Mandelbaum & Mandelbaum
[2009] FamCAFC 138
•4 August 2009
FAMILY COURT OF AUSTRALIA
| MANDELBAUM & MANDELBAUM | [2009] FamCAFC 138 |
| FAMILY LAW - PROPERTY SETTLEMENT - APPEAL FROM FEDERAL MAGISTRATES COURT - DISCRETION – APPLICATION OF LAW – |
| Family Law Act 1975 (Cth) Section 75(2) |
| Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 House v The King (1936) 55 CLR 499 Norbis v Norbis (1986) 161 CLR 513 CDJ v VAJ (1998) 197 CLR 172 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 24 Bennett and Bennett (1991) FLC 92‑191 Coghlan & Coghlan (2005) FLC 92‑220 Gronow v Gronow (1979) 144 CLR 513 |
| APPELLANT: | MR MANDELBAUM |
| RESPONDENT: | MS MANDELBAUM |
| FILE NUMBER: | PAC | 1499 | of | 2008 |
| APPEAL NUMBER: | EAA | 1 | of | 2009 |
| DATE DELIVERED: | 4 August 2009 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Coleman J |
| HEARING DATE: | 25 June 2009 |
| LOWER COURT JURISDICTION: | Federal Magistrate’s Court |
| LOWER COURT JUDGMENT DATE: | 12 December 2008 |
| LOWER COURT MNC: | [2008] FMCAfam 1399 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Neil Jackson |
| SOLICITOR FOR THE APPELLANT: |
| COUNSEL FOR THE RESPONDENT: | Andrew F. Givney |
| SOLICITOR FOR THE RESPONDENT: | McPhee Kelshaw |
Orders
That the appeal be dismissed.
That the wife’s costs of the appeal be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Mandelbaum & Mandelbaum is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| IN THE FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
Appeal Number: EA 1 of 2009
File Number: PAC1499 of 2008
| MR MANDELBAUM |
Appellant
And
| MS MANDELBAUM |
Respondent
REASONS FOR JUDGMENT
By Amended Notice of Appeal file 11 June 2009, Mr Mandelbaum (“the husband”) appealed against orders made by Cassidy FM on 12 December 2008 in proceedings with respect to settle of property between himself and Ms Mandelbaum (“the wife”).
The orders of the Federal Magistrate provided that the wife receive funds totalling $217 916, and that a “splitting order” be made in her favour with respect to a superannuation interest of the husband in the base amount of $154 120.
In lieu of those orders, the husband sought that the sum of $217 916 be reduced to the sum of $150 000 and that the base amount with respect to the splitting order in favour of the wife be increased from $154 120 to $166 000.
The wife resisted the husband’s appeal and sought to maintain the Federal Magistrate’s orders.
Background
The parties cohabited from 1980 to 2005, a period of 25 years. They married in April 1983. There were four children of the marriage, all of whom had attained the age of 18 years by the time of the Federal Magistrate’s judgment.
The wife was aged 48 years at the date of the Federal Magistrate’s judgment. The husband was then aged 49 years.
The Federal Magistrate considered the property of the parties by reference to “two pools”. The first such pool, comprising non-superannuation assets, was valued at approximately $306 000 net. Included in that sum was an “add-back” of $27 846.22 which was referrable to monies expended by the husband. Other than in that respect, the identification and quantification of the non-superannuation assets of the parties is not controversial in this appeal.
The second pool identified and quantified by the Federal Magistrate comprised superannuation interests of the husband worth $280 218. That figure is not controversial in the appeal.
The Federal Magistrate determined the contribution based entitlements of the parties as 47.5 percent in the case of the wife, and 52.5 percent in the case of the husband. Such conclusion is controversial in the appeal.
The Federal Magistrate adjusted the contribution based entitlements of the parties to the pool of the non-superannuation assets by 27.5 percent in favour of the wife pursuant to section 75(2) of the Family Law Act 1975 (Cth) (“the Act”). Her Honour adjusted the “superannuation pool” by 7.5 percent in favour of the wife pursuant to section 75(2) of the Act.
The Federal Magistrate concluded an apportionment of the non-superannuation assets of 75 percent to the wife and 25 percent to the husband to be just and equitable. The husband contends that by so doing, rather than concluding that the entitlements should be 65 percent to the wife and 35 percent to the husband, her Honour erred.
The Federal Magistrate considered that a division of the superannuation pool of 55 percent to the wife and 45 percent to the husband was just and equitable and concluded that the effect of those determinations was that the wife receive 65 percent, and the husband 35 percent, of the totality of their superannuation and non-superannuation assets. That conclusion is controversial in the appeal.
Relevant Principles
Although variously expressed, the ground articulated in the husband’s Amended Notice of Appeal essentially assert that the Federal Magistrate’s exercise of discretion miscarried thereby enlivening appellate intervention.
The principles which govern the appeal are not in doubt and do not require extensive restatement. There is a presumption that the decision of the Federal Magistrate is correct (Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621). In House v The King (1936) 55 CLR 499 the High Court said (at 504-505):
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
In Norbis v Norbis (1986) 161 CLR 513, Brennan J said (at 539-540):
The difficulties in the way of developing guidelines beset an appellate review of the exercise of discretion under s.79. Unless the primary judge reveals an error in his reasoning, the Full Court can intervene only if the order made is not just and equitable. How does the Full Court arrive at that conclusion? In Bellenden (formerly Satterthwaite) v. Satterthwaite [1948] 1 All ER 343 at p.345 Asquith LJ. stated the rationale of an appellate court’s approach:
“…It is, of course, not enough for the wife to establish that this court might, or would, have made a different order. We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable. It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.”
The “generous ambit within which reasonable disagreement is possible” is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.
In CDJ v VAJ (1998) 197 CLR 172, Kirby J said (at 230):
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. (footnotes omitted).
Insofar as far as some of the husband’s amended grounds of appeal challenged the adequacy of the Federal Magistrate’s reasons for her decision, the principles are not in doubt and do not require extensive restatement in this appeal. In Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 24 McHugh J (then a judge of the Court of Appeal of the Supreme Court of New South Wales) said (at 279):
…without the articulation of reasons, a judicial decision cannot be distinguished from an arbitrary decision. In my opinion the giving of reasons is correctly perceived as “a necessary incident of the judicial process” because it enables the basis of the decision to be seen and understood both for the instant case and for the future direction of the law.
In Bennett and Bennett (1991) FLC 92‑191 the Full Court of this Court embraced the principles which had earlier been established in relation to the need for a trial Judge, or Magistrate, to provide adequate reasons for his or her decision.
The Grounds of Appeal
Sensibly in the Court’s view, Counsel for the husband endeavoured to group and agitate together, by reference to their subject matter, a number of his grounds of appeal. It is appropriate to deal with those challenges in like manner.
The Disputed Add-backs
Counsel for the husband “argued collectively” Grounds 1, 2, 3 and 4 of his Amended Notice of Appeal. Those grounds provided:
Ground 1
That the Federal Magistrate erred in making finding resulting in add backs being included in the net matrimonial pool, such add backs relating to expenditures made by the Husband of items for the benefit of the children of the marriage
Ground 2
That the Federal Magistrate erred in the quantification of add backs as included in the net matrimonial pool, such add backs relating to expenditures made by the Husband of items for the benefit of the children of the marriage.
Ground 3
That the Federal Magistrate erred in failing to give reasons or adequate reasons in relation to determining add backs in favour of the Wife in respect of the expenditures of items for the benefit of the children of the marriage.
Ground 4
That the Federal Magistrate erred in failing to permit the Husband’s Counsel to be asked [sic] the Husband a question in re examination, concerning an attempt to clarify the Husband’s evidence as presented in cross examination, relating to a conversation between himself and the wife referable to cars purchased for the use of two of the children of the marriage.
It is convenient to first consider the husband’s challenge to the adequacy of the Federal Magistrate’s reasons for making the add-backs totalling $27 846.22. As Counsel for the husband’s submissions make clear, the origin of that figure is neither in doubt nor controversial.
