Marsh & Marsh
[2014] FamCAFC 24
FAMILY COURT OF AUSTRALIA
| MARSH & MARSH | [2014] FamCAFC 24 |
| FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Contributions – where the parties continued to be financially enmeshed post separation – where the husband made all financial contributions – s 75(2) relevant considerations – when separation was not at the same time as financial separation. |
Allesch v Maunz (2000) 203 CLR 172
Best & Best (1993) FLC 92-418
Black & Kellner (1992) FLC 92-287
Browne & Green (1999) FLC 92-873
CDJ v VAJ (1998) 197 CLR 172
Clauson & Clauson (1995) FLC 92-595
De Winter & De Winter (1979) FLC 90-605
Elsey & Elsey (1997) FLC 92-727
Farmer & Bramley (2000) FLC 93-060
Fenton & Marvel [2013] FamCAFC 132
Ferraro & Ferraro (1993) FLC 92-335
GBT v BJT [2005] FamCA 683
Gludau & Gludau [2013] FamCAFC 112
Gronow v Gronow (1979) 144 CLR 513
House v R (1936) 55 CLR 499
In the Marriage of Aleksovski (1996) 20 Fam LR 894
In the Marriage of Pierce (1998) 24 Fam LR 377
Kasiopoulos & Garapiperis [2010] FamCA 39
Mallet v Mallet (1984) 156 CLR 605
Norbis v Norbis (1986)161 CLR 513
Oriolo & Oriolo (1985) FLC 91-653
Tyson & Tyson (1993) FLC 92-368
Warren v Coombes (1979) 142 CLR 531
Williams v Williams (1985) FLC 91-628
Willis & Willis [2007] FamCA 819
| Family Law Act 1975 (Cth) |
| APPELLANT: | Ms Marsh |
| RESPONDENT: | Mr Marsh |
| FILE NUMBER: | SYC | 8390 | of | 2007 |
| APPEAL NUMBER: | EA | 17 | of | 2012 |
| DATE DELIVERED: | 25 February 2014 and amended on 27 February 2014 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ainslie-Wallace, Murphy & Le Poer Trench JJ |
| HEARING DATE: | 6 September 2013 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 19 January 2012 |
| LOWER COURT MNC: | [2012] FMCAfam 13 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr R Mater |
| SOLICITOR FOR THE APPELLANT: | John R Quinn & Co |
| COUNSEL FOR THE RESPONDENT: | Mr B Richards |
| SOLICITOR FOR THE RESPONDENT: | Turner Freeman |
Orders* (as amended on 27 February 2014)
Appeal against the orders of the Federal Magistrates Court made on 19 January 2012 be allowed.**
The orders made by the Federal Magistrates Court on 19 January 2012 be set aside.
Remit the matter to the Federal Circuit Court for re-hearing by a Judge other than Judge Monahan.
Application of the wife to adduce further evidence dismissed.
Application of the wife to amend the grounds of appeal dismissed.
The Court grant to the appellant husband a costs certificate pursuant to section 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 in respect of the costs incurred by the appellant in relation to the appeal.
The Court grant to the respondent wife a costs certificate pursuant to section
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 in respect of the costs incurred by the respondent in relation to the appeal.The Court grants to each party a costs certificate pursuant to the provisions of section 8 of the Costs Act, being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise payment under that Act to each party in respect of such part as the Attorney-General considers appropriate of any costs incurred by each party in relation to the new trial granted by these Orders.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Marsh & Marsh has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 17 of 2012
File Number: SYC 8390 of 2007
| Ms Marsh |
Appellant
and
| Mr Marsh |
Respondent
REASONS FOR JUDGMENT (AMENDED)*
Ainslie-wallace J
The wife appeals against orders made by Federal Magistrate Monahan (as he then was) on 19 January 2012 in property proceedings with the husband. The husband resists the appeal and seeks to maintain the Federal Magistrate’s orders.
The wife, by application in an appeal, sought leave to amend the filed grounds of appeal by adding a further three grounds. She also sought leave to adduce further evidence. Both applications were opposed. Both were refused. The proposed further grounds of appeal were, on analysis, further articulation of the grounds in the notice of appeal. We will return to the application to adduce further evidence later in these reasons.
It is necessary to set out some background of the parties’ relationship and the litigation to give context to the appeal. The matters of context are taken from the Federal Magistrate’s reasons.
Background
The husband and wife were born in 1958. They were married in 1979. At that time they were both working full time and it seems that while the wife had little in the way of assets, the husband had some savings, a car and superannuation.
In 1981 the husband commenced to work for B Company and continued to work for that company throughout the marriage and up to and including the date of trial. The wife worked until the birth of the parties’ first child in late 1983. There are two other children of the marriage born in 1986 and 1990.
The wife did not return to work after the birth of the children and has not since been in paid employment.
The husband’s work required him to work in different states and countries and the family moved together to accommodate his working requirements.
In 2000 the parties moved into a property at H. The husband moved out of that property in November 2000 and the parties formally separated in December 2000.
The parties were divorced in January 2008.
The wife brought proceedings for property settlement in June 2010, it was first necessary to obtain leave to commence the proceedings. That leave was granted by the Federal Magistrate on 21 July 2010.
The Federal Magistrate found that the total net value of the parties’ property was $3,106,313. That sum was exclusive of the husband’s superannuation entitlements, which he found to be $1,673,902. His Honour found the wife to be entitled to 40 per cent of the property which amounted to $1,242,535 and to 30 per cent of the superannuation in the amount of $502,170. His Honour made a superannuation splitting order. Payment to the wife of her entitlement in the superannuation fund is to occur at the time when a such payment becomes payable. It was accepted that this would be some time in the future. His Honour determined that the wife’s entitlement would be satisfied by her retaining the H property, other items such as a bank account and car and a payment to her by the husband of $125,178. The payment of her declared interest in the husband’s superannuation fund is to occur on the husband’s retirement.
Federal Magistrate’s Reasons
In order to determine the property of the parties or either of them for consideration in the matter, the Federal Magistrate compiled a balance sheet [26]. He observed at [27] that of the items in that balance sheet the parties were in dispute in respect of four. The disputes concerned the value of the husband’s 9,835 shares in B Company and the amount of tax payable in the event that the shares were sold. There was further contention about the tax payable on a parcel of those shares that were sold in 2010. There was an issue as to the value of the husband’s share in a boat. Finally, there was a dispute as to whether the wife’s paid legal costs up to the date of the final hearing “should be treated as an asset and/or liability”.
As to the value of the husband’s shares in B Company and tax payable on sold shares, the Federal Magistrate observed that the husband asserted that the value of the shares presently held by him was $398,178. The husband’s evidence of the then value of those shares was by reference to the market price of B Company shares at £26.969 per share [31].
The Federal Magistrate found that the present value of the 9,835 B Company shares was $395,000 [33].
The husband had asserted that on any sale of the B Company shares, tax payable in the United Kingdom would accrue. He estimated the tax to be
AU$99,293.89. The husband relied on a letter from Ernst and Young, dated 26 July 2011 to support this assertion. The Federal Magistrate said that while it was not “readily apparent … how the figures stated in the letter translate to a converted liability, in Australian dollars, of $99,293.89. That said, it is clear that tax will be levied on the future disposition of the shares.” [35].
His Honour noted that while the wife did not concede the amount of the tax, she offered “no evidence in rebuttal” [36].
The Federal Magistrate accepted the husband’s evidence as to the amount of tax payable on future sale of those shares and determined allowance should be made for that potential liability [39].
As to tax payable on shares previously sold, it seems uncontentious that in 2010 the husband sold 3,669 B Company shares in respect of which a tax liability accrued (although it appears the tax had not been paid at the date of hearing). The amount of tax accepted by the Federal Magistrate was $6,463 and his Honour included that liability in the statement of assets and liabilities of the parties [44].
At the time of the hearing, the husband was part owner of a boat. The husband estimated its value at $60,000. There was no expert valuation of it. The wife contested the value, asserting that the court should take it as asserted by the husband in an earlier financial affidavit sworn in 2010 in which he said it was worth $92,500. The Federal Magistrate found the value to be $76,250, being the mean figure of the two asserted values [50].
The Federal Magistrate refused to “add back” into the list of assets and liabilities the wife’s paid legal costs. He noted that she had received two interim property distributions of $120,000 and $30,000 [55].
Thus, the Federal Magistrate found the net assets (excluding superannuation) of the parties to be $3,106,313.00. The husband’s superannuation of $1,673,902 being added produced a total net figure of $4,780,215 [56]. In considering the parties’ contributions, the Federal Magistrate observed that since the time of separation in 2000; “the asset pool increased significantly” [60].
