Naisby & Naisby
[2022] FedCFamC1A 207
Federal Circuit and Family Court of Australia
(DIVISION 1) APPELLATE JURISDICTION
Naisby & Naisby [2022] FedCFamC1A 207
Appeal from: Naisby & Naisby [2022] FedCFamC2F 924 Appeal number(s): NAA 156 of 2022 File number(s): BRC 4847 of 2016 Judgment of: ALDRIDGE J Date of judgment: 8 December 2022 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Appeal from property settlement orders – Procedural fairness – Adequacy of reasons – Where the appellant asserts the primary judge’s reasons do not disclose why the parties’ contributions should favour the appellant by only 2 per cent, where contributions up to separation were equal and the pool included a property comprising over 10 per cent of the value of the net assets – Where the reasons do not readily identify how the contributions finding was derived – Error established – Appeal allowed – Orders set aside – Matter remitted for rehearing – Costs certificates granted. Legislation: Evidence Act 1995 (NSW) s 131
Federal Proceedings (Costs) Act 1981 (Cth)
Cases cited: Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
Boensch v Pascoe (2019) 375 ALR 15; [2019] HCA 49
Calvin & McTier (2017) FLC 93-785; [2017] FamCAFC 125
Kioa v West (1985) 159 CLR 550; [1985] HCA 81
Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110
Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88
Sun Alliance Insurance Ltd v Massoud [1989] VR 8
Number of paragraphs: 77 Date of hearing: 1 November 2022 Place: Sydney (via video link) The Appellant: Self-represented litigant Counsel for the Respondent: Mr Jordan Solicitor for the Respondent: Barry Nilsson Lawyers ORDERS
NAA 156 of 2022
BRC 4847 of 2016FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR NAISBY
Appellant
AND: MS NAISBY
Respondent
order made by:
ALDRIDGE J
DATE OF ORDER:
8 DECEMBER 2022
THE COURT ORDERS THAT:
1.The appeal is allowed.
2.The orders made on 14 July 2022 are set aside.
3.The matter is remitted for rehearing to the Federal Circuit and Family Court of Australia (Division 2) by a judge other than the primary judge.
4.The Court grants to the appellant a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
5.The Court grants to the respondent a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.
6.The Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of them in respect of costs incurred by them in relation to the new trial ordered.
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).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Naisby & Naisby has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE J:
Introduction
This is an appeal against property settlement orders made by a judge of the Federal Circuit and Family Court of Australia (Division 2) on 14 July 2022 in proceedings between Mr Naisby (“the appellant”) and Ms Naisby (“the respondent”).
The primary judge determined that the property should be divided so that the respondent received 60 per cent of it and the appellant 40 per cent. Orders were made for transfers of property and payment of money to give effect to that division. An order for the payment of spousal maintenance in the sum of $300 per week for three years was also made in favour of the respondent.
The matter had been the subject of final orders made on 1 September 2020, which were set aside on appeal on 11 June 2021 and the case was remitted for rehearing.
The parties were married in 1990 and finally separated in April 2015, that being a relationship of 25 years. At the time of the hearing they had been separated for nearly seven years.
The parties have five children, two of whom were born in 2009 and 2011 and remain in the care of their parents. They have lived with both parties since separation but at the time of the hearing they lived with the respondent and spent alternate weekends and just over half of school holidays with the appellant.
The appellant served with the defence forces in Country Y in December 2004. In December 2012, he was diagnosed as having post-traumatic stress disorder as a result of his defence forces service. Between 9 October 2015 and 29 June 2016 the appellant received total and permanent disability (“TPD”) insurance payments totalling $1,021,201.
His Honour found that all of these funds had been spent in a number of ways, including acquiring an interest in a property at Town KK with his present wife. The primary judge included the appellant’s half interest in that property in the balance sheet noting of course that “it represents a contribution by the [appellant] almost entirely” (at [30]).
Accordingly, the assets and liabilities of the parties were found to be the following:
43. …
ASSETS Description Ownership Value 1. J Street, Suburb K Joint $1,250,000 2. Motor vehicle 1 [Respondent] (1/3rd interest – registered owners are [the respondent], [her] mother and … father $4,500 3. Motor vehicle 2 [Appellant] $4,000 4. Motor vehicle 3 [Appellant] $8,000 5. [Appellant’s] bank accounts:
- Bank SS smart access #...39 ($16,059.48)
- Bank SS Goal Saver #...07 ($2,680.79)
- Bank SS Streamline #...31 ($8.26)[Appellant] $18,748.53 6. [Respondent’s] bank accounts:
- Bank SS streamline account #...15 ($3,117.33)[Respondent] $3,117.33 7. Joint Bank Accounts:
Bank SS complete access #...22 ($137.52)Joint $137.22 8. M Shares Joint $886.36 9. Sale proceeds of Business 1 held in the Naisby Family Investment Trust bank account Joint $407,303.38 10. Household contents [Appellant] $59,090 11. Household contents [Respondent] $14,250 12. [Appellant’s] 50% net equity in Real property located at JJ Street, Town KK. That property was valued … on 15 December 2021 at $1,925,000.
