Lint & Lint
[2011] FamCAFC 115
•27 May 2011
FAMILY COURT OF AUSTRALIA
| LINT & LINT | [2011] FamCAFC 115 |
| FAMILY LAW - APPEAL – Further evidence – In circumstances where the trial Judge was not satisfied that a debt to the husband’s father would be repaid, evidence sought to be adduced of the husband’s repayment of that debt subsequent to the trial Judge’s judgment – In circumstances where the value of units in a trust had been attributed zero value, evidence sought to be adduced of a claim filed against the husband and/or entities owned by him in relation to that sum which, if successful, would result in the husband having to pay an amount to a corporation controlled by a brother of the husband – Not established that the further evidence would render erroneous the trial Judge’s decision. FAMILY LAW – APPEAL – PROPERTY - Contributions – In circumstances where substantial contributions were made by the husband’s family on the husband’s behalf, not established that the trial Judge failed to consider, or gave inadequate weight, to any relevant contributions made on behalf of the husband – Not established that the trial Judge erred in his assessment of the post separation contributions. FAMILY LAW – APPEAL – PROPERTY - Section 75(2) adjustment – Not established that the trial Judge erred by failing to give proper consideration to the monetary result of the s 75(2) adjustment made in the wife’s favour, or the extent to which the wife could earn income from the sum resulting from the settlement – Not established that the s 75(2) adjustment was outside the reasonable ambit of the trial Judge’s discretion. FAMILY LAW - CROSS-APPEAL – Whether the trial Judge failed to adequately recognise the wife’s contributions to the acquisition, through litigation, by the husband of a sum from the interests of third parties owned or controlled by members of the husband’s family – No error established – No error established in the weight given by the trial Judge to other matters in relation to the contributions of the parties. |
| Family Law Act 1975 (Cth) s 93A(2), s 75(2) |
| CDJ v VAJ (1998) 197 CLR 172 Norbis v Norbis (1986) 161 CLR 513 Pierce v Pierce (1999) FLC 92-844 Waterways Authority v Fitzgibbons (2005) 221 ALR 402; (2005) 79 ALJR 1816 Wills v Australian Broadcasting Corporation (2009) 173 FCR 284; (2009) 253 ALR 228 |
| APPELLANT: | Mr Lint |
| RESPONDENT/CROSS-APPELLANT: | Mrs Lint |
| FILE NUMBER: | BRF | 1875 | of | 2006 |
| APPEAL NUMBER: | NA | 44 | of | 2010 |
| DATE DELIVERED: | 27 May 2011 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Coleman, Strickland and Murphy JJ |
| HEARING DATE: | 29 March 2011 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 22 February 2010 |
| LOWER COURT MNC: | [2010] FamCA 121 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr North SC |
| SOLICITOR FOR THE APPELLANT: | Murdoch Lawyers Pty Ltd |
| COUNSEL FOR THE RESPONDENT/CROSS-APPELLANT: | Mr Kirk SC and Ms Brasch |
| SOLICITOR FOR THE RESPONDENT/CROSS-APPELLANT: | Hemming & Hart Lawyers |
Orders
That the appeal, cross-appeal and application for leave to adduce further evidence be dismissed.
That costs be reserved.
That any submissions in support of an application for costs be filed and served within 28 days.
That submissions in reply to any submissions in support of an application for costs be filed and served within 49 days.
IT IS NOTED that publication of this judgment under the pseudonym Lint & Lint 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 PARRAMATTA |
Appeal Number: NA 44 of 2010
File Number: BRF 1875 of 2006
| Mr Lint |
Appellant
And
| Mrs Lint |
Respondent/Cross-Appellant
REASONS FOR JUDGMENT
Introduction
By Amended Notice of Appeal filed 17 January 2011 Mr Lint (“the husband”) appealed against orders made in property settlement proceedings between himself and Mrs Lint (“the wife”) by Warnick J on 22 February 2010.
By Amended Notice of Cross-Appeal filed 28 January 2011 the wife also appealed against the trial Judge’s orders. The husband and wife thus each sought a more favourable outcome than that arrived at by the trial Judge.
On 17 January 2011 the husband filed an application for leave to adduce further evidence in the appeal pursuant to section 93A(2) of the Family Law Act 1975 (Cth) (“the Act”). The further evidence sought to be relied upon was contained in an affidavit sworn by the husband, and filed on 17 January 2011. On 22 March 2011 the husband filed an affidavit of further additional evidence sought to be adduced by him in the appeal.
Background
The parties married in 1987, having commenced cohabitation in the previous year.
The wife was 45 years of age at the date of the trial Judge’s judgment. The husband was then aged 46 years.
There were two children of the marriage, the elder of whom was aged 19 years at the date of the trial Judge’s judgment, the younger then being aged 17 years.
The parties separated in 2005.
The net value of the assets of the parties was controversial before the trial Judge who found the property of the parties to be worth $9,602,540.00 net. Whilst the identity and value of the property of the parties has not been controversial in this Court, by virtue of the husband’s further evidence application, which asserted additional liabilities to those taken into account by the trial Judge in determining the net value of the property of the parties, the net value of the assets of the parties, and the implications of that asserted net value, have been controversial.
The trial Judge concluded that the contribution based entitlements of the husband should be assessed at 62.5 per cent, and those of the wife at 37.5 per cent. The husband’s contention in this Court was that such assessment was impermissibly generous to the wife. Albeit in the opposite direction, the wife also asserted that the trial Judge’s determination of the parties’ contributions fell outside the ambit of a reasonable exercise of discretion.
The trial Judge concluded that the contribution based entitlements of the parties should be adjusted in the wife’s favour by 7.5 per cent pursuant to s 75(2) of the Act. The husband contended in this Court that such an adjustment exceeded the generous ambit of the trial Judge’s discretion. No part of the wife’s cross-appeal in this Court involved any challenge to the s 75(2) adjustment determined by the trial Judge.
The further evidence application
In part because it was agitated first, and in part because the determination of it impacts upon some grounds of his appeal, and potentially impacts upon some grounds of the wife’s cross-appeal, we shall first consider the further evidence application of the husband. That application has two components. The first relates to the sum of $1,236,713.13 allegedly owed by the husband to I Corporation Pty Ltd, a corporation owned and controlled by the husband’s father, Mr Lint Snr.
The I Corporation Pty Ltd amount
The husband’s affidavit of 17 January 2011 revealed that, subsequent to the trial Judge’s judgment, by payments of $409,257.00 and $827,456.73, from funds to which he was entitled pursuant to the trial Judge’s orders, the husband “repaid” I Corporation Pty Ltd $1,236,713.73.
Senior Counsel for the husband submitted that, at least for the purposes of s 93A(2) of the Act, the Court could accept that the sum of $1,236,713.73 had been “repaid” in satisfaction of a legal obligation. Senior Counsel for the husband further submitted that the trial Judge had not included that sum as a liability of the parties as he had concluded that he did “not think that, more probably than not, the husband will be required to repay his father” that sum.
It was submitted by his Senior Counsel that the effect of the repayment by the husband to I Corporation Pty Ltd of the $1,236,713.73 was that:
7.If the evidence concerning the repayment of those monies is accepted and there seems no basis upon which the fact of the repayment and the demand for the repayment can be challenged, it demonstrates an error in his Honour’s Reasons in that his Honour found that he did “not think that, more probably than not, the Husband will be required to repay his father”. The affidavit of [Mr Lint] discloses that after the trial but before judgment [Mr Lint]’s father was approaching him seeking repayment and that within a month of his Honour having published his reasons the debt his Honour did not think would have to be repaid had indeed been repaid.
Senior Counsel for the wife resisted the further evidence application with respect to the $1,236,713.73 on two bases. The first was that, whilst the trial Judge did not include that sum as a liability of the husband when determining the net worth of the property of the parties, his Honour had taken it into account in the husband’s favour in determining a just and equitable apportionment of the property of the parties. The trial Judge was asserted to have done so in a manner which precluded this Court from accepting that, if accepted, the further evidence would render the trial Judge’s decision erroneous. In support of that contention, Senior Counsel for the wife referred us to a number of paragraphs in the trial Judge's Reasons for Judgment, and we will identify these paragraphs shortly.
In the alternative, Senior Counsel for the wife submitted that, even if the net value of the parties’ property were to be reduced by $1,236,713.73, having regard to the trial Judge’s conclusions with respect to the contribution based entitlements of the parties, that would not make a material difference to the outcome of the proceedings. Again, Senior Counsel for the wife sought to substantiate that assertion by reference to a number of paragraphs in the trial Judge’s Reasons to which we will also shortly refer.
