Manolis & Manolis (No 2)

[2011] FamCAFC 105

FAMILY COURT OF AUSTRALIA

MANOLIS & MANOLIS (NO. 2) [2011] FamCAFC 105

FAMILY LAW - APPEAL – Property orders – Challenge to the percentage division attributed to the parties by way of property settlement – Where it was submitted the   Federal Magistrate made an error of principle in the approach to property settlement – Where it was said that the husband’s initial contribution demanded a greater percentage of the property pool – Where it was submitted that the Federal Magistrate erred in giving the husband a fixed sum of the monies held on trust for the parties and failed to account for any interest earned on the sum invested – Where the approach taken by the Federal Magistrate was not the proper approach – Where it was found that there were inconsistencies in the Federal Magistrate’s reasons – Where the Federal Magistrate erred in not making an order allowing for the distribution of the accumulation of interest and attributing one party a fixed sum – Appeal allowed

FAMILY LAW - APPEAL – Cross appeal – Challenge to the percentage division attributed to the parties by way of property settlement – Where it was submitted that the husband’s contribution was not a “springboard” as the Federal Magistrate determined – Where the Federal Magistrate’s reasons were said to be inconsistent – Whether the trial judge had the power to make a further adjustment in relation to the parties’ contributions under the fourth step – Where the power to make property settlement orders is not exhausted after the third step, it is not until orders are made that the power is exhausted – Where the husband’s contributions were found to be greater than that of the wife – Where the Federal Magistrate erred in not making an order allowing for the distribution of the accumulation of interest and attributing one party a fixed sum – Appeal allowed

FAMILY LAW - APPEAL – Re-exercise of discretion – Husband made a greater initial contribution – Where there are no circumstances by which the percentages would alter to the date of trial – No alteration made to the percentage to be applied to the property pool from that ordered by the Federal Magistrate – Adjustment of orders to account for the interest earned on the monies held in trust

FAMILY LAW - COSTS – Error of law identified – Where each party would be entitled to a costs certificate – Where it is appropriate in the circumstances for written submissions to be filed and served

Family Law Act 1975 (Cth) s 75(2); s 79; s 79(4); s 79A
Family Law Rules 2004 (Cth)
Federal Proceedings (Costs) Act 1981 (Cth)

Gabel & Yardley (2008) FLC 93-386
Hickeyand Hickey& the Attorney-General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143
Pierce & Pierce (1999) FLC 92-844

APPELLANT & CROSS RESPONDENT: Mr Manolis

RESPONDENT & CROSS APPELLANT: Mrs Manolis

FILE NUMBER: BRC 7940 of 2008

APPEAL NUMBER: NA 85 of 2010

DATE DELIVERED: 13 May 2011

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Coleman, May & Ainslie-Wallace JJ

HEARING DATE: 1 April 2011

LOWER COURT JURISDICTION: Federal Magistrates Court

LOWER COURT JUDGMENT DATE: 17 June 2010

LOWER COURT MNC: [2010] FMCAfam 573

REPRESENTATION

COUNSEL FOR THE APPELLANT & CROSS RESPONDENT: Mr Page SC

SOLICITOR FOR THE APPELLANT & CROSS RESPONDENT: Family Law Solutions

COUNSEL FOR THE RESPONDENT & CROSS APPELLANT: Mr Galloway

SOLICITOR FOR THE RESPONDENT & CROSS APPELLANT: Jones Mitchell Lawyers

Orders

1. The appeal be allowed.

2. The cross appeal be allowed.

3. Order 8 of the orders made 17 June 2010 be varied to provide:

   That the money in the sum of EIGHT HUNDRED AND EIGHTY FOUR THOUSAND NINE HUNDRED AND EIGHTY SIX DOLLARS ($884,986) held in Trust be divided as follows:

   a)FIVE HUNDRED AND THIRTY ONE THOUSAND EIGHT HUNDRED AND EIGHTY TWO DOLLARS AND FIFTY SIX CENTS ($531,882.56) to the husband;

   b)        The balance to the wife, and further;

   c)That any interest accrued on that sum be divided as to 55 per cent to the husband and the balance to the wife

4. The parties are at liberty to file written submissions with regard to the costs of the appeal in accordance with the following timetable:

   (a)       On behalf of the husband within 21 days of the date hereof;

   (b)On behalf of the wife within 21 days thereafter;

   (c)On behalf of the husband in reply within seven days thereafter, and;

   (d)That each submission have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.

