Merritt & Merritt
[2009] FamCAFC 154
•27 August 2009
FAMILY COURT OF AUSTRALIA
| MERRITT & MERRITT | [2009] FamCAFC 154 |
| FAMILY LAW - APPEAL – PROPERTY – LIABILITIES – where the Federal Magistrate divided the property in the proportions of 60 per cent to the wife and 40 per cent to the husband – whether his Honour erred in refusing to take into account five liabilities of the husband when calculating the net value of the parties’ property – whether his Honour erred in finding that the parties’ contributions were equal – whether his Honour erred in making a 10 per cent adjustment in favour of the wife based on the matters contained in s 75(2) of the Family Law Act 1975 (Cth) – found errors in relation to the treatment of liabilities and the contribution assessment – the importance in property settlement proceedings of the distinction between the existence of a liability and the question of whether it should be taken into account in calculating the net value of the property or as a s 75(2) matter emphasised – appellate interference warranted – appeal allowed – Federal Magistrate’s orders set aside – application for property settlement remitted for re-hearing. |
| Family Law Act 1975 (Cth) Federal Proceedings (Costs) Act 1981 (Cth) |
| Antmann and Antmann (1980) FLC 90-908 H & H [2001] FamCA 134 J & J [1998] FamCA 163 Prince and Prince (1984) FLC 91-501 per Evatt J at 79,076 Parshen v Parshen (1996) FLC 92-720 |
| APPELLANT: | Mr Merritt |
| RESPONDENT: | Ms Merritt |
| FILE NUMBER: | BRC | 7883 | of | 2007 |
| APPEAL NUMBER: | NA | 39 | of | 2008 |
| DATE DELIVERED: | 27 August 2009 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Finn, May and Strickland JJ |
| HEARING DATE: | 10 November 2008 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 20 March 2008 |
| LOWER COURT MNC: | [2008] FMCAfam 459 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr McGregor |
| SOLICITOR FOR THE APPELLANT: | Milburn Guttridge Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Jordan |
| SOLICITOR FOR THE RESPONDENT: | Jones Leach Hawley Lawyers |
Orders
That the appeal against the orders of Federal Magistrate Jarrett made on 20 March 2008 (and as amended pursuant to r 16.05(2)(e) of the Federal Magistrates Court Rules 2001 on 13 May 2008) be allowed.
That the orders be set aside.
That the parties’ applications for property settlement be remitted for hearing by a Federal Magistrate other than Federal Magistrate Jarrett.
a) The Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 (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 husband in respect of the costs incurred by the appellant husband in relation to the appeal.
b)The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (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 wife in respect of the costs incurred by the respondent wife in relation to the appeal.
c)The Court grants to each party a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act1981 (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 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 under the pseudonym Merritt & Merritt is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 39 of 2008
File Number: BRC 7883 of 2007
| Mr Merritt |
Appellant
And
| Ms Merritt |
Respondent
REASONS FOR JUDGMENT
This is an appeal by the husband against orders for property settlement made by Jarrett FM on 20 March 2008 (subsequently amended pursuant to “the slip rule” on 13 May 2008) in proceedings between the husband and the wife.
The effect of the orders was to divide property which his Honour found to have a net value of $792,863.19 in the proportions of 60 per cent to the wife ($475,717) and 40 per cent to the husband ($317,145). That division was arrived at on the basis of an assessment of equality of contributions under s 79(4)(a), (b) and (c) of the Family Law Act 1975 (Cth) (“the Act”) and then with an adjustment of 10 per cent in favour of the wife on account of the matters referred to in s 75(2) of the Act.
The submissions made in support of the husband’s seven grounds of appeal reveal that the husband’s challenges are to his Honour’s finding in relation to the value of the property to be divided; to his assessment of equality of contribution; and to his 10 per cent adjustment in favour of the wife on account of the s 75(2) matters.
In the final ground of appeal contained in his Notice of Appeal, the husband asserts that his Honour “failed to act or appeared to act in an impartial manner and afford [the husband] natural justice”. This complaint was not pursued in the written or oral submissions of counsel for the husband in support of the husband’s appeal. A reading of the transcript of the hearing before his Honour indicates that such a complaint would have no substance.
In opposing the appeal and seeking to maintain his Honour’s orders, the wife relied on the discretionary nature of those orders.
Background
By way of background, we need only say, at this point, that his Honour found at the commencement of his reasons for judgment, that the husband and the wife commenced to live together in December 1987; that they married in December 1990; and that they had one child, a daughter, E, who was born in early 1992.
There was a dispute between the parties as to the date of their separation, with the husband contending for June 2002 and the wife contending for January 2004. Although his Honour considered that nothing turned on that issue, he determined that if it had to be determined, he would prefer the wife’s evidence on the issue. The parties were divorced on 1 November 2006.
Having regard to the issues which arise in the appeal, we would add to his Honour’s chronology that the husband filed an application for property settlement on 27 June 2007, with a response being filed on behalf of the wife on 10 September 2007. Jarrett FM heard the proceedings on 17 March 2008 and delivered his reasons for judgment and made the orders, which are the subject of this appeal, on 20 March 2008.
His Honour outlined the history of the parties’ financial affairs in the context of his consideration of their contributions. It will be convenient for us also to set out that history when we consider the husband’s challenge to his Honour’s contribution assessment. We will do this following a consideration of the challenge to his Honour’s calculation of the pool of property available for distribution.
The challenge to the Federal Magistrate’s calculation of the value of the parties’ property
The husband’s challenge to his Honour’s finding as to the value of the property to be divided between the parties, relates to his Honour’s refusal to take into account in his calculation of the net value of that property five particular liabilities. Before referring to those disputed liabilities, it will be useful to set out his Honour’s findings concerning the assets of the parties in relation to which there was no issue before us.
In paragraph 5 of his reasons for judgment his Honour made the following findings concerning the parties’ assets in the following numbered sub-paragraphs (emphasis added):
1)real property at [Property E, in town J] with a value of $550,000 and a mortgage over it of $143,400 [nett equity of $406,600];
2)real property at [Property S, in town U] with a gross value of $315,000 and a mortgage over it of $176,470 [nett equity of $138,530];
3)property at [Property R, in town U] with a value of $272,500 and a mortgage over it of $145,733 [nett equity of $126,767];
4)there is land at a place called [Property M] in respect of which the husband has a half share and the parties agree that share is worth $50,000;
5)the husband has plant and machinery which I am satisfied should be valued for the purposes of these proceedings at $288,500. I prefer the husband's calculations as to the value of that plant and machinery over those proffered by the wife. The husband’s day to day experience with the plant and equipment and his involvement in the … industry lends authority to his calculations;
6)the wife has [a Holden] motor vehicle valued at $5,500, superannuation of $21,824; and
7)the husband has superannuation of $4,200. He also has the proceeds of a bobcat or a skid steel loader of $9,189.
