Loncar & Loncar
[2021] FedCFamC1A 14
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Loncar & Loncar [2021] FedCFamC1A 14
Appeal from: Loncar & Loncar [2020] FCCA 2094 Appeal number(s): EAA 127 of 2020 File number(s): SYC 3269 of 2016 Judgment of: STRICKLAND, AINSLIE-WALLACE & WATTS JJ Date of judgment: 21 September 2021 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Where the wife appeals a property settlement order – Contributions – Where the wife was subjected to a systemic pattern of family violence – Where, but for the wife’s Kennon argument, the primary judge would have assessed the parties’ contributions as equal – Where having regard to the wife’s Kennon argument and assessing contributions holistically, the primary judge found that the wife should receive 57.5% of the net assets based on contributions – Where the wife received an additional 10% adjustment for prospective factors, which was not unreasonable and plainly unjust – Consideration of a novel argument as to whether the additional 7.5% the wife received based on an assessment of contributions arising from the Kennon argument should be quarantined or ignored from the third and fourth steps – Consideration of earlier cases involving claims in tort made contemporaneously with proceedings for a property settlement order – Where the application of the principles articulated in Kennon do not fall within the same rubric as cases based in tort – No error established – Appeal dismissed – No order for costs. Legislation: Family Law Act 1975 (Cth) ss 75, 79 Cases cited: Benson & Drury (2020) FLC 93-998; [2020] FamCAFC 303
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
Hickey and Hickey and Attorney-General (Cth) (Intervener) (2003) FLC 93-143; [2003] FamCA 395
House v The King (1936) 55 CLR 499; [1936] HCA 40
Kennon v Kennon (1997) FLC 92-757; [1997] FamCA 27
Kowaliw and Kowaliw (1981) FLC 91-092; [1981] FamCA 70
Loude & Loude [2009] FamCAFC 52
Marsh v Marsh (1994) FLC 92-443; [1993] FamCA 57
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Pates & Pates [2018] FamCAFC 171
Prince and Prince (1984) FLC 91-501; [1984] FamCA 7
ReChemaisse; Federal Commission of Taxation (Intervenor) (1990) FLC 92-133; [1990] FamCA 32
Re Q(Damages for Sexual Assault) (1995) FLC 92-565; [1994] FamCA 158
Re Wakim, Ex parte McNally (1999) 198 CLR 511; [1999] HCA 27
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
W v W; R and G (by their next friend P)(Intervener) (1994) FLC 92-475; [1994] FamCA 34
Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12
Yen v Yen (2010) 42 Fam LR 691; [2010] FamCA 1
Division: Division 1 Appellate Jurisdiction Number of paragraphs: 67 Date of hearing: 27 May 2021 Place: Sydney Counsel for the Applicant: Mr Givney Solicitor for the Applicant: MacLarens Lawyers The Respondent: Litigant in person ORDERS
EAA 127 of 2020
SYC 3269 of 2016FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS LONCAR
Applicant
AND: MR LONCAR
Respondent
ORDER MADE BY:
STRICKLAND, AINSLIE-WALLACE & WATTS JJ J
DATE OF ORDER:
21 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.The Amended Notice of Appeal filed 29 September 2020 be dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Loncar & Loncar has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
STRICKLAND, AINSLIE-WALLACE & WATTS JJ:
INTRODUCTION
By way of Amended Notice of Appeal filed 29 September 2020, Ms Loncar (“the wife”) appeals certain paragraphs of a final property settlement order made by the primary judge on 4 August 2020. Mr Loncar (“the husband”) opposes the appeal.
The wife challenges the primary judge’s consideration of the wife’s contributions, particularly those made by her as homemaker and parent between 2015 and 2020 and the adequacy of the primary judge’s adjustment pursuant to s 79(4)(d)–(g) of the Family Law Act 1975 (Cth) (“the Act”).