His Honour found that the parties had made both financial and non-financial contributions and said:
62. It is also clear from the evidence that the husband, through the parties’ decision so specialise their respective roles, has been able to contribute significantly more income and energy into making relevant financial contributions than the wife. This appears so, not just during the period of the parties’ cohabitation, but in the decade since their separation.
His Honour accepted the submission made on behalf of the husband that the evidence supported the fact that he had made “virtually all” of the financial contributions to the increased value of and subsequently acquired property since 2001 [64].
It seems that the Federal Magistrate further accepted the proposition advanced on behalf of the husband that “his post separation contribution to the property pool would be in the order of $1,285,000” [65] and accepted the submission that he would find as a fact and take into account that the husband had contributed money in the order of $2.6 million “for the benefit of the wife and the children” since separation [66].
His Honour recorded the wife’s submissions that he take into account her contributions to the improvement of the the H property in which she lived and her ongoing contributions to the family and her indirect contributions to the acquisition of the investment properties [67].
He found at [69] that the wife “has made a significant contribution to the family pursuant to s 79(4)(c) of the Act”.
The Federal Magistrate considered at [75] the husband’s submission that in this matter an “asset by asset” consideration of the property would be appropriate, although observed that the husband’s counsel also submitted that if a “global approach” was adopted it would not make a difference. The Federal Magistrate concluded that a global approach was appropriate.
His Honour accepted the submissions that, to the date of separation, the contributions of the parties were equal but found that the evidence did not support that finding being made overall and determined:
78. … A further adjustment should be made in the husband’s favour and I am satisfied that the evidence supports a further adjustment in percentage terms of 20%.”
The Federal Magistrate determined that this percentage would apply both to the property and the superannuation [80].
Turning to s 75(2) of the Act, the Federal Magistrate took into account, inter alia, that the wife has some health problems [84]; that the husband will continue to be employed albeit with the loss of living abroad allowances if he was to return to work in Sydney [86]; that the wife has not worked in paid employment for many years and although she had undertaken courses, they had not been intended to provide her with employment capacity [88]. He noted that the wife had, at that time, no children living with her.
Taking into account the matters to which he referred in his reasons, the Federal Magistrate at [101] concluded that there should be a further adjustment in the wife’s favour of 10 per cent in respect of “the property pool (excluding superannuation)”. He determined at [103] based on the husband’s contributions, the wife’s entitlement to a portion of the superannuation should be 30 per cent. He observed that with this amount, $502,170 together with “a substantial property division, the wife will be able to adequately provide for herself financially in the years ahead” [104].
The appeal
The wife’s notice of appeal asserted 5 grounds of appeal (Ground 5 was not pressed). As has been indicated, the application to amend the grounds of appeal was dismissed. The proposed amended grounds did no more than expand the grounds already asserted and as much was conceded by counsel for the wife.
Ground 1
His Honour Federal Magistrate Monahan’s determination that the asset pool had a net value of $3,106,313 (excluding superannuation entitlements) was erroneous in that:
(a)His Honour added back as an asset in the wife’s hands two payments made by way of interim property settlement totalling $150,000 after determining that in the circumstances of the case paid legal costs should not be added back whereas the evidence disclosed that the wife had utilised $36,187 of the $150,000 paid to her for the payment of legal costs;
(b)His Honour determined the Australian value of the sums of money held by the husband in HSBC Bank accounts in London and Hong Kong to be AUS$155,354 whereas the correct value was AUS$210,837;
(c)His Honour adopted as the value of shares in B Company $395,000 although their value at the date of trial was $198,178.
Ground 1(a) was abandoned. Ground 1(c) contains an error. The value of the shares at date of trial was not $198,178 but $398,178. Thus it was contended that the Federal Magistrate’s mistake was of the order of $3,178.
The husband conceded at the outset that the Federal Magistrate had made the calculation errors to which paragraphs (a) and (c) refer and argued that they were matters not for appeal but for correction by the slip rule. In any event, it was submitted that the husband was prepared to pay an additional sum to the wife to rectify the calculation error.
The asserted errors are not necessarily of the type that could be corrected by application of the “slip rule”. However, in this case, nothing turns on whether or not the “slip rule” does indeed apply.
For the wife it was argued that the errors in the Federal Magistrate’s calculations were more than merely mathematical and amounted to appealable error because they undermined the exercise of his discretion which was based on the miscalculated value of the parties’ assets. This argument in different circumstances may well speak of error. However, in this case the net effect of the Federal Magistrate’s miscalculation was in the order of $23,400 to the wife’s detriment. Against total assets (both property and superannuation) of the parties in excess of $4 million, that error could not nor do we find it did admit of an error in the exercise of the Federal Magistrate’s discretion. (see De Winter & De Winter (1979) FLC 90-605)
This ground is not established.
It is convenient to deal with ground 4 as it too can be readily disposed of.
Ground 4
His Honour did not address in his judgment the argument put by the wife that the husband’s disclosure of his financial circumstances had not been adequate and that authorities such as Weir & Weir (1992) 16 Fam LR 154, Oriolo & Oriolo (1985) FLC 91-653 and Black & Kellner (1992) FLC 92-287 were pertinent to the determination of the case.
It was argued that the husband did not make timely disclosure of his income and work related benefits. It was said that on the morning of the hearing, the husband provided a document concerning his bank accounts and, after the trial started, produced a document which set out his employment related incentives and other entitlements including the tax payable on the vesting of share options. It was submitted that this tardy production should be seen against the wife’s attempts to secure the production of relevant information from the husband before the trial.
In his submissions to the Federal Magistrate counsel said:
… In my submission, your Honour, there is room for the application of cases such as Weir, Black & Kellner, Oriolo, such that your Honour need not apply particular case to the outcome of these proceedings because there is room for at least grave suspicion that the husband has not, and deliberately not, provided a full and frank disclosure of his financial affairs. There have been at least two notices to produce, which are before your Honour, and some correspondence which has made its way before your Honour which must surely have made it clear to any rational person that there was going to be an inquiry as to the provision of information by the husband, as to both his income and as to his asset provision, perhaps even his superannuation position.
(Transcript 27.7.11 page 143 line 25)
Counsel continued and said that the “most obvious documents to make available” would be bank statements but they were not produced nor were the husband’s credit card records. Counsel said:
… It’s an astonishing circumstance, in my respectful submission, that he does not put himself forward for examination on what are probably the most highly relevant documents that could have been produced.
(Transcript 27.7.11 page 144 line 5)
The submissions then moved to other issues.
It was properly conceded that at no time in the address did counsel for the wife ask the Federal Magistrate to make a finding of non-disclosure; suggest any particular finding that might flow from his submissions; nor ask the Federal Magistrate to take the asserted failure into account under s 75(2)(o). In those circumstances, it is difficult to ascribe error to the Federal Magistrate in failing to do so.
This ground of challenge is not made out.
Grounds 2 and 3
It is appropriate to consider Grounds 2 and 3 together.
Ground 2
His Honour’s determination that the evidence supported a finding of a contribution assessment of 70 per cent in the husband’s favour as to each of the non-superannuation assets and the husband’s superannuation entitlements was outside the range of a reasonable exercise of discretion.
Ground 3
His Honour’s determination that the evidence supported a Section 75(2) adjustment limited to 10 per cent in relation to the non-superannuation asset pool was outside the range of a reasonable exercise of the discretion as to both the non-superannuation pool and to the superannuation pool.
In respect of both grounds 2 and 3, I am satisfied that the Federal Magistrate erred in the exercise of his discretion and the appeal must be allowed.
Discussion
Counsel for the husband described the facts of this matter as “highly unusual” and I agree. In this matter although the parties physically separated in 2000, their relationship continued until the date of trial, each making significant contributions although different in nature from those made during the relationship.
Both parties continued to make significant contributions up to the date of the trial, the wife to the welfare of the family and indirectly to the property of the parties. The husband continued to make significant financial contributions to the wife, children and their household and the husband continued to acquire assets.
It is of assistance to consider in detail the Federal Magistrate’s findings on the parties’ contributions.
The Federal Magistrate’s consideration of s 79(4) (Ground 2)
The Federal Magistrate made the following findings in relation to the s 79(4) contributions of the parties:
61. It is clear that both parties have made financial and non-financial contributions to the acquisition, conservation and improvement of their matrimonial property. This is particularly so given their mutual investment of their earnings into their property pool and their labours associated with the conservation of the [H] property].
62. It is also clear from the evidence that the husband through the parties’ decision to specialise their respective roles, has been able to contribute significantly more income and energy into making relevant financial contributions than the wife. This appears so, not just during the period of the parties’ cohabitation, but in the decade since their separation.