The Trust has two loans with a combined debt of approximately $1,264,999.70)[Appellant]
$335,643 13. Legal fees paid by [the appellant] for these proceedings [Appellant] $249,811.80 14. Legal fees paid by [the respondent] and/or on [her] behalf by [her] parents [Respondent] $514,445 15. Partial property settlement from Business 1 sale proceeds [Appellant] $25,000 16. Partial property settlement from Business 1 sale proceeds [Respondent] $25,000 Assets Subtotal $2,919,932.62 LIABILITIES 18. Line of credit with Bank SS [Appellant] $400,187 19. Loan owing to [the respondent’s] parents for [her] legal fees [Respondent] $182,567 20. Suburb KK property rates and utilities (January 2022) [Respondent] $729.19 21. G Invoice [Respondent] $3,206.50 Liabilities subtotal $586,689.69 SUPERANNUATION Name of Fund Member Value 22. Super Fund EE Super [Respondent] $98,498.65 23. Super Fund XX [Respondent] $247.69 24. Super Fund XX Participating Employer [Respondent] $905.55 25. Super Fund FF Super [Appellant] $183,753.39 26. Military Super [Appellant] $609,548 Superannuation subtotal $892,953.28 TOTAL ASSETS $3,226,196.21
As to contributions, his Honour concluded:
61.Overall when I consider the post separation contributions of both parties and in particular the contribution of [the appellant] in relation to the Town KK property I am satisfied that a contributions based assessment would see the overall contributions as 52% by [the appellant] and 48% by [the respondent].
After consideration of the matters raised by s 75(2) of the Family Law Act 1975 (Cth) (“the Act”), an adjustment of 12 per cent in favour of the respondent was found to be warranted so that she received 60 per cent of the net assets.
The Appeal
The grounds of appeal relied on by the appellant included a want of procedural fairness and inadequate reasons. The former should be dealt with first (Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128) and it is convenient to deal with the latter next.
Did the primary judge deny the appellant procedural fairness by refusing to accept parts of his Case Outline and evidence? (Ground 4)
The appellant’s affidavit evidence included a discussion of and reference to a number of offers of settlement that he had made (Appellant’s affidavit filed on 16 February 2022, paragraphs 325–327). That evidence was picked up in his Case Outline filed on 7 March 2022.
The appellant’s contention is that the offers of settlement were admissible under s 131(2)(a)–(c) and s 131(2)(g) of the Evidence Act 1995 (NSW) (“Evidence Act”).
At the outset, it has to be said that in his submissions the appellant moved between assertions of a want of procedural fairness and an error in the application of the section. They are different errors and it seems clear that the appellant is relying on both.
A person will be denied procedural fairness if they are deprived of the opportunity to present their case (Kioa v West (1985) 159 CLR 550 at 582). This, the appellant asserts, was the case here.
Counsel for the respondent objected to the paragraphs in the Case Outline which referred to offers of settlement (Transcript 14 March 2022, p.8 line 21 to p.9 line 19).
His Honour then said:
HIS HONOUR: … [Addressing the appellant], there’s a prohibition for trial judges to understand or receive any offers of settlements made by the parties, save for in circumstances where at the end of a case a party might be making an application for costs, and it’s one of the section 117(2A) matters that I can then take into account.
…
HIS HONOUR: … In the circumstances, it is my ruling that those paragraphs that have been referred to by [counsel for the respondent] that relate to offers of settlement shouldn’t be included in your case outline.
(Transcript 14 March 2022, p.9 lines 21–35)
This led to the following:
[THE APPELLANT]: May I speak to that, your Honour?
HIS HONOUR: You may.
(Transcript 14 March 2022, p.9 lines 36–38)
The appellant then proceeded to make submissions, asserting that the respondent had consented to the admission of the relevant offers because she herself had referred to them in previous affidavits. He referred twice to the Evidence Act in general terms, but did not identify
s 131 of that Act. He reiterated the point about consent and referred to waiver.