In addition, the wife makes a novel argument. At the second stage, the primary judge assessed contributions in the wife’s favour 7.5 per cent higher as a result of her “Kennon argument” (Kennon v Kennon (1997) FLC 92-757 (“Kennon”)). His Honour then at the third stage took the whole of the disparity arising from the contribution findings into account under s 75(2)(b) of the Act. The wife argues that given the increased contribution assessment was founded upon those contributions being made significantly more arduous by the systemic violence of the husband towards her, the primary judge erred in not quarantining the 7.5 per cent increase from consideration at the third stage.
For reasons which follow, the appeal shall be dismissed.
BACKGROUND
The parties married on 3 February 2001 and separated under the one roof in September 2012.
The husband vacated the former matrimonial home at Suburb A (“the Suburb A property”) in April 2015. The wife and the four children of the marriage remained living in the Suburb A property which represented the major asset of the parties.
The wife is 51 years of age; the husband is 46 years of age. The four children of the marriage at the date of separation were aged 13, 12, 11 and four years.
The proceedings commenced in May 2016. The parties resolved parenting issues in October 2019.
REASONS OF THE PRIMARY JUDGE
The primary judge adopted a conventional approach to the structure of his reasoning. After setting out in detail the property settlement order sought by the wife and the written evidence provided by each of the parties, the primary judge made detailed findings relevant to the financial history of the parties. The primary judge also recorded the wife’s allegations of a systemic pattern of family violence perpetrated by the husband against her (at [12]).
After referring to Stanford v Stanford (2012) 247 CLR 108, the primary judge found that a property settlement order should be made (at [14]). At [15], the primary judge referred to, and then, in the judgment subsequently adopted, what his Honour correctly described as the “preferred approach to the determination of an application under s 79 of the Act”, quoting the four steps set out at [39] in Hickey and Hickey and Attorney-General (Cth) (Intervener) (2003) FLC 93-143.
The primary judge adopted a two pooled approach, so that the parties’ superannuation interests were considered separately (at [32]). Whilst almost all issues relating to the identification and the value of assets and liabilities were agreed, his Honour resolved a small number of controversies, including claims for add backs, and ultimately settled a table of assets and liabilities in the first pool in the net sum of $1,124,594 and superannuation in the amount of $232,623 in the second pool (at [68]). There is no complaint about his Honour’s conclusions at step one.
After analysing particular parts of the evidence of each of the parties, the primary judge “accept[ed] the wife’s evidence over that of the husband where there is a dispute between their versions” (at [80]).
His Honour then, turning to step two, described the direct and indirect financial contributions of the parties and the parties’ contributions to the welfare of the family, including those in the capacity of homemaker and parent, both during the period of the cohabitation and the period between the separation and the trial. At [108] the primary judge ultimately concluded that, prior to turning to the wife’s Kennon argument, his Honour would assess the parties’ contributions in all forms equally to both pools.
His Honour then turned to “Family Violence and Kennon” referring to the test set out in well-known passages such as “a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party’s contribution to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been…” and making a further reference to another statement “…it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party” (at [110] and [111]).
The primary judge recorded that “[t]he wife’s evidence as to family violence was detailed and specific and was telling in its particularity” (at [115]). His Honour had also a good deal of corroborative evidence including police records, the husband’s criminal record and court records of numerous Apprehended Domestic Violence Orders made against the husband prior to the separation.
The primary judge found that the husband subjected the wife to a systemic pattern of family violence including being choked, cut, kicked, slapped, hit and having household items thrown at her during the cohabitation not less than once every three months. His Honour found the wife had been subjected to abusive language and abusive behaviour by the husband directed not only to her but also at the children, and the wife had to intervene on numerous occasions in an attempt to protect the children. The husband also hit the wife in the shoulder with a piece of wood in 2013. The husband tightly controlled the wife’s access to and expenditure of money.
During the course of this pattern of family violence, the wife experienced pain, bruising, bleeding, a perforated eardrum and anxiety. The wife received medical treatment, including stitches in respect of a wound to her right elbow as a result of the husband slashing it with a razor blade.
