Norris & Matthews
[2022] FedCFamC1A 30
•3 March 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Norris & Matthews [2022] FedCFamC1A 30
Appeal from: Matthews & Norris [2020] FamCA 547 Appeal number(s): EAA 98 of 2020 File number(s): NCC 2226 of 2015 Judgment of: ALDRIDGE, HOGAN & HANNAM JJ Date of judgment: 3 March 2022 Catchwords: FAMILY LAW – APPEAL – FINAL PROPERTY – Majority decision – Appeal by the wife from final orders providing for an equal distribution of the parties’ property interests – Adequacy of reasons – Where primary judge did not provide adequate reasons as to her assessment of the wife’s contributions and an assessment of contributions generally – Where primary judge did not also provide adequate reasons regarding the s 75(2) matters and her conclusion as to a just and equitable distribution – Appeal allowed – Orders set aside – Matter remitted for rehearing – Costs certificates granted to the parties. Legislation: Family Law Act (Cth) ss 75(2), 79(4)
Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 8, 9
Cases cited: Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
Black and Kellner (1992) FLC 92-287; [1992] FamCA 2
Chang v Su S 104/2002 [2002] HCATrans 549
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
Holland & Holland (2017) FLC 93-798; [2017] FamCAFC 166
House v The King (1936) 55 CLR 499; [1936] HCA 40
Marsh & Marsh (2014) FLC 93-576; [2014] FamCAFC 24
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110
Steinbrenner & Steinbrenner [2008] FamCAFC 193
Sun Alliance Insurance Ltd v Massoud [1989] VR 8
Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49
Weir and Weir (1993) FLC 92-338; [1992] FamCA 69
Willis & Willis [2007] FamCA 819
Number of paragraphs: 161 Date of hearing: 29 September 2021 Place: Sydney (via video link) Counsel for the Appellant Dr Smith Solicitor for the Appellant Barry Nilsson Lawyers Counsel for the Respondent Ms Carty Solicitor for the Respondent Oliver Campbell Heslop Solicitors ORDERS
EAA 98 of 2020
NCC 2226 of 2015FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS NORRIS
AppellantAND: MR MATTHEWS
Respondent
DATE OF ORDER:
3 MARCH 2022
THE COURT ORDERS THAT:
1.The appeal is allowed.
2.Orders 1 to 18, 20 and 21 made on 9 July 2020 are set aside.
3.The proceedings are remitted for rehearing before a judge of the Federal Circuit and Family Court of Australia (Division 1) other than the primary judge.
4.The appellant be granted a costs certificate pursuant to the provisions of 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 her in relation to the appeal.
5.The respondent be granted a costs certificate pursuant to the provisions of 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 her in relation to the appeal.
6.The appellant and the respondent be granted 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 party in respect of the costs incurred by her in relation to the rehearing of these proceedings.
AND THE COURT NOTES THAT:
A.The parties through their counsel advised the Court at the hearing that they were agreed that, if the appeal was allowed and the matter remitted for rehearing, they would seek to have the subsequent costs order, made in reliance on the now set aside 9 July 2020 orders, set aside by consent.
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 Norris & Matthews has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE J:
I have read the reasons of Hogan and Hannam JJ. In my opinion, for the reasons that follow, the appeal should be dismissed. I shall not rehearse the relevant background which has been set out by Hogan and Hannam JJ.
Were the reasons adequate? (Grounds 1, 3 and 4)
As indicated by counsel for the wife in his oral submissions, the appeal was largely about the adequacy of reasons. It is convenient to commence with that issue.
The obligation to give adequate reasons is well known. In Bennett and Bennett (1991) FLC
92-191 at 78,266–78,267, the Full Court of the Family Court of Australia 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 (“Pollard ”), 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)
I wish to emphasise, as did the Court of Appeal in Pollard, the point that the extent and content of reasons depend on the particular case in question and the matters in issue. It is well established that reasons need not be lengthy or elaborate to be adequate. For example, see Thorne v Kennedy (2017) 263 CLR 85 at [61].
