Malcher & Malcher (No 2)
[2018] FamCAFC 87
•11 May 2018
FAMILY COURT OF AUSTRALIA
| MALCHER & MALCHER (NO. 2) | [2018] FamCAFC 87 |
| FAMILY LAW – APPEAL – PRACTICE AND PROCEDURE – Oral application for an adjournment of the appeal hearing – Where the husband gave no adequate reason for seeking an adjournment – Application for adjournment refused – Oral application to amend the Notice of Appeal to add a ground of appeal – Where the husband’s proposed ground of appeal was raised only vaguely in his Summary of Argument – Application refused. FAMILY LAW – APPEAL – PROPERTY – Assessment of factors pursuant to s 75(2) of the Family Law Act 1975 (Cth) – Whether the primary judge failed adequately to take into account the disparity between the income earned by the wife and that by the husband – Whether it was open to the primary judge to find that the husband had a significant earning capacity and had access to a source of funds – Whether the husband’s “substantial” contributions were taken into account by the primary judge – Whether the primary judge failed to address specific contributions relied on by the husband – Whether the primary judge gave no reasons for dismissing the husband’s application for spousal maintenance – Whether the primary judge erred as to his findings about the husband’s earning capacity for the purposes of the Child Support (Assessment) Act 1989 (Cth) – Where the primary judge’s finding was open on the evidence – Whether the primary judge failed to take into account an exhibit comprising bank statements tendered by the husband – Where the exhibit could be given little weight – Whether the primary judge erred by failing to take into account the wife’s late disclosure of some evidence – Whether the primary judge failed to understand the husband’s case as to his financial circumstances – Whether the primary judge demonstrated actual bias or failed to afford the husband procedural fairness – No appealable error demonstrated – Appeal dismissed. FAMILY LAW – APPEAL – PARENTING – Single expert – Whether the primary judge erred by relying on the evidence of the single expert – Where the husband asserts that the single expert’s evidence was tainted because of an extensive and unauthorised conversation that occurred between the single expert and the children’s therapist – Where the husband made an oral application for the removal of the single expert – Where the primary judge refused the application and indicated that he would give reasons for doing so in the reasons for judgment but failed to do so – Where this failure was not material to the outcome as the primary judge did not ultimately rely on the single expert’s recommendation as to parental responsibility – Where the husband asserted that the primary judge failed to take into account that the single expert had changed his opinion on multiple occasions – Where the primary judge expressly considered this and did not base his decision on the single expert’s evidence – No appealable error demonstrated – Appeal dismissed. FAMILY LAW – COSTS – Where the appeal was wholly unsuccessful – Where the wife seeks an order for indemnity costs – Where the circumstances of the appeal fall short of constituting exceptional circumstances justifying an order for indemnity costs – Costs order in favour of the wife on a party/party basis in a fixed sum – Costs order in favour of the Independent Children’s Lawyer in a fixed sum calculated at Legal Aid scale. |
| Child Support (Assessment) Act 1989 (Cth) ss 102(1), 117(2)(c)(ib), 117(4)(da), 117(7B), 118(1)(c) Family Law Act 1975 (Cth) ss 72(1), 75(2), 79(4) Family Law Rules 2004 (Cth) Sch 3 |
| Babett & Falconer (2015) FLC 98-067; [2015] FamCAFC 124 Bahonko v Sterjov (2008) 166 FCR 415; [2008] FCAFC 30 CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67 Hall v Hall (2016) 257 CLR 490; [2016] HCA 23 Kohan and Kohan (1993) FLC 92-340 Limousin & Limousin (Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178 Malcher & Malcher [2018] FamCAFC 23 Malcher & Malcher (Security for Costs) (2017) FLC 93-803; [2017] FamCAFC 202 Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507; [2001] HCA 17 |
| APPELLANT: | Mr Malcher |
| RESPONDENT: | Ms Malcher |
| INDEPENDENT CHILDREN’S LAWYER: | Legal Aid NSW |
| FILE NUMBER: | SYC | 3808 | of | 2012 |
| APPEAL NUMBER: | EA | 8 | of | 2017 |
| DATE DELIVERED: | 11 May 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ainslie-Wallace, Aldridge & Austin JJ |
| HEARING DATE: | 20 March 2018 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 9 December 2016 |
| LOWER COURT MNC: | [2016] FamCA 1063 |
REPRESENTATION
| THE APPELLANT: | In person |
| COUNSEL FOR THE RESPONDENT: | Mr Kearney SC |
| SOLICITOR FOR THE RESPONDENT: | Barkus Doolan |
| COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: | Mr Lawrence |
| SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: | Legal Aid NSW |
Orders
Leave to appeal against orders 73 to 81 inclusive of the orders made on 9 December 2016 is refused.
The appeal otherwise be dismissed.
The appellant is to pay the costs of the respondent fixed in the sum of $49,478.07.
The appellant is to pay the costs of the Independent Children’s Lawyer fixed in the sum of $6,479.
The appellant shall not deal with any funds remaining from the sum of $30,000 held pursuant to Orders 55(b), 76, 77 and 78 made on 9 December 2016, other than with the prior written consent of the respondent and the Independent Children’s Lawyer, unless those costs have already been paid by him or the Court otherwise orders.
Leave is granted to the parties, Independent Children’s Lawyer or any creditor of the appellant to apply in respect of Order 5.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Malcher & Malcher (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 8 of 2017
File Number: SYC 3808 of 2012
| Mr Malcher |
Appellant
And
| Ms Malcher |
Respondent
And
| Independent Children’s Lawyer |
REASONS FOR JUDGMENT
Introduction
Mr Malcher (“the husband”) appeals against parenting and property orders made by Le Poer Trench J on 9 December 2016 in proceedings between him and Ms Malcher (“the wife”) and an Independent Children’s Lawyer (“ICL”) who was appointed to represent the children’s interests in the parenting proceedings.
The parties commenced their cohabitation in mid-2000 and separated on a final basis in or about February or March 2011. They have three children who were born in 2002, 2003 and 2006. The husband moved to live in Country FF in Europe in November 2015. He has not spent regular time with the children since then.
Throughout the hearing before the primary judge the wife was represented by a solicitor and counsel. The husband acted for himself.
The parenting orders made by the primary judge provided for the wife to have sole parental responsibility for the children who were to live with her. Orders were made for the children to spend substantial time with the husband both during the school term and during school holidays, although the orders in relation to each child were slightly different.
In relation to the parties’ property his Honour ordered the wife to pay the husband the sum of $350,622 on or before 1 April 2017, although the wife was to deduct from that sum a number of specified debts owed to her by the husband as set out in the orders. Upon the wife making the payment the husband was to transfer to the wife all his interest in a property at Suburb N, in which the parties had previously lived.
The primary judge also made an order that there be a departure from the Child Support Assessment dated 16 June 2015 in respect of the period 1 June 2015 to 30 June 2018. The Child Support Registrar was to assess the child support payable by the husband on the basis that he had a taxable income in each of those years of the order of $200,000.
The husband has appealed against each of the 83 orders made by the primary judge, including an order dismissing his claim for spousal maintenance.
The Appeal
The husband relies on ten grounds of appeal:
1. That the judge was in error in that:
1.1. The judge fell into error in the parenting matter by allowing the single expert (Dr [A]) to continue to give evidence when it had been proven that his testimony was tainted by his contact with the treating psychologist (Dr [U]) before the hearing. Dr [A]’s recommendations had completely changed between the period of his written reports and the time of the hearing following his contact with Dr [U]. This was in direct defiance to the direction of the judge and was aided by the ICL in that he/they had been involved directly in contravening the judge’s directions.
1.2. The judge fell into error by not considering that the single expert (Dr [A]) had changed his opinions on numerous occasions during his testimony.
1.3. The judge fell into error in not considering all of the evidence put before him in the financial matter.
1.4. His judgement does not consider a vast majority of the evidence that was put before him.
1.5. The judge fell into error in making findings that are not based on any evidence.
1.6. The judge fell into error by exercising his discretion in making findings that are not based on any or all of the evidence that was before him. His decisions and certain conclusions are clearly wrong.
1.7. The judge fell into error in making findings that are in direct contradiction to the evidence put before him.
1.8. The judge also fell into error by being exhibiting strong bias against the appellant as evidenced in the transcript. The judge treated the appellant with a great level of ambivalence and ignored certain requests and motions without giving them due consideration.
1.9. The judge fell into error in not allowing the cross examination of certain witnesses.
1.10. The judge fell into error in not allowing the appellant to call certain witnesses.
Save for the first two grounds, they are very broad and general in their terms. Where specific complaints are made, the grounds of appeal do not identify the particulars of those complaints: for example, while the husband asserts that evidence was ignored and that witnesses were not permitted to be called, the grounds do not identify the evidence said to have been ignored or the witnesses that he was not permitted to call. Grounds 1.3 to 1.7 are repetitive, although the husband did offer the suggestion that there were, in fact, subtle differences between them. In the absence of any degree of particularity in those grounds it is difficult to see the differences.
Thus grounds 1.3 to 1.10 do not readily disclose what the husband asserts to be error on the part of the primary judge. In this respect, we keep in mind what the Full Court of the Federal Court of Australia said in Bahonko v Sterjov (2008) 166 FCR 415 at 417:
3.Notwithstanding the obligation of an appeal court, where it is able to do so, to make its own evaluation of the material at first instance, it is a fundamental aspect of the appellate process that appeals are made available for the correction of error. This basic principle imposes an obligation upon an appellant to identify where error is to be found in a judgment under appeal, whether it be an error of fact, law or general principle. It is not necessary for an appeal court to hunt through all the material at first instance and recanvass every aspect of it unless an occasion arises for suspecting, on reasonable grounds (generally those provided by the appellant), that such an examination may yield a conclusion of appellable error.
(Citations omitted)
In his Summary of Argument the husband did not address the grounds in terms. Rather, he divided his summary into the five following categories:
1. Errors in regards to Section 75(2)
2. Dismissal of spousal maintenance
3. Findings with no basis of evidence or submissions from either party
4. Conduct and maintenance of the receipt of documentation throughout the case
5. Parenting & the expert witness Dr [A]
As can readily be seen, while some of these categories can be matched to grounds of appeal, some, and in particular the fourth, appear not to be linked to the grounds at all. The husband’s Summary of Argument contained no submissions at all on grounds 1.8 to 1.10.
Notwithstanding that, counsel for the wife and for the ICL addressed all of the husband’s submissions in their own Summaries of Argument.
When oral submissions commenced it quickly became apparent that the husband did not propose to confine himself to the points raised in his Summary of Argument. Indeed, he described that summary as merely containing examples of the submissions that he intended to make. He also informed us that grounds 1.8, 1.9 and 1.10 were not abandoned and that despite the lack of any submissions directed to them in his Summary of Argument, they would be the subject of oral submissions.
The unfairness of this course to the wife and to the ICL is obvious.
The primary judgment extends over 437 pages and contains 2,228 paragraphs. The transcript of the 33 days of hearing is 2,498 pages long. There are many voluminous exhibits (Malcher & Malcher (Security for Costs) (2017) FLC 93-803 (“Malcher”) at [53]–[57]). In these circumstances it could not be expected that even an experienced senior counsel would be able quickly and easily to deal with unforeshadowed and detailed submissions as to aspects of the evidence “on the run” during the course of oral submissions.