IT IS NOTED that publication of this judgment under the pseudonym Manolis & Manolis (No 2) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 85 of 2010
File Number: BRC 7940 of 2008

Mr Manolis

Appellant and Cross Respondent

And

Mrs Manolis

Respondent and Cross Appellant

REASONS FOR JUDGMENT

Introduction

1. This matter involves an appeal and a cross appeal from final property orders made on 17 June 2010 by Federal Magistrate Demack. The husband’s appeal was filed 30 August 2010, and an amended notice of appeal was filed on 18 February 2011. The cross appeal of the wife was filed 21 September 2010.

2. The husband’s notice of appeal was filed after an extension of time was granted on 27 August 2010. It was necessary for the husband’s appeal to be reinstated on 16 November 2010 after the appeal was abandoned for failure to file a draft appeal index. The husband was ordered to pay the wife’s costs of the application for reinstatement on an indemnity basis.

3. The hearing of the appeal and the cross appeal was expedited on 20 January 2011. The costs of that application were reserved to the Full Court.

4. The appeal and the cross appeal challenge the percentage division attributed to the parties by way of property settlement and is in effect directed to order 8 of the orders made by her Honour. This order concerns the division of the money held on trust for the parties. It provides:

   8.That the money in the sum of EIGHT HUNDRED AND EIGHTY FOUR THOUSAND NINE HUNDRED AND EIGHTY SIX DOLLARS ($884,986) held in Trust be divided as follows:

   a)FIVE HUNDRED AND THIRTY ONE THOUSAND EIGHT HUNDRED AND EIGHTY TWO DOLLARS AND FIFTY SIX CENTS ($531,882.56) to the husband; and

   b)The balance to the wife.

5. An application was made by the husband to file an amended amended notice of appeal at the commencement of the hearing. Leave was granted. The effect of the document is to introduce one further ground of appeal and the other ground is responsive to the cross appeal.

6. The husband relies on only two grounds of appeal (as amended):

   Ground 3

   That the Federal Magistrate erred in determining that the contributions of the parties during the marriage were equal having regard to the findings contained in paragraph 78 of the Reasons for Judgment.

   That the learned Federal Magistrate erred in determining that an appropriate adjustment having regard to the husband’s initial contribution and the use made of that contribution in the course of the marriage should be 5%.

   Ground 4

   That the Federal Magistrate erred in ordering that the sum of $884,986 held in trust be divided as to $531,882.56 to the husband and the balance to the wife in that she:

   (a)failed to have any or any proper regard to the evidence that the said sum was invested for the benefit of the parties;

   (b)failed to have any regard to the fact that at the time of the payments to the parties from the said sum the total sum available would have acquired accretions;

   (c)failed to have regard to the fact that having included the sum invested at trial in the asset pool, her honour then divided the pool as to 55% to the husband and 45% to the wife.

7. It can be seen that the basis of the husband’s appeal is twofold. First, that the Federal Magistrate made an error of principle in the approach to the task of the applications for property settlement and the effect was to wrongly attribute only 5 per cent of the property over 50 per cent to the husband. It is submitted that the husband’s contribution, especially his initial contribution demanded a result of 60 per cent in his favour. The second is that there is an error in the orders by giving the husband a fixed sum rather than a percentage of the sum invested which would then take into account his share of the interest on the sum invested.

8. The orders sought by the husband are that the appeal be allowed and that the sum of $531,882.56 in order 8(a) be replaced with the sum of $735,660.92. In the alternative, the husband asks that order 8 be discharged and the court order “[t]hat the sum held in trust for the parties initially being the proceeds of the house in Tasmania together with accretions thereto be paid to the parties as to 60% to the husband and 40% to the wife” and, within 14 days each party provide to the trustee their written authority to pay to the parties their respective entitlements. The husband also seeks that the wife pay his costs of and incidental to the appeal and the cross appeal.

