Marcin & Marcin
[2020] FamCAFC 85
•21 April 2020
FAMILY COURT OF AUSTRALIA
| MARCIN & MARCIN | [2020] FamCAFC 85 |
| FAMILY LAW – APPEAL – PROPERTY – Where the husband appeals from final orders adjusting the parties’ property interests 52/48 per cent in favour of the husband – Where the parties’ financial affairs are complex – Where the husband’s grounds of appeal allege bias and a denial of procedural fairness in relation to the single expert’s valuation evidence – Where there is no demonstration of bias or denial of procedural fairness – Where it was open for the primary judge to find that the single expert had difficulty acquiring information from the husband – Where the husband’s submission that the primary judge’s reasons were inadequate is rejected – Where there is no error in the primary judge’s treatment of the wife’s premature distribution of assets – Where there is no error in his Honour’s separate treatment of the wife’s inheritance – Where the primary judge’s alleged failure to take into account the financial dependence of the husband’s partner is rejected – Where the single expert’s valuation evidence is revealed by further evidence to be erroneous and so its acceptance by the primary judge was a material factual error – Where the primary judge made findings based on the single expert’s evidence being correct when it transpired it was not – Where, otherwise, the Full Court does not accept that the orders reflect an outcome which was anything but just and equitable – Where the Full Court considers whether to remit the matter or re-exercise discretion – Whether there should be variation made to correct mathematical error in Order 30 – Appeal allowed in part – Where the appeal is to be relisted on a date to be fixed to receive the parties’ oral submissions regarding re-exercise of discretion or remitter for re-hearing – Costs reserved. FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – Where the husband seeks leave to adduce further evidence – Where the further evidence comprises a contentious appeal book containing material which is already part of the Court record and various affidavits – Where the parties agreed there is no impediment to the husband’s reliance upon the material which is part of the Court record – Where some of the affidavits are permitted as further evidence in the appeal as the evidence demonstrates the primary judge’s factual error – Where application is otherwise dismissed. |
| Family Court Act 1997 (WA) Part 5A Family Court Rules 1998 (WA) rr 12, 13 |
| Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40 Anson & Meek (2017) FLC 93-816; [2017] FamCAFC 257 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Assistant Commissioner Condon v Pompano Pty Ltd (2013) 252 CLR 38; [2013] HCA 7 CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67 Chorn and Hopkins (2004) FLC 93-204; [2004] FamCA 633 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194; [2000] HCA 47 Commonwealth v Mullane (1961) 106 CLR 166; [1961] HCA 28 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54 Gadde & Gadde [2019] FamCAFC 116 House v The King (1936) 55 CLR 499; [1936] HCA 40 Johnson v Johnson (2000) 201 CLR 488; [2000] HCA 48 Kioa v West (1985) 159 CLR 550; [1985] HCA 81 Marcin & Marcin [2018] FCWA 18 Marcin & Marcin [2018] FCWA 234 Marcin & Marcin [2018] FCWA 235 Marcin & Marcin [2019] FCWA 121 Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28 National Companies and Securities Commission v News Corporation Ltd (1984) 156 CLR 296; [1984] HCA 29 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 198 ALR 59; [2003] HCA 30 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100; [1953] HCA 22 Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52 Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146; [1997] HCA 1 Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173 Trevi & Trevi (Re-Exercise) [2019] FamCAFC 51 Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12 |
| APPELLANT: | Mr Marcin |
| RESPONDENT: | Ms Marcin |
| FILE NUMBER: | PTW | 4365 | of | 2013 |
| APPEAL NUMBER: | WEA | 32 | of | 2019 |
| DATE DELIVERED: | 21 April 2020 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Perth (by video link) |
| JUDGMENT OF: | Strickland, Kent & Austin JJ |
| HEARING DATE: | 30 March 2020 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 2 August 2019 |
| LOWER COURT MNC: | [2019] FCWA 171 |
REPRESENTATION
| THE APPELLANT: | In person (via telephone link) |
| COUNSEL FOR THE RESPONDENT: | Mr Rynne (direct brief) |
Orders
Leave is granted to the appellant to adduce further evidence and to rely upon:
(a)The affidavit of Ms B, sworn or affirmed on 16 March 2020;
and the following parts of the court record:
(b)The material comprising the Contentious Appeal Book (but excluding the parties’ filed affidavits, save for those filed by the husband on 5 November 2018, 16 May 2019 and 18 July 2019);
(c)The appellant’s Form 2 Application, filed on 9 May 2017;
(d)The respondent’s Form 2A, filed on 26 May 2017; and
(e)The transcript of proceedings before the primary judge on 15 September 2017.
Otherwise, the Application in an Appeal filed by the appellant on 16 March 2020 is dismissed.
The appeal is allowed in part.
The appeal will be re-listed on a date to be fixed to receive the parties’ oral submissions about whether the appeal is to be finalised by the re-exercise of discretion or the remitter of the proceedings for re-hearing.
Costs are reserved.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Marcin & Marcin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WEA 32 of 2019
File Number: PTW 4365 of 2013
| Mr Marcin |
Appellant
And
| Ms Marcin |
Respondent
REASONS FOR JUDGMENT
Introduction
On 2 August 2019, a judge of the Family Court of Western Australia made orders under Part VIII of the Family Law Act 1975 (Cth) (“the Act”) dividing the parties’ property interests.
The husband appealed from the orders, which appeal the wife resisted. For the reasons which follow, the appeal should succeed in one limited respect though, as explained later in these reasons, we presently reserve the consequential questions of the remedial orders and costs.
Background
The parties married in 1976 and separated in 2013, but continued living in the same house until early 2014.
The proceedings were commenced by the wife not long after the parties separated in 2013.
The parties have three children, but they are all now adults.
The proceedings were first heard in July 2015 but, for reasons which it is unnecessary to explain, no final orders were ever pronounced to determine the dispute. Nearly two years later, in June 2017, procedural orders were made to assign the proceedings to the docket of a different judge, allowing the evidence to be re-opened, and enabling the parties to rely upon transcripts of the evidence given during the first hearing in July 2015.
The proceedings were assigned to the primary judge’s docket and then re-heard before his Honour in November 2018. Judgment was reserved, but there were still several more developments.
In April 2019, the primary judge needed to make more interim orders to regulate the parties’ financial affairs. Then, in May 2019, the primary judge granted the husband’s application to re-open the proceedings and adduce further evidence about the wife’s expected inheritance from her late father’s estate. The primary judge received the further evidence in July 2019 and judgment was again reserved. The appealed orders were pronounced and the reasons for judgment were delivered shortly afterwards on 2 August 2019.
The husband is a finance professional. The business in which he works is conducted within a commercial structure of two corporations and a trust, over which he exerts effective control. The primary judge referred to the two corporations as “Corporation C” and “Corporation D” and we will do the same. During the proceedings, a single expert witness was appointed to value the corporations, which entailed consideration of the value of their respective businesses.
To eradicate any confusion which may have arisen from imprecise references to the businesses and the corporations, some early clarification is desirable. Although the husband repeatedly referred to “his businesses”, the single expert was appointed to value the husband’s interest in two corporations, the first of which, Corporation C, acts as the trustee of the trust. Corporation C owns and operates the financial services business – colloquially referred to as the husband’s business even though it is not. The business is not a separate legal entity; it is only an asset of Corporation C. The value of the business plainly influences the value of Corporation C, but has no bearing at all upon the value of Corporation D, which is engaged in other business activities. The business operation was split between the two corporations in 2015, when the financial professional licensee directed that income derived from financial advice be segregated from income derived from the administration of self-managed funds (at [317]).
Besides the single expert appointed to value the corporations, other single expert witnesses were appointed to value six real properties owned by the parties, either individually or jointly.
According to his Honour’s reasons for judgment, the appealed orders resulted in an adjustment of the parties’ property interests which left the husband with 52 per cent and the wife with 48 per cent. In effect, four of the six real properties were to be sold with the sale proceeds used to discharge debt, the husband would retain the corporations and their businesses in return for a cash adjustment to the wife and superannuation splitting orders in her favour and, otherwise, each party retained one real property and items of personal property.
Because the parties’ financial affairs are complex, so were the adjustment orders. In summary, the orders provided for:
a)the wife, as the trustee for sale, to sell four parcels of real property (Orders 1-8) and use the net proceeds of sale to discharge mortgages, reimburse herself for any repair costs incurred, and hold the balance to split between the parties in accordance with an equation (Orders 14-16);
b)pending the sale of those four properties, the husband to pay mortgage repayments, rates, taxes, utilities and insurance premiums in respect of them (Orders 9, 10 and 12);
c)the restraint of the parties’ further encumbrance of the four properties pending their sale (Order 11);
d)the husband to pay out and close one particular loan account prior to the settlement of the last of the four properties sold (Order 13);
e)the wife’s receipt of the credit balances of various bank accounts (Order 17);
f)the wife’s receipt of a 100 per cent split of the husband’s superannuation interest held in the parties’ self-managed superannuation fund and then the termination of her involvement in that fund (Orders 18-24);
g)the wife’s receipt of a 100 per cent split of the husband’s superannuation interest held in a second superannuation fund (Orders 25-28);
h)the husband to pay to the wife a cash adjustment if the superannuation splits in her favour fell below a prescribed figure (Orders 29 and 31);
i)the husband to pay to the wife a cash adjustment of $601,340 (Order 30);
j)the parties to each acquire sole proprietorship in one parcel of real property (Orders 32 and 33), with the husband to remove a caveat registered over the property taken by the wife (Order 40);
k)the husband’s acquisition of the wife’s interest in the corporations and the trust (Orders 35 and 41), his procurement of her release from any guarantee of the corporations’ financial commitments (Order 36), her removal as an officer of the corporations and as a beneficiary of the trust (Order 37), his indemnity of the wife against any liability arising from her association with the corporations and trust (Order 38), and the husband’s restraint from distributing unpaid entitlements from the trust to the wife for past financial years (Order 39);
l)the parties’ retention of personal property (Orders 34 and 35); and
m)the discharge of an interim spousal maintenance order (Order 43).