The very point of the Court’s requirement for the parties to file and serve Summaries of Argument is to ensure that the submissions that are to be placed before the Court are identified. This allows the parties to deal with the opposing submissions in a cogent and ordered way. This not only permits a proper degree of procedural fairness, but reduces costs and delay in preparing for and conducting appeals.
The Court too relies on the Summaries of Argument to identify the issues in dispute in the appeal. This enables the members of the bench to read in advance the material identified in these summaries relevant to these issues. This permits the appeal to be heard in a timely and efficient way which not only reduces costs and delay, but enables there to be a more efficient use of scarce judicial time and resources.
These aims are entirely defeated when a party chooses not to deal with all of their proposed submissions in their Summary of Argument.
Finally, the husband was alerted to the difficulty with his grounds of appeal at [39] of Malcher.
For these reasons, we declined to hear submissions from the husband that went beyond either his grounds of appeal or his Summary of Argument.
Oral application for an adjournment
Immediately after lunch the husband applied for an adjournment to the following day (the appeal was listed for two days). This was because he said he did not “feel up to continuing today”. When pressed, he said that he was “not in a position where I feel I can continue” and that he was “feeling physically and emotionally bereft” (as best as can be discerned from the audio of the hearing).
We refused the adjournment because:
·the husband gave no adequate reason for justifying an adjournment;
·the wife and the ICL would incur the legal costs of a second day of hearing;
·the husband did not offer to defray the extra legal costs that would be incurred by the wife and the ICL;
·the husband has an extensive history of non-compliance with orders and if a costs order was made the husband would be unlikely to meet it – this history was outlined in Malcher & Malcher [2018] FamCAFC 23 at [11];
·the husband had already been given some short adjournments during the course of the morning so as to assist with his presentation of the appeal.
Oral application to amend the grounds of appeal
The husband also made an oral application to amend his Notice of Appeal to add a ground to assert that the primary judge erred by continually questioning the husband when he was not in the witness box and then taking those answers into account.
Such a complaint was made in very general terms in the Summary of Argument but there is no reference to any parts of the transcript or the findings that the husband presumably asserts were wrongly made based on the answers so elicited.
It would therefore have been quite unfair for the husband to embark upon identifying with precision the basis of these submissions in oral argument. For this reason, his application to amend was refused.
We will first deal with the husband’s submissions using the categories formulated by the husband in his Summary of Argument and then return to the grounds of appeal. The headings are ours, not the husband’s.
Did the primary judge err in his application of s 75(2) of the Family Law Act 1975 (Cth) (“the Family Law Act”)?
In order to place the husband’s submissions in context it is necessary to record that the primary judge found that the net value of the parties’ property to be divided was $1,074,560 together with superannuation of $370,451 (at [1630]). His Honour dealt with these groups of property separately. The parties’ contributions-based entitlements to the first group were assessed to be 45 per cent to the wife and 55 per cent to the husband (at [1728]). The contributions in respect of the superannuation were assessed to be 70 per cent to the wife and 30 per cent to the husband (at [1731]).
His Honour then turned to a consideration of s 75(2) factors and ultimately concluded:
Conclusion as to adjustment under s 75(2)
1987. In determining whether to make any adjustment under s 75(2) I consider the following matters specified above to be the most significant:
·The relatively young age of the parties;
·The income of the parties. In this regard I have had regard to the actual income of the wife and the determined income earning capacity of the husband;
·The level of debt, outside of the liabilities of the parties on the Balance Sheet, including liability for unpaid legal fees and outstanding credit card debt;
·The husband’s failure to make a full and frank disclosure of relevant financial matters including an accounting for funds and assets under his control or ownership which were transferred to his father, his mother or entities in which either had some proprietary interest;
·The husband’s failure to provide evidence as to how the sum of $1.243 million distributed by the PP Unit Trust was applied or used in the 2011 financial year;
·The future anticipated roles of each parent in caring for the children (i.e. the extra burden which is expected to fall to the wife until such time as the husband returns to Australia and takes up spending time with the children as permitted by the Court Orders proposed to be made as determined in these reasons;
·The ongoing cost of private school fees which is anticipated to fall upon the wife over the next three years and possibly longer;
·The husband’s obligation to support his partner and their infant child;
·The net amount of assets and superannuation each party will be entitled to following the assessment of contribution as set out in these reasons;
·The amount of child support to be paid by the husband based upon his earning capacity being found to be AUD$200,000 per annum taxable income;
I note that the “Child Support Estimator” provided by the Child Support Agency on the website allows an estimate of child support which would be payable to be obtained having first provided the necessary information. In this case that provided an estimate for the wife to pay the husband about $12,672 were he to have a taxable income of not more than $200,000 and share care of the children equally. I note the husband has conceded (as seen in his response to the questions asked by me through email sent by my Associate to the parties on 13 September 2016) that the wife should deduct from any payment of child support which might operate in his favour, the sum of any Child Support Assessment. Consequently the husband would in this case receive no payment of child support because of the size of the private school fee paid by the wife. In the event of the wife having 100 per cent of the care of the children then the estimate is for the husband to pay the wife child support in the sum of $10,665. Again I note the wife’s concession that she would provide a credit against the husband’s liability to pay assessed child support for any payment of school fees made by the husband in relation to the subject children’s private school fees.
·At the date of separation the husband removed from the parties’ joint account $110,000 which he said he had deposited the day before the separation. The nature of that payment was never established by the husband (i.e. was it capital or income). Whatever the case, the husband spent that fund in a manner for which he has not accounted;
·The wife’s use and occupation of the former matrimonial home since the date of separation (18 February 2011 as the wife said or 1 March 2011 as the husband said) less the period when the husband resumed living in the property between January and July 2012. The wife also had the children living with her until November 2015, when they were not in the husband’s care, and then almost exclusively since November 2015, however that is a fact which I have taken into account as a contribution and so that circumstance plays no part in this consideration;
·The matters determined as to the probability the husband will not bear an onerous outcome of the Supreme Court of NSW proceeding commenced by his parents against him, such that there may be a requirement negotiated for the payment of a fund which would probably not be enforced were he to fail to meet same.
1988.I have determined in this case that it is appropriate to make an adjustment in favour of the wife. I propose that adjustment should be such as to move the parties’ entitlements to the net property specified in the Balance Sheet to 70 per cent to the wife and 30 per cent to the husband.
1989. In relation to the parties’ superannuation interests I consider there should also be an adjustment in favour of the wife so that the wife will receive 80 per cent of the superannuation entitlement and the husband receive 20 per cent.
1990. In this case I have considered all of the relevant s 75(2) matters so far as the considerations relate to the asset pool. I now apply those findings to the superannuation pool. The most significant matters already set out in relation to the asset pool, arise for consideration under s 75(2)(a), (b), (n) and (o).
1991. The matters which are particularly impacting upon this determination include:
·The relatively young age of the parties, which means they each have the ability to enhance their superannuation entitlements over another approximately 20 years of earnings; and
·The amount of superannuation each would retain based upon assessment of contribution as set out herein.
The general property was to be divided so that the wife received 70 per cent and the husband 30 per cent (at [1992]). The superannuation was divided so that the wife was to receive 80 per cent and the husband 20 per cent (at [1993]).
The husband challenges these adjustments and submits that any adjustment under s 75(2) in favour of the wife should have been “cancelled out by her stratospheric income”. He also submits that the primary judge did not consider the evidence that he was unemployed and left with no assets. The husband then, in effect, challenges the weight that was given to his “substantial” contributions. Finally he raises five specific contributions that he submits were ignored or given insufficient weight.
Disparity in income and findings as to the husband’s income
The primary judge found that the wife’s income for the 2014 year was $268,439 (at [1741]). Her income at the time of the hearing was found to be $546,000 per annum (at [1742]).
His Honour accepted the wife’s evidence that she was heavily indebted. He found that the wife alone was responsible for the mortgage on the family home, the support of the children, including the payment of private school fees and the large legal bill resulting from a 30 day hearing. Her monthly payments for the mortgage, other loans, credit cards, income tax and legal fees were found to be $29,760. A further tax liability for $80,000 was about to arise (at [1742]).
None of these findings was challenged by the husband.
There was a considerable dispute as to whether in fact the husband was earning an income at all. According to the primary judge, “[t]he husband described himself as ‘ostensibly broke’ and asserted that he would be required to re-train and re-skill before re-entering the workforce” (at [1774]).
His Honour extensively considered the evidence touching upon the husband’s financial means, to which we shall return in greater detail when dealing with other submissions, and concluded:
1569.I record here my conclusion that the evidence provided by the husband to the court does not provide a quality basis upon which to conclude that the husband’s financial circumstances are as he has asserted.
1570.The extent to which the round robin exercise has distorted the true income available to the husband from the various entities which he controlled during the period 1 July 2010 and 30 June 2012, and possibly beyond, is not really capable of being assessed on the evidence which is available to the court. Expert evidence would be necessary for the court to be able to make clear findings. However, the evidence which has been given has served to undermine the confidence the court might have to make any clear findings about the true income of the husband during that period of time.
1571.I accept some of the wife’s submissions in relation to this topic which have been set out above. I agree that the evidence about the husband’s use of credit card indicates a level of spending which is not commensurate with the husband’s stated income and asset availability.
1572.I concur with the sentiment expressed in the above submission to the effect “this just can’t be right”. The contradictions in the husband’s financial circumstances as pointed out by the wife do strongly suggest he has had access to funds which have not been disclosed to the court or the wife.
1573.The husband is clearly a highly intelligent and resourceful person. He is highly credentialed in the world of finance and share, option and derivative trading. He clearly has had a considerable amount of success in that field. The substantial losses he experienced, one has the impression, were not foreseeable by him at the time.
1574.I agree with the submission that the court should not accept that the husband is currently unemployed because he chooses to be a full-time caregiver for his infant child EE.
1575.The finding which can be made at the conclusion of this topic is that the court can have no confidence that the husband’s financial circumstance is as he would have the court believe.
…
1776.I find the evidence supports a conclusion that the husband has probably embarked upon a deliberate course of action to avoid seeking formal employment since the beginning of 2015. It seems he has concentrated his energy in preparing for, and running as a self-represented litigant in, these proceedings. The husband presents as a highly intelligent, ambitious and hard working person who clearly has demonstrated the capacity in the past to work successfully in the financial sector. He has worked as an employee and he has worked as a business proprietor. His opinion about the industry is clearly respected by people such as his friend Mr LN who gave oral evidence in this hearing.
1777.I find the husband does have the capacity to earn a significant income through the resource of his high intellect and significant experience across a number of commercial enterprises, the greatest being in the buying and selling as an investor and stockbroker of listed shares, options and derivatives. I determine, based on the husband’s past income earnings, that his income earning capacity is not less than $200,000 per year.
Once again the husband did not challenge many of these primary findings. He did submit that the primary judge “did not consider the evidence before him of the husband/appellant being unemployed and left with no assets”. He did not however point to any evidence that he asserts was not considered, apart from his own statements as to his income. As has been seen that evidence was not accepted. That was a course that was open to his Honour. The evidence revealed a number of facts from which an inference can be drawn that the husband had the capacity to earn a significant income and that he in fact had access to some source of funds. These matters are discussed in more detail below at [60]–[76].
The primary judge clearly took into account the income of the wife and, indeed, his findings as to the husband’s income.
We shall deal elsewhere with the husband’s submissions that the primary judge did not understand the husband’s business, the draft accounts tendered by the husband or the effect of the loss the husband said he suffered in August 2012. It is sufficient to record here that we found no merit in them.
