MARCON & CUSSEN - [2017] FamCAFC 150

FAMILY COURT OF AUSTRALIA

MARCON & CUSSEN

[2017] FamCAFC 150

FAMILY – LAW APPEAL – PROPERTY– Procedural fairness – Primary judge delivered reasons and listed matter for further submissions – Failure to allow parties to give submissions on superannuation pool – Reasons – Primary judge gave no further reasons for final orders made where he had indicated submissions would be taken into account – Appealable error demonstrated – Matter remitted to Federal Circuit Court of Australia – Costs certificates granted.

Family Law Act 1975 (Cth) s 75(2)

Calder & Calder (2016) FLC 93-691
Coghlan and Coghlan (2005) FLC 93-220

APPELLANT:

Ms Marcon

RESPONDENT:

Mr Cussen

FILE NUMBER:

BRC

2236

2014

APPEAL NUMBER:

2016

DATE DELIVERED:

3 August 2017

PLACE DELIVERED:

Sydney

PLACE HEARD:

Brisbane

JUDGMENT OF:

Ainslie-Wallace, Aldridge & Loughnan JJ

HEARING DATE:

19 July 2017

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

20 June 2016

LOWER COURT MNC:

[2016] FCCA 74

REPRESENTATION

COUNSEL FOR THE APPELLANT:	Mr Fisher (direct brief)
THE RESPONDENT:	In person

Orders

The appeal against the orders of Judge Baumann made on 20 June 2016 is upheld and the orders of 20 June 2016 are set aside.
The matter is remitted to the Federal Circuit Court of Australia to be determined by a judge other than Judge Baumann.
There be no order as to costs.
That the Court grants to the appellant wife a costs certificate pursuant to the provisions s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant wife in respect of the costs incurred by her in relation to the appeal.
That the Court grants to the respondent husband a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent husband in respect of the costs incurred by him in relation to the appeal.
That the Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of the parties in respect of the costs incurred by the appellant wife and respondent husband in relation to the rehearing of the application.

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 Marcon & Cussen 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 BRISBANE

