MacKinnon & Talbot

Case [2023] FedCFamC1A 156

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

MacKinnon & Talbot [2023] FedCFamC1A 156   

Appeal from: MacKinnon & Talbot [2022] FedCFamC2F 1738
Appeal number(s): NAA 20 of 2023
File number(s): SYC 3345 of 2017
Judgment of: RIETHMULLER J
Date of judgment: 19 September 2023
Catchwords: FAMILY LAW – APPEAL – Property – Where the respondent brought significant assets to the relationship – Whether the increase in property value should be treated as an equal contribution by each party or holistically – Whether the primary judge erred in failing to consider the appellant’s work on renovations as a contribution where the renovations added no value to the home – Whether the appellant caring for the ’respondent’s child pre-cohabitation is a s 90SF(3)(r) factor – Whether the ’respondent’s occupation of property post-separation was a contribution by the appellant – Appeal allowed – Re-exercise of discretion.
Legislation:

 Family Law Act 1975 (Cth) ss 66M, 90SF, 90SM

Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 9

Cases cited:

Aleksovski & Aleksovski (1996) FLC 92-705; [1996] FamCA 111

Browne v Green (1999) FLC 92-873; [1999] FamCA 1483

Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63

House v The King (1936) 55 CLR 499; [1936] HCA 40

Hsiao v Fazarri (2012) 270 CLR 588; [2020] HCA 35

Kowaliw and Kowaliw (1981) FLC 91-092; [1981] FamCA 70

Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78

Lee v Lee (2019) 266 CLR 129; [2019] HCA 28

Meadows & Meadows (No. 2) [2019] FamCA 491

Meadows & Meadows (No. 3) [2020] FamCAFC 124

R & H [2003] FamCA 125

Rhesa Shipping Co SA v Edmunds (The Popi M); Rhesa Shipping Co SA v Fenton Insurance Co Ltd [1984] 2 Lloyd’s Rep 555

Robb and Robb (1995) FLC 92-555; [1994] FamCA 136

Robinson Helicopter Company Inc v McDermott (2016) 331 ALR 550; [2016] HCA 22

Willmore and Willmore (1998) FLC 91-975; [1988] FamCA 45

Zappacosta & Zappacosta (1976) FLC 90-089; [1976] FamCA 56

Zaruba & Zaruba (2017) FLC 93-776; [2017] FamCAFC 91

Number of paragraphs: 64
Date of hearing: 6 July 2023
Place: Sydney
Solicitor for the Appellant: Browns The Family Lawyers
Counsel for the Respondent: Mr Batey
Solicitor for the Respondent: Windsor Law Group

ORDERS

SYC 3345 of 2017
NAA 20 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTION
BETWEEN:

MR MACKINNON

Appellant
AND:

MS TALBOT

Respondent

ORDER MADE BY:

RIETHMULLER J

DATE OF ORDER:

19 SEPTEMBER 2023

THE COURT ORDERS THAT:

1.The appeal be allowed.

2.Order 1(a) of the Orders made 16 December 2022 be substituted with the following:

“That on or before 31 October 2023, the respondent pay to the applicant the sum of $296,986”

3.The appellant be granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in…

Continue reading MacKinnon & Talbot

Sign in free to access the full text

Details
AGLC
MacKinnon & Talbot [2023] FedCFamC1A 156
Case
[2023] FedCFamC1A 156
Decision Date

CaseChat Overview and Summary

MacKinnon & Talbot involves an appeal by the appellant, the former de facto husband, against property settlement orders made pursuant to the Family Law Act 1975. The relationship began in 2004, with cohabitation starting in 2009. The respondent, who owned significant assets, brought a substantial amount into the relationship, while the appellant had limited assets. The relationship ended in 2015, and the primary judge assessed the contributions of the parties, finding the appellant's contributions at 12.5% and the respondent's at 87.5%. The primary judge made a 5% adjustment in favour of the appellant, resulting in a 17.5% share for the appellant and 82.5% for the respondent. The appellant was ordered to receive $159,742 from the respondent.