9. In the cross appeal the wife relies on four grounds of appeal, which in summary are:

   1.That the trial judge erred in determining that the property overall should be divided on the basis of 55% to the husband and 45% to the wife.

   2.Erred in making an 5% adjustment in favour of the husband in circumstances where;

   (a)the initial contribution was approximately $40,000 at the start of the parties relationship and 30 years prior to the trial;

   (b)her Honour had rejected the husband’s claim that he contributed $400,000 from his business at the start of the relationship.

   3.That after finding that the parties direct and indirect, and financial and non-financial contributions during the marriage had been equal, and finding that s 75(2) was not applicable, it was not open to her Honour “to adjust the finding of equal contribution by giving to the Husband 5% more on the basis of “justice and equity” when her justification for the increment was a matter which she had already considered under s.79(4) and in respect of which she had come to a different conclusion”.

   4.That the trial judge gave inconsistent reasons and reasons which inadequately support the orders made.

10. The orders the wife seeks are that the appeal be dismissed and the cross appeal allowed, and that order 8 be varied so that $328,104.40 is payable to the husband. It is asked that the property pool be divided equally. The wife also seeks the husband pay her costs of the trial and the appeal. No reference was made to the question of interest on the trust account held for the parties in the cross appeal document.

11. In relation to the contribution question, counsel for the wife summarised the issue:

    (a)Is the finding (at paragraph 71 of the Reasons) of equality of contribution, sustainable in light of a finding (in paragraph 78 of the Reasons) that there was a greater initial contribution justifying for the Husband a greater than equal division of assets (the Husband’s says “no”); or

    (b)Is the finding that there ought to be an adjustment in favour of the Husband for an initial contribution as found in paragraph 78 of the Judgment sustainable against an earlier finding (in paragraph 71 of the Judgment) that the parties respective contributions have been equal) (the Wife’s says “no”).

The Reasons of the Federal Magistrate

1. The trial judge was satisfied that the parties commenced a relationship in 1980 and married in 1982. Her Honour found that it was during the early years of the parties’ relationship that the original source of the parties’ income, V Pty Ltd was established.

2. There are no children of the parties’ marriage. The husband does have children from a previous marriage. The children lived with the parties from “time to time” and financial support was provided to them.

3. The husband is eighteen years older than the wife. The husband is now aged 75 and the wife 57. Both parties are retired.

4. It is explained in her Honour’s reasons for judgment that the parties were married for twenty-six years and during that time “amassed a sizeable pool” through their dealings in a number of highly profitable businesses. The profits were used to acquire real property in both Australia and in Greece. The trial judge said “[t]here is sufficient finances and property in the pool for them to each have a reasonable level of comfort”.

5. The trial judge understood that there were a number of issues in contention. In summary, these issues were:

   a)The initial contribution of the husband in terms of the assets in his possession at that time.

   b)The value of some real property:

   ·the former matrimonial home in Y, New South Wales;

   ·the house in Greece, and;

   ·the land in Greece.

   c)The husband’s dispersal, post separation, of farming machinery and some livestock, and the values of these items.

   d)How the debt to a Mr K should be considered.

6. The Federal Magistrate said at paragraph 10:

   So apart from not agreeing on the pool, the parties also cannot agree on the initial contributions, the percentage adjustments or on how the property should be adjusted: whether the real property should be realised and the net proceeds distributed or whether it should be distributed in its present form. (footnote omitted)

7. In the identification of the property pool the items and values said to be agreed were:

   a)the net sale proceeds held in trust from the sale of a house in Tasmania, $884,986

   b)the wife’s motor vehicle, $7,500

   c)the husband’s motor vehicle, $15,000

   d)the sedan at the house in Greece, $17,500

   e)money in the wife’s control which came into her possession at separation, $1,046,000

   f)money in the husband’s control which came into his possession at separation, $1,038,885.

