MacKinnon & Talbot
[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 2023FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: 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 the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
4.That the respondent be granted a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym MacKinnon & Talbot has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
RIETHMULLER J
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.
At the date of separation, the mortgage on the Suburb C property was $750,000, which was reduced by the respondent to $686,698 by the time of trial in 2021. At separation, the respondent’s superannuation was $154,992, which had increased to $231,429 by the time of trial. The appellant was said to have superannuation of $32,724 at the time of trial (see Exhibit R1).
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’”.
However, as was explained in Lee v Lee (2019) 266 CLR 129 at [55], an appeal court is nonetheless “bound to conduct a ‘real review’” and thus appellate restraint with respect to fact finding applies to “factual findings which are likely to have been affected by impressions about the credibility and reliability of witnesses formed by the trial judge as a result of seeing and hearing them give their evidence” and “secondary facts which are based on a combination of these impressions and other inferences from primary facts”.
Ground 3 – Alleged error in assessing the credit of the appellant
The primary judge erred in assessing the credit of the appellant, specifically by:
a.Failing to take into account the circumstances surrounding the appellant’s false statements to the Australian Tax Office regarding his income.
b. [Abandoned]
c.The effect of the delay in the delivery of the judgment meant his Honour’s ability to assess the witnesses’ demeanour was compromised.
The primary judge was required to assess the credibility of both parties due to the significant differences in each of their accounts. The primary judge noted that the appellant had made false statements to the Australian Taxation Office (failing to disclose cash payments from his employer in his personal income tax returns) (at [32]). The primary judge also noted that whilst the appellant claimed that he was homeless following his relationship breakdown with the respondent, he had leased a property at 2, B Street, Suburb C NSW, and paid rent for at least part of the separation period (at [32]).
The primary judge also found inconsistencies in the respondent’s account. During cross-examination, the respondent admitted to giving false evidence to the Court when she denied being in a de facto relationship with the appellant (at [33]). It also transpired that her claim that she never purchased food at McDonald’s or Domino’s Pizza was incorrect (at [34]).
Unsurprisingly, given that both parties had advanced falsehoods, the primary judge determined to approach the evidence given by each of the parties with caution (at [35]).
Whilst the appellant argues that the primary judge ought to have determined a number of differences in the evidence of the parties, it is accepted that the primary judge was not persuaded to accept the evidence of either party. In the circumstances of this case where there was a clear objective basis for the conclusion that the evidence of each of the parties should be treated with caution.
The appellant argued that the primary judge should have expressly referred to the appellant’s explanations for making the false statements he gave to the Australian Taxation Office. The explanation was simply that the relevant employer only engaged him on the basis that he was paid cash. This explanation, at best minimises, but does not explain the failure to disclose the cash earnings to the Commissioner of Taxation. It is not a matter so significant in the context of the judgment in this case that its absence from the reasons shows error on the part of the primary judge.
The appellant also relied upon the time taken to deliver judgment. However, in this case there were sound, objective reasons to treat each party’s evidence with caution, beyond an assessment of their credit when giving evidence. The time between hearing and judgment did not affect the objective reasons for treating the evidence of the parties with caution.
Finally, the appellant argued that the primary judge should have made findings of fact on various specific differences in the evidence. A trial judge is not required to make findings of fact on issues unless persuaded on the balance of probabilities of the relevant fact: see Rhesa Shipping Co SA v Edmunds (The Popi M); Rhesa Shipping Co SA v Fenton Insurance Co Ltd [1984] 2 Lloyd’s Rep 555. Where there are competing allegations of two witnesses, both of whom have been found wanting when assessing their credit, a trial judge may have little basis for finding or rejecting the relevant fact, unless there is other evidence that bears upon the issue. The appellant did not point to evidence, beyond the evidence of the parties, from which it could be said that findings ought to have been made. The appellant has not made out this ground of appeal.
Ground 6 – Findings on contributions to household expenses
The primary judge failed to properly assess the financial contributions of the appellant, specifically failing to make any finding as to the inadequacy of the respondent’s income to meet her household expenses without assistance from the appellant.
The respondent asserted that she “paid for practically all household expenses for [her son] and myself” which the primary judge notes, on the respondent’s evidence, would have limited the appellant’s contribution to considerably less than he asserted (at [122]-[123]). The evidence showed that the respondent’s income was inadequate to meet her expenses during certain periods when she cohabited with the appellant. However, when cross-examined on this discrepancy, the respondent stated that she met the excess of expenses through the appellant’s repayments for the motorcycle she purchased for him. The respondent also met expenses through her various refinancing (at [124]).