Appeal Number: NA 48 of 2016
File Number: BRC 2236 of 2014

Ms Marcon

Appellant

And

Mr Cussen

Respondent

REASONS FOR JUDGMENT

Ms Marcon (“the wife”) appeals against property orders made by Judge Baumann on 20 June 2016 in proceedings between her and Mr Cussen (“the husband”). The proceedings were heard on 29 September 2015 and on 29 January 2016 the primary judge published his reasons. His Honour did not make any orders, other than listing the matter before him in order to take further submissions. On 20 June 2016 the orders from which the appeal is now brought were made.
The appeal itself is of narrow compass but it is necessary nonetheless to give some background to the dispute in order to give context to the appeal.
The parties began living together in August 2001, married in 2002 and separated on a final basis in August 2012. There is one child of the relationship who was born in 2004. At the time of the hearing before the primary judge, the wife was aged 54 and the husband 50.
At the commencement of the relationship, the wife had considerably greater assets than the husband in that she owned a property in Suburb A and held a half share in a property in Suburb B. While there was no evidence of the actual increase in value of the Suburb A property, the primary judge accepted that it had increased in value since its acquisition.
The parties originally lived together in the wife’s property at Suburb B. Upon transferring her share to the co-owner in 2006 the wife received net proceeds in the order of $260,000.
The parties purchased a property jointly in Suburb C in 2003 for $375,000, of which $73,000 was contributed by the wife from money awarded to her in a personal injuries claim and $20,000 from her savings. The husband paid the wife $15,000 towards the purchase price sourced by way of a loan from his aunt. The balance of $281,000 was provided by way of a loan from the Commonwealth Bank of Australia in the parties’ joint names.
The loan provided to purchase the property at Suburb C was used by the parties by way of a working account and in 2007 the debit balance was about $283,000, for which the parties were jointly responsible. However, at that time the debt was, in effect, divided into two parts. The amount of the debt allocated to the husband was $200,000 and that to the wife was $83,000. After that time the parties each made payments in reduction of their individual debt from various sources. For example, the husband was made redundant in July 2010 and reduced the debt in his line of credit by $67,000 by payment in of his redundancy payment.
In addition to the properties owned by the parties and the wife, both the husband and wife had interests in superannuation. The wife’s entitlement at the date of the trial was $106,779 and the husband’s was $346,780.
In his reasons, the primary judge observed that while neither party made a submission in preference as to how to approach the assets of the parties, his preference was to consider the assets in two pools; that is, considering the non‑superannuation assets of the parties in one pool and the superannuation interests in another (at [26]).
His Honour then considered the contributions of the parties and determined that the wife’s initial contributions to the non-superannuation property pool were more significant than those of the husband (at [34]). His Honour further found that during the marriage the parties each contributed financially through their incomes (at [36]).
After setting out the parties’ non-financial contributions, the primary judge considered the contributions made after separation before ultimately concluding that in relation to the non-superannuation property pool the wife’s contributions should be reflected as 70 per cent (at [43]).
Turning then to the superannuation pool, the primary judge considered that the contribution entitlements should favour the husband, reflected as 57.5 per cent (at [46]).
After considering the factors in s 75(2) the primary judge determined that there should be a further adjustment in favour of the wife of 10 per cent in respect to the non-superannuation property pool (at [50]). His Honour did not make any further adjustment to the superannuation pool in relation to the s 75(2) factors.
His Honour gave no reasons for adjusting the parties’ interests by reference only to the non-superannuation property pool, or, conversely, any reasons why he failed to make any similar adjustment to the superannuation pool.
His Honour said:
46. …I am aware that neither party sought a superannuation splitting order, however whether the Court is able to make orders without including a splitting order and do justice and equity is an issue I discuss below.
This comment recognised that the wife’s solicitor had made submissions dealing with the assets and superannuation interests as a whole. The primary judge foreshadowed calling the parties back to make submissions about whether the Court could make orders absent a superannuation splitting order (at [54]).
His Honour then set out the orders he proposed making adopting the two pool approach, and the effect of those orders in monetary terms for each party.
Consistent with his expressed view, the primary judge published his reasons which set out his proposed orders and sought the views of the parties at a hearing conducted on 10 February 2016.
We will return to the submissions made to his Honour at that hearing shortly, but at its conclusion the primary judge indicated that he intended to make orders in the next week. This did not occur. The matter was again before his Honour on 20 May 2016 when the wife applied to re-open the evidence in the hearing, and again on 25 May 2016 when this application was dismissed.
Ultimately, the orders foreshadowed in the primary judge’s reasons delivered on 29 January 2016 were made on 20 June 2016.
It is from these orders that the wife appeals.

The appeal

By Amended Notice of Appeal, the wife raises six grounds of challenge to the orders of the primary judge. Of those, Ground 1 asserts a denial of procedural fairness and a failure to give reasons supporting the primary judge’s decision. As will appear, we are satisfied that both of the contentions in Ground 1 are made out and the orders of his Honour will be set aside and the matter remitted for re-hearing. Thus it is unnecessary to consider Grounds 2 to 6.
Ground 1 comprehends two challenges to the procedure adopted by the primary judge in determining the matter.
The first aspect of this challenge contends that in his decision to consider the parties’ assets and superannuation interests in two pools, the primary judge failed to afford the parties an opportunity to be heard as to “the adoption of such an approach or as to whether or not it was appropriate to make different assessments with respect to those pools or as to an appropriate assessment for each pool”.
The second aspect of this ground contends that the primary judge failed to give any or any adequate reasons for the adjustments made in relation to the two pools.
It is uncontentious that neither party submitted that the Court should consider the assets in two pools. Indeed, during the hearing the primary judge raised this very issue with the solicitor then appearing for the wife clarifying the parties’ position that “no one has suggested to me it shouldn’t be the one pool” (transcript 29 September 2015, page 81 line 16 to 17).
Similarly, neither party submitted to his Honour that there should be an order made splitting the superannuation, a position again clarified by his Honour with the solicitor appearing for the wife (transcript 29 September 2015, page 61 line 1 to 2).