His Honour did not provide a sub-total for the value of the assets at this point in his judgment. But on our calculation the value of the assets (less the value of the mortgages on the real property) listed by his Honour is $1,051,110.
His Honour went on in paragraphs 6 to 13 of his reasons to discuss and either to accept or to reject various liabilities, all of which the husband contended should be taken into account.
The liabilities which his Honour was prepared to take into account were a “plant and machinery liability of $233,246.81” and “a liability to [Mr G Merritt] of $25,000” (see paragraphs 6 and 8 of his reasons). When these two liabilities are deducted from the value of the assets, the nett figure of $792,863.19 arrived at by his Honour (paragraph 14 of his reasons) is reached.
The liabilities which his Honour rejected were:
1)the costs of renovations to the R property - $45,382;
2)an “ANZ Supplementary business” loan - $24,890.93;
3)a loan from a Mr D - $17,000;
4)an income tax liability - $23,279.62;
5)a visa card debt - $6,473.66.
His Honour’s rejection of these five liabilities was, as earlier mentioned, the subject of challenge before us. We therefore turn to consider each of those liabilities and his Honour’s refusal to take them into account in his determination of the value of the parties’ property.
Renovations to the R property
There was no reference to an alleged liability of $45,382 on account of renovations to the R property, in town U, in either the husband’s affidavit or financial statement both of which were filed on 27 June 2007 in support of his application for final property settlement orders also filed that day. (No copy of that financial statement was included in the appeal book, but a copy was provided to us at the hearing of the appeal). In his affidavit (paragraph 38), the husband referred only to the acquisition of the R property on 31 May 2005 for $200,000. He went on to say “I borrowed $150,000 and I currently owe $147,000”. There was no mention of liability for renovations to the property.
Similarly, there was no mention of this liability in the “Applicant Husband’s Outline of Case” which was prepared before the trial (dated 12 March 2008).
The liability was referred to for the first time in the husband’s financial statement dated 12 March 2008, which was filed in Court on 17 March 2008, the date of the hearing before Jarrett FM. (The correct copy of that financial statement was also provided to us at the hearing of the appeal). In the “liabilities” section of that financial statement and in relation to the item “Other mortgages”, the husband’s name appeared followed by “[R property] Renovations ANZ …”, with the figure “$E45,382.00” then shown.
At trial the husband was cross-examined in rather general terms about the various liabilities shown in his last financial statement, but there was no specific question in relation to the liability for the R property renovations.
However, in re-examination the husband was questioned specifically about the liability of “$45,000”:
[MR CLUTTERBUCK:] Down - further down the page on the most recent one you've got "other mortgages" which is the $45,000?--- That's correct.
Could you tell us what that is for?--- That's basically in common terms an overdraft.
And that work was performed was it- - -?--- Sorry?
That work was performed on that particular property, was it, on - before- - -? -- Not that particular - not all that money, no. It was for other things as well.
What were the other things it was used for?---Court matters. (Transcript 17/03/08, p 23)
In his closing submissions at trial, counsel for the wife submitted:
In respect of the [R property] renovations, in my submission, this is the real problem for the husband, is that there's just no evidence about any of these things and the currency in this Court clearly is evidence. There's no evidence about how he has used $43,382 [sic] for renovations in any sense whatsoever. He acknowledged in the witness box himself that some of that money had been used for legal fees in these proceedings and, in my submission, it's not appropriate to suggest that my client ought bear any responsibility in respect of that liability for renovations or styled renovations when we know nothing more about it, and the onus is clearly on the husband to show that. (Transcript 17/03/08, p 59)
Later the Federal Magistrate questioned counsel for the husband during his closing submissions about this liability (emphasis added):
MR CLUTTERBUCK: The [R property] renovations. The [R property] - - -
FEDERAL MAGISTRATE: There's no evidence about that, is there?
MR CLUTTERBUCK: The [R property] renovations were renovations to the house. The major- - -
FEDERAL MAGISTRATE: But there's no evidence about that, is there?
MR CLUTTERBUCK: Can I say that - can I say this- - -
FEDERAL MAGISTRATE: Yes.
MR CLUTTERBUCK: - - -that the valuation increased, as you would have seen in successive from [sic] 13's that - from 215,000 to 272 which effectively takes into account the benefit that he's ascribed to the house.
FEDERAL MAGISTRATE: But that's not evidence.
MR CLUTTERBUCK: Well, it's agreed- - -
FEDERAL MAGISTRATE: What's his expertise to value property?
MR CLUTTERBUCK: No, I'm sorry, your Honour, it's actually based upon agreed valuations as I understand it.
FEDERAL MAGISTRATE: Well, there's no evidence that that's the case. So just take me to the evidence about the [R property] renovations.
MR CLUTTERBUCK: No, it's only in letter format. There's nothing before you in affidavit material.
FEDERAL MAGISTRATE: No evidence. Right…
(Transcript 17/03/08, p 68)
In his reasons for judgment his Honour rejected this liability, saying (emphasis added):
6. … The husband claims that a liability referred to in his financial statement and in the asset schedule handed up to me as the "[R property] Renovations" being a liability of $45,382 ought to be taken into account. I do not propose to bring that liability to account. There is no evidence about it other than that appearing in the form 13 financial statement filed by the husband by leave before me. It does not appear in his form 13 filed on 27 June, 2007 and it is not the subject of any evidence by him in his affidavit.
We understood counsel for the husband to submit that if a party to property settlement proceedings swears or affirms in his or her financial statement that a particular liability exists, and is not challenged in cross-examination regarding that liability, then the Court must accept that the liability exists. We accept as a general rule that this is so, but there are some exceptions to it. If, for example, the liability is only claimed in a very recent document and had not been claimed in earlier documents prepared at a time when the liability may well have existed, as was so in this case, or if some other evidence which casts doubt on the nature of the liability itself is available to the Court, again as there was in the present case (being the husband’s evidence given in re-examination that the liability in question may have also been used for other purposes), the Court is entitled to reach its own conclusion regarding the existence of the liability and its purpose or nature.
Thus notwithstanding that the husband had given evidence in his last financial statement and that there was no cross-examination of him regarding this liability, his Honour’s conclusion that this liability should not be taken into account was clearly open to him, particularly given that he himself had raised with the husband’s counsel the lack of any other evidence to support the alleged liability.
