MADDEN & MADDEN
[2006] FamCA 1391
•21 December 2006
FAMILY COURT OF AUSTRALIA
| MADDEN & MADDEN | [2006] FamCA 1391 |
| APPEAL – PROPERTY – PROCEDURAL FAIRNESS - Whether trial Judge erred in failing to afford procedural fairness to the husband in relation to sale of one of parties’ properties – Husband represented by senior counsel when wife sought order for sale of property - No denial of procedural fairness – Ground not established. APPEAL – PROPERTY – EXCLUSION OF PROPERTY - Whether trial Judge erred in excluding certain property – Trial Judge adopted “two pools” or asset by asset approach - Whether trial Judge in error in including amount borrowed by wife against security of matrimonial home and applied by her to purchase of property with her father in the liabilities of the parties included in the first pool – Trial Judge did not include corresponding asset – Trial Judge did not reduce the liabilities to reflect his removal of the property from the pool – Trial Judge in error in including total liabilities as joint and disregarding benefit received by wife – Appealable error found. APPEAL – PROPERTY – ADD BACKS – BORROWINGS – LEAVE ENTITLEMENTS – LEGAL FEES - Whether trial Judge erred in failing to add back $40,000 claimed by wife to have been borrowed from her parents – Whether trial Judge in error in including wife’s borrowings of $24,000 – Whether trial Judge in error in including husband’s long service and annual leave entitlements – Whether trial Judge in error in finding parties accepted liabilities for unpaid legal fees should be included as joint debts. APPEAL – LEAVE TO AMEND GROUNDS OF APPEAL –During course of hearing of appeal senior counsel for husband sought leave to further amend grounds of appeal – Principles espoused in State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 apposite – Application to amend grounds of appeal after commencement of appeal hearing must be regarded as an extraordinary circumstance – Discretion to be exercised in favour of an applicant only in the most limited circumstances where failure to do so would be contrary to interests of justice – Consideration of merits of proposed ground – No merit in proposed ground – Not appropriate to grant leave to further amend grounds of appeal. APPEAL – RE-EXERCISE OF DISCRETION – Parties to provide agreed statement of facts to be taken into account in re-exercise of discretion – Parties afforded opportunity to file and serve any affidavit material relevant to re-exercise of discretion. APPEAL – COSTS – COSTS OF APPEAL – Parties sought costs appeal and costs of appeal be determined on basis of written submissions – Appropriate orders to be made after re-exercise of discretion determined. |
| Family Law Act 1975 (Cth), ss 79, 94(1AA), 94(1), 94(2D) |
Allesch v Maunz (2000) 203 CLR 172; (2000) FLC 93-033
Bennett and Bennett (1991) FLC 92-191
Bonnici and Bonnici (1992) FLC 92-272
Burke and Burke (1993) FLC 92-356
Farnell and Farnell (1996) FLC 92-681
Gronow v Gronow(1979) 144 CLR 513; (1979) FLC 90-716
House v The King (1936) 55 CLR 499
Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378
Norbis v Norbis (1986) 161 CLR 513; (1986) FLC 91-712
Omacini and Omacini (2005) FLC 93-218
State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
Y & Y [2004] FamCA 799
Zyk and Zyk (1995) FLC 92-644
| APPELLANT: | Madden |
| RESPONDENT: | Madden |
| FILE NUMBER: | SYF | 3952 | of | 2002 |
| FIRST APPEAL NUMBER: | EA | 101 | of | 2005 |
| SECOND APPEAL NUMBER: | EA | 12 | of | 2006 |
| DATE DELIVERED: | 21 December 2006 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Coleman, Warnick & Boland JJ |
| HEARING DATE: | 27 June 2006 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 20 May 2005; 23 December 2005 |
| LOWER COURT MNC: | [2005] FamCA 418; [2005] FamCA 1254 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Lethbridge SC |
| SOLICITOR FOR THE APPELLANT: | Karras Partners |
| COUNSEL FOR THE RESPONDENT: | Mr Kearney |
| SOLICITOR FOR THE RESPONDENT: | Newnhams |
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Madden v Madden.
Orders
That the appeal be allowed.
On or before 15 January 2007 the appellant serve on the respondent a draft statement of agreed facts relevant to the re-exercise of the discretion.
On or before 22 January 2007 the respondent serve on the appellant the changes, if any, sought to the draft statement of agreed facts, relevant to the re-exercise of the discretion.
If the parties have finalised an agreed statement of facts, such agreed statement shall be filed with the Appeals Registrar, Eastern Appeals Registry on or before 22 January 2007.
In the event the parties are unable to agree on a statement of agreed facts, the appellant file and serve any affidavit evidence on which he seeks to rely as further evidence relevant on the re-exercise of the discretion together with any submissions by 4.00 pm on 22 January 2007.
That the respondent file and serve any affidavit evidence on which she seeks to rely as further evidence relevant on the re-exercise of the discretion together with submissions by 4.00 pm on 5 February 2007.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 101 of 2005; EA 12 of 2006
File Number: SYF 3952 of 2002
| Madden |
Appellant
And
| Madden |
Respondent
REASONS FOR JUDGMENT
Introduction
The husband seeks to appeal orders made by Rowlands J on 29 August 2005 in proceedings for settlement of property under s 79 of the Family Law Act 1975 (Cth) (“the Act”) between himself and his former wife. The effect of the trial Judge’s orders was to divide the parties’ assets of $2,657,235.00 as to 72.5 per cent or $1,926,495.00 to the husband and 27.5 per cent or $730,740.00 to the wife. This division of assets excluded the first property which was initially owned by the wife and her late father, and which by the date of his Honour’s reasons for judgment was solely owned by the wife, she having inherited her late father’s half share in the property in February 2005.
At the commencement of the hearing before us the husband’s grounds of appeal fell essentially into three areas. The husband contended error by the trial Judge:
·in making orders for the sale of the second property without affording the husband the opportunity to be heard about such sale (the procedural fairness ground);
·in the manner in which his Honour dealt with the first property (the exclusion of property grounds); and
·in failing to “add back” or exclude various items including legal costs from the pool of assets available for division.
Conduct of appeal
The appeal books contained the husband’s Notice of Appeal filed 14 September 2005. In his written submissions filed 9 June 2006 the husband’s senior counsel noted that grounds 3, 4 and 11 were not pressed, that ground 5 should be dealt with together with grounds 6 and 7, and that leave would be sought to amend grounds 8, 10 and 14.
At the commencement of the hearing before us senior counsel for the husband advised that ground 2, although addressed in the submissions, was no longer pressed. No opposition was raised by counsel for the wife to any of the amendments set out in the husband’s senior counsel’s written submissions. However, at the conclusion of senior counsel for the husband’s oral submissions he sought to further amend the grounds of appeal to include an additional ground asserting appealable error in a failure by the trial Judge to give reasons in respect of the orders made on 29 August 2005, and in particular as to why the trial Judge considered the orders he made to be just and equitable. As there was no consent to such amendment, we made orders permitting the husband to file a further amended Notice of Appeal, and determined we would reserve our reasons as to whether or not we would permit the late amendment. We also gave directions for the filing of further written submissions by the wife’s counsel once the amended Notice of Appeal was filed. Those submissions were received by us on 22 August 2006. We indicated we would, when giving our reasons in respect of the other grounds of appeal, deal with the question of the leave sought to rely on an additional ground of appeal.