Procedural fairness: two pools or one

At the outset of this discussion it is important to observe that the decision as to whether the property of the parties or either of them is considered globally or in separate pools is a matter for the trial judge (see Calder & Calder (2016) FLC 93-691 (“Calder”) at [102]). The thrust of the ground as we understand it is not so much the fact that the primary judge did not raise with either party his intention to consider the property in two pools, but that he did not afford the parties the opportunity of addressing him as to how the two pools were to be considered in the determination of contributions and, in the event of there being a further adjustment in recognition of the s 75(2) factors, whether that adjustment would be made from one or both pools.
The point made in Calder was that while in that case the trial judge did not foreshadow his intention to treat the property in two pools, there was no denial of procedural fairness because the appellant received the orders she sought albeit from only one of the two pools. However the court said:
102.…In our view, issues of natural justice only come into play where the trial judge’s approach leads to an outcome outside the parameters of the competing claims, or where the judge has adopted an approach to one of the pools which neither party had advocated: Guthrie and Guthrie (1995) FLC 92-647.
…
104. …The case is thus quite unlike Scrymegeour & Scrymegeour (2014) FLC 93-600 where the departure by the trial judge from the agreed position of the parties was shown to have occasioned prejudice. There being no possible prejudice to the wife in the present case, there can be no merit in this part of her complaint.
Here the complaint is that in adopting the course he did, the primary judge failed to afford the wife the opportunity to make submissions on the contributions and how they were to be recognised in relation to the two pools. We agree with the contention. Having decided to consider the property of the parties and the superannuation interests in two pools, his Honour then proceeded to determine the individual contributions by the parties in relation to each pool and thereby arrived at a percentage division of that pool to reflect that party’s contributions. These steps were arrived at without hearing submissions from either party as to how those pools should be regarded in terms of the parties’ contributions to them, what would in the parties’ view be an appropriate percentage division in relation to each pool, and how any adjustment pursuant to s 75(2) would be reflected in the pools.
We too are mindful of what was said in Coghlan and Coghlan (2005) FLC 93‑220 by the majority of the Full Court:
59. It may well be that if a superannuation interest is considered having regard to the matters in s 79(4) in a case where a splitting order has not been sought by either party, it will become clear to the Court on such consideration that the only just and equitable order which can be made in the particular case is a splitting order. The Court can then afford the parties an opportunity to be heard in relation to such an order with the requisite notice being given to any trustees of the superannuation fund and a formal valuation according to the Regulations, if necessary, obtained.
In our view, this approach (while apparently his Honour’s intention) did not, as we will shortly show, remedy the denial of procedural fairness which we have found.
The primary judge took an unusual course which was to publish his reasons, foreshadow the orders to be made and then to relist the matter to give the parties an opportunity to make further submissions. His Honour published his reasons on 29 January 2016 and made the following order:
That this matter be adjourned to 9.30am on 10 February 2016 for further submissions in the Federal Circuit Court of Australia at Brisbane.
(Emphasis in original)
As we have said, in the reasons his Honour divided the property into two pools with the parties’ superannuation being placed in a separate pool which was to be subject to a splitting order so that the wife received 42.5 per cent and the husband 57.5 per cent.
The primary judge said:
54.I have, subject to giving the parties an opportunity to make further submissions, come to the conclusion that it is difficult to see how the Court can make orders which are just and equitable to both parties without a superannuation splitting order.
…
59.I accept that the wife may say she is not prepared to borrow over $400,000 to retain ownership of the [Suburb C] and [Suburb A] properties. However, anticipating that the wife would wish to retain the [Suburb C] [sic] where she currently resides with [the parties’ child], a sale of the [Suburb A] property would be the only option, although Capital Gains Taxes (which will impact more significantly on the wife by reason of a 80/20 division), might be an issue.
60.The reason why the Court is contemplating a superannuation splitting order is that with the wife able to elect to draw down on her superannuation, the debt created to make the payment to the husband could be significantly reduced within 12 months but otherwise the husband would leave the long relationship with debt (if he were able to finance it which seems on the evidence unlikely) and superannuation which mostly accrued during the relationship, but which he is unable to access until he reaches at least age 55 years (on current legislation), and only then with some significant limitations.
These paragraphs do not clearly identify the issues upon which further submissions would be received but the paragraphs appear to envisage the parties making submissions as to whether a splitting order should be made; which, if any, property should be sold; and the amount of any cash adjustment. Clearly then, those issues go beyond the formulation of orders to give effect to the reasons already published.
At the relisting of the matter on 10 February 2016, the husband handed up a document entitled “Submissions in Response” which proposed four different options for orders. Each option involved a splitting order, but one proposed a different splitting order to that identified by the primary judge in his reasons.
Of these submissions, the primary judge said at the hearing on 10 February 2016:
Matter of [Marcon] and [Cussen], please. Yes, come forward. The matter of [Marcon] and [Cussen], please. Thank you. Yes. Now, I will deal first with [the husband]. I’ve had a brief look at your submissions. I understand what you’re saying. I understand your options. They’re matters I will consider before I make my order. I don’t need anything further from you at this stage. [Ms Marcon], I’m happy to hear your submissions, either your own or in response to what [the husband] has put before the court. I’m marking his submissions as exhibit 1.
(Transcript 10 February 2016, page 4 lines 31 to 37, emphasis added)
The primary judge then sought the wife’s submissions and she commented that she was somewhat unclear as to what the husband wanted. His Honour said:
Well, it’s not a question of what he wants. Can you understand that what it’s about is – I’ve given details of what I made findings about. They’re not here to be questioned today. I’m not discussing those. I understood that your hope was, if possible, to retain at least both properties initially. You have had [the Suburb A property] in your control for a long time. You’re living at [the Suburb C property], and the only way that – and, therefore, I was not – and you might remember at the trial- the husband’s case was that we sell [the Suburb A property]. Right? And I indicated that I thought it was your preference not to sell [the Suburb A property], if you could do so.
I had no reliable evidence of what capital gains tax might apply, but that would obviously be brought into account. My understanding was that, if possible, you would have liked to have retained [the Suburb A property], and you would have liked to have retained the [Suburb C] home, your Honda, your shares, and that that would require a payment. Now, it was possible, as I indicated in my reasons, that would require you to make a payment to the husband in the region of $380,000.
(Transcript 10 February 2016, page 4 line 44 to 45, page 5 line 1 to 13)
The wife then sought to raise what she considered to be the failure of the primary judge to take into account a contribution of $100,000 which led to the following:
HIS HONOUR: No, no. It’s not appropriate – it’s not appropriate for me to discuss my reasons. Not appropriate. You’ve got rights of appeal if you want to make an appeal, but only after I make a decision.
…
HIS HONOUR: No, no. I appreciate you’re unrepresented, and it would be inappropriate for me to engage in a further explanation upon my reasons. You had a lawyer. They would know that’s not possible.
(Transcript 10 February 2016, page 6 line 18 to 20)