After discussing the husband’s submissions that he had “made virtually all the contributions to the increased property pool since 2001” and finding that “the evidence would support this submission in terms of the strength of the husband’s financial contributions”, his Honour said:
67. The wife, understandably, asks the Court to consider her own contributions to the conservation and improvement of the [H] property, but also her own competing family contributions that act to erode the significance of the husband’s on-going financial and non-financial contributions. The wife also asks the Court to accept that she indirectly contributed to the acquisition of the investment properties.
Turning to the contributions as homemaker the Federal Magistrate said:
68.As has been previously noted, in addition to the wife’s contributions made pursuant to s.79(4)(a) and (b) of the Act, the Court is satisfied that the wife was the primary homemaker for the parties and the primary carer for the parties’ now adult children. This is not disputed in any way by the husband who, through Mr Richards, described the wife’s role as homemaker and parent in the post-separation period as “absolutely marvellous”.
69.Consequently, the Court finds that the wife has made a significant contribution to the family pursuant to s.79(4)(c) of the Act.
In assessing the parties’ contributions pursuant to s 79(4) the Federal Magistrate said:
77.The husband ultimately asked the Court to assess contributions at 90% in his favour and 10% in the wife’s favour. The wife contended that the evidence supported a “pretty much equal” assessment of contributions.
78.I would agree that the evidence would support an outcome of equal contributions being made as at the date of separation. That said, given the significance of the financial contributions made by the husband post-separation, I am not satisfied that the evidence supports an overall assessment of equal contributions being made. A further adjustment should be made in the husband’s favour and I am satisfied that the evidence supports a further adjustment in percentage terms of 20%.
79.Consequently, I am satisfied that the evidence supports a contributions assessment outcome favouring the husband of 70% and 30% in favour of the wife.
80.I am further satisfied that such determination should apply to both the net property pool (excluding superannuation) as well as to the superannuation assets. There is evidence before the Court that the husband’s superannuation has increased from $388,426.00 to $1,673.902.00 since separation.
The effect of this determination in dollar terms, given the net value of the property of the parties (excluding superannuation) was found by the Federal Magistrate at [56] to be $3,106,313.00; 30 per cent of that in the wife’s favour amounted to $931,894 and $2,174,419 to the husband.
In this case the contributions of the parties after they separated were different in kind and nature to those made during the relationship. Those of the husband were almost entirely made under s 79(4)(a) and those of the wife made pursuant to s 79(4)(c). Obviously the husband’s contributions were of significant amounts of money. His ability to make the contributions was largely as a result of being able to build a career during the 21 years of the marriage during which the wife, by mutual agreement did not work outside the home but took on the role of homemaker and parent, a role in which, the husband said she had been and continued to be after separation “absolutely marvellous” [68].
To a degree, counsel for the husband accepted that in this case the parties’ contributions continued after their physical separation however argued that during the same period, the husband was working and acquiring property and assets and these ought to be sequestrated in the sense that the wife made no contribution to their acquisition.
That argument must be rejected. It does not give account to the wife’s continuing indirect financial contributions to the husband’s income (albeit in a different way from that during the relationship with the husband).
In Ferraro & Ferraro (1993) FLC 92-335 at 79,569, the Full Court said, referring to the trial judge’s characterisation of the appellant wife’s contributions as homemaker:
There can be no doubt that this was a significant matter in this case. The issue here is not whether the wife made direct contributions to the conduct of the business. His Honour found that she had not. The facts are that the husband, particularly in the latter years, devoted his full time and attention to his business activities and thus the wife was left with virtually the sole responsibility for the children and the home. That latter circumstance is significant not only in relation to the evaluation of the wife’s homemaker contributions under paragraph (c) but is important under paragraph (b) because it freed the husband from those responsibilities in order to pursue without interruption his business activities. …
Further, in Ferraro, the Court rejected the trial judge’s finding that the wife made no contribution to property acquired after separation and said:
The wife continued to make a significant contribution to this -
post-separation property for the above reason and because she continued to make her contributions to it during that period under paragraphs (b) and (c).
Section 79(4) requires the Court to consider the entirety of the parties’ contributions, financial and non-financial, contributions to the welfare of the family and to the acquisition, conservation and improvement of assets. Contributions of any nature are not required to be tied to particular assets and are taken into account in a general sense (see Farmer & Bramley (2000) FLC 93-060). The Court’s role is to evaluate the significance of the various contributions.
In this case, the Federal Magistrate’s acceptance that the husband had made “the overwhelming contribution” to the investment properties, acquired after 2000, fails to give proper weight to that to which he referred in [68] namely the wife’s contributions as a homemaker and parent fails to give account to her indirect contribution to the husband’s career and thus his ability to make financial contributions.
The parties settled on a way of life which had the wife attend to the family and not work outside the home. This clearly enabled the husband to give great attention to his career and work, confident that his home life and parental responsibilities were being well met. Indeed, in this case, the wife and children moved from place to place with the husband as his career path dictated. For a considerable period of time after 2000 the husband lived abroad and it fell entirely to the wife to meet all of the burdens of parental responsibility, albeit with financial assistance from the husband. The Federal Magistrate’s acceptance of the husband’s proposition that in some way the increase in and acquisition of the property after separation should in some way be segregated from consideration neglects the continuing indirect financial contribution of the wife to the husband’s earning capacity, commenced during the marriage and continuing to date of trial.
The parties agreed that, up to separation, their contributions had been equal. What then had changed between separation and trial sufficient to warrant the Federal Magistrate’s conclusion that the husband’s post-separation contributions should be assessed at 70 per cent and those of the wife at
30 per cent? It seems that the issue operating on his Honour’s mind was the husband’s use of his very considerable earning capacity to support the family and to acquire assets after separation. For the wife’s part, she remained in the role adopted by her during the marriage, caring for the children and the home. It was not until 2008 that the youngest child completed final school exams.
The assessment of parties’ contributions involves weighing the quality and extent of each contribution. It is accepted that the nature and character of those contributions may change, as here. During the cohabitation, the husband developed expertise and skills which have caused him to advance in his employment, skills and expertise which continued after separation. The wife has contributed to that ongoing earning capacity.
Clearly then the husband’s submissions that the increase in property after separation should be regarded as being referrable to a contribution made only by him is to be rejected. It not only ignores the ongoing contribution of the wife to his income but further seeks, impermissibly, to confine contributions to a particular class or list of assets.
The effect of the Federal Magistrate’s orders was to accept the husband’s argument that he had made the overwhelming financial contribution since 2000 but in which he failed to give effect to his findings that after separation the wife continued to make significant contributions both as to the home and children and also indirectly to the husband’s present earning capacity.
Given the findings as to the wife’s contributions both up to and after the date of separation to which reference has been made, his Honour’s determination is “plainly wrong” so as to, in itself, justify appellate intervention.
The Federal Magistrate’s consideration of s 75(2) (Ground 3)
Turning to the relevant considerations under s 75(2), the Federal Magistrate noted that that both parties were then aged 53, and observed that there was no evidence that the husband was in ill-health, however he accepted that the wife’s health was poor noting that she suffered from a number of physical illnesses for which she was at that time undergoing medical investigation [84].
His Honour considered the earning capacity of each party and said:
85. While the husband has remained in full-time work throughout the duration of the marriage, the wife has not been in paid employment since 1983, that is, when she was aged just 26 years.
….
87. In her evidence the wife stated that although she had completed several courses of education since separation, such courses were “for personal development [and] they were never intended to lead to employment.”
88. In response, the husband asserted that the wife was capable of generating income by devoting her energies to establishing and running a small business. That said, the husband acknowledged that unless she had sufficient money available to invest then the only way the wife could obtain the necessary funds to establish a small business would be via borrowed funds. The husband also stated that, using his experiences in the … industry, as an example, an amount of $200,000.00 would be needed to establish a small business (such as acquiring a franchise) and a further amount of $200,000.000 would be needed for stock purchases “but if you’re into other items it varies”. He also acknowledged that should the wife be successful with her claim she would have sufficient funds to be able to establish a small business. (footnotes omitted; emphasis in original)
His Honour noted that the wife was in receipt of a Centrelink Newstart Allowance [92].
As to what adjustment was required having regard to the matters to which the Federal Magistrate referred, he noted that both parties contended that an adjustment was required. He observed that counsel for the husband submitted “that an adjustment of 10 per cent in her favour would approximately provide for that expenditure to be met for the next decade”. The wife’s counsel submitted an appropriate adjustment in the wife’s favour would be of 25 per cent.