Amended Notice of Appeal
The grounds of appeal in the amended Notice of Appeal filed 28 June 2006 are as follows:
1.That the trial judge erred in permitting the wife in the circumstances of this case to seek orders for the sale of the [second property] with the benefit of the judgment in that that course amounted to a denial of natural justice to the husband where, in particular:
1.1The wife had on two occasions resisted interim applications for the sale of the property;
1.2The trial proceeded on the basis that the wife would retain the property or it would be transferred in specie to the husband and in this regard the trial judge wrongly found as a fact that that matter was in issue at the trial (Judgment, ¶62);
1.3The course permitted by the trial judge denied to the husband the opportunity to cross-examine the wife as to her reasons for wishing the sale and to question those reasons and further to cross-examine and make submissions that if the sale were less than the agreed value, the wife should bear the loss.
2.That the trial judge erred in law in making orders which he knew or ought to have known would not lead to a division in percentages found by him to be just and equitable.
5.That the trial judge erred in law in failing to treat the whole of the wife’s equity in [the first property] as an asset rather than, as he did, as a resource.
6.That further, or in the alternate to Ground 5, the trial Judge erred in law in excluding as an asset of the wife’s the equity in [the first property] originally acquired by her in cash, together with an appropriate adjustment to that sum to reflect the increased value in the property between date of purchase and date of trial.
7.That further or in the alternate to Grounds 5 and 6, the trial judge, if he was correct in excluding the value of [the first property] as an asset, erred in failing to exclude from the parties’ joint liabilities that part of the ANZ Bank debt with which the wife had acquired her original equity in the property.
8.That the trial judge erred in law in failing to add back as a notional asset of the wife’s the $40,000 wrongly claimed by her to have been borrowed from her parents and the trial Judge’s finding that the wife applied that money to pay legal fees was against the weight of evidence.
9.Further or in the alternate to Ground 8, the trial judge erred in law in including as a debt of the parties an amount of $24,000 said to be loaned by the wife’s father to her for living expenses.
10.That the trial judge erred in law in wrongly including as an asset of the husband the amount of $69,586 being said to be his accrued long service leave and annual leave entitlement when the husband’s unchallenged evidence was that that leave had been taken pro rata on his resignation from [C] Inc and the trial Judge’s finding that at the relevant time the husband had other income available to him was against the weight of evidence.
14.That the trial Judge erred in finding that the parties appear to accept that liabilities for contingent legal fees should be included as their joint debts when it had been submitted at trial that this was not the case.
16.That the trial Judge erred in failing to in his Judgment of 20 May, 2005 or otherwise thereafter, having directed submissions by the parties as to the appropriate Orders to be made to take account of his findings, give any reasons for making the Orders he made on 29 August, 2005. In particular, because that failure to give reasons or adequate reasons deprived the parties of any ability to understand his process of reasoning and why he considered these Orders just and equitable pursuant to Section 79(2).
We propose to deal with the grounds of appeal, except ground 16, in the three broad topics we have previously identified. We will discuss proposed ground 16 in our considerations of the application for leave to amend the Notice of Appeal.
Background
The relevant background is contained in the trial Judge’s reasons for judgment and is not contentious.
At the date of the hearing the husband was aged 54 years and the wife was aged 50 years.
The parties commenced cohabitation in 1996 and they were married in 1997. They separated in 2002. There were no children of the parties’ relationship.
Both parties had been previously married. The husband had two children, aged at the commencement of cohabitation approximately 11 years and 9 years. The trial Judge noted “[t]hey frequently resided with the parties during cohabitation”. The wife had one child of her prior marriage, a daughter, aged approximately 12 years at the commencement of the parties’ cohabitation. That child lived with the parties during their cohabitation.
The husband has tertiary qualifications in law “with accounting and economics subjects to his credit”. The trial Judge noted “[h]e worked full time, in his business [C] Inc. until September 2003”. The husband was not employed at the date of the trial but was noted to be interested in “further ventures and gaining non executive directorships”.
The wife had qualifications in interior design and many years experience as an interior designer. At the commencement of cohabitation the wife commenced her own business. She was not employed at the date of trial.
At the commencement of cohabitation the husband asserted he had assets to a value of $1,371,868.90. The husband’s assets comprised a car, furniture, superannuation and a life insurance policy. His most substantial asset was shares in a corporation he had founded.
At the commencement of cohabitation the wife owned the second property, a home unit, which was unencumbered and valued at that time at $325,000.00. The wife asserted she also had furniture, savings of approximately $5,000.00 and a motor vehicle.
In November 1996 the parties purchased the third property. The property was subsequently renovated and when sold the proceeds eventually applied to the repayment of a bridging loan obtained by the parties to purchase the matrimonial home.
The matrimonial home was subject of consent orders made 7 March 2005 which provided for the property to be sold by auction. The net proceeds of sale of $2,290,862.00 were included in a schedule of assets provided to the trial Judge.
In October 2003 the wife and her late father purchased the first property as joint tenants. The wife contributed $80,000.00 from a mortgage advance of $300,000.00 obtained by the parties and secured over the matrimonial home. The borrowings over the matrimonial home were subject of consent orders made on 19 June 2003. The wife asserted she borrowed the sum of $506,531.00 from her father for her share of the purchase price of the first property. The trial Judge noted “[u]pon the death of her father the wife obtained full ownership of this property and also became liable for the $70,000 St George loan, over it”. His Honour also noted there was no dispute as to the value of the property of $1,325,000.00.
Conduct of the trial
In order to fully understand the grounds of appeal relating to the second property it is necessary we say something about the litigation.
The husband commenced proceedings on 30 May 2002 seeking final orders pursuant to s 78 and s 79 of the Act. On 11 June 2002 the wife filed a response in which she sought, inter alia, orders for spousal maintenance. The parties’ competing applications, together with a review application and enforcement summons filed by the wife seeking spousal maintenance arrears, commenced before the trial Judge on 16 June 2003 when the hearing proceeded for four days. The matter resumed part heard on 25 to 29 October 2004 inclusive and on 1 November 2004. Following the wife’s father’s death, which occurred on 4 February 2005, an application was made to reopen and further evidence was placed before the trial Judge on 18 March 2005.
On 17 May 2005 the trial Judge received further material from the parties and delivered reasons for judgment on 20 May 2005. On that day the trial Judge directed that the parties should, within seven days, provide a minute of order to reflect his Honour’s reasons for judgment.
