MITYUKOV & MITYUKOV
[2019] FamCAFC 199
•5 November 2019
FAMILY COURT OF AUSTRALIA
| MITYUKOV & MITYUKOV | [2019] FamCAFC 199 |
| FAMILY LAW – APPEAL – PROPERTY – Where the trial judge made orders dividing the property as to 57.5 per cent to the husband and 42.5 per cent to the wife – Where the husband asserts the trial judge erred in not adequately considering the husband’s contributions – Where it was asserted that the trial judge failed to give sufficient reasons – No error found – Appeal dismissed. FAMILY LAW – COSTS – Where the appeal was wholly unsuccessful – Where an order for costs made against the appellant. |
| Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54 Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63 Wallis & Manning (2017) FLC 93-759; [2017] FamCAFC 14 |
| APPELLANT: | Mr Mityukov |
| RESPONDENT: | Ms Mityukov |
| FILE NUMBER: | PAC | 3644 | of | 2017 |
| APPEAL NUMBER: | EA | 58 | of | 2019 |
| DATE DELIVERED: | 5 November 2019 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ainslie-Wallace J |
| HEARING DATE: | 8 October 2019 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 20 May 2019 |
| LOWER COURT MNC: | [2019] FCCA 1121 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Maddox |
| SOLICITOR FOR THE APPELLANT: | Meehans Solicitors |
| SOLICITOR FOR THE RESPONDENT: | Bainbridge Legal |
Orders
The appeal EA 58 of 2019 be dismissed.
The appellant husband pay the respondent wife’s costs of and incidental to the appeal fixed in the sum of $12,473.41 such sum to be paid within twenty-eight (28) days of this order.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Mityukov and Mityukov has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 58 of 2019
File Number: PAC 3644 of 2017
| Mr Mityukov |
Appellant
and
| Ms Mityukov |
Respondent
REASONS FOR JUDGMENT
On 20 May 2019 Judge Dunkley in the Federal Circuit Court made orders for property adjustment between Mr Mityukov (“the husband”) and Ms Mityukov (“the wife”) the effect of which was to divide the parties’ net assets of $208,765.41 as to 57.5 per cent to the husband and 42.5 per cent to the wife.
The husband appeals those orders.
BACKGROUND
The parties commenced cohabitation in 1999 and married in 2009. There are two children of the relationship Ms Y aged 21 who resides with the wife and X aged 15 years who resides with the husband. The parties separated on 20 May 2017 when the husband left the matrimonial home.
Although the wife remained living in the parties’ former home after separation, between June and September 2018 she was unable to pay the mortgage on the property and an order was made that the husband occupy the property and that he meet the mortgage payments. Overall, the period in which the wife lived in the property but did not pay the mortgage resulted in arrears of about $15,000.
Apart from the parties’ house, the only other asset of significance was a business owned and operated by the parties, C Pty Ltd, which was agreed by the parties for the purposes of the hearing to have no value. The parties’ debts amounted to $971,168.59 leaving a net value of the parties’ non superannuation assets of $203,831.41. The parties’ superannuation entitlements were small, those of the wife being $3,600 and those of the husband $1,334 albeit he had earlier withdrawn $22,000 from his superannuation for reasons unconnected to the marriage.
Prior to the final hearing of the property settlement proceedings an order was made for a partial property settlement and each party received $180,000. His Honour found that each used that money for his or her own purposes.
As to the business, although at the time of the hearing before the primary judge the husband was then the sole shareholder and director, the wife had been a shareholder of that company.
It was uncontentious that in 2016 as a result of a dispute, the business’ largest customer withdrew its business and as a result there was a down turn in the business revenue but, of course, the business liabilities remained the same. As a result, the husband sold many assets of the company (other than cars, a caravan and other assets owned by the company but used by the husband) for $235,000. There was no dispute that of those funds the husband used $135,000 to pay down business debt and of the remaining $100,000, $51,000 was used by the husband for personal expenses, purchasing furniture and paying rent.
