Monteiro & Monteiro
[2022] FedCFamC1A 86
•3 June 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Monteiro & Monteiro [2022] FedCFamC1A 86
Appeal from: Monteiro & Monteiro [2021] FedCFamC2F 458 Appeal number(s): NAA 109 of 2021 File number(s): ADC 2845 of 2014 Judgment of: TREE J Date of judgment: 3 June 2022 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Appeal against final property settlement orders – Whether the overall division of the parties’ property of 60/40 per cent in favour of the wife was unreasonable – Challenge to the adjustment made under s 75(2) of the Family Law Act 1975 (Cth) – Whether the primary judge erred in not including a personal debt of the husband in the balance sheet – Where such post separation liabilities are not bound to be included in the balance sheet – Adequacy of reasons – Challenges to the weight attributed to the evidence – Where no ground of appeal established – Appeal dismissed – Costs ordered.
FAMILY LAW – CROSS-APPEAL – PROPERTY – Cross-appeal from the primary judge’s failure to add-back a sum of money to the balance sheet – Where the sum was a distribution of profit from the parties’ trust – Not exceptional – No appealable error established – Costs ordered – Where costs ordered against each party were offset.
Legislation: Family Law Act 1975 (Cth) s 75(2) Cases cited: Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67
De Winter v De Winter (1979) 23 ALR 211
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
House v The King (1936) 55 CLR 499; [1936] HCA 40
Sun Alliance Insurance Ltd v Massoud [1989] VR 8
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Wilde & Wilde [2007] FamCA 1044
Number of paragraphs: 73 Date of hearing: 24 May 2022 Place: Cairns (via video link) Counsel for the Appellant/Cross-Respondent: Mr Heinrich Solicitor for the Appellant/Cross-Respondent: Townsends Solicitors Counsel for the Respondent/Cross-Appellant: Mr Tredrea Counsel for the Respondent/Cross-Appellant: Jordan & Fowler Family Lawyers ORDERS
NAA 109 of 2021
ADC 2845 of 2014FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR MONTEIRO
Appellant/Cross-Respondent
AND: MS MONTEIRO
Respondent/Cross-Appellant
ORDER MADE BY:
TREE J
DATE OF ORDER:
3 JUNE 2022
THE COURT ORDERS THAT:
1.The appeal and cross-appeal are dismissed.
2.The husband pay the wife the sum of $6,467.28 in respect of her costs within 28 days.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Monteiro & Monteiro has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
TREE J:
INTRODUCTION
On 3 December 2021, a judge of the Federal Circuit and Family Court of Australia (Division 2) made final property settlement orders in proceedings between Mr Monteiro (“the husband”) and Ms Monteiro (“the wife”).
As explained in the reasons contemporaneously then delivered, those orders were intended to effect a division of the net assets of the parties 60 per cent to the wife and 40 per cent to the husband. Particularly the wife was to retain the former matrimonial home (“the Suburb A property”), a vehicle, personal effects and her superannuation interests, and the husband was to retain a unit in Suburb B (“the Suburb B property”), the Monteiro Family Trust, the Monteiro Retirement Fund (less the wife’s interest in the fund to be rolled over to her), a 50 per cent shareholding in a company known as X Pty Ltd (“X Pty Ltd”), personal effects and his superannuation (subject to any subsequent splitting order to the wife).
The parties were also ordered to discharge a number of outstanding debts secured against their properties, with such debts being allocated to each party. Further, the husband was ordered to bring the Monteiro Retirement Fund into compliance with the relevant regulations and pay any consequent penalties to the Australian Taxation Office (“ATO”). In the event the penalties to the ATO totalled less than $150,000, then the wife was ordered to file a Minute confirming a superannuation splitting order equivalent to 25 per cent of the adjusted value of the husband’s interest in the Monteiro Retirement Fund.
By his Notice of Appeal filed 31 December 2021, the husband appeals from the orders providing for a 60/40 division of property in favour of the wife and a number of other orders.
By her Notice of Cross Appeal filed 19 January 2022, the wife appeals from the primary judge’s failure to add back into the balance sheet a sum of money accessed by the husband post separation.
For the reasons which follow, the appeal and the cross-appeal will both be dismissed.