The husband submitted that the Federal Magistrate’s reasons for imposing add-backs were to be found in paragraph 19 of her judgment and “as well as arguably” paragraphs 17 and 18 of those reasons. The husband submitted that:
5.A reading of paragraph 19 of the Reasons for Judgment suggests that the add backs appear to be based solely upon the fact that the matrimonial property pool was modest. No apparent other reasons are provided.
It was submitted on behalf of the husband that:
10.Chorn and Hopkins does not state that a guiding principle for the Court in determining whether to introduce an add back is [sic] this particular instance, is the size of the asset pool. It does however invite a court to exercise its discretion in determining whether or not any such expenditure so incurred was reasonable or extravagant. In this case the Honourable Federal Magistrate did not give any reasons why, she formed the view that the add backs as determined were unreasonable, and/or extravagant.
It was further submitted in support of this challenge that:
14.The Court in this case also identified the expenditure on the parties’ daughter’ cars, amounting to $20,000, as well as the expenditure on their 17 year old son [S’s] car amounting to $5,600, as representing an add back. (Reasons for Judgment at page 10 Appeal Book 17). There are no reasons provided in the judgment why these particular expenditures were identified as representing add backs. No reasons are given that would suggest that such expenditures were either extravagant and/or unreasonable.
As is almost invariably the case, the present challenges to the adequacy of reasons for a judicial decision are primarily determined by reference to the judgment under challenge. The learned Federal Magistrate recorded in paragraph 19 of her judgment that:
19.I accept Mr Givney’s submission to the extent that the cars and the dental bill should be added back. These were, in my view, examples of a premature distribution. They did not appear to involve the consent of the wife and with such a small pool, as is in the present case, they should be added back.
To the extent that paragraphs 17 and 18 have, fairly, been suggested by Counsel for the husband to potentially provide elucidation of the Federal Magistrate’s reasoning process with respect to the add-backs, the Court does not consider that they can properly have that effect. The Court understands the observations of the Federal Magistrate in those paragraphs to be no more than an explanation of why, if a sum was appropriate to be added back in the circumstances of this case, she should decline to do so on the basis that the amount involved was delivered by overnight courier please di minimus.
It is clear that the Federal Magistrate effectively adopted the submission made by Counsel for the wife with respect to payments for motor vehicles and a dentist bill, all of which were referrable to the parties’ adult children.
It is clear (see Appeal Book, page 283) that the trial concluded on the basis that Counsel for the parties would file written submissions. Her Honour’s reference to “Mr Givney’s submission” and the absence of any oral submissions at trial leave little doubt that written submissions were in fact made to her Honour after the trial concluded and prior to the making of final orders and publication of reasons for such orders.
The very extensive written submissions of Counsel for the husband clearly found their way into the Appeal Books (pages 91-116), but the submissions of Counsel for the wife do not have appear to have had the same fate.
Mr Givney’s submission to the learned Federal Magistrate with respect to the add backs was that the larger sum which he contended should have been added back was appropriately added back in reliance upon the judgment of Full Court in Townsendv Townsend (1995) FLC 92-596.
In his submissions to this Court, Counsel for the wife referred to the judgment of the Full Court in Chorn v Hopkins (2004) FLC 93-204 and to the following passage from that judgment:
It is important to bear in mind and indeed it should be emphasised that in Townsend the Full Court was concerned only with the situation where between separation and the hearing of property settlement proceedings one party had disposed of an asset which could be described as a “matrimonial asset” in the sense that it was an asset which was owned by one or both of the parties at separation and in which the other party would have a legitimate interest in that, for example he or she had made a direct or indirect contribution to that asset. (See headnote): There were three categories of case where the Court had determined that it was appropriate to notionally add back to the parties’ pool of assets. Firstly, where the parties had expended monies on legal fees, where there had been a premature distribution of matrimonial assets and thirdly, where one of the parties had undertaken reckless investments or deliberately set out to diminish the value of the matrimonial property.
It was thus submitted that:
14.With respect to Counsel for the Appellant it would seem that the submissions focus on proving or showing that the obligation upon the Learned Federal Magistrate is to find that there has been a reckless approach to the use of an asset which with respect was not incumbent upon the Learned Federal Magistrate so defined.
The learned Federal Magistrate’s Reasons for Judgment in relation to the disputed add-backs were brief. Their brevity does not however preclude them from being adequate. Why her Honour concluded as she did with respect to the disputed add-backs is ultimately not in doubt. The items which her Honour notionally added back were found by her to constitute premature distributions to which the wife had not consented. Whereas add-backs of that quantum might be viewed differently in a case where the asset pool was substantial, her Honour did not exclude them in the case before her as the parties otherwise had “such a small pool”.
The Court is accordingly not persuaded that the learned Federal Magistrate’s reasons for making the notional add-backs which she did were inadequate. It is necessary then to consider other challenges to her decision to add back those sums.
Grounds 1 and 2 appear to articulate the same complaint. Each is in reality a challenge to the learned Federal Magistrate’s exercise of discretion. Notwithstanding that one challenge (Ground 4) relates to the course of evidence at trial, neither of these grounds asserts material errors of fact. The challenges are accordingly to the exercise of discretion in reliance upon unchallenged findings of fact. The obstacles which confront such challenges are not insubstantial, as the authorities to which reference has earlier been made confirm. In support of these complaints, Counsel for the husband asserted that by December 2008 the parties had been separated for almost four years. The learned Federal Magistrate’s unchallenged finding was that the parties finally separated in August 2005, some three years and four months prior to her decision. There can be no suggestion that her Honour was unaware of the period which had intervened between the parties’ final separation and the trial of the proceedings before her. Moreover, what significance her Honour should have attached to that reality has not been suggested, much less that her Honour’s discretion miscarried in some way referrable to that period.
Counsel for the husband submitted, undoubtedly correctly, that the amount added back by the learned Federal Magistrate ($27 846.22) exceeded 10 percent of the tangible assets of the parties. There is nothing sinister about that, and it is not a matter which can advance the husband’s complaint. Correctly in the Court’s view, the learned Federal Magistrate recognised that, relative to the parties’ non-superannuation assets, the sum which she concluded should be added back was not insignificant.
Counsel for the husband referred to the submissions made by him at trial which, when read, have the effect asserted by him in his written submissions, namely:
6.The Husband’s Counsel’s written submissions at trial urged the Court to exercise caution in relation to considering the issues of add backs (Paragraphs 4 to 16 inclusive of the Husband’s Counsel’s written submissions dated 14th November 2008 Appeal Book 92-96).
Perhaps the crux of the husband’s complaint in relation to the learned Federal Magistrate’s conclusion with respect to add-backs is most cogently expressed in the following submission made by his Counsel:
7.…in making an order which represents in effect notional property of this kind the Court must do so as an exception rather than as the rule, and that it should be consistent with a finding of economic misconduct or waste of matrimonial assets. In other words, normally when the court exercises its discretion to include notional assets in this particular circumstances, (as set out in Omancini and Omancina (2005) FLC ¶93-218), it is necessary to demonstrate an appropriate basis for doing so, for example by wastage such as gambling or extravagant living.
A number of authorities were cited in support of those assertions, and it was then submitted that:
7.…A finding of economic misconduct is required, because an add back of this kind does represent a form of a monetary penalty that one party will have to incur.
It was then submitted by Counsel for the husband that:
8.In light of the requirement that there be a finding of economic misconduct, in accordance with the principles held by the Full Court in Browne and Green (1999) 25 Fam LR 482 – 29, it would be unfair to the Husband in this case to depart from the Kowaliw guideline, and to place upon him the full burden of the losses, merely on the basis that he was that party who initiated and had overall control of the venture which led to the financial losses. In respect to the expenditure of the children’s motor vehicles, the Wife was fully aware of such payments, and raised no complaint until 21st October 2008, being day one of the trial, (as referred to at paragraph 22 of the Husband’s Counsel’s written submissions dated 14th November 2008 Appeal Book 97; and Transcript of 21st October 2008 pages 58-60 Appeal Book 202-204). The Wife’s affidavit of 15th September 2008 (Appeal Book 117-122), as relied upon in the proceedings before the Federal Magistrate, presented no evidence in support of her own add back case that in effect she was ever in the dark about these expenditures.