It is to be noted that none of the primary judge’s findings of fact has been challenged, including the findings that the wife conducted the proceedings “with cavalier disregard for financial disclosure and candour” (at [8]) and with “defiant unwillingness” to “comply with proper requests and the rules of Court” (at [11]).
One of the consequences was the unwillingness of the wife to acknowledge or permit the valuation of her assets.
This was important given that the wife held significant assets in New Zealand and the United States of America (“USA”). Notably, in the Amended Balance Sheet, the primary judge referred only to estimated values for them. This obviously created difficulties for the primary judge not only in valuing the assets but also taking into account their nature, form and characteristics.
It is worth looking at her Honour’s findings as to those assets in some detail.
At the time the parties met, the wife owned two companies in New Zealand. “Company W Limited (NZ)” (“Company W NZ”) purchased a property on 27 March 2006 for $350,000 and “Company AA Ltd” (“Company AA NZ”) purchased a property on 21 June 2007 for $900,000 (at [53]–[54]).
Her Honour recorded that it was alleged that the property purchased by Company W NZ was sold in early 2014 for $558,250.
When the parties prepared a joint Balance Sheet listing their assets and liabilities (at [245]), the husband used estimated values for these two New Zealand companies and, in the case of Company W LLC (“Company W LLC”) (a company registered in the USA) an estimated value for a property owned by it (based on internet searches) as opposed to the value of the company itself.
This immediately highlights a difficulty faced by the primary judge. If a property is owned by a company in which a party owns shares, the relevant property to be divided and accordingly to be valued, is the value of the shareholding of the party and not the value of the property owned by the company. Where, as here, the relevant party owns all of the shares in the company, the matter is simply one of valuing the company itself, taking into account all its assets and liabilities. That is the relevant value.
Further, the value recorded in the accounts might not represent the actual current value of the property but, perhaps its acquisition costs. It is for this reason that valuations of companies which hold real estate ordinarily commence with a valuation of the property held before a valuation of the company itself can be undertaken.
Based on valuations of the properties held by it and the 2018 accounts, the husband estimated the value of equity in the property held by Company AA NZ to be between $264,380 and $444,244. The accounts showed the shareholder’s equity in Company AA NZ to be NZD295,017. The primary judge adopted the figure of $444,244.
The husband relied on the value of the shareholders equity shown in the 2018 account for the value of Company W NZ.
These figures were well before the hearing which took place in late 2019.
The estimated value for Company W LLC was derived by using internet searches to ascertain the value of the property, which was unencumbered. The financial position of the company was not known.
For her part, the wife provided estimates of negative values for these three companies without providing any basis for those values.
The primary judge adopted the higher end of the range from the husband’s estimates in the Amended Balance Sheet. It must be recognised that these figures are somewhat artificial partly because they were taken from the highest figures from the range proposed by the husband.
However, the husband and her Honour did the best they could on the evidence. As Callinan J said in the course of argument in the application for special leave to appeal in Chang v Su S104/2002 [2002] HCATrans 549:
[The Court] does the best it can, having regard to the evidence that is adduced and if the parties are not frank then naturally there is going to be a measure of imprecision about any findings that the court can make.
Her Honour then turned to the question of contributions, which were discussed under two headings – “Initial Contributions” and “Contributions during the marriage and to date of trial”.
Under the first heading, the primary judge set out the assets held by the husband at the time the parties started to live together. They totalled $167,945 together with assets still held by him and his former wife (at [256]).
As to the wife, her Honour said:
257. The wife:
· The wife was the sole director of two companies in New Zealand; Company W NZ which had bought a property in HH Town, New Zealand and Company AA NZ which bought the property at JJ Street, City BB, New Zealand, incorporating a hospitality business;
· Some shares estimated at $30,000; and
· Cash of about $20,000.
(Emphasis removed)
Counsel for the wife correctly points out that the primary judge includes no values for the two New Zealand companies. There is no doubt that her Honour had well in mind the purchase price of the two properties (having earlier set it out), but that does not equate to the value of the contribution. The contribution was the value of the company taking into account all of its assets and liabilities or, at least, the value of the property less the amount of any funds borrowed in order to purchase it.