The legal issues before the court included the correctness of the primary judge's factual findings, particularly concerning the contributions made by each party, and whether the primary judge failed to consider relevant factors when exercising the discretion under section 90SM of the Act. The appellant contested the primary judge's assessment of contributions and argued that the increase in the value of the property should be considered a windfall, to be equally shared. The court noted that the primary judge was entitled to consider the contributions holistically, rather than attributing the increase in value solely to the respondent. The court found that the primary judge's assessment of contributions was open to him based on the evidence presented, and that the appellant's argument concerning the "windfall" nature of the property's increase in value was misconceived. The court upheld the primary judge's decision, affirming the property settlement orders.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The appellant appeals against property settlement orders made on 16 December 2022 pursuant to section 90SM of the Family Law Act 1975 (Cth) (“the Act”) following the breakdown of his de facto relationship with the respondent.BACKGROUND The appellant and the respondent commenced seeing each other in about 2004 or 2005. Between May and August 2009, the parties commenced cohabitation when the appellant moved into the respondent’s home in Suburb E, New South Wales where she lived with her son. The parties separated in July 2015 (at [200]) after a de facto relationship of around six years. At the commencement of the relationship, the appellant had little property (a modest car, some motorcycles, tools, and personal effects (at [214])) and around $12,000 in superannuation. The appellant was employed periodically as a construction worker. The respondent, however, owned two properties, a strata unit in Suburb Q NSW (which she had purchased for $245,000 in 1998) and her home at Suburb E (purchased for $155,000). The respondent was employed as a medical professional. The initial contributions of the parties were set out in Exhibit R1 tendered at the trial: the respondent brought $484,669 in assets together with superannuation of $74,621, at total of $559,290 (a figure expressly adopted by her counsel in final addresses before the primary judge) to the relationship; and the appellant brought chattels of little value and an unknown amount of superannuation. In November 2009, the respondent sold the Suburb Q unit for $431,000 and used the proceeds to purchase a property in Suburb C for $709,000 in January 2010, which became the parties’ home (“the [Suburb C] property”). The respondent’s Suburb E property was then sold in June 2010 for $735,000 (yielding net proceeds of $262,000). The appellant undertook some work on the Suburb Q unit, although the extent of his work in this regard is disputed (at [57] and [65]). In early 2011, the appellant undertook renovations on the Suburb C property for over 10 months and ceased paid employment during this period (“the first [Suburb C] renovation”) (at [75]). The necessary tools and equipment were largely paid for by the respondent (at [79]). The renovation work undertaken by the appellant was unsuccessful and later removed by a builder employed by the respondent. The appellant conceded the first Suburb C renovation he undertook was “a failed attempt” (at [81]-[83]). From August 2014 until April 2015, the appellant was occupied full-time in the renovation, and only engaged in paid employment following April 2015, but continued to work on the second Suburb C renovations outside his working hours (at [102]). In September 2014, the respondent transferred $5,000 to the appellant for trades and materials for “the second [Suburb C] renovation” (at [97]). The respondent claims the work was “mostly incomplete” (at [105]). There was considerable dispute about the extent of the appellant’s contributions. For example, the respondent maintains that between August 2009 and July 2014, the appellant made financial contributions to the household varying between $100-$250 per week except during the periods of the first and second Suburb C renovations (at [112]). The appellant claimed that these were not his only financial contributions (at [113]), and that prior to cohabitation, he paid for recreational activities and activities for respondent’s son, that he gave the respondent $100 a week for shopping, and mostly filled up the respondent’s car with fuel when it was required, and occasionally purchased groceries (at [114]). However, it appears both committed their resources to the relationship.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The primary judge received little assistance from the parties in submissions at the trial as to the outcome. It is apparent that neither of the submissions of the parties’ respective representatives at trial were figures within any reasonable range of outcomes. The appellant submitted that an appropriate outcome was for orders that provided him with between 40 per cent and 50 per cent of the parties’ property after a relationship of around six years, which had no discernible impact upon their earnings, where the parties had no children together (and were unlikely to, given their ages), and where the respondent brought in around 40 per cent of the value of the assets whilst the appellant brought in very little in assets. Equally unhelpful was the submission of counsel for the respondent: that there should be no adjustment of the parties’ property interests when very little of the assets and superannuation was held by the appellant. Neither party even provided submissions that identified a percentage contributions assessment separate from an adjustment based upon the factors in s 90SF of the Act, let alone submissions as to the reasonable range for each finding. The decision of the primary judge The primary judge identified the assets and liabilities of the parties (including superannuation) at $1,372,449 (at [261]) (which is not challenged on appeal) and assessed the appellant’s contributions at 12.5 per cent and the respondent’s contributions at 87.5 per cent (at [231]). The primary judge then made an adjustment pursuant to s 90SF(3) of the Act of 5 per cent in favour of the appellant, recognising the care he had provided to the respondent’s son when the parties were together, as well as the inequality in the parties’ future financial circumstances (at [249], [256] to [258]). The primary judge found that an appropriate division of the net relationship pool between the parties would have the appellant receive 17.5 per cent which equals $240,178.57 (rounded to $240,179) and the respondent receive 82.5 per cent, which equals $1,132,270 (at [262]). The result of these findings, having regard to the property held by each of the parties, was that the respondent was required to pay to the appellant $159,742 (at [263]). As neither party made submissions relating to a superannuation splitting order (at [264]), the adjustment was made by an order for payment without any superannuation splitting order. GROUNDS OF APPEAL The Notice of Appeal filed 13 February 2023 contains nine grounds. The appellant did not pursue Ground 4. Ground 3 and Ground 6 address the fact finding conducted by the primary judge. The remaining grounds address alleged failures of the primary judge to take into account relevant factors when exercising the discretion pursuant to s 90SM of the Act. It is convenient to address Ground 3 and Ground 6 first.Finding of fact by the primary judge When considering an appeal against a finding of fact, the advantages that a trial judge enjoys, having seen the witnesses give evidence and having heard the trial in its entirety, must not be overlooked: see Fox v Percy (2003) 214 CLR 118. Generally, a finding of fact should not be overturned if it was reasonably open on the evidence: see Edwards v Noble (1971) 125 CLR 296 at [17] and Gronow v Gronow (1979) 144 CLR 513 at [8]. In Robinson Helicopter Company Inc v McDermott (2016) 331 ALR 550 at [43], it was said that an appeal court should not interfere with findings of fact “unless they are demonstrated to be wrong by ‘incontrovertible facts or uncontested testimony’, or they are ‘glaringly improbable’ or ‘contrary to compelling inferences’”.