The law governing applications pursuant to s 93A(2) of the Act is not in doubt, and was clarified by the High Court in CDJ v VAJ (1998) 197 CLR 172. In that case, the majority, McHugh, Gummow and Callinan JJ, said:
109.One consideration in construing s 93A(2) is its remedial nature. Its principal purpose is to give to the Full Court a discretionary power to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors which cannot be otherwise remedied by the application of the conventional appellate procedures. A further, but in practice subsidiary, purpose is to give the Full Court a discretion to admit further evidence to buttress the findings already made.
By way of further elucidation of the principles governing the admission of further evidence by intermediate appeal courts, Senior Counsel for the husband referred us to the judgment of Rares J (with whom North and Emmett JJ agreed) in Wills v Australian Broadcasting Corporation (2009) 173 FCR 284; (2009) 253 ALR 228, in which his Honour said (at ALR 237-8):
52.The principles upon which the discretion to admit further evidence in an appeal under provisions similar to s 27 of the Act may be exercised were considered by the High Court in CDJ v VAJ (No 1) (1998) 197 CLR 172 ; 157 ALR 686 ; [1998] HCA 67 at [107]–[111] (CDJ). In essence, the court is at large in considering whether, under the section, fresh evidence ought be received, but a number of discretionary considerations developed by the common law may be relevant to the exercise of that discretion (although not as binding rules in the way that the common law fixed). The discretion is more ample than the common law provided. The issues involved in the appeal will point to the considerations which are, or are not, extraneous to the exercise of the power: CDJ at [108].
53.The power is remedial in nature and its principal purpose is to give a Full Court, or a judge of the court exercising the appellate powers of the court, a discretion to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors which cannot be otherwise remedied by the application of the conventional appellate procedures.
54.In Williams v Grant [2004] FCAFC 178 at [37], Lander J (with whom North and Dowsett JJ agreed at [1]and [10] respectively) said that the power to receive further evidence was discretionary, and that while there were no fixed rules which would govern the exercise of the discretion, matters which were usually relevant include whether the applicant exercised due diligence in attempting to procure the evidence before the trial, but the evidence was not available at trial, and if the evidence had been available at trial, the opposite result would have been obtained. In VUAD of 2003 v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCAFC 186 at [18], Gray, Moore and Emmett JJ held that a relevant consideration in exercising the discretion to admit further evidence under s 27 was whether the evidence proffered would be likely to have produced a different result, had it been available at the trial.
55.The discretion given by s 27 does not, however, have the practical effect of eliminating the distinction between original and appellate jurisdiction. It is a power which exists to serve the demands of justice: CDJat [111].
We were also referred to a number of decisions of this Court, all of which, as Senior Counsel for both parties at least tacitly acknowledged, turned rather more on their own facts than any distillation of principle.
Having regard to the passage from the majority judgment in CDJ which we have set out above, we perceive there to be two elements to a further evidence application. The first relates to the acceptance of the further evidence. Whilst nothing ultimately turns on it in this case, we are less than certain that, as submitted by Senior Counsel for the husband, the husband’s further evidence with respect to the repayment to I Corporation Pty Ltd of a debt in the sum of $1,236,713.73, renders that “an incontrovertible fact”.
We perceive that acceptance of further evidence pursuant to s 93A(2) does not give rise to any issue estoppel with respect to such evidence in the event of the appeal succeeding, whether the matter is remitted or the trial Judge’s discretion re-exercised by this Court. For the purpose of the present s 93A(2) application, we consider that the evidence of the repayment to I Corporation Pty Ltd can be accepted. We thus proceed to consider what we perceive to be the second aspect of the s 93A(2) application. That is whether the further evidence would render erroneous the trial Judge’s decision.
The sum of $1,236,713.73 represents 12.9 per cent of the net assets of the parties as determined by the trial Judge. If the submissions of Senior Counsel for the husband are correct, that would represent a significant change to the net value of the property of the parties, and potentially render the trial Judge’s contribution and section 75(2) adjustment conclusions problematic.
To determine whether the further evidence has the effect asserted by Senior Counsel for the husband, it is necessary to consider the course taken by the trial Judge’s reasoning.
Early in his Reasons for Judgment under the heading “Credibility”, the trial Judge recorded that he would not “unhesitatingly accept the evidence of either party”. His Honour provided some examples of why that was so with respect to the husband.
The husband’s father, Mr Lint Snr, gave evidence before the trial Judge, who found it “difficult to assess” Mr Lint Snr’s evidence as he was “not fluent in English”, for which “allowance” was made. His Honour concluded that, in giving his evidence, Mr Lint Snr tried to “‘second guess’ the significance of questions he was asked and, rather than directly answering the question, to construct answers to bolster his and the husband’s claims about events”.
The provision of funds by I Corporation Pty Ltd for or on behalf of the parties to the marriage and/or entities owned by them in May 2007 was clearly a significantly controversial issue at trial.
In his Reasons, under the heading “loan from [Mr Lint Snr]” the trial Judge referred to the sequence of events relating to the provision of the disputed funds by I Corporation Pty Ltd, and the evidence of each party in relation to it. Having referred to evidence of the husband of a demand for the repayment of the monies in November 2007, his Honour recorded, correctly there can be no doubt, that I Corporation Pty Ltd had provided the funds.
The trial Judge summarised the issue, again undoubtedly correctly, in the following terms:
120.The wife challenges the husband’s assertion about the transaction, but essentially, the question between husband and wife is whether the alleged loan should be taken into account in the asset pool.
His Honour then referred to evidence of the wife in relation to the issue, the crux of which was that the husband had said to the wife in an email that his father had agreed to give him the money ($1,236,713.73), and that there was no expectation that he would have to repay his father this money.
In the email to which the wife referred, the husband said:
…
I can do this as dad is prepared to clear the remaining debt of [The U property] by the 3/5/07. This leaves us with an asset to sell of over $2.3mil, less the sale of unit 5, so an asset of $2.65M. Dad will do this for me without requiring any repayment or custody over any assets. I will be responsible for all costs / tax so that you receive the $2.5M clear. You also retain the house, car and contents.
The trial Judge referred to the evidence of Mr Lint Snr in relation to the issue and said:
125.My assessment of [Mr Lint Snr]’s evidence was that he had no intention of enforcing any provision for the payment of interest. While he maintained he needed for his own purposes repayment of the capital, I did not think he was convincing, nor that anything he said indicated he was likely to take steps to recover capital.
Ultimately, the trial Judge concluded:
126.I do not think that, more probably than not, the husband will be required to repay his father. I intend therefore not to include the liability in the asset pool for division between husband and wife.
It is not in doubt that the trial Judge’s determination of the net assets of the parties reflected that conclusion.
Under the heading “Assessment of contributions”, the trial Judge set out “benefits received from the husband’s family, in summary, the parties directly or indirectly have had the benefit of”, which list included “$1,236,714.00 loan (quite possibly not to be repaid) from husband’s father”.
The topic was revisited in the course of the trial Judge’s consideration of “section 75(2) factors”. His Honour said in that context:
183.I have not included in the asset pool the $600,000.00 for the “B” class units held by [Lint Stores] in the [T Trust], or the $1,236,000.00 that the husband “owes” his father. Though recognising that the husband has received weighting in the contributions assessment on account of my findings about the probabilities of repayment, nonetheless he possibly will have to meet some call in respect of each of these arrangements and/or may have them “set against” any inheritance he might otherwise receive.
It is reasonably apparent from other paragraphs of the trial Judge’s consideration of relevant s 75(2) factors that the adjustment ultimately made in the wife’s favour was, at least to some extent, moderated by reason of the matters to which his Honour referred in the paragraph we have set out above.
Whilst the $1,236,713.73 was not taken into account as a liability when determining the net value of the parties’ property, we are thus not persuaded that it was not taken into account to the husband’s benefit in the context of ss 79(4) and 75(2) of the Act. If this provides an insufficient basis for rejecting the further evidence application with respect to the $1,236,713.73 “repayment” to I Corporation Pty Ltd, the second basis of the wife’s resistance of the application provides an independent basis for doing so.
Senior Counsel for the wife submitted that if, as asserted by Senior Counsel for the husband, the net asset pool were notionally reduced by $1,236,713.73 to produce a net asset pool of $8,365,826.27, it would be necessary to revisit the trial Judge’s assessment of the contributions of the parties. We agree with that contention.