The Court cannot accept that, as a matter of principle, “a finding of economic misconduct” is necessary to enliven the discretion to notionally add back funds disbursed by a party to a marriage prior to trial. Nor can the Court accept that the authorities suggest or support that proposition. A finding of economic misconduct will usually provide a foundation for notionally adding back, but it is not the only situation in which there can be a notional adding-back. Each case depends upon a consideration of all the relevant facts and circumstances. In any event, disbursing the modest assets of a long cohabitation in the absence of the knowledge and consent of the other party to the cohabitation could constitute “economic misconduct” if that be a prerequisite to notionally adding back funds.
Counsel for the husband also submitted, correctly in the Court’s view, that:
9.A required assessment of the reasonableness of the expenditure was also made plain by the Full Court in Omancini and Omancina.
As indicated earlier, Counsel for the husband submitted, in reliance upon the passage cited by him from the decision of the Full Court in Gollings & Scott [2007] FamCA 397 (paragraph 11), that “any modest provision of capital by parents of their adult children to enable the children to get a start in life is a normal experience in our society [and] should not be deemed as being an add-back”. Counsel for the husband pointed to the fact that the husband:
12.…had the four children of the marriage living in the former matrimonial home at the time of the parties’ separation some three years prior to the commencement of the family law proceedings. One of those children was 17 and still at school. Another child was only aged 19, and largely unemployed during the year 2006.
On behalf of the husband it was submitted in support of his assertion that the sums added back by the learned Federal Magistrate represented outlays of a “simply modest” magnitude that:
13.The issue of the expenditure of [G’s] dental expenditure was an example of a particularly modest outlay. She was at that time just 19 years old and unemployed. The expenditure was for the amount of $1,500. Even in a net asset pool of just under $600,000, such an expenditure should never have been determined an add back. In this instance, there are no reasons provided as to why it was so determined. Additionally, the Reasons for Judgment give no indication as to why such expenditure represented an extravagance or unreasonable conduct by the Husband.
In support of his contentions, Counsel for the husband referred to a number of passages of the transcript of the proceedings before the learned Federal Magistrate. He submitted by reference to the evidence of the wife that:
15.The cross examination of the Wife revealed that as of 2006, she was fully aware that the daughters had used these cars for several years in the case of [A], and for about a year in the case of [G]. (Transcript of 21st October 2008 pages 58-60 Appeal Book 202-204). And there was no issue that that they had been both encumbered to leases, and that as of mid 2006, there was a debt owned by the parties amounting to $20,000, that is, the leases of each of the cars in question.
The case for the wife before the learned Federal Magistrate was clearly that she had not consented to the disbursements which constituted the disputed add-backs. The wife reiterated that during the course of her evidence, albeit at times asserting that she had been unaware of disbursements, or not consulted with respect to them, or, in some instances of which she had been made aware, had opposed them. Such evidence was clearly relevant to the issue of the disputed add-backs. Significantly, the learned Federal Magistrate did not find, and was not asked to find, that the disbursements which constituted the notional add-backs were reckless, negligent, wanton or otherwise blameworthy. Nor did her Honour find that that the disbursements were themselves inherently unreasonable. The issue, as her Honour identified in her Reasons for Judgment was whether, in all the circumstances, the premature distributions should have been added back. Pivotal to that issue was whether or not the wife knew of the disbursements and either consented to or acquiesced in them. There is no suggestion that any of the distributions was not made by the husband, who at all material times controlled the funds from which the disbursements were made.
In the course of her evidence (Appeal Book, page 205), the wife asserted that she had been “annoyed” about certain expenses met by the husband which related to the parties’ adult children, although the thrust of her complaint in that regard, and generally with respect to the add-backs to which she was referred in cross-examination, related to the husband’s alleged failure to consult her about such expenditures.
Counsel for the husband referred to his assertion that there had been discussions between the parties with respect to the add-back (see Husband’s Outline of Argument, par 16).
The learned Federal Magistrate did not make a finding as to whose version of the disputed add-backs was to be preferred. It can reasonably be inferred however from her Reasons for Judgment with respect to the issue that her Honour accepted the wife’s evidence that she had not consented to the disbursements which constituted the disputed add-backs. Implicit in such acceptance was a preference for the wife’s assertion that she had not consented, to such evidence as there was from the husband that she had.
Counsel for the wife submitted to this Court that:
15.There can be no doubt that the wife through various contributions both as an income earning and homemaker and parent over the years of a lengthy relationship made a contribution to the redundancy package which the husband dissipated by the time the parties came for hearing.
He also submitted that:
16.The learned Federal Magistrate’s finding as to the add backs were well within the ambit of her discretion and there was in respect of no error in her approach in adding the monies back.
It is appropriate to have regard to the evidence which was before the learned Federal Magistrate in relation to this topic. Regrettably, although, given the modest pool of non-superannuation assets of the parties it might have been expected that the fate of the husband’s redundancy moneys would be a matter of intense interest in the lead-up to trial, the “add-back issue” appears to have first clearly emerged at the commencement of the trial of the proceedings. As is clear, from the evidence, only the sum of $27 846.22) was controversially added back out of the total redundancy payment of approximately $165 999.
The wife, who was the applicant in the proceedings before the learned Federal Magistrate was cross-examined before the husband gave oral evidence. During the course of cross-examination of the wife, Counsel for the husband traversed the payments made by the husband from his redundancy monies with respect to motor vehicles which were, and remained, in the possession of the parties’ children (Appeal Book page 204 and following). It is not in doubt that at least two of the motor vehicles in the possession of the children were under finance, the husband being liable pursuant to the financial instruments relating to them, and thus having a personal obligation with respect to those vehicles.
During the course of her cross-examination the wife made clear that she either had not been “informed”, or had “no idea”, or objected to the expenditures with respect to the children’s motor vehicles (Appeal Book page 205). So far as the dentistry was concerned, the wife’s evidence was that she had “no idea” what work was done or its cost, suggesting the husband to have been “evasive” about that. At no time during the wife’s cross-examination to which the Court has been referred, or discovered for itself, did the wife deviate from her assertions with respect to the disputed add-backs.
The husband then gave oral evidence. Without criticizing his learned Counsel, for the significance of the disputed add-backs appears only to have been fully appreciated after the delivery of judgment in the proceedings, no evidence-in-chief was sought to be led from the husband in relation to the disbursements comprising the disputed add-backs with respect to the children’s cars and/or dentistry expenses. It is correct to suggest, as Counsel for the husband has, that the failure of the husband to refer to these matters in any affidavit sworn on his behalf ought not in the circumstances be viewed critically.
Again, without criticising Counsel for the husband, the wife having so clearly disavowed all suggestions that she had consented to these disbursements, it is regrettable that the opportunity to adduce evidence-in-chief of the asserted conversations was not pursued. As will be seen, that oversight by Counsel did not in this Court’s view ultimately result in an injustice being visited upon the husband.
In the course of cross-examination of the husband, it can with some justification be suggested that Counsel for the wife studiously avoided giving the husband the opportunity in cross-examination to suggest that the wife had known of and agreed to the disputed disbursements. Having (Appeal Book: 224), established the ages of the children whose motor vehicles gave rise to the disputed disbursements, and their employment positions, Counsel for the husband acknowledged that the husband had not in his affidavit evidence asserted any conversation between himself and the wife, regarding the purchase of motor vehicles for the parties’ children at the time or soon after he received the redundancy package. (Appeal Book: 227). As earlier acknowledged, it would be unfair to the husband to attach significance to the absence of such assertions in his affidavit evidence in the circumstances of this case.
During the course of his being cross-examined on the document he prepared explaining to the wife what he had done with the redundancy package moneys, the husband sought to assert “I had also had numerous discussions with my wife one on one” about such disbursements to which Counsel responded “well, did I ask you that or not?” to which the husband replied “no”.