The husband was before the Local Court in respect of allegations of violence on at least eight occasions. The husband had pleaded guilty on a number of occasions to charges arising from violent conduct towards the wife. The husband pleaded guilty to the charge that he had choked the wife. In relation to the incident where he slashed the wife with a razor blade, the husband had received a good behaviour bond for 24 months.
At [125] the primary judge made a finding that the wife’s contribution as a homemaker and parent was made “much more arduous” as a result of the systemic pattern of family violence, and that the effect of the family violence did not end at the date of separation and included making the wife’s contributions in the post separation period in her role as parent much more arduous.
At [132] the primary judge indicates that “there should be an adjustment in terms of s 79(4) of the Act in respect of the abovementioned Kennon factors in favour of the wife in the order of 7.5 [per cent]”.
Subsequent to his Honour’s judgment, the Full Court in Benson & Drury (2020) FLC 93-998 (“Benson”) at [37] cautioned against the use of the short-hand descriptor of a “Kennon claim” and the reference to the issue as a “Kennon adjustment” given that those epithets might invite the treatment of the issue as an isolated claim for an additional share of the available property.
In Benson at [35] the Full Court said:
The central question raised by this appeal is how a judge takes into account the contributions of one party, found to have been made significantly more arduous by the conduct of the other, when assessing contributions under ss 79(4)(a)–(c) or
ss 90SM(4)(a)–(c) of the Act. The answer is the primary judge must take a holistic approach. The contributions which have been made significantly more arduous have to be weighed along with all other contributions by each of the parties, whether financial or non-financial, direct or indirect to the acquisition, conservation and improvement of property and in the role of homemaker and parent. All contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder.(Citations omitted)
There is no cross appeal in this case and in any event, we are not satisfied that the use of the now discouraged epithet by the primary judge led him to take an approach other than a holistic one to the overall assessment of contributions.
The primary judge concluded:
133.Accordingly, the wife would be entitled to receive 57.5% in terms of a contribution analysis in the net property pool of $1,124,594.00 which equates to $646,641.55. The husband would be entitled to receive the balance of 42.5% of the net property pool being $477,952.45. An adjustment of 7.5% equating to $84,344.55.
There is no challenge to that finding by the husband nor is there any complaint on appeal by the wife that the contribution analysis involving the Kennon claim was only applied to pool one.
The primary judge next referred to arguments by the wife in relation to the husband’s lack of financial disclosure and resolves to deal with that issue at the third step.
His Honour then turned to the third step and dealt seriatim with the relevant prospective statutory considerations.
Having created a disparity of 15 per cent in the parties’ capital positions in pool one as a result of the contribution based entitlement, the primary judge found that, pursuant to s 79(4)(d)–(g), there was to be a further adjustment as to 10 per cent in favour of the wife on account of prospective factors.
Importantly, in relation to Grounds 3 and 4 of this appeal, when considering s 75(2)(b) of the Act, the primary judge said at [150]:
The Court must have regard to any disparity in the parties’ capital positions as a result of the contribution based assessment. See Loude & Loude [2009] FamCAFC 52.
Subject to a consideration of the argument in Grounds 3 and 4, the approach taken by the primary judge in taking into account the result at step two as a consideration at step three, pursuant to s 79(2)(b) is appropriate and orthodox (Loude & Loude [2009] FamCAFC 52 at [84]; Pates & Pates [2018] FamCAFC 171 at [91] and [92]).
The overall result was the parties’ entitlements were to be 67.5 per cent to the wife and 32.5 per cent to the husband of the non-superannuation assets, a disparity of 35 per cent.
The primary judge made an order splitting the husband’s superannuation so that the superannuation retained by each of the parties was equal. There was no challenge made to that part of the property settlement order.
Finally, his Honour turned to the question as to whether or not the adjustments made as a result of his findings at steps two and three led to a just and equitable outcome and concluded that they did (at [196]).
THE APPEAL
It is first useful to refer to the principles which guide this Court in determining an appeal against an exercise of discretion.