There was simply no evidence of the value of this contribution other than the purchase price of the property. The primary judge, therefore, could not identify a particular value for these contributions.
Nonetheless, it is clear that the primary judge accorded the initial contributions of the wife significant weight. Her Honour found that the contributions during the marriage and to the date of the trial, and considerations under s 75(2) of the Act favoured the husband. The only explanation for the outcome of equality was that the wife’s initial contributions were given significant weight even though no particular value was ascribed to them.
On the state of the evidence, it is difficult to see what more the primary judge could have done or said.
Turning to the “[c]ontributions during the marriage and to [the] date of trial” her Honour discussed various property dealings and the care of the child before saying:
265.The wife maintained her New Zealand and American interests through her companies throughout the relationship. She probably developed and enhanced the values of those assets. That is unclear.
266.When the marriage ended in 2015 the parties briefly repartnered and have fought furiously since.
267.The assets of the wife were not brought into any arrangement to the joint benefit of the parties. The husband made no contribution to the acquisition of the New Zealand properties. He may have made an indirect contribution to the property in America acquired by the wife’s US corporation, it is unclear.
268.The husband was left to contend with loss making property investment and debts. The wife resigned as a director of Matthews Pty Ltd, the parties’ company, and walked away from its management.
269.The wife chose to enter voluntary bankruptcy. The costs of the Trustee in Bankruptcy were $102,165. Debts to creditors were comparatively modest. The wife’s only explanation for the decision she made in that regard was that it was done on advice.
270. Overall the contributions during the marriage favour the husband.
The primary judge did not ascribe any percentages to the various contributions but, as counsel for the wife correctly accepted, there is no obligation to do so even if it is commonly done. The task was succinctly described in Dickons v Dickons (2012) 50 Fam LR 244:
24.There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
It was submitted that the primary judge did not come to any concluded view with respect to the parties’ respective contributions. I do not agree. There is an express finding as to the contributions during the marriage and to the date of trial and an implied finding as to initial contributions. The latter is admittedly vague, but that was all that could be done on the evidence. As that was for the wife to adduce and because she did not, it is now difficult for her to complain about lack of precision in the primary judge’s findings.
I shall return to the question of the overall contributions after discussing the considerations under s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).
Her Honour’s reasons as to the s 75(2) factors are quite extensive and discussed under the headings taken from s 75(2) of the Act itself. The primary judge found that a number of them favoured the husband but made no finding as to the others. Plainly, that was because they were considered to favour neither the husband nor the wife.
Thus, her Honour took into account, in favour of the husband, the following:
288.Some adjustment is made for the current disparity in income between the parties but balanced by undisclosed levels of income received by the wife from the units in the JJ Street property in which she lives.
…
296.Accordingly, the Court does not know the value of the wife’s interests in her own fund.
…
298. The wife returned to live in her property in New Zealand.
299.She is living in one of the nine units which constitute the JJ Street property, owned by one of her New Zealand corporations – Company AA NZ, a company of which she is the sole director.
300.The wife provided no information about the leasing arrangement for the other eight units. The husband was unable to discover how much rent is earned from the other units nor who receives the rent.
301.Such evidence as the husband was able to provide reveals that there is equity of between AUS$264,380 and AUS$444,424 in the property.
302.The property was purchased for $900,000 in 2007. Consent to subdivide the property was granted in 2016.
303.The wife resisted discovery and valuation. She claims that debt exceeds equity, and repeats her mantra that the property should not be taken into account.
304.The wife cannot then be heard to complain if the Court assumes that the wife lives rent free, although paying off debt on the property, that she probably receives rental income for that purpose and that in future she could undertake a profitable subdivision.
…
307.The financial position of the wife as outlined in these reasons is not clear by her own decision.
308.What is known is that she has assets owned by companies in New Zealand and the United States of America. She has hidden money from the sale of Business asset 1. She has been deceptive about the whereabouts of an asset, the truck, and the sale of Business asset 1.