We also observe at this point before going on to consider the other alleged liabilities which were rejected by his Honour, that it is necessary in property settlement proceedings under the Act not only to establish the existence of a particular liability, but also to establish that it is a liability which should be taken into account in determining the value of the property to be divided between the parties to the proceedings; in other words, that it is a liability, the burden of which the other party should share (Antmann and Antmann (1980) FLC 90-908; Prince and Prince (1984) FLC 91-501 per Evatt J at 79,076).
If the Court determines that a particular liability exists, but it is not one which should be taken into account in calculating the net value of the property to be distributed between the parties, such a liability can, at least as a general rule, then be taken into account when the Court considers, in the context of the s 75(2) matters, the financial circumstances of the party who is alone to bear responsibility for the liability (J & J [1998] FamCA 163; H & H [2001] FamCA 134). This is a matter which the husband also relies upon in this appeal, and to which it will be necessary to return when we consider his challenge to the s 75(2) adjustment.
ANZ Supplementary business loan
As to the husband’s assertion that his Honour wrongly excluded the liability for an ANZ supplementary business loan of $24,890.93, there was no reference to this liability in the husband’s affidavit filed in support of his initiating application, or in the financial statement filed 27 June 2007, or in the husband’s Outline of Case which was prepared before the trial. Again, it appears that the first reference to this loan was contained in the husband’s financial statement filed in Court on 17 March 2008, where it appeared in the “liabilities” section in the “Loans” item.
There was cross-examination of the husband regarding this liability, which was as follows:
[MR JORDAN:] The liability of $24,890 is a business loan?---It's a loan.
When was that taken out?---Last year some time.
And has it remained constant since it was taken- - -? ---Yes.
- - -since it was drawn down.
FEDERAL MAGISTRATE: Who were the borrowers on that loan?---I was but it says up the top- - -
Well, this is you [sic] document, sir?---Yes.
It says that it's you and Mrs [Merritt], you've got a 50 per cent share. Is that right?---I think it's in relation to the top, your Honour.
In relation to what top?---The top one, the 71/7, that's our [property E in town J], the matrimonial home.
Right?---Yes, and in the next column down it says ANZ lender.
I see?---Yes.
MR JORDAN: But it follows that what his Honour is saying is that it seems as though that ANZ lender in the same way as the [SM] one has my client down there as- - -
FEDERAL MAGISTRATE: Borrower.
MR JORDAN: - - -borrower?---That's what it says there.
FEDERAL MAGISTRATE: Yes?---Yes.
MR JORDAN: Is that not the case?---No, that's not the case, no. (Transcript 17/03/08, pp 19-20)
At the conclusion of the husband’s oral evidence, the following exchange took place between the Federal Magistrate and the husband:
[FEDERAL MAGISTRATE AND THE HUSBAND]:
Yes. And the other loan for the ANZ, the $25,000 - $24,890?---Yes.
Just tell me again what that was for?---That was for machine repairs.
Machine repairs?---Yes, I blew an engine … and it cost 22,000 to repair.
Yes. All right. Thank you… (Transcript 17/03/08, p 25)
Then during final submissions by counsel for the husband, the following exchange occurred (emphasis added):
FEDERAL MAGISTRATE: The ANZ supplementary business loan?
MR CLUTTERBUCK: Well, that was - the ANZ supplementary business loan was for the continuation of the - you might recall your Honour actually asked him some questions about that, I think, concerning exactly what – what sort of things he actually purchased with that and you may recall that he - moneys were used just simply for the ongoing day to day running of the business.
FEDERAL MAGISTRATE: Well, no, what he said was that they were used to fix - for some repairs.
MR CLUTTERBUCK: Well- - -
FEDERAL MAGISTRATE: Repairs to some sort of vehicle.
MR CLUTTERBUCK: Well, that's certainly a business loan.
FEDERAL MAGISTRATE: (Indistinct) … Yes. But there's no other evidence about that, is there?
MR CLUTTERBUCK: No, there's nothing apart from what he has said himself.
FEDERAL MAGISTRATE: Yes. (Transcript 17/03/08, p 67)
In his reasons for judgment, Jarrett FM concluded in relation to the ANZ business loan:
7.[The husband] contends that I ought to take into account a liability described as "ANZ supplementary business loan" in the sum of $24,890.93. Again, that amount appears in his most recently filed form 13 financial statement but there is no evidence in his affidavit about that liability. In cross-examination he touched on the existence of that loan and in some answers to questions asked by me it seemed that that amount or part of that amount was expended on repairs to some of his machinery but there are no particulars and it is something that one might have expected some more cogent evidence about in his affidavit material. I am not satisfied that he has discharged the onus on him to prove on the balance of probabilities that the liability exists or the nature of it. I do not take it into account.
We have reservations as to whether, given the evidence before his Honour, he was entitled to reject the existence of this alleged loan. But, however that may be, he was certainly entitled to conclude, given the state of the evidence, that if this liability did in fact exist, it was not one which should be taken into account in calculating the net value of the property to be divided between the parties. In other words, there was not sufficient evidence before his Honour which would have enabled him to conclude that this was a liability for which the wife should share responsibility particularly given the husband’s evidence that it had only been taken out in the “last year sometime”. Again we emphasise the importance in property settlement proceedings of the distinction between the actual existence of a liability and the issue of whether it should be taken into account in calculating the net value of the property.
Liability to Mr D
The husband further asserts that his Honour wrongly excluded the husband’s liability to repay a loan of $17,000.00 to Mr D. Again, such a loan was not mentioned in the husband’s affidavit filed in support of his initiating application, or in the Outline of Case which was prepared before the trial.
However, in the husband’s first financial statement filed 27 June 2007 in the item “Other personal liabilities” in the “liabilities” section, there was a liability of $17,000.00 listed with the description of “[Property M]”. In his financial statement filed in Court on 17 March 2008, this liability again appears, but there is added to its description the further words “Loan from [Mr D]”.
In an affidavit sworn by him on 7 January 2008, Mr D stated:
…
4.I was informed by [the husband] a few years ago that he wished to buy a vacant parcel of land together with [Mr S] as a joint venture. I agreed to lend him the sum of $17,000.00 unsecured and without interest, to enable him acquire [sic] a half interest in the property.
5.I lent the money, being $17,000.00, to [the husband] who eventually brought [sic] a parcel of land … at … [Property M]…, [in the] Parish of [U], containing an area of 21.25 hectares (the Land).