The Federal Magistrate said, accepting that a 10 per cent adjustment in the wife’s favour was appropriate:
100. …While the wife has some health issues, she is under the assessment and treatment by generalist and specialist medical practitioners. The wife is also in transition from significant homemaker and parenting roles to the next phase of her life which is largely free of responsibilities of traditional parenting.
He found that the wife should receive a further 10 per cent of the property pool to reflect the matters relevant to s 75(2). The Federal Magistrate excluded the superannuation from the adjustments to which we have just referred and found:
103. In this case, while I am satisfied that based upon contributions assessment alone the husband’s superannuation should be divided 30% in the wife’s favour and 70% in the husband’s favour, I am not satisfied that there should be any further adjustment for s.75(2) and related factors.
104.I am satisfied that with a base amount of $502,170.60 (reflecting 30% of the current value of the husband’s superannuation), and a substantial property division, the wife will be able to adequately provide for herself financially in the years ahead.
Had the Federal Magistrate paused at this point in his reasons and turned to consider the adjustment of the husband’s superannuation in dollar terms, he would have found it amounted to $310,631.
Although the Federal Magistrate referred to the wife’s income as being derived from a Centrelink Newstart Allowance and board paid by the youngest, $467 per week, and apparently took it into account in his determination, the huge disparity in the incomes of the husband and the wife, of itself, should have led to a significant adjustment in the wife’s favour.
The evidence before the Federal Magistrate was that the husband’s income was in the order of $640,000 together with bonuses and incentives which provided him with significant sums in addition to that income. His financial statement before the Federal Magistrate indicated a weekly income of some $13,000. Thus, even without taking into account the value to the husband of his share entitlements, the income disparity between the parties was immense.
Further, the husband left the relationship with an earning capacity contributed to in no small way by the wife and to which she had continued to make an indirect contribution. In Clauson & Clauson (1995) FLC
92-595 it was said at 81,911:
It has long been recognized that in most cases the most valuable ''asset'' which a party can take out of the marriage is a substantial, reliable, income-earning capacity: see Best and Best (1993) FLC 92-418 at 80,295.
While counsel for the husband argued that unlike the husband in Best & Best (1993) FLC 92-418 who was a relatively young man, the husband is at an age where he is nearer to retirement, and the value of his earning capacity should be viewed in that light. While age is relevant, in this matter it does not assume particular importance. There was no evidence that the husband was considering retirement and it was submitted by counsel for the wife that the husband was anticipating further advancement within B Company.
It is also important to note that as well as this “most valuable asset”, the husband retains the bonuses and incentives that form part of his remuneration.
The Federal Magistrate discussed with apparent acceptance the husband’s contention that the wife, with perhaps an injection of $400,000 could
re-enter the workforce in some, unspecified way, perhaps by buying a franchise of some, unspecified nature. It is difficult to see considered in the light of the wife’s evidence about her qualifications for work, her health problems and the fact that she had not, by mutual agreement, worked since 1983, how the Federal Magistrate came to the conclusion expressed at [82] that the order would improve the wife’s earning capacity. However, it seems clear that this was his Honour’s conclusion because at [82]:
82. The orders that I propose making in this matter will not affect the earning capacity of the husband and should improve the earning capacity of the wife.
It is difficult to see how this finding could be made on the evidence in the matter before the Federal Magistrate.
Given all the facts found by the Federal Magistrate and the evidence before him, the result of his determination is to leave the wife $1,242,525 plus $502,170 to be paid sometime in the future, a total of $1,744,695. The husband, on the Federal Magistrate’s calculations is to retain $1,863,788 plus $1,171,732 in superannuation, a total figure of $3,035,520 together with his ongoing capacity to earn significant income and bonuses.
The burden of demonstrating appealable error in relation to a discretionary judgment is articulated in House v R (1936) 55 CLR 499, where Dixon, Evatt and McTiernan JJ said at 505:
It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
In Gronow v Gronow (1979) 144 CLR 513 Stephen J said [at 519]:
The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion...
In its widest formulation the discretion and its immunity from challenge was described by Brennan J in Norbis v Norbis (1986) 161 CLR 513 in relation to the decision of the Court of Appeal in Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343 at 345 as:
The generous ambit within which reasonable disagreement is possible is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.
The Federal Magistrate’s orders fall outside the ''generous ambit within which reasonable disagreement is possible''. Grounds 2 and 3 are made out and the appeal will succeed.
Disposition
Although both parties are anxious to avoid the spectre of another trial, perhaps followed by another appeal, after hearing submissions from each, it is clear as was accepted by the parties that the matter must be remitted to be heard in the Federal Circuit Court.
Application to adduce further evidence
As has been noted, the wife, by application in an appeal sought leave to adduce further evidence. The application was misguided because it sought to do two things; secure information through the issue of various subpoenas and to bring evidence of the wife’s present financial circumstances. Counsel for the wife conceded that the wife sought to issue subpoenas because, while she believed a certain state of affairs existed in relation to the husband’s employment, she had no information and hoped that a subpoena to his employer would provide her with that information. Clearly, that is not “evidence” and in the circumstances of this case, could not fall within the ambit of evidence able to be accepted by this court hearing an appeal (see CDJ v VAJ (1998) 197 CLR 172). Counsel for the wife conceded that the evidence of the wife’s present financial circumstances sought to be admitted on the appeal was, properly regarded, not within the confines of CDJ.
Costs
As is usual, submissions on the costs of the appeal were sought at the conclusion of the appeal hearing. The wife submitted that if the appeal succeeded on a point of law and we were of the view that an order for costs was not otherwise appropriate, she would seek a certificate under the relevant legislation both for the appeal and any rehearing. The husband made the same submission.
This is a matter in which a costs order as between the parties is not appropriate and, the appeal having succeeded on a demonstrated error of law, the parties should receive certificates.
Murphy J
I have had the advantage of reading the reasons prepared by Ainslie-Wallace and Le Poer Trench JJ.
I agree that grounds 2 and 3 of the appeal, which are set out in the reasons of Ainslie-Wallace J, are made out and that the appeal should be allowed on that basis. I also agree with her Honour’s conclusions that the remaining grounds have no merit.
The Appeal’s Factual Context
Having separated in December 2000 after some 21 years of marriage, the parties continued in a relationship that, despite the separation, retained at least some of the characteristics of their pre-separation union. Post-separation, the wife and children continued to live in the former matrimonial home and the husband met outgoings for that property and other expenses from his high income gained from employment, a proportion of which involved work overseas. The parties’ three children were aged about 17, 14 and 10 at separation.
The parties divorced in January 2008. Their inability to agree upon a distribution of their property and superannuation interests led to a trial before a Federal Magistrate. The central thrust of the wife’s appeal against the orders made by the Federal Magistrate is the challenge to his Honour’s assessment of the respective contributions of the parties and his Honour’s adjustment pursuant to s 79(4)(e).
His Honour assessed the former at 70 per cent in favour of the husband. Despite determining to treat the assessment of contributions globally (as his Honour was entitled to do), in considering what adjustment if any should occur by reason of s 79(4)(e), his Honour determined to adjust by 10 per cent his contributions assessment in respect of the parties’ property in favour of the wife, but to make no adjustment in respect of superannuation. That approach is not the subject of challenge on this appeal.
The net value of the parties’ respective interests in property was found to be $3,106,313 and the amount of superannuation interests $1,673,902. As a consequence of the approach just referred to, the effect of his Honour’s 60:40 per cent assessment in respect of the parties’ property sees the wife retain the former matrimonial home and chattels and a payment to her by the husband of $125,178.20. The splitting order made by his Honour reflecting a
70:30 per cent assessment sees the wife with a superannuation interest in an amount of about half a million dollars.