No agreement was reached by the parties as to the form of orders to be taken out. On 23 August 2005 the wife filed an application in which she sought that injunctive orders, which had been made on 31 October 2002, insofar as they related to the second property be discharged, and that the husband be restrained from attending an auction of the second property to be held on 31 August 2005.
On 29 August 2005 the trial Judge made final orders, some of which are the subject of this appeal. The orders the subject of the appeal included an order permitting the wife to sell the second property for the best price available, and that subject to the sale price being less than the agreed value of $720,000.00, for the husband to pay an adjustment to the wife of 72.5 per cent of the amount by which the sale price net of agent’s fees and commissions and legal costs was less than the agreed value. The orders also provided for an adjustment in the event the property sold for more than $720,000.00 and for an adjustment in respect of capital gains tax if such tax exceeded or was less than $114,550.00. The property was sold by auction in 2005 and net proceeds of sale were approximately $506,000.00
On 30 August 2005 orders were made by consent by Steele J staying Orders 2.1 to 2.4 of the trial Judge’s orders pending finalisation of this appeal and providing that the proceeds of sale of the matrimonial home due to the husband pursuant to the trial Judge’s orders be retained by solicitors in an interest bearing account pending finalisation of the appeal, or further order of the Court.
Grounds relating to the sale of the Second property (grounds 1 and 2)
The thrust of the husband’s first argument in respect of these grounds is that he was denied natural justice. The husband asserted that occurred because:
· the wife had on two occasions resisted interim applications for the sale of the property;
· the trial proceeded on the basis that neither party sought an order that the second property be sold;
· the property had an agreed value at trial of $720,000.00 but an order was made permitting the wife to dispose of the property for an amount of not less than $500,000.00; and
· the course permitted by the trial Judge denied the husband the opportunity to cross examine the wife, and make submissions if the sale proceeds were less than the agreed value, that the wife should solely bear any difference.
Counsel for the wife submitted that the husband had the opportunity to be heard in relation to the orders sought, and hence there was no denial of natural justice.
The trial Judge at the commencement of his reasons, did not set out with any particularity the orders sought by either party by way of property adjustment under s 79 of the Act. He did set out the list of assets and liabilities contended for by the parties in exhibit W22, which exhibit included the second property at an agreed value of $720,000.00.
In his reasons for judgment the trial Judge noted:
The wife, at the commencement of cohabitation had a Commercial Interior Design practice and she continued in this work until about 1998. She had an unencumbered unti [sic] [(the second property)] valued at some $325,000.
When discussing the parties’ assets and liabilities, the trial Judge referred to the capital gains tax which would be payable in the event the second property was sold. His Honour noted:
It is not clear at this stage that the [second] property is to be sold however the parties have agreed upon a figure in the event that such a sale is part of the final orders or consequential upon them (Liability Q) [referring to capital gains tax]. Appropriate adjustment to the figures will be required if this contingency eventuates.
In his application for final orders the husband sought in paragraph 12 of his proposed orders, a “[d]eclaration that the husband has no right, title or claim in the property situate at and known as [the second property]”. In her response, the wife did not seek any specific orders in respect of the second property.
At the commencement of the hearing of 17 June 2003 the transcript reveals that counsel then appearing for the husband said, referring to the case outline documents:
They comprise a reworking of some figures as a consequence of some additional evidence that came before your Honour yesterday and as a consequence of those amendments some amendments to the minutes of orders sought by my client including she [sic] seeks an order in relation to the sale of the [second] property. Accepting on the pool that’s available, that asset will have to be realised. I’ve provided our friends with copies of that.
When the wife made her application for the discharge of the injunction she provided written submissions to the trial Judge.
On 19 August 2005 the wife relied on written submissions in respect of the form of orders she sought to reflect the trial Judge’s judgment. Amongst the orders sought was an order for the sale of the second property and for machinery orders for the distribution of the sale proceeds. At paragraph 22 of the submissions made on behalf of the wife it was said:
22.It is now clear that the [second property] is to be sold. The Wife proposes an unequivocal order requiring the same (Order 3). In such circumstances, that which the decision contemplated has come to pass and the Orders to be entered by the Court should both:
22.1 provided [sic] for the sale as the Wife’s orders propose; and
22.2 allow for the impost of capital gains tax upon such sale in the amount agreed upon by the parties and forming part of the decision of the Court.
In separate written submissions filed on behalf of the wife on 23 August 2005 the wife enunciated the reasoning she relied on to support the assertion it was just and equitable for the second property to be sold. Having noted it was the wife’s case she should, if possible, retain the second property, the wife submitted she had consented to the sale of the matrimonial home, and as the net proceeds of sale were approximately $394,000.00 less than the agreed value, the wife found herself in a financial position which required her to sell the second property. The wife’s submissions noted she had advised the husband’s solicitors of her intention to sell the second property as a consequence of orders that would ultimately be made, and that the husband failed to provide any basis of opposition for the sale.
The husband filed written submissions dated 11 August 2005 (paragraphs 3.5 to 3.10). In those submissions the husband referred to interim applications to sell the second property which had been opposed by the wife, and that neither party at trial had sought orders for the sale of the second property. The balance of the husband’s submissions dealt with practical difficulties likely to arise on a sale because of the poor relationship between the parties. At paragraph 3.10 senior counsel for the husband said:
Fundamentally, however, the proposition, if any, by the wife that there should now be a sale amounts to a fundamental denial of natural justice to the husband when, as has already been stated, it was never a proposition contended for by the wife at trial.
Counsel for the wife, in his written submissions on this appeal, noted that the husband did not seek to cross examine the wife on her application to discharge the injunction, or to reopen proceedings. Further, it was submitted the husband did not adduce evidence of any relevant prejudice and “did not seek to renew his prior application for transfer of the property to him rather than having it sold”. It was asserted in such circumstances the husband could not maintain there had been a denial of natural justice.
The husband was represented by senior counsel at the time of the wife’s application. We accept the force of the wife’s counsel’s submissions and are not satisfied that ground 1 is established.
The second limb of the husband’s complaint about the order for the sale of the second property is that the trial Judge erred in making orders which he knew or ought to have known would not lead to a division in the percentages found by him to be just and equitable. We have some difficulty with this ground of appeal which appears to have been included in the further amended Notice of Appeal in error. We note before us the concession that ground 2 was not pursued, and accordingly we disregard this ground.
Treatment by the trial Judge of the First Property (grounds 5, 6 and 7)
(a) Trial Judge’s reasons
The trial Judge referred to the wife’s acquisition of the first property firstly in conjunction with a bank loan. His Honour said:
55.It is put on behalf of the wife that she has a loan agreement with her father for $506,531 and that she will be liable to repay this to her father’s estate. The situation is unclear but a risk seems to be present although the matter appears to be “in family” (and of course on the wife’s side).
56.I have determined, as appears elsewhere, that [the first property] should be dealt with separately and left out of the general equation.
57.It is also appropriate to deal with the St George Bank loan on [the first property], Liability M, in the same fashion by leaving it out of the global exercise.
