Lippman and Lippman
[2010] FamCAFC 127
•5 July 2010
FAMILY COURT OF AUSTRALIA
| LIPPMAN & LIPPMAN | [2010] FamCAFC 127 |
| FAMILY LAW - APPEAL – Whether trial judge exhausted powers pursuant to s 79 – grant of leave to appeal - distinction between partial orders and interim orders. |
| Family Law Act 1975 (Cth), s 79, s 79(2), s 80, s 93A, s 94AA(1) |
| CDJ v VAJ (1998) 197 CLR 172 Mullane v Mullane (1982) 158 CLR 436 Gabel & Yardley (2008) FLC 93-386 Rutherford v Rutherford (1991) FLC 92-255 Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 |
| APPELLANT: | Mr LIPPMAN |
| RESPONDENT: | Ms LIPPMAN |
| FILE NUMBER: | PTW | 1328 | of | 2008 |
| APPEAL NUMBER: | WA | 5 | of | 2010 |
| DATE DELIVERED: | 5 July 2010 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Bryant CJ, Coleman & Thackray JJ |
| HEARING DATE: | 28 June 2010 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 30 March 2010 |
| LOWER COURT MNC: | [2010] FCWA 28 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Kirk S.C. and Dr Ingleby |
| SOLICITOR FOR THE APPELLANT: | O'Sullivan Davies |
| COUNSEL FOR THE RESPONDENT: | Mr Hooper and Ms Leach |
| SOLICITOR FOR THE RESPONDENT: | Leach Legal |
Orders
That the appeal be adjourned to a date to be fixed.
That costs be reserved.
That a copy of the transcript of the proceedings on 28 June 2010 be made available to the parties.
IT IS NOTED that publication of this judgment under the pseudonym Lippman & Lippman 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 PERTH |
Appeal Number: WA 5 of 2010
File Number: PTW 1328 of 2008
| Mr Lippman |
Appellant
And
| Ms Lippman |
Respondent
REASONS FOR JUDGMENT
introduction
By Further Amended Notice of Appeal filed 11 June 2010 Mr Lippman (“the husband”) appealed against orders made by Crisford J on 30 March 2010 in proceedings for settlement of property between himself and Ms Lippman (“the wife”).
The wife resisted the husband’s appeal and sought to maintain the trial judge’s orders.
On 11 June 2010 the husband filed an application to adduce further evidence in the appeal. The wife resisted the husband’s application for leave to adduce further evidence.
On 22 June 2010 the wife filed an application in the appeal in which she too sought to adduce further evidence. For reasons which we need not detail, that application does not assume significance for present purposes.
Background
The parties cohabited from January 2001 until March 2008.
At trial both parties were aged 45 years.
There were three children of the marriage, those children being aged 8, 7 and 5 years as at the date of the trial judge’s judgment.
The trial judge’s decision with respect to the parenting proceedings heard and determined by her forms no part of the present appeal. The effect of the trial judge’s orders in the parenting proceedings was that during school term in a two week cycle the children would live with the father for five nights and with the mother for nine nights. School holidays were to be largely equally shared by the parents.
The property of the parties was regarded by the trial judge as being worth approximately $11,000,000 net at the time of the trial.
The wife was found to have net assets of approximately $1,600,000 when the parties commenced cohabitation. The husband was found to have net assets at that time of approximately $1,113,000. The wife’s assets at the commencement of cohabitation thus exceeded those of the husband by approximately $487,000.
The trial judge found the contribution based entitlements of the parties to be 55 per cent to the wife and 45 per cent to the husband. The disparity of entitlements was essentially referrable to her Honour’s findings as to the significance of the disparity in the initial capital contributions of the parties.
The trial judge did not consider any s 75(2) adjustment to the contribution based entitlements of the parties to be appropriate.
A major asset of the parties was a business (“the parties’ business”) conducted through a corporation the value of which was found to be $5,950,000 as at 31 December 2008.
The trial judge concluded that the wife should retain the parties’ business. The husband sought before the trial judge that he have the opportunity to acquire the parties’ business, an outcome maintained by him in his appeal to this Court.
The further evidence applications
Sensibly in our view, senior counsel for the husband agitated his client’s further evidence application before proceeding to deal with the Further Amended Notice of Appeal. Learned counsel for the wife then responded to senior counsel for the husband’s submissions in support of the application for leave to adduce further evidence.
After hearing the submissions of counsel, the Court invited further submissions in response to a suggestion from the bench that adjourning the appeal may be the appropriate course for the Court to take.