His Honour then said:
HIS HONOUR: … I’m of the view that those offers of settlement won’t assist me today in deciding the matter.
(Transcript 14 March 2022, p.10 lines 46–47)
The appellant was directed to file an Amended Case Outline omitting reference to the offers, which he did. For the same reasons, paragraphs 325–327 of the appellant’s affidavit filed on 16 February 2022 were also rejected.
The appellant was given the opportunity to make such submissions as he wished despite the initial reaction of the primary judge and there was no want of procedural fairness.
The next submission was that the primary judge “failed to properly engage with the appellant’s submissions…pursuant to subsections 131(2)(a)–(c) and (g) of the Evidence Act” (Appellant’s Summary of Argument filed on 16 September 2022, paragraph 6).
It is to be recalled that the appellant only referred to the Evidence Act in general terms in his submissions to the primary judge and did not identify the sections on which he relied.
The relevant subsections, including s 131(1) of the Evidence Act provide that:
Exclusion of evidence of settlement negotiations
(1) Evidence is not to be adduced of —
(a)a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute, or
(b)a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
…
Section 131(1) imposes a blanket ban on evidence of settlement negotiations being adduced unless one of the exceptions in s 131(2) is established.
Subsections 131(2)(a)–(c) require the consent of at least the respondent. It was apparent that she was not consenting to the evidence because she objected to it. At no time, either before the primary judge or myself, did the appellant identify where the respondent had tendered the communications or document. Reference to it in an affidavit that has not been read is not such a tender.
The appellant’s submissions focused mainly on s 131(2)(g) of the Evidence Act. He contended that the evidence was relevant to the finding that the primary judge made about the respondent’s reaction to the uncertainty of the continuing litigation, concerns about her financial capability and that there was a continuing acrimonious dispute. His point was that if the respondent had accepted the offers not only would the litigation have been over, she would have been well off.
The submissions did not otherwise identify the evidence or inference which was likely to mislead the Court if the relevant evidence was not admitted.
Nonetheless, the appellant submitted that the offers of settlement, if admitted, would undermine the relevant findings.
The premise of the submissions is that the respondent should have accepted the offers and that she would have been better off had she done so. In order to make that premise good it would be necessary to examine, at the least, the full terms of the offers, the precise financial position of the parties at the time of the offers, the impact, if any of his or her earning capacity and the terms of any counter proposals. Even then, it may well be very difficult for an objective determination, as opposed to a subjective one, to be made as to the merits of the offers.
For these reasons, I am not satisfied that the primary judge erred in rejecting the evidence.
This ground does not succeed.
Were the primary judge’s reasons adequate? (Grounds 1, 5 and 6)
Again, in these grounds and the relevant submissions, the appellant has conflated lack of reasons with other errors (for example, Ground 1 also seems to relate to errors by making particular findings).
The obligation to give adequate reasons in well known. In Bennett and Bennett (1991) FLC 92-191 at 78,266-78,267, the Full Court of the Family Court of Australia (as it was then known) adopted the principles expounded in Sun Alliance Insurance Ltd v Massoud [1989] VR 8, saying:
In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal. Gray J, who delivered the principal judgment, said, 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.”
We think that the test propounded by Gray J is a particularly useful one, and one which also applies to discretionary judgments. In Maday and Maday (1985) FLC 91-636, Fogarty J, in a judgment with which the other members of the Court (Emery and Murray JJ) agreed, took the view that these principles clearly did apply to discretionary judgments and, in particular, judgments in custody matters.
In Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110, the New South Wales Court of Appeal said:
57.The giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes “a sense of grievance” and denies “both the fact and the appearance of justice having been done”, thus working a miscarriage of justice.
58.The extent and content of reasons will depend upon the particular case under consideration and the matters in issue. While a judge is not obliged to spell out every detail of the process of reasoning to a finding, it is essential to expose the reasons for resolving a point critical to the contest between the parties.
59.The reasons must do justice to the issues posed by the parties’ cases. Discharge of this obligation is necessary to enable the parties to identify the basis of the judge’s decision and the extent to which their arguments had been understood and accepted… it is necessary that the primary judge “‘enter into’ the issues canvassed and explain why one case is preferred over another”.
(Citations omitted)
The two matters that that featured prominently in oral submissions were motor vehicle 4 and the parties’ post-separation contributions. It is convenient to commence with them.