6.I am advised by [the husband] that he bought the Land with [Mr S], as equal owners, for $80,000.00.
7.I have not been repaid the $17,000.00 which I lent to [the husband], but I have not requested that he provide the money to me at this time. My arrangement with [the husband] is that he is to repay the money to me upon request being made by me to do so.
The cross-examination of the husband in relation to this particular alleged loan was as follows:
[MR JORDAN]: Now, you've got an affidavit from [Mr D]?---That's correct.
And you assert that - he asserts that he lent you some money, $17,000. Is that correct?---That's right.
All right. Now, when I read your affidavit, your first affidavit which was filed on 27 June 2007, there's no mention in here, is there, that he lent you any money?---I can't recall if that's not in there.
Now, that's in respect of you say some land that you bought with [Mr S]?- - That's right.
So at paragraph 38D of your first affidavit you say:
I went into partnership with a friend called [Mr S] and we purchased a property [Property M] in 2005 for $80,000. My share of $40,000 I paid cash.
?---That's right.
Why did you not mention in that affidavit anything about any liability to [Mr D]?---I have no idea. It's an in-depth thing and things come back to me as I'm asked more and more about what happened.
… (Transcript 17/03/08, pp 15-16)
The cross-examination of Mr D was then as follows:
MR JORDAN: [Mr D], you say that you agreed to lend [the husband] $17000?---That's correct.
Did you do so?---Yes.
And how did you loan him the money?---Cash.
Cash. Where did you get the cash from?---I had it - personal account. I just sold my boat.
Sold your boat. All right and did you pay him in cash or in a cheque?---In cash. I was paid cash for the boat and I gave him the cash.
All right. So how much cash did you get for your boat?---$60,000.
…
What's the arrangement to pay it back?---For him top [sic] pay me back?
Yes?---When he's got the money or whenever he sells whatever assets he's got. I mean, we've been friends for many years and we've lent each other money over those years.
Right. And there's nothing written about this at all - no written agreement?---There's - there was no requirement.
All right. And there's no interest to be paid?---No.
No. And that $17,000 would be quite handy for you?---Oh, if I need it. I don't need it at this moment. I just - I've got enough money to keep me comfortable for what I do.
All right. Okay. So do you know exactly when you loaned him the money?---Oh, I couldn't tell you the date. I went to the auction that the land was bought at.
All right?---I was originally going to buy half of it myself but the auction went to a lot more money than I can afford and the other chap, [Mr S] - - -
Yes- - - ?---become partner and so I withdrew and that's why I lent [the husband] the money.
And how long after the auction did you give him the money?---A matter of – I can't remember, it was only days because I went there prepared to buy the - my half with him but it went to a lot more money than I can afford.
…
Okay. And what arrangements did you have with [the husband] about getting the money back when you requested it?---When I requested it.
So if you were to request it now, what's the arrangement? When does he have to pay it back to you?---When he can.
When he can?---Well, when he can. I mean that's what friends do.
Now, are you aware that he's - that he's bought machinery and the like this year for his business?---Yes. Yes.
And that didn't cause you to want to get your money at that point in time?---Well, I can't see any reason why it would. He didn't run out and buy them for cash. He has a lot of money to buy things.
All right. Okay. And have you loaned him money in the past? Yes.
And when was the first time you loaned him some money?---I have no idea. We used to - we used to - we knocked around together as friends and we bought land together. We bought a house together over the years.
So if - is there any time that you - that you have got in your own mind about when you might call that money up?---Not necessarily, no.
So it might go on for any number of years?---It might go on for two days.
But it might go on for years?---It might do either, yes.
And you wouldn't require any interest?---No because we've looked after each other with things like that before. Not for that amount, of course, but that's what friends do. (Transcript 17/03/08, pp 26-28)
The Federal Magistrate also questioned Mr D about the money loaned to the husband:
FEDERAL MAGISTRATE: Yes, [Mr D] what happens if he can't repay the money?---Well, well I hope that would never happen. It never really come [sic] into contention, your Honour.
But what if he can't? When you want it back?---Well I will have - if he can't repay it, I'd have to suffer, I'm afraid.
Yes?---There's no way I could - I have no idea. That never crossed my mind at any stage. (Transcript 17/03/08, p 29)
His Honour considered this issue in the following paragraphs of his reasons for judgment:
9. The next liability the husband wishes taken into account is a loan from a [Mr D]. I do not take that liability into account for these reasons: first of all the loan is not explained in the husband's affidavit material. There is an affidavit from [Mr D] that supports the liability, both the existence of a liability and the amount. He also deposes to the circumstances in respect of which the loan might have been made and inasmuch as [Mr D] gave evidence and was cross-examined before me, I saw no particular reason not to accept what he said as a result of his demeanour or any of the answers he gave in cross-examination.
10.But he is a friend of some standing of the husband's and when one couples that with what the husband swears in para.38(d) of his affidavit filed on 27 June 2007, there is a real reason, it seems to me, to be sceptical about the existence of the loan. In para.38(d) of his affidavit the husband swears:
I went into partnership with a friend, [Mr S], and we purchased a property [Property M] in 2005 for $80,000. My share of $40,000 I paid cash. This was acquired from the sale of the industrial block of land at [property D]. Now produced and shown to be marked "GMC6" is a copy of the title search in respect of this property.
11. Clearly enough the husband is asserting that he paid $40,000 for his interest in the land. He paid that in cash and the cash came from the sale of the industrial block of land at [property D]. It is not suggested in that part of his affidavit that any part of the $40,000 used by him came from [Mr D]. In those circumstances the husband, in my view, fails to discharge the onus of proof on him.
It would seem from the above paragraphs that his Honour concluded that the husband had failed “to discharge the onus of proof on him” to establish the existence of the alleged debt to Mr D. However, we consider that on the state of the evidence, and in particular the evidence of Mr D, which his Honour in effect accepted, his Honour should not have rejected the actual existence of the debt (if that is what he in fact did).
If the existence of the debt to Mr D was accepted (as, in our view, it should have been), a decision was then necessary as to whether the debt should have been taken into account either in calculating the pool or only as a s 75(2) matter. However, given our ultimate decision in relation to the appeal, it is unnecessary for us to express a view as to what that decision should have been.
Income tax liability
The husband’s asserted liability for income tax of $23,279.62 was also not included in his original affidavit or financial statement, both filed 27 June 2007 (-although an amount of $18,105 on account of assessed but unpaid income tax for previous financial years was shown in that original financial statement).