Counsel for the wife did not oppose that course. Senior counsel for the husband informed the Court of his instructions to consent to such course in the event that a series of concessions were made by counsel for the wife. Those concessions were not made.
After hearing the submissions of counsel for the parties, the Court made orders adjourning the proceedings to a date to be fixed. The Court’s reasons for so doing are set out hereunder.
To better understand why adjourning the appeal was considered appropriate, it is helpful to refer to the further evidence itself, the submissions of counsel for the parties and the orders made by the trial judge.
The further evidence sought to be adduced by the husband
The further evidence sought to be adduced by the husband was an undated draft report by Mr E of a firm of chartered accountants. The trial judge recorded Mr E as having valued the parties’ business at $5,950,000 for the purpose of the trial of the proceedings before her. Mr E had been appointed as a single expert for that purpose.
The recent report of Mr E recorded that in his opinion the value of the parties’ business at 28 February 2010 was $8,800,000. [Page 12, annexure “A” to affidavit of husband sworn 11 June 2010].
Noting that the report was a draft, and by reference to paragraph 8.8.8, dot point 14 [page 15], senior counsel for the husband submitted that Mr E may ultimately assert a value of up to $14,000,000, as the “Rule of thumb acquisition criteria indicate a price around $14 million” for the parties’ business. We proceed on the basis that, albeit a draft report, Mr E’s expert opinion evidence suggested that the parties’ business was worth approximately $3,000,000 more in February 2010 than it had been worth in December 2008.
The submissions of counsel for the parties
Although so summarising them perhaps does not do justice to their sophistication, we perceive the thrust of the submissions of senior counsel for the husband in relation to the further evidence to be that, whereas the trial judge proceeded, uncontroversially we perceive, to determine the property settlement proceedings by reference to an asset pool of approximately $11,000,000 net, the further evidence, if accepted, would establish that the net assets of the parties approximated at least $14,000,000. It was submitted that, whatever the Court concluded with respect to the husband’s challenges to the trial judge’s decision by reference to a net asset pool of approximately $11,000,000, the Court would be persuaded that the further evidence relied upon by the husband established appealable error.
Senior counsel for the husband referred to the oft cited judgment of the majority in CDJ v VAJ (1998) 197 CLR 172 in which it was 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.
As his Further Amended Notice of Appeal reveals, the husband challenged both the trial judge’s conclusion as to the respective entitlements of the parties, and the wife’s entitlement to retain the parties’ business. In essence, it was submitted that by reference to such a significantly greater asset pool, as the further evidence revealed, both of those conclusions would be shown to have been erroneous.
During the course of senior counsel for the husband’s submissions, debate ensued as to the nature and extent of the powers which the trial judge retained in the light of the orders made by her Honour on 30 March 2010.
Senior Counsel for the husband submitted that the trial judge’s orders of 30 March 2010 “exhausted” her powers pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) (see Mullane v Mullane (1982) 158 CLR 436, Gabel & Yardley (2008) FLC 93-386). As such, all that her Honour was able to do in order to finalise the proceedings was to make what are commonly referred to as “machinery” orders, or orders which did no more than implement the substantive determination by the Court of the parties’ property settlement entitlements. Senior counsel for the husband referred us to a number of passages in the trial judge’s Reasons for Judgment, and the terms of the orders made by her on 30 March 2010 in support of that contention.
Learned counsel for the wife submitted that the trial judge had not “exhausted” the powers conferred upon her by s 79 of the Act. Her Honour was submitted to have power to make further orders, both of the kind the orders made by her on 30 March 2010 contemplated, and in other respects. Although not expressed in such terms, learned counsel for the wife did not dispute that, in final form, the further valuation of Mr E would be admissible in the proceedings, albeit the thrust of his submissions was that that should occur before the trial judge pursuant to her orders of 30 March 2010 rather than in this Court pursuant to s 93A of the Act. It was accordingly the contention of learned counsel for the wife that determining the husband’s appeal in the absence of the trial judge completing the proceedings as envisaged by, and provided for by the trial judge’s orders of 30 March 2010, was in the circumstances premature.
As is plain, counsel for neither party submitted that the trial judge’s power to make orders to finalise the property proceedings had been “exhausted”. As the submissions of counsel made clear, there was disagreement as to the nature and extent of that power. For reasons which will become apparent, it is unnecessary, and unhelpful, to traverse in greater detail than we have above, the submissions made by counsel for the parties as to the scope of the power which remains exercisable by the trial judge.