The primary judge found the respondent made “overwhelmingly the greater financial contributions during the parties’ cohabitation” (at [213], [221], and [223]) which the appellant alleges fails to assess his own financial contribution. The appellant argues his Honour did not deal with his evidence that demonstrated how he made a financial contribution to the household beyond what was “very minimal”.
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” argument
The 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.
In this case, the primary judge did not treat the increase in value as a contribution made entirely by the respondent, but included the property in the list of assets of the parties and then considered the wide variety of contributions of the parties on a holistic basis. The appellant has not shown that the primary judge erred in his approach in this respect (although, for reasons set out below, the primary judge did fail to take account of some relevant considerations when exercising his overall discretion).
Ground 2 – Contributions of appellant (renovations)
The primary judge erred in taking into account the failure of the applicant to produce evidence in relation to any value he added on the [Suburb Q, Suburb E, and Suburb C] properties. His Honour erred in finding his work on the [Suburb C] property was not to an adequate standard and was not a contribution as it amounted to nothing.
The primary judge noted that the appellant did not produce expert evidence showing that his work added value to any of the properties, nor was expert evidence produced as to the adequacy of his work on the Suburb C property (at [146]). As a result, there was no evidence of the effect of his work upon the market value of the properties. This left the primary judge without evidence that the work led to any increase in the market value of the properties.
In the absence of evidence as to the effect of the work on the value of the property, it was open to the primary judge to conclude that the renovation had “come to nothing” (at [224]) particularly in light of the appellant’s concession that the work was a “failure as to time”.
Whilst the primary judge was able to conclude that the appellant’s work and expenditure on renovations did not add to the market value of the property, his Honour appears to have gone further and concluded that the appellant’s efforts were not a contribution within the meaning of s 90SM of the Act. Section 90SM(4)(b) of the Act specifically provides for account to be taken of:
Alteration of property interests
(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party … :
(i) to the acquisition, conservation or improvement of any of the property of the parties … ; or
(ii) otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them …
There is no question that the appellant undertook work on the home nor that his efforts were genuine. On the findings of the primary judge, this work did not lead to an increase in the value of the property. However, not all contributions by parties to marriages or de facto relationships lead to an increase in the wealth of the parties. A more common example of work and effort that does not lead to a financial benefit is where a party unsuccessfully attempts to establish a business to provide for the family: one could not deny that the work and effort in attempting to establish a business is a contribution to be considered, even if the business fails. There is no requirement that a contribution must result in a positive economic result before it can be taken into account: see Browne v Green (1999) FLC 92-873 at 86,359. Whilst the lack of economic benefit may be relevant (Willmore and Willmore (1988) FLC 91-975), a party’s work and effort generally remains a contribution unless it is conduct of the type described in Kowaliw and Kowaliw (1981) FLC 91-092.
The appellant has made out the part of this ground that alleges that the primary judge failed to take into account, as a relevant factor, the appellant’s contributions by way of work and effort in renovating the property, albeit that the work and effort did not result in an increase in the market value of the property.
Ground 5 – Effect upon contributions due to tax evasion
The primary judge erred in his approach in his categorisation of the appellant’s conduct as illegal tax evasion and avoidance of employer compulsory superannuation entitlements. His Honour erred by not properly considering the contribution entitlement of the appellant in respect of the respondent’s superannuation.
The primary judge found that the appellant did not declare income to the Australian Tax Office (at [32]) and found that the appellant should not benefit from his illegal tax evasion which has resulted in an avoidance of compulsory superannuation contributions (at [230]).
The relevant period referred to by the primary judge occurred after separation (at [201], [229]). Thus, the finding was to the effect that the appellant had earned cash income following separation and had not paid appropriate tax or made contributions to his superannuation in the post separation period. Those monies did not otherwise form part of the assets of the parties but were applied to the appellant’s own use.
More elegantly expressed, the finding was that the failure of the appellant to contribute to his superannuation during the period after separation was relevant to the assessment of his contributions to the superannuation available at trial, particularly given that the respondent continued to contribute to her superannuation during the relevant period. There is no error in taking account of the different contributions to superannuation.
Ground 7 – Contribution to finding and purchase of Suburb C Property
The primary judge failed to take into account important non-financial contributions of the appellant, including his contribution to the finding of and decision to purchase the [Suburb C] property.