BACKGROUND
The husband was born in 1966 and is presently 55 years of age. The wife was born in 1967 and hence is 54 years of age. The parties met in 1988, married in 1991, separated around June 2008 and divorced in 2014. They have two children of their relationship, the eldest of whom is 23 years of age and the youngest 17.
The uncontested background facts to these proceedings are set out in the primary judge’s reasons for judgment at [3]–[19]. In summary, the parties had bought and sold various properties and undertook a range of property development projects over the years. They also acquired a business and purchased a one-third interest in a company through the Monteiro Family Trust.
In 2004, the parties moved into what was then the wife’s parents’ house (which is the Suburb A property). Following the wife’s father’s death, the parties continued to live in the Suburb A property with the wife’s mother. In 2008, the parties purchased the Suburb A property from the wife’s mother for an agreed price of $500,000, of which they paid $400,000, with the remaining $100,000 being provided by way of vendor finance. The parties and the wife’s mother entered into an agreement whereby she would remain living at the property rent free for her lifetime or until the property was sold. The $100,000 had not been repaid to the wife’s mother at the time of trial, and the wife’s mother remained living in part of the Suburb A property.
In 2005, the parties established the Monteiro Retirement Fund, which is a self-managed superannuation fund, with each party rolling their personal superannuation into the fund. The fund purchased a property at Suburb C (“the Suburb C property”) in the same year.
In April 2008, the parties purchased the Suburb B property, into which the husband initially moved at separation. The wife remained living in the Suburb A property where she and her mother still reside. Between 2009 and 2020, the wife provided accommodation to student lodgers at the Suburb A property as a source of income.
In 2009, the parties refinanced their existing debt structure with ANZ Bank. At the time of trial, the parties had five different loan accounts all secured against the Suburb A property, although one of those loans was secured against the Suburb B property as well.
The husband and his new partner resided in the Suburb C property between 2011 and 2019.
In 2011/2012, the parties’ company went into liquidation. The husband and his business partner continued to work in the company and an agreement was later reached whereby the husband and his partner would purchase the business from the liquidators. This occurred and the husband and his partner set up X Pty Ltd.
The wife commenced these proceedings in August 2018, with leave later being given to commence them out of time.
For the purposes of the trial, a single expert was appointed to value the parties’ interests in the Monteiro Family Trust, X Pty Ltd and the Monteiro Retirement Fund. It became clear during the early stages of the proceedings that the Monteiro Retirement Fund was non-compliant with the relevant superannuation regulations, as a result of the husband and his partner having lived in the Suburb C property.
The trial commenced on 20 April and concluded on 23 April 2021, with written submissions being made thereafter. No oral submissions were made. Her Honour’s reasons for judgment were delivered on 3 December 2021. In them, the primary judge concluded that the parties’ contribution based entitlements were equal (at [91]) but that the factors under s 75(2) of the Family Law Act 1975 (Cth) justified a 60/40 split in favour of the wife (at [101]). The primary judge made orders purporting to give effect to that outcome.
THE APPEAL
At the outset, it is useful to restate the relevant principles which govern appeals from discretionary judgments. Particularly, it is well settled that error of the type identified in House v The King (1936) 55 CLR 499 at 504–505 (“House v The King”) must be established. There, the majority of the High Court said:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. 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.
I will deal with the husband’s grounds of appeal in the same way he addressed them in his Summary of Argument. Ground 8 was abandoned.
Grounds 1, 2 & 3 – Overall division
These grounds provide:
1.The decision to divide the asset pool 60%/40% in favour of the respondent wife was not justified and/or was not reasonably open on the evidence and/or the findings made by the learned trial judge. The appropriate outcome should have been a decision to divide the asset pool equally between the parties.
2.The learned trial judge failed to have adequate regard to her finding and/or conclusion at paragraph 91 of her Reasons that the parties made equal contributions to the marital asset pool.
3.The purported effect of the decision is to provide for the respondent wife to retain assets worth 50% more than the value of the assets to be retained by the appellant husband. The facts as determined by the trial judge did not give any basis for the respondent wife to receive an adjustment and/or loading of 50% compared with the appellant husband.
These grounds are also related to Grounds 9, 10, 11 and 12, which challenge the primary judge’s s 75(2) adjustment, although I shall address those more specifically later, as did the husband.