Later, in the course of a non-responsive answer, the husband suggested that “the decision on buying money for the kids’ cars was both my wife and mine” (Appeal Book: 231) which prompted the response from Counsel for the wife “I didn’t ask you that did I, Mr [Mandelbaum]?”, to which the husband replied “That’s correct”. Although the reference to “buying” appears from the previous question to have clearly been a reference to “borrowing”, that evidence had some relevance to the disputed add-back issue.
Later, in his cross-examination with respect to the redundancy monies, Counsel for the wife asked the husband “But preserving the fund for you and your wife with respect to doing a property settlement. Did that cross- your mind?” to which the husband replied “No”.
In re-examination, albeit objected to, and apparently rejected by the learned Federal Magistrate, the husband suggested that “we discussed about the cars coming off lease and the fact that they were – because we were paying out the lease, they were actually worth more than the payout value, so that would be good value and [the wife] was very adamant about that these were cars that had airbags and ABS…” [Appeal Book: 264].
Albeit the husband was not permitted in cross-examination, or re-examination, to articulate his allegations with respect to the wife’s attitude to the disbursements for the children’s cars or the dental fees which constituted the notional add-backs made by the learned Federal Magistrate, it emerged with clarity that he disputed the wife’s claims.
Before dealing with the major issue for determination pursuant to these challenges, the add-back for dental fees ($1500) can be disposed of.
In cross-examination the husband gave evidence which (Appeal Book: 246 - 248) left little room for doubt that he had been reimbursed substantially, if not wholly, for the $1500 which he paid out in dental expenses for one of the children of the marriage from his redundancy monies. Albeit not relied upon by the learned Federal Magistrate, that evidence provided an additional, or independent basis for adding back that sum.
So far as the broad issue of consent was concerned, nothing to which this Court has been referred establishes that the learned Federal Magistrate erred in regarding as pivotal to the determination of the issue of the disputed add backs, the wife’s attitude to them. The wife’s evidence in relation to the issue was clear and unequivocal. To the extent that it emerged, so was the husband’s.
Her Honour was faced with competing versions of the events. No evidence to which this Court has been referred, or which it has discovered for itself, suggests that the probabilities in relation to the topic could be determined other than by reference to the evidence of the parties. Her Honour saw the witnesses give their evidence. She thus enjoyed an advantage which this Court lacks. Nothing to which this Court has been referred establishes that the learned Federal Magistrate “palpably misused” her advantage as the trial magistrate. In circumstances where there was no clear evidence impacting upon the probabilities, the decision was one for her Honour and, on the evidence before her, could have been decided either way.
Unlike expenses involving infant or even adult children, which of their very nature were essential, or were in the interests of the children in circumstances where the children had no capacity to make those payments or meet those expenses, in a case where the non-superannuation assets of the parties were very modest after two and a half decades of cohabitation, the wife’s attitude to the diminution of the parties’ assets was material to the conclusion which the Federal Magistrate was able to reach with respect to the disputed add-backs.
Objectively, had the wife been consulted, and refused to consent to the disbursements, it could not on the evidence before her Honour be said that so doing was necessarily unreasonable in the circumstances of this case. These challenges accordingly fail.
It is, as Brennan J explained in Norbis, the nature of the exercise of discretion that different minds will reach different conclusions without necessarily thereby erring. In the circumstances of this case, it was, as Counsel for the wife submitted, within the ambit of the learned Federal Magistrate’s discretion to add back the sums she did for the reasons she did, in reliance upon the wife’s absence of consent to the disbursements. She may have concluded otherwise, but that is not the test.
It is convenient before considering the last challenge in the “add-back” group of challenges, to refer to an ancillary submission made by Counsel for the husband with respect to the children’s motor vehicle.
In essence, it was submitted by Counsel for the husband that the learned Federal Magistrate erred in adding back the amounts paid out for the motor vehicles rather than their values. To the extent that this approach was urged upon her Honour by the husband at trial, it was fairly conceded that there was no evidence of the value of the motor vehicles in 2006.
In those circumstances, the learned Federal Magistrate could not have acceded to the submission made on behalf of the husband, and may well have erred in so doing. Moreover, although not so intended, this submission provides underpinning for the course which her Honour adopted with respect to the motor vehicle payments. If in reality, the motor vehicles were worth less than the amount outstanding with respect to them, and in circumstances where there was no evidence that the children were failing to discharge their moral obligations with respect to the finance on the motor vehicles, to have paid out those facilities without first consulting the wife was consistent with the premature distribution which the learned Federal Magistrate concluded these disbursements to have been.
Counsel for the husband asserted that it had never been suggested to the husband that he had not discussed the payments with the wife. It was submitted that it had never been suggested to the husband in cross-examination that he had “never discussed or otherwise communicated the payments comprising the disputed add-backs with your wife”.
The Court accepts the accuracy of that assertion having closely read the transcript of the husband’s cross-examination. Counsel for the wife’s failure to do so was however clearly not in advertent, for reasons which have been suggested earlier.
There remains to be considered the challenge articulated in Ground 4, in respect of which it was submitted that:
19.A further point relates to the decision made by the Honourable Federal Magistrate to disallow a question sought by the Husband’s counsel in re-examination of a purported joint decision asserted by him, that these cars given to the daughters of the marriage were always intended to be theirs. It should not be lost in these proceedings that the issue of add backs was not raised by the Wife until the first day of the trial, (Transcript of 21st October, 2008 pages 7 and 8 Appeal Book 151,152; Husband’s Written Submissions dated 14th November 2008 at paragraph 10 Appeal Book 93). At the time that the parties had filed their substantive and final affidavits, being filed just a few weeks before the trial, was there was no issue about add backs.
The transcript of the proceedings does suggest that, at least in a formal sense, the question of add-backs was first raised at the commencement of the trial of proceedings before the learned Federal Magistrate. The Court has earlier referred to the evidence which was given during the course of cross-examination of the husband and the wife.
Although not so expressed, it was submitted by Counsel for the husband that the learned Federal Magistrate had denied him natural justice by refusing to allow evidence from the husband in re-examination relating to the disputed add-backs.
The course of re-examination of the husband is clear (see Appeal Book, pages 263-266). As is clear from the transcript, the basis of the objections successfully raised by Counsel for the wife in re-examination was that the matters sought to be the subject of re-examination did not “arise out of cross-examination” of the husband.
As noted earlier, the disputed add-backs assumed a significance at trial which was not reflected by the affidavit evidence of the parties prior to that time. By the conclusion of the wife’s case at trial, it was clear beyond doubt that the wife remained adamant that she had not consented to the disbursements which were ultimately the subject of notional add-backs by the learned Federal Magistrate. Particularly in the circumstances which Counsel for the parties identified and briefly debated at the commencement of trial, and admittedly with the benefit of hindsight, had Counsel for the husband sought to have adduced evidence in chief from the husband in relation to the wife’s alleged consent to or acquiescence in the disputed disbursement, such application would either have been successful, or if unsuccessful, potentially have provided a ground for challenging the learned Federal Magistrate’s conclusion with respect to the add-back issue. As the transcript reveals, there was no such application.
Sensibly in the circumstances, Counsel for the wife skilfully avoided asking any questions which provided the husband with the opportunity to raise the matters which he clearly, as his non-responsive answers revealed, was anxious to with respect to the wife’s attitude to the controversial disbursements.
In the circumstances, Counsel for the wife was undoubtedly correct in submitting, as was her Honour in accepting, that the matters sought to be raised by Counsel for the husband in re-examination did not arise from Counsel for the wife’s cross-examination of the husband.
Had the re-examination been permitted, there is no secret that the husband would have asserted that he had conversations with the wife during which she either consented to or subsequently by conduct acquiesced in the monies being disbursed by the husband. Her Honour would then have been confronted with two conflicting versions of events. Given that Counsel for the husband cross-examined the wife at some length about the disputed disbursements, but did not in the course of doing so refer to any documentary or other evidence capable of impacting upon the probabilities, her Honour would have been faced with competing and uncorroborated versions of conversations with respect to the disputed disbursements.
As noted earlier, her Honour accepted the wife’s evidence in relation to the issue of consent or acquiescence to the disbursements. Although her Honour did not expressly refer to the husband’s evidence, in the passages to which reference has been made the husband clearly, if unresponsively, made well known to the Court his attitude to the wife’s version of the disputed events.