Again, the alleged liability for income tax of $23,279.62 first appears in the husband’s financial statement filed in Court on 17 March 2008, and is described as “Total income tax assessed and unpaid in previous financial years”.
Interestingly, the word “Nil” appears beside the item “Total income tax assessed for the current financial year”.
There was no cross-examination of the husband regarding the tax liability. However, in his closing submissions, counsel for the wife submitted:
…The income tax liability of the husband; that's clearly his own liability. It doesn't matter when separation occurred, but he's incurred that himself. It's a most recent taxation liability and particularly in light of the fact that he says in his own material that he required my client to pay her 2003 taxation liability of $7000. So it really is a little bit rich and is a wonderful example of cherry picking to suggest that somehow my client has to join in in being responsible for income tax liability. (Transcript 17/03/08, p 60)
In his closing submissions, counsel for the husband asserted that the income tax liability is a “direct matrimonial … liability… [that] the husband certainly has” (Transcript 17/03/08, p 66). When counsel was then asked by the Federal Magistrate to “take [him] to the evidence about the income tax liability”, counsel stated that “it’s referred to in his statement of financial circumstances”.
The following exchange then followed:
FEDERAL MAGISTRATE: Yes. But can you take me to the evidence that would suggest that it ought to be something that's taken into account in these proceedings and not something that he should remain solely liable for?
MR CLUTTERBUCK: Well, your Honour, his - my submission only is this, that I can't - the only evidence I can take you to is what's referred to in his statement of financial circumstances but - except I can say that the respondent is seeking to benefit from, of course, the increase in value of the business. One just simply can't increase - accept an increase without also at the same time accepting a business liability, which is his own personal liability. (Transcript 17/03/08, p 67)
In his reasons for judgment, his Honour concluded that he would not take into account this alleged liability, saying (emphasis added):
12.The next liability referred to by the husband is an income tax liability of $23,279.62. I am not prepared to take that into account in these proceedings. It is not the subject of any evidence in his affidavit about how and in what circumstances that debt arose. There is no notice of assessment, for example, in evidence. I remain entirely unsatisfied (a) that the debt exists, (b) about the value of the debt, and (c) about the circumstances in which, if it exists, it has accrued.
In our view, it was clearly open to his Honour not to take this alleged debt into account in calculating the value of the parties’ property without more evidence regarding its nature and the circumstances in which it had been incurred.
Again, however, we have serious reservations as to whether his Honour was entitled to reject the evidence of the existence of the debt (and thus ignore it for s 75(2) purposes), given the husband himself was not challenged either by counsel for the wife or his Honour himself regarding the existence of the debt.
Visa card debt
In his first financial statement filed 27 June 2007, the husband stated in the section for “Personal expenditure” that the “Minimum credit card payments” for his “ANZ Banking Group Limited Visa” were $E5.50 per week. However, in the “Liabilities” section of that financial statement beside the item “Credit/charge cards” “$ NIL” was written.
In the financial statement which was filed in court on 17 March 2008, the minimum credit card payment of $E5.50 was again shown, but in the liability section the “ANZ Visa” liability was shown as being $E6,473.66.
When the husband was questioned by his Honour regarding his liabilities at the end of his oral evidence, the following brief exchange occurred:
Four ANZ loans?---Two houses and two other loans.
And that's not including your Visa card, I take it?---That - no, no, that's not included in that, no.
All right. There only seem to be two loans and the Visa card set out in your last financial statement…. (Transcript 17/03/08, p 24)
In his final address counsel for the wife submitted:
…And, similarly, the Visa card liability. There's just no evidence whatsoever about the Visa card liability and what that's been used for and, in my submission, that can't possibly be seen to be a matrimonial liability as well. (Transcript 17/03/08, p 60)
Counsel for the husband then stated in his final address that the Visa card is a “liability the husband certainly has” (Transcript 17/03/08, p 66). When asked by the Federal Magistrate what was the evidence about the Visa card, counsel for the husband said:
Again, it's contained in his statement of financial circumstances but it doesn't go to identify exactly what it was used for. (Transcript 17/03/08, p 67)
In his reasons for judgment his Honour then said (emphasis added):
13.Finally the husband seeks for inclusion in the liabilities to be taken into account in these proceedings a visa card liability that suffers the same fate as the tax debt. There is no evidence to support it at all in my view.
There was, of course, the evidence of the husband in his last financial statement that he had at that time (March 2008) an ANZ Visa card debt of $E6,473.66. But, particularly in circumstances where that debt had apparently not existed at the time of his first financial statement (June 2007), and when the parties had been separated for four years prior to the trial (or six on the husband’s version of events), his Honour was certainly entitled to have required more evidence concerning the nature of the debt and the circumstances in which it had accrued before taking it into account as a debt for which the wife would share responsibility.
Again, however, we are not persuaded that on the state of the evidence that this was a liability the existence of which should have been rejected by his Honour and thus ignored for s 75(2) purposes.
Conclusion in relation to liabilities
For the reasons we have given, we have concluded that there is substance in the husband’s complaint concerning the rejection of the existence of the loan to Mr D, but that there is no substance in the husband’s complaints concerning his Honour’s refusal to take the other liabilities in question into account when determining the value of the property to be divided between the parties. There remain issues for s 75(2) purposes concerning the existence of the ANZ Supplementary Business Loan, the tax liability and the Visa card debt as well as the loan to Mr D.
THE CHALLENGE TO THE ASSESSMENT OF EQUAL CONTRIBUTIONS
As we indicated at the outset of these reasons, his Honour assessed the parties’ contributions as equal overall. The husband now challenges this assessment on the basis that his Honour erred in giving no weight to the husband’s initial contributions, nor to the three real estate properties which the husband acquired after mid 2002 when, according to the husband, the parties separated. (It will be recalled that his Honour preferred the wife’s evidence that separation was in January 2004).
The reasons for the contribution assessment
In order to determine if there is substance in these challenges, we consider it necessary to set out the greater part of his Honour’s reasons which led to his assessment of equality of contributions:
15. I turn to the question of contributions. At the commencement of the relationship – and I should say before I commence this discussion that it is difficult to ascertain from the husband's material exactly what his case is in respect of initial contributions and many of the other matters upon which I need to make findings in this matter. But having regard to his affidavit material and the many concessions made by the wife in her material, it seems that at the time the parties commenced their relationship [1987] the husband had an interest in a dwelling house at … [Property K]. The husband was at the time working as a … [Public Service] officer and … had accumulated some superannuation entitlements at that time, although I cannot say how much.