What these grounds boiled down to was an assertion that a 60/40 split was so unreasonable, that it must be the product of error, with an even division being the appropriate outcome. No challenge is made by the appeal to the finding by the primary judge that the parties’ contribution based entitlements were equal, rather it is said that the final outcome of a 60/40 division was simply not open.
However the weakness of these challenges is immediately manifest from the fact that at trial, the husband himself argued for a 60/40 contribution based entitlement in his favour, together with (it seems) some further s 75(2) adjustment benefiting him as well. He could not explain how that contended adjustment was reasonable, but a 60/40 split in favour of the wife was not. In any event, self-evidently, if the challenges he now makes to the primary judge’s adjustment for s 75(2) factors are unsuccessful, then these grounds add little, if anything, to the appeal. Particularly, it adds nothing to interrogate the outcome as Ground 3 does, to demonstrate that a party who receives 60 per cent of a pool necessarily gets 50 per cent more than the other party who receives 40 per cent. That is simply a mathematical truth which attends any 60/40 split.
Also under these grounds the husband sought to argue that, if he succeeds on Grounds 4, 5, 6 and 7, then the outcome was more in the order of a 91/9 split in the wife’s favour. Again, Grounds 4, 5, 6 and 7 will succeed or fail; if they all fail, they add nothing to Grounds 1, 2 and 3.
Finally in the husband’s argument under these grounds, some criticism was made that a 10 per cent adjustment for s 75(2) factors (at [100]) could not lead to a 60/40 split, but at best a 55/45 split. However it is plain that the primary judge determined that a 60/40 split was the appropriate outcome. Since plainly that additional 10 per cent could only come from the husband’s share, the disparity resulting from the adjustment is necessarily doubled. There can be no room for argument that the primary judge was unaware of that.
As shall be seen, Grounds 4, 5, 6, 7, 9, 10, 11 and 12 all fail. It follows, given that no challenge is made to the equal contribution finding, that the failure to successfully impugn the primary judge’s s 75(2) adjustment, which resulted in the 60/40 division, means that the overall outcome is justifiable, and hence certainly not unreasonable. It follows that Grounds 1, 2 and 3 must also fail.
Grounds 4, 5, 6 & 7 – Husband’s liability to Monteiro Retirement Fund
These grounds are as follows:
4.In identifying the relevant asset pool the learned trial judge failed to have adequate regard to the loan liability of $182,262 that the appellant husband has to the parties' self-managed superannuation fund called the Monteiro Retirement Fund (SMSF). Amongst other things:
4.1.That loan liability was not included in the asset pool determined by the learned trial judge (refer paragraph 76 of the Reasons);
4.2.That loan liability was not taken into account in the division of the asset pool referred to in paragraphs 106 and 108 of the Reasons.
5.Paragraph 106 of the Reasons incorrectly states the net asset position of the appellant husband. Once account is properly taken of his loan liability of $182,262 to the SMSF and the payment of the wife's interest in the SMSF pursuant to paragraph 6(b) of the orders, which should be deducted from the amount at paragraph 106(4), the net asset position amount of $193,338 stated in paragraph 106 of the Reasons should be reduced to negative amount of at least-$10,000.
6.The effect of the orders is to provide for a division of the overall asset pool of approximately 90% of the respondent wife and approximately 10% of the appellant husband, which is manifestly way outside the bounds of any range of outcomes that are reasonably open.
7.In the alternative, the learned trial judge should have found and/or concluded that if all or any part of the above loan liability of $182,262 should not be taken into account in determining the relevant asset pool, the value of $188,800 attributed to the SMSF in paragraphs 76 and 106 of the Reasons should have been reduced to the same extent.
At [47] the primary judge said:
47.A substantial portion of the value of the Retirement Fund consists of a loan owed by the husband in the sum of $182,262. The husband was cross examined in relation to this loan account and how it had arisen but was unable to give any clear explanation.
Leaving aside some confusion as to the amount in question, that accurately reflects the oral evidence of the husband about the provenance of the relevant debt, as follows:
[COUNSEL FOR THE WIFE:] Thank you. So I suppose my question it this, [the husband]: it appears that between 2009 and now, you’ve taken $172,000 out of the super fund?