309. She is qualified to work but is not working. She receives government benefits.
310.The evidence does not support a finding that the wife is unable to support herself adequately.
…
333.Since February 2017 the child has lived with the husband. The wife has paid some child support. However she discloses no income and is the beneficiary of government support in New Zealand. The wife describes herself as unable to work. Accordingly on the balance of probabilities the wife is unlikely to pay any, or at best minimal, child support in future.
334. It is a matter I take into account in favour of the husband.
…
335. The wife brazenly failed to make disclosure of her financial position.
336.The wife has taken the unwavering stance that the property proceedings should have been heard in New Zealand and that certain assets owned by her should be excluded from consideration.
337.This defiant attitude to her legal obligation to disclose her financial position, all assets and liabilities, made the task of the legal representatives for the husband hugely and unnecessarily onerous and costly.
Under the heading “Analysis” her Honour first turned to the parties’ initial contributions and said:
338.The wife retained her overseas assets throughout the relationship. She received whatever benefit those assets delivered and used her income to maintain them.
339.The husband provided the majority of funds for the parties’ first home in Suburb F although it was purchased in the name of the wife.
It is a comparison between the value of those contributions and discounts the importance of the wife’s because they were not used for the benefit of the family.
Her Honour then concluded:
343.By the date of separation the contribution favours the husband particularly as a result of the use of the funds from his property settlement.
344.Post-separation the wife has worked to hide and sell assets and conceal her financial position. She was determinedly secretive about her US corporation, Company W LLC.
345. The Court cannot come to a fully informed conclusion.
346.In the circumstances the appropriate course is for the husband to retain certain items including the trust funds, the parties’ self-managed superannuation fund and receive a payment accounting for the proceeds of sale of Business asset 1 and the attributed value of the truck.
This led to an approximately equal division of the parties’ property. That was achieved by balancing the wife’s greater initial contributions against the husband’s greater contributions during the marriage, taking into account the considerations under s 75(2) of the Act, which favoured the husband. Her Honour’s reasoning process is readily apparent and her reasons are therefore, adequate.
It is true that there is an air of uncertainty or vagueness about some of these findings but that is caused by paucity of evidence, which was entirely due to the stance taken by the wife.
The wife submitted that at [343] it is not clear whether this comment included the initial contributions. Plainly, as expressed, it does not but they are taken into account at [256]–[257], at [338]–[339] and by having regard to the overall result, as I have explained.
Contrary to the wife’s submissions, there were abundant findings about the wife’s failure to disclose which plainly and rightly influenced her Honour’s determinations.
Finally, it was submitted that the primary judge needed to make firm conclusions on contributions so as to give a basis for the s 75(2) adjustments.
First, this submission if accepted would require the making of a percentage finding as to contributions which are then adjusted under s 75(2) of Act. That, quite simply, is not the law as explained earlier. There is no requirement that a finding be made as to overall contributions, as long as all relevant contributions are taken into account, as was the case here.
Secondly, as I have endeavoured to make clear, her Honour made as firm findings as to contributions as best could be done on the evidence.
It follows that Grounds 1, 3 and 4 do not succeed.
Did the primary judge give inadequate weight to the initial contributions made by the wife? (Ground 2)
Challenges to weight face a high bar (Norbis v Norbis (1986) 161 CLR 513; Gronow v Gronow (1979) 144 CLR 513). For such a ground to succeed the appellant must show that the outcome was unreasonable or plainly unjust (House v The King (1936) 55 CLR 499).
The wife submitted that her initial contributions amounted to 50.5 per cent of the total property. That is so, but that is to ignore the difficulties with the figures noted above or to what extent the purchase of the particular properties led to the current value of the companies.
Counsel for the wife properly accepted that the primary judge was not required to attribute the full amount to the wife as her contribution or to attribute an exact percentage to it. Rather, he submitted that such a contribution should be given substantial weight, particularly over the course of a seven year relationship.