16.The wife owned furniture and a motor vehicle. She was a fulltime carer for her son, [C] … born … 1984. The husband also had two children from an earlier relationship, [B] … born … 1978 and [G] … born … 1979.
17.About two years after the parties commenced their relationship the husband left the … [Public Service] and at the time he received $125,000 by way of a superannuation payout; $98,000 of that was put into the National Mutual rollover fund and the balance was used to meet part of the purchase costs of a [Property F in north Queensland]...
18.The parties' family unit at that time, as best as I can tell, comprised the husband and the wife and [C] … but from time to time [B] … and [G] … spent … time with the family… [S]ubsequently in 1993 both [B & G] came to live with the husband and wife … on a fulltime basis.
19.Soon after the husband left the [Public Service] he commenced operating a business [in the food industry]... He was apparently and remains qualified [in that business]. The wife assisted him in working in that business. The business did not last very long however and according to both the husband's evidence and the wife's evidence, it did not make much by way of an income. The business was sold after about six months and the parties moved to [Property F].
20.In [Property F] the husband worked two days a week as a casual [in the food industry] … for [X]. The wife worked fulltime according to the husband's evidence, also in [X]…
21.In para.8 of his affidavit filed on 27 June, 2007 the husband swears:
…She worked on a fulltime basis for the year I worked as a casual. I was able to afford to live on two days' work per week due to my receipt of superannuation from [the Public Service] and I injected this into the relationship as both [the wife] and I used that money supplemented by her income over the period of time…
22.Not a lot is clear about what the husband did with his superannuation money when he received it, apart from putting $98,000 into a National Mutual rollover fund. The balance between what he received and what he put into the rollover fund, $27,000, might have gone to defray some of the purchase costs of [Property F] or it might be the money the husband speaks of in para.8 of his affidavit as facilitating him being able to "afford to live on two days' work per week"; or it might be that the amount that permitted him to live on two days' work per week was in fact the $98,000 from the National Mutual rollover fund. None of that is clear.
23.The wife's evidence provides perhaps something of an answer because she swears in para.18 of her affidavit that the husband withdrew money from the National Mutual rollover fund totalling nearly $88,000 over the period between 16 July, 1990 and 26 October, 1990. She subsequently swears that most of that money was used by the parties to fund a $60,000 capital injection into a partnership business between the husband and one of his brothers.
24.In any event the position is not entirely clear but what is clear is that the wife worked fulltime and earned an income; the husband worked casually two days per week and earned an income and lived off some of his capital.
25.The husband also did some work on the former matrimonial home at [Property F] at the time: the wife concedes as much. The nature and extent of the work is not clear from the material. On the husband’s case it was substantial work. I am prepared to accept that evidence...
26.…[A]t the time that the parties’ commenced cohabitation the husband also had some plant and equipment. It is not clear from the husband’s material, but … I am prepared to find that he had a truck and a bobcat that he had deployed in [a] … business that was conducted in partnership between two of his brothers and himself. He describes himself as a "silent partner"... There is no evidence that he received anything other than the return of the truck and the bobcat.
27.…[A]fter a couple of years in [Property F] the husband decided to join a partnership with his brother [B] in [a] … business that was conducted in [J]. That happened in about 1990 and the husband paid $60,000 towards acquiring an interest in that business. He swears that most of that money went to defraying debt accumulated in that business and about $15,000 was subsequently used, again to defray debt.
28.After a little while, again, it is not entirely clear how long, the partnership conducted between the husband and [B] was converted to a company, [CE] Pty Ltd. [B] and the husband became directors and shareholders of that company. But [B] and his wife, and the husband and the wife in these proceedings all worked in the business and drew a wage. The wife worked in the business as a book-keeper of sorts and the husband, it seems, operated some machinery.
29.In 1996 that … business was terminated and according to the husband's evidence the assets were distributed equally between the parties. The husband took out of that dissolution two bobcats and two trucks. The values of the items at the time are not in evidence. The earnings of either of the parties from [CE] Pty Ltd or from its predecessor partnership are not in evidence.
30.…Following [E's] birth [1992] the parties agree that the wife became the primary carer for [E]. In 1993 … [G] and [B] moved to live with the parties on a full time basis and the wife, I am satisfied, took on the lion's share of the care for [B], [G], [E] and [C]… [C] ceased living with the parties in 1997 when he started to live with his father. [B] left the direct care of this family in 1997 and [G] left in 2002.
31.At about the same time that the … company [CE Pty Ltd] was wound up [1996] the husband commenced working in [a] … business on his own account using the machinery he took from the company. The wife commenced a [retail] business … in partnership with a person called [Ms S].
32.The husband was supportive of that arrangement. He swears in his affidavit that he saw considerable potential for that business. That business, however, seems not to have realised whatever potential the husband saw for it because the partnership between the wife and [Ms S] ended after not too long. The business was then conducted by a partnership between the wife and one [Ms B]. The relationship with [Ms B] soured and ended in litigation. The litigation was continuing when the husband said the relationship ended in 2002.
33.There is no evidence before me about the earnings from the [retail] business. There are some assertions by the each party about profit margins and the turnover of the business but beyond that there is no precise evidence about what was earned or what was drawn from this business by the parties.
…
36.The [retail] business was a joint enterprise by these parties and ought to be seen as such. The parties were able to inject capital into the business from the husband’s … business (see exhibit 2), but the business venture did not go to plan.
37.The parties were fortunate to be able to acquire a parcel of five acres in [J] from the husband's brother in about 1990. The purchase price of the land was modest. The husband says it was the cost of subdivisional approval amounting to about $12,000. The wife says it was that plus about $32,000. In any event, they jointly borrowed $125,000 in 1991 and built the house which became their home and which is now the [J] property…
38.…[I]n about March, 2002 the husband went to [H] for work purposes. He returned to Brisbane soon after and I am satisfied that in June of that year he returned to [H] for work purposes. He has remained there ever since. The wife and [E] have remained in Brisbane… She has had to accommodate herself in rental accommodation for the reasons that she sets out in her affidavit and which do not significantly differ from the reasons set out in the husband's affidavit material. I accept her evidence about those matters. The husband has assisted her with some of the costs of that alternate accommodation.
39.I am satisfied that since separation in January, 2004 the wife has had almost sole care of [E], apart from some moments from time to time when she might have visited the husband in [H].
40.As to what occurred between 2002 and 2004 the evidence is a little unclear. The husband denies but the wife asserts that she would go to [H] every second weekend. I am not sure that I can make that finding. I found the wife's evidence ultimately a little equivocal on that point, but it does not much matter; the parties agree that she had the primary responsibility for [E].