The trial Judge ultimately concluded with respect to contributions that only the “assistance from the husband’s family, attributable to him” provided a basis for recognising the contributions of the parties as other than substantially equal. His Honour had earlier identified, in summary form, the “benefits” received from the husband’s family by the parties, “directly or indirectly”. As is apparent from the eleven dot points which his Honour then detailed, the most significant provision of capital by the husband’s family was the $1,236,714.00.
The trial Judge’s conclusion that the husband’s contributions exceeded those of the wife by 25 per cent translated as a disparity of $2.4 million in the net asset pool of $9,602.540.00.
Senior Counsel for the wife submitted that the trial Judge’s reasoning with respect to the parties’ contributions suggested that approximately half the 25 per cent disparity in contribution based entitlements determined by him was likely to have been referrable to the $1,236,713.73 provided by, or on behalf of, the husband by I Corporation Pty Ltd.
It was submitted, correctly in our view, that if that sum were to be regarded as a liability, thereby reducing the net asset pool, it would have ceased to be a contribution by or on behalf of the husband, and, as such, not something which could have increased the husband’s contribution based entitlements.
It was thus submitted that, accepting, for the purposes of the s 93A(2) application, the trial Judge’s conclusions with respect to contributions, reducing the net value of the parties’ property by $1,236,713.73 would have reduced by approximately the same amount, albeit expressed in percentage terms, the husband’s contribution based entitlement.
When one looks at the trial Judge’s reasons for concluding that the husband’s contributions should be regarded as exceeding those of the wife by 25 per cent, or approximately $2.4 million, it is in our view difficult not to conclude that a very substantial proportion, possibly as much as half of that 25 per cent disparity, was referrable to the provision of $1,236,713.73 which was “quite possibly not to be repaid” to I Corporation Pty Ltd. The magnitude of the other amounts referred to by his Honour in the other ten dot points of para 142 reinforce that impression. We are, therefore, not persuaded that the “different result” contended for by the appellant would necessarily follow.
We thus do not consider that we should exercise the discretion to admit the further evidence with respect to the $1,236,713.73 paid to I Corporation Pty Ltd by the husband after the delivery of judgment.
The T Pty Ltd claims
The second component of the husband’s section 93A(2) application relates to the claim made by Lint Stores Pty Ltd (“Lint Stores”), a corporation controlled by a brother of the husband, which holds units in the T Trust, the trustee of which is T Pty Ltd. T Pty Ltd is and has at all material times been controlled by the husband.
The statement of claim against T Pty Ltd filed in the Supreme Court of Queensland in March 2011 seeks a variety of orders, the practical effect of which, at least for present purposes, can be said to be that, if successful, the husband and/or entities owned by him will have to pay $600,000.00 to Lint Stores and, presumably, the costs of unsuccessfully resisting Lint Stores’ claim.
Senior Counsel for the husband thus asserted that the net assets of the parties determined by the trial Judge should, in the light of the further evidence of the husband, be reduced by $600,000.00.
Quite properly in our view, Senior Counsel for the husband conceded that, if the further evidence application with respect to the I Corporation Pty Ltd repayment was unsuccessful, the application with respect to Lint Stores’ claim would also fail. In deference to Senior Counsel for the husband, who agitated the issue before us, we will however provide brief reasons for rejecting the application with respect to the Lint Stores claim.
We have earlier suggested that a section 93A(2) application has two elements. In this case, although we cannot find that the Lint Stores claim will be unsuccessful, we have some difficulty accepting that it could succeed. Lint Stores was a party to the proceedings before the trial Judge, having been the sixth respondent. However, on 14 December 2009 Lint Stores was discharged from the proceedings by order made by the trial Judge, presumably on the basis that its differences with the husband and the wife and their interests had at that time been resolved. As such, Lint Stores did not actively agitate any question of its entitlement as against the interests of the parties at trial. Why it did not then, but has subsequently, is not apparent, and has not been explained.
Not without significance, Lint Stores’ own balance sheets show that, since 2005, the sum sought to be recovered has been written off by Lint Stores in its published accounts.
Whilst we cannot dismiss the possibility that T Pty Ltd may be held to have some liability to Lint Stores, and the husband’s net assets thereby reduced, we struggle with the proposition that such evidence as there is before us in relation this topic could be “accepted” as establishing the probability of that occurring. Ultimately however, we do not need to express a concluded view about that as, in our view, even if T Pty Ltd may be liable to Lint Stores in the sum of $600,000.00, that would not render erroneous the trial Judge’s decision.
Senior Counsel for the husband confirmed that, in substance, the basis of the s 93A(2) application with respect to the Lint Stores claim was identical with that underpinning the I Corporation Pty Ltd repayment.
The “value of the [T Trust] – the units held by [Lint Stores]” was considered by the trial Judge. It was a controversial issue at trial. His Honour there recorded, accurately there can be no doubt having regard to the evidence before him, that “[Lint Stores] has written off the $600,000.00 ascribed to the units” held by it in the T Trust.
The trial Judge then referred to expert opinion evidence of Mr C deducting $600,000.00 from the value of the T Trust, which was regarded before the trial Judge as property of the parties.
His Honour concluded:
116.In my view, having regard to the totality of the dealings of the [Lint] extended family over the years, there is a real prospect that no payment will ever by made to [Lint Stores] on account of the units it holds.
However, his Honour also said:
117.Further, in my view, as between husband and wife, this prospect is best handled by adopting a figure for the value of the husband’s units in the [T Trust] which disregards the amount of $600,000.00 for the “B” class units, but, in assessing s 75(2) factors, recognising that at some time the husband may have to pay from the [T Trust], the sum of $600,000.00 or some lesser sum to [Lint Stores]; or alternatively, that in any future distribution of “family wealth”, the benefit received by the husband will be taken into account.
Later, the trial Judge recorded, in the course of his “assessment of contributions” “$600,000 towards the establishment of [Z Storage], unlikely to be repaid” as a component of the “benefits received from the husband’s family, in summary, the parties directly or indirectly have had the benefit of”.
The topic was revisited in the course of his Honour’s consideration of s 75(2) factors (par 183), which we have set out above.
We are not persuaded that, even if the husband is likely to have to pay $600,000.00 to Lint Stores, so doing would, in the circumstances, render erroneous the trial Judge’s decision. Those paragraphs of the trial Judge’s Reasons to which we have referred in this context reveal why we so conclude.
The husband’s further evidence application will be dismissed.
The Husband’s Grounds of Appeal
Ground 1 (a)
Ground 1(a) provided:
1.In assessing the contributions of the parties His Honour erred in that:
(a)His Honour failed to give any or any proper regard to the benefits received by the Husband and Wife from the Husband’s family and in particular to the dividends received by the Husband between 1995 and 2000 totalling $321,963;
Senior Counsel for the husband complained that the trial Judge “overlooked” the “significant contribution associated with the Husband’s ownership of shares” in his assessment of the respective contributions made by the parties. The significant contribution referred to on behalf of the husband was asserted to have been the $321,963 in franked dividends received by the husband between 1995 and 2000.
It is not in doubt that the learned trial Judge accepted (in par 40) that the husband received the dividends. Although the wife, both at trial and in her submissions on appeal, contested that the dividends were received, nothing to which we have been referred establishes that it was not reasonably open to the trial Judge to find that they had been.
Senior Counsel for the husband submitted:
25.In paragraph 142 of his Honour’s Reasons there is a reference to the Husband’s shares in [Lint Stores]. That cannot of itself be regarded as a recognition of the dividend income earlier received as the value of the shares at trial formed part of the settlement with the third parties.
With particular reference to paragraph 142 of his Honour’s Reasons for Judgment, in which he set out the “benefits received from the husband’s family, in summary, the parties directly or indirectly have had the benefit of”, it was asserted on behalf of the husband that the absence of reference “to the dividend income received from the Husband’s shares” by his Honour in that paragraph, or in any of the other paragraphs in which he expressed reasons for his assessment of the contributions of the parties, constituted “a failure to have regard to a relevant consideration and an appellable error”.
It was also submitted on behalf of the husband that the trial Judge’s reasons were deficient for not considering the dividends as a contribution on behalf of the husband. Particular reference was made to the paragraphs of Hayne J’s reasons in Waterways Authority v Fitzgibbons (2005) 221 ALR 402; (2005) 79 ALJR 1816 (pars 129 & 130) in which his Honour said:
129.Reference was made in argument to the “sufficiency” of the primary judge’s reasons. When it is said that a judge did not give “sufficient” reasons for a decision there may be some doubt about what principles are engaged. Reference may be being made to the duty of a judicial officer “to make, or cause to be made, a note of everything necessary to enable the case to be laid properly and sufficiently before the appellate court if there should be an appeal [including] not only the evidence, and the decision arrived at, but also the reasons for arriving at the decision”. To fail to make or cause to be made such a note may invoke principles of procedural fairness and constitute a failure to exercise the relevant jurisdiction.