The appeal
On 11 March 2020, Strickland J ordered that an Amended Notice of Appeal attached to an affidavit filed by the husband on 28 February 2020 should be treated as the document containing the grounds of appeal he prosecuted, and further, that the husband could rely upon the very lengthy Summary of Argument annexed to the same affidavit.
Many of the husband’s revised grounds of appeal contended “justice miscarried” for an array of reasons. We think it is necessary to observe that no ground of appeal pleaded in that form corresponds with the confined grounds of appeal which lie from a discretionary judgment (House v The King (1936) 55 CLR 499 at 504-505) and so the following discussion of the husband’s grounds of appeal assumes his references to a miscarriage of justice are in fact either a reference to some asserted miscarriage in the primary judge’s exercise of discretion or to the result being unreasonable or plainly unjust.
On 16 March 2020, the husband filed an Application in an Appeal seeking leave to adduce further evidence. The proposed further evidence was voluminous and included:
a)an affidavit sworn or affirmed by Ms B on 16 March 2020, which relates to the valuation evidence given by a single expert as to the corporate structure controlled by the husband. The application for leave to adduce this evidence is considered under Ground 1.
b)an affidavit affirmed by Mr E on 13 March 2020, which the husband deposed in his affidavit in support of his application was relevant to the taxation consequences of the failure to distribute trust income to the wife, which distribution is restrained by Order 39. The application for leave to adduce this evidence is considered under Ground 8(h).
c)a bank transaction record dated 12 July 2018 purporting to show the repayment of $24,000, which was paid into a superannuation fund for the benefit of the husband’s partner several weeks before. The application for leave to adduce this evidence is considered under Ground 4(f).
d)an affidavit of the husband’s partner filed on 13 November 2017 and what the husband called “a bundle of Court subpoenas”. The application for leave to adduce this evidence is considered under Ground 5(d).
Some aspects of the husband’s application to adduce further evidence can be conveniently determined at this point. The Contentious Appeal Book comprises filed applications and responses, filed affidavits, court orders, a letter sent to the husband by the Court, transcripts of interlocutory court events, and the published ex tempore reasons of the primary judge for interlocutory decisions. Aside from the parties’ affidavits, which obviously are evidence, the remaining material is part of the Court record and so there should be no impediment to the husband’s reliance upon those documents in the appeal. The wife agreed.
Save for the husband’s three affidavits filed on 5 November 2018, 16 May 2019 and 18 July 2019, which are all pertinent to the adjudication of Grounds 1 and 13, none of the parties’ other affidavits in the Contentious Appeal Book should be received in the appeal because they were not relied upon at trial.
The husband omitted from the Contentious Appeal Book two other applications filed by the parties in May 2017 and the transcript of an interlocutory court event in September 2017, upon which he also wanted to rely. Similarly, there should be no impediment to the husband’s reliance upon those documents and, again, the wife agreed.
On 27 March 2020, the husband filed an Application in a Case [sic] seeking, in part, to adduce even more evidence in the appeal but that aspect of the application was abandoned and therefore dismissed at the appeal hearing.
Grounds 1(f), 2(d) and 13 – bias and procedural unfairness
We shall first deal with the husband’s complaints against the primary judge of actual bias, apprehended bias, and the denial of procedural fairness, all of which pertain to the expert valuation evidence concerning the corporations and, more particularly, the financial services business conducted by Corporation C.
Although the concepts of actual bias, apprehended bias and procedural fairness are all quite distinct, the husband did not usefully distinguish between them and indiscriminately alleged he suffered the adverse consequences of each by the primary judge determining to:
a)raise the issue of expert valuation evidence at a directions hearing in September 2017, when neither party had raised it;
b)dismiss the husband’s application for an order compelling the preparation of an updated valuation report from the single expert in October 2018;
c)dismiss the husband’s application for leave to adduce evidence from an adversarial expert at the commencement of the trial in November 2018;
d)refuse leave for the husband to amend his application for property settlement orders at the conclusion of the trial in November 2018, notwithstanding the wife’s alleged consent to the amendment application;
e)dismiss the husband’s application for leave to adduce evidence from an adversarial expert in May 2019 (at which time judgment was reserved);
f)refuse leave for the husband to file an application in July 2019 to adduce evidence from an adversarial expert (while judgment was still reserved); and
g)omit from the reasons for judgment any reference to the husband’s applications which were dismissed or for which leave was refused in November 2018, May 2019, and July 2019.
Some history is needed to contextualise these complaints.
At the first trial back in July 2015, the parties agreed upon the value of the financial services business run by Corporation C (at [317]), though they disputed the value of some of the six real properties.
After the primary judge assumed control of the proceedings, procedural orders were made in September 2017 to list the proceedings for the re-trial in January 2018. The orders directed the parties to procure single expert evidence in relation to any valuation dispute which might then exist between them. His Honour was entitled, if not obliged, to raise that issue for consideration by the parties because any need to determine a valuation dispute would require the appointment of a single expert. Such extra evidence would probably elongate the trial and affect his Honour’s decision about when to list the trial. If no valuation dispute existed between the parties then, self-evidently, single expert evidence was not needed. His Honour did not compel its procurement.
In November 2017, with the parties’ consent, orders were made to vacate the upcoming trial and push it back to March 2018. Orders were also made appointing single experts to value the six real properties. As an aside, even though the husband ultimately did not cross-examine the single experts on the valuation evidence at trial, he still insisted on the primary judge accepting his contrary opinions about the value of the properties in his final submissions. Unsurprisingly, the primary judge instead accepted the unchallenged single expert evidence to establish the value of those properties (at [103]-[104]).
In December 2017, another dispute arose between the parties about whether the new trial date should again be vacated and the identity of the single expert who needed to be appointed to value the corporate interests. The primary judge heard that dispute in early January 2018 and pronounced orders and delivered reasons on 31 January 2018 (Marcin & Marcin [2018] FCWA 18). Relevantly, the person nominated by the wife was appointed as the single expert to furnish a report about the value of the corporate interests and the husband’s application to vacate the trial was stood over, pending his presentation of medical evidence. The contention in this ground of appeal that no reasons were given for those orders is wrong and is rejected.
Subsequently, on 1 March 2018, the upcoming trial was vacated on the husband’s application, but the dates were retained for another interim hearing to determine more interlocutory disputes between the parties. The orders arising from that hearing were made in May 2018.
In August 2018, the trial was fixed for November 2018.
On 8 October 2018, about a month before the trial started, the husband filed an application for an order compelling the single expert to update her original report prepared in March 2018, which application was listed before the primary judge on 30 October 2018. The application was dismissed and ex tempore reasons delivered (Marcin & Marcin [2018] FCWA 234). Again, any suggestion that the primary judge did not give reasons for the orders is wrong and is rejected.
As it transpired, the husband’s application proved to be moot and its dismissal was not prejudicial to him. That is because, at the trial, the husband told the primary judge he had earlier asked the single expert to update her report and, while she told him she was willing to do so for a fee, he admitted he was unprepared to pay for it. In fact, when the single expert later gave oral evidence at trial, she said she would only have been willing to prepare an updated report on the joint instructions of the parties or pursuant to an order of the Court. The wife was unwilling to contribute to the cost of an updated report and so if, as the husband contended, he was also unwilling to meet the cost then the acquisition of an updated report was an impossibility. The husband still owed the single expert $3,380 for the first report (at [179]-[180]).
On 5 November 2018, only two days before the trial commenced, the husband filed a quite different application, seeking leave to adduce evidence at the trial from an adversarial expert about the value of the corporate interests, which application the wife opposed. The application was listed for hearing on the first day of trial (7 November 2018). His Honour heard from the parties and, after a short period of deliberation, dismissed the application and delivered ex tempore reasons (Marcin & Marcin [2018] FCWA 235). Similarly, any suggestion that the primary judge did not give reasons for the orders is wrong and is rejected.
Litigants are not permitted to call adversarial expert evidence which they consider to be more favourable simply because of their dissatisfaction with the evidence proffered by a single expert. Rule 15.49(2) of the Family Law Rules 2004 (Cth) (“the Rules”), which is adopted and applied in Western Australia by rr 12 and 13 of the Family Court Rules 1998 (WA), does not permit a party to call adversarial expert evidence once a single expert has been appointed, unless certain conditions are fulfilled. The Rules impose a system which seeks to avoid, so far as is possible, the multiplication of contradictory expert opinions.
There was no evidence the husband had, in any formal sense, sought to pose questions to or confer with the single expert in advance of the trial to try and tease out areas of controversy, as the Rules permit and encourage (rr 15.64B and 15.65). In fact, the husband admitted to the primary judge he had not done so (Marcin & Marcin [2018] FCWA 235 at [29]-[30]). While the bases of the husband’s attack upon the reliability of the single expert’s evidence became evident from the tenor of his subsequent cross-examination of her in the trial, neither the evidence adduced by him nor the submissions he made in support of his interlocutory application addressed the pre-conditions under r 15.49(2) of the Rules for the grant of leave to use an adversarial expert.
The adversarial expert report upon which the husband wanted to rely was compiled in October 2018 and a copy of it was annexed to the affidavit he filed on 5 November 2018 in support of his application. The report makes clear that the adversarial expert relied upon information provided by the husband which was different from that given to the single expert and that the accuracy of his valuations was reliant upon the accuracy of the information furnished by the husband.
Corporation C’s financial services business was valued by the single expert at $1,530,800 and by the adversarial expert at $1,161,000, a difference of $369,800.
Corporation D’s business was valued by the single expert at $472,500 and by the adversarial expert at $335,700, a difference of $136,800.
The single expert and adversarial expert then ultimately arrived at different valuations for the two corporations (as distinct from the businesses) because of the manner in which loan accounts and inter-entity loans were treated. As the primary judge explained in the reasons for judgment (at [95], [111], [112], [115], [137]), the values of the corporations were affected by the parties’ agreement at trial that certain loan accounts and inter-entity loans should not be brought to account. The primary judge later adjusted the single expert’s valuation evidence by taking into account both Corporation C’s financial performance in the 2017/2018 fiscal year (at [146]) and the parties’ agreement about Corporation D’s then current assets and liabilities (at [152]).