The submissions of counsel for both parties, sensibly in our view, recognise that, subject to any intervention by this Court, it remains for the trial judge to make further orders to finally dispose of the property settlement proceedings. The parties would clearly be entitled to be heard in that process. The trial judge’s orders, and the reasons for them clearly envisaged the prospect that the parties would exercise such entitlement.
The trial judge’s orders
It is instructive for present purposes to have regard to the terms of the orders made by the trial judge. Her Honour’s orders were submitted by senior counsel for the husband to conveniently fall into three “parts”.
Orders 4 - 11 of the trial judge’s orders provided:
4.The parties do all acts and things necessary to appoint [HC] to update their valuation of Specialist Mortgage (“the business”).
5.The parties forthwith instruct [CW] to promptly prepare special purpose accounts for the business and related entities as at 30 June 2009 and 28 February 2010 and which are to be supplied to the business valuer by 30 April 2010.
6.The parties do all acts and things necessary to appoint [GA] as single expert to value the following real estate unless the relevant party elects to go to sale:
a.1 [W] Street, [West Perth];
b.16 [B] Road, [Inner City Perth]; and at the husband’s sole expense
c.41 [D] Street, [Inner City Perth], and
d.87 [W] Avenue, [Inner West Perth].
7.The parties do all acts and things necessary to appoint [L] as single expert to re-value [the Melbourne Apartment].
8.The parties do all acts and things necessary to appoint a single expert to value the furniture and chattels contained within [the Melbourne Apartment] such valuation to be at the wife’s expense.
9.The parties do all acts and things necessary to appoint [FA] to provide valuations of all paintings at the residence of either party or the business premises including all paintings specified to form part of the parties’ self-managed superannuation funds.
10.All valuers in relation to paragraphs 6, 7 8 and 9 above be requested to supply their valuations to the parties on or before close of business on 30 May 2010.
11.Following the provision of valuations by all valuers, the solicitors for the parties prepare a common schedule of assets and liabilities to be filed at the Family Court of Western Australia Registry on or before 8 June 2010. [AB 1: 18 & 19, pars 4 – 11].
As senior counsel for the husband submitted, these orders facilitated the preparation of accounting records and valuations with respect to the entities therein referred to. We do not understand counsel for either party to suggest that the outcome of any of the exercises to be undertaken pursuant to these orders would be incapable of agitation before the trial judge in the event of any report or valuation emerging pursuant to the orders being controversial. We perceive it to be common ground between the parties that the resolution of disputes of that kind by the trial judge would fall within the ambit of “machinery orders”, or orders for the implementation of substantive orders for settlement of property.
The trial judge further ordered:
14.In the event there is dispute as to the final settlement the parties each file a written submission and have liberty to re-list on short notice to have a determination made by Court [sic]. [AB 1: 19, par 14].
The “final settlement” referred to in the order was clearly referable to the “final settlement” referred to in Order 12 which provided:
12.Save for any adjustment which may be required to be made relating to the business performance between 28 February 2010 and final settlement the parties arrange for final settlement to take place as soon as practicable and in any event on or before 30 June 2010. [AB 1: 19, par 12].
It is not in dispute that Order 14 can be comfortably accommodated within the ambit of “machinery orders” or orders for the implementation of substantive orders for settlement of property. It is not controversial that the order envisaged, if it be necessary to do so, a judicial “determination” of any disputed valuation or accounting issues arising with respect to evidence obtained pursuant to the terms of Orders 4 to 11 of 30 March 2010.
Under the heading “Partial property settlement”, the trial judge made a series of orders (Orders 15 to 24) in relation to various parcels of real estate owned by the parties in their own right and/or as directors of corporations through or by which such properties were held. It is unnecessary for present purposes to set those orders out in their entirety, and sufficient to record only that the orders provided for the sale of a number of properties (Orders 15 & 16), and distribution of net proceeds of such sale and, subject to his electing to do so, the husband retaining a property in Melbourne owned by a family trust, in default of which election that property was to be sold.
Under the heading “Final Property Settlement”, the trial judge recorded:
27.The parties’ assets and resources are to be divided to achieve an overall division of 55% to the wife and 45% to the husband. [AB 1: 22, par 27].
There followed a series of orders for the transfer in specie of properties in West Perth (Orders 28, 29 & 30) and Inner City Perth (Orders 31 & 32).
The trial judge then made a series of orders (33 to 39) which were intended to facilitate the retention by the wife of the parties’ business, and the receipt by the husband of a “cash adjustment necessary to effect a division of assets and financial resources in the proportions of 45% to the husband and 55% to the wife” (Order 33. c.) in accordance with her Honour’s Reasons for Judgment of 26 February 2010.