Thus, even if, contrary to the Court’s conclusion with respect to the natural justice complaint, the re-examination had been permitted, there is no basis for concluding that things would have been any different. Expressed another way, Counsel for the husband’s oversight in not adducing evidence in chief from him in relation to the issue has not ultimately visited an injustice upon the husband.
None of the challenges to the quantification of the non-superannuation asset pool of the parties having succeeded, it is necessary to consider other challenges agitated on behalf of the husband. So doing necessarily occurs in the context of the learned Federal Magistrate having exercised her discretion in reliance upon findings with respect to the asset pool which have not been successfully challenged. As will be seen, save in one respect relating to credit, none of the husband’s complaints yet to be considered involves any challenge to a material finding of fact made by the learned Federal Magistrate.
The Contribution Challenges
The husband relied in this context upon Grounds 5 and 6 of his Amended Notice of Appeal which provided:
Ground 5
The Federal Magistrate erred in failing to give sufficient weight to the contributions of the Husband, and in particular in relation to the contributions made during the second half of the marriage.
As is apparent, these challenges essentially raise two issues. As the learned Federal Magistrate clearly appreciated, and the submissions of Counsel for the husband before her and in the appeal confirm, the husband’s contention has always been that his contributions during the last decade of the parties’ cohabitation, and the post separation period, should have been found to have significantly exceeded the contributions of the wife during those times.
Having referred to the parties’ allegations with respect to these periods, it was submitted on behalf of the husband that:
31.The Court was faced with two different versions as to the extent of the Wife’s contributions, particularly her non financial contributions, during the years 1995 to 2005. At paragraphs 37 and 51 (Appeal Book 100 and Appeal Book 106) of the Husband’s Written submissions dated 14th November 2008, the Court was urged to effectively take sides, and in this instance, to take the Husband’s version. Details [sic] written submissions were then presented in relation to why due to credit issues, the Husband’s version should be preferred to that of the Wife’s version. [
In essence, it was submitted (paragraphs 32 and 33) by Counsel for the husband that the learned Federal Magistrate could not, in the circumstances, make relevant findings of fact without expressing a preference for the evidence of one party to that of the other. In addition, it was submitted that her Honour had erred in not giving reasons for having impliedly preferred the evidence of the wife to that of the husband with respect to the post 1995 contributions.
In oral submissions, Counsel for the husband suggested that the learned Federal Magistrate should have found that contributions overall favoured the wife by 58 percent to 42 percent, such disparity being referrable as to 5 percent with respect to the period from 1995 to 2005 and as to 3 percent with respect to the post separation period.
In the post separation period, Counsel for the husband ultimately submitted that:
35.It submitted that with all of the factors raised above, the contributions should have favoured the Husband by way of 58% to the Wife’s 42%, and the assessment of made by the Honourable Federal Magistrate was inadequate. [Counsel for the husband’s Summary of Argument, par 35].
Counsel for the wife submitted that:
17.These grounds challenge the Learned Federal Magistrate’s findings as to contributions in favour of the husband were not as generous as they should have been.
Counsel for the wife also submitted that:
23.The cross-examination of the wife in respect of contributions occurs on pages 199 to 203. It is submitted that there is nothing in that cross-examination that would stand out to indicate that the wife did not make contributions of quality when not affected by emotional problems during the course of the parties marriage. [Counsel for the wife’s written submissions, par 23, page 5].
On behalf of the wife, Mr Givney also submitted:
24.The husband was cross-examined about the wife’s contributions as a homemaker at pages 261 and 1262. Again there is no evidence there that would enable the Appellant to seriously challenge the Learned Federal Magistrate’s views as to contributions of the parties.
Although the learned Federal Magistrate’s judgment referred to the period between 1980 to 1985 as the period in which the contributions of the parties were agreed to have been equal, there is no doubt that her Honour was in fact referring to the period from 1980 to 1995, and no one suggests otherwise.
Her Honour identified the husband’s contention that “from 1995 to 2005 there was an increase in the work the husband was doing around the house”. Her Honour recognised that the wife did not concede that to have been the case and said, “I do not intend to find that there was an adjustment to be made on the contributions up to that point.”. An equality of contribution-based entitlement from 1980 to 2005 was thus concluded to have been appropriate.
Inferentially, her Honour preferred the evidence of the wife to that of the husband to the extent that the two were in conflict. No other interpretation of her judgment can be successfully asserted. It is clear that her Honour appreciated the issue which required determination. Had the learned Federal Magistrate preferred the evidence of the husband to the wife in relation to this issue it is inconceivable that she would not have made an adjustment to the contribution based entitlements of the parties.
To better appreciate these challenges, it is instructive to have regard to the evidence of the parties with respect to the period from 1995 to 2005.
In her affidavit evidence-in-chief, the wife alleged in relation to the period from 1995 to 2005:
30.I returned to part-time work in 1989 when my youngest son, [S], was approximately one year old. I worked as a nurse. I continued to work part-time until 1995 when I ceased work altogether as a result of my medical condition. I then did not work again until I started at my present employment as [a Club] which is part of the Psychiatric Rehabilitation Association. I commenced part time casual work with [the Club] in approximately January 2008. I do not know how long that employment will last.
31.My husband worked full-time throughout our relationship. He worked long hours sometimes not getting home until 8.00 p.m. or 9.00 p.m. at night. On some occasions he was away from home on business for a week at a time.
32.As a consequence, I was primarily responsible for caring for the children when they were preschool age. I attended to most of their needs including washing, feeding, clothing and parenting. I attended to nearly all of the household domestic tasks including cleaning, cooking, shopping, washing, ironing and some gardening. I undertook small domestic maintenance work like cleaning the gutters of the home, changing light bulbs and painting. When the children commenced school I would regularly attend at the school on presentation days and school functions and sporting carnivals. I was a parent helper on some school excursions. My dyslexia made it difficult for me to help the children with their reading and homework after they left primary school. I was involved with the school council and had an executive position. I also had to attend the school regularly to meet with counsellors and specialist teachers who were helping the children, with their education in both primary and high school.
33.All of my children had special needs. [C] was diagnosed with ADHD and Oppositional Defiance. [A] was diagnosed with ADHD and Dyslexia. [G] was diagnosed with ADHD and Dyslexia. [S]was diagnosed with ADHD and was prescribed occupational therapy to assist with spatial perception difficulties. As a consequence of the above, I attended to nearly all of the children’s medical appointments and followed up with their treatment regimes.
34.By 1995, I was feeling exhausted and needed much more assistance from my husband and he provided some assistance. [Appeal Book 120 & 121, pars 30 – 34].
The husband asserted in his affidavit evidence-in-chief in relation to the period 1995-2005:
11.From the early 1990’s I began to carry out more responsibility for the care of the children and the household duties. I did this while I continued to work full time. This contribution included cooking a minimum of two or three times per week, making the children’s school lunches, undertaking the major help in the children’s homework, washing and cleaning.
12.In the last 10-12 years of the relationship I increasingly undertook more of the cooking and household duties, initially being 3-4 means per week, and by 2002 almost all of the meals, all the kids’ lunches, most of the washing and vacuuming. I often returned home from work or raced in from working on the extension or landscaping, started dinner, had one of the children watch the diner while I had a quick shower and then completed the dinner.
13.In the last 10-12 years I took most of the parenting responsibilities for the children. From approximately 1995 the wife did not get up in the morning to get the children ready for school. The children were aged between 7-11 years at that time. I made the wife a cup of tea at 5.30am before I left for work. She did not get out of bed. The children got themselves breakfast and left for school before she got up. I made the school lunches for the children before I left for work.
14.From the mid 1990’s I assisted with most of the children’s homework including reading, projects and assignments, eventually doing all the homework help from the late 1990’s.
15.From the mid 1990’s when the children started playing sports, I took most of the responsibility for transporting, watching and being involved in the children’s sport. They mostly did winter sports, with all four doing sports including netball, soccer and rugby league. For a few years I also coached the boys’ soccer teams. For two years the wife was the Manager for one of the boy’s soccer teams however the responsibility fell to me for the majority of time as the wife did not like getting up for early mornings in winter.