The only material distinctions between the experts’ methodology relate to the assumed age profile of the clients of the financial services business and the characterisation of different income streams for the financial services business for use in the valuation. As to the first point of distinction, the difference made no appreciable difference to the equation each expert used to value the business. As to the second point of distinction, it is separately addressed under Ground 1.
Significantly, both experts valued Corporation C’s financial services business by applying a multiple to annual revenue, though they differed over whether the multiple should be applied to all revenue or only recurring revenue. The adversarial expert used an almost identical multiple to that used by the single expert, save in relation to one particular type of recurring income stream, which represented barely more than five per cent of the overall business income. However, in respect of Corporation D’s business, the adversarial expert used an identical multiple to that used by the single expert.
Save for what is said in the discussion of Ground 1 below, it necessarily follows from such comparison of the experts’ reports that the husband failed to establish to the primary judge’s satisfaction that the adversarial expert evidence upon which he wanted to rely was premised upon a different and substantial body of expert opinion, or that the adversarial expert knew material matters which were unknown to the single expert, or that there was some other special reason for permitting reception of the adversarial expert evidence, which are the various pre-conditions for the grant of leave to rely upon adversarial expert evidence (r 15.49(2) of the Rules). That was the principal basis upon which the primary judge dismissed the husband’s application (Marcin & Marcin [2018] FCWA 235 at [34]-[52]), apart from its lateness (Marcin & Marcin [2018] FCWA 235 at [54]-[55]).
During the trial, which then ensued without the adversarial expert evidence, the wife sought to rely upon the single expert report compiled in March 2018. The husband did not object to the receipt of the single expert report in evidence and he was later able to cross-examine the single expert at length.
At the end of the trial, after the evidence was closed, the husband sought to tender a minute of the amended orders he proposed. While the minute itself is quite unclear, because of an apparent contradiction between some of the proposed orders, it is clear from the transcript of its discussion at the time that the primary judge, the husband, and the wife’s counsel all understood the husband’s revised intention was to sell the businesses and to divest himself of proprietary interest in the two corporations. The wife objected to the husband being granted leave to amend his application at such a late stage because, had that proposal been known earlier, the wife’s counsel would have cross-examined the husband differently. His Honour had earlier allowed the husband the liberty, on his application, to seek expressions of interest from prospective purchasers of the financial services business, but the husband confirmed he had received none. His Honour then denied the husband leave to belatedly amend his application. The primary judge’s rejection of the amended application is challenged by the husband in the appeal and is considered separately under Ground 2.
The husband sought and was granted permission to make final submissions to the primary judge in writing. He submitted that he held a “shadow expert” report, the report should have been adduced in evidence, and the shadow expert was available to give oral evidence, which submissions deliberately ignored the dismissal of his application to adduce such evidence at the beginning of the trial. Judgment was reserved once final submissions were complete.
In May 2019, the husband filed another application seeking a raft of further interlocutory orders, including orders appointing an alternate expert to prepare a valuation report in respect of the corporate interests, though his supporting affidavit actually contrarily expressed his desire for only an update of the single expert report. He also applied for the preparation of update valuation reports in respect of the six real properties. The primary judge dismissed the husband’s application for those orders on 27 May 2019 and gave ex tempore reasons (Marcin & Marcin [2019] FCWA 121). The suggestion made by the husband that he was not furnished with reasons is wrong and is rejected.
The primary judge did, however, grant the husband’s oral application to re-open the evidence to deal with the wife’s anticipated inheritance, which additional evidence was received by the primary judge on 8 July 2019.
The husband tried to file another interim application shortly afterwards, on 18 July 2019, which was remarkably similar to the one filed in May 2019. It again sought orders appointing an alternate expert to prepare a valuation report in respect of the corporate interests and for the preparation of updated valuation reports in respect of the six real properties. The primary judge refused permission for the application to be filed, for reasons stated in these terms:
The application is premised on a concern that delivery of the judgment will be delayed. Judgment will be delivered on Friday, 2 August 2019 at 10.00 am. The application is not accepted for filing.
The husband’s new application was otiose. His earlier applications to the same effect, made at trial in November 2018 and again in May 2019 when judgment was reserved, were refused. As was clear from the affidavit he attempted to file in support of the fresh application, no new facts or circumstances, aside from the elapse of two more months, warranted a different decision in July 2019 when judgment was ready for imminent delivery.
Though the husband seemed quite unaware of it, by the application he filed in May 2019 and by the application he again tried to file in July 2019, he was seeking an indulgence to rely upon adversarial expert evidence, let alone at a point in time well after the trial had concluded. Nor did he seem to appreciate that, even if armed with such new evidence, he still needed leave to re-open the proceedings to adduce the evidence. He had already been given leave to re-open once and so he was asking for such permission a second time.
Quite properly, the husband acknowledged in his Summary of Argument that these specific grounds were not an appeal from the various interim orders made by the primary judge – only from the final orders made in August 2019. How then, against that chronology, could the husband sustain his complaints of bias and procedural unfairness as the elements of these grounds of appeal from those final orders?
For the husband to make good his assertion of the primary judge’s actual bias, he must demonstrate the bias was real and the high probability that the primary judge’s conduct was inconsistent with any fair performance of judicial duty (see R v Australian Stevedoring Industry Board; Ex parte Melbourne Stevedoring Co Pty Ltd (1953) 88 CLR 100 at 116). In other words, he must inferentially demonstrate the primary judge’s mind was committed to a conclusion already formed and incapable of alteration (see Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 198 ALR 59 at [101]). We were not taken to any aspect of the primary judge’s conduct which could reasonably be said to meet that high standard.
As for the alternate contention of apprehended bias, the husband had to demonstrate that a fair-minded lay observer might reasonably apprehend from the primary judge’s conduct that his Honour might not bring an impartial mind to the resolution of the dispute (Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at 344-345; Johnson v Johnson (2000) 201 CLR 488 at 492). Again, we were not taken to any aspect of the primary judge’s conduct which would lead an objective observer to reasonably doubt his Honour’s impartiality.
Lastly, the concept of procedural fairness is practical rather than abstract and is designed to avoid injustice (Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 14). The rules of procedural fairness do not have immutably fixed content but, generally speaking, require that the parties know the case the opponent seeks to make, know how the opponent seeks to make it, and have the chance to meet it (Assistant Commissioner Condon v Pompano Pty Ltd (2013) 252 CLR 38 at 99-100; National Companies and Securities Commission v News Corporation Limited (1984) 156 CLR 296 at 312; Kioa v West (1985) 159 CLR 550 at 582). The husband knew what orders were sought by the wife, he knew the evidence upon which she relied to attain them, and he was given the fair chance to challenge that evidence and press his own case for different orders. The husband was unable to articulate how, at any point in the litigation, the primary judge denied him the opportunity to meet the wife’s case or to press his own.
In effect, the primary judge simply made a series of interlocutory decisions about which the husband is displeased, but displeasure is not a competent ground of appeal. These grounds only contend that, by making those particular decisions, the primary judge was either actually or ostensibly biased against the husband and also denied him procedural fairness, which contentions are rejected. No procedural unfairness is evident in the primary judge entertaining the husband’s various applications and giving him fair hearings on them. Nor is any bias demonstrated by the primary judge making curial decisions to determine the parties’ disputes. When two litigants want incompatible outcomes, at least one of them is liable to be disappointed. These grounds fail.
Ground 1 – expert evidence valuing the “businesses”
The primary judge received single expert evidence to resolve the dispute over the values to be attributed to the two corporations and their businesses under the husband’s effective control. Notwithstanding that the single expert’s valuation evidence was properly admissible before the primary judge, this ground of appeal asserted his Honour erred by accepting the evidence as reliable, essentially because the single expert was inexperienced and her evidence was impugned in numerous different ways during her cross-examination by the husband at trial.
In respect of Corporation C, the single expert valued it using a “net asset backing approach factoring in the value of its client book”, with the value of the client book being established by a multiple of the annual income it generates. For that purpose, the single expert used a multiple of 2.15, the selection of which was elaborately explained. The client book was valued at $1,530,800 but, allowing for adjustments in respect of other assets and liabilities, Corporation C was valued at only $56,181.
In respect of Corporation D, the single expert valued it according to its “tangible assets less its liabilities”, plus the value of its client book, again established by a multiple of the annual income it generates. In this instance, for reasons given, a lower multiple of 1.35 was used. The client book was valued at $472,500 but, allowing for adjustments in respect of other assets and liabilities, Corporation D was valued at $332,351.
The single expert was cross-examined by only the husband. The wife accepted the single expert’s evidence without equivocation.
As the primary judge correctly pointed out in the reasons for judgment (at [129]), the husband’s challenges to the single expert’s evidence in cross-examination pertained only to the value ascribed to the financial services business owned and conducted by Corporation C. It is important to note there was no challenge at all mounted by the husband to the valuations of Corporation C, Corporation D, or the business conducted by Corporation D. Nonetheless, in the appeal, the husband asserted he had intended that his challenge should extend similarly to Corporation D’s business, though he conceded that was not evident from his conduct of the trial. Commendably, the wife’s counsel conceded the wife was not prejudiced and so the husband’s analogous challenge in the appeal to the valuation of Corporation D’s business was not estopped (Metwally v University of Wollongong (1985) 60 ALR 68 at 71; Water Board v Moustakas (1988) 180 CLR 491 at 497).
The husband’s challenges to the single expert’s valuation evidence, in so far as they are relevant to the appeal, concerned:
a)the single expert’s inexperience in valuing such businesses;
b)her application of the chosen multiple to all income of the businesses, rather than to only the recurring income;
c)the multiple she chose for use in the valuation equation in respect of only Corporation C’s business; and
d)her contention that she could not obtain from the husband all of the background information she wanted.