The key issue then is whether the difference between the incomes of the parties should have overwhelmed any other adjustment that could properly have been made under s 75(2) of the Family Law Act.
As can be seen from his Honour’s conclusions which we have already quoted, the incomes of the parties were but two matters taken into account along with many others. Those other matters were each deserving of considerable weight. The difficulties that face a person who seeks to challenge the exercise of a discretion are well-known. In CDJ v VAJ (1998) 197 CLR 172 at 230–231, Kirby J said:
Discretionary and evaluative decisions
186A number of general propositions may be stated:
1.Neither this Court, nor the Full Court in relation to appeals to it, has authority to disturb a decision under appeal simply because the appellate judges, faced with the same material, would have reached a conclusion different from that under appeal. To approach the appellate function in such a way would contravene established authority. It would involve one level of the judicial hierarchy, without lawful warrant, intruding into the decisions of another. To authorise appellate disturbance, where the decision under appeal is discretionary or involves quasi-discretionary evaluation, it is necessary for those mounting the challenge to demonstrate that, in reaching the orders the subject of the appeal, the court below has acted on a wrong principle or (although the precise error of principle cannot be identified) has reached a conclusion which is plainly wrong. Obviously, what is “plainly wrong” will vary in the eyes of different beholders. It is not necessary for an appellant to demonstrate the kind of unreasonableness that must be shown to authorise judicial intervention in the decision of an administrator otherwise acting within power. The reference to “plainly wrong” is designed to remind the appellate court of the need to approach an appeal with much caution in a case where an error of principle cannot be clearly identified.
2.Such reasons for appellate restraint are of general application. However, they have particular relevance to appeals within, and from, the Family Court of Australia. This is because of the functions and purposes of that Court and the difficult and evaluative decisions which it often has to make. The peculiar nature of decisions relating to the intensely personal questions of the division of the property of parties to a failed marriage and the welfare of their children makes it essential that those who decide appeals respect the onerous responsibilities of those whose decisions they review. They need to recognise that it is of the very nature of such decisions, including those relating to the residence of children, that any two decision-makers may, with complete integrity and upon the same material, often come to differing conclusions. This is an inescapable feature of the nature of this jurisdiction.
…
(Footnotes omitted)
This principle was extensively discussed by the Full Court in Babett & Falconer (2015) FLC 98-067 at [31]–[35] and [37].
We are unable to identify any error in the approach of the primary judge. His Honour expressly took into account many matters under s 75(2), and indeed, went to some lengths to identify those which he felt carried particular weight. We expressly reject the submission that the disparate incomes of the parties mandated that there be no adjustment under s 75(2). That is but one factor to be taken into account and, in the circumstances of this matter, cannot be seen to be determinative.
Were the husband’s “substantial” contributions taken into account?
The husband submitted the primary judge did not “understand and fully consider the contributions made by the husband”.
Apart from making the general assertion that the primary judge was “unable to decipher, unable to understand, or simply did not look at a raft of supporting documentation”, no further details were provided. Neither the husband’s asserted “substantial” contributions nor the documents that established them was identified.
In these circumstances we are unable to deal with this aspect of the husband’s challenge.
The five specific matters
The husband referred to the following matters which he submits were not addressed by the primary judge:
·AXA – the husband asserts he realised nearly $2,000,000 from an investment in AXA in 2002.
·BX – the husband sold a business with this name in 2001 for $250,000 which was not recognised as a contribution.
·Wine before marriage – the husband submits that he brought into the marriage 400 bottles of wine which were not properly regarded as a contribution.
·South Coast holiday home – the husband submits that the parties frequently used a holiday home owned by his parents for holidays, which should be regarded as a contribution by him.
·Parents’ tax losses – the husband submits that the parties were able to take the benefit of tax losses which had accrued to his father.
AXA
His Honour recorded:
1460.Further, the husband said that $1.3 million was invested by him in an AXA Investment account. His evidence was that the investment proved very successful and returned a payment of $1.75 million which was invested through the entity HH Assets Holding Trust. Evidence to support that contention is found in Exhibit H19. There the husband included a copy of the 30 June 2002 Financial Report for the Trust. That shows that the assets of the Trust at that date were $1,756,134. There were liabilities to the HH Distribution Trust of $6,046.
1461.The husband’s evidence is that over time these funds were applied for the benefit of the parties. It would seem the funds became available to the parties via the HH Distribution Trust. There were some losses on investment amounting to $507,332, however, the husband asserted that over the period from 2002 until June 2012 the parties had received $1.25 million from the HH Distribution Trust (see Exhibit H19). The return for the HH Asset Holding Trust for the 2012 financial year shows that the assets of $1.253 million were held by associated companies and persons (with one possible exception). The largest part of that asset holding was an unsecured loan with the HH Distribution Trust of $1.072 million. Other unsecured loans were held with the PP Unit Trust, HH Pty Ltd, and LL Funds Management Pty Ltd. Those entities are associated entities through the husband’s ownership and interest.
The primary judge was therefore clearly aware of the AXA investment. His Honour found that the investment resulted in funds being received and paid into entities associated with the husband but what happened to the investment thereafter was less clear. The husband did not address any submissions to these paragraphs of his Honour’s reasons so as to identify error within them.
BX
As [1659] and [1672] make abundantly clear, the sale for $250,000 of BX, a patent held by the husband, was expressly noted by the primary judge as a contribution by the husband.
Wine before marriage
The primary judge included among the assets to be divided the husband’s wine collection, which was valued at $20,546 (at [1474]). No challenge was made to that finding. It is implicit in that finding that the wine was contributed by the husband. It was also expressly recognised by the primary judge as an initial contribution by him (at [1606]–[1611], [1645]).
South Coast holiday home
This issue too was recognised by the primary judge. His Honour said:
1667.The husband claimed a contribution through the provision of accommodation at the South Coast holiday home of his parents and the provision of child care by his parents in the United States while the family lived there. There is little to no evidence in relation to both those claimed contributions to enable the court to properly weigh such contributions. The wife conceded that the family had many holidays in the husband’s parents’ family home on the South Coast of NSW. The wife conceded that was a contribution made by the husband. The evidence suggests that the accommodation was provided free of charge and very much enjoyed by the family. No evidence was provided to establish how this contribution could be weighed.
The husband did not challenge the last sentence or suggest how this contribution might be weighed. That, therefore, remains a difficulty.
Use of the parents’ tax losses
The husband’s submissions merely said:
These tax losses were the subject of an enormous amount of evidence and to ascribe no value to them is simply unacceptable. All of the transfers surrounding the usage of these tax losses were tendered in H38.
Exhibit H38 consists of a number of aides-memoire together with extracts from bank accounts with particular transactions highlighted. They identify a series of transactions in which entities associated with the husband transferred funds to his parents or entities associated with them. These transfers were apparently matched by transfers of funds flowing in the opposite way on the same day or shortly thereafter.
His Honour said of these transfers and of Exhibit H18, which is a folder containing balance sheets, financial statements and tax returns for entities controlled by the husband and his parents:
1666.It was asserted by the husband that his parents reduced the taxes payable by the parties through their participation in the round robin style transactions and the invoicing of ZZ Services to absorb tax losses. In relation to that claimed contribution I find that it is not possible to give weight to any saving, which may have arisen in relation to the tax losses which were passed by the husband’s parents and their controlled entities to the husband and his controlled entities, as the husband has not yet filed either his or any of the subject entities’ tax returns for the 2011 and 2012 tax years. The losses which it was intended the husband may have, to his advantage, are yet to stand the scrutiny of the Australian Tax Office. Further, the transactions are yet to be actioned, in terms of commitment to same by the entities involved, by submitting final accounts and income tax returns and adopting those transactions in those documents.
…
1764.I have assumed that faced with the prospect of having to pay tax on $1.243 million, the husband was motivated to take advantage of the tax losses which were reposed in the entities controlled by his father. Thus, the Court was told of the movement of funds between various entities which gave rise to the transposing of about $600,000 of tax losses from those entities owned/controlled by the husband’s father to the entities owned/controlled by the husband.
1765.In Exhibit H18 the Annual Report for the PP Unit Trust shows that the profit of $1,243,788 was distributed to the PP Discretionary Trust for the 2011 financial year. The Annual Report for the PP Discretionary Trust shows that it distributed total funds of $1,243,788 to LL Funds Management Pty Ltd. Nowhere in Exhibit H18 is there any Annual Report for LL Funds Management Pty Ltd for the 2011 tax year or any tax year. LL Funds Management Pty Ltd is owned wholly by the husband who is also the sole director and secretary. The PP Discretionary Trust Annual Report for 2011 also shows that in that year LL Funds Management Pty Ltd lent to that trust the sum of $1,243,788. That is the same amount as was distributed to LL Funds Management Pty Ltd. The Annual Report for the PP Discretionary Trust also shows that the trust lent to the PP Unit Trust in that same year the same sum, namely $1,243,788. That loan is then reflected in the PP Unit Trust accounts for the same year as a “Beneficiary Loan”. Without the corresponding Annual Report for LL Funds Management Pty Ltd it is not possible to know what other funds the company had to meet the tax liability on the income received. It may be that there was a nil taxation liability arising from the round robin exercise.
1766.The Annual Report for PP Unit Trust 2011 shows a liability to Mr Malcher Snr Superannuation Fund of $186,000. In the previous year the liability to that superannuation fund was $26,000. Thus there was an increase in the liability of $160,000. The only evidence of any loan from the husband’s father to the husband at about that time was for the purchase of the Motor Vehicle 2 for about that sum, however, the husband’s evidence is that the loan for that purchase was met by the transfer of the vehicle to his father on 6 September 2010. Although the evidence from the husband and his father was of an advance of about $150,000, there is other evidence showing receipt by the husband of $155,000 from his father at about that time. The actual source of the funds from the husband’s father may well have been the Mr Malcher Snr Superannuation Fund. The debt of $186,000 is further reported as still owing by the trust to the Mr Malcher Snr Superannuation Fund as at 30 June 2012 (Exhibit H18). There is no specific evidence from the husband to explain this loan. It may be it was part of the fund advanced to the husband by his father to meet his legal costs, however, there is no evidence to identify that payment as the source of that fund. In the same Annual Report for the PP Unit Trust for the year 2011 there appears a liability by the husband’s father personally to the trust of $130,000. In the previous year there had been no liability. The liability of the husband’s father of $130,000 continued to be reported as owing to the PP Unit Trust as at 30 June 2012.
1767.In relation to HH Asset Holding Trust and the HH Distribution Trust, the husband provided Annual Report documents for the years ending 30 June 2010, 2011 and 2012 (see Exhibits H18 and H19). The husband provided, in both Exhibits H18 and H19, Annual Reports for the HH Distribution Trust and the HH Asset Holding Trust for those financial years. The HH Distribution Trust did not receive income or trust distributions in either the 2010 or 2011 tax years. The HH Asset Holding Trust received income in both the 2010 and 2011 tax years. The source of the income was stated as “Interest received” and also “Net Gain on Option & Foreign Exchange Trading”. In the 2011 year that income was $58,968 and in the 2012 year it was $15,594. There is no evidence as to the purchases and/or sales made (if any) on behalf of the trust during those two years. The trust had carried forward substantial losses since at least the 2004 tax year. As at 30 June 2012 the trust had accumulated losses of $491,817.