16.In the last three to four years of the relationship I carried out all of the cooking for the family. I also carried out most of the housework and cared for the children. My employer … allowed me to carry out much of my work from home since I was taking responsibility for most of the household duties. I was able to work from home typically 3-4 days a week. However I believe this affected my employment and I was eventually made redundant. [Appeal Book 25 & 26, pars 11-16].
The husband asserted that he made the greater financial contributions as between the parties. The wife did not dispute that he had. In his affidavit-evidence-chief the husband also (paragraphs 17 & 18) referred to physical work which he asserted that he had undertaken during the course of cohabitation.
In cross-examination, (Appeal Book: 186) the wife conceded that after 1995 her health had rendered the performance of household duties a “struggle” notwithstanding which the wife maintained that she had completed such duties. Nothing to which the Court has been referred, or has discovered for itself, suggests that the wife was ever seriously challenged in cross-examination with respect to the nature or quality of her contributions between 1995 and 2005. Nothing emerging from cross-examination of the wife constituted an impediment to the learned Federal Magistrate’s conclusion with respect to contributions in the period 1995-2005.
In cross-examination, (Appeal Book: 261), the husband reiterated that it was his view that during the course of the marriage the quality of the wife’s contributions was progressively reduced, necessitating the husband becoming “more involved in the household duties” and eventually, inferentially by 2005, having to “take them over”.
With respect to Counsel for the husband, the nature and quality of the wife’s contributions between 1995 and 2005 appears to have now assumed a significance which it did not have at the time the parties gave their affidavit evidence-in-chief, or subsequently when each of them was cross-examined.
Objectively, although the evidence before the learned Federal Magistrate suggested that the husband’s contributions as homemaker and parent increased between 1995 and 2005, nothing emerging from the evidence before the learned Federal Magistrate precluded her from declining to make an adjustment to the equality of contributions which the parties had sensibly conceded to have accrued between 1980 and 1995.
So far as the complaint articulated in Ground 6 with respect to a credibility finding is concerned, to the extent that her Honour’s conclusion was underpinned by a preference for the wife’ version of events between 1995 and 2005 to that of the husband, nothing to which the Court has been referred establishes either that her Honour palpably misused her advantage as the trial Magistrate in relation to the issue, or that the conclusion she reached was not reasonably open to her on the evidence before her. These challenges accordingly fail with respect to the period from 1995 to 2005.
As is apparent, the husband’s challenge to the learned Federal Magistrate’s conclusion with respect to contributions extends to the post separation period. In fairness, during the course of submissions in this Court, Counsel for the husband acknowledged the difficulty which confronted this challenge having regard to the broad nature of the discretion the learned Federal Magistrate was undoubtedly exercising and the authorities relevant in that regard.
So far as the husband’s complaint with respect to the post separation period is concerned, the contention of the husband was that:
34.The Court did recognise the greater contributions made the Husband during the period of post separation, 2005 to October/November 2008. It is period in excess of three years. There was no mention however to the unchallenged evidence that during the period up until October 2006, the Husband was maintaining and indeed improving the property. This included the evidence of the renovation work associated with the paving and the installation of new railing. (Paragraphs 17 and 18 of the Husband’s affidavit of 2nd October 2008, Appeal Book 26).
The learned Federal Magistrate adjusted in the husband’s favour with reference to the post separation period by 2.5 percent. The resultant disparity, 5 percent, translated as $15 316.30 in relation to the non-superannuation assets, and $14 010.90 with respect to the superannuation assets.
Her Honour provided reasons for so adjusting, they being that:
29.I accept the submissions of the husband, however, that his contributions were greater after separation:
- He had the care of a child under 18 until October 2006;
-He paid the entire mortgage from the date of trial until the date the property sold;
-He made contributions to the superannuation in that period, and he paid the wife maintenance during that period.
I also accept that the husband was the only person earning income of any significance during that period to make contributions to the property of the parties, the home, as was necessary from time to time.
Notwithstanding the complaints referred to above, it is clear that the Federal Magistrate had regard in exercising her discretion with respect to contributions in the post separation period to all matters which could have enhanced the husband’s contributions during that period. Albeit unquantified, the contributions made by the husband to the matrimonial home in the post separation period were encompassed in her Honour’s acceptance of the husband’s assertions with respect to contributions to the property of the parties in general and to “the home” in particular.
Although her Honour did not specifically refer to it, the husband occupied the parties’ matrimonial home until its sale in January 2008. The wife had to accommodate herself elsewhere. The paragraphs of the husband’s affidavit evidence-in-chief to which his Counsel referred in support of the complaint with respect to the post separation period do not indicate that the contributions there detailed were made in the post separation period. Nor were they referred to in the extensive written submissions made on behalf of the husband after the conclusion of the trial. These matters cannot advance the husband’s complaint with respect to the husband’s post separation adjustment determined by the learned Federal Magistrate.
No other relevant facts or circumstances were suggested to have not been considered by the learned Federal Magistrate in the context of evaluating contributions in the post separation period. Nor has it been submitted that her Honour had regard to any irrelevant or extraneous fact or circumstance. Her Honour’s exercise of discretion was not submitted to have been based upon erroneous findings of fact. No errors of principle were asserted in relation to the exercise of discretion.
The factors to which her Honour referred, on balance, suggested that an adjustment of the parties’ contribution based entitlement by reference to the post separation period was appropriate. As the factors identified by her Honour suggest, a number of countervailing factors were involved. The adjustment her Honour made in the husband’s favour cannot be regarded as nominal, particularly having regard to the quantum of the two assets pools with which she was concerned.
Whilst other trial courts may have made a greater adjustment in the husband’s favour than did her Honour, that is not the test for present purposes. Nothing to which this Court has been referred establishes that the post separation period adjustment made by the learned Federal Magistrate fell beyond the ambit of a reasonable ambit of discretion. This challenge accordingly fails.
Section 75(2) Challenges
The section 75(2) challenges are articulated in Grounds 7, 8 and 9 of the husband’s Amended Notice of Appeal which grounds provided:
Ground 7
The Federal Magistrate erred in making separate section 75(2) adjustment in relation to the two pools of net property.
Ground 8
The Federal Magistrate erred in her assessment of section 75(2) factors, and gave excessive weight to factors favouring the wife, and insufficient weight to factors favouring the Husband.
Ground 9
The Federal Magistrate erred in her assessment of section 75(2) factors, by giving excessive weight to the Wife’s capacity (or lack thereof) to work.
The thrust of these challenges was conveyed by the submissions of Counsel for the husband that:
38.It is both unnecessary and wrong for the court to make separate section 75(2) adjustments in accordance with the separate pools.
39.A 27.5% adjustment in relation to the non-superannuation assets was manifestly excessive. (Reasons for Judgment at paragraph 35 Appeal Book 21).
The submission on behalf of the husband that the learned Federal Magistrate erred in principle by making section 75(2) adjustments with respect to the “separate pools” of property of the parties is without merit. No authority to which Counsel for the husband has referred the Court supports the proposition, nor does commonsense. If, as Counsel for the husband contends, the same section 75(2) adjustment must be made to both non-superannuation assets and superannuation interests, the utility of considering such assets or interests in separate pools would dissolve in most cases. Given the quite different nature of the interests, applying the same section 75(2) adjustment to superannuation and non-superannuation assets would have considerable potential to produce unjust results. This case provides a good example of that potential.
Nothing to which the Court has been referred establishes that her Honour erred in principle in the way complained of on behalf of the husband. Her Honour’s obligation was to make orders which produced a just and equitable settlement of the property of the parties. So doing was to be achieved by reference to the factors referred to in section 79(4), and section 75(2) to the extent that they were relevant.
Just as her Honour had a discretion to determine the proceedings globally or on an asset by asset basis (see Norbis, supra), and to do so by reference to one or two “pools” (see Coghlan & Coghlan (2005) FLC 92‑220), so did her Honour have a discretion in relation to the section 75(2) adjustment which she considered appropriate in the circumstances. Whichever approach her Honour adopted, its validity is determined by reference to the effect of the conclusions reached in the light of the evidence before the Court. No more needs be said about this challenge.