The single expert firmly rejected the husband’s challenges about her experience to value financial services businesses. The only submission the husband ultimately made to the primary judge on that point was that the single expert had “vague knowledge about valuation of a financial service business”, which was not accepted by the primary judge. His Honour found her reliable (at [72], [135]), which finding was open, at least in relation to her professional experience. The single expert admitted she had not recently valued a financial service business, but she had extensive experience valuing businesses generally and her valuation methodology was the same as that employed by the husband’s adversarial witness, save for the few differences already highlighted. The single expert’s denial of inexperience was not demonstrated to be wrong by the husband and, although he may not accept it, his contention of her inexperience in the appeal is not sustained merely by making the assertion. The husband’s first challenge to the reliability of the single expert’s evidence is rejected.
The single expert agreed she did not differentiate between the different streams of business income when valuing the business. The husband implied that only some of the various streams of income should be counted when valuing the businesses, but the single expert did not concede that was correct during her cross-examination, nor did the husband explain why his contention was correct in his final submissions. Although the husband’s adversarial expert reported that it was his practice to only include recurring revenue in his valuation calculation, he did not say in his inadmissible report why that was the practice he adopted.
In an effort to cure that problem, the husband sought to adduce further evidence in the appeal from Ms B, who is employed by the industry organisation which publishes the periodic sale results and price guides for financial service businesses. The single expert relied upon the information published by this organisation. Ms B’s evidence confirms that only the recurring income of the businesses should be used to calculate their value. The industry information published by Ms B’s organisation in March 2017, upon which the single expert actually relied, expressly referred to the practice of only using recurring income for valuation purposes.
If such further evidence is admitted, it demonstrates the single expert erred when calculating the value of the businesses by using their total annual income as the coefficient in her equations and so his Honour’s reliance upon her valuation evidence was compromised. The further evidence of Ms B should therefore be received and leave is granted for that purpose, in which event the husband’s second challenge to the reliability of the single expert’s evidence succeeds. While the primary judge blamelessly accepted the single expert’s evidence at trial, the further evidence reveals that his Honour inadvertently made material mistakes of fact by finding the values of the businesses owned and conducted by Corporation C and Corporation D were as the single expert said. We shall deal with the question as to how the primary judge’s acceptance of the defective evidence should best be cured after consideration of the remaining grounds of appeal.
The husband also challenged the single expert about the multiple of 2.15 she applied to the Corporation C business valuation, which decision she stoutly defended. The husband contended the multiple should have been lower – he asserted 1.95 in his evidence – but he seemed to have overlooked in his unbridled attack upon the single expert that his adversarial expert used an even higher multiple of 2.20, albeit in respect of only recurring rather than non-recurring income. That challenge by the husband was recounted and rejected by the primary judge in the reasons for judgment (at [109]-[110], [121]-[128]), which was well open. Therefore, the husband’s third challenge to the reliability of the single expert’s evidence is rejected. For completeness, we repeat that the husband’s adversarial expert used exactly the same multiple of 1.35 as the single expert in respect of the Corporation D business.
The last issue was the completeness of the material upon which the single expert relied. The single expert confirmed, both in her report and in cross-examination, that the valuations were compiled by reference to the 2017 financial data of the corporations, as no 2018 data was available when the report was completed in March 2018. Although the husband repeatedly complained to his Honour about the staleness of the single expert’s report, the financial statements for the fiscal year ended 30 June 2018 were tendered as exhibits during the trial and were therefore available for the single expert’s perusal, but the husband did not ask her about how, if at all, they may have affected her valuations.
The single expert said in her report that the husband had only partially responded to her requests for information. During her cross-examination, the husband maintained she did not consult him adequately about the intimate details of the business, but the single expert soundly and repeatedly rejected the proposition.
In relation to that issue, the primary judge found:
132.The approach taken by [the single expert] to the exercise of seeking information from the husband, and most particularly the formality and transparency adopted, was entirely appropriate. I reject any suggestion to the contrary. It was also clear from the evidence that [the single expert] faced considerable difficulty in obtaining from the husband the information that she sought, and that she completed her valuation to the best of her professional abilities with the information she was able to obtain.
133.In making that observation, like [the single expert] I do not suggest that the husband was intentionally obstructive…
In the appeal, the husband challenged the efficacy of the finding about the single expert’s difficulty acquiring information from him, but it was well open on the evidence and so the husband’s fourth challenge to the reliability of the single expert’s evidence is also rejected. The husband seemed to have overlooked that, according to the contents of the adversarial expert report on which he wanted to rely at trial, he undeniably gave material to the adversarial expert which he had not given to the single expert.
The only measure of success enjoyed by the husband in his cross-examination of the single expert was his extraction of a concession from her that, for several reasons in aggregation, the value of Corporation C’s financial services business would likely be a little less at the time of trial than it was about six months before when she prepared the valuation report, though the diminution in value was not quantified.
Ground 2 – refusal of leave for the husband to amend his application
This ground relates to the primary judge’s refusal of leave for the husband to amend his application for property settlement orders at the conclusion of the trial in November 2018. The issue has already been addressed under Ground 13 in the context of alleged bias and procedural unfairness, but this separate complaint relates to the primary judge’s alleged failures to properly consider the husband’s application and to give adequate reasons for the decision, which decision the husband believes was “completely illogical and unreasonable and affronts common sense”.
As pleaded, Grounds 2(a), 2(b) and 2(c) collectively purport to appeal from the interlocutory order made on 12 November 2018, refusing the husband leave to amend his application. Even if the dismissal order is a decree from which an appeal lies (Commonwealth v Mullane (1961) 106 CLR 166 at 169), it would require the grant of leave, which was not sought. Nonetheless, for the sake of completeness, we shall explain why this aspect of the appeal must fail even if the husband could surmount the procedural hurdles.
When the husband told the primary judge at the end of the trial that he wished to change the property settlement orders he proposed, his Honour explained why such late notice of his intention to fundamentally change the complexion of his case was unduly prejudicial to the wife. At the commencement of the trial, the husband had confirmed he applied for the orders set out in the minute of orders he filed on 30 October 2018. The husband ran his case throughout the trial on the basis that he should retain exclusive control of the corporate structure, including the businesses owned by the corporations.
Rule 11.10 of the Rules, again adopted and applied by the Family Court Rules 1998 (WA), disallows the late amendment of applications without an opponent’s consent. The husband repeatedly asserted in his Summary of Argument that the wife consented to his amendment application, but she did not. She expressly opposed his application and so the husband was seeking another indulgence. The primary judge’s refusal to give it to him was merely a decision the husband did not like. The husband did not demonstrate it to be an illogical or unreasonable decision.
The husband’s assertion that the primary judge failed to properly consider his amendment application was plainly wrong. It had to be considered in order for it to be dismissed and no submission made by the husband explained why his Honour’s consideration of it was inadequate. The husband’s assertion that he was not given reasons for the decision is also rejected. At the time, the primary judge had the following discussion with the husband and the wife’s counsel, from which the position was abundantly clear:
HIS HONOUR: … Well, [husband], the problem is we’re on four days of trial on the proposition that you would be keeping the business, because that’s what you’re asking for, and now you’re seeking to substantially amend your application after the evidence has closed, and that’s a problem.
[THE HUSBAND]: Okay. I did ask to do this earlier. I did ask and it is a problem. Well, I didn’t know it was a problem, but you’ve alerted to me as it being a problem.
…
HIS HONOUR: … The fundamental problem you face is that you – it is not open to you to fundamentally recast the case at the start of what effectively are your closing submissions by seeking leave to substantially amend your application.
[THE HUSBAND]: I feel quite traumatised by this. I feel that the business is going to be liquidated anyhow. I’m willing to put that on the table now in expectation of that happening or not happening. My circumstances have changed. I am carrying – I’m – my health issues are a worry. Business pressure demands are a worry. And maybe it’s time for a lifestyle change. This was always a possibility. It’s always an option once you’re over 65, after six years of trauma and going through this trial, on the weekend [his partner] and I made a decision that we want to move on and whatever comes from the asset will become part of the pool. And it will be shared as your Honour sees fit.
HIS HONOUR: All right. Is there anything further you wanted to say?
[THE HUSBAND]: No, except that, your Honour, I didn’t realise it would make such a big difference…
…
HIS HONOUR: All right. Yes, [counsel for the wife].
[COUNSEL FOR THE WIFE]: No, your Honour. [the husband] can sell the business if he likes and he could have sold it at any time, but his case is his case.
HIS HONOUR: … So, [husband], I’m not prepared to allow you to so substantially amend your application after the evidence has closed. …
(Transcript 12 November 2018, p.85 line 21 to p.86 line 49)
When the husband told the primary judge he had “ask[ed] to do this earlier”, he was referring to having advised the wife’s counsel earlier that morning that he intended to propose a different set of property settlement orders. While the wife’s counsel therefore had some advance warning of what was to come, it was not enough to cure the prejudice the wife asserted and the primary judge accepted she would suffer if the husband’s belated application to amend was granted.
Unlike for some other interlocutory decisions made in the litigation, for which written reasons were subsequently published, that did not occur in this instance. However, in the final reasons for judgment the primary judge confirmed having made the decision to dismiss the husband’s amendment application (at [351]).
The husband contended in the appeal that the primary judge’s description of his attempt to “substantially recast his case” was wrong, but that was indeed the real effect of his application. To that point, the husband had run his case on the basis that the businesses would be retained by the corporations and he would retain exclusive control of the corporate structure, in which event there had been no need for the parties to acquire evidence about or to even consider, for example, what taxation implications might arise from the sale of the businesses or other corporate assets. Allowance of the husband’s amendment application would almost certainly have required an adjournment of the trial to obtain additional expert evidence about the taxation implications of the intended asset sales and the revised values of the corporations. The wife would also have needed a further opportunity to cross-examine the husband. Almost inevitably, resolution of the litigation would have been delayed by many months. Delay was by then anathema, since the litigation had already been pending for five years.
In the appeal, the husband relied upon Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 (“JL Holdings”) as the authority to assert his right to belatedly amend his application at the trial, but his faith in it was mistaken. As the High Court of Australia subsequently said in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (at 182, 192, 212, 217), JL Holdings ought not now be regarded as authoritative. Relevantly for present purposes, the High Court went further and said (at 189-190, 211-215) that the aspirations of efficiency stated in Rules of Court cannot be ignored and are to be applied having regard to the objectives of the timely disposal of proceedings at an affordable cost, as litigation is justly resolved in a context of minimum delay and expense. While the Rules of Courts confer discretion to grant amendments for the purpose of deciding the real issues in dispute, the adversarial system does not permit disregard of undue delay. The avoidance of undue delay and the efficient use of public resources are considerations which may transcend the individual interests of the parties.