The High Court in House v The King (1936) 55 CLR 499 (“House”) said at 504–505:
… It is not enough that the judges comprising the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts on a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.
In Gronow v Gronow (1979) 144 CLR 513, Stephen J said at 520:
…an appellate court should be slow to overturn a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight.
Did the primary judge err in failing to have regard or to properly consider the wife’s overall contributions and particularly the contributions that she made as homemaker and parent between 2015 and 2020? (Ground 1)
The challenge arises from the fact that, putting the Kennon argument to one side, the primary judge found the parties’ contributions were otherwise equal. The wife argues that the primary judge failed to have regard to or properly consider the contributions made by the wife in the role of homemaker and parent for the five year period from when the husband vacated the former matrimonial home to the date of trial. During this time, the wife had the care of the four children of the marriage and the husband had only minimal time with one of the children. Whilst the husband paid child support as assessed from time to time, the wife asserted that those payments were totally inadequate to support the family.
When reaching the overall finding of equality of contributions, apart from the Kennon argument, the primary judge specifically refers to the fact that the husband made an initial contribution of his 25 per cent interest in the Suburb A property (at [108]). It is also not controversial that the wife had the benefit of the occupancy of the former matrimonial home after the husband vacated it.
The weighing of contributions is quintessentially a matter for the primary judge and we are unable to discern any merit in Ground 1. It is not open to cherry-pick specific contributions and submit that adequate weight was not given to them without taking into account and weighing all other contributions of the parties. As is required his Honour assessed the respective contributions of the parties holistically, and no error is revealed.
Was the primary judge’s finding that an adjustment pursuant to s 79(4)(d)–(g) of 10 per cent unreasonable and plainly unjust? (Ground 2)
This ground is based on the final limb of House and asserts that having taken into account all the matters that his Honour discussed, it is not apparent how the primary judge has reached the result that he has which, upon the facts, is unreasonable and plainly unjust and a failure to properly exercise discretion although the nature of the error is not discoverable.
The primary judge dealt with relevant prospective considerations at [141]–[183] and, as indicated, made a further 10 per cent adjustment in the wife’s favour.
During the discussion at the first step, the primary judge considered the wife’s assertion that an amount should be added back against the husband arising from his withdrawal of funds and failure to particularise the nature of the expenditures or explain those withdrawals. At [63] the primary judge quantified the unexplained amount at $57,045.27, but indicated that that unexplained expenditure “should be considered under s 75(2) of the Act in terms of an adjustment in favour of the wife rather than by way of an addback which will be ascribed a $0.00 value in the balance sheet. The court notes that this sum represents approximately 5 [per cent] of the net property pool”. At the third stage, at [172], the primary judge said:
The Court accepts that the husband’s withdrawal of funds and his failure to particularise the nature of the expenditures in explanation for those withdrawals, as set out in paragraph 63 above sounds in an adjustment in the wife’s favour.
The wife argues that based upon [63], this s 75(2)(o) consideration accounted for at least 2.5 per cent of the 10 per cent adjustment that the primary judge made for s 79(4)(d)–(g) considerations.
Ground 2 asserts that the primary judge reached a plainly unjust outcome by otherwise allowing only a further 7.5 per cent adjustment at the third stage having taken into account the uncertainty of the wife’s employment as a recently graduated public servant, her responsibility for the financial support and parenting of three children under the age of 18 and one over 18, the inability of the husband to make any reasonable contribution by way of child support or any other financial support and the requirement of the wife to house four children.
It is correct that the primary judge took all of those matters into account in favour of the wife. However, his Honour also took into account: the husband’s diminished future earning capacity arising from permanent physical disabilities following a motor vehicle accident; the wife had no issues in relation to her health; the wife’s current employment and future employability; the husband’s rent free accommodation with his parents; the disparity in the parties’ capital position as a result of his Honour’s contribution based assessment; and the current ages of the children.