8. The items and values that were not agreed by the parties were attributed values by the Federal Magistrate. Although the reasons for each ascribed value will be briefly summarised, neither party challenges any of the findings in relation to the parties’ assets.

9. Valuations had been prepared in relation to the house at Y, New South Wales (“the former matrimonial home”). The valuers were cross examined.

10. Her Honour found that the valuation of most use to the court was the second report by Mr L. She considered this report to more closely reflect the subject property and represent a figure based on completed sales. The former matrimonial home was valued at $500,000.

11. The real estate in Greece, namely the house and the land, was found by the trial judge to be valued at €210,000 ($304,200) and €73,000 ($150,700) respectively. These values accorded with the valuations obtained by the wife. The husband did not agree with these values and said “you can’t trust valuers in Greece, they will tell you want you want to hear”. He also contended that his daughter had offered to buy the house for $700,000. Her Honour accepted the valuation of the wife, concluding correctly that there was no other evidence before her.

12. It was said that after separation the husband sold some farm machinery and livestock. He received $56,300 plus GST from the sale of the machinery and had sole use of the funds. Although the wife considered that the machinery was worth $70,000, the trial judge was of the view that there was no evidence to support this contention. The trial judge concluded that $56,300 should be added back into the pool on account of these factors.

13. In respect of the sale of the cattle, an amount of $19,492.20 was added back into the pool. This figure was ascertained by attributing the average price paid per head of cattle times the number of cattle, said by the wife to be remaining on the property.

14. Of more significance in this appeal, the loan to Mr K of $80,000 was also added back into the property pool. The husband asserted that some money had been repaid to a bank account in Greece. It was found by her Honour correctly that there was no evidence to support that assertion.

15. Ultimately, the total property pool was found to be $4,075,563.20.

16. In relation to contribution, the trial judge made a number of findings.

17. Her Honour found the husband to be “a most difficult witness during the trial” who “seemed to persist in having difficulty in hearing”. Overall, it was said that he was a “most unhelpful witness” who “wasn’t prepared to concede that his former wife has worked in any meaningful way or contributed anything like his contribution”.

18. In contrast, the trial judge said of the wife:

    14.… She was inclined to be forthright and determined in her responses to questions.  She had a good recall of events, dates and transactions.  She was quick to bristle against assertions that she had contributed anything less than the husband. …

19. Her Honour said that “[t]he husband’s manner of operating his successive … businesses appeared to be to build up a business and then sell it, achieving substantial profits. He would then effectively retire for a period before commencing another similar business”.

20. V Pty Ltd was the parties’ first business, followed by T T, D T and A T.

21. The husband’s previous business V R was sold prior to the commencement of the relationship, the husband said in an affidavit filed by him in these proceedings for $400,000. The proceeds were used to establish V Pty Ltd.

22. However the Federal Magistrate was provided with information about proceedings with the husband’s former wife. As recounted by the trial judge, Justice Baker on 30 September 1982 the business was sold but the husband only received $40,000 due to some disagreement with business partners. Her Honour correctly relied on those previous findings.

23. The wife contended that she and the husband both worked in the various businesses together. The husband denied the wife’s involvement and said “that he was not only the driving force behind the businesses, but that it was his particular skill and business acumen that made the successive business the grand successes that they were and which allowed he and the wife to have a pool of assets in the order of over $4,000,000”.

24. The trial judge said that “[t]he husband was so dismissive of the wife’s contribution to the businesses and her contributions generally to the marriage” that his evidence was “of little use” to her Honour.

25. The husband’s son, G Manolis, gave evidence that both the husband and the wife worked hard in the businesses. The evidence of the parties’ accountant also supported this assertion. The accountant said that the wife worked in the office and referred all paperwork to him, and that “the husband worked the physical side of the business”.