The husband sought to amend his application at the end of the trial, at or about the closure of the evidence, after many years of litigation, when throughout the litigation he had consistently maintained his proposal to acquire exclusive control of the corporate structure. That was the reason why expert evidence was needed to value the corporations and their businesses. Had it always been the husband’s desire to relinquish control of the businesses, the businesses could have been sold or shut down long before trial and the taxation and financial implications of that decision would have been well known in a timely way. The Rules disallowed the belated amendment of his application over the wife’s objection and the primary judge was unpersuaded, in the exercise of discretion, that the Rules should be relaxed. The husband failed to demonstrate his Honour was wrong to deny him leave to amend his application and so this ground fails.
Ground 3 – treatment of rates and land tax under Order 10
This ground contended the primary judge failed to give adequate reasons for the omission of a liability for $98,658 from the schedule of the parties’ liabilities, which finding he also criticised as being “illogical and unreasonable”.
In May 2018, the primary judge made an interim order compelling the husband to pay all outstanding rates and land tax in relation to four of their six real properties. At trial, the husband admitted he failed to comply with that order and the outstanding rates and taxes then amounted to $98,658. The husband asserted, and the primary judge inferentially accepted, that his failure to discharge all of those liabilities was due to lack of cash flow. As the primary judge explained in the reasons for judgment (at [158]-[162]), the aggregate debt of $98,658 was excluded from the parties’ liabilities, for otherwise the wife would then assume liability for 48 per cent of the liabilities when it had already been determined the husband should bear exclusive liability. His liability for the debt could then be taken into account under ss 79(4)(e) and 75(2) of the Act, as it was (at [327]).
In his Summary of Argument, the husband contended:
It can infer that the [primary] judge simply made an exemplary punishment for the breach of his order [sic].
We reject the submission. The asserted inference of punishment does not flow from the reasons given by the primary judge. The husband was merely expected to pay the liabilities for which he had already been found exclusively liable and directed to pay (at [384]). The primary judge then confirmed the husband’s responsibility with a fresh order (Order 10).
We also reject the submissions that his Honour’s reasoning for doing so was inadequate and that the decision itself was illogical or unreasonable. The husband was ordered to pay the liabilities in May 2018, but did not, and so he was ordered to do so again in August 2019. The primary judge was not obliged to take that course, but it was urged upon his Honour by the wife and the course was plainly open.
Ground 4 – premature distribution of assets
This ground contended the primary judge erred in the treatment of the wife’s premature distribution of assets. It was contended that the primary judge:
a)wrongly characterised assets distributed to the wife as “pre-settlement” benefits, wrongly found that $297,000 spent by the wife after separation was used by her for necessary living expenses, failed to give any reasons for only taking into account part of the capital received by the wife after separation, and failed to take the wife’s post-separation expenditure into account under s 75(2) of the Act;
b)erred by adding-back the husband’s legal fees; and
c)erred by adding-back the sum of $24,000 distributed by the husband to his new partner.
In the reasons for judgment (at [196]), his Honour noted the husband contended at trial for the sum of $783,500, which the husband described as “pre-settlement benefits”, to be notionally added-back as an asset in the wife’s hands, though the husband reduced the sum to $625,000 in closing submissions. The first point to be made is that the characterisation of the funds as “pre-settlement benefits” was the husband’s, not the primary judge’s.
In reliance upon the evidence within affidavits filed by the wife in November 2014 and February 2018, the primary judge accepted that she spent the money she received after separation largely on her living expenses and the acquisition of a real property which was brought to account in the proceedings (at [197]-[204]). It follows that the primary judge did give reasons for why the husband’s proposed add-back was declined.
Relevantly, the primary judge ultimately concluded:
204.On the wife’s case, the balance of approximately $297,000 (apart from the amount gifted to Ms F) was used by her for necessary living expenses. While the husband pointed out that for a significant period he has been paying spousal maintenance, and challenged not only the wife’s spending habits but also her efforts to generate her own income, her evidence as to the use to which the money was put was not effectively challenged and I accept it.
205.Monies spent from capital in order to meet reasonable living expenses will not ordinarily be added back for the purposes proposed by the husband. I decline to add back that component of the amounts received by the wife.
In the appeal, the husband took issue with the finding concerning the wife’s expenditure on living expenses, but only by reference to the same evidence he placed before, and the same submissions he made to, the primary judge. The primary judge’s finding was open on the wife’s evidence so there was no utility in him emphasising in the appeal the countervailing evidence upon which he relied but did not use to challenge the wife. The husband complained in the appeal that the primary judge “ignored” his evidence on the topic but, faced with two bodies of conflicting evidence on the topic, it was open to accept the wife’s evidence when the husband did not attempt to usefully contradict her in cross-examination. The husband was contending for a large add-back and, since the practice of notionally adding-back expenditure is the exception rather than the rule (Trevi & Trevi (2018) FLC 93-858 (“Trevi”) at [28]; Chorn and Hopkins (2004) FLC 93-204 at [24]), he bore the evidentiary onus of persuasion. He failed. There was no error.
The husband’s complaint about the primary judge’s failure to take the wife’s expenditure into account under s 75(2) of the Act is difficult to fathom. For her expenditure to be taken into account in the property settlement, either by adding it back as a notional asset or by taking it into account under s 75(2) of the Act, a finding first had to be made that it was expenditure which fell within one of three recognised categories (Trevi at [27]) – namely, expenditure on legal fees, the premature distribution of an asset in which the other party has a legitimate interest, or waste. No finding was made in this instance that the subject expenditure fell into any of those categories and so there was no justification for it to be taken into account as a material consideration under s 75(2) of the Act.
The husband’s next complaint was that the primary judge added-back as his notional asset the sum of $91,000 he spent on legal fees in the proceedings. In his Summary of Argument, the husband purported to explain those legal fees should not have been notionally added-back because he paid them from his own post-separation income, though his submission actually was:
…the [husband’s] legal fees were generated by his own endeavour through his businesses.
However, his submission was devoid of evidence to support it because the primary judge found:
220.Notwithstanding the confused nature of the self-authored “costs notification” tendered on the same day by the husband, it was established in the course of his evidence before [a different judge] that he had paid legal fees to that point of approximately $91,000. While he asserted that “under confidential agreement, some of those lawyers [had] refunded money”, he provided no details. In any event, it appears that since the hearing before [a different judge] the husband has likely incurred and paid some further legal fees, albeit he has been self-represented in the proceedings.
221.Doing the best that I can on the evidence provided, I consider it appropriate to add back the sum of $91,000 to reflect the husband’s paid legal fees. While the evidence does not descend into detail as to the source of payment for those fees, I conclude that any risk of unfairness to the husband arising from the possibility that they were paid in whole or in part from income generated post separation is offset by the likelihood that he has paid additional fees not brought to account in my calculations.
Clearly, the husband incurred legal fees of $91,000 in the proceedings at some point prior to July 2015 and the evidence led by him at trial did not enable any positive finding that he paid the fees from his post-separation income. The notional add-back of that amount was not demonstrated to be an error. Similarly, the primary judge added-back the legal fees paid by the wife from funds which would otherwise have been available for division between the parties, so the parties’ were treated equally in that respect (at [219], [226], [228]).
In May 2018, the primary judge made an interim order restraining the husband from withdrawing funds from numerous sources without the prior written consent of the wife. Only a month later, in June 2018, in breach of the interim injunction, the husband withdrew $24,000 from one of the named accounts without the wife’s consent and deposited the sum into a self-managed superannuation fund under his effective control, establishing it as a member entitlement of his partner. The husband admitted those facts at trial. The primary judge accepted the husband regarded it as a prudent financial investment for him and his partner, but it was still an action in breach of the interim injunction which had the effect of placing those funds outside the pool of property and superannuation available for distribution between the parties and so his Honour determined to notionally add-back that sum as an asset in the husband’s hands (at [163]-[169]).
The husband contended in the appeal that his Honour erred by doing so. In his Summary of Argument, the husband submitted the error was evident because he was free to use $24,000 from income he generated after separation to confer a financial advantage on his new partner, with whom he had then lived for about two years. However, his submission overlooked that the payment was withdrawn from an Corporation C corporate account and, at the very least, the wife remained an equal shareholder in Corporation C, which was the trustee of the trust in which she remained a beneficiary. No error in the primary judge’s approach was demonstrated.
In the appeal, the husband contended the sum of $24,000 was “transferred back after the financial year” and, to vindicate that submission, he sought leave to adduce further evidence of a bank statement purporting to show the repatriation of $24,000 several weeks later on 12 July 2018. We refuse leave for such evidence to be adduced in the appeal because it would tend to obliterate the distinction between appellate and original jurisdiction (CDJ v VAJ (1998) 197 CLR 172 (“CDJ”) at 202). The bank statement was available for the husband’s use in evidence at trial, but he did not use it and he did not explain in the appeal why not. Nor, so far as we can tell from the evidence, did the husband even assert at trial that the sum of $24,000 had been repaid, as he now alleges. If, as the primary judge found, the money was deposited into a superannuation account for the husband’s partner and designated as her member entitlement just before the end of the 2018 fiscal year, it is difficult to understand how she could then gain access to the superannuation funds only about two weeks later in the 2019 fiscal year to withdraw and repay it. Lastly, even if the bank statement does show a deposit of $24,000 being made on 12 July 2018, without more evidence to explain it, the bare transaction would not prove the deposit originated from the financial resources of the husband’s partner in the guise of the repayment of the earlier advance.
During the appeal hearing, the husband submitted that this sum of $24,000 had been double-counted but, when challenged to draw our attention to the specific evidence and the paragraphs in the reasons for judgment which would prove it, the husband could not do so. At his request, he was allowed to move on with his submissions and return to the point later, but he did not return to it.