The orders of 30 March 2010 were subject to “[c]ompletion of all valuations of property, including the business”, the “[f]iling of a common schedule of assets and liabilities”, the wife providing evidence that she had “secured finance to transfer to the husband such property and pay to him any cash adjustment” necessary to achieve a 45/55 per cent division of the parties’ assets, and the securing of a number of releases (Order 33).
Her Honour’s orders provided for the husband to acquire the parties’ business on the same terms and conditions as the wife was ordered to be entitled to retain that business, in the event of the wife failing to comply with the provisions of the orders pursuant to which she was to retain the parties’ business (Order 35).
Not surprisingly in the circumstances, the trial judge’s orders did not make provision for the eventuality that neither party was able to exercise the option to retain, granted to the wife, or the option to acquire granted to the husband in default of the wife exercising such option.
Discussion
It is clear that the trial judge’s orders did not finally dispose of or determine the property settlement dispute between the parties. Nor did they purport to. These are not criticisms of the trial judge. On the material before us, it is apparent that the trial judge approached the proceedings in the manner in which the parties invited her to, determining the percentage entitlements of the parties by reference to a net asset pool which was not significantly controversial, and then determining which of the parties should have the parties’ business.
It is clear that further orders need to be made to conclude the proceedings. Whether such orders can include substantive orders pursuant to s 79, or are limited to “machinery” orders, or orders implementing the orders of 30 March 2010, inferentially pursuant to s 80 of the Act, remains controversial.
In the light of the decision in Gabel & Yardley (supra), any distinction between “partial” and “interim” orders for settlement of property is probably more apparent than real. However, the distinction between orders which finally determine proceedings, and orders which do not remains potentially significant, as this case clearly illustrates. To the extent that orders do not finally determine proceedings, they are, at least to some extent, “interim”. We also note, without commenting further on its significance in this case, that the provisions of s 79(2) require the Court to make final orders that are just and equitable.
On any view of the case, a number of significant issues potentially remain for judicial adjudication if they prove controversial. Whether controversial or not, further orders need to be made in order to finally and completely determine the proceedings between the parties. Whatever the nature and extent of the power which remains exercisable by the trial judge, the existence of such power in our view renders the orders of 30 March 2010 “interim”. As such, the orders are “prescribed decrees” for the purpose of s 94AA(1) by virtue of Regulation 15A(1). Leave to appeal is thus required.
It can safely be inferred, to the extent that leave to appeal is required, that senior counsel for the husband seeks such leave. Ultimately, in substance, if not formally, the question of leave was agitated before us by counsel for the parties.
The principles governing applications for leave to appeal to this Court are not in doubt and require only brief reference. In Rutherford v Rutherford (1991) FLC 92-255 the Full Court adopted the principles governing applications for leave to appeal articulated by the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170. For leave to be granted, counsel for the husband must establish an error of principle and/or substantial injustice.
In the circumstances of this case, we are not satisfied that either of the possible bases for a grant of leave to appeal has been enlivened. Unless and until the trial judge makes orders finalising the proceedings, no error of principle or substantial injustice could arise.
It is common ground that if this Court were to now determine the husband’s appeal, and allow it, a new trial of the proceedings, before another judge, would result. Conversely, if, having heard the husband’s appeal, this Court dismissed it, and dismissed his Application to Adduce Further Evidence, albeit after some delay, the parties would need to return to the trial judge in order to finalise their property settlement dispute. The issues which would then arise have been identified during the course of the appeal in this Court, and briefly discussed earlier in these reasons. The orders ultimately made by the trial judge in that eventuality could lead to a further appeal, or appeal and cross-appeal.
If, as the orders made on 28 June 2010 provide, the parties’ appeal rights are preserved, and the matter finalised by the trial judge, in the event of the husband wishing to relist his appeal, or the wife wishing to appeal against the orders ultimately made by the trial judge, this Court would have both the benefit of final orders, and the trial judge’s reasons for such orders. Having regard to the matters agitated before us, those reasons would be likely to include her Honour’s determination of the nature and extent of the powers which she considered to be available to her in the light of her orders of 30 March 2010.
In the event appealable error was established, there would then be a much greater likelihood that this Court would be in a position to re-exercise her Honour’s discretion, as it would then have findings of fact and Reasons for Judgment which, through no fault of her Honour, are not available at this time.
For the foregoing reasons, the Court has ordered that the husband’s appeal be adjourned to a date to be relisted by arrangement at a later date.
I certify that the preceding fifty four (54) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate:
Date: 5 July 2010
8
3
3