Reasons and Findings
The trial Judge set out in summary form his findings in respect of the background, including the major financial transactions, underpinning the conclusions which his Honour reached ultimately. Having set out the circumstances of the parties’ early relationship, the birth of the children, and the cessation of the wife’s remunerative employment in 1983, his Honour continued at [11]:
…
· 1991: Husband transferred by [B Company] to Sydney and parties move to Sydney with the children; parties purchase property at [Suburb Q], NSW for $195,500.00 financed by the proceeds of the sale of the [W] property and NAB mortgage funds of $140,000.00;
· 1992: Husband is advised by [B Company] that he is being transferred to Melbourne; parties sell the [Q] property for $201,000.00; Husband subsequently advised by [B Company] that he will not be transferred to Melbourne and parties and the children reside in rented serviced apartment (with rent paid by [B Company]);
· 1993: Parties purchase the [investment] property for $320,000.00 funded by the proceeds of the sale of [Q] property and NAB mortgage funds of $286,000.00; [B Company] pays some interest on NAB mortgage for first four years;
· 1998: Parties purchase vacant land at the [H] property for $220,000.00, using joint savings and NAB mortgage funds of $520,000.00 to fund both the purchase and construction of a family home;
· 2000: Parties move into the [H] property; parties spend $150,000.00 on furnishings before occupation; parties lease out the [investment property]; Husband moves out of the [H] property in November 2000 and thereafter rents accommodation until July 2002; parties formally separate on 4 December 2000; Husband pays $8,500.00 per month to Wife for 9 years and 4 months, together with various running expenses on home, private health insurance, gap fees, children’s tertiary fees and expenses, books, laptops, allowances, motor vehicles for each child on their sixteenth birthdays, registration and insurance, travel and accommodation expenses, birthday presents, milestone birthday parties and presents (which Husband asserts totals $2,645,170.00);
· 2001: Husband commences relationship with Ms [G] in late 2001; Husband also moves back into the [H] property for two weeks in December 2001 while wife’s parents visit; Husband moves into Ms [G’s] home with her two children at [K], NSW;
· 2002: Parties sell the investment property for $555,000.00 with net proceeds used to reduce mortgage over the [H] property;
· 2003: Husband purchases interest in a boat;
· 2005: Husband transferred to Singapore (and later Hong Kong) by [B Company]; the husband provides the wife with $12,000.00 per month and meets mortgage payments on the [H] property; the wife acknowledges that in 2005 the husband reduced her credit card debt by $27,000.00; [the eldest son] moves out of the [H] property;
· 2006: Husband sells his interest in the first boat and purchases an interest in a second boat; the husband discharges the [H] property mortgage of $350,000.00; thereafter the husband pays the wife $8,500.00 and not $12,000.00 per month;
· 2007: Husband purchases property the [R] property for $1,030,000.00 financed by mortgage loan; the [R] property leased to parties’ son …; wife asserts she organises improvements to the [R] property; husband purchases the [C] property for $925,000.00 financed by mortgage loan;
· 2008: Divorce order made by Registrar Davis on 24 January 2008; Ms [G] resigns her employment and moves with her 12 year old daughter to Hong Kong to live with husband (Ms [G’s] 18 year old son remains in Sydney); husband pays $5,000.00 off the wife’s credit card debt; husband purchases property in [B] (“the [B] property”) for $535,000.00 financed by mortgage loan; [the youngest child] completes her Higher School Certificate;
· 2009: [The younger son] moves out of the [H] property and into the [B] property;
· 2010: Husband posted to London by [B Company]; Husband pays $90,000.00 to Wife (to repay her debt to son …) and a further $30,000.00 by way of interim property distribution; Wife commences property proceedings; wife commences spousal maintenance proceedings; [the youngest child] moves to USA as part of tertiary studies;
· 2011: Husband pays wife a further $30,000.00 by way of Court-ordered interim property distribution; Husband continues to pay support for [the youngest child]; Final Hearing.
The Contributions Assessment
Expressed in terms of principle, the appellant’s challenge in grounds 2 and 3 is premised on the assertion that his Honour’s assessment of, respectively, contributions and the s 79(4)(e) adjustments, is each “unreasonable or plainly unjust” (House v The King (1936) 55 CLR 499 at 505, per Dixon, Evatt and McTiernan JJ) or “plainly wrong” (Gronow v Gronow (1979) 144 CLR 513 at 519, per Stephen J).
That is, each result lies outside the parameters of a discretion which, it must be kept in mind, is “extraordinarily wide” (ee, for example, De Winter & De Winter (1979) FLC 90-605 at 78,092, per Gibbs J; Norbis v Norbis (1986) 161 CLR 513 at 540, per Brennan J). The parameters of that wide discretion mark out the boundaries within which reasonable minds might differ as to the result without appealable error.
His Honour’s ultimate conclusion as to the assessment of contributions is expressed this way in the reasons:
77.The husband ultimately asked the Court to assess contributions at 90% in his favour and 10% in the wife’s favour. The wife contended that the evidence supported a “pretty much equal” assessment of contributions.
78.I would agree that the evidence would support an outcome of equal contributions being made as at the date of separation. That said, given the significance of the financial contributions made by the husband post-separation, I am not satisfied that the evidence supports an overall assessment of equal contributions being made. A further adjustment should be made in the husband’s favour and I am satisfied that the evidence supports a further adjustment in percentage terms of 20%.
[Footnoted references to transcript omitted.]
As that passage suggests, his Honour placed considerable importance upon the financial contributions made by the husband in the post-separation period. Other passages of the reasons recite submissions made in that respect on behalf of the husband. For example:
64.The husband’s overall argument is that he has made virtually all the contributions to the increased property pool since 2001. The evidence would support this submission in terms of the strength of the husband’s financial contributions.
65.In support of his argument, the husband submitted through his counsel that “the mathematics in this case is a useful guide to assessing contribution”. The husband asserts that his post-separation contribution to the property pool “would be in the order of about $1.285 million following separation”.
66.The husband also asks the Court to accept that, post-separation, he has expended monies totalling $2.6 million “for the benefit of the wife and children”. The wife does not deny that the husband has provided financially for her and the children from the time of separation until more recent times when he reduced and ultimately withdrew such on-going financial assistance following the youngest child’s transition from high school to university. Indeed, it was this decision by the husband that seems to have acted as a catalyst to the wife commencing these proceedings after nearly 10 years of separation and some 18 months after their divorce.
[Italics in original.]
His Honour also recites submissions made on behalf of the wife:
67.The wife, understandably, asks the Court to consider her own contributions to the conservation and improvement of the [H] property, but also her own competing family contributions that act to erode the significance of the husband’s on-going financial and non-financial contributions. The wife also asks the Court to accept that she indirectly contributed to the acquisition of the investment properties.
Family contributions as homemaker and parent
68.As has been previously noted, in addition to the wife’s contributions made pursuant to s.79(4)(a) and (b) of the Act, the Court is satisfied that the wife was the primary homemaker for the parties and the primary carer for the parties’ now adult children. This is not disputed in any way by the husband who, through Mr Richards, described the wife’s role as homemaker and parent in the post-separation period as “absolutely marvellous”.
[Footnotes omitted.]
I consider, with respect, that his Honour’s assessment is unjust and “plainly wrong”. That conclusion is informed by what I consider to be errors in the manner in which the respective contributions of the parties were assessed.
First, I consider that [78] of the reasons in particular is redolent of his Honour having misled himself by, in effect, posing the question of what adjustment should be made to an equal division at separation to take account of contributions in the ten years or so post-separation. The question to be addressed was what did an analysis and weighing of all contributions of all types prescribed by s 79(4) made by both parties across 31 years (the approximate 21 years of the cohabitation and the approximate 10 years after their separation) suggest was a just assessment of contributions. (See, for example, In the Marriage of Aleksovski (1996) 20 Fam LR 894, particularly per Kay J at 903).
For that same reason, it is not a matter, as is said at [67] of the reasons, of “competing” contributions by the wife “erod[ing] the significance of the husband’s on-going financial and non-financial contributions” (see, for example, In the Marriage of Pierce (1998) 24 Fam LR 377, particularly at 385-6).
Inherent in the finding at [78] is the proposition that the contributions of all types recognised by s 79(4) made by both parties over 21 years in their “own spheres” (see, Mallet v Mallet (1984) 156 CLR 605 at 636, per Wilson J) results in contributions being assessed as equal, but the contributions of all types made by both parties in their own spheres over 31 years justifies a disparity between them of 40 per cent or, in dollar terms over both assets and superannuation, of about $1.91million. In my view, that conclusion pays no, or no sufficient, regard to the significance of the wife’s contributions over 21 years, the impact of those 21 years of contributions on the property and income earning by the husband, and the fact that those significant contributions (as his Honour found them to be, at [69]) undoubtedly continued in the 10 years after separation.
The expression “post-separation contributions” has, of course, been used widely in many authorities within the context of discussions about the assessment of contributions. But, importantly, it is not the fact of separation or when contributions are made that is the delineator. It remains crucial to analyse and weigh the nature, form and characteristics of all contributions across the whole of the period under consideration.
Often, but by no means invariably, the nature of contributions – particularly
s 79(4)(c) contributions – will change with separation by reason of how the parties conduct their post-separation relationship. Equally, in many cases, particularly when children are being cared for predominantly by one party contributions of the same kind will continue despite the separation, and continue to be very significant.
In Ferraro & Ferraro (1993) FLC 92-335, for example, this Court specifically recognised (at 79,568-9) that:
The wife continued to make a significant contribution to this post-separation property for the above reason and because she continued to make her contributions to it during that period under paras (b) and (c).