The motor vehicle 4
The parties’ household contents of the Town KK property were valued by an independent valuer who assessed it to be $71,090 (Affidavit of Mr AA filed on 11 March 2022, p.7). As can be seen, the primary judge included in the balance sheet the appellant’s household contents in the sum of $59,090.
The valuation included two cars owned by the appellant which were separately included in the balance sheet and were valued at a total $12,000. Thus, his household contents were taken into account in the sum of $59,090. This figure included the motor vehicle 4 valued at $30,000 (Affidavit of Mr AA filed on 11 March 2022, p.15).
The appellant’s evidence was that a loan for the purchase of motor vehicle 4was obtained by the company owned by the appellant’s current wife and leased to a trust where the beneficiaries are the appellant and the current wife. The appellant, however, paid the deposit of $8,000 and is making the monthly repayments (Appellant’s affidavit filed on 16 February 2022, paragraph 137). The appellant’s Amended Financial Statement recorded the amount outstanding as being $26,564, leaving a net value of $3,436 (Appellant’s Amended Financial Statement filed on 17 February 2022, p.7).
The appellant accepted, however, that motor vehicle 4 should appear in the balance sheet as an asset of his but asserted that his interest was only half of $3,436 because he had lived with his current wife for five and a half years. The half interest in the L Trust would not avail him unless that interest had actually vested.
I fail to see the relevance of that when motor vehicle 4 was acquired in 2021 and although the current wife’s company provided the loan, the evidence is that the repayments are being made only by the appellant himself (Appellant’s affidavit filed on 16 February 2022, paragraph 137).
The appellant raised this in his written submissions at the hearing in brief terms (Appellant’s Written Submissions filed on 27 April 2022, paragraph 56).
Thus, the appellant’s point is that his household contents should have been calculated taking into account the amount owing on motor vehicle 4 and his current wife’s interest. I have rejected the appellant’s submissions as to the latter.
The primary judge’s reasons do not refer to motor vehicle 4 or the amount owing at all. His Honour therefore wrongly calculated the appellant’s household contents as being $59,090 and not $32,526.
This can be seen as a lack of reasons, or preferably, as a failure to take into account relevant evidence. Either way, it is an error. A question arises, however, as to its materiality. The error adversely affects the appellant by reducing his entitlement of 40 per cent by $26,564 or namely, $10,625. There is much to be said for the proposition that an error of approximately $10,000, where the total net assets to be divided are $3.2 million, is of no materiality whatsoever. It certainly does not justify an appeal.
I shall return to this materiality as well as the question of whether a simple alteration should be made to the outcome in due course.
The parties’ post separation contributions
In short, the appellant submitted that the reasons do not disclose why the parties’ contributions should favour the appellant by only 2 per cent, despite the contributions up to separation being agreed to be equal and where the property pool included the Town KK property, which comprised over 10 per cent of the value of the net assets. The appellant also submitted that the legal fees that were added back came from his TPD insurance payments and should also have been regarded as a further contribution by him.
Before turning to his Honour’s reasons, it is useful to say something about the Town KK property, which was acquired after separation and was a contribution that the primary judge found was made almost entirely by the appellant.
As was identified in Calvin & McTier (2017) FLC 93-785 at [49] and [50], after-acquired property can be included in the one pool of property to be divided and that:
50.…Whilst the court did indicate that in the case before them it would have been simpler for the primary judge to have dealt with the inheritance separately from the other property, it expressly said that there was nothing wrong with a global approach (i.e. dividing just one group of assets, including the inheritance), provided there was an explanation as to how the division was arrived at (at [46]). See also Bishop & Bishop (2013) FLC 93-553 at 87,421.
(Emphasis added)
Here, it is plain that the primary judge, correctly, intended to give the contribution of the Town KK property considerable weight. The appellant’s complaint is that it is not clear how that weight resulted in a finding of only a 52 per cent contribution by the appellant.
His Honour dealt with the question of contributions at [46]–[61] of his reasons.
At [46], it was noted that the contributions throughout the marriage were equal and that there were no unequal initial contributions.
His Honour set out the parties’ contentions as follows:
47.Much of [the appellant’s] submission goes to his argument that he made substantially more contributions post separation than [the respondent]. He refers to his payments of joint debts continuing until approximately 2017 and his payment of child support and spousal maintenance.
48.[The respondent] argues that she should be given an uplift for her contributions post separation due to her ability to secure a highly commercial price for the sale of the [business] … she argues that the contributions [the appellant] made post separation were nothing more than his obligations pursuant to relevant laws.