[THE HUSBAND:] That’s not correct because the portion has been made up of rental plus interest on rent accredited over a period of years, which I wasn’t paying, obviously, so that gets put into the – into the pool. So it wasn’t money that was actually – I’ve gone and taken $172,000 out.
[COUNSEL FOR THE WIFE:] That’s what the documents say?
[THE HUSBAND:] It’s no rent paid for that period. There was also interest every year with increase of rental. That was a large portion of it.
[COUNSEL FOR THE WIFE:] Right. Well, are you saying this? And I don’t want to put words in your mouth …. What I’m saying to you is that the records of the Monteiro Retirement Fund indicate that in the post-separation period, you’ve taken $172,000 out of the fund. That’s what the records show. Now, are you saying, “Well, that might be so, but I was paying the loan independently, which has got nothing to do with the super fund”? Are you saying that some sort of – should be set off against your loan from the super fund?
[THE HUSBAND:] No. I’m answering your question based on what’s on the records as far as the amount that’s on there, and the way you’ve put it to me is have I actually taken that money out. I haven’t actually taken the money out. It is recorded as, obviously, a loan against me---
[COUNSEL FOR THE WIFE:] Yes?
[THE HUSBAND:] ----once the auditing was done.
[COUNSEL FOR THE WIFE:] Yes?---
[THE HUSBAND:] But is was actual – it was – it was – it was bills. There’s was rates. There was – there was rental not paid in there. There was – there was everything---
[COUNSEL FOR THE WIFE:] Yes? ---
[THE HUSBAND:] --- that we’re all doing, I guess all our properties, that needs---
[COUNSEL FOR THE WIFE:] All right?---
[THE HUSBAND:] ---to be paid that I couldn’t pay at the time, yes.
[COUNSEL FOR THE WIFE:] Right?
[THE HUSBAND:] ---Yes.
[COUNSEL FOR THE WIFE:] So have you done the exercise of any net amount that you say you’ve had a personal benefit from the fund? Have you done any calculations about that?---
[THE HUSBAND:] A personal benefit as far as, what, staying alive, living, taking care of my children? What do you mean as in benefits?
HER HOUNOUR: Well---
[COUNSEL FOR THE WIFE]: Yes.
HER HONOUR: They’re all personal benefits, aren’t they?
[COUNSEL FOR THE WIFE]: Yes.
[THE HUSBAND]: I guess if you look at it that way, yes.
HER HONOUR: Yes?---
[THE HUSBAND:] Yes, yes, yes.
[HER HONOUR:] So, again, no one is necessarily saying you had a lot of choice about this. I think everyone accepts that when the business was imploding, you were in a very difficult financial situation?---
[THE HUSBAND:] Correct.
[HER HONOUR:] And, as I understand your evidence – and, again, like [counsel for the wife], I don’t want to be putting words in your mouth, and I’m sure [counsel for the husband] will jump up if he thinks I’m characterising your evidence incorrectly, but when you needed to, as you say, for rates or taxes or thing like that, the super fund met those expenses because you weren’t able to?
[THE HUSBAND:] That’s correct, yes.
(Transcript 22 April 2022, p.169 line 41 to p.171 line 9) (Emphasis added)
Later at [55] the primary judge concluded:
55.It is a matter for the husband to bring the Retirement Fund into compliance. While both parties have equal legal responsibility as Trustees, the husband has been in effective control. The husband’s debit loan account remains a significant asset of the Retirement Fund. Counsel for the husband argues that his client does not have the capacity to repay the debt and therefore it is unrealistic to take this debt into account when valuing the Retirement Fund. I do not accept this proposition. The husband cannot receive the benefit of this loan account and then argue it is irrelevant to these proceedings.
Before the primary judge, the wife contended that “the funds withdrawn by the husband from the Monteiro Retirement Fund (if not otherwise brought to account) should be added back to the asset pool” (wife’s affidavit filed 15 April 2021, paragraph 51). Later she contended that the loan should be ignored (wife’s written submissions filed 16 September 2021, page 7).
The husband’s position in his written submissions listed the loan (albeit at the amount of $170,000) as an extant liability of his.