58.Section 75(2) considerations will be dealt with later.
The trial Judge further dealt with the first property later in his reasons noting it was purchased by the wife and her father in October 2003 and that the wife used $80,000.00 from the $300,000.00 mortgage over the matrimonial home “pursuant to orders made 19 June 2003” to fund the purchase. Having recorded that the wife was entitled to the whole of the property following the death of her father his Honour said:
Counsel for the wife submits that in the circumstances an asset by asset approach is appropriate in relation to the [second property] and [the first property] and cited the Full Court decision of Zyk v Zyk (1995) FLC 92-644 at 82,509. It is put that these properties were treated as the property of the wife during and after the marriage. (paragraph 104)
His Honour concluded:
I accept that argument in relation to [the first property]. The history of the financing of the wife’s share in the property (from post separation orders), the parties [sic] treatment of it and the fact of the wife’s father’s heavy involvement before it all became the property of the wife, suggests that this approach is appropriate. The husband’s association with this property is really limited to the parties’ joint liability arising from the orders of the 19th June 2003, in respect of which he gained monies, she gained monies and both have an obligation to repay which will occur following the orders emanating from these proceedings. (paragraph 105)
In finding the pool of assets available for division between the parties at $2,657,235.00, the trial Judge excluded the value of the [first] property. In paragraph 16 of his reasons for judgment the trial Judge set out in full Exhibit W22. That exhibit contained each party’s contentions in respect of assets and liabilities to be included in the net pool of assets available for division. The trial Judge set out in a third column the items which he accepted should be included in the pool. He recorded in the list of assets the wife’s interest in the first property at $662,500.00 and her interest in the same property received by survivorship at $662,500.00. However in calculating the total value of the assets, he excluded the two items relating to the first property in coming to his finding that the parties’ gross assets had a value of $4,049,964.00. In calculating the parties’ liabilities of $1,392,729.00 the trial Judge included in those liabilities “ANZ mortgage on [the matrimonial home] additional borrowings pursuant to order 19/6/03” of $301,066.00, and excluded a “St George Bank loan on [the first property] (wife)” of $35,000.00. He also excluded the estimated capital gains tax likely to be incurred on the sale of the second property.
(b) The parties’ submissions
There was no dispute that the first property was purchased by the wife and her late father on 1 July 2003 for a purchase price of $1,200,000.00. The wife deposed to her total financial contribution to the purchase of the property “was $85,494, this amount was provided … from the amount of $130,000 advanced … on security of [the matrimonial home] in accordance with the Orders of the Family Court dated 19 June 2003”. The orders provided:
1.That each of the parties forthwith do all acts and things and sign all documents necessary to cause an application to be made to ANZ Private Bank for a one (1) year interest only loan to the parties jointly of $300,000.00 secured over the parties’ [matrimonial home].
2.That the parties request and direct that such advance as may be made as a consequence of Order 1 be paid to them each in the sum of $130,000.00 with the balance to be deposited into a joint account in the names of the parties, with the bank to be directed to debit interest payments on the said loan facility from such joint account, with the balance of the joint account to abide further order of the Court.
3.Direct that each of the parties file and serve an Affidavit, by not later than 10 November, 2003, setting out particulars of how each of them have expended the moneys received pursuant to Order 1.
The husband’s senior counsel in his written submissions asserted that:
… the trial judge accepted the submission made on the wife’s behalf that he should adopt in relation to [the first property] an asset-by-asset approach and treat it separately from the parties’ other property. The only conclusion open from his Honour’s exclusion of the property entirely from the parties’ divisible property is that he found that the husband made no contribution to the property whatsoever.
Senior counsel for the husband thereafter noted the source of the funds used by the wife to acquire the first property, and submitted that the trial Judge’s finding was unsustainable. In support of this submission senior counsel noted:
·the trial Judge found the husband was entitled to 72.5 per cent of the equity in the matrimonial home;
·repayments in respect of the borrowing used to acquire the first property were subject of direct contribution by the husband and via borrowings against the matrimonial home; and
·the wife’s continued residence in the matrimonial home (because she asserted the first property was uninhabitable) amounted to an indirect contribution by the husband to its acquisition and conservation.
It was further submitted on behalf of the husband that if the trial Judge was correct in excluding the value of the first property as an asset, that his Honour erred in failing to exclude from the parties’ joint liabilities that part of the ANZ Bank debt with which the wife had acquired her original equity in the property.
In his oral submissions before us, senior counsel for the husband submitted the trial Judge had wrongly included two liabilities in calculating the parties’ net assets. Firstly, a liability of $35,000.00 which the wife had incurred as part of a joint borrowing of $70,000.00 with the husband, and said “that had been a borrowing applied to the purchase of the property”. He additionally sought the deduction of $85,494.00 from the ANZ liability.
In the course of his oral submissions, senior counsel for the husband took us to the husband’s affidavit sworn 1 September 2004 (paragraph 82). In that affidavit the husband deposed to the disposition by him of $130,000.00 which he received pursuant to the consent orders of 19 June 2003. The husband deposed to reducing his overdraft by $74,000.00, reducing his credit card liabilities, payment of tax, and in payment of legal and other fees in the sum of $46,015.00.
It is clear from the trial Judge’s reasons that he included the parties’ paid legal fees in the parties’ list of assets so that approximately $46,000.00 of the borrowing was effectively written back by the trial Judge.
The wife’s counsel submitted it was inappropriate that we should adopt the approach suggested by the husband’s senior counsel in analysing the application of the funds, as that approach was inconsistent with the broad approach adopted by the trial Judge.
(c) Appellate principles
This is an appeal against a discretionary judgment. The circumstances in which the Full Court should interfere with a discretionary judgment are well known. In Gronow v Gronow(1979) 144 CLR 513; (1979) FLC 90-716 Stephen J said at 519:
The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, 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.
In House v The King (1936) 55 CLR 499 Dixon, Evatt and McTiernan JJ said at 504-5:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. 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. If the judge acts upon 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.
(d) Position before the trial Judge
In order to more readily understand his Honour’s determination of the parties’ asset position, and the parties’ contentions, we set out the list of assets and liabilities which comprised the pool as adjusted between the parties by the trial Judge.