1768.I accept that the husband has failed to provide evidence by way of disclosure both to the wife and in support of his case, which enables this Court to be satisfied the husband has accounted for the income received by NN Pty Ltd in the 2011 tax year (if it actually received an income) and/or LL Funds Management Pty Ltd for that same year. The failure to provide to the court the Annual Reports for LL Funds Management Pty Ltd is a matter of serious concern. The husband put together in Exhibits H18 and H19 a series of reports for the HH Asset Holding Trust, the HH Distribution Trust, the PP Unit Trust, and the PP Discretionary Trust. Those documents provide a complete picture of the financial position of each of those entities over a number of relevant financial years. The only document before the court which provides relevant evidence as to the financial position of NN Pty Ltd is contained in the wife’s Exhibit W36. There is, in that exhibit, an Annual Report and a tax return for NN Pty Ltd for the 2011 tax year. Given what is stated in the Annual Report for the 2011 year for the PP Discretionary Trust (showing distribution of all profit to LL Funds Management Pty Ltd) and the Annual Report for the PP Unit Trust (showing a loan from LL Funds Management Pty Ltd to the PP Unit Trust of exactly the amount paid by the PP Discretionary Trust to LL Funds Management Pty Ltd for that year) it seems the NN Pty Ltd Annual Report for that year has changed.
The husband did not mention these findings, let alone come to grips with the need to demonstrate error with them. We do not consider that we should ourselves rummage through the oral evidence to look for an identification and explanation of the relevant transaction, or to ourselves take on the task of a forensic accountant and attempt to decipher these draft accounts.
Contrary to the submissions of the husband, the primary judge did consider each of the above five asserted contributions. We consider that the husband has not identified any error in the primary judge’s approach to these issues.
We do not find any merit in the submissions in this category.
Did the primary judge err by dismissing the husband’s application for spousal maintenance without any reasons?
In addition to the assertion that the primary judge erred by failing to give reasons for dismissing the husband’s spousal maintenance application, the husband also submitted that the dismissal of his application was “a miscarriage of justice” and an “improper” exercise of discretion. He also submitted that the wife’s income mandated an order in his favour.
The primary judge did, obviously, give reasons for dismissing the husband’s application and did so over some fifteen paragraphs. Importantly, his Honour found that the husband had a capacity to earn an income of at least $200,000 (at [2005]; see also [1560]–[1575] and [1736]–[1777]). For that reason, the primary judge was “not satisfied he has demonstrated he is ‘unable to support himself’” (at [1998]).
A spousal maintenance order can be made “if, and only if, the other party is unable to support herself or himself adequately” (s 72(1) of the Family Law Act). If that threshold is not passed the income of the other party is entirely irrelevant.
The husband complained that there was no evidence that he was actually earning $200,000 per annum. That was not the finding of the primary judge – rather, the primary judge’s finding was that he had the capacity to do so (at [1777]). That finding is sufficient: s 75(2)(b) of the Family Law Act. In Hall v Hall (2016) 257 CLR 490 at 506, French CJ, Gageler, Keane & Nettle JJ said:
53The matters referred to in s 75(2)(b) are matters which bear on the practical ability of one party to support the other, and of the other party to support himself or herself. Hence the concluding reference is to the matter of “the physical and mental capacity of each of them for appropriate gainful employment”. Hence also the opening reference to the matter of “the income, property and financial resources of each of the parties” cannot be confined to the present legal entitlements of the parties.
The husband did challenge the finding as to his capacity to earn income, which we shall deal with under the next heading. However, on the assumption that this finding stands we do not see any error in the primary judge not being satisfied that the husband was unable adequately to support himself.
The husband submitted that his unchallenged evidence on this issue should have been accepted. We do not accept the premise that his evidence was not challenged. The wife put in issue the veracity and reliability of the accounts relied on by the husband, pointed to his failure to lodge tax returns after 2010 (when his taxable income was $414,711), his diversion of funds in 2014 to a company owned by his father (at [1775]) and his failure to give evidence of his income in 2016 other than to say “there may well be some income” (Transcript 7 August 2015, p.1179).
Thus this submission must fail.
Further, the primary judge did not accept the husband’s evidence, which, in the above circumstances, was a course that was open to him. His Honour said:
1569.I record here my conclusion that the evidence provided by the husband to the court does not provide a quality basis upon which to conclude that the husband’s financial circumstances are as he has asserted.
1570.The extent to which the round robin exercise has distorted the true income available to the husband from the various entities which he controlled during the period 1 July 2010 and 30 June 2012, and possibly beyond, is not really capable of being assessed on the evidence which is available to the court. Expert evidence would be necessary for the court to be able to make clear findings. However, the evidence which has been given has served to undermine the confidence the court might have to make any clear findings about the true income of the husband during that period of time.
1571.I accept some of the wife’s submissions in relation to this topic which have been set out above. I agree that the evidence about the husband’s use of credit card indicates a level of spending which is not commensurate with the husband’s stated income and asset availability.
1572.I concur with the sentiment expressed in the above submission to the effect “this just can’t be right”. The contradictions in the husband’s financial circumstances as pointed out by the wife do strongly suggest he has had access to funds which have not been disclosed to the court or the wife.
1573.The husband is clearly a highly intelligent and resourceful person. He is highly credentialed in the world of finance and share, option and derivative trading. He clearly has had a considerable amount of success in that field. The substantial losses he experienced, one has the impression, were not foreseeable by him at the time.
1574.I agree with the submission that the court should not accept that the husband is currently unemployed because he chooses to be a full-time caregiver for his infant child EE.
1575.The finding which can be made at the conclusion of this topic is that the court can have no confidence that the husband’s financial circumstance is as he would have the court believe.
The reference to credit card spending is a reference to the husband conceding that he spent at least $10,000 in Europe on 22 March 2014, including $5,980 at a high end fashion store (at [714]).
The husband did not deal with these findings in his submissions. As there appears to be no reasonable basis for suggesting error we do not propose to cast about in the evidence ourselves in an endeavour to identify error.
This aspect of the husband’s appeal fails.
Did the primary judge err in law by making findings without any basis in the evidence?
In his Summary of Argument, the husband complained only about the finding that he had the capacity to earn $200,000 per annum and did so only in the context that this capacity was set for the purpose of the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”). His submission was that the evidence did not support such a finding.
Once again, the husband erroneously stated the finding to be one that he had an income of $200,000 as opposed to the finding that he had the capacity to do so. Once again, the latter finding is sufficient: see ss 117(2)(c)(ib), 117(4)(da), 117(7B) and 118(1)(c) of the Assessment Act.
The primary judge’s findings were not limited to those to which we have just referred. His Honour also found:
1769.In addition to the matters specified above, there is still the circumstance of the husband and the abovementioned entities committing to completion of the necessary statutory documents such as Annual Returns, income tax returns and the like. Until that occurs, it is open to the husband to cause a change in the distributions of income between the entities and himself. Once he files the required documents, he commits to the authenticity and accuracy of the documents and opens himself to any consequences which might follow.
1770.It was asserted that there was an absence of any reliable evidence to support the husband’s contention that he needs to re-skill, nor was there evidence of any attempts by the husband to apply for positions commensurate to his skill and experience or alternatively for any government benefits. The Court was referred to the evidence of Mr LN on 6 August 2015 where he said that he frequently spoke to the husband about progress of the stock market. The wife said this establishes at least an inference that the husband continues to have current market knowledge. Counsel for the wife also referred to the evidence provided by the husband during his cross-examination which establishes that he has had two decades of experience working in financial services and has worked for MX Bank, TT Stockbrokers, GX Pty Ltd, MJ Services, and EQ Brokers.
1771.The husband gave evidence that he had experience trading currencies, derivatives, and instruments on the ASX, buying and selling ordinary shares or equities, setting up companies, advising lawyers and accountants on setting up company structures, setting up trust structures and complex financial structures, running his own small business, and turning over a profit through operating a small business. Reference was also made to the husband’s Masters qualifications in support of this submission. I note the husband also conceded that substantial losses were incurred in the HH Asset Holding Trust in about 2007 which have been carried forward to the last of the Annual Reports for the HH Asset Holding Trust which the husband has supplied, namely the 2012 year.
1772.It was submitted for the wife that the husband’s claim that he does not work so that he can be the primary carer for his daughter EE should not be accepted by the Court as a legitimate reason for his lack of gainful employment. Counsel for the wife contended that there is no reason why EE would require both parents to be full-time caregivers and thereby render them both unable to generate an income. Further, as deposed to by the husband’s partner at paragraph 76 of her affidavit, her parents provided the parties with assistance with caring for EE for a period of time when they visited Sydney.
1773.Given the above matters, counsel for the wife sought a finding that the husband has a significant income earning potential and that in the recent years he has had access to a considerable level of financial resources. Accordingly, it was submitted, no adjustment should be made in favour of either party pursuant to s 75(2)(b).
1774.The husband submitted that there should be an adjustment in his favour pursuant to s 75(2)(b), given the level of the wife’s current income and his own circumstances of being unemployed and not in receipt of any income since January 2015. He submitted that no company or trust associated with him has any assets and accordingly he had no other funding available to him. The husband described himself as “ostensibly broke” and asserted that he would be required to re-train and re-skill before re-entering the workforce. He submitted that his earning capacity upon re-entering the workforce would be significantly lower than the wife’s.
1775.I accept the submission of the wife that the husband appears to have diverted some of the income he earned whilst working for GX Pty Ltd to RR Pty Ltd (a company owned and controlled by the husband’s father) towards the end of 2014. The reason for this was not provided by the husband. To the extent it might be inferred this was part of the round robin, I do not accept such an inference, assuming it was available based upon the current state of the evidence. The extent to which this practice of diverting his income was practiced cannot be determined.
1776.I find the evidence supports a conclusion that the husband has probably embarked upon a deliberate course of action to avoid seeking formal employment since the beginning of 2015. It seems he has concentrated his energy in preparing for, and running as a self-represented litigant in, these proceedings. The husband presents as a highly intelligent, ambitious and hard working person who clearly has demonstrated the capacity in the past to work successfully in the financial sector. He has worked as an employee and he has worked as a business proprietor. His opinion about the industry is clearly respected by people such as his friend Mr LN who gave oral evidence in this hearing.
1777.I find the husband does have the capacity to earn a significant income through the resource of his high intellect and significant experience across a number of commercial enterprises, the greatest being in the buying and selling as an investor and stockbroker of listed shares, options and derivatives. I determine, based on the husband’s past income earnings, that his income earning capacity is not less than $200,000 per year.
The husband submitted that his evidence that he had no income should have been preferred. The above reasons make plain why it was not. The husband did not seek to identify any error in the above reasons, other than to say that the primary judge did not understand “the circumstances that the appellant faced in his corporate life following the events in August 2011”. We shall deal with this submission and others to similar effect shortly.
No error has been identified let alone demonstrated.
Leave to appeal a child support determination is required (s 102(1) of the Assessment Act). As there is no merit in the appeal, leave will be refused.
Did the primary judge make “improper use of his discretion by allowing improper conduct and maintenance of the receipt of documentation throughout the case”?
As we have said, it is difficult to relate this category to any of the grounds of appeal. However, some of the submissions did relate to the grounds concerning the weight to be given to evidence. Some did not. Senior counsel for the wife usefully placed the submissions made by the husband into various groups. It is convenient to follow these headings.