His Honour recognised that the nature of this particular marriage union was that the husband was the “significant ‘breadwinner’” and the wife the “significant ‘homemaker’ and parent” and that this “…usually advances both the financial prosperity and the overall welfare of a couple and their children” (at [57]). So, too, his Honour recognised that the court is required to consider “…the parties’ contributions made on and from the commencement of their relationship, during their relationship, and following separation” (at [59]). Under the heading, “Financial and non-financial contributions”, his Honour says:
61.It is clear that both parties have made financial and non-financial contributions to the acquisition, conservation and improvement of their matrimonial property. This is particularly so given their mutual investment of their earnings into their property pool and their labours associated with the conservation of the [H] property.
Having recognised that, his Honour goes on to say:
62.It is also clear from the evidence that the husband, through the parties’ decision to specialise their respective roles, has been able to contribute significantly more income and energy into making relevant financial contributions than the wife. This appears so, not just during the period of the parties’ cohabitation, but in the decade since their separation.
[Emphasis added.]
However, it is equally clear that the very same decision by the parties to “specialise their respective roles” permitted (or required) the wife to contribute significantly more time and energy to the care of the household and the rearing of the parties’ three children not just in the 21 years to separation, but in the
10 years after separation.
Although each party’s respective role was conducted with increased exclusivity after separation, it was those same respective roles which continued. That is, each of the parties contributed within their “own spheres” in that respect in a manner similar to that which they contributed prior to separation.
Notably, at separation two of the parties’ three children were teenagers; the youngest, aged 10, had the whole of her secondary education ahead of her and, post-separation, the demands of the husband’s employment and absences associated with it had significant consequential impacts upon the nature and extent of those contributions by the wife.
This Court said in Tyson & Tyson (1993) FLC 92-368 at 79,847:
…as has often been pointed out, the court is not confined, even on the issue of contributions, to assets in existence as at the date of separation: Jacobsen and Jacobsen (dec); Auston and Jacobsen (1988) FLC 91-901 ... Nor can it be said that the contribution of the wife as homemaker and parent ceased as at that date. Indeed, it continued until 1990: Williams v Williams (1985) FLC 91-628. It is therefore not correct to say, as his Honour did, that any relevant contribution of the wife had ceased for many years by [the date of trial].
[Emphasis added.]
In Williams at 80,093 (referred to in the preceding extract from Tyson), the High Court said:
The second matter arises from a submission that the primary judge proceeded on a wrong view of sec.79(4)(c) of the Act in taking into account the contribution made by the respondent wife to the welfare of the family after the appellant husband left the home. It is unnecessary to say more than that we consider that the construction upon which her Honour acted, a construction affirmed by the Full Court of the Family Court, was correct, and that the care by the respondent of the children after cohabitation ceased was a factor within sec.79(4)(c).
In my view, his Honour nowhere recognises the significance of the wife’s (predominantly s 79(4)(c)) contributions across the whole of the 31 years under consideration, including, importantly the 10 year, post-separation component of that time.
At [61], above, his Honour finds that the financial position of the parties at separation was due to both financial and non-financial contributions made by both parties. There, his Honour refers to the “mutual investment” of “their” earnings. However, as his Honour found, the wife had not worked remuneratively since 1983. His Honour also there refers to the mutual “labours associated with the conservation” of the former matrimonial home. But the overwhelming bulk of the contributions made by the wife were s 79(4)(c) contributions as his Honour recognised elsewhere in the reasons. Crucially, those contributions also contributed – and contributed significantly – to the “acquisition, conservation and improvement of their matrimonial property”.
The vital importance of that matter was emphasised by this Court in, for example, Ferraro at 79,568-9. Just as there the wife made a contribution to the business, here the wife made a contribution to the earning of significant income by the husband for the reasons identified by the Court in that case:
The issue here is not whether the wife made direct contributions to the conduct of the business. His Honour found that she had not. The facts are that the husband, particularly in the latter years, devoted his full time and attention to his business activities and thus the wife was left with virtually the sole responsibility for the children and the home. That latter circumstance is significant not only in relation to the evaluation of the wife’s homemaker contributions under para (c) but is important under para (b) because it freed the husband from those responsibilities in order to pursue without interruption his business activities. In addition, the wife by her joint ownership made the contributions referred to previously. It is, however, important to ensure that there is no double counting under the two separate paragraphs.
While his Honour makes reference to the contributions of both parties “throughout the entirety of their relationship” his Honour describes it as “noteworthy” that “…the asset pool increased significantly in the post-separation period.” His Honour underscores, it seems, the importance of the husband’s financial contributions and, it appears, attributes some form of causal connection, between those “financial contributions” and the increase in the assets and the value of them during the post-separation period. Yet, the foundation for the property transactions which occurred subsequent to separation was the property acquired during the marriage and the husband’s income acquired through advancement in his employment. The wife contributed significantly to each.
In my respectful view, his Honour did not give proper consideration to that important matter in arriving at his assessment of contributions.
Finally, his Honour found, with respect correctly, that the husband had made significant contributions from his income to the property and directly to the wife and children. However, the husband was, as was accepted, earning a very high income and the conservation and preservation of assets occurred in circumstances where, in later years, his employment saw him living overseas. Within that context, it is important that, while the payments made by the husband were made voluntarily (in the sense of there being, until very late in the post-separation period, no court order), the circumstances otherwise applicable indicate plainly that significant payments by way of spousal maintenance and child support would otherwise have very likely been ordered.
In that respect, his Honour records both the amount of the husband’s periodic payments to the property and wife and children and the calculations done by the husband as to the total amounts paid [11], [65] and [66]. Yet, nowhere in the reasons (including in respect of a specific consideration of s 75(2)(b)) is the husband’s income recorded or the disparity between that income and the income earned by the wife. During cross-examination, the husband confirmed that his income as at March 2011 was $640,000 per year (about $53,300 per month). As part of his employment “package”, the husband earned additional bonuses. As an example, the evidence before his Honour reveals that the husband received a bonus in the United Kingdom of AU$503,668 in 2011. By way of contrast, the wife’s only income derived from a government benefit.
Each of the matters discussed above inform my conclusion that his Honour’s assessment of contributions was “unreasonable or plainly unjust” or “plainly wrong”. I am unable to persuade myself that the assessment of contributions made by his Honour falls within the bounds of a reasonable exercise of discretion.
In my view, error is demonstrated in respect of ground 2.
The s 79(4)(e) Assessment
Each of the parties conceded before his Honour that there should be an adjustment in favour of the wife pursuant to this sub-section; the wife contended it should be “probably about 25 per cent” whereas the husband contended for an adjustment of 10 per cent. His Honour concluded that a
10 per cent adjustment was just, but, as earlier referred to, only in respect of property; his Honour concluded there should be no such adjustment in respect of superannuation (at [100] and [103]).
It is not suggested that his Honour erred in the assessment of the so-called
“s 75(2) factors” by taking into account any irrelevant considerations nor by failing to take account of relevant considerations. Again, the challenge is that the result arrived at is “unreasonable or plainly unjust” or “plainly wrong”. Again, the balancing of a number of discrete factors as but one part of an overall assessment, and the incorporation of a broad enquiry (s 75(2)(o)), involves the exercise of a wide discretion with the result that this court should be well satisfied that a trial Judge’s conclusion falls outside the necessarily wide ambit within which reasonable disagreement is permissible.
Important to the assessment pursuant to s 79(4)(e) is a consideration of the quantum and effect of the mooted assessment of contributions. That is required by reference to ss 75(2)(b) and (n) (see, Willis & Willis [2007] FamCA 819, especially at [50]). Here, in considering specifically s 75(2)(b), and, indeed,
s 75(2) more broadly, the Federal Magistrate appears to have paid no regard to his mooted assessment of contributions nor the nature and effect of the orders that might flow from it.
No ground of appeal contends that his Honour erred in principle in so doing. Yet, the consideration just referred to is important in informing my view that his Honour’s adjustment of 10 per cent in respect of the parties’ property in favour of the wife (in dollar terms, about $310,000) is plainly wrong.
Reference has already been made to the very high level of income earned by the husband and the disparity between that income and the receipt by the wife of Newstart Allowance. His Honour found:
86. The husband is hopeful that his employer, [B Company], might facilitate his return to Australia in approximately two years whereupon he would take on a senior role in the business. Should that eventuate, the husband stated that his income will be unchanged but that he would no longer be entitled to any financial benefits for living overseas. In that event, the husband proposes to reside with his partner at the [C] property.
[Footnoted references omitted.]
His Honour also found:
82.The orders that I propose making in this matter will not affect the earning capacity of the husband and should improve the earning capacity of the wife.