The appellant alleges that the primary judge failed to give any consideration to the contribution of the appellant to the Suburb C property which had increased appreciably in value. The appellant gave evidence surrounding his efforts to research and find the Suburb C property, including market research and discovering the property (at [71] and [149]). This evidence was not contradicted by the respondent. The issue was clearly put in the appellant’s Case Outline filed 26 March 2021.
The primary judge acknowledged the appellant’s submission regarding this contribution (at [149]) but did not specifically identify it as a relevant factor when assessing the contributions of the appellant. Not every finding as to the minutia of contributions must be slavishly repeated later in the judgment when summarising the significant factors that explain the percentage struck for contributions.
This factor, which was not in dispute, does not appear to be of such significance that one could draw an inference that the primary judge failed to take it into account simply because it was not expressly mentioned in the judgment.
I am not persuaded that this ground is made out.
Ground 8 – Contributions to care of child
The primary judge failed to correctly take into account the assistance of the appellant relating to the respondent’s child…, in particular:
a. [Abandoned]
b.His Honour erred in failing to consider any contribution in the period before the parties commenced cohabitation.
The primary judge took into account the appellant’s role in the parenting and financial support of the respondent’s son pursuant to section 90SF(3)(r) of the Act, referring to Robb and Robb (1995) FLC 92-555, for the period of the parties’ de facto relationship. However, with respect to the period prior to cohabitation, the primary judge said:
255. I do not consider that the [appellant’s] engagement with the parenting of [the respondent’s son] in the period from March 2005 until commencement of the cohabitation around mid-2009 should be a component of assessment of appropriate adjustment for this consideration, as I consider that during that period his actions were in line with those of a person in a non-cohabiting romantic relationship with a child’s parents who forms a relationship with a child and assists with the child’s parenting and occasional financial support, particularly in relation to outings and regular attendance at extracurricular activities, and that such does not have the necessary relevance in connection to the subsequent de facto relationship to be so considered.
As the appellant identifies, his contributions prior to the de facto relationship may also be taken into account: see Hsiao v Fazarri (2012) 270 CLR 588 (noted by the primary judge at [196]). However, contributions towards the care of a child for which one is not the biological parent cannot be seen simplistically when compared with contributions of money or property. It is not appropriate to attempt to place a financial value upon everything done by extended family or friends for a child as families are not commercial enterprises: see the comments of Kay J in Aleksovski & Aleksovski (1996) FLC 92-705 at 83,440.
In R & H [2003] FamCA 125, the Full Court identified that:
22.There is a danger of double counting in too readily making such an adjustment. Where each party brings in equivalent capital and the efforts of each party during the course of the marriage are seen to be equal, the fact that children from another relationship benefited in some way by support given to them arising out of that relationship, does not necessarily lead to the conclusion that a further adjustment should be made on behalf of the non-parent. One cannot necessarily conclude that, absent the step-children, the parties would be any the richer. Their quality of life may have been enhanced in terms of expenditure on themselves rather than on the children, or there may have been opportunity for capital gain or savings, but these things are merely speculative. Ultimately it is a matter for the discretion of the trial Judge.
23.There are further difficulties with the so-called Robb v Robb concept. Whilst it is true that a step-parent has no legal obligation to support a step-child unless an order has been made under s 66M of the Family Law Act, a moral obligation may well be created before then. In any event, the relationship between a step-parent and a step-child is not necessarily a one way street. Nor is it one upon which it is necessarily appropriate to put any commercial value.
In Zaruba & Zaruba (2017) FLC 93-776, the Full Court stated (at [54]) that “not everything a party does for the benefit of their spouse’s children should result in some monetary reward in property settlement proceedings.”
It was well within the broad ambit of the primary judge’s discretion to determine which periods, if any, were appropriately taken into account when assessing this factor. The appellant has not shown appealable error in this regard.
Ground 9 – Occupation of Suburb C post-separation
The primary judge erred in his finding that the respondent’s occupation of the [Suburb C] property post-separation was not a contribution from the appellant. In the alternative, it was not a matter to be offset against the respondent’s contribution to post-separation payments on the loan and other outgoings in relation to the [Suburb C] property.