Exhibit H42
Exhibit H42 comprised a folder of bank statements of the parties’ joint bank accounts together with two aides-memoire. The purpose of the documents was to show that between 13 March 2003 and 11 December 2007, $2,260,814.35, directly or indirectly, was withdrawn from accounts in the name of HH Pty Limited and paid into the parties’ joint bank accounts. It also purported to show that between 1 November 2004 and 6 September 2010, $2,589,458.91 was paid from EQ Brokers, NN Pty Limited, LL Asset Management Pty Limited, MX Bank Limited and “PP” into the parties’ joint bank accounts. Thus, according to the husband, he had contributed “over $5,000,000” to the family which was a significant contribution and one which was not recognised by the primary judge.
Further, according to the primary judge:
2140.The clear purpose of Exhibit H42 was for the husband to establish that transactions involving the movement of funds between himself (or entities controlled by him) and his father (and/or entities controlled by his father) were part of a series of transactions in which he sought to obtain the benefit of tax losses which stood in the accounts of entities controlled by his father. He also sought to establish that certain funds were obtained by him from his father which were additional loans to the $2.6 million which had been advanced to him during the earlier part of his marriage to the wife. The husband sought to establish that the amount of money owing by him to his father, either directly or through entities controlled by each of them, was as asserted by his father and mother in the Supreme Court proceedings which they had commenced against him and which stands stayed by order of this Court.
His Honour declined to place any weight upon this exhibit because “it does not establish in any definitive manner what the husband said it does or should establish” (at [2141]).
We note that the husband’s submissions to the effect that he was denied procedural fairness because the document was not admitted into evidence and he was not permitted to make submissions upon it appear to be misconceived.
Exhibit H42 was tendered on 8 October 2015 which was the 29th day of the hearing. On 13 September 2016, by email, the Court sought submissions on a number of issues. The matter was relisted on 22 September 2016 when directions were made for written submissions, including submissions to the admissibility of and weight to be given to Exhibit H42. Written submissions were provided. Clearly enough, it was admitted into evidence but given little weight.
The husband’s Summary of Argument asserted that these bank statements “should be considered in some way shape or form”. Essentially, it is a challenge to the finding noted above at [67].
There are a number of reasons as to why the exhibit could be given little weight.
The bank accounts are unexplained in that they were not accompanied by evidence as to the source of the funds that the entities transferred into the parties’ joint bank accounts.
This is of some significance. The husband had received some $2,600,000 from his father which was said to be held in HH Pty Limited. The primary judge treated these funds as a gift and, accordingly, a contribution by the husband (at [1510]). If the funds transferred by HH Pty Limited were the funds received from his parents they could not again be counted as a contribution when they were paid into the parties’ joint bank account. This is because the same funds would be counted as a contribution twice.
The wife’s written submissions pointed out that in five transactions between 20 May 2004 and 25 June 2004, a total of $1,085,494 was withdrawn from the joint accounts. As the parties purchased a property at Suburb N at this time, it is possible the funds were used for that purpose (there was a suggestion that the $2,600,000 from the husband’s father was used, in part, for this purpose).
The wife also suggested that a possible source of the funds was the sale of a jointly owned property in Suburb AA in 2002 for $1.7 million.
Whether any of this is the case is not known. However the cautiousness of the primary judge is amply justified.
The wife’s written submissions pointed out that, due to its late tender, she was not able to cross-examine the husband on its contents or to issue subpoenas, for example, directed to the transferors of the funds for the purpose of identifying their source.
Similarly, the fate of the funds after they were paid into the joint bank account is not known. The wife also submitted that whilst some of the payments into the account may have been from income generated by the husband, there were also payments made from that account which were business expenses. Obviously any such expenses would need to be offset against any income in order to determine what any contribution by the husband might have been.
Finally, the wife submitted she had not had the opportunity to reconcile the bank statement with the draft accounts relied upon by the husband.
Thus, she submitted that Exhibit H42 was an “evidentiary minefield”. His Honour largely accepted at least the general thrust of her submissions. Given the complex financial issues, the late stage of the trial in which Exhibit H42 was tendered and the lack of any explanation as to the source of payments into the joint account and categorisation of the payments out of it, we consider that the finding that little weight could be given to the payments into the joint account recorded in it was clearly open to his Honour. The weight to be given to pieces of evidence is quintessentially a matter for a trial judge and we are unable to detect any error on the part of the primary judge on this issue.
Non-disclosure by the wife (Exhibit H41)
Exhibit H41 is a letter from the wife’s solicitors dated 8 September 2015. It provided disclosure of three ANZ bank accounts from 16 October 2003 to 15 October 2010, 18 May 2004 to 24 December 2007 and 19 December 2007 to 29 May 2009. These were the parties’ joint bank accounts. Parts of these accounts form part of Exhibit H42 which was tendered on 8 October 2015.
The husband submitted that this delayed disclosure of the joint bank accounts by the wife was a “monumental failure to provide full and frank disclosure”. He complains that this non-disclosure was not even referred to by the primary judge whereas the husband’s non-disclosure was taken into account and given significant weight.
The primary judge was faced with many draft financial documents from entities associated with the husband and with his father. Some of the transactions were asserted by the wife merely to be a “round-robin” of transactions. These issues were compounded by the fact that two versions of the 2011 accounts for NN Pty Limited were before the Court. Each was prepared and signed by the husband’s accountant (who did not give evidence). One shows that in that year the company received $1,243,788 and derived a profit of $870,759.30. An associated income tax return reveals a taxable income of $1,243,788 and tax payable of $373,028.70. The other set of accounts shows that the company received no income at all.
The primary judge concluded that:
1768.I accept that the husband has failed to provide evidence by way of disclosure both to the wife and in support of his case, which enables this Court to be satisfied the husband has accounted for the income received by NN Pty Ltd in the 2011 tax year (if it actually received an income) and/or LL Funds Management Pty Ltd for that same year. The failure to provide to the court the Annual Reports for LL Funds Management Pty Ltd is a matter of serious concern…
Later in the reasons his Honour devoted 29 paragraphs to a discussion of the parties’ submissions as to the other party’s non-disclosure (at [1877]–[1905]).
In the course of that discussion, the primary judge said:
1896.As became clear during the trial, the husband had a reluctance to expose all of the dealings between the entities controlled by him and the entities controlled by his father which surrounded the attempt to move tax losses from one group of interests to another. It was not until the husband gave his re-examination in the property case that he made what he said was a full disclosure to the Court about those transactions. He provided extensive documentation to support his disclosure.
1897.The question to be determined is whether the Court finds the husband failed to make a full and frank disclosure.
His Honour concluded:
1902.I conclude in this matter, by accumulating all the experience of observing and hearing each of the parties give their oral evidence over a lengthy period of time, having considered their affidavit evidence and the documents tendered in support, that the husband did consciously fail to disclose relevant transactions which surrounded the round robin exercise and the mixing of the parties’ assets with those of the husband’s parents during the time that ABC Pty Ltd was acting as Trustee of the two relevant trusts and trading in listed stocks, options, derivatives and the like.
1903.I conclude, if it be necessary to do so, that the husband probably acted in this way either because he considered this was really “none of the wife’s business” or alternatively, he was concerned about the implications for his father and himself of the round robin transactions being set aside on an audit by the Australian Tax Office. I cannot rule out that the husband also intended that the transactions would benefit him to the disadvantage of the wife in this property proceeding. I also conclude the husband consciously failed to provide to the Court the Annual Report for LL Funds Management Pty Ltd for the 2011 tax year. Details of matters which may have been disclosed in that document are set out earlier in these reasons.
1904.The consequence of the above finding is that the Court concludes the husband has failed to make a full and frank disclosure of relevant documents and facts.
1905.Having so determined, the Court needs to consider what the consequence of that finding might be. I conclude that, coupled with the findings and conclusions made under the following heading, the failure of the husband to make a full and frank disclosure is a matter which works against him, in a very significant way, in the determination of how the s 75(2)(o) matters are weighed.
The reference in [1905] to the “conclusions made under the following heading” is a reference to the following section of his Honour’s reasons headed “Has the husband alienated assets?”.
The conclusion to that question was as follows:
1933.I find that the husband did alienate and/or transfer assets which were clearly matrimonial assets post separation. I am satisfied that, for the most part, those transfers were well intentioned; that is, that the husband intended that his parents should not lose the benefit of the money they had lent him. There are, however, other transactions where money belonging to the parties, through the PP Unit Trust and other associated entities, was applied for the benefit of the husband’s father. An example was the purchase of NSW number plates N7 and N5, and also funds paid for continued restoration work on motor vehicles which at the time belonged to the husband’s father or his wife. There still remains an unanswered question, namely, “Who or which entity ultimately obtained the benefit of the $1.243 million distributed by the PP Discretionary Trust in the 2011 financial year?””
1934.There clearly was an onus on the husband in this case to provide evidence of thorough accounting as between the husband and his parents. In the absence of such evidence, the Court concludes in favour of the wife that it would not have supported the case the husband seeks to promote.
1935.The final conclusion on this aspect of the case is that the husband has alienated assets of the parties. I accept that, for the most part, the evidence shows the recipients of the assets were probably his parents. I conclude that the husband has alienated assets with a total value indeterminable on the evidence. It is not possible to determine what funds might be properly recoverable by the husband’s parents from the husband as a result of the Supreme Court of NSW proceedings instituted by the husband’s parents against him, assuming it was possible to provide a full accounting between those parties for money advanced and money or value repaid. As stated earlier I have treated these funds as having been contributed by the husband and not being a loan which should be included as a liability in the determined Balance Sheet as set out herein.
1936.The husband’s failure to satisfy the Court as to the value of the assets and funds transferred by him to his parents and failure to provide a complete accounting of the financial dealings between himself and the entities he controls, and his parents and the entities they control, must, as a matter of justice, have a consequence adverse to him.
There is no appeal against these findings. Therefore the finding that husband’s non-disclosure was significant remains, irrespective of whether the wife also failed properly to disclose financial information.
Accepting for the moment the husband’s submission that the wife failed to provide copies of joint bank accounts until late in the hearing, that failure must be weighed against the husband’s. He, on the other hand, failed to provide a complete accounting of the dealings between himself and the entities he controls and his parents and the entities that they control. In addition, he was found to have alienated assets with an indeterminable value.
As can be seen, the husband’s non-disclosure was found to be of a different magnitude to that of the wife and one which warranted a robust approach to be taken under s 75(2)(o) of the Family Law Act.
The husband’s point is that the wife’s disclosure of these bank accounts was late into the hearing and that he had been disadvantaged by this because he had attempted to obtain copies of these accounts from the banks but, due to the time that had passed, complete copies could not be obtained. Thus, he submits, he only received complete sets of these accounts sometime after the disclosure letter was sent to him by the wife’s lawyers. This, in turn, led to his late preparation of Exhibit H42.
The force of these submissions is somewhat diminished when it is realised that the transfers into the parties’ joint accounts could also have been established from the payers’ bank accounts which were in the possession of the husband or his parents.
The question is whether the primary judge’s exercise of discretion miscarried by failing to give the wife’s non-disclosure, and late disclosure, sufficient weight. As we have already observed above at [41]–[42], such submissions face a high bar.
The primary judge was aware of the husband’s submissions as to the wife’s disclosure, having recorded them at [1877]. To repeat, the primary judge was clearly of the view that the husband’s non-disclosure was of a completely different magnitude to any non-disclosure by the wife. We consider that this finding was open on the evidence and that no error has been demonstrated.
Financial Agreement
The parties entered into a Binding Financial Agreement (“BFA”) on 25 January 2011. It was set aside by consent on 22 April 2014. The primary judge noted that “it has not been suggested by the wife that its contents motivated the husband to act in a particular way” (at [1504]).