In effect, the primary judge accepted the wife’s submission that the husband’s $182,262 loan should be ignored, or at least not included as a liability of the husband. That is justifiable absent proper and detailed explanation of what it comprised. Moreover, there is no injustice suffered by the husband in the way the primary judge dealt with his debt, since to the extent the loan was explained, it appears to have been in relation to outgoings and unpaid rent for the Suburb C property between 2011 and 2019, together with interest on those amounts. In other words, the loan account was attributable to the post-separation living expenses for the husband and his new partner. Yet as the primary judge recorded at [40]:
40.Given the length of time since separation, the parties agree that items such as their present savings, household contents, motor vehicles, credit card debts and other personal debts should not be brought to account in calculating the net asset pool. I agree this is an appropriate, pragmatic approach and does not compromise my capacity to determine a just and equitable settlement.
Hence to the extent the evidence permitted any conclusion, the loan account plainly was a personal debt. Moreover, such post separation liabilities are not bound to be included in the balance sheet (Wilde & Wilde [2007] FamCA 1044).
It follows that the contentions advanced by Grounds 6 and 7 are without merit.
All these grounds fail.
Grounds 9 & 10 – Contributions
These grounds provide as follows:
9.The learned trial judge failed to have adequate regard to the direct financial contribution of $50,000 made by the appellant husband at about the commencement of the parties' relationship in 1992, which was used to assist in the acquisition of the parties' first real estate property, particularly having regard to the fact that the respondent wife had minimal assets at that time and made no significant financial contribution to the acquisition of that property.
10.The learned trial judge failed to have proper regard to the circumstances relating to the respondent wife's mother's rent free occupation of the downstairs part of the former matrimonial home at Suburb A from the time in 2008 when the parties acquired that property from the mother up to and including the trial. Amongst other things:
10.1.The learned trial judge failed to have proper regard to the terms and effect of the deed dated 30 March 2008 between the parties and the respondent wife's mother that she could reside in the downstairs part of the home "free of rent or other fee".
10.2.The finding and/or conclusion at paragraph 98 of the Reasons that the agreed terms for rent free accommodation for the respondent wife's mother with no other fee set out in the above deed were not financial terms or conditions was wrong.
10.3.The learned trial judge should have concluded that the value of the $100,000 vendor finance provided by the respondent wife's mother in 2008 was spent, repaid, offset or otherwise negated and made redundant by the over 13 years of rent free accommodation.
10.4.The learned trial judge erred in concluding that the $100,000 vendor finance provided by the respondent wife's mother into 2008 must be taken into account in a substantial way and/or provided a basis for making an adjustment in the wife's favour pursuant to section 75(2) of the Family Law Act or otherwise.
10.5.In considering what, if any, significance should be given to the above $100,000 vendor finance, the learned trial judge failed to have adequate regard to the effect and/or significance of the appellant husband's direct financial contribution of $50,000 in 1992 referred to above.
These grounds, although ostensibly directed towards contributions are, of course, inconsistent with the lack of challenge to the contribution findings by the primary judge. Rather, as argued, they were vehicles to challenge the adjustment under s 75(2). Moreover, grounds advanced by phrases such as “failed to have adequate regard” and “failed to have proper regard” cannot disguise the fact that they are weight challenges. The high bar which such contentions face is well known (Gronow v Gronow (1979) 144 CLR 513 at 519; CDJ v VAJ (1998) 197 CLR 172 at 230–231).
Plainly the primary judge did have express regard to the husband’s initial financial contribution of $50,000 (at [78], [82] and [91]). Having taken it into account in considering contributions, no criticism can be made of the primary judge not then further considering it under s 75(2), which is where the primary judge considered the wife’s mother’s vendor finance of $100,000 for the Suburb A property (at [75]). No error is established by her Honour’s approach. Ground 9 therefore fails.
Ground 10 seems to really be a challenge to the weight given to the wife’s mother’s $100,000 vendor finance. At [97]–[98] the primary judge said:
97.I have concluded that this sum should not be treated as a matrimonial debt, but equally it should not be ignored in assessing a proper outcome between the parties.