Grounds 5(a), 5(b) and 6 – treatment of assets acquired after separation
These grounds complained of the primary judge’s differential treatment of assets acquired respectively by the parties after separation. The two assets which were the subject of this complaint were the husband’s proprietary interest in Corporation D and the wife’s inheritance. The husband incidentally contended that the primary judge failed to attach proper weight to his post-separation contributions to the value of “his business”.
The husband incorporated Corporation D in July 2015 (at [91]). He was and remains its sole shareholder and director. The primary judge took the husband’s proprietary interest in that corporation, valued at $454,224, into account as an asset available for division between the parties (at [259]). The husband contended Corporation D should not be taken into consideration because the wife made no contribution to it, but he then confusingly included it among the assets in the schedule of property he compiled in his closing written submissions. Nevertheless, he sought an order that he retain exclusive proprietary interest in it. The husband accepted that his proprietary interest in Corporation C should comprise part of the pool of assets available for distribution between the parties.
No error is evident in the primary judge taking the husband’s legal proprietary interest in Corporation D into account as a divisible asset because it was one of his existing assets and to do so was consistent with orthodox practice (Stanford v Stanford (2012) 247 CLR 108 at [37], [50]). Compliance with orthodoxy does not require overt justification in the reasons for judgment.
The only reason the husband incorporated Corporation D in 2015 was to use it as the future receptacle for a particular stream of income being generated by Corporation C’s business, and only then at the direction of the financial services licensee (at [317]). There was no evidence before the primary judge that the husband’s contributions to the overall business activity increased after the parties separated (at [318]). The husband conducted the financial services business from its inception in 2003 (at [89]) and the split of its operation between two corporations in 2015 made no tangible difference to the day-to-day business activity. The husband’s attempt to characterise his proprietary interest in Corporation D as entirely unrelated to the pre-existing corporate structure overlooked these inconvenient facts.
In the appeal, the husband sought to vindicate his contention of the primary judge’s erroneous failure to give his post-separation contributions much greater weight by reference to comments made by the Full Court in Anson & Meek (2017) FLC 93-816 about the importance, in that case, of the post-separation increase in value of an asset. However, that case was decided on its own facts and, as Barwick CJ said in Edwards v Noble (1971) 125 CLR 296 at 303:
…A decision in point of fact is of no precedent value whatever. In my opinion it is a dangerous judicial course to attempt to decide one case by the analogy of the facts of another…
Here, his Honour expressly considered the parties’ post-separation contributions, acknowledged the husband’s submission that his post-separation contributions should be given much more weight than those of the wife, and reasoned:
320.The husband argues that his contributions have continued unabated, or have increased, since separation and that the wife has made little or no contribution in that period, noting in particular that by the time of separation the children were adults. Of course, the contributions described in s 79(4)(c) are contributions to the “welfare of the family” including (rather than limited to) contributions in the capacity of homemaker or parent. The passage of children into adulthood does not mean that the contributions described in that subsection simply cease; indeed, both parties gave evidence as to the assistance they have given their adult children since separation.
321.It must also be borne in mind, as observed earlier, that the required assessment of contributions extends over the whole of the period from the commencement of cohabitation to trial. While these parties have been separated for six years, it is 43 years since their cohabitation commenced.
322.While I conclude on the totality of the evidence that the husband has made a greater contribution than the wife during the last six years, the impact of that on the required holistic assessment of their respective contributions over 43 years is, with no disrespect to the husband’s efforts, relatively small.
For the reasons given by the primary judge, we perceive no error in his Honour’s inclusion of the husband’s proprietary interest in Corporation D in the pool of assets or in the approach taken of holistically considering all of the parties’ contributions over the very long period from the time they commenced cohabitation until the time of trial – a period of some 43 years.
The husband fell into the error of assuming the parties’ contributions should be segregated into two categories: those before separation and those after. As the primary judge explained in the reasons for judgment (at [272]-[273]), the parties’ contributions which are recognised under s 79(4) of the Act are not usually amenable to such compartmentalisation. The husband submitted in his Summary of Argument that the parties agreed during the trial that their respective contributions should reflect in equal shares prior to their separation, but that was incorrect. That was his case, at least initially (at [265]), but he later revised his position to claim a greater share of the property (at [266], [268]). The wife’s case was that she was entitled to an equal share of the property (excluding her inheritance) by reference to the parties’ contributions right up until the time of trial (at [262]).
As for the wife’s inheritance, she was due to receive the sum of $490,022 shortly after the evidence was re-opened in July 2019, but the primary judge did not take it into account as an asset available for division between the parties (at [259]), even though the husband advocated for it (at [99]). The wife conceded the inheritance was properly characterised as property rather than as a financial resource (at [194]), but contended the husband made no contribution to it (at [262], [270]).
In that respect, the primary judge reasoned:
274.In this case, those latter considerations are of relevance to a central element of each party’s case. The wife’s inheritance arises from the death of her father some six years after the parties separated. A central component of the husband’s case is the argument that his contributions in the six years since separation exceeded those of the wife to the extent that a holistic assessment of contributions over the 43 years since the parties married must favour him, even if he is unsuccessful in his submission that he made greater contributions during cohabitation.
275.In my view, it is appropriate in this case to take a “two pools” approach, isolating the wife’s inheritance into one of those pools. That is so, given not only the timing of its receipt, but also the nature of the property in question and the fact that it cannot be said that the husband made any contribution of the nature described in ss 79(4)(a) or (b) to it. That is not to ignore the fact that I am required to consider also contributions made by the parties of the nature described in s 79(4)(c), or that contributions of that type are not “linked by the words of the subparagraph to the ‘…acquisition, conservation or improvement of any of the property…’ or, indeed, to ‘property’ at all”.
276.That consideration, while it must be undertaken as part of the required holistic assessment, does not detract from the conclusion that the nature, form and characteristics of the contributions of the parties (if any) to the wife’s inheritance are so fundamentally different from the nature, form and characteristics of their other contributions over the entirety of the period since their marriage as to make a “two pools” approach not only appropriate but preferable.
Assessment of the contributions of the parties to the wife’s inheritance
277.Neither party made any financial contribution, direct or indirect, to the acquisition of the property comprised as the wife’s inheritance. There has been no opportunity for either of them to make any contribution to its conservation or improvement.
278.There is no evidence to suggest that the husband made any non-financial contribution, direct or indirect, to the acquisition of that property. There is, for example, no evidence to suggest that the intention of the wife’s father was other than that she and her siblings would benefit exclusively from his bequests. Again, there has been no opportunity for either party to make any non-financial contribution to the conservation or improvement of the property comprised in the inheritance
279.In my view, the contributions of each party of the nature described in s 79(4)(c) are more appropriately taken into account and given relevant weight in the assessment of their overall contributions to the property acquired through their own efforts over the course of their long relationship.
280.I conclude that the wife’s inheritance is appropriately to be regarded as property contributed by her father exclusively on her behalf.
281.I have considered whether the factors in s 79 (4)(d) to (g) inclusive should inform the making of a just and equitable order in respect of the property comprised by the wife’s inheritance. I conclude that they should not, and that those matters more properly inform the making of orders in respect of the balance of the property of the parties or either of them.
282.Any order altering the interests of the wife in her inherited monies would not itself be just and equitable in all the circumstances. The wife will retain the whole of her inheritance.
…
326.In addition to the share of the non-inherited property she will retain on the basis of my assessment of contributions, the wife will also retain the entirety of her inheritance. In broad terms, that means she will retain property and superannuation to a net value exceeding that retained by the husband by approximately $332,000. That is appropriately to be taken into account. In considering her property and financial resources, I take into account also the fact that she will have a significant liability to her former solicitors, whether or not as a result of the litigation between them that liability crystallises in the amount presently being claimed.
(Original emphasis) (Footnote omitted)
For the reasons given by the primary judge, we perceive no error in his Honour’s separate treatment of the inheritance from the other assets or in the findings about how the wife’s recent receipt of it affected the application of the statutory considerations under ss 79(4) and 75(2) of the Act.
Grounds 5(c) and 5(d) – assessment of contributions
These residual grounds alleged the primary judge erred in the assessment of the parties’ contributions by failing to find the wife made “negative contributions” and by failing to properly consider the contributions made by the husband’s new partner “to the business and the [husband’s] life”.
In his Summary of Argument, the husband submitted:
After the separation (in 2013), the [wife] made no or little contributions both financially or non-financially (save as to her own residence). However, she made reckless and negative contributions…
In support of that submission, the husband did no more than refer to a portion of his affidavit filed on 30 October 2018, which was emotively entitled “RECKLESS CONDUCT/NEGATIVE CONTRIBUTIONS” and followed by several pages of complaint about the wife’s conduct. The short answer to the appeal submissions is that the primary judge considered that evidence, as well as the wife’s reciprocal evidence which was critical of the husband (at [306]-[312]), and then concluded:
313.While considerable energy was spent by both parties in exploring the matters just outlined, and in criticising each other for their respective decisions and actions, the evidence does not support any conclusion that those decisions and actions should influence the overall assessment of contributions.
We discern no error by the primary judge. Repetition in the appeal of the same submissions made at trial does not sustain the ground of appeal. The primary judge made no error merely by failing to make the finding for which the husband advocated.
The husband said he began a de facto relationship with his new partner in or about December 2015. The husband submitted in his Summary of Argument that the primary judge did not make a finding about his new partner’s “contribution”, even though he adduced evidence of her “substantial contribution to his life, health and business”.
The husband’s approach to this issue was misconceived. In the Case Outline document he filed just prior to the commencement of the trial, one of the issues the husband contended required determination at trial was whether his partner was entitled to a proportion of the assets, which claim he repeated in his final written submissions. But no such issue arose for determination by the primary judge. The proceedings were between only the spouses and neither of them ever pressed any application for property settlement orders which did anything other than apportion their assets between them.
In the appeal, the husband referred to his partner’s prospective entitlement to bring proceedings against him for relief as a de facto partner under Part 5A of the Family Court Act 1997 (WA), but her personal rights against him under the State legislation had no bearing at all upon his Honour’s consideration of the competing applications between the spouses seeking relief against one another under Part VIII of the Act, which is why the husband’s partner’s involvement in the corporations’ businesses was not mentioned in the reasons for judgment as a relevant consideration. Nor should it escape attention that, during the appeal hearing, the husband admitted his partner was a paid employee of the businesses and so it must follow that her work was properly remunerated.