The husband submitted that “at the time the BFA was in force it was shown that the appellant did what was required of him and that he would not have been criticised for any of his actions under the BFA, but the respondent did the exact opposite. However the judge affirmed the criticisms of the appellant in the BFA period and not those of the respondent”.
During the course of his cross-examination of the wife the husband put to her that she had no intention of complying with the BFA in that she had no intention of selling the Suburb N property. She denied that (Transcript 5 August 2015, p.1051). There was no other evidence on this issue.
The wife did not criticise the husband for dealing with the parties’ assets contrary to the BFA and the primary judge made no finding to that effect.
The husband pointed to the fourth dot point at [1987] as such a finding. It states:
The husband’s failure to make a full and frank disclosure of relevant financial matters including an accounting for funds and assets under his control or ownership which were transferred to his father, his mother or entities in which either had some proprietary interest.
This is not a finding that the husband improperly dealt with assets covered by the BFA whilst it was in force.
No error has been identified.
The husband also complained that the primary judge ignored Exhibit H5, which he said demonstrated that the wife did not comply with the BFA. He submits, however, that he was unfairly criticised for non-compliance whereas the wife was not. As we have just pointed out, there was no such criticism of the husband.
Exhibit H5 is a bundle of letters passing between the lawyers for the parties shortly after the BFA was entered into. The letters make claim and counter-claim about the conduct of the other party in relation to many issues, including their obligations under the BFA. Such claims are of course not evidence of the events themselves. Further, the complaints are about matters that bear little to no relevance to the division of the parties’ property which took place many years later. It is not surprising, therefore, that the primary judge did not refer to the exhibit and no error has been demonstrated.
Legal Fees
The husband asserted that the primary judge did not take into account outstanding debts of the husband for legal fees but did take them into account for the wife.
The primary judge did not include outstanding legal fees in the Balance Sheet (at [1576]). The primary judge declined to include the wife’s credit card debt (part of which was used for legal expenses) as a liability in the Balance Sheet (at [1616]). The husband borrowed $10,000 to use for legal fees, which the primary judge also declined to include as a liability in the Balance Sheet but said he would take it into account under s 75(2) of the Family Law Act (at [1626]).
At [1949]–[1958], the primary judge discussed the amounts spent by the parties on legal costs, the amounts that remained outstanding to their lawyers, the arrangements made to pay those debts and the loan the husband obtained for the purpose of paying his legal fees. The discussion covered both the husband’s and the wife’s legal costs.
In conclusion his Honour said:
1959.I will take into account all those matters regarding payment of legal costs and outstanding liabilities for money borrowed by each party to pay legal costs.
There is no basis for any suggestion that the primary judge did not follow the course identified by him. It can therefore be seen that the husband’s submission that the wife’s outstanding debts for legal fees were taken into account but his were not has no basis whatsoever.
The premise of the submission has not been made out.
Did the primary judge understand the husband’s case?
The husband submits that the primary judge did not understand that although the husband may have made a profit in 2011 of $1.243 million in respect of the PP Unit Trust, that loss was entirely negated by losses that were made in August 2011. It follows he submits that the primary judge could not have taken into account in adjusting the parties’ interests in their property his failure to explain how the profit of $1.243 million was distributed.
The primary judge said:
1755.The husband did not provide any copy of Annual Reports or tax returns for LL Funds Management Pty Ltd.
1756.Exhibit H18 included an Annual Report of the PP Discretionary Trust for the year ended 30 June 2011. That document showed that the trust distributed $1,243,788.18 to NN Pty Ltd in that year. That company is owned by the husband. The total income received by the trust for that year came from PP Unit Trust in the sum of $1,243,788.18.
1757.Part of Exhibit W36 is the Annual Report for NN Pty Ltd for the year ended 30 June 2011. That shows the receipt of $1,243,788 for that year as income. It shows “Profit after Income Tax $870,759”. Such a statement makes clear that the amount received was profit and not capital. That is, it cannot be a repayment of part of the $2.6 million which the husband received from his parents.
1758.Also forming part of Exhibit W36 is a copy of the tax return for NN Pty Limited for the year ended 30 June 2011. That shows the company had a taxable income of $1,243,788. The amount of tax payable is $373,028.70.
1759.The husband’s evidence is that there are no funds available to him from any source. That is, he has no savings nor can he draw on any funds. If that is correct then the funds which belong to NN Pty Ltd have been spent and there are probably no funds available to pay the outstanding tax.
1760.Whatever the true position might be, the fact remains that the husband has failed to clearly demonstrate how the $1,243,788 fund received by NN Pty Ltd has been applied. Further it is not clear that the original tax return for NN Pty Ltd has ever been lodged with the Australian Tax Office. If the financial position of NN Pty Ltd for the 2011 tax year is really as detailed above, then the husband as the sole shareholder in the company had the ability to pay himself funds from the profits. Accordingly, it would be entirely misleading to say that his personal income for the 2011 tax year was only $4,211.
1761.Just to confuse things further, another copy of the NN Pty Ltd Annual Report was tendered by the husband as Exhibit H18. This document has the word “DRAFT” in red prominently stamped on the first page. I note this document has been dated 15 July 2014 by the accountant preparing same, Mr KJ. The document bearing the same title which is set out above, as part of Exhibit W36, is dated 2 July 2014 and is also under the signature of Mr KJ. The document forming part of Exhibit H18 portrays an entirely different picture of the financial position of NN Pty Ltd for the 2011 financial year. That document shows the company received no income at all in that year.
1762.The picture painted by the documents forming Exhibit W36 is as follows for the 2011 tax year. The income of the PP Unit Trust was $1,239,032. That sum, together with some other funds, was paid to the PP Discretionary Trust giving it an income of $1,243,788. The PP Discretionary Trust distributed to its beneficiary NN Pty Ltd the sum of $1,243,788 for that year. NN Pty Ltd prepared a tax return incorporating income of $1,243,788. It had no expenses and therefore reported a taxable income of $1,243,788 for the year. As stated earlier, the husband is the sole shareholder, director and secretary of that company.
1763.Thus, the conclusion must be that the documents forming Exhibit W36 reflect the true position the husband had available to him, should he have chosen to draw down a dividend from NN Pty Ltd of $1.243 million and pay the tax payable resulting from same, rather than the meagre sum of $4,211.
1764.I have assumed that faced with the prospect of having to pay tax on $1.243 million, the husband was motivated to take advantage of the tax losses which were reposed in the entities controlled by his father. Thus, the Court was told of the movement of funds between various entities which gave rise to the transposing of about $600,000 of tax losses from those entities owned/controlled by the husband’s father to the entities owned/controlled by the husband.
1765.In Exhibit H18 the Annual Report for the PP Unit Trust shows that the profit of $1,243,788 was distributed to the PP Discretionary Trust for the 2011 financial year. The Annual Report for the PP Discretionary Trust shows that it distributed total funds of $1,243,788 to LL Funds Management Pty Ltd. Nowhere in Exhibit H18 is there any Annual Report for LL Funds Management Pty Ltd for the 2011 tax year or any tax year. LL Funds Management Pty Ltd is owned wholly by the husband who is also the sole director and secretary. The PP Discretionary Trust Annual Report for 2011 also shows that in that year LL Funds Management Pty Ltd lent to that trust the sum of $1,243,788. That is the same amount as was distributed to LL Funds Management Pty Ltd. The Annual Report for the PP Discretionary Trust also shows that the trust lent to the PP Unit Trust in that same year the same sum, namely $1,243,788. That loan is then reflected in the PP Unit Trust accounts for the same year as a “Beneficiary Loan”. Without the corresponding Annual Report for LL Funds Management Pty Ltd it is not possible to know what other funds the company had to meet the tax liability on the income received. It may be that there was a nil taxation liability arising from the round robin exercise.
…
1768.I accept that the husband has failed to provide evidence by way of disclosure both to the wife and in support of his case, which enables this Court to be satisfied the husband has accounted for the income received by NN Pty Ltd in the 2011 tax year (if it actually received an income) and/or LL Funds Management Pty Ltd for that same year. The failure to provide to the court the Annual Reports for LL Funds Management Pty Ltd is a matter of serious concern. The husband put together in Exhibits H18 and H19 a series of reports for the HH Asset Holding Trust, the HH Distribution Trust, the PP Unit Trust, and the PP Discretionary Trust. Those documents provide a complete picture of the financial position of each of those entities over a number of relevant financial years. The only document before the court which provides relevant evidence as to the financial position of NN Pty Ltd is contained in the wife’s Exhibit W36. There is, in that exhibit, an Annual Report and a tax return for NN Pty Ltd for the 2011 tax year. Given what is stated in the Annual Report for the 2011 year for the PP Discretionary Trust (showing distribution of all profit to LL Funds Management Pty Ltd) and the Annual Report for the PP Unit Trust (showing a loan from LL Funds Management Pty Ltd to the PP Unit Trust of exactly the amount paid by the PP Discretionary Trust to LL Funds Management Pty Ltd for that year) it seems the NN Pty Ltd Annual Report for that year has changed.
1769.In addition to the matters specified above, there is still the circumstance of the husband and the abovementioned entities committing to completion of the necessary statutory documents such as Annual Returns, income tax returns and the like. Until that occurs, it is open to the husband to cause a change in the distributions of income between the entities and himself. Once he files the required documents, he commits to the authenticity and accuracy of the documents and opens himself to any consequences which might follow.
As we have already recorded, at [1987] his Honour took into account “[t]he husband’s failure to provide evidence as to how the sum of $1.243 million distributed by the PP Unit Trust was applied or used in the 2011 financial year” under s 75(2) of the Family Law Act.
The husband submits that “[a] quick look at the 2012 draft financial report” would show that the profit was lost.
Exhibit H18 was tendered by the husband. It contains the financial reports for the PP Discretionary Trust for 2011 and 2012. Rather confusingly for each year there are two set of reports, each stamped draft but numbered 1 and 2 in handwriting.
The husband himself gave evidence as to the weight that should be attached to these documents in the following exchange:
[COUNSEL FOR THE WIFE]: Mr [Malcher], I’m going to show you the tax return documents for the [PP] Discretionary Trust, [NN Pty Limited], and the [PP] Unit Trust. And draw your attention to each of the yellow tags. And if you could consider those 30 documents, and I will suggest to you that each of those documents traces the distribution of the figure 1.243788?---No, they’re not. They’re draft documents. So they haven’t been lodged. They’re not worth the paper they’re written on at this point.
(Transcript 17 August 2015, p.1259)
Draft 1 for 2011 records that as at 30 June 2011 the current assets of the Trust consisted of “Trade and Other Receivables” of $1,545,351.90. The Balance Sheet records a non-current liability for “Financial Liabilities” in the same sum. The net assets were recorded as $500. An income of $1,243,788.18 was recorded which was fully distributed to LL Funds Management Pty Limited. As the primary judge noted, the husband did not tender any of the accounts of that company.
Draft 2 differs in that the income of $1,243,788.18 is said to be distributed to NN Pty Limited.
Draft 1 for 2012 records that the 2011 receivables were $1,103,351.90 which were matched by a liability in the same sum. Nonetheless, the accounts still recorded an income of $1,243,788.18 which was fully distributed to LL Funds Management Pty Limited.
Draft 2 for 2012, on the other hand, continues to record receivables for 2011 at $1,545,351.90 matched by a corresponding liability.
Draft 2 for 2012 also records the income for 2011 which is shown as $1,243,788.18 and said to be distributed to NN Pty Limited.