The question of whether the section 75(2) adjustment determined by her Honour, and particularly the 27.5 percent adjustment determined with respect to the non-superannuation assets should enliven appellate intervention is less simply determined.
The challenges to the learned Federal Magistrate’s 27.5 percent adjustment to the non-superannuation assets of the parties pursuant to section 75(2) have two broad bases. The first, as clearly articulated in Grounds 8 & 9, relates to the weight given, or not given to the matters there identified. The second, which could be suggested as the last limb of the tests described by the High Court in House v The King (1936) 55 CLR 499 is, that howsoever reached, the learned Federal Magistrate’s conclusion with respect to the 27.5 percent adjustment with respect to the non-superannuation assets pursuant to section 75(2) was “manifestly excessive”.
In support of these challenges it was submitted on behalf of the husband that:
40.The Wife had qualification as an enrolled nurse. Significantly, the evidence points to the fact that the wife had a capacity to work at least 30 hours per week. (Transcript of proceedings 21st October 2008, pages 41 and 42 Appeal Book 185/`86).
41.Section 75(2)(b) is not limited to the Court simply assessing the difference in earnings as of the date of trial. The operative words in section 75(2)(b), require the court to consider both the differences in earnings and the physical and mental capacity of the parties to obtain gainful employment. It is expressed conjunctively.
In support of the contention that the 7.5 percent adjustment with respect to superannuation assets was also “manifestly excessive,” Counsel for the husband submitted that:
43.The Written Submissions dated 14th November 2008 as presented by the Husband’s Counsel at paragraph 55 (Apeal Book 107) stressed the point that any equal splitting division of the Husband’s superannuation interest is predicated from the Husband’s prospective that, the division in the superannuation splitting should be consistently proportionally to the overall property division.
44.In this case the orders provided that Wife will under a superannuation splitting order achieve the sum of at least $154,120. Once the splitting orders arose, that splittable superannuation became entirely her interest. The Wife’s (section 75(2)) case, as robustly presented, is that she has possibly a total, if not partial incapacity to work. This is at least recognised by the Honourable Federal Magistrate at paragraph 37 of the Reasons for Judgment (Appeal Book 22). Consequently, it is submitted that under such a circumstance, the Court should have given a degree of weight to the fact the Wife could very likely achieving her vested splittable superannuation interest well before the Husband does. At the very earliest, he will have to wait almost 6 years, more likely however 10 to 15 years.
As is clear from the terms of the grounds urged on behalf of the husband and the submissions made in support of them, these challenges do not involve any alleged material error of fact. Nor do they assert any failure to have regard to any relevant fact or circumstance. Nor do they assert that the learned Federal Magistrate had regard to irrelevant facts or circumstances.
The authorities relevant to weight challenges have earlier been referred to. It is perhaps useful to add to those authorities a brief reference to the judgment of Steven J in Gronow v Gronow (1979) 144 CLR 513 in which his Honour said (at 519-20):
The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight.
The learned Federal Magistrate identified the factors which were influential in her determination of the section 75(2) adjustment. There has been no suggestion that so doing involved any errors of fact, or of principle.
As her Honour recorded, the husband had an income of $156 000 per annum. The wife’s capacity for employment was found to be $9360 per annum. No basis for rejecting the learned Federal Magistrate’s acceptance of the wife’s evidence in that regard has been asserted in the appeal.
Even if, as Counsel for the husband submitted, the wife could work 30 hours per week, her gross weekly income would become $450 per week which, when annualised, would produce a figure of approximately $22 500 for a 50 week period. On any view, at its highest, the wife’s earning capacity paled into insignificance when compared with that of the husband, being, at best, approximately one seventh of the earning capacity of the husband. The learned Federal Magistrate’s conclusion that there was “clearly a significant earning income discrepancy in this case” was accurate, if somewhat understated.
The learned Federal Magistrate accepted the evidence with respect to the wife’s psychiatric wellbeing. It is less than clear whether the husband complained about the significance that the Federal Magistrate gave to that evidence. It is to be remembered that in the context of the evaluation of contributions, the husband unsuccessfully sought to have his contribution based entitlement enhanced by virtue of the wife’s asserted limited contributions arising from the state of her psychiatric health in the period subsequent to 1995.
The learned Federal Magistrate clearly appreciated the implications of the section 75(2) adjustment which she made with respect to the non-superannuation assets of the parties. There is no suggestion that the calculations (paragraph 35) which her Honour provided in support of her conclusion are other than accurate.
This was a case involving a cohabitation of 25 years, and the enormous disparity in the earning capacity of the parties, in part by reason of health. The very significant section 75(2) adjustment made by the learned Federal Magistrate has not been shown to be beyond a reasonable exercise of discretion, albeit other courts may well, with similar immunity from appellate intervention, have made a smaller adjustment.
So far as the 7.5 percent adjustment with respect to the superannuation interests of the parties were concerned, the learned Federal Magistrate again explained why she made the adjustment which she did (see paragraphs 36-37). Nothing to which this Court has been referred establishes that the section 75(2) adjustment made by her Honour with respect to the superannuation interests of the parties, or the reasons for it, enliven appellate intervention.
These challenges accordingly lack substance.
Asserted Mathematical Errors
This challenge finds expression in Ground 10 of the husband’s amended Notice of Appeal which provided:
Ground 10
The Federal Magistrate make [sic] a mathematical error in making orders that were deemed to result in a proportional division 65% in favour of the Wife, and 35% in favour of the Husband.
Rather than attempt to paraphrase the submissions in support of the challenge to mathematical calculations, which are succinctly presented in the outline provided by Counsel for the husband, it is convenient to set those out in full:
47.The Reasons for Judgment state that the proceeds of sale of the property located at [G] was $225,628. (Reasons for Judgment page 11, Appeal Book 18). They also confirm that the Wife’s solely owned net assets were valued at $21,562. (Appeal Book 19). The Reasons for Judgment further confirm that the Husband’s solely owned net assets, (not including superannuation and add backs), were of a value of $31,292, (not including the Western Australian property).
48.The Court determined (Orders 1 and 2, Appeal Book 6) that the Wife receive $217,916 from the proceeds of sale of the [G property], with the Husband receiving just $7,712. The Wife also received via a superannuation splitting order, a base amount of $154,120 from the Husband’s … Australia Limited Superannuation fund.
49.In essence, this meant that the Wife would receive $393,598, representing 67% of the entire net asset pool, or 70.5% if one excludes the add backs. Therefore, a 65:35 division as determined by the Court, the Honourable Federal Magistrate was plainly wrong in light of the orders made.
50.There was also no issue that the Husband was at the time of the trial, aged 49 (Reasons for Judgment page 1, Appeal Book 8), and that he would be responsible for the payment of a heavily encumbered mortgage in respect to a property located in Western Australia, (being $206,845, Reasons for Judgment page 7, Appeal Book 14).
For the reasons which it has articulated, this Court rejects the challenges to the learned Federal Magistrate’s conclusions with respect to the division of the parties’ non-superannuation and superannuation assets. To the extent that this challenge asserts that the learned Federal Magistrate made a mathematical error when combining the effect of her conclusions with respect to the two pools of property of the parties, to the extent that her Honour may have made such an error, the Court is not persuaded that so doing vitiated the exercise of her discretion in ways not otherwise established. This is particularly so given that, whether her Honour’s calculation of the effect of her conclusions with respect to the non-superannuation and superannuation assets was or was not mathematically correct, her Honour clearly appreciated the practical effect of each of those conclusions.
With respect to the ingenuity of the argument of Counsel for the husband, the Court perceives that it is based on the illogical assumption that, by working in reverse in reliance upon a mathematical error, the components of an award which have withstood appellate challenge should nevertheless be subjected to appellate intervention.