ASSETS [The matrimonial home] (Joint) Sale price less costs J 2,290,862 [The second property] W 720,000 Bank savings W 243 Bank savings W 22,492 Options – [C] Inc H 1,440 Loan shares – [C] Inc H 4,000 1,230 shares – [C] Inc H 566 AMP Life Policy - Surrender Value H 11,132 Volkswagen motor vehicle W 10,000 Ford motor vehicle H 7,500 Household effects in [matrimonial home] 19,765 Household effects in husband's possession H 39,475 Annual leave and long service leave H 69,586 Addback legal costs and disbursements paid W 210,811 Addback legal costs and disbursements paid H 226,642 Joint ANZ account used for interest payment pursuant to Order of 7/5/03 J 501 Joint ANZ account used for interest payment pursuant to Order of 19/6/03 J 21,067 ING Superannuation H 393,882 Total Assets 4,049,964 LIABILITIES ANZ - mortgage on [matrimonial home] J 501,503 ANZ - mortgage on [matrimonial home] - Break cost loan H 14,028 ANZ - mortgage on [matrimonial home] - additional borrowings pursuant to Orders 7/5/03 94,478 ANZ - mortgage on [matrimonial home] - additional borrowings pursuant to Orders 19/6/03 301,066 2001 Tax W 20,585 2002 and 2003 Tax W 2,330 Quarterly tax payable 28/10/04 W 1,042 Overdraft H 90,000 ANZ Settlement fee 200 Visa card W 5,800 Visa card H 20,966 Loan from father for living expenses W 24,000 ANZ loan secured on [the second property] W 120,000 Extra Borrowings for interest (not for legal expenses) 11,923 Outstanding and contingent legal and expert fees W 114,808 Outstanding and contingent legal and expert fees H 70,000 Total Liabilities 1,392,729 TOTAL ASSETS AND LIABILITIES 2,657,235
The transcripts reveal the differing positions adopted by counsel who appeared before the trial Judge as to their assertions about the appropriate way in which to treat the first property. The wife’s counsel first submitted at the close of the evidence in November 2004 that the wife’s then interest in the property should not be taken into account on the basis that it was “after acquired property”. However, counsel acknowledged the wife’s interest in the property had been funded from borrowings secured against the matrimonial home, and said “[a]dmittedly that 80,000 does come from an encumbrance on the matrimonial property, but for that fact, your Honour, it would not be a property, in my submission, that would be included into the schedule of assets and liabilities” (transcript 1 November 2004, p 33). He further submitted, for that reason, the trial Judge should adopt an asset by asset approach and referred his Honour to Zyk and Zyk (1995) FLC 92-644 at 82,509.
In response to a query by the trial Judge, the wife’s then counsel confirmed there were two assets which he submitted should be dealt with separately namely the second property and the first property.
By contrast, senior counsel for the husband on 1 November 2004 acknowledged that “while my client can’t claim to have made any significant contribution to the acquisition of that asset” the wife’s then interest in the first property should be included in the list of assets to be divided between the parties, and the debt due to the wife’s father disregarded on the basis it was unlikely she would be called upon to repay the debt.
When the matter was relisted before the trial Judge on 18 March 2005 to provide evidence of the wife’s father’s death, the wife’s solicitor submitted the wife’s inherited share of the property should be excluded from the list of assets to be divided between the parties on the basis that it was a post separation, post hearing asset to which there had been no contribution by the husband. On that occasion the husband’s senior counsel’s primary submission was that the wife’s father’s death had not changed matters, other than the wife’s interest in the property had increased. However, in the alternate, he said, having referred to Bonnici and Bonnici (1992) FLC 92-272, that the trial Judge could treat the inherited share of the property as a resource and have regard to the wife’s receipt of the property as a relevant factor under s 75(2).
(d) Relevant Law
The decision of the High Court in Norbis v Norbis (1986) 161 CLR 513; (1986) FLC 91-712 confirmed that in adjusting property interests of parties under
s 79(2) a trial Judge has a wide discretion and can employ either a global assessment of contributions to property, or adopt an asset by asset approach. Having discussed the global approach to proceedings under s 79 Wilson and Dawson JJ said:Of course, it may be possible and appropriate in many cases to determine the proportions in which the property is to be divided without treating any of the assets separately, but where the interests of the parties differ, a different approach will be open. Section 79, in particular sec. 79(4), refers to “any property of the parties to a marriage or either of them” and that expression is sufficient to encompass both the entirety of their property and their individual interests. If the parties' interests in specific items of property differ or they have made differing contributions, it may be desirable to proceed upon an item by item basis in the division of the property between them. In such a case, justice and equity may best be served by treating the items separately for the purpose of determining the proportions in which they are to be divided, particularly if the overall division is to be effected by the transfer or retention of interests in individual assets, as was convenient in this case. It is true, as Nygh J. pointed out, that where this is done, at the end of the exercise a calculation of the overall proportions in which the total property has been divided may serve as a useful check to ensure that the result is not disproportionate as a whole.
To say as much is to say no more than that the legislation confers a discretion upon the Court which, provided the required matters are taken into account, does not dictate the employment of any particular method in the formulation of an appropriate order for the alteration of property interests. The matters which are to be taken into account will sometimes require the division of the assets, or some of them, upon the basis of their individual values, but in other cases no more than an overall division will be required. In some cases either approach may be adopted in part or in whole.
…
We think it is not possible to take the question of guidelines further than this. Nor is it desirable to attempt to do so. With all respect to those who think differently, we believe that the sound development of the law, in this area as in others, is served best by following the tradition of the common law. The genius of the common law is to be found in its case-by-case approach. The decision and reasoning of one case contributes its wisdom to the accumulated wisdom of past cases. The authoritative guidance available to aid in the resolution of the next case lies in that accumulated wisdom. It does not lie in the abstract formulation of principles or guidelines designed to constrain judicial discretion within a predetermined framework. There is no reason to think that the traditional approach, when applied in the family law area, leads to arbitrary and capricious decision-making or that it leads to longer and more complex trials.
Those principles were summarised in Zyk and Zyk (supra), a case to which the trial Judge was referred, and in which the Full Court further referred to the circumstances where an asset by asset approach could be appropriate citing the example of an inheritance received post separation. (See also Burke and Burke (1993) FLC 92-356 and Y & Y [2004] FamCA 799).
(e) Discussion
It appears to us that there are three issues which require determination in respect of these grounds:
(i)if, as is suggested by the wife’s counsel, the trial Judge did not intend to exclude the first property from his global assessment, was he in error in not attributing at least the asserted value of $85,494.00, as set out in the husband’s submissions to the trial Judge in respect of proposed orders, in the list of assets of the parties?
(ii)if the trial Judge dealt with the property of the parties in effect in two pools, that is all other assets in one pool, (“the first pool”) and the first property in the other pool (“the second pool”) was the trial Judge in error including the $85,494.00 borrowed by the wife against the security of the matrimonial home and applied to the purchase of the first property in the liabilities included in the first pool?
(iii) if the trial Judge assessed contribution on a global basis, and excluded the first property from that assessment, but included the borrowings for the property did such methodology constitute appealable error?
In considering these questions, we note at the time of the trial Judge’s reasons, the wife had not inherited her late father’s undivided interest as a joint tenant in the first property. We consider that it was well open to the trial Judge to adopt, as submitted by senior counsel for the husband in the alternate, that this “inheritance”, and the wife’s late father’s liability attaching to it, should not be included in the property adjusted between the parties, and its only relevance was as a factor under s 75(2). We consider this argument later in our consideration of proposed ground 16.