130.In the present case, however, reference to the “sufficiency” of the primary judge’s reasons is not to be understood as seeking to invoke only those principles. Rather, because the primary judge was bound to state the reasons for arriving at the decision reached, the reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. Understanding the reasons given at first instance in that way, the error identified in this case is revealed as an error in the process of fact finding. In particular, it is revealed as a failure to examine all of the material relevant to the particular issue. (footnotes omitted)
We are persuaded by the submissions of Senior Counsel for the wife in response to this complaint. Those submissions asserted:
It is correct that the Husband’s tax returns revealed dividend income of $321,963 in the 5 years between 1995-2000 as that evidence came from the Wife. However, that is not to say that it is agreed that those funds were actually received. As the trial Judge found (AB1 p29 – para 40):
“In her second affidavit, the wife tabulates documentary evidence of dividends received by the husband during the marriage, though says that apart from dividends received in 1994, she does not recall dividends being received.”
Clearly, the Trial Judge was aware that the Husband’s shares were productive of dividends. Plainly put, the Appellant’s argument is that even though the trial Judge refers to the dividends within his reasons, he is in error because he does not specifically refer to dividends in his contributions assessment. Yet, one of the items in His Honours lists in the “major contribution attributable to the Husband” is his shares in [Lint Stores] (AB1 p 45 – para 142) – the shares which were productive of the very dividends to which His Honour earlier refers.
Given that the only benefit which the parties derived from the Lint Stores shareholding during the marriage was by way of the dividends to which the trial Judge had earlier referred, his Honour could only have been alluding to the dividends received by the husband from the shareholding in para 142 of his judgment.
We are thus not convinced that his Honour failed to have any, or proper, regard to the dividends, or failed to adequately reveal how he did so.
Ground 1(b) – (d)
Grounds 1(b) – (d) provided:
1.…
(b)His Honour erred in determining that the post separation contributions favoured the Wife (paragraph 166, Reasons for Judgment);
(c)In assessing the post separation contributions of the parties His Honour failed to have any proper regard to:
(i) the Husband’s receipt of $500,000 without interest from his mother in November 2005 and/or that those monies had not been repaid at the time of trial;
(ii) the receipt of $1,236,714 from the Husband’s father in May 2007 and/or that the sum was applied to extinguish existing pressing liabilities to third parties and/or was received in circumstances such that the parties were otherwise unable to meet those liabilities without borrowing an equivalent sum from a third party on commercial terms and/or without the sale of assets which assets remained available for division at trial:
(d)The assessment of contributions to the net assets of 62.5% to the Husband and 37.5% to the Wife was outside the reasonable ambit of the trial judge’s broad discretion.
As the submissions of Senior Counsel for the husband make clear, the thrust of these challenges is that the trial Judge failed to give adequate weight to contributions made by or on behalf of the husband by his family.
It was, sensibly in our view, conceded by Senior Counsel for the husband that the trial Judge did not err in finding “nothing to separate or to distinguish the contributions of each of the parties from personal exertion, at least during the lengthy period of [their] cohabitation”.
Senior Counsel for the husband expressly acknowledged that these grounds involved no challenge to the findings of fact recorded in paragraphs 146 – 165 of the trial Judge’s Reasons.
The error in the assessment of contributions asserted by Senior Counsel for the husband was said to be apparent from paragraphs 166 and 167 of his Honour’s Reasons. It is convenient to set out those paragraphs now in order to better understand the husband’s complaints, and our conclusions with respect to them:
166.In summary, I do not regard the work and homemaker/parenting efforts during cohabitation of one party, as outweighing those of the other. The most significant factor favouring one party is the assistance from the husband’s family, attributable to him. However, the fulsomeness of the parties’ other contributions tends to diminish the impact of assistance from the husband’s family, compared to what might have been expected otherwise. In addition, post-separation contributions, including the wife’s efforts in relation to the claims against the third parties, but most particularly in parenting, favour the wife.
167.I assess contributions to the net assets in the table, 62.5 percent to the husband, 37.5 percent to the wife.
It was submitted on behalf of the husband that:
32.Once his Honour determined, as he did, that the Husband was unlikely to have to repay the $1,236,713.73 lent by his father after separation (in March 2007) it was simply not open to his Honour to conclude that the Wife’s post-separation contribution identified at paragraph 166 of the Reasons outweighed those made by the Husband or on his behalf.
Senior Counsel for the husband submitted that the impact of the contribution by I Corporation Pty Ltd on behalf of the husband of $1,236,713.73 after separation (in March 2007) resulted in an increase in the “net available assets [of the parties] of in excess of 12%”.
Senior Counsel further relied upon the provision of $500,000.00 interest free from the husband’s mother in November 2005. That sum remained unpaid at the date of trial. It was not suggested that the outstanding debt of the husband of $500,000.00 was not reflected in the calculation of the net assets of the parties, but rather that the interest foregone by the husband’s mother had not been given adequate weight by the trial Judge in determining the contribution based entitlements of the parties.
For reasons which Senior Counsel articulated in his written submissions, and amplified orally, it was asserted to have been “simply not open to his Honour to conclude as he did, that post separation contributions favoured the Wife”, so doing having been “not open on the evidence and an error causing his discretion to miscarry”.
These challenges essentially contain two elements, which are not unrelated. The first is that the trial Judge unreasonably discounted the disparity in contribution based entitlements favouring the husband by reference to what his Honour perceived were the wife’s greater post separation contributions. The second is that his Honour’s overall conclusion with respect to contributions fell beyond the ambit of a reasonable exercise of discretion having regard to the facts found by him.
It is, as Senior Counsel for the wife submitted, necessary to carefully analyse what the trial Judge actually said in paragraph 166 of his Reasons for Judgment in order to evaluate these complaints.
It is clear from paragraph 142 of his Honour’s judgment that he was aware of, and there recorded and particularised, eleven areas in which the husband’s family made contributions from which the parties directly or indirectly benefited. Having rejected the husband’s challenge with respect to the dividend income generated by the Lint Stores shares, and in the absence of any other asserted failure to refer to any material benefit provided by the husband’s family, paragraph 142 can be seen as definitive of those contributions.
We do not perceive from Senior Counsel for the husband’s submissions any suggestion that there were other contributions by the husband’s family to which his Honour did not there refer. As is readily apparent, the $500,000.00 loan “on favourable terms” from the husband’s mother and the $1,236,714.00 “quite possibly not to be repaid” loan from the husband’s father were both referred to by the trial Judge.
The trial Judge said, undoubtedly correctly, that the “most significant factor favouring one party is the assistance from the husband’s family, attributable to him”. The issue was what, in the exercise of an undoubtedly broad discretion, was an appropriate measure of the impact of that assistance on the contribution based entitlements of the parties.
His Honour recorded, again correctly in our view, having regard to decisions of this Court such as Pierce v Pierce (1999) FLC 92-844, that the “fulsomeness of the parties’ other contributions tends to diminish the impact of the assistance from the husband’s family, compared with what might have been expected otherwise”. It is apparent that his Honour was there recognising that the contributions by the husband’s family by or on his behalf were not to be viewed in isolation from the other contributions made by the parties during the course of their cohabitation.
As we have earlier recorded, Senior Counsel for the husband conceded that, but for the contributions by or on behalf of the husband’s family, the contributions of each of the parties “from personal exertion”, at least to the time of separation, were able to be seen as equal, as the trial Judge clearly did.
His Honour’s reference to the post separation contributions of the parties, and conclusion that, “most particularly in parenting”, such contributions favoured the wife, when read in context, in our view simply recorded his conclusion that, so far as contributions by way of “personal exertion”, as Senior Counsel for the husband conveniently described them, were concerned, the wife had made a somewhat greater contribution than had the husband. Nothing to which we have been referred in the evidence before the trial Judge, or the findings of fact made by him persuade us that such a conclusion was not reasonably open to his Honour.