In my opinion, the contribution was given significant weight as I have already explained. It is also to be recalled that a failure to disclose can have significant consequences (Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338).
In my opinion this ground has not been made out.
Costs
The appeal has been wholly unsuccessful and the wife should pay the husband’s costs of $30,275.13.
HOGAN & HANNAM JJ:
INTRODUCTION
On 9 July 2020 a judge of the Family Court of Australia (as it was then known) made property orders (“the orders”) and delivered reasons for judgment. It was anticipated that the making of those orders would bring an end to protracted property settlement proceedings between the parties which have been on foot since their commencement in the Federal Circuit Court of Australia (as it was then known) in August 2015.
The orders brought about a roughly equal distribution of the parties’ property interests in circumstances where the primary judge found that the orders sought by the husband if made would have seen him receive a 75 per cent share of the parties’ net assets. The primary judge found that the wife’s proposed orders if made would have seen her receive the entirety of those net assets and required the husband to pay her further large sums from unidentified sources.
The primary judge found that the wife owned property interests in two overseas countries (“the overseas assets”) which had a total approximate value of $985,268 at the date of hearing, representing just over half of the total net property of the parties. The primary judge also found that the husband made no contribution to the acquisition of the overseas assets in one country (valued at approximately $761,284) and that he “may have” made an indirect contribution to the acquisition of property in the second overseas country, though the last-mentioned matter was considered to be unclear. The primary judge further found that the wife maintained her overseas assets through her companies throughout the relationship and probably developed and enhanced the value of those assets though that matter was also unclear. Finally the primary judge found that the wife did not bring the overseas assets into any arrangement to the joint benefit of the parties at any time.
In the circumstances outlined, the wife contends that in making an assessment of the parties’ respective contributions the primary judge was required to give significant weight to the initial contributions made by the wife.
The gravamen of this appeal is that the primary judge gave inadequate reasons for assessing that the husband made a greater contribution to the parties’ property interests, in particular having regard to the overseas assets, when determining a just and equitable settlement of the parties’ property. It is also contended that the primary judge’s reasons in relation to her Honour’s assessment of the s 75(2) factors and for coming to the overall decision that she did, were also inadequate. For this reason, it is contended that the appeal should be allowed and a new trial ordered.
In our view, for the reasons which follow, this contention is correct and the appeal should be allowed.
BACKGROUND
The following background and context is set out in order to understand the appeal.
The appellant (“the wife”) who is 48 and the respondent (“the husband”) who is 54 met in 2008 shortly after the wife moved to Australia from New Zealand where she was born.
Prior to moving to Australia the wife had incorporated two companies in New Zealand, Company W Limited (“Company W NZ”) and Company AA Ltd (“Company AA NZ”) (collectively “the wife’s two New Zealand companies”). In March 2006 Company W NZ purchased a property in New Zealand for NZD350,000 and in June 2007 Company AA (NZ) purchased a property in New Zealand for approximately NZD900,000.
The parties began living together in late 2008 and married in August 2009.
The primary judge found that when the parties began living together the husband had superannuation interests of $132,483, shares worth $35,462 and shared assets with his former wife including a property. The primary judge found at this time the wife held approximately $20,000 in cash, shares estimated to be worth $30,000 and was the sole director of the two New Zealand companies which owned the two parcels of real property in that country. These findings are not challenged in this appeal.
In September 2008 the wife incorporated a company in Australia (“the wife’s Australian company”) of which she was the sole director and shareholder.
In 2009 the parties purchased a property in a suburb of Newcastle (“the Newcastle property”) which was registered in the wife’s sole name. There is no dispute between the parties that the husband transferred $485,000 to the wife in the month preceding this purchase being largely funds he had received in a property settlement with his former wife. Most of this sum was used to reduce the loan secured on the Newcastle property.
In the same year, the wife received a payment of approximately $110,000 as a result of litigation in relation to her former employment.