In relation to the application of s 75(2) of the Act, the husband initially submitted to the primary judge that he was committed to support his partner, who had “little financial resources” but, in his final written submissions, the husband made inconsistent submissions about whether or not he actually did rely upon his financial support of his partner as a relevant factor under s 75(2) of the Act. Notwithstanding the husband’s apparent vacillation over the issue, the primary judge did take into account the husband’s financial support of his new partner as a relevant consideration. His Honour noted the husband distributed $115,367 to his partner from the trust in the 2018 fiscal year (at [330]), that the husband quite reasonably considers himself morally bound to support her (at [334]), and that her personal financial circumstances do not affect the exercise of discretion as between the parties (at [339]).
No error is identified in the manner in which the primary judge applied the provisions of s 75(2) of the Act to the evidence concerning the husband’s new partner. Contrary to the husband’s submissions in the appeal, he has no legal duty to maintain his partner unless and until he is found liable to do so under State legislation upon any future application she sees fit to make.
The husband applied to adduce further evidence in the appeal to support his contention of the primary judge’s error in respect of his partner. The evidence he sought to adduce was, first, his partner’s affidavit filed in the proceedings on 13 November 2017, and secondly, “the bundle of subpoenas issued in relation to [her] financial circumstances”. The husband’s application to adduce such evidence is refused. His partner’s affidavit was filed a year before the trial, so he could have relied upon it at the trial but he did not (at [68]). The documents produced to the Court in answer to subpoenas were also available to be adduced in evidence at trial, but were not tendered as exhibits. Regardless, such evidence was not then and is not now of any utility. The primary judge accepted the husband’s contentions that his partner had little in the way of financial resources and she was financially dependent upon him. No point is served trying to prove in the appeal what was accepted as correct at trial.
Grounds 8 and 10 – assessment of s 75(2) factors
Both of these grounds concern the primary judge’s consideration of factors under s 75(2) of the Act. Ground 8 alleges the failure to take relevant matters into account and, conversely, Ground 10 alleges irrelevant matters were wrongly considered.
The husband alleged the primary judge failed to take into account how the “short timeframe” for him to sell his business would affect his future earning capacity. The submission is rejected. His Honour did not make any order compelling the husband to cause the corporations to divest their businesses, but did acknowledge the husband would likely choose to retire within a “relatively short timeframe” and his retirement would involve sale of the corporations’ businesses (at [333]). Until then, his Honour found the husband would maintain his earning capacity, which was significantly greater than the wife’s (at [331], [333]).
The husband alleged the primary judge failed to take into account the impact upon him of bearing sole responsibility to meet mortgage repayments, rates and taxes. The submission is rejected. His Honour expressly took into account his exclusive responsibility for those liabilities as a feature of the evidence which influenced the exercise of discretion under s 75(2) of the Act (at [327]).
The husband alleged the primary judge failed to take into account the dependence of the husband’s partner upon him. The submission is rejected. As explained under Ground 5(d), his Honour did so (at [330], [334]).
The husband alleged the primary judge failed to take into account the wife’s inheritance. The submission is rejected. His Honour expressly acknowledged the wife would retain the entirety of her inheritance (at [326]).
The husband alleged the primary judge failed to take into account the “large amount of capital wasted” by the wife after separation. The submission is misconceived and is rejected. As was explained under Ground 4, the primary judge did not find the wife wasted capital and so the unproven allegation was irrelevant to the exercise of discretion under s 75(2) of the Act.
The husband alleged the primary judge failed to take into account the wife’s “negative contributions”. Again, the submission is misconceived and is rejected. As was explained under Ground 5(c), the primary judge did not find the wife made “negative contributions” and so the unproven allegation was irrelevant.
The husband alleged the primary judge failed to take into account numerous liabilities for which he contended and which were referred to in various paragraphs of the reasons for judgment. The contention is rejected. The primary judge discounted each of those alleged or contingent liabilities from further consideration for lack of evidence (at [174]-[178], [190]-[191], [211]-[212], [231]-[240]). This complaint of the failure to take the liabilities into account necessarily assumes the liabilities were actually proven. They were not, in which case it would have conversely been an error of law to take them into account.
Under Ground 8(h), the husband alleged the primary judge failed to take into account the wife’s “unpaid present entitlements” from the trust administered by Corporation C. The wife was a beneficiary of the trust and had not received any distributions for a number of fiscal years. The husband contended that taxation liabilities would be incurred if she did not receive or accept the distributions ear-marked for her. Importantly, the primary judge found there was no evidence to support a finding of any such actual or prospective taxation liabilities, in which event the husband’s contention was rejected (at [174]-[175], [211]-[212]) and so the alleged liabilities were irrelevant to the application of s 75(2) of the Act. Since the wife has not actually received the distributions, nor would the s 75(2) discretion be affected by money she has not and will not receive.
The husband sought leave to adduce further evidence in the appeal from his accountant, Mr E, about the additional tax which will fall due and payable if the wife’s trust distributions for the 2014-2018 fiscal years are revoked. Leave is refused for several reasons. Primarily, it is evidence which could have been adduced at trial, but was not. If the issue had arisen then, a single expert could have been appointed to settle the issue. The primary judge emphasised in the reasons for judgment that no “coherent evidence” was led and no “meaningful submissions” were made at trial on the issue. Mr E’s adversarial evidence is controversial, which would make it difficult to assess in the appeal in any event, but the power conferred by s 93A(2) of the Act is not a solvent for correcting orders which, even if deemed unsatisfactory, contain no appealable error (CDJ at 217).
Lastly, the husband alleged the primary judge wrongly took into account, under s 75(2) of the Act, the wife’s liability for unpaid legal costs because there is a pending dispute between her and the lawyers about the proper quantum of such costs. The submission is rejected. His Honour was clear that any unpaid legal fees would not be considered as a liability which diminishes the parties’ assets, but would instead be considered as a factor under s 75(2)(o) of the Act (at [217]-[218], [226], [228], [230]). His Honour recorded that the wife could be indebted for huge fees (at [222]-[225]) and, although she is contesting their quantum, it is likely she will be left with a “significant debt” (at [229]). His Honour then took into account the wife’s large but unquantified liability for legal fees as a factor of relevance to the exercise of discretion under s 75(2) of the Act (at [326]). No error is evident in his Honour’s reasoning.
The husband submitted in his Summary of Argument:
If the [wife] successfully substantially defends the costs claim by her solicitor, then she would be further enriched by the judge’s consideration of her “significant” legal costs under s 75(2).
(Original emphasis)
The submission is, of course, wholly speculative. The primary judge’s finding that she will probably be liable for legal costs of a “significant” amount was perfectly open when she has been sued for more than $444,000 (at [225]).
The husband then submitted in his Summary of Argument:
If the [wife] succeeds in the costs claim against the [husband], then she will also be enriched by the judge’s consideration of her “significant” legal costs under s 75(2).
(Original emphasis)
The submission is entirely hypothetical. The husband conceded the wife made no costs application against him following the appealed orders and so no more need be said, besides that he will not be liable to the wife for any of her costs at first instance.
Ground 12 – Order 1
The husband confirmed during the appeal hearing that he abandoned Ground 12 and so it is not considered.
Ground 11 – Orders 9 and 12
The husband asserted the primary judge erred by making Orders 9 and 12, requiring him to meet mortgage repayments, rates and taxes pending sale of the four real properties.
Those particular orders represent the perpetuation of interim orders to the same effect (at [355]), which his Honour thought were appropriate because the husband could resort to income to meet the expenses while the wife could only resort to capital (at [381]). The reasons given for the subject orders were logical and open, which is to say nothing of the probable futility of this ground of appeal. Six months has now elapsed since the appealed orders were made and so the properties should already be sold or at least be being auctioned. According to what we were told in the appeal, two of the properties are still unsold, but there is some apparent contention between the parties about the contractual state of the other two. The husband’s liability for the mortgages and expenses expires on sale of the properties.
Ground 7(a) – Order 16
The husband asserted the primary judge erred by making Order 16, which he described as a “fall order”, governing the sale of the four real properties.
Order 16 cannot be assessed in isolation from Order 15.
The primary judge found on the evidence that the sale of the four real properties would yield net sale proceeds of around $274,107 (at [370]-[371]) and so, to take account of variations in the sale prices and the expenses of the sales, the orders had to take account of either a rise or fall in the net sum ultimately realised (at [372]). To achieve a division of the net sale proceeds which is consistent with the overall division of assets in proportions of 52/48 per cent favouring the husband, Order 15 requires the wife to pay 52 per cent of any amount in excess of $274,107 to the husband, while Order 16 requires the husband to pay 48 per cent of any deficiency to the wife.
The husband asserted error in Order 16, but not in Order 15, which seems inconsistent. We are unable to discern any error.
Ground 7(b) – Order 30
This ground asserted the primary judge erred by failing to explain how he is expected to meet Order 30, requiring him to pay the sum of $601,340 to the wife.
The solitary submission made in support of it contended:
…in his judgment, the learned judge failed to deliberate how the [husband] is going to meet this payment [of $601,340].
Of course, the primary judge did not need to discuss how the payment would be made. That was a matter of choice for the husband. Once he was holding more than his 52 per cent of the net assets, it was up to him how he raised the cash to pay an adjustment to the wife to bring his overall share back to 52 per cent and to raise the wife’s share to 48 per cent.
Nonetheless, the primary judge did canvass that issue in the reasons for judgment. His Honour expressly acknowledged that the net proceeds raised by the sale of real properties would not be enough to pay to the wife the whole of her entitlement and so it would be necessary to make an order requiring the husband to make a further payment to her (at [355]). His Honour accommodated the husband’s request that any adjustment to the wife be, to the greatest extent possible, payable in superannuation (at [374]-[375]) by making superannuation splitting orders requiring the transfer of the whole of his two accumulation superannuation interests to the wife (Orders 18-24). Since the other orders give the husband exclusive proprietary interest in the two corporations and the trust, together with the real property from which the corporations’ businesses are conducted, it follows that he would have to pay the cash adjustment to the wife either by the use of that capital or from the income he derives from his work in the businesses. The primary judge well understood the husband was not receiving “immediately realisable assets” (at [327]). The husband may choose to retire and sell the businesses, which the primary judge recognised in the reasons for judgment (at [333], [343]), but that would be the husband’s choice.