The primary judge then said:
HIS HONOUR:   But what you’re really asking me to do – and I think this might be your proposition – I think what you’re saying is rather than a super split, you would rather that money come off the cash you have to pay [the husband].
…
HIS HONOUR:   The reason I didn’t give you an order was because I don’t believe I can make an order that’s just and equitable to both of you ‑ ‑ ‑
[THE WIFE]:   Yes.
HIS HONOUR:   ‑ ‑ ‑ without a splitting order. It would be open to me – it would be open to me to consider making no splitting order and adjusting what I regarded as something you were entitled to receive from pool 2, the superannuation interest.
[THE WIFE]:   Yes.
HIS HONOUR:   It would be open to me ‑ ‑ ‑
[THE WIFE]:   Okay.
HIS HONOUR:   ‑ ‑ ‑ to, in some way, adjust that in the cash. Right? It would be open to me.
[THE WIFE]:   Thank you.
HIS HONOUR:   And what I’m hearing you say to me, based on my reasons, that certainly you would like to retain [the Suburb A property]. You would like to retain, if possible, [the Suburb C property] as well.
(Transcript 10 February 2016, page 7 line 28 to 30, page 8 line 33 to 46, page 9 line 1 to 8)
This led to the primary judge to raise that issue with the husband in the following way:
HIS HONOUR: But I hear what you say is that – you say there ought be the payment to you that the court has calculated, and a super split. That’s your primary option.
(Transcript 10 February 2016, page 10 line 23 to 25)
There was then some considerable discussion about the bank pressing to recover its debt, the possible sale of a property and the capital gains tax that would arise if the Suburb A property was to be sold.
This aspect of the hearing concluded with the following:
HIS HONOUR:   Well, madam, if you want me to make an order to sell [the Suburb A property] now and not give you any time to try and refinance, tell me, but my impression is – and you’ve only had just over a week to consider the judgment – I’m happy to give you – and I understand from the exchange I had with [the husband], he understands the importance. You’ve had [the Suburb A property] for a long period. I want to give you a reasonable opportunity. Right? But if it can’t happen, there has to be a default position.
[THE WIFE]:   I understand.
HIS HONOUR:   Otherwise you keep coming back all the time and we keep having these chats ‑ ‑ ‑
[THE WIFE]:   Yes.
HIS HONOUR:   ‑ ‑ ‑ which is the way it works. Right? So what I intend to do is take on board your comments today. Take on board your comments and your written document today. Prepare an order that will issue within the next seven days or so. Now, is there anything else you want to tell me? Maybe your friends who are there who are supporting you, is there something that you – if you want to speak to your friends ‑ ‑ ‑
(Transcript 10 February 2016, page 20 line 26 to 46, emphasis added)
What is clear enough from these passages is that the primary judge refused to receive submissions about contributions at all, including those made to the superannuation pool. Thus, the parties were not given the opportunity at any stage to address this issue.
We thus accept that his Honour’s failed to afford the wife procedural fairness in this regard.