During the relationship, the husband’s parents assisted the parties’ financially and advanced $75,000. Of that sum, $35,000 was repaid and the parties gave the husband’s parents the use of a fuel card worth about $8,000. His Honour concluded that in relation to the remaining $32,000 advanced, the husband’s parents had no expectation of being repaid.
Turning to the issue of contributions, his Honour found that to the date of the final hearing, the contributions favoured the wife as to 51 per cent against 49 per cent to the husband. In coming to that conclusion, his Honour took into account the money given to the parties by the husband’s parents, finding quite correctly that it should be taken into account with all of the contributions by the parties over their lengthy marriage. His Honour also took into account the fact of the wife’s occupation of the parties’ home for those few months without paying the mortgage.
In considering the matters to which s 75(2) refers, his Honour found each party to be in good health, that the wife presently earns more income than the husband but otherwise each is capable of gainful employment and that the husband has the care and principal financial responsibility for the parties’ youngest child, then aged 15. However, his Honour then said:
59. The husband has a potential liability arising from personal guarantees for business debts which debts have a current value of $281,000. Those liabilities fall to be considered under s 75(2)(o). They are significant.
This matter, taken with the other factors to which his Honour referred in considering the future needs of the parties, persuaded him that there should be an adjustment in the husband’s favour of 8.5 per cent that is an overall adjustment in the husband’s favour of 57.5 per cent of the net assets.
The result of his Honour’s determination led to orders that the husband will retain the home subject to the mortgage and subject to assuming a second debt secured over that property. He will retain the company with the remaining assets and liabilities some of which are subject to the personal guarantees and he retains his superannuation.
This resulted in an order that the husband pay the wife $85,123.30 being 42.5 per cent of the net assets less her superannuation entitlements.
The appeal
The use of the $180,000 to “prop up” the business
The appellant contends that his Honour erred in not finding as the husband asserted that he had used about $168,000 of the funds advanced to him as partial property settlement to pay business debt. In the alternative, it was argued that if his Honour did accept the husband’s contention that he had used the money in this way, he failed to give it sufficient weight in his consideration of the contributions of the parties.
It is clear that his Honour’s found at [10] that the parties used the partial property settlement of $180,000 “for their own purposes” which plainly amounts to a rejection of the husband’s contention that he used the bulk of the money to assist the business. Further, his Honour’s finding was made clear to counsel for the husband during submissions where he rejected the husband’s contentions.
Before turning to the arguments advanced on appeal to this ground, it is to be understood that to succeed in a challenge to a finding of fact made by a trial judge it is necessary to show that the finding was not reasonably open on the evidence (see Edwards v Noble (1971) 125 CLR 296 at 304).
Counsel for the appellant pointed to the husband’s evidence in which he asserted having used the bulk of the money in the business and contended that his Honour ought to have accepted it. It was further argued that it was not suggested to the husband in cross examination that he had not.
However, it was during cross examination that the husband agreed that he had placed the $180,000 into his personal ANZ account and he was cross examined about the withdrawals from that account. While it is unnecessary for the purposes of this judgment to set out those withdrawals in detail, sufficient of them are exposed in the submissions of the respondent, to show considerable personal spending from that account which, it was submitted amounted to about $159,000.
Although the husband asserted both in his affidavit and in his oral evidence, that he had used the money to bolster the business, it was uncontroversial that he did not adduce any evidence to show just how that money was used to support his assertions.
Thus it was argued by the respondent that there was abundant evidence on which his Honour could conclude as he did. That being the case, the argument on this ground that his Honour erred in rejecting the husband’s account of how he spent the money fails.
The arrears of mortgage
Next it was contended that the primary judge failed to give proper weight to the wife’s failure to pay the mortgage on the house in which she was living, leaving arrears of $15,000.
It was not argued that his Honour ignored that evidence, indeed, he expressly took it into account at [47] when considering the parties’ contributions.
In essence, this challenge devolves to an argument that the primary judge did not give sufficient weight or importance to the evidence. The apportionment of weight is a matter quintessentially one for the primary judge and appellate intervention is difficult to obtain. As Stephen J said in Gronow v Gronow (1979) 144 CLR 513 at 519-20:
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. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight…
The amount of the mortgage arrears fell within his Honour’s consideration of the parties’ contributions over a lengthy marriage and was taken into account alongside the husband’s receipt and use for personal expenditure of $51,000 from the sale of some of the business assets. It was, as his Honour correctly observed a balancing exercise and no error in his Honour’s approach has been demonstrated.