Additionally, the drafts for 2012 reveal different figures for the receivables and the matching liability being $673,351.90 in Draft 1 and $1,545,351.90 in Draft 2.
In the light of the differences between them and because the accounts remain as drafts, it is difficult to see what of value could be drawn from them. However, neither of the draft 2012 accounts appears to identify a loss which entirely negates the profit earned in 2011.
Of course, if in fact income of $1,243,788.18 was received in 2011 and fully distributed, a subsequent loss does not, of itself, necessarily reverse that distribution.
It is useful to return to the precise finding made by the primary judge under s 75(2) on this issue which was (at [1987]):
The husband’s failure to provide evidence as to how the sum of $1.243 million distributed by the PP Unit Trust was applied or used in the 2011 financial year.
(Emphasis added)
First, this finding is limited to the 2011 financial year. Clearly, his Honour was interested in whether or not there had actually been a distribution of funds. It is also useful to recall that the accounts of LL Management Pty Limited, the recipient of the funds (according to one version of the drafts) were not in evidence.
Secondly, we consider that the primary judge’s scepticism with respect to these draft accounts was well placed. Nothing pointed to by the husband incontrovertibly or by way of compelling inference suggests otherwise: Robinson Helicopter Company Incorporated v McDermott (2016) 331 ALR 550 at [43]. We do not consider there to be any merit in this complaint.
The husband also complained that the primary judge did not understand the reason for the loss in 2012 or the evidence as to the husband trading shares on behalf of his father.
The husband submitted:
The judge showed he had no comprehension of the type of trading that was being undertaken by the appellant in his business dealings previously. The losses that occurred in August 2011 were as a result of options positions on the ASX. However the judge has stated that “because of the change to the options trading rules” (reason page 376 para 1945) the company suffered losses. Basically he had no comprehension as to what was going on and didn’t ask any (or enough) questions to broaden his understanding of the matter. This is crucial in that he doesn’t understand that more money was lost than was available. This dovetails into his lack of understanding to my personal financial position.
My assessment of his understanding is that when you go to work you earn an income. In my previous profession as a stockbroker you become liable for the losses of clients and in effect can go into negative income. He simply did not grasp the concepts surrounding the losses that were incurred in August 2011. His reasons clearly indicate this.
The finding to which this submission refers is:
1945.In about August 2011, because of the change to the options trading rules for ABC Pty Ltd, the Australian Stock Exchange/TT Stockbrokers called upon the Banker’s Undertaking for $700,000. In addition to the payment by Westpac Banking Corporation Ltd of the $700,000, funds were paid from the trading balances of ABC Pty Ltd on the evidence of the husband and his father, effectively wiping out all remaining monies and assets held by the enterprise.
This finding is entirely consistent with the husband’s evidence in his financial affidavit filed 16 July 2015:
50.Consequent upon the changes for options trading with the Australian Stock Exchange, [ABC Pty Limited] ceased to trade in August 2011. At that time, some of the monies paid out to it from my Father for the purchase of the number plates had not been described/allocated in its books of account but were in the nature of distributions to him from the entity. However, I cannot say with certainty what the company owes him or what he owes the company or what the company owes me or what I owe the company. Some financial accounts and other documents were prepared in draft form by our then accountants. But in 2012 and following, my financial position has not permitted me to generate sufficient monies to finalise the existing versions of draft accounts that had been prepared by them in the 2011/2012 period. The company has ceased to trade and is dormant and has no assets and has substantial liabilities. When I have sufficient funds I intend to pay for it to be put into administration/liquidation. It holds no assets and has no value. At or about August 2011 with the dramatic change to the options trading outcome for [ABC Pty Limited] (“[ABC]”), the Australian Stock Exchange/[TT Stockbrokers] called upon the bank guarantee for $700,000. The funds were paid from [ABC]’s trading balances and effectively wiped out all remaining monies held by the enterprise.
The husband did not refer us to any other evidence.
This submission therefore fails as his Honour’s finding was entirely consistent with the husband’s own evidence.
As to the second point, the husband submitted that the primary judge has confused the husband’s personal dealings with those that were undertaken by him in his capacity as his father’s financial adviser. The husband did not identify any parts of his Honour’s reasons said to be adversely affected by this confusion. It is not for this Court to search them out.
In any event, the primary judge was well aware that the husband not only acted for his father but also had dealings with him. The dubious nature of the accounts that purport to record these transactions has been noted many times already.
His Honour said:
109.The husband said ABC Pty Ltd, as trustee for the PP Unit Trust and the PP Discretionary Trust, ceased to trade in August 2011. As things stood at the time of the hearing, the husband was unable to say what funds are owing to PP Unit Trust or the PP Discretionary Trust by his father or alternatively what funds are owed by those entities to his father. The same is true in relation to the husband. The husband has not had sufficient funds to be able to finalise the draft account for the 2011 or 2012 financial years. The husband proposes that the corporation ABC Pty Ltd be placed into administration or liquidation.
…
716.The husband agreed ABC Pty Ltd ceased trading in August 2011. He confirmed he did not know what his father owed the company or was owed by that company. He agreed that in relation to the PP trusts the final distribution amounts have not been finalised.
…
1506.Given the circumstance of the husband and his parents being unable to definitively and transparently establish the amount repaid by the husband through the transfer of assets to his parents and other transactions identified in these reasons or otherwise, then the Court is not able to place a figure in the Balance Sheet as representing the liability of the husband to his parents.
…
1543.The conclusion which must be drawn in relation to the subject heading is that on the available evidence it is not possible to determine what funds, if any, are owed by the husband, either directly or through any of the entities he controlled, to the husband’s father and/or his wife and/or his superannuation fund.
Any difficulty arises from the inadequacy of the evidence, despite its volume, as opposed to the primary judge’s understanding. No error or the materiality of it to any finding has been established.
The husband also complained about the manner in which the primary judge conducted the hearing. The primary complaint appeared to be that the primary judge asked an “extraordinary volume of questions to the appellant when he was not on the witness stand” and thus his role as an advocate and as a witness “were melded into one”. He also complained that the proceedings were allowed to carry on for too long, that the examination of witnesses was extra-ordinarily prolonged and that too much evidence was admitted.
There are a number of difficulties that attend these submissions.
First, they bear no relation to any of the grounds of appeal.
Secondly, the submissions do not identify any finding of his Honour that is said to be adversely affected. If the complaints are directed to a failure of procedural fairness, the particular failure is not identified. Asking many questions of the husband does not of itself bespeak error.
Thirdly, these reasons make clear that the husband was attempting to establish a very complex set of circumstances where the evidence was scant and the documents confusing. It is not surprising that his Honour asked many questions.
Presumably, the questions were pertinent and appropriate – certainly the husband did not suggest otherwise. As the husband was acting for himself, he had to deal directly with questions from the primary judge in the course of his conduct of the case.
Finally the submissions are too general and diffuse to attract weight. For example, by what standard is it said there were too many questions, there was too much evidence or the examination of witnesses was too extensive?
We are not satisfied that the husband’s submissions under this heading identify any error.
Bias
Ground 1.8 provides:
1.8The judge also fell into error by being exhibiting a strong bias against the appellant as evidenced in the transcript. The judge treated the appellant with a great level of ambivalence and ignored certain requests and motions without giving them due consideration.
It is apparent that the asserted bias is said to arise from the conduct of the hearing, because the bias is said to be evidenced in the transcript.
No submissions were directed to this ground in the husband’s Summary of Argument. It is therefore impossible to identify the acts of the primary judge said to indicate bias.
Further, a finding of actual bias, as opposed to apprehended bias, faces a high bar. Such allegations must be distinctly made and firmly established (Minister for Immigration and Multicultural Affairs v Jia Legeng (2001) 205 CLR 507 at 546 [127] per Kirby J). Thus we would have expected this issue to have been squarely addressed in the husband’s Summary of Argument.
For the reasons given earlier we declined to permit the husband to present oral submissions on this ground as it would have been grossly unfair to the wife and the ICL.
This ground therefore cannot succeed.
Grounds 1.9 and 1.10
These grounds assert error in that the husband says he was not allowed to cross-examine some witnesses or to call others.
The husband failed to particularise this complaint: the grounds themselves did not identify the witnesses and these grounds were not addressed in the Summary of Argument.
In order for us to determine there is merit in these grounds it would be necessary first to determine whether the asserted rulings were in fact made. The next step would be to consider whether they were erroneously made and, if so, whether the refusal had a material effect on the outcome.
For the reasons given earlier it would have been unfair for the husband to have embarked on this process for the first time during oral submissions. Procedural fairness is a two-way street. For this reasons we declined to hear oral submissions on these grounds.
Thus no error has been established.
Parenting
Two grounds of appeal deal specifically with the issue of parenting. They are in the following terms:
1.1The judge fell into error in the parenting matter by allowing the single expert (Dr [A]) to continue to give evidence when it had been proven that his testimony was tainted by his contact with the treating psychologist (Dr [U]) before the hearing. Dr [A]’s recommendations had completely changed between the period of his written reports and the time of the hearing following his contact with Dr [U]. This was in direct defiance to the direction of the judge and was aided by the ICL in that he/they had been involved directly in contravening the judge’s directions.
1.2The judge fell into error by not considering that the single expert (Dr [A]) had changed his opinions on numerous occasions during his testimony.
In his submissions the husband said that the discussion that occurred between the two doctors caused a miscarriage of justice. He did not say why this was so.
As can be seen, the grounds are limited to the role and evidence of Dr A, a psychiatrist, who was the court-appointed single expert for the parenting aspect of the proceedings. The point of the grounds is to complain about the role of the expert and his evidence; however, as will shortly be explained, the grounds are misconceived. This is because the primary judge did not accept the opinion of Dr A that there should be equal shared parental responsibility (which was the order proposed by the husband) and instead made an order that the wife have sole parental responsibility for the children.
Dr A was appointed pursuant to orders made on 4 August 2014. One of the orders authorised him to be “at liberty to speak to … any medical/mental health practitioners and/or therapists/counsellors of the children and/or the parents if he wishes to do so”.
He prepared two reports dated 14 March 2013 and 16 October 2014. In each of those reports he expressed the view that an order for equal shared parental responsibility would be in the best interests of the children.
Dr A gave oral evidence on 30 July 2015. Prior to giving evidence, apparently at some stage during the previous week, Dr A was informed by the ICL that an issue had now arisen as to whether there should be an order for equal shared parental responsibility or an order that the wife have sole parental responsibility for the three children.
This led Dr A to read the new affidavits filed in the proceedings and to peruse documents from the children’s schools and NSW Police. He also had an “extensive” conversation with Dr U, a psychologist who had been providing therapy to the three children of the parties and to the parties themselves.
Dr U was appointed by orders made on 13 March 2015, some time after the appointment of Dr A. There is, however, no doubt that the order of 4 August 2014 permitted him to speak to Dr U. There is therefore persuasive force in the submission made on behalf of the wife that the conversation between Dr U and Dr A was authorised by extant court orders and involved no impropriety whatsoever.
That, of itself, is sufficient to dispose of this aspect of the ground.
Returning then to the evidence of Dr A, in response to questioning from the ICL, he indicated that this had led him to change his recommendation as to parental responsibility (Transcript 31 July 2015, pp.682–684). He indicated that he now favoured an order for sole parental responsibility.