Failure to give reasons

Aligned to this ground is the further contention that the primary judge failed to give reasons for his decision to consider the property in two pools, failed to give reasons for adjusting the wife’s entitlement against the property pool while making no adjustment in relation to the superannuation pool and in failing to support the orders ultimately made by reasons.
Although the primary judge envisaged making orders within seven days of the 10 February 2016 hearing, he did not do so. The trustees of the superannuation fund had to be given notice of the proposed splitting order. The primary judge, via his associate, seems to have facilitated the provision of that notice to the trustees which, although done in an endeavour to assist the parties who were acting for themselves, was a most unusual course.
After being delayed by an application made by the wife to re-open her case, the primary judge made the orders under challenge on 20 June 2016. No further reasons were given and the orders made were identical with those foreshadowed in the reasons published on 29 January 2016.
It is important to understand that on several occasions during the hearing on 10 February 2016, the primary judge indicated that he would take the parties’ submissions into account in making the final orders.
In circumstances where the primary judge proposed to receive submissions of a substantive nature on the question of making the superannuation splitting order, and received those submissions and told the parties that he would take them into account in making the orders, his Honour needed to explain why, in the light of those submissions, he made the same orders as had been adumbrated earlier. There is no explanation as to why his Honour did so or why the various options proposed by the parties had been rejected.
Thus we are of the view that his Honour fell into error and both aspects of Ground 1 are made out.
Given that we are satisfied that his Honour failed to afford the parties procedural fairness, the orders must be set aside and the matter remitted to another judge of the Federal Circuit Court for rehearing.

Costs

As is our custom, we took submissions from the parties on the question of costs of the appeal. Both parties submitted that if the appeal succeeded on a question of law, they sought a costs certificate for the appeal and for any rehearing. Those orders will be made.

I certify that the preceding fifty-four (54) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Aldridge & Loughnan JJ) delivered on 3 August 2017.

Associate:

Date: 3 August 2017