of his reasons for judgment:
The parties have agreed that they will share the care of the child and such agreement is embodied in the parenting orders made by consent on
30 November 2011.There was no parenting order made by his Honour on 2 May 2012, and thus there can be no appeal of the nature sought to be agitated here by the husband.
Conclusion
Having found merit in a number of the grounds of appeal, the appeal must be allowed.
The next question is whether we are able to re-exercise the discretion or whether we need to remit the matter to the Federal Circuit Court for rehearing.
When this issue was raised by us, Mr Gould indicated that the wife would not be seeking to adduce any further evidence, and thus we could re-exercise the discretion on the facts as found by the Federal Magistrate. However, the husband indicated that if the appeal was allowed he would want to present updated valuation evidence unless the valuation of March 2004 could be used.
In these circumstances we are not disposed to re-exercise the discretion. The valuation of March 2004 is controversial, and if we let it into evidence we would have to allow the wife the opportunity to present alternative valuation evidence and/or to be able to cross-examine the author of that report. Further, there would be no guarantee that any updated valuation evidence would be admitted by agreement, and particularly in light of the dispute that arose at trial in relation to the attempt by the husband to tender the contentious valuation. Thus, there is the real prospect of any further valuation evidence being contentious, and this court is not well suited to address disputed evidence.
It is also relevant to observe that if we re-exercised the discretion, an appeal from our decision could only be brought by seeking special leave from the High Court of Australia. On the other hand, if the matter is remitted then an appeal from the decision of the new trial judge will be able to be brought in this court.
For these reasons we propose to remit the proceedings to the Federal Circuit Court for rehearing.
Costs
At the conclusion of the hearing we sought submissions from the parties as to the question of costs depending on the result of the appeal.
In the event the appeal was successful both parties sought costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) in relation to the appeal and any rehearing. Although the husband appeared without legal representation he indicated that he had incurred some legal costs and of course he paid for the transcript to be obtained.
We consider that it is appropriate that each party bear their own costs and that we grant costs certificates to them for the appeal and the rehearing of the proceedings. The appeal has succeeded on a question of law, and there is no basis for an order for costs to be made.
I certify that the preceding ninety-three (93) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, Strickland &
Le Poer Trench JJ) delivered on 24 April 2014.
Associate:
Date: 24 April 2014
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