98.The husband argues that the non payment of $100,000 was a quid pro quo for [the wife’s mother’s] ongoing right of occupancy at the Suburb A property and should not otherwise be taken into account. He relies upon the agreement entered into between the parties, however the written agreement does not mention any financial terms or conditions. The document simply records the parties’ agreement to [the wife’s mother] residing at the Suburb A property free of rent or any other fee, provided that she pays her own living expenses and other requirements. I have not included this sum as a matrimonial debt, but this financial assistance provided by [the wife’s mother] is reflected in the net matrimonial asset pool now available to the parties and must be taken into account in a substantial way.
(Footnote omitted)
The husband’s criticisms advanced by the several sub-grounds to Ground 10 are all directed to weight, with the exception of Grounds 10.1 and 10.2. As to the weight challenges, there is no reason to think the primary judge failed to appreciate the significance of the wife’s mother’s contribution, or the benefits she obtained from it. As to Grounds 10.1 and 10.2, the criticism that the primary judge concluded that the “written agreement does not mention any financial terms or conditions” ignores that such reference must logically exclude her fee free occupation, which her Honour mentions in the very next sentence, and thus “financial terms or conditions” must be taken to mean repayment terms or conditions which are indeed not mentioned in the agreement. These sub-grounds are thus without merit.
Finally, during oral argument, counsel for the husband sought to argue that there was deficient exposure of the primary judge’s reasoning as to, in effect, why $50,000 introduced by the husband early in the relationship was not given the same apparent significance in the final result as was the wife’s mother’s vendor finance of $100,000. However, plainly that challenge is not encompassed in either of those grounds, and yet despite that being explained to counsel, no application to amend them was forthcoming. I will therefore not consider it further.
Grounds 9 and 10 both fail.
Ground 11 – Wife’s additional income
The ground alleges:
11.The learned trial judge failed to have proper regard to the evidence relating to the student lodger income that the wife received after separation between 2009 and 2020 (12 years). Amongst other things:
11.1.Inadequate regard was had to the findings and conclusions at paragraph 69 of the Reasons regarding the wife's concealment of the extent of student lodger income;
11.2.The evidence that student lodgers were accommodated in the former matrimonial home between 2009 and 2020 and paid fees that were tax free gave proper grounds for concluding that the wife had probably received substantially more than $100,000 net and possibly well over $200,000 net during that period;
11.3.It ought to have been concluded that in all the circumstances there was no basis for any adjustment in favour of the wife pursuant to section 75(2).
Again, this ground challenges the weight given to certain facts. The primary judge initially dealt with the lodger income at [68]–[72], before concluding she would not add-back any sum into the pool referrable to it, but rather would instead consider it under s 75(2) of the Act. At [99] the primary judge concluded:
99.The husband argues that he has facilitated the wife’s income from her lodgers as joint owner of the Suburb A property and by virtue of his ongoing payment of three loans secured against the property. The husband’s equity in the Suburb A property is a factor that I take into account, but it has a modest impact, on my assessment. Regarding his loan repayments, I consider the husband received as much benefit from his loan repayments as did the wife, given that the loans he was repaying also related to his business finances, the overdraft refinancing and the Suburb B property.
Plainly the primary judge considered the husband’s argument and gave it some, albeit “modest” weight. That others may have given it greater weight does not establish appealable error.
Ground 11.3 is better considered under Ground 12, but as shall be seen, the challenges made there all fail, and 11.3 suffers the same fate.
Ground 11 is without merit.
Ground 12 – 10 per cent adjustment
Ground 12 reads:
12.The learned trial judge failed to explain the basis for the so-called adjustment of 10% referred to in paragraph 100 of the Reasons and there was no basis for any such adjustment in any event. Amongst other things:
12.1.The finding and/or conclusion at paragraph 91 of the Reasons that the parties made equal contribution to the marital asset pool should mean here that there is no basis for an adjustment in favour of the respondent wife on account of any financial contributions, including financial assistance from the respondent wife's mother;
12.2.The $100,000 vendor finance referred to above was the only evidence of financial assistance from the respondent wife's mother;
12.3.The learned trial judge did not explain what, if any, features or circumstances regarding the parties' overall future financial circumstances were relied upon to justify an adjustment in the wife's favour pursuant to section 75(2);
12.4.The circumstances did not justify any adjustment in the wife's favour and/or no such adjustment was reasonably open in the circumstances.