The Just and Equitable Challenges
Grounds 11 and 12 provided:
Ground 11
The Orders made by the Federal Magistrate pursuant to section 79 of the Family Law Act were plainly unjust for the Husband, being outside an expected and reasonable range of a discretionary determination,
Ground 12
The Federal Magistrate erred in failing to concerning whether the Orders 1, 2, 4 and 9 were just and equitable pursuant to section 79(2) of the Family Law Act.
These challenges were sought to be advanced on a number of bases, they being that:
51.The primary basis of these grounds are founded in accordance with the principles held by the High Court in House v The King (1936) 55 CLR 499 and Gronow v Gronow (1979) 144 CLR 513, (per: Stephen J at 519-20). These submissions are pressed, even if the Husband fails to persuade the Court about the other grounds sought, (grounds 1 to 10 inclusive).
52.So even if one permits a division of 65:35 in favour of the wife, such a determination was plainly unjust and inequitable.
53.There was no issue that this was a long marriage, whereupon the parties had cohabitated for about 25 years (Reasons for Judgment page 1, Appeal Book 8). Although there is an appellant issue about the weight afforded by the Court in relation to the parties respective contributions, there is no dispute the Husband made a greater contribution than that of the Wife. Finally and relevant to the section 75(2) factors, there was no issue that the Husband was at the time of the trial, aged 49 (Reasons for Judgment page 1, Appeal Book 8) and that he would be responsible for the payment of a heavily encumbered mortgage in respect to a property located in Western Australia, (being $206,845, Reasons for Judgment page 7, Appeal Book 14).
54.It submitted that consequently, a division that resulted even in upon a 65:35 division, (resulting in the Wife being deemed to receive almost double what the Husband was to receive), was outside an appropriate judicial discretion.
Whilst there was undoubtedly in this case a “reasonable range” within which the learned Federal Magistrate’s exercise of discretion would be immune from appellate intervention, the Court does not understand there to be any “expected” range given that, as the High Court has made clear, each case turns on its own facts and circumstances and the Court’s evaluation of the nature and quality of the parties’ contributions and, to the extent that they are relevant, the section 75(2) factors.
For reasons which have been provided, the Court has rejected the challenge to the learned Federal Magistrate’s conclusion with respect to the contribution based entitlements of the parties, and to her Honour’s adjustment pursuant to section 75(2) to each of the asset pools to which she had regard pursuant to section 75(2).
In those circumstances, there is little scope for advancing a challenge on the basis upon which this submission proceeds. Whilst other courts may well have made a less generous award in the favour of the wife than did the Federal Magistrate, that is not the test.
As her Honour clearly recognised, in circumstances where the contribution based entitlements of the parties were not greatly unequal, and favoured the husband, and the non-superannuation assets were modest, a very large section 75(2) adjustment in the wife’s favour was justified having regard to the fact that, quite apart from the impact on her earning capacity of her health problems, the wife’s capacity to earn income was approximately 15 percent of the capacity of the husband.
It has not been established that the learned Federal Magistrate’s orders fell outside an exercise of “appropriate judicial discretion”.
Counsel for the husband sought to demonstrate by reference to the practical effect of the orders made by the learned Federal Magistrate the injustice and inequity of the decision reached by her. It was complained in this regard that:
58.However, not included was the Husband’s interest in a property located at Western Australia. Herein the Husband’s interest in that Western Australian property was $175,000 (Reasons for Judgment, page 6 Appeal Book 13), encumbered by a loan from the Husband’s partner for the purchase of a Western Australian property ($17,067), and the mortgage secured against the Western Australian property ($206,845), (Reasons for Judgment at page 7 Appeal Book 14) In essence, that represents a negative net value of $48,912. (-48,912).
This complaint is without merit. It is not in contest that the learned Federal Magistrate was invited to decide the case on the basis that the husband’s interest in the Western Australian property, whatever it was, was not taken into account. Quite properly, no submission made on behalf of the husband to the learned Federal Magistrate raised the argument now sought to be agitated on behalf of the husband.
It is to be noted that, quite properly in the circumstances of this case, no part of the section 75(2) adjustment determined by the learned Federal Magistrate to be appropriate had regard to the husband’s present partner. Whether an adjustment pursuant to section 75(2)(m) was open to her Honour, in either direction, is academic for present purposes. The case before her was conducted on the basis that, in reality, the circumstances of the husband’s present cohabitation were irrelevant. The husband cannot now seek to advance his case in reliance upon any aspects of that cohabitation. To permit selective reliance upon matters not raised, or tested, at trial on appeal would not be appropriate.
It was further submitted on behalf of the husband that:
59.The injustice visited upon the Husband becomes apparent when the Court divided the net proceeds of sale of the [G] property. It is important to consider that, the [G] property was the only asset of any real substance that was subject to division. The Wife received $217,916, the Husband just $7,712. This division is set against a situation where in reality the Wife’s sole net assets amount to $21,562, and the Husband’s sole net assets, including the Western Australian property, amount to a negative of value of $17,620, (-$17,620): that is $32,292 less $48,912.
It was submitted accordingly that:
60.The practical reality of the court order means that the Wife receives an interest in net assets in tangible form which are vastly greater than that of the Husband’s net interest. Even allowing the add backs, if one includes the Western Australian property, she receives a net interest of non-superannuation property amounting to $239,478, compared with the Husband receiving a relation to non-superannuation property in effect, a negative figure of $9,908 (-$9,908)..
It was also submitted that:
65.In this case there was also a failure by the Court in considering a just and equitable outcome in terms of a practical and realistic result of the division of assets immediately available. This was a position adopted by the Full Court in H and H (2003) FLC ¶93-168. Essentially the value of the superannuation entitlements has no regard to the fact that the money cannot be accessed in the ordinary course for serval years.
The Court does not accept that the reality that the husband received as little as he did of the non-superannuation assets of the parties advances the contention on his behalf that her Honour’s decision was not just and equitable as required by section 79(2) of the Act.
Her Honour was clearly aware of the practical effect of her decision. Nothing to which this Court has been referred, or to which her Honour was referred, establishes appealable error by reason of the learned Federal Magistrate’s refusal to retreat from the conclusion which she reached pursuant to section 79(4) and section 75(2).
Objectively, the factor which contributed overwhelmingly to the ultimate, and substantial disparity in the non-superannuation assets receivable by each of the parties was the fact that the husband’s earning capacity was vastly superior to that of the wife. Any analysis of the outcome of the case simply by reference to the capital received or receivable by each of the parties necessarily excludes any reference to that very substantial financial resource. Reality demanded that, on the findings of fact made by the learned Federal Magistrate, a very significant disparity of capital would result from its proper consideration pursuant to section 75(2).
As the learned Federal Magistrate, correctly recorded, the adjustment made by her by reason of the fact that the husband had a much greater earning capacity than the wife equated to approximately 58 percent of the husband’s salary for just one year. When the simple distinction between capital and income is ignored, and the financial realities of the lives of these parties are considered, no basis for concluding that her Honour’s decision was not just and equitable can be discerned.
So far as the submission on behalf of the husband that the ability of the wife to vest her superannuation interest in possession pursuant to the splitting order sooner than the husband could precluded the Federal Magistrate’s decision from being just and equitable, the submission overlooks at least two significant realities.
The first is that, in order to be able to receive her superannuation interest, the wife would need, presumably by virtue of ill-health, to relinquish her capacity to earn income, modest though that capacity undoubtedly is. The change in her position in those circumstances may thus be minimal.
The other matter which the submission overlooks is that, quite apart from his far greater capacity to make further contributions to his superannuation interest, the husband would be able to do so for considerably longer than could the wife. It is unnecessary to speculate further about these matters, and sufficient to record that no aspect of the superannuation interests of the parties establishes that the learned Federal Magistrate’s decision was contrary to justice or equity as required by section 79(2) of the Act.
Conclusion
No ground of appeal having been established, the husband’s appeal will be dismissed.
Costs
Counsel for the husband sought the opportunity to file an updated financial statement on behalf of the husband and to make further submissions with respect to the costs of the appeal. Although it is difficult to see on what basis the husband could avoid an order for costs, the Court will make directions to afford him the chance to do so.
I certify that the preceding one hundred and sixty (160) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman
Associate:
Date: 4 August 2009
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