We are unable to conclude that the adjustment made by the primary judge for prospective factors was unreasonable and plainly unjust and accordingly there is no merit in Ground 2.
Should the result of the Kennon argument be ignored at the third and fourth stage? (Grounds 3 and 4)
Grounds 3 and 4 are expressed in the following terms:
3.The trial judge was in error in expressing the Full Court’s consideration of s 75(2) adjustment as:
“The court must have regard to any disparity in the parties’ capital position as a result of the contribution based entitlement”
In that His Honour:
3.1Was indicating that he only was having regard to the financial discrepancy rather than “the cause” of the discrepancy.
3.2Overtly “diluted” the Wife’s “Kennon” adjustment which was brought about by the Husband’s conduct.
4.The Trial Judge erred when considering a just and equitable result erred in ignoring, and/or failing to consider all of the Husband’s conduct.
We have already, in the discussion of the primary judge’s reasons above, detailed his Honour’s findings in relation to the systemic pattern of the husband’s family violence against the wife and his Honour’s acceptance of the wife’s Kennon argument which led to the primary judge assessing the wife’s contributions so that a division of the net assets, in the first pool, based on contributions was 7.5 per cent more than they otherwise would have been.
In these two grounds, the wife argues a novel point by making three alternate arguments:
(a)that when making an assessment at the third step, the primary judge erred by not acknowledging, when considering s 75(2)(b) of the Act, that the capital provision to the wife, on a contribution based assessment, was 7.5 per cent more of pool one, as a result of the wife’s Kennon argument. The wife asserts that when considering s 75(2)(b) the 7.5 per cent uplift in the wife’s contribution based assessment created by Kennon should have been ignored because it was the result of family violence perpetrated by the husband upon her;
(b)alternatively, the primary judge should have taken into account as a further fact or circumstance under s 75(2)(o) of the Act, that 7.5 per cent of the wife’s capital allocated to her at the end of stage two from pool one was as a result of her Kennon argument; or
(c)alternatively, the primary judge should at the fourth stage have made an adjustment in the wife’s favour because part of what she was receiving as a result of the considerations at the second and third stages flowed from the family violence perpetrated upon her by the husband.
Each of these alternate positions relies upon the notion that any financial advantage the wife has received from her Kennon argument should be quarantined when assessing what was an appropriate, just and equitable property settlement order.
Counsel for the wife conceded before us that these arguments were not made to the primary judge. Ordinarily a party is bound by the conduct of their case (Metwally v University of Wollongong (1985) 60 ALR 68 at [71]). However, “where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point” (Water Board v Moustakas (1988) 180 CLR 491). The facts and findings by the primary judge relevant to the argument are beyond controversy. The argument involves an interpretation of the construction of s 79(2)(b) of the Act. It is expedient and in the interests of justice to entertain the point.
In pursuing the argument, counsel for the wife relies by analogy on a class of cases decided in this Court, at a time before the High Court’s decision in Re Wakim, Ex parte McNally (1999) 198 CLR 511 when this Court on occasion was asked to assess claims in tort for common law damages arising out of assault within a family under the 1987 Jurisdiction of Courts (Cross Vesting) Acts of the States in which the case was heard.