To the extent that this challenge involves accepting that the wife’s overall contributions in the post separation period were greater than those of the husband, we do not accept that his Honour’s words expressly or impliedly suggest that he so found. Read in context, what is clear is that until the date of separation the parties’ contributions from “personal exertion” were viewed as equal by the trial Judge whilst, in the post separation period, by virtue of the wife’s greater discharge of parenting duties, the contributions from “personal exertion” were concluded to “favour the wife”.
It cannot in our view be successfully contended that the trial Judge regarded the significance of the assistance received by the husband from his family as having ceased, at separation or subsequently, to be the matter of greatest significance in the determination of the contribution based entitlements of the parties. Whatever that significance, it was in our view reasonably open to his Honour to reduce it, albeit no doubt only modestly, by reference to his conclusion with respect to contributions by way of “personal exertion” in the post separation period.
It is necessary to then consider whether his Honour’s discretion miscarried in assessing the overall contribution entitlements of the parties as he did.
In dealing with the further evidence application of the husband earlier in these Reasons, we have made observations which have some relevance to this complaint. As is not in doubt, recognising the husband’s contributions as exceeding those of the wife by 25 per cent meant that, in monetary terms, the husband’s contributions were held to be worth $2.4 million more than those of the wife. Some figures emerging from the trial Judge’s findings in relation to the assistance received from the husband’s family are instructive for the purposes of this challenge.
As the submissions of Senior Counsel for the husband record, $1,236,713.73 represented approximately 12 per cent of the net asset pool. The $600,000.00 contribution towards the establishment of Z Storage, by or on behalf of the husband, represented approximately 6 per cent of the net asset pool. When regard is had to the other quantified contributions made by or on behalf of the husband by his father, and the timing of them, it cannot in our view be successfully asserted that the 25 per cent disparity in contribution based entitlement of the parties determined by the trial Judge did not adequately reflect all of those factors, in the light of the unchallenged findings with respect to the parties’ other contributions up to the date of separation, with some modest off-setting by way of contributions by “personal exertion” of the parties subsequent to separation.
Other conclusions, possibly more generous to the husband than those reached by the trial Judge, may also have been reasonably open, but that is not the test for present purposes. The well known passages from the judgment of Brennan J (as he then was) in Norbis v Norbis (1986) 161 CLR 513 are relevant in this context. Nothing to which we have been referred persuades us that his Honour exceeded the “generous ambit” of his discretion. We thus find this challenge lacks merit.
Ground 2
Ground 2 provided:
2.In assessing factors under section 75(2) of the Family Law Act 1975 His Honour erred in that:
(a)In considering the income of the parties His Honour failed to give any or any appropriate consideration to the income the Wife was capable of generating from the cash adjustment she was to receive under the order, which adjustment, on the contributions assessment alone would have amounted to $2,126,709;
(b)His Honour’s reasons for judgment failed to reveal whether in considering the monetary result of the adjustment made pursuant to section 75(2) His Honour had regard to the monetary disparity created by the adjustment of $1,440,380 or only considered the monetary result of the adjustment itself, that is, $720,190 and in that respect His Honour’s reasons do not enable one to discern whether His Honour has acted in accordance with the correct principle;
(c)The adjustment of 7.5% giving rise to a monetary disparity of $1,440,380 was outside the reasonable ambit of the judge’s broad discretion.
(d)His Honour failed to have any or any proper regard to the prospect that the Husband would have to repay or may have to repay the $1,236,713.73 owed by him to [I Corporation Pty Ltd].
Earning capacity and monetary disparity
In support of this challenge Senior Counsel for the husband asserted that whilst the trial Judge “focused his attention on the disparity in earning capacity from personal exertion”, he “did not similarly observe that the Wife’s capacity to earn investment income from her estate likewise diminished the significance that a disparity in earning capacity from personal exertion might otherwise have where the pool of assets is more modest”. We have not been referred to any written or oral submissions made on behalf of the husband at trial in which the issue of the income generating capacity of the parties’ assets was raised.
The trial Judge found, uncontroversially for present purposes, that the husband had the capacity, through Z Storage, to receive an income of $120,000 per annum, plus a share of profits of about $60,000 annually, and the provision of accommodation. The wife’s capacity to earn, after a period of retraining, was found, uncontroversially for present purposes, to have been $40,000 to $60,000 per annum. There was, accordingly, a very substantial disparity in the earning capacities of the parties from “personal exertion”.
These challenges variously assert that the trial Judge erred in failing to have regard to the income which the wife could generate by investing the $2 million, approximately, which she would receive in cash pursuant to his orders. Alternatively, it was submitted that the trial Judge failed to provide any or adequate reasons for his failure to have regard to the income which the wife would be able to generate by investing a cash fund of approximately $2 million.
The trial Judge clearly recognised that, by virtue of his conclusions with respect to the contribution based entitlements of the parties, the husband’s property exceeded that of the wife, and recorded:
186.I recognise that, on the contributions assessment, the husband has a greater estate than the wife, but both estates are sizeable and I think the disparity of itself of little moment.
His Honour had earlier recorded, for reasons which he detailed, and about which the husband makes no complaint, that the prospect of “benefits” possibly coming to the husband from his family in the future warranted “only slight consideration in favour of the wife”.
Ultimately, the trial Judge concluded:
187.In my view, the disparity in earning capacities, including the uncertainty of the wife’s working future and the on-going contribution likely to fall on the wife to the welfare of the family are the significant factors and require adjustment to the contributions assessment in the wife’s favour.
We are not persuaded that the trial Judge was not conscious of both the disparity in the “estates” which each party would receive as a result of his conclusion as to the respective contribution based entitlements, or of the reality that the wife would receive a substantial cash payment. “Cash payable by the husband” is referred to only a few paragraphs after the foregoing discussion.
In our view, the logic underpinning the first aspect of these complaints is flawed. There may be cases where the ability to generate income without exertion from a portion of a party’s entitlement to a settlement of property can, and should, be taken into account to the advantage of the other party. We do not however perceive this to be such a case.
As is apparent from the trial Judge’s discussion of “the proposed division and orders”, the husband, as he was entitled to, retained a substantial proportion of his ultimate entitlement in non-liquid form in the T Trust ($6,046,921.00 less a loan payable to the trust of $298,154.00). That was the husband’s choice. He was entitled to do what he wished with his property. So in our view was the wife. Whilst there may be cases where the distinction assumes significance, we do not accept that, in the circumstances of this case, the nature of the “property” receivable by the parties or either of them should have assumed significance for the purpose of his Honour’s consideration of s 75(2).
In the circumstances of this case, had the trial Judge undertaken the exercise which Senior Counsel for the husband contends that he should have, it would have been necessary to undertake a similar examination of the extent to which the husband’s property might generate greater income if rearranged in some fashion. We have been referred to no evidence which would have enabled his Honour to undertake the exercise which Senior Counsel for the husband asserts that he should have. That is not surprising, as this challenge involves assertions which do not appear to have been urged upon the trial Judge. There having been no need to undertake such an exercise, the absence of reasons for the trial Judge not having done so, or not concluding that the nature of the property or form of the property received by either of the parties should assume significance, cannot enliven appellate intervention.
We are not persuaded that the trial Judge was under any misconception as to the practical effect of a 7.5 per cent adjustment pursuant to s 75(2). Nor was he in any doubt as to the monetary value of the disparity which resulted from such an adjustment, or its composition. The passages of his judgment to which we have earlier referred, and those in which he considered the effect of the orders he proposed appearing later in the trial Judge’s reasons, lead us to so conclude.
Overall s 75(2) assessment
It remains to consider whether the 7.5 per cent adjustment in favour of the wife, resulting in her receiving 15 per cent more of the net property of the parties than the husband, a sum of $1,440,380, exceeded the generous ambit of the trial Judge’s discretion.
As we have earlier noted, the s 75(2) adjustment determined by the trial Judge was essentially referrable to two factors, which he expressly identified.
The adult child of the parties, B, is autistic and in that regard the trial Judge made a finding, which has properly not been challenged, that:
57.…Though [the child B] turned 18 at the end of 2008, and has started an apprenticeship, I accept the wife’s evidence of the degree of attention which is still needed, and given by her, to assist [the child B] to negotiate life.
During the course of his consideration of relevant s 75(2) factors, his Honour said:
170.[The child B] is an apprentice working with the installation of security systems. The husband acknowledges that [the child B]’s autism will not improve though he did not concede that it would worsen and asserted that [the child B]’s coping strategies were likely to improve. Even so, his future capacity for self-sufficiency is uncertain.