The primary judge found that the appellant obtained rental accommodation at his own expense and later occupied his campervan as his accommodation after the breakdown of his relationship with the respondent. However, his Honour did not consider the post separation occupation of the Suburb C property by the respondent and her son to be a contribution by the appellant, saying:
226. Whilst the [appellant] obtained initially rental accommodation at his own expense and later occupied his campervan as his accommodation, I do not find that the occupation of the [Suburb C] property by the Respondent and [the respondent’s son] post separation is a contribution of any nature by the [appellant]. At no time has the [appellant] had a legal or an equitable interest in the [Suburb C] property.
In Meadows & Meadows (No. 3) [2020] FamCAFC 124 (at [152]), the occupation of a former matrimonial home was considered to be an indirect contribution by the spouse not in occupation, even though the title to the former matrimonial home was held by the spouse in occupation: see Meadows & Meadows (No. 2) [2019] FamCA 491. The fact that the interest of the appellant may be only an inchoate right at common law (until property settlement orders are made), does not restrict consideration of the use of the property pursuant to s 90SM of the Act as between the spouses.
Counsel for the respondent conceded this finding was an error, in light of the decision in Meadows & Meadows (No. 3). Unfortunately, this authority was not drawn to the attention of the primary judge. This factor cannot be seen as insignificant in the present case as the time between separation and judgment was substantial, some five years. The primary judge therefore erred in failing to take this factor into account.
As a result, this ground is made out.
As the appellant has established two grounds of appeal, the appeal must be allowed.
RE-EXERCISE OF THE DISCRETION
Both parties asked that I re-exercise the discretion in the event that the appeal is allowed, based upon the material before the primary judge, subject to the determination of the appeal grounds.
For the reasons given by the primary judge, a property settlement order should be made and the contributions assessment should be undertaken on a global basis.
It is unnecessary to restate all of the matters set out in the primary judgment that are relevant to the exercise of the discretion, save to make those matters with respect to which the appeal has been successful. As a result, I also take into account the contributions by the appellant in choosing the property that was purchased, the renovations of the property, and the use that the respondent has had of the property in the long period since separation, as discussed above.
It is not appropriate to attempt to alter the contributions assessment of the primary judge by adjusting the percentage to attempt to reflect the additional factors with respect to which the appeal has been allowed. The discretion must be considered afresh. Neither party argued that the approach to superannuation should be different to that of the other assets. The whole of the parties’ contributions must be considered holistically: see Jabour & Jabour (2019) FLC 93-898.
The property pool was found by the primary judge to be $1,372,449 (inclusive of superannuation). At the start of the parties’ cohabitation in 2019, the appellant (who was 50 years of age) had very modest assets, whilst the respondent (who was 49 years of age) had two real properties and superannuation of around $559,290. In the context of this case, the initial contribution of property by the respondent is substantially greater than that of the appellant.
The parties cohabited for around six years, during which time the respondent’s two properties were sold and the current home owned by the respondent was purchased and renovated (although the renovations were the subject of much difficulty). During the relationship, the respondent’s child lived with the parties. The roles that the parties performed in the relationship do not appear to have impacted upon their careers or earning capacities. They each worked and, as set out above, during the relationship the respondent’s properties were sold and a different property purchased. The appellant undertook renovation work (as discussed above). Following separation, the respondent remained in the home for the lengthy period between separation and judgment, reducing the mortgage by around $65,000 and continuing to contribute to her superannuation.
In the circumstances of this case, the appellant’s contributions are appropriately assessed at 22.5 per cent of the assets and superannuation of the parties.
The primary judge assessed the s 90SF(3) factors at five per cent based upon the care the appellant provided for the respondent’s son and the difference in the asset position of the parties. Whilst I have found a different contributions percentage to that of the primary judge, I am not persuaded that a lesser adjustment should be made as the appellant remains in a substantially weaker financial position to that of the respondent. Such an adjustment results in a property settlement 72.5 per cent to 27.5 per cent in favour of the respondent.
If the property is settled 72.5 per cent to 27.5 per cent, this would result in an overall outcome where the appellant receives a total of $377,423 and the respondent $995,026 (inclusive of superannuation). Neither party made submissions that the superannuation should be treated separately nor be the subject of a splitting order. As the appellant has property and superannuation of $80,437 (at [260]–[263]), the respondent must make a payment to him of $296,986. The outcome is just and equitable and an appropriate property settlement. The appeal will be allowed and orders made accordingly.
COSTS
The parties requested that certificates should be issued pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) as, at least with respect to Ground 9, the appeal would be allowed as a result of errors of law. It is appropriate that costs certificates are issued with respect to the parties’ costs in this appeal.
I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Riethmuller. Associate:
Dated: 19 September 2023
3
12
0