Although, again, not the subject of any specific challenge on this appeal, it is, with respect, difficult to see an evidentiary basis for, at least, the latter part of that finding.
Later in the judgment, his Honour said:
87.In her evidence the wife stated that although she had completed several courses of education since separation, such courses were “for personal development [and] they were never intended to lead to employment”.
88.In response, the husband asserted that the wife was capable of generating income by devoting her energies to establishing and running a small business. That said, the husband acknowledged that unless she had sufficient money available to invest then the only way the wife could obtain the necessary funds to establish a small business would be via borrowed funds. The husband also stated that, using his experience in the … industry as an example, an amount of $200,000.00 would be needed to establish a small business (such as acquiring a franchise) and a further amount of $200,000.00 would be needed for stock purchases “but if you’re into other items it varies”. He also acknowledged that should the wife be successful with her claim she would have sufficient funds to be able to establish a small business.
[Footnoted references omitted. Italics in original].
Although those arguments are recorded under a heading referenced to
s 75(2)(b), no findings are made by his Honour in respect of the respective assertions there recorded. With great respect, in the absence of any other evidence, none of which is recorded in the reasons, I consider that speculation by the husband about what the wife – who has been out of the paid workforce for over 25 years – may or may not do in respect of a mooted small business, assists very little, if at all, in informing s 75(2)(b) or relevant “s 75(2) factors” more broadly.
His Honour’s ultimate assessment with respect to s 79(4)(e) appears to be encapsulated by what is said at [100]:
In light of the above-mentioned circumstances, the Court agrees with the wife that the circumstances warrant a further adjustment of matrimonial property in the wife’s favour. That said, the Court is also persuaded by the submissions made by the husband that an adjustment of 10% is appropriate. While the wife has some health issues, she is under the assessment and treatment by generalist and specialist medical practitioners. The wife is also in transition from significant homemaker and parenting roles to the next phase of her life which is largely free of the responsibilities of traditional parenting.
It can be seen within that summary that, again, no mention is made of the disparity in income between the parties. Nor is there a specific finding in the reasons in respect of the wife’s future capacity to generate income. In my view, each is a crucially important factor in assessing the “s 75(2) factors” relevant to this particular marriage embracing the approximately 31 years between cohabitation and trial (see, for example, Clauson & Clauson (1995) FLC
92-595, particularly at 81,911).
Expressed in dollar terms, his Honour’s adjustment is the equivalent of less than six months’ salary for the husband. It is, for example, significantly less than the husband received in one year (2011) by way of bonus. I reject the argument on behalf of the husband that the husband’s age places him closer to retirement and, as a result, the factor just described should accordingly have less weight. The finding made by his Honour at [86] quoted above militates against that conclusion as does the level of income and benefits earned by the husband when compared to the wife.
In my view, his Honour’s assessment falls outside the bounds of the inherently wide discretion to which reference was earlier made. Ground 3 is established.
I should indicate my agreement with the views of Le Poer Trench J that, although not raised in the grounds of appeal, his Honour erred in holding that ss 75(2)(k) and 75(2)(n) have no relevance to the present case because, here, there was no application for spousal maintenance (at [97]). I agree, as his Honour points out, that this is an error for the reasons explained in in Browne & Green (1999) FLC 92-873, at [66]-[68]. I also agree with what is said about the importance of s 75(2)(n) and s 79(4)(d) by reference to Elsey & Elsey (1997) FLC 92-727.
The Remaining Grounds of Appeal
I respectfully agree with what is said by Ainslie-Wallace J about each of the remaining grounds of appeal.
I agree that neither ground has merit.
The Application for Leave to Adduce Further Evidence
At the hearing of this appeal, I joined with Ainslie-Wallace and Le Poer Trench JJ in dismissing the wife’s application to adduce further evidence on this appeal.
The power to admit further evidence on appeal pursuant to s 93A(2) of the Act is discretionary and is exercised to “…facilitate the avoidance of errors which cannot be otherwise remedied by the application of conventional appellate procedures” (CDJ v VAJ (1998) 197 CLR 172 at 201, per McHugh, Gummow and Callinan JJ). While the Court has a broad discretion, it is not so wide “…that the Full Court can admit further evidence merely because it is useful” (CDJ at 203, emphasis in original).
Considerations relevant to the exercise of the discretion (although neither individually or collectively necessarily conclusive) include, the nature of the proceedings, whether the evidence was reasonably available at the hearing or deals with events that have occurred subsequently, whether the further evidence is disputed and the like (CDJ at 202-3, per McHugh, Gummow and Callinan JJ and 233-6, per Kirby J). Ultimately, however, the criterion is that earlier referred to.
Both the nature of the application brought by the wife (the obtaining of evidence by subpoenae) and the nature of the evidence sought to be adduced otherwise (the wife’s present financial circumstances) suggest, in my respectful view, a misunderstanding of the role of further evidence upon appeal and the overriding purpose to which further evidence might properly be directed.
It is for those reasons that I joined in the order refusing the application.
Re-Exercise or Remitter?
As is almost invariably the case in appeals in this Court, the parties each submit that they are anxious to avoid the cost, stress and inconvenience of a new trial. The concerns expressed by the parties are, of course, perfectly understandable and certainly do not go unheard.
Yet, as has been said on many occasions by this Court, the question of
re-exercise or remitter must be determined by reference to principle and, in particular, by reference to what was said by the High Court in Allesch v Maunz (2000) 203 CLR 172(see, also, Gludau & Gludau [2013] FamCA FC 112 at [84]-[90]).
The submissions made by counsel for each of the parties are to the effect that, in the circumstances of this case, remitter is necessary. It is appropriate to so order.
Costs
I agree that it is appropriate that each party should bear their own costs of the appeal.
I also agree that the appeal has succeeded on an error of law.
The Court has not been made aware of any offers to settle nor has a request been made to put further matters before us on the issue of costs. Nothing to which the Court was taken suggests that the appeal arises from any position adopted unreasonably or unnecessarily by either party or that either party contributed to the error upon which the appeal succeeds.
I consider it appropriate, then, that each party be given a costs certificate in respect of both the appeal and the new trial.
LE POER TRENCH J
I also agree that grounds 2 and 3 of the appeal, which are set out in their Honour’s reasons, are made out and that the appeal should be allowed on that basis. I also agree with their Honours’ conclusions that the remaining grounds have no merit and wish to add the following reasons.
Although within the canopy of the grounds of appeal, yet without a specific ground and not specifically argued by the appellant, there is an aspect of the Federal Magistrate’s determination which cannot be allowed to stand for the reason that it may be seen to have been sanctioned by this court. The content of [97] of the Federal Magistrate’s judgment (as set out hereafter) contains errors of law. There is authority which permits an appellate court, in such circumstances, to identify and correct the clear error of law.
In Fenton & Marvel [2013] FamCAFC 132 the Full Court (May, Strickland and Murphy JJ) upheld an appeal against an order by Coates FM (as his Honour then was) declaring that a de facto relationship had never existed between the parties. While the appeal was successful, the error upon which it succeeded was not addressed in the grounds of appeal. All members of the Full Court agreed that the appeal should be allowed; however, Strickland J did not share the view of May and Murphy JJ as to the error on which the appeal’s success was based.
Murphy J was of the view at [80] that Coates FM (as his Honour then was) had “misdirected himself as to the correct legal principle to be applied”. While the error of law had not been identified in the appellant’s grounds of appeal, his Honour concluded as follows:
78. Although on one view of Ground 1 it might be seen to encompass the error of law just identified, its reference to “excessive weight…as to the indicia” of a de facto relationship and an alleged failure to “implement a broader view” of “the jurisdictional requirements of section 4AA” point against that conclusion. That position is reinforced by an absence from the Ground, and the Summary of Argument, to any reference to the Amendment Act, and s 86 of that Act in particular.
79. Despite its absence from the grounds, where there is a clear error of law (and all the more so if the error pertains to jurisdictional fact) the principle is, in my view, clear: “if the judges of an appellate court hold the decision of the trial judge to be wrong, they should correct it” (Warren v Coombes (1979) 142 CLR 531 at 553, per Gibbs ACJ, Jacob and Murphy JJ).
80. I am satisfied that his Honour misdirected himself as to the correct legal principle to be applied in the manner earlier discussed. His Honour’s order should be set aside.
As noted above, while May J at [3] agreed with the conclusion of Murphy J as to the existence of a “fundamental error” of law, Strickland J did not at [35]. Rather, his Honour concluded at [36]–[37] that the appeal should succeed on the basis that Coates FM (as his Honour then was) failed to make specific factual findings in support of the outcome he had reached.