The trial Judge also, and in our view permissibly in the circumstances of this case, took into account the wife’s expected “financial burdens for [the child K] while she pursues tertiary qualifications”. Whilst it could not have been substantial, a more than nominal adjustment in the wife’s favour pursuant to s 75(2) was in our view reasonably open to the trial Judge in reliance upon the matters to which he thus referred.
The other factor upon which his Honour based the section 75(2) adjustment in favour of the wife related to the ability of the parties to generate income by “personal exertion”. The figures in that regard are not in doubt. The wife’s capacity was predicated upon her pursuing employment with a greater commitment than the evidence revealed to have been the case previously. However, before the wife could earn the $40,000 to $60,000 per annum which the trial Judge found to be her capacity, the wife needed “another two years or so to complete the course”. No contingencies attached to the husband’s ability to earn the income to which the trial Judge referred.
It is readily apparent that the husband’s capacity to earn income from “personal exertion” was several times that of the wife, the only uncertainty being whether that was by a multiple of three, or as much as four and a half times, that of the wife.
Senior Counsel for the wife also directed the Court to the will of the husband’s mother, which he asserted “reveals he is a beneficiary” despite that “the Husband tried to assert to the contrary”.
We are not persuaded that the trial Judge gave more than “only slight consideration in favour of the wife” to any prospect that the husband “potentially has significant financial resources coming his way from his father, if not his father and mother”. His Honour’s reasons (pars 183 & 184) reveal why he so concluded.
Nothing to which we have been referred establishes that any significant proportion of the s 75(2) adjustment determined by the trial Judge was by reference to future inheritance by the husband. The exercise of his Honour’s discretion with respect to s 75(2) thus was not vitiated by any consideration of the husband’s prospects of inheriting in the future. Nor, were it necessary to do so, could the wife successfully assert that any significant proportion of the s 75(2) adjustment determined by the trial Judge was, or should have been, referrable to the husband’s potential inheritance(s).
Given the ages, and the likely duration of the very substantial disparity in their earning capacities, it was in our view open to the trial Judge to make a substantial adjustment pursuant to s 75(2) in reliance upon the factors to which he had regard.
As with the assessment of contributions, and as acknowledged by Senior Counsel for the husband, the trial Judge was exercising an undoubtedly broad discretion. Others exercising that discretion may have been less generous to the wife, but, again, that is not the test and, again, the often cited passages from Norbis are also relevant to this challenge.
We are not persuaded that the trial Judge’s adjustment pursuant to s 75(2) exceeded the ambit of the generous discretion which he was undoubtedly exercising. We accordingly find these challenges fail.
So far as the $1,236,713.73 provided by I Corporation Pty Ltd is concerned, our reasons for rejecting the husband’s further evidence application preclude our acceptance of this challenge, as Senior Counsel for the husband, at least tacitly, acknowledged.
Ground 3
As indicated by Senior Counsel for the husband this ground was only relied on in the event that we admitted the further evidence. We have not done that, and therefore we do not need to address this ground of appeal.
No ground of appeal having been established, the husband’s appeal will be dismissed.
The wife’s cross-appeal
Ground 1 of the wife’s Amended Notice of Cross-Appeal contained eight separate but to some extent overlapping challenges. It is convenient, and hopefully more conducive to understanding these challenges and our conclusions with respect to them, to consider them by reference to their subject matter.
The acquisition of monies from the husband’s family
Grounds 1(a) and (b) and Ground 2 relate substantially to the one issue. That issue is the asserted failure of the trial Judge to adequately recognise the wife’s contributions to the acquisition by the husband of a sum of $3,143,370 from the interests of third parties owned or controlled by members of the husband’s family.
Those grounds provided:
1.His Honour erred or otherwise failed to provide a just and equitable assessment of the parties’ disparate contributions to particular assets and consequently to his Honour’s overall assessment of contributions, and in particular, his Honour:
(a)failed to give proper weight to the Wife’s contribution to the pursuit of the third party proceedings and in particular the steps, risks and costs she undertook from August 2005 (Reasons #60) until the Husband finally sought orders against the third parties pursuant to s232 Corporations Act on 17 November 2008;
(b)His Honour’s finding (Reasons 159(ix)) that had the Wife done nothing with respect to the valuation of the Husband’s shares, the Husband in turn would not have done nothing (ie, done something which resulted in the shares having a significant value) is contrary to the weight of the evidence, particularly given the valuation in which the Husband participated resulted in a nil valuation for these shares;
…
2.The assessment of the Wife’s contributions to the nett [sic] assets of 37.5% to the Wife, was outside the reasonable ambit of the trial judge’s broad discretion in circumstances where the $3,143,370 essentially resulting from the Wife’s contributions equates to 33% of the divisible pool.
The broad contention of Senior Counsel for the wife was that the trial Judge erred in not regarding the acquisition of those funds as overwhelmingly referrable to the actions of the wife. It was submitted that, had his Honour properly recognised the wife’s contributions to the acquisition of the funds, he could not permissibly have concluded that the parties’ contribution based entitlements favoured the husband over the wife by 25 per cent, or $2.4 million.
The chronology by way of preamble to the submissions of Senior Counsel for the wife provides a helpful background to this issue. Although Senior Counsel for the husband asserted that “caution” was required in relation to the submissions on behalf of the wife, the dates and events extracted from Senior Counsel for the wife’s chronology which follow are not in our view controversial for present purposes.
In 1978 the husband commenced to be employed by Lint Stores, a corporation owned by his parents. The husband continued in employment with Lint Stores until 1994, by which time he had a role analogous to that of a general manager.
In April 2003 the husband resigned as a director of Lint Stores and Lint Holdings Pty Ltd (“Lint Holdings”), one of the companies associated with the husband’s family. He then sought financial accounts, the continuation of his dividends, and signalled his willingness to be “bought out”.
The husband and wife separated on 3 June 2005. In August 2005 the wife sought financial documents with respect to Lint Stores and Lint Holdings and was told by the husband to contact the husband’s brother “in regards any matters to do with my shareholding in that company”.
On 30 June 2006 the wife commenced proceedings in the Family Court. In September 2006 the wife joined Lint Holdings and Lint Stores and other entities associated with the husband’s family. The wife then sought the production of financial documents from a number of those third parties. The third parties resisted producing them.
On 18 September 2006 the husband emailed his former solicitors, indicating that he supported the wife’s actions, and instructed them to send copies of correspondence with the third parties to the wife’s lawyers.
On 15 February 2007 the wife was provided with a “short form” valuation by Mr H, in which the husband’s shares in the Lint interests were valued at “nil”.
In April 2007 the husband and wife negotiated a financial settlement. On 11 May 2007 consent orders were made reflecting the settlement reached by the husband and wife.
On 18 May 2007 the husband filed an application to review the consent orders. Having been made by a Registrar, the orders were set aside, and the parties’ property rights remained to be determined by judicial adjudication.
On 31 May 2007 the wife renewed her attempts to gain access to financial documents belonging to the third parties.
On 26 October 2007 the wife filed an application in this Court against the third parties seeking third party disclosure. Documents were received after the filing of that application.
On 22 April 2008 the husband’s solicitors wrote to the wife’s solicitors indicating the husband’s refusal to contribute to the costs of valuations by BS (real estate) or XF accountants.
On 24 June 2008 a report was received from Mr X of XF accountants. That report reviewed the earlier report provided by Mr H.
On 24 September 2008 the wife received a draft report from Mr X of XF accountants valuing the shares at between nil and approximately $6,000,000.
On 27 October 2008 the wife filed pleadings in this Court seeking declarations, and asserting “waste” by the husband with respect to Lint Holdings and Lint Stores.
On 17 November 2008, the husband commenced proceedings in which he sought relief directly against the third parties.
On 22 May 2009, having taken advice from Senior Counsel, the wife’s solicitors wrote to the husband and requested him to commence proceedings against Lint Holdings and Lint Stores. The wife offered to share the costs of doing so. The wife did not have standing to commence such proceedings. The wife’s solicitors placed the husband’s solicitors on notice that if he refused to commence appropriate proceedings for relief against Lint Holdings and Lint Stores she would seek to mount a “waste” argument in the property settlement proceedings which were pending in this Court.
On 22 July 2009 the husband offered to reimburse the wife for one half of the costs of the valuations, which offer the wife declined. On 23 July 2009 the husband reconfirmed his willingness to contribute to those costs.
On 8 December 2009 the husband paid $76,000 towards the wife’s costs.
On 14 December 2009, by consent, Lint Holdings and Lint Stores agreed to pay $3,163,370.00 to interests of the husband.