The personal guarantees
There was little dispute that the husband had given personal guarantees of $281,000 in relation to certain business related debts.
As has been indicated earlier, his Honour took those potential liabilities into account in his consideration of the matters to which s 75(2) refer and referred to those potential liabilities as “significant” (at [59]).
There was no challenge to his Honour’s decision to consider the guarantees in this way, indeed, in his submissions on appeal, counsel for the appellant reflects that he agreed to this course during the trial.
Nonetheless, the husband argued that his Honour’s ultimate adjustment in relation to s 75(2) matters did not give proper weight to the amount of those potential debts.
As was submitted to the primary judge by the advocate for the wife at trial, it was not contended that the company had failed to meet its obligations, and apparently the company had continued to meet the repayments on the loans to which the guarantees related. Further there was no evidence of default by the company in relation to these loans. Finally it was submitted to the primary judge that there was no evidence of the present value of each of these assets to which the guarantees relate. His Honour was well alive to the inchoate nature of these potential liabilities because he said in response to those submissions:
HIS HONOUR: … I’m not going to make that finding, because there is no evidence that enables me to make that finding. So he has got a future liability. I have got to take that into consideration – 75(2)(o). Yes. You say not much weight attaches to - - -
MR BAINBRIDGE: I say zero weight, your Honour. I say those debts are contingent, and the contingency has not been satisfied to date, and there is no evidence that would suggest that it’s likely.
(Transcript 16 April 2019, p 137 line 44 – p 138 line 3)
It was argued that the potential liability was such that his Honour was obliged to indicate the weight he apportioned to them other than to reflect that they were “significant liabilities”.
His Honour was not obliged to apportion a percentage figure in respect of that particular aspect of s 75(2), rather he adopted a global approach to the various matters to which he referred when considering the parties’ future circumstances. However, it is not to be overlooked that his consideration of these factors alone resulted in an adjustment in the husband’s favour of 8.5 per cent which in a modest pool such as this was considerable. Indeed when one looks at his Honour’s consideration of these factors but for the impact of the guarantees, each seems to be evenly balanced as between the parties (at [51]-[59]). One could safely infer that the significance of the guarantees was the factor which caused his Honour to make the further adjustment in the husband’s favour.
To the extent that this ground challenges the weight attributed by the primary judge to the guarantees, it must fail because nothing put by the appellant reflects error by his Honour.
It was also argued as part of this ground that his Honour failed to take into account the husband solely assuming the burden of these guarantees, a burden not shared by the wife.
First it must be observed that counsel for the appellant made no submissions to his Honour in respect of this burden and how his Honour ought to take it into account. Counsel had made written submissions to the primary judge but they did not find their way into the appeal books and no application was made for them to be added. Thus it is unknown what his Honour was urged to do.
The following exchange during submissions before the primary judge may throw some light on this issue:
Counsel for the appellant said:
MR MADDOX: …The only significant thing is that, as your Honour has pointed out, there are these possible liabilities that the husband may have for the personal guarantees. That’s the only – that’s the only relevance of this so far as we know, your Honour. The husband sets out in his affidavit the contributions he has made and he has continued to make to those company debts. I think I’ve noted in the – in the summary there – I just can’t recall the – but he says, “I’ve been paying this number of hundreds of dollars of
week –” or month or whatever – “for the various debts.” So he’s the one that has been keeping the company afloat. His - - -HIS HONOUR: Well, he has been solely responsible for it since
post-separation. I mean, they could have wound it up if they wanted to. That’s a choice that he makes. It’s just a means of income for him. Sorry, it’s a means of earning income. It’s just like any other job.MR MADDOX: Yes, it is, your Honour. But the problem with winding up the company was that it owed all these debts. You know, we say now they’re $281,000. That’s the problem. Where is the husband – because the wife is not going to contribute, where is the husband going to get $281,000 from?