26. Her Honour in one part of the reasons concluded that the parties’ respective direct and indirect, financial and non-financial contributions during the marriage were equal. She said at paragraph 70:

    This was a long marriage.  I cannot see that any evidence before me which supports an argument that the husband has any particular entrepreneurial skills in the way of exceptional business skills. I accept that the husband was a hard worker and that good money has been made by the parties in their … businesses. I do not consider that the wife has been quietly sitting by and not contributing, let alone, the suggestion by the husband that she was more interested in shopping and spending the money, than in working.

27. In the Federal Magistrate’s consideration of the parties’ contribution, post separation, she said that the husband had attended to the payment of some matrimonial debts amounting to a total of $28,534.80. It was her Honour’s view that considering that the husband had the sole use of the former matrimonial home, and disposed of assets for his own benefit, this contribution was not of any moment.

1. No adjustment was made by the Federal Magistrate for what was described as either party’s future needs. The trial judge said at paragraph 76:

   I consider that the wife has a longer life expectancy than the husband, due to the age difference and the husband’s known health issues.  It seems to me that the parties’ positions cancel each other out – the wife may have a longer life ahead of her, but she has the personal resources to find a manner in which she could support herself, should she so choose.

2. Later in the reasons under the section characterised as “Discussion about proposed methods of adjustment - Justice and equity” her Honour said:

   78.This long marriage achieved substantial material outcomes for these parties. The husband’s initial contribution, although not of the magnitude which the husband erroneously asserts, was a springboard for the successful sale of the [V Pty Ltd] business only four years into the parties’ marriage. With the husband’s initial contribution of the money from [V R] and his knowledge of the … business coupled with having swiftly moved from the end of [V R] to the starting of [V Pty Ltd], the husband provided a solid base which has not been weathered away with the passage of time, but which has grown and grown. I consider that an adjustment should be made to the husband in the order of 5 per cent for that contribution at the outset the thread of which is able to be seen in the parties’ prosperity throughout their long marriage.

   79.I consider all other contributions to have been equal and have already determined that there should be no adjustment either way for any future needs.

   It was not contended in the appeal that the finding of facts were not open to           her Honour, rather that it should not have sounded in the husband receiving             55 per cent of the net asset pool.

3. Her Honour was of the view that the wife had a personal connection with the land and house in Greece and therefore was the appropriate recipient of those assets. Orders were made providing for the real property in Greece to go to the wife. This amounted to the wife having assets in her possession or control with a value of $1,480,900.

4. Orders were made providing that the husband retain the former matrimonial home. The husband was also ordered to deal with the loan to Mr K “as he sees fit”. The husband’s retained assets were said to total $1,709,677.20.

5. In dealing with the money held in trust her Honour said:

   The money held in trust will be divided so that the parties’ respective shares of 55 per cent to the husband and 45 per cent to the wife will be achieved.  The husband will receive $531,882.56 and the wife will receive the balance of $353,103.44.  Each will otherwise keep the assets in their care or control.

The Appeal

1. The issues for consideration on appeal and cross appeal can be summarised into three initial questions. First, is the finding of the adjustment to the husband for his initial contribution correct and consistent with the earlier finding that the parties’ contributions were equal. Second, is the finding of equal contributions sustainable given the initial contribution of the husband. Third, did the trial judge have the power to make a further adjustment in relation to contributions under the heading “Discussion about proposed methods of adjustment - Justice and equity”. This argument was particularly agitated through the cross appeal.

The submissions of the husband

1. The husband asserted that cohabitation with the wife commenced in February 1982 after the commencement in 1981 of V Pty Ltd. The trial judge did not accept this assertion and relied on the wife’s evidence. No error has been demonstrated in this respect.

2. Apart from that matter, it is submitted on behalf of the husband that there was an error in the assessment of the adjustment made reflecting the husband’s initial contribution to V Pty Ltd. It is submitted “that the nature of the contribution made was relevant to the use made of that contribution in the early years of the marriage and that the fruits of the sale of the business that were established by reason of the initial contribution by the husband was responsible for the acquisition of the majority of the assets, both in number and value”.