The wife’s contention at trial, and before us, was that the sum of $3,163,370.00 which was added to the property of the parties to the marriage by virtue of the settlement with the Lint interests was, and should have been recognised as, overwhelmingly referrable to her efforts.
The trial Judge rejected the wife’s contention. Having set out in his Reasons for Judgment the steps taken by the parties, respectively, in relation to the third party proceedings, and acknowledged that he had not fully recounted that process, the trial Judge recorded that he did not “accept the thrust of the submissions for the wife” which was, as he subsequently reiterated, that “had the wife done nothing, the husband would have done nothing”, and the parties would have been poorer by $3,163,370.
Reasons for the conclusions he reached in relation to this issue were detailed by the trial Judge. His Honour commenced by acknowledging that the wife “undoubtedly made a valuable contribution to the settlement achieved with the third parties” but that it was not “an overwhelming contribution”. His Honour referred to the wife being “reimbursed” for the husband’s share of the costs attributable to the pursuit of the third parties, the effect of which was that her “contribution is significantly lessened”. The wife’s “reimbursement” forms a distinct complaint within the context of Ground 1(c).
The trial Judge then articulated why he did not accept that the contribution to the acquisition of the settlement monies from the third parties was “an overwhelming contribution” by the wife. It is necessary to have regard to what his Honour there said, and to reproduce in its entirety his articulation of the eleven particular matters upon which he relied:
159.I do not accept the thrust of the submissions for the wife. She undoubtedly made a valuable contribution to settlement achieved with the third parties, but it was not in my view an overwhelming contribution. Indeed, if she is “reimbursed” for the husband’s share of the costs attributable to the pursuit of the third parties, I think thereby her contribution is significantly lessened. In reaching this conclusion (because of which I also do not place the settlement sum in a separate “pool”), I take account of:
(i)The husband held his shares in [Lint Holdings] before cohabitation began.
(ii)The husband received his shares in [EV Lint] (later [Lint Stores]) in 1990, by gift.
(iii)The husband made a major work contribution to the [Lint Stores] business over most of the period of cohabitation.
(iv)The wife made significant indirect contributions to the husband’s capacity to work for [Lint Stores].
(v)Significant financial benefit flowed to the husband from his shareholdings and positions at [Lint Stores].
(vi)Following the husband’s cessation of directorship and employment with the companies, while the wife and he were together, he made approaches to his family to come to a financial arrangement in respect of his position with the companies. That he did so delicately and warily may have been prudent and certainly does not indicate a lack of interest in the attempt.
(vii)The husband was an active participant in obtaining the report from [Mr H].
(viii)The husband and wife settled the proceedings, following receipt of [Mr H]’s report, valuing the husband’s shareholdings at nil.
(ix)Though, following the breakdown of the May 2007 settlement, the wife pursued the question of the value of the husband’s claims, the husband was aware of progress and took his own advice as matters unfolded. I do not accept that had the wife done nothing, the husband would have done nothing. Therefore, I do not accept that “but for” the wife’s action, no settlement would have been received. Within about one month of receiving [Mr X]’s final valuation – which finally quantified the “interest”, the husband had instituted proceedings against the third parties.
(x)In so far as the wife took “risk” by joining the third parties, she may not necessarily have been prudent in so doing. As Mr North points out, all of the wife’s efforts in relation to valuing the chose in action which the husband had against the third parties, was to the advantage of, and in preparation for her own case, which she could have presented without joining the third parties.
(xi)The husband’s alleged “strategy of standing back, letting the wife do all the running and then only acting when forced” may be a strategy which the wife at once criticises, but of which she also seeks to take advantage, by having weight placed in the assessment of s 75(2) factors, on the husband’s expectations and/or possibilities of receiving benefit from his family. His “strategy” may have preserved or enhanced his expectations of benefit.
Although Senior Counsel for the wife submitted that the trial Judge’s conclusion with respect to the acquisition of the settlement monies was not reasonably open to him, nothing to which we have been referred persuades us that the findings of fact upon which that conclusion was based, as they are detailed in the paragraph we have set out above, were not reasonably open to his Honour.
In our view there is force in the submission of Senior Counsel for the husband that the trial Judge’s consideration of this issue was “balanced and mindful of the wife’s separate interest in obtaining evidence as to the value of the husband’s entitlements”, to which his Honour had referred earlier in his reasons and to which we have earlier made reference.
In our view there is also force in the submission of Senior Counsel for the husband that we have not been referred to any relevant fact or circumstance to which his Honour failed to have regard in this context, or to any irrelevant fact or circumstance to which his Honour did have regard.
As the authorities to which Senior Counsel for the husband referred make clear, the question of the weight to be given to the efforts of each of the parties in relation to the acquisition of the third party settlement monies involves the exercise of a broad discretion. Others may have considered the wife’s efforts to have been of greater significance than the trial Judge did, but, again, that is not the test.
In our view, it was open to the trial Judge to conclude that the wife’s contributions, though substantial, to the acquisition of the third party settlement monies were not “overwhelming”. It is clear from a balanced reading of the trial Judge’s Reasons for Judgment that the trial Judge gave very substantial recognition to the wife’s contributions. Had he not done so, the husband’s challenge to the trial Judge’s conclusion with respect to the contribution based entitlements of the parties would have been more difficult to reject.
The conclusion reached by the trial Judge as to the contribution based entitlements of the parties could, in our view, only have been reached after giving very substantial, and possibly equal, weight to the contributions of the wife to the acquisition of the third party settlement monies.
The reimbursement to the wife
It is convenient to now consider Ground 1 (c) which provided:
1. …
(c) His Honour erred, acted on wrong principle and/or his discretion miscarried by finding that a re-imbursement to the Wife (of $150,000 or thereabouts) for the Husband’s share of the costs attributable to the pursuit of the third parties (which added $3,143,370 to the pool) “significantly lessened” her contribution (reasons #159).
The trial Judge referred in his judgment to the receipt by the parties of $1,500,000 in the post separation period. It is clear that, uncontroversially for present purposes, the trial Judge included in the assets of the parties $809,060 on the part of the wife and $645,366 on the part of the husband. His Honour acknowledged that “Much of this amount went to each party’s legal fees.” It is not in doubt that the wife had paid in excess of $300,000 by way of legal fees with respect of the third party claims. The trial Judge determined that requiring the husband to reimburse the wife with respect to that expenditure was the appropriate way in which to rectify the disparity between what the wife had paid with respect to those claims, and what the husband had paid.
The trial Judge referred to the payment by the husband on 8 November 2009 of $76,000.00 towards the wife’s costs. His Honour ordered that the husband reimburse the wife $150,000.00. The effect of so doing was that the parties ultimately bore the costs of securing the third party monies in shares of 55 per cent by the husband and 45 per cent by the wife. As is not in doubt, those percentages correspond with the overall percentage entitlements of the parties to their net property determined by the trial Judge to be just and equitable. This complaint does not assert any error in his Honour’s calculations.
The trial Judge recorded that, the husband having reimbursed the wife for his “share of the costs attributable to the pursuit of the third parties” significantly lessened the wife’s contributions. We are unable to accept the contention of Senior Counsel for the wife that it was not reasonably open to his Honour to make that finding.
The issue is whether, as Senior Counsel for the wife submitted, recognition of the wife’s contribution to the acquisition of the third party settlement monies was thereby excessively and erroneously “lessened”. In our view, when one reads the trial Judge’s consideration of the “pursuit of the third parties”, all that his Honour was doing was recording that, whilst the wife’s claim had two bases, one of them (the payment of legal costs) having dissolved as a result of the order for reimbursement which he proposed, the overall significance of her contributions to the pursuit of the third parties overall was significantly lessened.
As is not in doubt, the effect of the trial Judge’s order was that the wife ultimately bore only her share (albeit dictated by the trial Judge’s ultimate determination of the overall entitlements of the parties to their property) of the costs of the pursuit of the third parties.
The extent of the work reflected by those costs ought not be seen as necessarily extending beyond maintaining her “tenacity”, as it was described during discussions with Counsel, and giving instructions; there was little more that the wife could do, or have done in relation to the pursuit of the third parties. Thus, without in any way demeaning the wife’s contributions, reality demands that it be recognised that reimbursement of the husband’s share of the costs of those things which were done by professional people retained for that purpose, necessarily “lessened” the significance of the wife’s contributions to the pursuit of the third parties.
It could be asked what did the wife do beyond instigating the pursuit of the third parties and refusing to abandon it. We have been referred to nothing to which the trial Judge did not refer in that regard. Nor has it been suggested that anything relied upon by the trial Judge in relation to the husband’s contributions to the pursuit of the third parties was erroneous in fact.