41.I am not satisfied that she has been left without proper financial support from time to time for herself or [E] by the husband. There is evidence in his affidavit filed on 5 March this year that suggests that he has made a number of payments since 2002 totalling almost $100,000 towards either [E] or the wife.
42.Some of those payments do not bear close scrutiny and one needs to be careful not to double dip as such because one of the assets in these proceedings is also taken up in that list of payments; I speak of course of the car. There are other payments said to be made by the husband to the wife for [E] which really could probably be seen as personal gifts by the husband to [E]: birthday presents and Christmas presents and the like, not really forms of child support that one would expect to see or give credit to; but I record that the husband has made those payments.
43.There are also some payments made and described as “Back Taxes” totalling $34,902.05. The nature of that liability, or how it arose, is not explained in the evidence. I am not satisfied that those amounts might properly be said to be contributions by the husband to the property of the parties or the welfare of the family in the absence of such evidence.
44.After the date that the husband contends was the date of separation, the husband acquired real property, the details of which are set out in para.38 of his affidavit filed on 27 June, 2007. The property purchase [sic] in 2003 [Property S, in town U] was initially purchased by both parties. I accept the wife’s evidence in her affidavit filed on 10 September, 2007 at para.45 on this point.
45.Having regard to those findings about contributions and that view of the evidence I am satisfied that this is a case where I ought to see contribution-based entitlement as equal between the parties. I specifically reject the notion that the husband ought be seen as having contributed more by reason of the $125,000 superannuation received by him in about 1989 for these reasons: first, the whereabouts of the balance of $27,000 between the National Mutual investment account and the amount received by him in superannuation is not really explained in the material. It may have found its way into [Property F], it might not have; it might have been used by him for the purposes of funding his two days of casual work per week whilst the parties lived in [Property F], it may not have. It is unclear from the evidence if the parties had any equity in the [Property F] when it was sold.
46.Secondly, the balance of $98,000 in the National Mutual investment account seems to have found its way into the … partnership with [B] and to the extent that one is able to trace that money through the assets, it might be that that amount is still represented by plant and equipment that is in the husband's hands. But having regard to the asset valuations in this case about which the parties agree or as the case might be, I have found, there is little by way of equity in the plant and equipment that the husband presently has. There is in round terms, about $50,000 equity in the plant and equipment. Plant and equipment of course is a depreciating asset and it is likely, it seems to me, that any plant and equipment that the husband might have obtained indirectly via his interest in the business in 1990 when he injected $60,000 into the partnership, is likely to have depreciated over the nearly 18 years since then.
47.In terms then of the current assets it is difficult to see that the husband’s superannuation contribution is reflected in any of them, save as I have set out above. Both parties have worked during the relationship in their different ways, sometime contributing in a financial way and sometimes in a non-financial way. In my view, neither party has made a contribution that is in any way more significant than the other.
The husband’s initial contributions
In support of the submission that his Honour erred in refusing to give any weight to the husband’s initial contributions, counsel for the husband referred us to paragraph 45 of his Honour’s reasons where his Honour in his own words “specifically reject[ed] the notion that the husband ought to be seen as having contributed more by reason of the $125,000 superannuation received by him in 1989” (that is, some two years after cohabitation commenced). Counsel also referred us to his Honour’s reasons in paragraphs 45 and 46 of his reasons for this rejection, which appear essentially to have been that the fate of the superannuation monies could not be satisfactorily traced in a way that it could be shown to be reflected in any existing assets, other than depreciating assets. It was submitted that in the absence of any finding of waste of the superannuation funds by the husband, this approach was not open to his Honour. We agree that his Honour’s approach to the husband’s superannuation monies was erroneous for the following reasons.
There is no requirement in the legislation, nor guideline in the authorities, which requires that in assessing contributions under s 79(4)(a) and (b) of the Act, property contributed by a party must be in existence, or its value traceable to other property in existence, at the time of property settlement proceedings. Indeed to the contrary s 79(4)(a) and (b) require a Court in determining property settlement proceedings to have regard to contributions to property which may have “ceased” to be the property of the parties.
Also relevant to the circumstances of this case is the statement by the Full Court in Parshen v Parshen (1996) FLC 92-720 at 83,665 that “in the absence of evidence to the contrary, it should be inferred in proceedings pursuant to … s 79 that moneys howsoever received by a party during the course of the parties’ cohabitation, are used by that party for the benefit of the family unit [and] … thus constitute a financial contribution by the party who received the moneys”.
There could be no justification, in our opinion, for a refusal to give the husband in this case, some additional credit or recognition for the contribution of his superannuation payment of $125,000, albeit received in as long ago as 1989, and apparently used to some extent for a period by the husband as a substitute for earned income.
Furthermore, no recognition appears to have been given by his Honour to the husband’s interest in the house at Property K which the wife agreed he had had at the commencement of the relationship (Affidavit of the wife filed 10 September 2007, paragraph 3). Although the value of that interest is apparently unspecified in the evidence, and the fate of the interest apparently unknown, this contribution was nevertheless a matter which required some assessment by his Honour (even if he proposed to disregard it).
Properties acquired by the husband after 2002
It is also part of the husband’s appeal that his Honour failed to give the husband any credit for, or even identify, his contribution of Property S, Property R, and Property M acquired after 2002 and now forming a significant part of the parties’ property.
It will have been seen that in paragraph 44 of his reasons, his Honour stated that after the separation date contended for by the husband, he had “acquired real property, the details of which are set out in paragraph 38 of his affidavit filed on 27 June 2007”. His Honour then immediately continued:
The property purchase [sic] in 2003 at [Property S, in town U] was initially purchased by both parties. I accept the wife’s evidence in her affidavit filed on 10 September, 2007 at para.45 on this point.
To understand fully his Honour’s reasoning in relation to the properties acquired after 2002, it is therefore necessary to refer to the paragraphs in the parties’ affidavits referred to by his Honour.
At paragraph 38 of his affidavit filed on 27 June 2007, the husband said:
38. Since 2002 I have worked hard to reacquire that which we had lost. Since 2002 I have made the following acquisitions:
(a)A house in [H] at [Property S, in town U] which I purchased on 13 June 2003 for $170,000.00. I borrowed the full amount of the funds that were required to purchase this property and borrowed money to pay legal and other costs associated with its acquisition. The amount owing on the loan is now $185,000.00…
(b)I acquired a block of industrial land at [Property D]… which I purchased on 4 July 2004 for $140,000.00. I borrowed the entire amount. I sold this property on 14 March 2005 for $250,000.00.