Marsh v Marsh
Counsel for the wife relied upon Marsh v Marsh (1994) FLC 92-443 (“Marsh”), a case decided before Kennon. In that case the wife made two applications; the first for a property settlement order, the second in tort relying upon the then cross-vested jurisdiction, for common law special, general, aggravated and exemplary damages arising from an assault by the husband upon her. Justice Coleman found the husband’s attack was deliberate, unprovoked and involved an act of serious domestic violence. The wife abandoned her claim for special damages. His Honour assessed damages in each of the other categories claimed and entered a verdict on the wife’s statement of claim in the sum of $7,000. His Honour then considered the competing applications for a property settlement order. The sole relevant asset of the parties was an equity in their former matrimonial home in the agreed sum of $88,267. Having considered the history of contributions, his Honour found that that equity should be divided 56/44 per cent in the husband’s favour and then considered relevant prospective factors, apart from the wife’s damages verdict. As to that issue, his Honour said at 80,625:
There are really no other provisions of Section 75 (2) which do impact in this case to affect the proper division of the assets of the parties, with the possible exception of Section 75(2)(o), which becomes relevant by virtue of the verdict for damages which I propose entering in favour of the applicant as against the respondent. I do not believe it legitimate to make that award and then take it into account under Section 75(2)(o) to reduce what is otherwise properly the entitlement of the applicant. By the same token it is a debt which the respondent will have to reduce what he receives of the meagre matrimonial assets of the parties and it will, relative to those meagre funds, provide a substantial boost to what the applicant receives. Moreover, I cannot fail given the terms of Section 79(2) of the Act to do what is just and equitable in an overall sense…
Without regard to the effect of the wife’s verdict in Marsh, his Honour found that the wife was entitled to a 16 per cent adjustment pursuant to s 75(2) considerations and an overall order in her favour of 60/40 per cent of the equity in the matrimonial home. His Honour ordered the husband pay the $7,000 damages award from his 40 per cent of the net assets. The overall consequence was that the wife effectively received 68 per cent of the asset pool. In other words, Coleman J quarantined the amount the wife was to receive and the amount that the husband was to pay by way of a verdict for damages from consideration at the third stage.
In this case, counsel for the wife argues, by analogy that the 7.5 per cent “adjustment” that the wife received because her contributions had been made significantly more arduous by the husband’s perpetration of systemic family violence, be disregarded when considering s 79(2)(b) of the Act and that the primary judge erred at [150] when his Honour took into account the whole of the disparity in the parties’ capital positions as a result of the contribution based assessment.
W v W
In W v W; R and G (by their next friend P)(Intervener) (1994) FLC 92-475, Brown J dealt with the competing applications for property settlement orders first and then dealt with claims by the wife’s daughters against their step father arising from wrongful sexual assault. Brown J made an award of damages of $97,500 in respect of one child and $80,000 in respect of the other with the husband being required to pay those sums out of his share of the property settlement.
Re Q
Counsel for the wife also handed up to this Court, without otherwise commenting upon it, a copy of a decision by Kay J in Re Q(Damages for Sexual Assault) (1995) FLC 92-565, another case decided before Kennon. In that case the husband was in prison as a result of his conviction for sexual assault of the child of the marriage Q between the ages of six and 12 years. Listed for final hearing was the parties’ respective applications for a property settlement order and two claims for damages, one brought by Q and the other brought by the wife. The wife withdrew her damages claim. The primary judge first dealt with Q’s claim and made an award against the husband in Q’s favour for damages in tort in the sum of $112,000 (including costs).
Next, when considering the competing applications for a property settlement order, Kay J identified the assets (including add backs) in the sum of $406,000. Part of those funds had been acquired as a result of compensation the husband had received for a personal injury. His Honour assessed contributions 55/45 in his favour and then turned to prospective considerations at 81,630:
I turn now to consideration of the impact of the s75(2) factors mentioned in s 79(4)(e). This in turn raises an issue identified by Coleman J in Marsh v Marsh(1994) FLC 92-443, namely the impact upon the property proceedings of the damages award in favour of the daughter.
His Honour then referenced well-known passages in Kowaliw and Kowaliw (1981) FLC 91-092, ReChemaisse; Federal Commission of Taxation (Intervenor) (1990) FLC 92-133 and Prince and Prince (1984) FLC 91-501 and said at 81,631:
In my view considerations of justice and equity and public policy make it inappropriate for me (subject to one exception which I will refer to shortly) to take into account the husband's liability to pay his daughter's damages or costs in any way which would diminish the amount to be received by the wife by way of property interests. The only exception to that general principle is that by reason of receipt of the monies, the wife's commitments necessary to enable her to support the daughter will be reduced because the daughter will be possessed of funds which will assist her in her own support.