We are thus not persuaded either that the trial Judge erred in principle or the exercise of discretion in his approach to the “reimbursement” of the expenses paid by the wife in relation to the pursuit of the third parties. Nor are we persuaded that the trial Judge’s conclusion with respect to the pursuit of the third parties was not reasonably open to him.
Quite simply, as is apparent from His Honour’s reasoning, there were two components of the wife’s contribution to the pursuit of the third parties. One was financial, and related to the provision of services by appropriate professionals acting on the wife’s instructions, the quantum of which was reflected in the fees paid by the wife, for which she was reimbursed to the extent of the husband’s share of such expenses.
The other component of the wife’s contribution was well able to be viewed, as the trial Judge clearly did, as substantially equal to the contributions of the husband, to which he also referred in detail. We are thus not persuaded that this complaint has merit.
Grounds 1 (d), (e), (f) & (g)
These grounds provided:
1. …
(d) failed to give proper weight to the Wife’s s79(4) contributions, and in particular, an undervaluing of the Wife’s homemaker and indirect financial contributions;
(e)failed to give proper weight to the Wife’s s79(4) contributions, and in particular, her dual contributions of breadwinner and homemaker, and in circumstances where [the child B] faced many challenges which his mother, largely, met alone.
(f)gave undue weight to the contribution represented by the Husband’s receipt of $1,200,000 from his father, by failing to appropriately balance that factor against the Wife’s post-separation contributions and her significant contribution of adding $3,143,370 to the pool from the third party proceedings;
(g)failed to justly and equitably balance the Wife’s s.79(4) contributions and her contributions to the pursuit of the third parties, as against the Husband’s financial contributions from his family.
As is not in doubt, these challenges relate to the weight given to the matters referred to in them. The authorities governing such challenges are also not in doubt and do not need to be restated. The question is whether, in the exercise of an undoubtedly broad discretion, the trial Judge impermissibly undervalued the wife’s contributions.
Our reasons for rejecting the husband’s challenges to the trial Judge’s conclusion with respect to contributions have relevance to consideration of these challenges, albeit in the opposite direction. It having not been established that the trial Judge’s decision was excessively generous to the wife, the scope for successfully asserting that it was excessively generous to the husband is necessary limited in the circumstances of this appeal.
The trial Judge’s consideration of these factors is not suggested to have been in reliance upon material errors of fact.
It is appropriate to have regard to the trial Judge’s Reasons in order to appreciate why we conclude that these challenges fail.
The trial Judge recorded, uncontroversially for present purposes, that any disparity in the assets of the parties at the commencement of cohabitation did not significantly advantage either party, particularly “against the significant other contributions made in a long marriage” by both parties. The trial Judge recorded the “benefits received from the husband’s family” from which the parties directly benefited. Senior Counsel for the wife did not assert that any of the findings there recorded were not reasonably open to the trial Judge. His Honour categorised the contributions by the husband’s family as “a major contribution attributable to the husband”. Nothing to which we have been referred suggests that such a finding was other than reasonably open to his Honour.
So far as “work and parenting/homemaker contributions” were concerned, the trial Judge recorded that “Each party acknowledges the enormous effort of the other in that party’s primary sphere of activity”. Nothing to which we have been referred suggests that his Honour was in error or misunderstood the evidence before him in that regard.
His Honour then dealt specifically with the matters which give rise to a number of the present complaints and said:
145.The only significant issue in relation to the assessment of these contributions is whether those of the wife should be regarded as “dual” contributions, as against the husband’s “single” contribution. I do not accept contributions should be so regarded, because:
·to do so overlooks or insufficiently treats the four years of cohabitation prior to the birth of the first child;
·the husband’s intermittent, but more than slight, contribution to parenting;
·“outside” assistance to the wife, albeit modest, in her homemaking/ parenting role;
·that the wife has not worked since, at the latest, mid 2006, while the husband has;
·most importantly, that the evidence establishes, not that the wife was in two places at once, or attended to tasks 24 hours, or the bulk of that, a day, but that in a fulsome way, she combined varied activities, whereas the husband, in a fulsome way, worked in the [storage businesses].
Then, in the paragraphs to which we have earlier referred, the trial Judge referred to the contributions of the parties, and particularly those of the wife with respect to “the pursuit of the third parties”, after which his Honour provided his reasons for rejecting the wife’s claim to have made the “overwhelming contribution” to the pursuit of the third parties.
His Honour recorded that, apart from contributions made by members of the husband’s family, in the post separation period, contributions favoured the wife.
As is not in doubt, the trial Judge determined that the husband’s contributions exceeded those of the wife by 25 per cent, which translated as a sum of $2.4 million. With respect to Senior Counsel for the wife, having regard to the “benefits” identified, and in most instances quantified, by the trial Judge earlier in his assessment of contributions, the wife could only have been held to have a contribution based entitlement of 37.5 per cent if the trial Judge had given very substantial weight to the factors which are now complained of.
That inference is further sustained by the fact that the husband’s shares in Lint Stores generated franked dividend income of $321,963 during the latter stages of the marriage and that interest foregone by members of the husband’s family approximated $1,409,480.00 (see Exhibit 20). Set against the nature of the “benefits” received from the husband’s family, their quantum and the use made of them, it is inconceivable that the wife’s contributions could have been held to be as high as 37.5 per cent had the trial Judge not given them the substantial weight which they undoubtedly received.
As with the husband’s challenge to the trial Judge’s conclusion with respect to the entitlements of the parties, other judges may have come to a different conclusion, whether it be more or less favourable to the wife, than did the trial Judge, but, to repeat, that is not the test. Nothing to which we have been referred persuades us that, individually or cumulatively, the trial Judge failed to afford adequate weight to any of the factors referred to in these challenges.
Ground 1(h)
Ground 1 (h) provided:
1. …
(h)[His Honour] failed to give appropriate weight to the almost singular and on-going post-separation contribution of the Wife to the parties’ child [B] (a young man with special needs) and the child [K], still at school.
In support of this challenge it was submitted:
3.5.3 The Wife’s Submissions
In the 4 years between separation and trial, the Wife continued in her role as primary parent with the children seeing little of their father after May 2007. The Wife has occupied a role of sole parent to these two children.
[The child B] is an adult child with special needs. It is the Wife who manages his needs. In cross-examination the Husband was dismissive of the Wife’s responsibilities for [the child B], playing down her efforts. But, his approach and responses to the Wife’s efforts were somewhat churlish given that his time with [the child B] was limited to 3-4 hours once or twice a month.
Just prior to trial, [the child K] was diagnosed with a melanoma. It is the Wife who managed her daughter’s medical needs, but kept the Husband informed- by this stage he had moved to Sydney to take up acting.
As is apparent, there are two elements to this challenge. The first relates to the recognition of the wife’s contributions with respect to the parenting of the parties’ children. The second relates to the significance of those contributions within the context of section 75(2).
In the passages to which we have earlier referred, the trial Judge clearly recognised, and gave weight to, the wife’s contributions as homemaker and parent, balancing them with those of the husband in other respects to the date of separation, and elevating them above those of the husband in the post separation period. Nothing to which we have been referred demonstrates that, in the exercise of an undoubtedly broad discretion, the trial Judge gave inadequate weight to those matters, or that the exercise of his discretion was in reliance upon material errors of fact.
Turning to the element of this complaint which relates to the future, the section 75(2) adjustment determined by the trial Judge included, as we have earlier indicated, a significant adjustment for the future care of the parties’ children. Nothing to which we have been referred demonstrates that the trial Judge’s discretion miscarried, or was based upon material errors of fact. Nothing to which we have been referred demonstrates that the section 75(2) adjustment determined by the trial Judge, which favoured the wife by approximately $1.4 million, was based upon inadequate recognition of the wife’s future parenting of the children.
For reasons which we have earlier provided, in the light of our conclusions with respect to earlier challenges, Ground 2 cannot succeed.
Conclusion
The appeal, cross-appeal and application for leave to adduce further evidence, having been unsuccessful, will all be dismissed.
Costs
It was agreed by Senior Counsel for both parties that costs would be reserved to abide our determination of the appeal and cross-appeal.
I certify that the preceding one hundred and eighty six (186) paragraphs are a true copy of the Reasons for Judgment of the Honourable Full Court (Coleman, Strickland and Murphy JJ) delivered on 27 May 2011.
Associate:
Date: 27.05.11
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