While the primary question considered in Warren v Coombes was whether appellate courts were entitled to arrive at their own conclusions with respect to inferences made from facts, in the joint majority judgment of Gibbs ACJ, Jacobs and Murphy JJ the following was said at [552] in relation to the duties and functions of appellate courts:
Again with the greatest respect, we can see no justification for holding that an appellate court, which, after having carefully considered the judgment of the trial judge, has decided that he was wrong in drawing inferences from established facts, should nevertheless uphold his erroneous decision. To perpetuate error which has been demonstrated would seem to us a complete denial of the purpose of the appellate process. The duty of the appellate court is to decide the case—the facts as well as the law—for itself. In so doing it must recognize the advantages enjoyed by the judge who conducted the trial. But if the judges of appeal consider that in the circumstances the trial judge was in no better position to decide the particular question than they are themselves, or if, after giving full weight to his decision, they consider that it was wrong, they must discharge their duty and give effect to their own judgment.
…
The fact that judges differ often and markedly as to what would in particular circumstances be expected of a reasonable man seems to us in itself to be a reason why no narrow view should be taken of the appellate function. The resolution of these questions by courts of appeal should lead ultimately not to uncertainty but to consistency and predictability, besides being more likely to result in the attainment of justice in individual cases. (emphasis added)
At [553], their Honours continued:
… if the law confers a right of appeal, the appeal should be a reality, not an illusion; if the judges of an appellate court hold the decision of the trial judge to be wrong, they should correct it.
In this case the Federal Magistrate’s determination of the division of net assets and superannuation, based upon assessment of contributions pursuant to
ss 79(4)(a) to (c), was expressed in percentage terms. The learned Federal Magistrate, did not calculate, in dollars, the consequences for each of the parties resulting from that determination. Nor did he consider that difference when he came to consider the matters referred to by him under ss 79(4)(d) or (e). The reason for that omission appears to have arisen, at least in part, from what was stated by him at [97] of his judgment which provided as follows:
For the sake of completeness, I note that considerations under s.75(2)(h), (j) and (k) of the Act are not applicable here as neither party seeks final orders in respect of spousal maintenance. I also note that s.75(2)(c), (ha), (l), (n), (naa), (na), (p) and (q) as well as s.79(4)(f) and (g) of the Act are not applicable in the circumstances of this case.
In relation to his Honour’s determination that ss 75(2)(j), 75(2)(k) and 75(2)(n) were not applicable and/or relevant to the case, we conclude that determination is in error.
Section 79(4) requires that the court “shall take into account” s (79(4)(e)) “the matters referred to in s 75(2) so far as they are relevant.”
The sub-sections of s 75(2) here under consideration are as follows:
Section 75(2)(j):
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
Section 75(2)(k):
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
Section 75(2)(n):
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) ….
Section 75(2)(j) and 75(2)(k)
In Browne v Green (1999) FLC 92-873, the Full Court (Lindenmayer, Finn and Holden JJ) considered how the phrase “the party whose maintenance is under consideration”, found in ss 75(2)(g), (h) and (k), should be read when considering a property settlement application under s 79. Their Honours said:
66. In support of these grounds, it was submitted by Counsel for the husband that her Honour had in substance held that the wife should receive more money because of loss of future income-earning capacity under paragraph 75(2)(b) or (o) rather than under paragraph 75(2)(k). It was then submitted that her Honour had erred in using paragraphs 75(2)(b) and (o) in this way since paragraph 75(2)(k) covered the field in this regard but in fact only has application where the proceedings are for maintenance (which was not the case here).
67. It is fair to say that it has long been assumed in this Court that when s 75(2) is being applied in property settlement (as opposed to maintenance) proceedings, references in paragraphs (g), (h) and (k) to “the party whose maintenance is under consideration'' can be read as references to a party to the proceedings with respect to property settlement. Such an assumption was made, for example, by Nygh J in Hirst and Rosen (1982) FLC 91-230, and we were not taken to (nor are we aware of) any authority to the contrary.
68. However, if it should be that the submission put on behalf of the appellant is correct, and paragraph 75(2)(k) can only operate in maintenance proceedings and has no operation in property settlement proceedings, then it seems to us that her Honour was correct in concluding that she could in property settlement proceedings have regard under either paragraph (o) or (b) to the adverse impact that may have been caused to the wife's career by the arrangements concerning the wife's work which were implemented during the marriage. (emphasis added)
A more recent example of a Full Court decision in which s 75(2)(k) was considered and given weight in the context of property proceedings under s 79, is GBT v BJT [2005] FamCA 683. In that decision, the Full Court (per Kay, Holden and Warnick JJ) expressed a view that the trial Judge may have given insufficient consideration to the duration of a marriage when considering factors under s 75(2). Their Honours said:
64. We are inclined to the view that, in addressing the weight to be given to the disparity in the parties’ incomes and earning capacities, his Honour may well have given insufficient weight to the shortness of the marriage (relevant under section 75(2)(k)) and to the minimal nature of the wife’s contributions, particularly having regard to the fact that such contributions as she did make were mainly in the homemaker sphere, the husband paid for the provision of a great deal of domestic assistance, and there were no children of the parties (relevant under section 75(2)(j)).
An example of a first instance decision in which s 75(2)(k) was considered and given weight in the context of property proceedings under s 79 is Kasiopoulos & Garapiperis [2010] FamCA 39. In that decision, Johnston JR (as he then was) discussed which of the s 75(2) factors were most relevant to the property settlement proceedings before him.
At [79] his Honour stated clearly that s 75(2)(k) was one of those:
In my view, the most relevant s 75(2) matter is the vast difference between the parties’ respective capacities to earn income. In my view, sub-sections 75(2)(j) and (k) of the Act are very relevant in this case. Sub-section 75(2)(j) requires the Court to take into account the extent to which a party has contributed to the income and earning capacity of the other party. Sub-section 75(2)(k) requires the Court to take account of the duration of the marriage and the extent to which it has affected the earning capacity of a party. (emphasis added)
Section 75(2)(n)
There is clear authority to show that, when considering s 75(2) factors in the context of applications for property settlement, it is incumbent upon trial Judges to consider s 75(2)(n).
In Willis & Willis [2007] FamCA 819, the Full Court (Warnick, May and Stevenson JJ) expressed a view that, in determining property settlement proceedings under s 79, the trial Judge had erred in failing to consider under
s 75(2) the result which had been arrived at on the basis of contributions and the impact of that result on the parties. Their Honours said:
49. Her Honour contrasted the husband’s history of reliable and well paid employment to the situation of the wife. She found that the wife’s age and length of time out of the workforce made it unlikely that she would ever match the husband’s earning capacity. This conclusion seems to us to be logical and well justified on the evidence.
50. However, in our opinion there was an error in the trial judge’s treatment of the section 75(2) factors. Her Honour failed to consider the effect of the findings as to contribution on the respective positions of the parties, before proceeding to determine whether any adjustment was warranted pursuant to section 75(2). The effect of the 30 per cent differential established on the basis of contribution was approximately $220,000. This required consideration pursuant to section 75(2) but was not addressed by her Honour. The appeal must therefore be allowed in respect of the finding that the wife receive an adjustment of 15% on account of section 75(2) factors.
There is nothing in any of the ss 79(4)(d) to (g), or elsewhere in s 79 which requires a judge to calculate in dollar terms the differential achieved between the parties if the judge has apportioned assessment of contribution in percentage terms. Nevertheless, it is a matter of common practice developed by judges exercising jurisdiction under section 79 of the Act, to carry out such an exercise, at least at the time matters relevant to section 79(4)(e) are considered. Section 75(2)(n), on one level at least, invites such an exercise. Had the Federal Magistrate carried out such an exercise, in this case, he may have reached a different determination as to the amount of adjustment which was required under section 75(2).
The determination reached by the Federal Magistrate, in assessing contribution, produced a result which saw the husband receive $1,912,086 more than the wife in a net pool of assets and superannuation of $4,780,215, as determined by his Honour.
I certify that the preceding one hundred and seventy five (175) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
(Ainslie-Wallace, Murphy & Le Poer Trench JJ) delivered on 25 February 2014 2014
Associate:
Date: 25 February 2014
*Amended by insertion of new Order 2 and subsequent orders renumbered.
** Order 1 amended by the substitution of “the Federal Magistrates Court” for “Judge Monahan”.
Key Legal Topics
Areas of Law
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Family Law
Legal Concepts
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Appeal
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Jurisdiction
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Contributions
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Contributions Assessment
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S 75(2) Adjustment
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S 79(4)(e) Adjustment
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Family Contributions
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Earning Capacity
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