The obligation to give adequate reasons is well established. In Bennett and Bennett (1991) FLC 92-191 at 78,266, the Full Court adopted the following test articulated by Gray J in Sun Alliance Insurance Ltd v Massoud [1989] VR 8 at 18:
The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if:
(a)the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b) justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.
At [100] the primary judge concluded her consideration of the s 75(2) factors as follows:
100.Taking into account the financial assistance provided by the wife’s mother and the parties’ overall future financial circumstances, I am satisfied that an adjustment in the wife’s favour is appropriate. The wife sought an adjustment of 15% based on the parties’ respective financial contributions, the financial assistance from her mother and her ongoing responsibility to provide accommodation to her mother. In my view, that adjustment is unwarranted and does not lead to an equitable outcome between the parties. I conclude that an adjustment of 10% in the wife’s favour should be allocated.
(Footnote omitted)
Her Honour had previously addressed the considerations referred to in the first sentence of that extract at [92]–[98]. There is therefore an adequate exposure of the reasoning underpinning the s 75(2) adjustment. That reasoning comprises a sufficient justification for the adjustment.
Only Ground 12.3 deserves specific, but brief, address. It is plain that the matters articulated at [92]–[93] are referrable to “the parties’ overall future financial circumstances” and hence there is adequate exposure of the primary judge’s reasoning. Again, plainly a disparity between the parties’ future financial circumstances amply justifies an adjustment under s 75(2) of the Act.
Ground 12 fails.
Grounds 13, 14 & 15 – Wife’s interest in Monteiro Retirement Fund
These grounds assert:
13.The learned trial judge erred in concluding that the wife has an interest in the SMSF in an agreed sum of $28,172. The agreed amount was $21,500:
13.1.During the course of the hearing of the trial the parties' counsel informed the Court orally that:
(A)It was agreed that the value of the wife's interest in the SMSF was $21,500 dollars;
(B)The agreed amount took into account a potential liability for taxation penalties arising from the wife's unilateral withdrawal of funds from a bank account of the SMSF after separation;
13.2.The written submissions of both parties after the trial confirmed the agreed amount of $21,500 for the wife's interest in the SMSF.
14.Paragraph 6 of the orders dated 3 December 2021 should be varied to include the agreed amount of $21,500. Alternatively, paragraph 10(a) of the orders should be varied or alternatively, there should be a further order that provides for the wife to indemnify the husband and the SMSF for any taxation, liabilities or penalties arising from the wife's unlawful withdrawal of funds from a bank account of the SMSF after separation.
15.The learned trial judge erred in calculating the cash payment required by the respondent wife to the husband by not taking account of the payment of the wife's interest in the SMSF required pursuant to paragraph 6(b) of the orders. The cash amount should have been increased by the amount of the payment required pursuant to that order.
At [46] the primary judge recorded:
46.The Monteiro Retirement Fund was valued by [the single expert] based on figures for the financial year ending 30 June 2019. He valued the Fund at $356,241, consisting of the husband’s member entitlements in the sum of $334,741 and the wife’s member entitlements in the sum of $21,500. The parties now agree that the wife’s member entitlements are valued at $28,182.
The wife concedes that the last sentence is an error, and the proper figure remained $21,500.
However Order 6(b) of the primary judge’s orders, which rolled over the wife’s interest in the Monteiro Retirement Fund to a fund of her choosing, did not carry forward that error, in that no value of the wife’s interest was specified. There is thus no utility to Grounds 13 and 14.
In any event, patently an error of less than $7,000 would not be sufficiently material to justify upholding an appeal (De Winter v De Winter (1979) 23 ALR 211), which would be amendable by application to the primary judge under the “slip-rule” in any event. Thus Ground 13 fails, and Ground 14 is not a competent ground of appeal, but appears ancillary to Ground 13. Really only Ground 15 is deserving of discussion.
As to that, at [113] the primary judge said:
113.The wife still holds her superannuation entitlement in the Monteiro Retirement Fund in the agreed sum of $28,172. The parties agree that this sum should be rolled over into a superannuation fund of her choice. I have not included any adjustment for this figure in my calculations, given the uncertainty surrounding the overall value and circumstances of the Fund. As discussed above, the husband should take responsibility for clarifying the likely penalties to be imposed, as he is the party who has been in effective control of the Fund. He has failed to deal with the issue, even though the proceedings were adjourned on numerous occasions for this to occur.