3. The company was ultimately sold for a net profit of $800,000 in 1986. It is submitted:

   A provision of 5% adjustment for contributions in the pool found by the Federal Magistrate to be $4,075,563 is represented by only $203,778. A 10% adjustment is represented by $407,556. That sum represents one half of the proceeds of sale of the business which was acquired solely from the funds and skill of the husband.

4. On behalf of the husband it is submitted that a 10 per cent adjustment, or a 20 per cent differential is just and equitable in the circumstances. It is said that this “does not rest upon any element of special contribution or managerial and entrepreneurial skills which might affect the adjustment. It rests upon the contributions made by the husband to which the wife made no contributions”.

5. A part of this submission referred to paragraph 71 of the reasons that the parties’ contributions were equal. It was submitted that the Federal Magistrate then had no power to make a further adjustment in relation to contribution under the heading “Discussion about proposed methods of adjustment – Justice and equity”. As we will later explain we do not perceive the difficulty in this matter to relate to an absence of power.

The submissions of the wife

1. Counsel for the wife submits that “the difference between the parties’ contributions at the beginning of the relationship had become, by the time of the trial, insignificant”.

2. In support of this position reference is made to the trial judge’s findings on the parties’ respective initial contributions. The wife was found to have come into the relationship with $17,500 in savings and “very modest possessions”. The husband was found to have contributed $40,000 “from [V R] the company of which the husband and his first wife had been part owners”. By way of implication, it was submitted on behalf of the wife, that the husband also contributed “assets of unstated value”, as the trial judge said, “[i]t appears reasonable to consider that the older person may have amassed more personal wealth than a younger person”.

3. It is submitted on behalf of the wife that the husband has not demonstrated that the Federal Magistrate made an error in her findings about the date of cohabitation or the quality of the contribution made by the parties. It is said that the findings made by her Honour that there was equality of contributions were open on the evidence and the appeal should be dismissed.

The Cross Appeal

The submissions of the wife

1. It is the submission of the wife that the trial judge made a fundamental error in “enlarging the Husband’s share” by 5 per cent.

2. Counsel submits that her Honour “misunderstood the limitations attendant upon the ‘fourth step’” and made “a further adjustment on the basis of justice and equity when such is neither provided for in law and in any event not warranted on the evidence”.

3. It is said that the husband has not provided a “springboard”, as the money he contributed was “modest” and “was committed to a new business where, on her Honour’s findings, the Wife worked also”. Counsel for the wife also submits that this is particularly the case where the trial judge expressly declined to make a finding of the husband possessing “special skills”, a finding of fact which the husband does not seek to challenge on appeal.

The submissions of the husband

1. In response, counsel for the husband contends that the wife has failed to consider “the terms of the dictum” of the trial judge when the adjustment was made in favour of the husband and relied on the following paragraph in the reasons:

   78.This long marriage achieved substantial material outcomes for these parties. The husband’s initial contribution, although not of the magnitude which the husband erroneously asserts, was a springboard for the successful sale of the [V Pty Ltd] business only four years into the parties’ marriage. With the husband’s initial contribution of the money from [V R] and his knowledge of the … business coupled with having swiftly moved from the end of [V R] to the starting of [V Pty Ltd], the husband provided a solid base which has not been weathered away with the passage of time, but which has grown and grown.  …

2. The husband relies partly upon the monetary value of the business that he brought into the marriage. This is said to be “not only the financial contribution but also the fact that for many years he had been committed to the type of business that was developed afresh early in the marriage and which was responsible for the rapid growth in the asset worth of the parties”.

3. It is submitted that it is this consideration which has been undervalued and which warrants a re-exercise of discretion to reflect a 10 per cent adjustment.

4. For the husband “[t]o restrict the consideration of the initial contributions in financial terms would be to fail to have proper regard to the provisions of the Act”.

Relevant law

1. We will first deal with two questions. First, how contribution by the parties is to be assessed, in particular initial contributions. Second, the applicability of the “just and equitable” provision in s 79(2).