According to the primary judge the basis for the new opinion was:
1158.In his oral evidence, Dr A opined that he had “great concerns about the husband’s ability to take a considered and respectful approach to the children’s welfare” and questioned the capacity of the parties to maintain joint parental responsibility. Dr A considered that it would be “an unlikely event” that the husband could change, even with therapeutic intervention, to a point where he could be considered to be an involved parent who co-operated with the other parent. Dr A outlined that he was of the view that it would more appropriate for the wife to have sole parental responsibility in line with the conditions included in her amended Minute of order, which provided for significant consultation with the husband prior to any proposed decisions.
However the evidence did not rest there.
Again, according to the primary judge:
1159.It was then put by me that, given what Dr A has observed, it was entirely predictable that if there was an order made for the wife to have sole parental responsibility, the husband would feel angry and disenfranchised and would be completely incapable of hiding that view from the children. Dr A acknowledged that he was in “absolute agreement” with this view. Dr A then stated his preference for the type of order proposed by the Independent Children's Lawyer.
Thus, Dr A reverted to his original opinion which favoured an order for equal shared parental responsibility.
The husband became aware of the conversation between Dr A and Dr U when Dr A gave evidence on 30 July 2015. It emerged that the conversation included a discussion as to aspects of that therapy provided by Dr U, including the husband’s therapy.
That led the husband to make an application in the following terms:
MR [MALCHER]: Well, I will be very quick with your Honour. Nowhere in those orders does it allow for Dr [A] to coordinate or talk with Dr [U]. It does allow for the ICL to liaise with Dr [U]. The independent children’s lawyer has leave to liaise with Dr [U]. It does not talk about Dr [A] liaising with Dr [U] at any point. And for that reason, from my understanding, the witness has liaised with Dr [U] and I would ask that this witness’s testimony be stricken and a new single expert be appointed and a new report drawn up because his testimony is now tainted by what he has discussed with Dr [U] in what we or I certainly believed were confidential sessions.
HIS HONOUR: Right. Well, I will consider that application. I know what you’re making. I’m not going to decide it at the moment. In the circumstances, if I don’t decide it in your favour, I don’t want to waste time, so let’s move on.
(Transcript 30 July 2015, p.719)
This application was noted by the judge at [1034]. It is clear that the application was not otherwise referred to in the reasons.
There is no doubt that the judge viewed the conversation between Dr A and Dr U with some concern. This appears from a discussion of that conversation on 31 July 2015. The primary judge said:
If I had known that Dr [A] was going to speak to Dr [U] at an earlier time, I would have put restrictions on that. I would not have allowed that unless each of you and the mother agreed to it on the basis that Dr [A] would not be required to divulge any communication between he and Dr [U], but that’s not what happened, and a very unfortunate circumstance arose, and that’s why I raise it with you.
(Transcript 31 July 2015, p.775)
The evident concern was that, absent agreement from the parties, confidential material arising from the therapeutic relationship between them and Dr U should not be divulged to or by Dr A. This, of course, could have an adverse effect on whether Dr U should continue in her role as therapist. The primary judge’s concerns seem not to have involved the role of Dr A as an expert witness. This concern seems to have been misplaced. As we have already discussed Dr A was authorised to speak to Dr U and therefore any material communicated to him by Dr U could not be regarded as confidential. Perhaps his Honour was indicating that, had he known the conversation was to occur, he would have considered amending the orders of 4 August 2014 so as to prevent or limit it.
The concern held by the primary judge is made clear by the introduction to the discussion held on 31 July 2015, in the following terms:
What I really need to know now is are you wanting to make any application about the consequence of him speaking to Dr [U] in the manner in which I have raised, that is, that he be required to tell us everything that was said, and secondly, potentially Dr [U] be required to give evidence. They’re the two consequences that I see of what has happened. Now, do you want to make either of those applications at this time or at all?
(Transcript 31 July 2015, p.774)
For reasons that subsequently appear from the transcript the husband declined to make either of those applications.
The husband returned to his application during submissions on 17 September 2015. The primary judge indicated it would be dealt with in the final reasons but that “I think you can take it as read I’m not going to grant it” (Transcript 17 September 2015, p.27).
As we have recorded, the primary judge noted the application in his reasons but did not otherwise deal with it.
As we have already noted, Dr A gave evidence on 30 July 2015. He returned to give further evidence on 19 August 2015 and was cross-examined by the husband. The application for his removal was not raised.
In the light of the discussion on 31 July 2015 and the failure to raise the application on 19 August 2015 the primary judge was entitled to regard the application made on 30 July 2015 as spent by that discussion and the husband’s responses to the questions posed to him about the course to be taken. There would be no point in taking further evidence from Dr A if there was an unresolved issue about his status as the single expert.
It appears that primary judge had these matters in mind in the course of submissions on 17 September 2015.
We consider that whilst it would have been desirable for the primary judge to have explained why he did not remove Dr A in his reasons (given that he said he was going to do so), the reasons for taking that course emerge with sufficient clarity from the transcript of 31 July 2015. Weighing up the information received by Dr A, the primary judge considered that the more desirable course was to preserve Dr U’s role as therapist and therefore not to explore the nature of the information about therapy that was passed on to Dr A.
Further, if there was any error on the part of the primary judge, it was not material to the outcome.
Ultimately the primary judge made an order that the wife have sole parental responsibility for the children. In doing so, his Honour did not accept the evidence of Dr A whose final opinion was, as we have noted at [177], that there should be equal shared parental responsibility.
His Honour’s reasons for doing so were:
1167.I accept that the husband is a very complex personality. I accept the conclusions which Dr A has made about that aspect of the husband. I accept he does have a deep and abiding love for his children and a need to have them as part of his life. Nonetheless it is clear his own personal needs do come first in many circumstances. As such, should he feel he has been slighted or wronged by something which has arisen as a result of the wife’s actions, I conclude he has, and will probably in the future, withdraw from face-to-face time with the children. I conclude it is unlikely he would withdraw from any contact with them. In the past when he has withdrawn from seeing them or been unable to do so because he was overseas or the Court Orders made no provision for same, he has continued to be in contact with them by telephone or other electronic means. I am satisfied he sees himself as having a great deal of emotional investment in his relationship with the children, and that is particularly evident in his relationship with the oldest child.
1168.Having considered all the submissions of the parties and in particular the evidence of Dr A I do reluctantly conclude that much as I would like to be able to make an order for equal shared parental responsibility, I conclude I cannot, on balancing all relevant considerations, do so and be satisfied that would be in the best interests of the children. In particular I have weighed what I consider to be the most significant benefits and detriments which might reasonably be expected from an order for equal shared parental responsibility. The benefits would include the following:
· The husband would be expected to be content with such an order, perhaps even see it as a victory in the parental battle. Thus the Court could expect the husband would be less likely to withdraw from time with the children. However, there is always the possibility some other aspect of discontent arising from the Court Orders or the interaction with the wife which would have that unwanted result
1169. The detriments would include the following:
· The wife having to communicate with the husband and be subjected to his vitriol or, at the very least, disrespect;
· The very likely result that no agreement could be reached about an important aspect of the future of the children;
· Increased likelihood of further litigation; and
· Draw the children into the parental disputes.
It can thus be seen that whilst considerable weight was given to Dr A’s evidence, ultimately it was not accepted. That was a course the primary judge was entitled to take.
Thus, at least in relation to this issue, any failure to exclude Dr A from the proceedings had no impact on the outcome. It follows that any error in not giving reasons was not material to the outcome.
We repeat that given the nature of the orders of 4 August 2014, there was no basis for his removal in any event.
Did the primary judge fall into error by not considering that Dr A had changed his opinions on numerous occasions?
Given that Dr A’s evidence, ultimately, was supportive of the position of the husband, nonetheless the husband persisted with this ground which is that the primary judge failed to take into account the changes of position of Dr A. The husband submits that had those changes been taken into account his evidence would have been given little weight.
In addition to the paragraphs to which we have referred earlier, the primary judge said:
1160.The wife’s counsel in her submissions referred to these changes of opinion by Dr A in a critical manner. I, however, consider the changing position to be demonstrative of the difficulty this case posed for an expert with Dr A’s qualifications to make recommendations.
Thus contrary to the submission of the husband, the primary judge did expressly consider those changes of opinion. As we have observed, Dr A’s evidence on this point was not accepted.
Accordingly there is no merit in either of these grounds.
The husband also submitted that he was unfairly given only one hour to cross examine Dr A and that the witness wasted much of that time by providing uncooperative responses to questions.
The transcript does not support either contention. Dr A’s answers cannot be categorised in the manner suggested by the husband.
More importantly, whilst the husband’s time for questioning Dr A was limited to an hour which might be extended (“but it won’t be more than an hour and a half”) (Transcript 30 July 2015, p.715), he did not take up all of that time. His cross-examination commenced at 2:10 pm (Transcript 30 July 2015, p.719). Later, the husband indicated that “that was my last point, your Honour. Thank you. I have finished” (Transcript 30 July 2015, p.745). In answer to a question from the primary judge the husband repeated that he was finished.
The witness was then asked some questions by his Honour and left the witness box at 3:13 pm (Transcript 30 July 2015, p.746).
Dr A gave evidence again on 19 August 2015. No time limit was imposed upon the husband however he voluntarily ended his cross-examination (Transcript 19 August 2015, p.1383).
It follows that in each case his cross-examination ended because the husband had no further questions and not because any time limit had expired.
Finally, and in complete contradiction to the above submissions, the husband submitted that the primary judge erred by not according Dr A’s views in favour of an order for equal shared parental responsibility full weight. There is no need to grace that submission with further comment.
The appeal will be dismissed.
Costs
The appeal has been entirely unsuccessful. The appropriate order is that the husband pay the costs of the wife and the ICL.
The wife sought an order that these costs be paid on an indemnity basis because:
·of the husband’s poor conduct of the appeal and “serial” non-compliance with procedural orders. Reference was made to Malcher & Malcher [2018] FamCAFC 23 at [11];
·these grounds of appeal were fundamentally defective; and
·there was a disjunction between the grounds of appeal and the Summary of Argument.
There is some force in these submissions but they fall short of describing exceptional circumstances which justify an order for indemnity costs: Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin (Costs) (2007) 38 Fam LR 478.
The wife’s costs will be fixed in the sum of $49,478.07, which has been calculated at the scale rates provided for in Schedule 3 of the Family Law Rules 2004 (Cth) according to an itemised schedule handed to the Court. The husband took no objection to that course.
The costs of the ICL have been calculated in accordance with the Legal Aid scale and will be fixed in the sum of $6,479.
Orders 55(b), 76, 77 and 78 provided that a sum of $30,000 was to be set aside from the sum otherwise payable to the husband to be held as security for his obligations to pay child support. The funds, if not earlier expended, are to be paid to the husband on 1 July 2018.
The wife seeks an order that any funds remaining in the account on that day not be repaid to the husband but paid to the wife on account of the costs order.
This order is sought because this fund represents the only identifiable asset in Australia owned by the husband. He has lived in Country FF since November 2015 and shows no indication of returning to Australia. Thus any balance remaining in this fund represents the wife’s and the ICL’s only realistic possibility of recovering part of the costs order.
It is appropriate to make the order sought by the wife in these circumstances. Such an order is not intended to confer the status of a secured creditor on the wife or the ICL but to preserve the funds while they pursue the remedies that are available to them, such as a Third Party Debt Notice.
That may, of course, affect the entitlement of other creditors to seek remedies against the husband. They will therefore be given liberty to apply to vary the order.
I certify that the preceding two hundred and twenty-five (225) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Aldridge & Austin JJ) delivered on 11 May 2018.
Legal associate:
Date: 11 May 2018
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