Ratio Decidendi

Legal Principle Established

In this case, the respondent brought over $550,000 in assets and superannuation to the relationship, which represented around 40 per cent of the pool. The respondent also reduced the mortgage by a considerable sum post-separation and continued to contribute to her superannuation whilst the appellant did not. During the relationship, there was a significant period where the appellant was not contributing financially as he was working on the home. It was clearly open to the primary judge to conclude that the respondent made “overwhelmingly the greater financial contribution”. The issue concerning contributions does not lie in this ground, but Ground 2, which is addressed below. Grounds relating to whether the primary judge failed to take relevant considerations into account In House v The King (1936) 55 CLR 499 (at 504–505), the High Court stated that on an appeal against an exercise of discretion: It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. Importantly, error may be established if the primary judge failed to “take into account some material consideration”.Ground 1 – The “windfall” argumentThe primary judge erred in his approach of taking into account the increase in the value of the [Suburb C] property from the time of purchase to the time of trial. The appellant alleges the increase in the value of the Suburb C property, from $709,000 at the time of purchase to $1,725,000 at the time of trial, should be treated as a windfall and considered to be a contribution made equally by each of the parties. He cites Zappacosta & Zappacosta (1976) FLC 90-089 in support of this argument. The primary judge dealt with this issue in the judgment, saying that he did “not consider it appropriate to assess contributions on the basis that as the Respondent was the sole purchaser as between the parties … the whole of the value of the [Suburb C] property … is a contribution by the Respondent” (see [155]). The primary judge went on to eschew some form of mathematical formula when approaching the issue, saying that he did “not consider it appropriate to simply calculate the increase in value of the [Suburb C] property … and conclude that one half of that increase in value is attributable to … a contribution by the Applicant” (at [156]). The primary judge noted that other important considerations bore upon the ultimate exercise of discretion, such as “the contribution of the Respondent in being the sole financial source of the purchase of the property”, in order to undertake a “consideration and assessment of contributions of the parties on the holistic basis” (at [156]). To approach the matter on the limited basis argued by the solicitor for the appellant would be to quarantine one particular contribution and fail to consider the matter holistically. Such an approach runs the risk of undervaluing other contributions and indeed, completely overlooking the real value of the contribution by way of the initial purchase of the property: it is obvious that only those who owned property in the area benefited from an increase in its value, thus the initial purchase or contribution of the property must be a relevant consideration. The appellant’s argument incorrectly attempts to convert the principle that increases in value should not simply be attributed to the title holding spouse as a contribution solely by them (as opposed to it being one of the many relevant considerations) and convert it to some form of community property principle requiring the entire increase in value of an asset to be quarantined as an equal contribution of each party. It was clearly not a “windfall” in the sense of a lottery win, or an unexpected increase in value due to a rezoning or the like, that the respondent sought to claim as a contribution solely by her. The appellant’s argument that any increase in value of real property during a relationship is a “windfall”, which should be effectively quarantined as an equal contribution by each party, cannot be accepted as it would ignore the wide variety of other contributions that must be taken into account.