We discern from his Honour’s reasons that he adopted the second course urged upon him by the wife’s counsel, namely that he adopted a “two pool” or asset by asset approach. We are supported in this view by his Honour’s findings in paragraphs 105, 56 and 57 of his Honour’s reasons, albeit in the latter paragraph he referred to a “global” assessment. His Honour said:
56.I have determined, as appears elsewhere, that [the first property] should be dealt with separately and left out of the general equation.
57.It is also appropriate to deal with the St George Bank loan on [the first property], Liability M, in the same fashion by leaving it out of the global exercise.
However, in paragraph 105 of his reasons, the trial Judge makes it clear that he is accepting a two pools approach. That approach was well open to the trial Judge.
It is also clear from paragraph 105 that in assessing contribution to the first property his Honour took into account the contribution asserted by the husband being the joint borrowing secured against the matrimonial home.
In his conclusions in respect of contribution, the trial Judge did not again refer to his assessment of contribution to the first property, but rather set out his contribution based findings in respect of the first pool.
(f) Conclusions
We are satisfied the first and third questions posed by us have no relevance to our determination, and we now focus our attention on the second question. At paragraph 105 which we have already set out in full, the trial Judge said:
The husband’s association with this property is really limited to the parties’ joint liability arising from the orders of the 19th June 2003, in respect of which he gained monies, she gained monies and both have an obligation to repay which will occur following the orders emanating from these proceedings.
However, by including in the parties’ liabilities in the first pool the total joint borrowings of $301,066.00, and assessing contribution to that pool in the ratio of 72.5 per cent to the husband and 27.5 per cent to the wife, the real effect of the trial Judge’s orders was that the husband’s overall entitlement was reduced. Because the trial Judge was dealing with two pools or groups of assets, there was no corresponding or balancing asset, as required by double entry bookkeeping, for the equity of the wife in the first property taken into account in the first pool, and he did not reduce the borrowings (which provided the wife’s equity in the first property) to reflect his removal of the property from the pool of assets identified in Exhibit W22. This error was compounded when regard is had to the fact that the husband’s paid legal costs were properly included as an asset, and that his borrowings including borrowings for those costs were included in the joint borrowings.
Whilst the error is readily explicable in the circumstance where the trial Judge was invited by the parties to include the joint borrowings as an agreed liability, we are satisfied that in adopting the asset by asset approach the trial Judge was in error in including the total liability to the ANZ Bank as a joint liability, in the first pool thereby disregarding the benefit received by the wife, and this constituted appealable error.
Grounds relating to “add backs” (Grounds 8, 9 and 10)
(a) Asserted failure to “add back” $40,000.00 claimed by wife to have been borrowed from her parents
The trial Judge referred to the disputed $40,000.00 and said:
Item 27 concerns monies advanced to a Dr [W] (a family friend) in what seemed like a “round robin” exercise which also involved [J]. Whatever the true nature of the scheme (to keep it from the husband’s notice appears the most likely motive), the money returned to be expended, I accept, in legal fees by the wife. It is part of the money added back for that purpose. It would be to count the sum twice to add it back here and I do not do so.
It is asserted by senior counsel on behalf of the husband that the finding the money was applied to pay legal fees went against the weight of the evidence.
Senior counsel for the husband asserted that the evidence disclosed the sum of $38,500.00 was paid to Dr W and the amount was then passed to the wife’s parents. The amount was then paid to the wife by her parents. It was asserted that a loan document created after the transfer of the funds was a false document, and that the wife had no obligation to repay her father the sum of $40,000.00, which she advanced to him from borrowings jointly secured by the parties against the matrimonial home.
Counsel for the wife contended that the trial Judge was correct in refusing to add back the sum of $40,000.00. He asserted:
·no adverse credit findings were made by the trial Judge against the wife;
·the real issue to be addressed was whether the wife had an undisclosed asset and such finding was not made by the trial Judge; or
·in the event the trial Judge was in error in accepting the evidence of the wife, and as contended by the husband, the funds were applied to the purchase of the first property, the amount was taken into account by the trial Judge in his assessment of the wife’s contributions to the first property.
The wife’s cross examination reveals that she conceded the sum of approximately $39,000.00, being funds of the wife and her daughter J, was lent to Dr and Mrs W in about November 2001. She further conceded that she and her daughter were “building a lump sum to give to my parents” and the amount advanced to Dr W was repaid by a cheque which she delivered to her parents in July 2002. The wife conceded that on 30 September 2002 $38,639.00 was deposited into her account by her parents. When asked to explain her use of $40,000.00 borrowed pursuant to the consent orders the following is revealed by the transcript:
Well, you obtained with Mr [M]’s consent a borrowing, secured over [the matrimonial home] for $90,000, didn’t you?---Yes, that’s correct.
And of that $90,000, you sought $40,000 to repay, what I suggest to you, was this bogus loan from your parents?---I repaid my father approximately $40,000 from that amount of money.
Where’s the money now?---I repaid it to my father.
Well, where is it?---I think my father may have used it to purchase part of [the first property]. (transcript, 29 October 2004, p 27)
Later in re-examination the wife said:
[SENIOR COUNSEL FOR THE WIFE]: When – you were asked a series of questions regarding the amount of $40,000, and when you received from your father the sum of $40,00, [sic] what did you do with it? --- I paid legal fees with it. (transcript 29 October 2004, p 50)
We turn then to consider whether the $40,000.00 advanced by the wife to her parents, and which ultimately found its way into the acquisition of the first property, should be regarded as a premature disposition of assets and consequently added back to the pool of assets available for division between the parties.
It appears to us that the wife’s evidence on this topic contained inconsistencies. Those inconsistencies were recognised by the trial Judge. Whilst it would have been helpful if the trial Judge had discussed the inconsistencies in the light of the submission the wife had an undisclosed asset, we are not satisfied that his failure to do so constitutes appealable error.
The trial Judge did not make adverse credit findings about the wife. If the funds were not expended on legal fees, then the evidence supported a finding that those funds found their way into the first property and were thus taken into account by the trial Judge in his assessment of the wife’s contribution to the first property. We are thus not satisfied the trial Judge’s discretion miscarried. Hence, we are not satisfied this ground has been established.
(b) Asserted error in relation to the wife’s borrowings of $24,000.00
The husband’s senior counsel in his written submissions attacked the trial Judge’s inclusion of this debt on two bases:
(i)on the basis that the loan was a repayment of the wife’s own funds; and
(ii)that the trial Judge’s orders for arrears of maintenance as well as inclusion of the loan used for living expenses permitted the wife to “double up”.
The trial Judge found that the wife had a genuine need for funds to meet her living expenses, and concluded the debt would be repayable to the wife’s late father’s estate.
In his written submissions, counsel for the wife referred to the spousal maintenance orders made in favour of the wife, and the husband’s failure to comply in full with those orders. He submitted:
To accede to the contention of the Appellant is to permit the Appellant to, in effect, have the Respondent bear responsibility of her own maintenance out of her section 79 entitlements in the face of an Order which required the Appellant to provide spouse maintenance from his substantial income (paragraph 42).