I am quite unable to see where in the reasons these contentions were resolved. The primary judge did refer to the respondent’s management of the business post-separation at [34]. At [38] and [39], his Honour rejected the appellant’s submissions that the respondent received funds to which she was not entitled or that she mismanaged the business. Thus, no add backs were made to take account of those matters.
At [49], the primary judge rejected the appellant’s submissions, as described by his Honour, that “[the respondent’s] contributions to the sale of the [business] was in real terms negative”.
Itis difficult to see, even reading those three paragraphs generally, that the primary judge accepted the contentions set out in [47] and [48].
At [50]–[54], his Honour dealt with the appellant’s diagnosis of post-traumatic stress disorder and the effect of that diagnosis on the respondent’s “poor recollection and at times fabrication” (at [53]).
The appellant’s claim that his contributions had been made more onerous by the respondent’s family violence were considered and rejected at [56]–[61].
His Honour concluded:
61.Overall when I consider the post separation contributions of both parties and in particular the contribution of [the appellant] in relation to the Town KK property I am satisfied that a contributions based assessment would see the overall contributions as 52% by [the appellant] and 48% by [the respondent].
The Town KK property was worth just over 10 per cent of the total net assets and it was almost entirely a contribution by the appellant. It must be set against 25 years of equal contributions. Nonetheless, it is impossible to determine from the reasons why that contribution of the Town KK property was reflected in the 52 per cent finding.
His Honour’s reasons must be looked at in the context of the parties’ submissions which were extensive. For the respondent’s part, she asserted that her post-separation contributions so exceeded the appellant’s, in that the overall contributions favoured her 55 per cent to the appellant’s 45 per cent (Respondent’s Written Submissions filed on 14 April 2022, paragraphs 67 –125).
The appellant devoted some 182 paragraphs, or 40 pages, of his written submissions to contributions (Appellant’s Written Submissions filed on 27 April 2022, paragraphs 159–341). He submitted that contributions should favour him by 12.5 per cent.
None of these submissions, save for paragraph 82 referred to the Town KK property in the context of contributions. There the appellant submitted that the property should be regarded as a contribution by him alone. As has been seen, his Honour largely accepted that proposition.
There is force in the point that the reasons do not readily identify how the contributions finding was derived.
The respondent submitted correctly, that the contributions finding is not a mathematical process. The difficulty remains in identifying what was weighed against the contribution of the Town KK property, if anything.
The respondent also submitted that the monetary amount of the differential should also be considered. If the Town KK property had been placed in a separate pool for example and regarded as a contribution solely by the appellant, his overall contributions would increase by the value of his interest. Such an outcome would also result from an overall adjustment to contributions of 5 per cent, resulting in a 10 per cent differential or the same result.
It was submitted that the 2 per cent differential is so close to the 5 per cent that no further reasons are required. That, however, is not the correct comparison which is to compare 2 per cent against 5, or 4 per cent against 10.
This analysis, however, ignores the monetary value of the assets being divided. Two percent of the total here is $64,523.92. The difference is substantial.
Whilst the result may well be an acceptable exercise of discretion, it needs to be explained why the recognition of the contribution of the Town KK property resulted in a differential of only 4 per cent. The parties are entitled to know what was taken into account.
The reasons are therefore inadequate. It cannot be said that the amount involved was immaterial. It follows that the error substantially infects the reasons and the appeal must be allowed.
The appellant also submitted that the primary judge did not consider the add back of legal fees as a contribution by him. No submission was made to his Honour about this other than the very general submission just noted.
It is difficult then to see how his Honour erred by failing to deal with the more specific submissions now made on appeal when they were not made to him.
This is important to the proper exercise of appellate review. If the matters taken into account are not known it cannot be determined if any were erroneous.
As I have indicated, the parties’ cases as identified by his Honour at [47] and [48] were never determined, with critical findings of fact not made. It follows, unfortunately, that the matter must be remitted for rehearing.
There is no point therefore, and some disadvantage in dealing with the remaining grounds (Boensch v Pascoe (2019) 375 ALR 15). However, for a large part they attempt to articulate contentions that were not made, or not clearly made, at the hearing, or simply assert the primary judge erred by not accepting the appellant’s case.
Costs
The error that has been established was not induced by the parties. It is an error of law.
The appropriate course as to costs is to make no order as to them and grant the parties certificates under the Federal Proceedings (Costs) Act 1981 (Cth) for the appeal and the rehearing.
I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Aldridge. Associate:
Dated: 8 December 2022
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