HIS HONOUR: Wind it up and sell the assets, as they have, and the chips fall where they may and you start again from scratch. That’s how you– that’s how you bring it to roost. But if he doesn’t want to bring it to roost, that’s a matter for him.
(Transcript 16 April 2019, p 143 line 32 – p 144 line 6)
Thus is it clear that his Honour was well aware of the significance of the guarantees and that they would be the husband’s burden into the future. He was also plainly aware that the husband could if he wished rid himself of that burden by selling the assets the debts over which he had guaranteed.
In those circumstances, no error in his Honour’s approach to the guarantees has been demonstrated.
Insufficient reasons
Both by Ground 5 and Ground 7 the husband contends that the primary judge failed to give sufficient reasons.
Ground 5 argues that his Honour failed to give reasons for his contribution assessment.
However, the thrust of the ground appears to be a challenge to his Honour’s conclusion that the parties’ contributions up until the trial would reflect a 51 per cent adjustment in the wife’s favour.
Thus the ground contends that his Honour failed to take properly into account the advance from the husband’s parents. It is important however to understand that while the submissions on this ground assert that the husband’s parents advanced $75,000, counsel for the appellant properly acknowledged that this was an error on his part and he accepted that of the amount originally advanced, the sum of $32,000 remained.
The ground further relies on his Honour having accepted the husband’s assertion that he used the lion’s share of the $180,000 to bolster the company. An assertion rejected by the primary judge.
However, returning to the sum advanced by the husband’s parents. His Honour referred to it and took it into account, quite correctly as being a contribution amongst many others or as the Full Court said in Wallis & Manning (2017) FLC 93-759:
20. Yet, that approach must also ensure that the “myriad of other contributions” and the duration over which, and circumstances in which, the miscellany of other s 79(4) contributions were made is not accorded a subsidiary role. The essential s 79(4) task is for “trial Judges [to] weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation”.
(Footnotes omitted)
His Honour’s reasons at [40] and [41] correctly reflect that guiding principle.
Further, from [40]-[49] his Honour sets out his reasons for his ultimate conclusion as to contributions. Those paragraphs clearly set out his Honour’s reasoning to the ultimate conclusion. No error has been demonstrated either in approach or in a want of reasons.
Ground 7 contends that his Honour failed to give sufficient reasons for his rejection of the husband’s assertion as to the use he made of the $180,000; in failing to give significant weight, or perhaps more weight to the wife’s failure to pay the mortgage for three months of her occupancy of the former marital home and the issue of the husband’s potential liability for the guarantees.
As to the husband’s use of the $180,000, in circumstances where the husband offered no evidence to support his bald assertion of how he used the money against the evidence before his Honour of the introduction of the money into the husband’s personal account and the withdrawals and the agreed purposes for the withdrawals, little else needed to be said.
Given that, it seems no submission was made to his Honour about how the $15,000 of the mortgage arrears should be dealt with in the context of the other evidence, it is no wonder that his Honour did no more than mention it and refer to the wife having the advantage of rent free accommodation.
As to the guarantees, despite the insistence of counsel for the appellant urging his Honour to consider the husband potentially liable for the whole of the debt guaranteed, his Honour’s exchange with counsel makes clear his understanding of the truly potential nature of those guarantees. However, his Honour called them “significant” and, it seems at least on the face of the reasons, that characterisation drove the further adjustment of 8.5 per cent (at [59] – [60]).
In this aspect and in respect of the others, his Honour’s reasons clearly allow his path of reasoning to be discerned.
No error has been demonstrated.
The appeal will thus be dismissed.
COSTS
The respondent sought an order for costs in her favour in the event that the appeal failed. The costs schedule filed on her behalf seeks an order for $12,473.41.
Counsel for the appellant conceded that if the appeal failed it would be difficult to resist a costs order.
I will therefore order the husband to pay to the wife’s costs of and incidental to the appeal in the sum sought being $12,473.41.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie-Wallace delivered on 5 November 2019.
Associate:
Date: 5 November 2019
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