(c)Out of this, I used some to purchase a property at [Property R, in town U] which I purchased on 31 May 2005 for $200,000.00. I borrowed $150,000.00 and I currently owe $147,000.00...
(d)I went into partnership with a friend [Mr S] and we purchased a property [Property M] in 2005 for $80,000.00. My share of $40,000.00 I paid cash. This was acquired from the sale of the industrial block of land at [Property D]…
The wife’s evidence at paragraph 45 of her affidavit of 10 September 2007 which his Honour said he accepted was as follows:
45. …The property at [Property S, in town U] was purchased initially by [the husband] and I, as our marriage was still subsisting at the time. We borrowed jointly … to purchase the property, and my income from [W] Tavern was taken into account when [SM] assessed our borrowing capacity. It was not until after we were separated that [the husband] insisted on me transferring to him my interest in the [U] property, and I did so.
We are prepared to assume that because his Honour said that he accepted this evidence from the wife, he regarded Property S as property to which both parties had contributed, and thus did not further mention that property or give the husband’s contribution to it, any special recognition in his assessment of the parties’ contributions overall. We are also prepared to accept that this course was open to his Honour, although some elaboration of his reasoning would have been of assistance.
However, we have difficulty in understanding why having referred to paragraph 38 of the husband’s affidavit apparently in its entirety, his Honour referred only to paragraph 45 of the wife’s affidavit and not to her subsequent paragraphs 46, 47 and 48 where she effectively conceded the husband’s claims regarding his acquisition of other properties, including Property R and Property M.
His Honour’s failure to identify expressly the husband’s acquisition in 2005 of Property R and Property M, and either to give the husband some credit for the equity in those properties, or to explain why he did not do so, are, with respect, significant oversights in a judgment, which for the greater part was detailed and comprehensive.
Conclusion in relation to contribution assessment
The errors of principle in relation to the treatment of the husband’s superannuation payment, and the lack of assessment of the husband’s other initial contributions and also of his post separation contributions are clearly matters of sufficient significance as to justify our interference with his Honour’s decision.
In the event that we were to find substance in the appeal, the husband’s position both in his Notice of Appeal, and as reflected in his counsel’s submissions, was that there should be a new trial. We did not understand counsel for the wife to submit to the contrary.
Given our conclusion in relation to the contribution challenge, it may well be unnecessary for us to consider the husband’s challenge to his Honour’s ten percent adjustment in favour of the wife on account of the s 75(2) matters. Nevertheless, we propose to make some reference to that challenge if only for the reason that our conclusion in relation to it, justifies our overall conclusion that regrettably for the parties to these proceedings, a new trial is necessary.
THE CHALLENGE TO THE S 75(2) ADJUSTMENT
His Honour’s findings and conclusions in relation to the s 75(2) matters were as follows:
48. In terms of matters arising under s.79(4)(d), (e),(f) and (g), in my view child support is not likely to be a significant issue in the future. [E] is 16 and the father's liability for child support will end soon. The wife has, of course, the care and control of [E] and even though the husband might make payments by way of child support either formally through the assessment process or informally through other payments, they will not of course, come close to meeting the actual costs associated with caring for [E].
49.The husband on his own material swears that he earns about $60,000 per annum. He deposes, and there is some medical evidence to support the assertion that he is showing signs of wear and tear, especially in his back, but there is no clear evidence to indicate that his working life is of any particular or finite duration. Indeed the medical evidence does not bear on the issue that if he is forced into a position where he can no longer operate … [machinery] he cannot go back and exercise his skills [in the food industry]. There is no evidence about what he might earn [in the food industry].
50.The evidence does reveal that he claims he has outgoings at the moment of some $2797.14 per week, nearly $1,800 more than his income per week. When one carefully considers his expenses it is not difficult to conclude that at least some of them bear closer scrutiny and one must approach his claims about his level of expenses with a fair degree of circumspection.
51.It was demonstrated adequately in cross‑examination, I thought, that if his expenses truly were as he set out in his form 13, either that filed by leave at the trial or on 27 June, 2007 there would have been a significant increase in his liabilities over time and although as between the two financial statements there was a significant increase in his liabilities, the husband's explanations for those increases did not provide any explanation as to how he might have funded his shortfall in expenses over income for that period.
52.The wife's evidence is that she has recently lost her employment with the … Tavern. She was employed there in a managerial role but very recently, before the trial, was relieved of that position. Her evidence however was that notwithstanding that, she was able to secure casual employment at the same establishment which would return her an income stream of roughly equivalent to what she was earning in her previous role, the difference being that she would no longer have the security of paid recreation or sick leave.
53.It seems therefore that she presently earns and will continue to earn about $800 per week and have expenditure of a little over $1,000 per week. That expenditure, of course, includes the expenses that she will have for [E].
54.In the circumstances of this case, in my view, an adjustment under s75(2) is called for in favour of the wife to take into account the matters to which I have just referred. The adjustment ought to be 10 per cent or about $79,000. That is a little more than one year's gross earnings for the husband and in my view represents an appropriate adjustment given [E's] age and the earning capacities of both of these parties.
The principal matters relied on by the husband in challenging the ten percent adjustment in favour of the wife, were his Honour’s failure to take into account the fact that the husband would bear sole responsibility for the various liabilities which his Honour had refused to take into account when calculating the value of the property to be shared between the parties, and his conclusion that notwithstanding the medical evidence, the husband could, if necessary, return to work as in the food industry.
As we indicated in our earlier discussion of the husband’s liabilities which were rejected by his Honour, we are not persuaded that his Honour was entitled, given the state of the evidence, to reject the actual existence of the ANZ Supplementary Business Loan, the liability to Mr D, the tax liability and the Visa card debt (if that is what his Honour actually did). A new trial will provide the opportunity for a Court to determine clearly whether or not these liabilities exist (which, if established, would total over $50,000), and if they do, whether there is any reason not to have regard to them when assessing the husband’s overall financial position in the context of the s 75(2) matters.
We also have some reservations as to whether the evidence (including the medical evidence) did support his Honour’s conclusion that the husband could earn income in the food industry. However, it is unnecessary that we express a concluded view on that matter.
CONCLUSION AND COSTS OF THE APPEAL
As we have already stated, the appeal must be allowed, the orders of 20 March 2008 set aside, and a new trial ordered.
In the event that this was to be the outcome of the appeal, both sides sought certificates for the appeal and the new trial under the Federal Proceedings (Costs) Act 1981 (Cth). We propose to grant such certificates.
I certify that the preceding eighty-five (85) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 27 August 2009
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