As earlier mentioned, the husband sought leave to adduce further evidence from his accountant, Mr E, though his affidavit filed in support of the application did not say any of Mr E’s evidence was directed to this particular ground of appeal. However, the husband did depose he wanted to use the evidence to prove “the capital gains tax liabilities when the businesses are sold”. To the extent the husband may envisage he should be permitted to adduce Mr E’s evidence in the appeal to demonstrate the financial consequences of his voluntary sale of the corporations’ businesses, it should be made plain that leave should not be granted. There are several reasons why.
In his affidavit filed on 30 October 2018, about one week before the trial started, the husband attempted to adduce hearsay evidence of Mr E’s “rough figures” about the capital gains tax implications for the sale of the corporations’ businesses. Such evidence drew an objection, which was sustained and the offending evidence was struck out by the primary judge.
Had that issue of capital gains tax been raised in a timely way during the litigation, the controversy over the issue could have been permissibly resolved by single expert evidence. The Rules would not have permitted resolution of the issue by the husband’s resort to the adversarial evidence of Mr E. Consequently, trying to adduce adversarial expert evidence from Mr E on the cusp of the trial was an unsatisfactory solution to the problem perceived by the husband, especially when he was still proposing orders which had no prospect of crystallising capital gains tax for the corporations. The husband was still then proposing his acquisition of exclusive control of the corporations and their businesses, without any suggestion the businesses would be sold. The evidentiary decision made by the primary judge to exclude Mr E’s evidence was plainly right.
While the husband’s attempt to adduce evidence directly from Mr E in the appeal might cure the hearsay objection taken at trial, it certainly does not overcome the problem of the adversarial nature of his evidence. The wife was and is entitled to demand evidence from a single expert to settle the controversy, on the assumption that the controversy could be re-opened in the appeal.
But even if such impediments did not obstruct the husband’s path, the evidence of Mr E is not the panacea he expects. Mr E says no tax would be incurred by Corporation C on the sale of the financial services business, so that adds nothing to the body of evidence before the primary judge. He would also give evidence that, depending upon certain assumptions (which were not explored or developed in his affidavit), the personal taxation consequences for the husband could be very significant if Corporation D sells its business. But that says nothing at all about the capital gains tax implications for Corporation D, which is the explicit reason the husband wanted to adduce the evidence. The wife does not accept that part of Mr E’s evidence and she is unable to effectively test it in the appeal. The further evidence of Mr E is therefore rejected.
Ground 9 – Orders 38 and 39
Order 38 requires the husband to indemnify the wife against any liability arising from her association with the two corporations and the trust. In that respect, the husband asserted the primary judge erred by both making the order and giving inadequate reasons to explain it.
Order 38 was made because the husband was given exclusive ownership and control of the corporations and the trust, as he sought. Concomitantly, he assumes exclusive responsibility for any liabilities which arise from exclusive control. The husband actually applied for an order to that effect, so he got what he wanted. Even if he had been permitted to belatedly amend his application, he still sought an order in similar terms. The wife sought an order in those terms too and, as the primary judge therefore said (at [386]), orders to that effect were appropriate. No more had to be said given the parties’ concurrence.
Order 39 restrains the husband from causing a distribution from the trust to the wife for and since the 2015 fiscal year. In that respect, the husband asserted the primary judge erred by not giving any weight to his evidence about the liabilities which would arise from such distributions not being paid to the wife.
Order 39 was made because, as the primary judge explained (at [387]), both parties sought orders to that effect. The husband’s complaint in the appeal about the primary judge’s wrongful disregard of the liabilities is rejected because, as has been explained under Ground 8(h), his Honour explained how no “coherent” evidence was adduced about them (at [174]-[175], [211]-[212]).
Ground 7(c) – justice and equity of the orders
The husband contended the “practical effect of the overall orders is unjust and unequitable [sic]”.
According to the division of assets and superannuation in the proportions of 52/48 per cent favouring the husband, on the values accepted by the primary judge, the husband would receive $2,046,554 and the wife $1,889,126 (at [324]).
The wife already retained assets with a net value of $895,865 (at [348]), so she needed to receive an extra $993,261 (at [349]). That would be approximately made up by net proceeds of $274,107 expected to be realised on the sale of the four real properties (at [370]), the sum of $110,247 by way of superannuation split (at [376]), and the cash adjustment of $601,340 from the husband. The primary judge expressly recorded that “mathematical precision” was desirable but probably not achievable (at [372]).
The effect of the orders was to give the wife her home, some superannuation, and cash. The husband received the real property from which he conducted the businesses, exclusive control of the corporations and their assets, preservation of his income earning capacity from the businesses for as long as he wants to continue working, and a superannuation pension account.
Save for the quantum of the cash adjustment payable by the husband to the wife, which was calculated in reliance upon the erroneous valuation evidence of the single expert, we do not accept the orders imposed upon the parties an outcome which was anything but just and equitable.
Remitter or re-exercise
It is well accepted that any appellate interference with appealed decrees is only permissible when some legal, factual or discretionary error at first instance is identified (Coal andAllied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 at 203-204; Alleschv Maunz (2000) 203 CLR 172 (“Allesch”) at 180, 187). In this instance, the material error was factual: the primary judge accepted expert evidence as being correct when it transpires it was not.
In the face of established error, an order for the re-hearing of the dispute has been described as an order of last resort (CDJ at 199), though it is an order commonly made when circumstances have or are likely to have changed between the original hearing and the disposition of the appeal (Allesch at 183). Since the appeal is by way of rehearing, whether the proven appealable error is remedied by the re-exercise of discretion by the Full Court or by the re-hearing of the proceedings at first instance, the parties must be given the opportunity to adduce further evidence as to current circumstances (Allesch at 183, 192). The Full Court is ill-equipped to receive fresh controversial evidence and so, in that event, there would ordinarily be little realistic option but to remit the proceedings for re-hearing.
As would be obvious, after already enduring nearly six years of litigation, remitter of the proceedings for re-hearing to again try and attain finality would be an exasperating outcome for both parties, which is to say nothing of the attendant expense and stress such further litigation would likely cause. However, an alternative recommends itself.
Significantly in this case, the discrete appealable error is both confined and mathematical. It was only revealed by the further evidence of Ms B adduced in the appeal and it is ostensibly capable of arithmetical correction by reliance upon the content of the husband’s adversarial expert report, also adduced in evidence in the appeal. Because such evidence was available at the time of trial, its acceptance and use now by the Full Court in conjunction with the other evidence adduced in the trial would not result in any temporal distortion between stale and fresh evidence. It is feasible for the error to be corrected merely by the variation of Order 30 to reduce the cash adjustment payable by the husband to the wife. However, the re-exercise of discretion by the Full Court in that manner is only available if the parties agree to proceed in that fashion, without needing to adduce any further evidence to deal with asserted material changes of circumstances in the interregnum (Trevi & Trevi (Re-Exercise) [2019] FamCAFC 51 at [14]-[26]; Gadde & Gadde [2019] FamCAFC 116 at [130]-[135]).
This issue was raised unexpectedly in the appeal, so we acknowledge the parties had no real chance to consider the implications in a timely way and may appreciate another opportunity now we have published reasons rejecting all other grounds of appeal. In order that their consideration of that option is properly informed, it is necessary to set out the result which would follow.
The husband accepts (in reliance upon his adversarial expert) that the recurring revenue of Corporation C’s financial services business amounted to nearly 79 per cent of total revenue and so the valuation of the business should have only been about 79 per cent of the value fixed by the single expert. Had the single expert applied the selected multiple to only the fiscal year’s recurring income, the single expert would have reached a valuation of $1,209,332. Similarly, the husband accepts the recurring revenue of Corporation D’s business amounted to nearly 81 per cent of the total revenue and so, had the single expert applied the selected multiple to only the fiscal year’s recurring income, the single expert would have reached a valuation of $382,725.
Those two figures could be notionally substituted for the original valuations of $1,530,800 (for Corporation C’s business) and $472,500 (for Corporation D’s business) referred to in the primary judge’s reasons (at [149(a)], [150], [152], [259]), which then affects the cash adjustment payable to the wife under Order 30 (at [324]).
Adopting the same methodology used by the primary judge (at [259]), the assets and superannuation should then be:
Joint assets (net deficit)
-717,057
Husband’s assets (net surplus)
+392,739
Wife’s assets (net surplus)
+1,745,610
Corporation C and trust (net surplus)
+1,299,401
Corporation D (net surplus)
+364,449
Superannuation interests (net surplus)
+439,295
Total (surplus)
+3,524,437
Applying the 52/48 per cent division imposed by the primary judge, the husband should receive assets and superannuation worth $1,832,707 (to the nearest dollar) and the wife should receive assets and superannuation worth $1,691,730 (to the nearest dollar).
Leaving aside the cash adjustment, the wife’s entitlement comprises the assets she will retain ($895,865), the net proceeds expected to be realised on the sale of the four real properties ($274,107), and the superannuation split ($110,247), which totals $1,280,219. In order for the wife to receive her full entitlement of $1,691,730, the cash adjustment in her favour should therefore be $411,511. Consequently, the orders could be varied in one respect by the substitution of the figure $411,511 for the figure $601,340 in Order 30.
If either party still wants to adduce further evidence, we see no alternative but to remit the proceedings for re-hearing.
At this stage, we shall simply allow the appeal in part, but not set aside the appealed orders. We shall re-list the appeal in the relatively near future to give the parties the opportunity to make oral submissions about how best to dispose of the appeal by way of remedial orders. Costs will be reserved.
I certify that the preceding one hundred and seventy-one (171) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Kent & Austin JJ) delivered on 21 April 2020.
Associate:
Date: 21 April 2020
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