(Emphasis added)
The latter part of that excerpt is a reference to the inability of the Court to definitively determine the value of the Monteiro Retirement Fund, as the husband had failed to cause the impact of the fund’s non-compliance with the relevant legislation to crystallise. Hence Orders 17–21 were in these terms:
17.Within 60 days the husband do all things necessary to bring the Monteiro Retirement Fund into compliance with the Superannuation Industry (Supervision) Regulations 1994 and thereafter do ensure that all costs, fees and penalties are paid as directed by the Australian Taxation Office.
18.The husband keep the wife informed regarding the compliance process and details of any penalty imposed by the Australian Taxation Office.
19.The husband authorise his accountant to keep the wife or her solicitors advised regarding the compliance process and any ruling or penalty imposed from the Australian Taxation Office and this order shall be sufficient authority to the husband’s accountant in that regard.
20.In the event the Australian Taxation Office allocates penalties totalling less than $150,000, then the wife file a Minute confirming a superannuation splitting order equivalent to 25% of the adjusted value of the husband’s interest in the Monteiro Retirement Fund.
…
22.Liberty to the either party to apply in relation to Orders 17 – 20 regarding the Monteiro Retirement Fund.
Given that the single expert’s evidence as to the potential maximum amount of any penalty was $167,433, which was the figure used by the primary judge in determining a value for the Monteiro Retirement Fund, the threshold of $150,000 meant that $17,433 might be kept by the husband without adjustment, which is not even $4,000 less than the value of the wife’s member interest. Again, that is not a material sum. More, any adjustment to accommodate any excess payment is still potentially possible under Order 22, in the event that Order 20 applies.
Grounds 13, 14 and 15 all fail.
THE CROSS APPEAL
At the outset of the hearing, the wife abandoned Grounds 2 and 3 of her cross-appeal but pressed Ground 1.
Ground 1 – Add-back
Ground 1 of the wife’s cross-appeal asserted:
1.That the learned trial judge erred in failing to bring to account the husband’s drawings from the Monteiro Family Trust of $49,699 in 2017/2018 financial year.
Although the husband was cross-examined by reference to the relevant drawings from the Monteiro Family Trust, no intimation was then made that they should be added-back to the balance sheet, which was only first raised after the close of evidence, by way of the wife’s written submissions. As earlier noted, there were no oral submissions. In those circumstances, the primary judge declined to include it as an add-back (at [57] and [58]) and no appealable error arises from her Honour doing so.
In any event, it seems that the sum in question was a distribution of profit from the trust’s activities. That is not a premature distribution of matrimonial assets as discussed in Trevi & Trevi (2018) FLC 93-858, and otherwise does not qualify as “exceptional”. Even if it were, the decision as to whether to treat it is an add-back is discretionary, and House v The King error would need to be established. It has not been.
In oral argument counsel for the wife asserted that there was an absence of explanation for the refusal to add back this sum, however the ground patently does not raise that, and no application to amend the ground to incorporate such a challenge was made. I will not consider that matter further.
Ground 1 fails.
CONCLUSION
No ground of either the appeal or cross-appeal succeeds. Both will be dismissed.
COSTS
In the event the appeal failed, the wife sought her costs. In the event the cross-appeal failed, the husband sought his costs. Unfortunately the costs schedules filed by the parties did not enable differentiation between their costs of the appeal and cross-appeal.
At the hearing, the parties agreed that, using a broad brush, about 25 per cent of their costs were attributable to the cross-appeal. Hence the wife’s costs, claimed at $15,195.17, are attributable to the appeal in the sum of $11,396.37 and the husband’s costs, claimed at $19,716.39, are attributable to the cross-appeal in the sum of $4,929.09, the difference being $6,467.28.
The appeal has wholly failed, as has the cross-appeal. Both parties have financial capacity to meet a costs order. I am satisfied that each party should pay the other’s costs in relation to their respective failures. Further, I am satisfied that offsetting the parties’ respective costs should see the husband pay the wife the sum of $6,467.28, and it should be payable within 28 days.
I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Tree. Associate:
Dated: 3 June 2022
0
6
1