2. The relevant parts of s 79 of the Family Law Act 1975 (Cth) (“the Act”) to this appeal provide:

   Alteration of property interests

   (1)In property settlement proceedings, the court may make such order as it considers appropriate:

   (a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or

   (b)  in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;

   including:

   (c)  an order for a settlement of property in substitution for any interest in the property; and

   (d)  an order requiring:

   (i)either or both of the parties to the marriage; or

   (ii)  the relevant bankruptcy trustee (if any);

   to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.

   …

   (2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

   (4)  In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:

   (a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (b)  the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

   (c)  the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and

   (d)  the effect of any proposed order upon the earning capacity of either party to the marriage; and

   (e)  the matters referred to in subsection 75(2) so far as they are relevant; and

   (f)  any other order made under this Act affecting a party to the marriage or a child of the marriage; and

   (g)  any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

   …

3. In relation to an argument about how an initial contribution is to be assessed in Pierce & Pierce (1999) FLC 92-844 at paragraph 28 the Full Court (Ellis, Baker & O’Ryan JJ) said:

   In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution.  It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife.  In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.  In the present case that use was a substantial contribution to the purchase price of the matrimonial home: See also Campo and Campo (unreported, Full Court (Ellis, Lindenmayer and Finn JJ), Sydney, delivered 19 May 1995 at pages 21 and 22 of the joint judgment) and Zahra and Zahra (unreported, Full Court Sydney, delivered 3 October 1996, per Ellis J. at page 10).

4. The Full Court (Nicholson CJ, Ellis & O'Ryan JJ) in Hickeyand Hickey& the Attorney-General for the Commonwealth of Australia (Intervenor) (2003) FLC 93-143 explained in paragraph 39 of the judgment, what is now accepted as a four step approach:

   The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s. 79. That approach involves four inter- related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss. 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss. 79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s. 79(4)(e), the matters referred to in s. 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case…(our emphasis)

   It was said further at paragraph 48:

   … ultimately there is only one exercise of power under s. 79 in respect of the property of the parties, even though that single exercise of power may be reflected in a complex order of many paragraphs or clauses, each dealing with a different item of property and some dealing with questions of implementation. It may be that some items of property are not dealt with in paragraphs or clauses of the order as it is not proposed that there be an alteration of interest in such property. However, the single exercise of power prevents a further application in relation to both specified and non specified items of property except pursuant to the provisions of s. 79A.

5. After referring to that paragraph, in Gabel & Yardley (2008) FLC 93-386 the Full Court (per Bryant CJ and Coleman J) said, in considering Hickey at paragraph 67, that:

   Logically, until that “one exercise of power under s 79” has been completed, most obviously by the making of orders with respect to the totality of the “property” of the parties to the marriage or either of them, the power has not been spent or exhausted, but exercised partially or in an interim manner.

Conclusion

1. It can be seen that power to make orders in regard to property is not exhausted after the third step. It is not until orders are made that the power is exhausted. The exercise of power pursuant to s 79 of the Act remains subject to the overarching requirement of justice and equity imposed by s 79(2) until it is exhausted. Therefore, we cannot accept that the Federal Magistrate lacked the “power” to revisit the outcome to which she had been led by her consideration of s 79(4) and s 75(2) factors by reference to s 79(2) of the Act. If so doing persuaded her Honour that her proposed outcome was not just and equitable, she could not properly make orders in those terms.

2. Having regard to the nature and extent of the matters which had been evaluated pursuant to s 79(4) and s 75(2) of the Act prior to her consideration of s 79(2), the Federal Magistrate’s scope for varying the substance of the outcome resulting from that exercise would have been limited. It is difficult to discern specific matters impacting a consideration of s 79(2) which are not articulated in either s 79(4) or s 75(2) of the Act. The section does however oblige the court to “stand back” from its preliminary determination, and consider its impact. So doing may inform the terms of the orders appropriate to produce a just and equitable outcome in those terms. It may result in a re-consideration of s 79(4) and or s 75(2) factors, and a different outcome. Whatever the scope of s 79(2), the court’s determination with respect to it cannot be dependent upon findings or conclusions which are irreconcilable with those recorded in the context of a consideration of s 79(4) or s 75(2). Regrettably, that is what occurred in this case. In our view, paragraphs 71 and 78 of her Honour’s reasons cannot stand together.