In 2009 the wife’s Australian company purchased a business asset (“Business Asset 1”) for $5,000. The company also purchased a specialised vehicle (“the vehicle”) for $52,000 which the parties’ subsequently had customised to their particular needs at a cost of $94,000. The whereabouts of Business Asset 1 and the vehicle were the subject of considerable dispute throughout the proceedings before the primary judge who found that the wife made numerous false and misleading statements to the husband and the Court concerning her dealings with these two assets.
In February 2010 the parties registered an Australian company which became the corporate trustee of the parties’ self-managed superannuation fund (“the SMSF”). Both parties were directors and the husband was also the secretary and each party held one ordinary share of this company.
In September 2010 a property was purchased by the parties in P Town (“the P Town property”) utilising monies re-drawn from the loan advanced on the Newcastle property as well as a further loan. The P Town property was registered in the husband’s sole name.
In 2010 the parties’ only child (“the child”) was born.
In January 2012 the parties and the child moved to live interstate due to employment opportunities.
In 2012 Business Asset 1 was sold for $150,000. The primary judge was satisfied that the wife received the entirety of these proceeds even though she went to considerable length in the trial to deny that this was the case.
In September 2013 the parties registered another company in Australia (“the jointly owned Australian company”) of which both parties were directors and shareholders. In the following year this company purchased a commercial office and two residential units in the State in which the parties were living and a commercial property in another State.
The primary judge recorded that in around March to May 2014 Company W NZ is alleged to have sold the property it owned in New Zealand for $558,250.
In July 2014 the wife incorporated a company in the United States of America (“USA”), Company W LLC (“Company W LLC”). Company W LLC purchased a property in the US for USD$97,000 (“the US property”) which was leased by the wife to a tenant for USD$1,050 per month.
The parties continued to live and engaged in some paid employment interstate but subsequently returned to live in New South Wales at the P Town property.
By August 2015 the parties had separated and a short time later these proceedings were initiated.
At the time of separation the jointly owned Australian company owned three parcels of real estate with a combined value of $668,000 subject to mortgages of $794,000.
In November 2015 the husband sold the P Town property registered in his sole name for $785,000. Orders were subsequently made that the balance after the payment of expenses and discharge of the mortgage ($256,834) was to be held in trust by the husband’s solicitors.
At the first court event the wife advised the Court that she wished to return to live in New Zealand and take the child with her and for this reason the proceedings were transferred to the Family Court.
In January 2016 Company AA (NZ) was granted consent to subdivide the land it owned in New Zealand.
The parties subsequently reached agreement to sell one of the commercial properties owned by the jointly owned Australian company. Various experts were appointed to value the Newcastle property and the overseas assets as well as the vehicle.
In May 2016 the wife informed the husband’s solicitor that the vehicle was no longer in her possession and she took various steps to indicate that this asset had been sold.
Various delays were encountered in valuing the Newcastle property and the wife’s shareholding in the overseas companies.
In November 2016 the wife resigned as a director of the jointly owned Australian company leaving the husband as the sole director. By this stage the wife had also changed the banking passwords for various joint accounts with the effect that the husband was unable to access them. One of the properties owned by this company had been abandoned by the tenant and had fallen into a state of disrepair. The husband was unable to access any information in relation to this and other properties owned by the jointly owned Australian company.
Despite further orders being made in relation to the valuation of various assets including the wife’s shareholding in overseas companies, these shareholdings have never been valued.
In February 2017 the wife entered voluntary bankruptcy in Australia and then returned to live in New Zealand. By this stage the child was living with the husband pursuant to parenting orders which also provided for the child to spend supervised time only with the wife.
In March 2017 the parenting and property proceedings were bifurcated. The parenting proceedings were subsequently heard first in June 2017. Following the hearing, orders were made for sole parental responsibility for the child to be given to the husband and for the child to live with him and spend time with the wife at the discretion of the husband. Since those orders the child has remained living with the husband.
In March 2017 one of the commercial properties owned by the jointly owned Australian company was sold and after the payment of the outstanding mortgage and other fees and adjustments there was a shortfall of $38,000 (rounded down) on this sale. This shortfall was paid from the funds held in the husband’s solicitor’s trust account.