We accept there is merit in the submissions made on behalf of the husband in asserting a “double dip” in respect of this loan which the wife incurred for living expenses. We accept if the wife had been receiving spousal maintenance as ordered the loan would have been unnecessary. As a result of the trial Judge’s orders the wife is entitled to arrears of spousal maintenance which will have the effect of restoring her to the position she would have been in had the maintenance been paid. We accept therefore the inclusion of the $24,000.00 represented a “double dip”, and constitutes appealable error by the trial Judge.
(c) Asserted error in including the husband’s accrued long service leave and annual leave entitlements
In dealing with the husband’s long service leave entitlement commencing at paragraph 29 of his reasons for judgment, the trial Judge made a finding, on the balance of probabilities, that the husband received his entitlement as a lump sum “and had the use of it probably before September 2004”. The trial Judge recorded at that time the husband was in receipt of a large periodic income. The trial Judge thereafter referred to the husband’s evidence contained in his affidavit dated 1 September 2004 that as “part of an agreement with [C Inc] he was required from 15 May 2003 to use his annual and long service leave entitlements and that when his employment ceased on 31 August 2003 he was paid out the balance of his leave entitlements”. The trial Judge concluded:
It appears that the other income available to him was high enough to cover these items. I note that he does not suggest that this money was applied to costs. The figure of $69,586 will be included as an add back to the parties’ property.
The essential thrust of the argument advanced on behalf of the husband is set out in the husband’s senior counsel’s submissions as follows:
The husband’s evidence makes it plain the fact that he, on resignation, was required to use up his annual leave and long-service leave entitlements and under the terms of his contract the 12 month period of payment commenced not on 15 May 2003 when he left the company [C Inc] but rather on 1 September 2003. (Husband’s submissions, paragraph 10.2, p 8)
Thus it is asserted that the trial Judge disregarded the husband’s evidence.
In paragraph 89 of his primary affidavit the husband said:
As part of the May 2003 Agreement with [C Inc], from 15th May, 2003 I was required to take my annual and long service leave entitlements and my employment with [C Inc] ended on 31st August, 2003. At approximately this time I was paid the balance of my annual leave and other entitlements.
Against a background where the trial Judge made findings in the context of the enforcement summons brought by the wife in respect of arrears of spousal maintenance that the husband was “reluctant to reveal income”, and the husband failed to adduce evidence that he received his long service leave entitlements on a pro rata basis, and/or in lieu of any other income, or details of the quantum of the lump sum and disposition of that sum, we are satisfied it was open to the trial Judge to include this sum as an add back on the basis that it was a premature distribution of an asset to the husband (see Omacini and Omacini (2005) FLC 93-218 at paragraph 30).
Asserted error in respect of treatment of legal fees
This ground asserts error by the trial Judge in finding the parties “appear to accept that the liabilities for contingent legal fees should be included as their joint debts” when it had been submitted at trial that this was not the case.
In his written submissions, counsel for the wife conceded that the husband’s counsel did not support including in the parties’ list of assets and liabilities outstanding and contingent legal and expert fees, and further conceded that such a course is not consistent with general practice. Having made this concession, however, counsel for the wife submitted that the trial Judge in so doing did not have to take such fees into account as a relevant consideration under s 75(2). It was submitted that if the relevant amounts were excluded from the calculation of net property, there would need to be a reconsideration of matters relevant to s 75(2) and that upon such re-exercise “it is submitted that no different outcome would result”.
The position regarding unpaid legal fees, although subject to the exercise of discretion by a trial Judge, is regarded as well settled by authority. In Farnell and Farnell (1996) FLC 92-681, Fogarty J said at 83,068:
My strong impression from sitting on appeals in a large number of property cases over the years is that the common or usual practice is that, unless the parties themselves choose to approach it another way, (a) the liability of the parties for costs is generally disregarded in the sense that they are not treated as liabilities to be deducted in order to arrive at the net property figure …
Further, at 83,080, Kay J said:
The notional inclusion of costs already paid on account, or the exclusion of costs owing as a liability, is in my view a proper exercise of judicial discretion and well within the normal method by which property cases should be determined. To make any allowance for the liability for costs as was suggested by Lee Steere, in my view necessarily requires a breach of
s. 117(1).As a consequence of the trial Judge’s inclusion of the fees in the parties’ liabilities the husband was, by reason of the differential in the parties’ fees, disadvantaged.
We are satisfied that the trial Judge was in error in including the unpaid legal fees of the parties, and the ground is established. However, we find much force in the submissions made by the wife’s counsel that on a re-exercise of discretion we would not see any significant adjustment being made under s 75(2) in respect of the outstanding fees.
Leave to amend grounds of appeal
In his oral submissions before us, senior counsel for the husband asserted that, by reason of the trial Judge’s determination that the wife should be permitted to sell the second property, rather than retaining that property, it was necessary for the trial Judge to give reasons for his determination, including the basis on which he found the orders to be made were just and equitable in accordance with s 79(2).
During the course of the hearing before us, senior counsel for the husband sought leave to further amend the Notice of Appeal which oral application was opposed by counsel for the wife. After a brief adjournment we advised the parties we were neither inclined to grant leave to amend or to refuse it, but we proposed reserving our decision on the question of the application for leave to further amend and to give judgment on that application when we gave our judgment in the substantive appeal.
Rule 22.09 of the Family Law Rules 2004 (“the Rules”) is in the following terms:
22.09 Amendment of Notice of Appeal (Form 20)
A Form 20 may be amended without permission, at any time up to and including the date fixed for the procedural hearing for the appeal.
Note 1 A party may apply for permission to amend a Form 20 at a later time. See also paragraphs 94 (2D) (b) and 94AAA (10) (b) of the Act, paragraphs 102 (8) (b) and 102A (9) (c) of the Assessment Act and paragraphs 107 (7) (b) and 107A (9) (c) of the Registration Act. See Division 22.7.1 for how to apply for permission to amend grounds of appeal.
Note 2 Rule 11.12 provides for how to amend a document.
Whilst Chapter 22 of the Rules sets out the mechanism for making an application to amend a Notice of Appeal (Part 22.7) the Rules themselves contain no provision for the criteria to be considered by a court in dealing with such application. Section 94(2D) of the Act provides for applications of a procedural nature and includes in subsection (b) provision for an application for leave to amend the grounds of appeal under s 94(1) or s 94(1AA).
Neither counsel referred us to any relevant authorities applicable to the exercise of discretion to allow late amendment to a Notice of Appeal. It appears to us the principles espoused in State of Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 are apposite, in particular the seven criteria set out by Kirby J at 167 and following.