3. The approach taken by her Honour in paragraphs 71 and 78 of her reasons for judgment is not the proper approach. In addition, there seems to be an inconsistency in the reasoning in relation to the effect of the husband’s contributions.

4. In our view there are three matters which lead, some on their own, to the appeal being allowed:

   1.The trial judge misdirected herself about the provisions of s 79(2) and in particular the use of what is known as the “fourth step”;

   2.The inconsistency in the reasons contained in paragraphs 71 and 78 in relation to the parties’ contribution;

   3.The error in not making an order allowing for the distribution of the accumulation of interest and rather attributing to one party a fixed sum.

5. The next question is whether it is necessary to remit the matter for re-hearing.

6. In this case, there were no real contentions by either party in the appeal that the findings of fact of the trial judge were incorrect. Thus, in our view, the proper course is to re-exercise the discretion of the trial judge.

7. In our view the husband’s contributions were greater than that of the wife by reason of the business at the time of the marriage which provided a “springboard” for the later businesses. We would assess the parties’ contributions to the date of the separation as 55 per cent in favour of the husband. There are no circumstances by which that percentage would alter to the date of trial.

8. Each party can contend matters referred to in s 75(2) of significance, not the least their age, health and capacity to earn income. We agree with the conclusion of the trial judge in this respect and would make no alteration to the percentage to be applied to the pool of property.

9. The net result is that the husband should receive 55 per cent of the pool, valued at $4,075,563.20 by the Federal Magistrate together with the same percentage of any interest on the sum invested, and the wife the balance. The sum invested in a trust account is $884,986. Leaving to one side the interest component, this will mean that the parties will receive the following property:

H has	$500,000.00	FMH, Y
$80,000.00	K Loan
$15,000.00	Husband’s motor vehicle
$1,038,885.00	Previous “Distribution”
$56,300.00	Machinery
$19,492.20	Cattle
Subtotal	$1,709,677.20
Add	$531,882.56	Share Tasmanian money
NETT	$2,241.559.76

W has	$7,500.00	Wife’s motor vehicle
$1,046,000.00	Previous “Distribution”
$17,500.00	Sedan at the house in Greece
$304,200.00	“Manolis House”
$105,700.00	Land Greece
Subtotal	$1,480,900.00
W gets	$353,103.44	Share Tasmanian money
NETT	$1,834,003.44

1. We are satisfied that such division is just and equitable in relation to the value to be retained by each party and the nature of the assets.

2. We intend to allow the appeal and set aside those parts of the orders which are necessary to make a further order. We would also allow the cross appeal. Although the wife has not succeeded in persuading us that the proper percentage was one of equality, the submissions made in relation to the inconsistencies in the reasons and failure to follow the proper approach were well founded. How this limited success will be of significance in relation to a potential costs application is another matter.

3. Order 8 provided how the money sum was to be divided. Although we assume there has been interest on such a substantial sum there was no admission that this was so. Counsel for the wife did not resist an order allowing for the division of interest. We can only order then that the parties receive the sum in trust together with interest (if any).

4. The proper order to reflect the division will include this reference.

Costs

1. At the conclusion of the hearing of the appeal and the cross appeal the parties were asked to make submissions regarding the costs of the appeal.

2. Counsel for both the husband and the wife noted, that given the circumstances of the case, it was difficult to make submissions as to costs before the judgment was received.

3. It can be seen that our conclusion is that the appeal be allowed and the discretion be re-exercised. We have reached the same percentage division as the Federal Magistrate, however we have identified an error of law as asserted in the cross appeal. Each party would thus be entitled to a certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth). It is appropriate however in the circumstances of this case that each party be permitted to file written submissions should they wish to do so including any application for a certificate.

I certify that the preceding eighty (80) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Coleman, May & Ainslie-Wallace JJ) delivered on 13 May 2011.

Associate: 

Date:  13 May 2011