Whilst the wife's economic support of the daughter may be directly affected, the emotional support that the wife needs to give the daughter, and the effect that has on the wife's own earning capacity, are of course matters to which I must pay particular attention.
As the wife has withdrawn her own claim for damages I do not need to pay close attention to matters identified by Coleman J in Marsh (supra), namely whether one deals with the property claim or the damages claim first when the two are co-existent. It seems to me that there is a good argument for saying that the damages action between the husband and the wife would need to be determined before the property proceedings could be determined. Part of the property of the wife would be her chose-in-action against the husband. Part of the husband's liabilities would be his obligation to pay the damages to the wife.
It is difficult to determine the s 75(2) adjustment that should be made in favour of either the husband or the wife until it has otherwise been determined as to how the parties' property is to be divided after s 79(4)(a), (b) and (c) considerations have taken place. It may be that in some cases there will be an effective diminution of the damages award by reason of s 75(2) considerations. In other cases the award of damages will make no difference. For example if the pool of assets to be divided leaves each party with $1,000,000, then an award of damages of say $50,000 in favour of one party as against the other is unlikely to have any effect whatsoever on s 79(4)(e) considerations. If however both parties were totally dependent upon the pool and the pool is small, then the award of damages may create such an imbalance in ownership of the pool, that s 75(2) may require an adjustment back the other way.
If the pool was say $100,000 and each party was to receive $50,000 by way of s 79(a),(b) and (c) entitlements, but the wife was to pay the husband $50,000 for damages arising out of some tortious conduct of hers, it might well be that the Court would need to increase the wife's share of the $100,000 to give full effect to the provisions of s 79(4)(e).
Justice Kay quarantined Q’s damages award. His Honour otherwise made an adjustment for prospective factors in the wife’s favour in the sum of $50,000. The husband was left with $176,000 from which the $112,000 damages award had to be paid. Nonetheless, it can be seen that by way of obiter, Kay J was of the view that quarantining may not be always appropriate.
Yen v Yen
The only other published case that we can discover in which Coleman J’s views expressed in Marsh have been referred to is Yen v Yen (2010) 42 Fam LR 691 where at [45] Cronin J said, “I do not understand his Honour to say that an adjustment cannot be made under s 79(2) regardless of the award of damages.”.
Conclusions about Grounds 3 and 4
Whilst the analogy drawn by counsel for the wife relying on Marsh v Marsh and Re Q is obvious, in our view the application of the principles articulated in Kennon does not fall within the same rubric as the approach applied in the cases relied upon by the wife, which are claims in tort.
In 1975 the Act deliberately set out to exclude conduct from the assessment of financial adjustment between the parties. The Family Court in Kennon carved out an exception to that general proposition by acknowledging the effect that family violence in particular and conduct more generally might have upon the making of contributions by a party. Given that the acknowledgement is made in respect of contributions, the consideration of a Kennon claim axiomatically happens at the second step although the ongoing effects of family violence maybe a relevant prospective consideration at the third step.
Absent statutory instruction, there is no warrant in s 75(2)(b) to discount the outcome of the analysis under s 79(4)(a)–(c) of the Act based on a Kennon argument. Nor in our view does s 75(2)(o) or s 79(2) create scope for the approach suggested by the wife.
Accordingly, we find the primary judge did not err in failing to quarantine the 7.5 per cent the wife achieved as a result of her Kennon argument and there is no merit in Grounds 3 and 4.
THE HUSBAND’S FORESHADOWED CHALLENGE
The husband’s summary of argument indicates “[he] would like to challenge to His Honour’s percentage finding of 7.5 [per cent] in relation to the Kennon factors” (as per original). However, there is no cross appeal in relation to that finding nor any argument directed to any proposed challenge.
CONCLUSION
None of the wife’s grounds have merit and the appeal shall be dismissed.
COSTS
The husband has not incurred legal costs and accordingly did not seek an order for costs against the wife.
I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Strickland, Ainslie-Wallace & Watts. Associate:
Dated: 21 September 2021
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