Whilst the factual situation in State of Queensland v JL Holdings Pty Ltd (supra) dealt with a late application for amendment of pleadings before trial, we discern the principles therein are relevant to this application. As observed by Kirby J, the granting of a late amendment is an indulgence to a party applying for it and it is necessary for the court to determine if the proposed amendment “is of considerable importance to the rights of a party, particularly where it provides a complete answer to a claim; that any fault is that of the party's legal representatives … or, possibly, the outcome of the application to the case of fresh legal minds who perceived an important new point; that cost orders or the imposition of other conditions could adequately rebalance the competing claims to justice”. Kirby J also noted the considerations which may be brought against a late application to amend including “the failure of a party to offer anything by way of explanation … the blamelessness of the resisting party and the extent to which the applicant is at fault in its breach of clear directions”.
An application for permission (as it is described in the Rules) to amend grounds of appeal after the commencement of the appeal hearing must be regarded as an extraordinary circumstance, and discretion would be exercised in favour of an applicant only in the most limited circumstances where failure to do so would be contrary to the interests of justice.
In determining whether or not we should grant leave, we propose to examine the merits of the proposed ground, and only if we are satisfied that failure to address the ground would result in a serious injustice will leave be granted.
We have already set out the terms of the proposed new ground. Counsel for the wife has had the opportunity to provide written submissions in relation to the proposed new ground 16 thus ameliorating natural justice considerations.
In his written submissions, counsel for the wife set out a brief chronology of the litigation and in particular set out details of the applications filed by each of the parties from the period when his Honour’s reasons were delivered on 20 May 2005 and the orders were entered on 29 August 2005.
We pose the question, having regard for the function of reasons, whether it was necessary for the trial Judge to give supplementary reasons to those contained in his reasons for judgment of 20 May 2005.
The requirement for a trial Judge to give reasons is not in doubt. In Bennett and Bennett (1991) FLC 92-191 the Full Court considered that the test as to the adequacy of reasons propounded by Gray J in the passage appearing hereunder was a useful one and one which applies to discretionary judgments. The Court observed at 78,266:
In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal. Gray J, who delivered the principal judgment, said, at 18:
“The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if: —
(a) the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b) justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.
Counsel for the wife referred us to the decision of the New South Wales Court of Appeal in Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386. There Mahoney JA considered the function to be served by the giving of reasons. His Honour said the function included the fact that reasons may be necessary to enable a party to exercise his or her right of appeal, and that the requirement should be seen as an incident of the judicial process. Further, his Honour noted limits to the function:
Nor is it necessary for a judge who is exercising a discretionary judgment to detail each factor which he has found to be relevant or irrelevant, or to itemize, for example, in the assessment of damages for tort, each of the factual matters to which he has had regard … Nor is a judge required to make an explicit finding on each disputed piece of evidence. It will be sufficient, if the inference as to what is found is appropriately clear.
He concluded:
But, subject to matters such as these, the basis of the decision of a trial judge or of an intermediate court of appeal should be made apparent. This does not mean that the reasons given need be elaborate: an elaborate argument may not require an elaborate answer. Reasons need be given only so far as is necessary to indicate to the parties why the decision was made and to allow them to exercise such rights as may be available to them in respect of it.
It is submitted by the wife’s counsel:
·neither party sought to reopen proceedings for any purpose;
·the applications between May and August 2005 were in relation to interim issues; and
·his Honour’s sole obligation and function was to enter orders in accordance with his reasons for judgment.
Our reading of the transcript when the parties appeared before his Honour on 23 August 2005 does not, in our view, reveal that the issues now agitated by the husband were raised with the trial Judge.
On 23 August 2005 the trial Judge said:
HIS HONOUR: The real solution is for me to do the orders, isn’t it? I mean, that saves you going to all the trouble of doing things. It is just a matter of me prioritising, I think. But what I would be helped by would be a short sharp submission from each of you – I am talking half a page – as to why I should or should not do something in relation to the house. I mean, if the order I draw would naturally fall toward a sale, well that is fine. If the order I would naturally draw would go against a sale but leave it to the wife, well that is fine. If I gave it to the husband or something, well, there would be all sorts of – I am just making - - -
MR THOMPSON: Mind you, neither party seeks that you give it to the husband.
We are satisfied that the trial Judge in his reasons averted to the fact that the second property may be sold and in those circumstances capital gains tax would be incurred. We have, earlier in our reasons for judgment rejected the arguments put on behalf of the husband that he was denied natural justice. We conclude the necessity of the sale of the second property was contemplated by the trial Judge in his reasons for judgment, and there was no necessity for further reasons. It appears to us the husband’s complaints about the wife’s stance in respect of the interim application may be relevant in respect to issues about costs under s 117.
As we find no merit in the proposed ground, we do not find it appropriate to grant the leave sought by the husband to further amend the Notice of Appeal.
Re-exercise of the discretion
At the conclusion of the hearing we asked both parties their position in relation to the re-exercise of the discretion by us. Given the uncertainty about ground 16, counsel for the wife was reluctant to say whether he acceded to us re-exercising the discretion on the material then before us. Counsel for the husband also reserved his position as to whether or not he would wish to adduce further evidence relevant to the re-exercise of the discretion in accordance with the principles espoused in Allesch v Maunz (2000) 203 CLR 172; (2000) FLC 93-033. In those circumstances we agreed we would afford the parties an opportunity to provide written submissions to us.
Whilst we have found the grounds relating to the first property and the add back of the $24,000.00 loan have merit, it appears to us that the likely adjustment on the re-exercise of the discretion in the husband's favour on the facts as known to us would be modest given the husband’s acknowledgment of minimal contribution to the acquisition of the first property and the quantum of the loan. Having regard to the lengthy history of this litigation, and the costs incurred by the parties to date, we would seek to minimise further trauma and costs for both parties.
To assist the parties, we indicate we would, if re-exercising the discretion on the material presently before us, adjust the list of assets and liabilities in respect of all assets except the first property by:
·reducing the ANZ liability additional borrowings pursuant to the consent orders of 19 June 2003 by $85,494.00;
·substituting the actual net sale price for the second property for the agreed value;
·including in the list of liabilities the capital gains tax of $114,550.00;
·deleting the loan of $24,000.00.
and thereafter dividing the net proceeds as to 72.5 per cent to the husband and 27.5 per cent to the wife. We would not make any other adjustment in respect of the first property or the liability secured thereon. We note in the event that a retrial is necessary, that a trial Judge would not be bound by the views we have expressed above.
We are of the view this matter can most expeditiously and cost effectively be concluded by requesting the parties provide us, if possible, with an agreed statement of facts which we should take into account to re-exercise the discretion. In accordance with the principles in Allesch v Maunz (supra) we also propose to afford the parties, if necessary, the opportunity to file and serve any affidavit material relevant to the re-exercise of the discretion.
Costs of the appeal and the costs appeal
Both parties sought the costs appeal and the costs of the appeal should be determined on the basis of written submissions from each party, and we will accordingly make appropriate orders, after we have determined the issue of the re-exercise of the discretion.
I certify that the preceding one hundred and fourteen (114) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 21 December 2006
Key Legal Topics
Areas of Law
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Family Law
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Property Law
Legal Concepts
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Appeal
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Procedural Fairness
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Remedies
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Costs
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