A valuation report of the property owned by Company AA (NZ) dated June 2017 assessed the value of the property as $930,000 or $1,120,000 if proposed subdivision work was completed.
For some time little progress was made to ready the financial dispute for trial, particularly as the wife’s trustee in bankruptcy encountered difficulties in clarifying the existing assets and liabilities of the wife. A short time after a notation was made by a registrar to this effect in August 2017, the wife’s then solicitor ceased acting for her. The wife thereafter represented herself in the proceedings including at the final hearing before the primary judge.
In December 2017 the Newcastle property was sold by the wife’s trustee in bankruptcy for $900,000 and after the mortgage was discharged net proceeds of $252,339 were realised.
In December 2017 the vehicle was imported into New Zealand and in the following month registered in that country.
In March 2018 the wife’s trustee in bankruptcy was joined as a party to the property proceedings.
On 25 May 2018 the parties were divorced.
Numerous appeals were instituted by the wife in respect of various orders made after the proceedings were transferred to the Family Court, none of which were successful. There were also many other applications brought by each of the parties including a contempt application instituted by the wife and various contraventions, each of which were dismissed.
In July 2018 the wife’s voluntary bankruptcy was annulled. The trustee caused the sum of $42,130 to be paid to the wife’s admitted unsecured creditors. The primary judge found that the total cost of the bankruptcy otherwise was $102,165. In October 2018 the trustee in bankruptcy transferred the balance of $98,300 (rounded down) into the trust account of the husband’s solicitor following the sale of the Newcastle property and discharge of the bankrupt estate. Further sums were deposited into the same account by the trustee in bankruptcy after the closure of bank accounts for the bankrupt estate for the wife.
In February 2019 the proceedings were listed for four days for final hearing in August 2019.
The wife had also instituted other proceedings in New Zealand including for a protection order. A temporary protection order that had been put in place was discharged by a judge of the Family Court of New Zealand in April 2019 and this judge also found that the proceedings for a final protection order were an “abuse of process”. The wife also instituted an appeal in relation to these orders in New Zealand.
In June 2019 property proceedings commenced by the wife in New Zealand came before a judge of the Family Court of New Zealand who was not prepared to set the matter down for hearing until the outcome of the Australian proceedings was known.
The final hearing in relation to property adjustment orders sought by each of the parties, and the wife’s application to revisit the parenting orders, was heard by the primary judge over four days in August 2019 and two further single days in October and November 2019. The wife’s application in respect of parenting orders was dismissed and that order dismissing the application is not challenged on appeal.
Before coming to the grounds of appeal, it is necessary to observe that the primary judge encountered significant difficulties in relation to a range of matters relevant to the conduct of the proceedings by the wife particularly after she began representing herself from August 2017. The following observations and findings of the primary judge were not challenged at the hearing of this appeal and were specifically acknowledged by counsel who had been engaged to represent the wife at the appeal as causing those difficulties for the primary judge:
3. The parties have a four plus year history of incessant litigation.
4. In addition to this application/response for final orders, there have been 17 interim/interlocutory applications, four appeals lodged [three in Australia; one in New Zealand] and applications to a State Court in Australia and a Family Court in New Zealand for personal protective orders.
6.The applicant in all but three applications has been the wife. Several were dismissed for want of prosecution…
…
8. The wife conducted these proceedings with cavalier disregard for financial disclosure and candour.
…
11.Despite being legally represented in a most competent way, it was the husband who suffered disadvantage as his lawyers contended, at his expense, with the defiant unwillingness of the wife to comply with proper requests and the rules of the Court.
12. The wife repeatedly referred to her unwillingness to acknowledge, or permit valuation of, any assets acquired prior to the parties’ marriage or after separation.
13.The wife had assets in New Zealand before the parties met. She has retained those assets and also acquired assets in North America.
14.In her notes to the parties’ Balance Sheet the wife declared more than once that a particular asset “does not form part of the property” and would then refer to New Zealand legislation - “NZ Property (Relationships Act) 1976”.
…
16.The wife is a skilled, intelligent, tertiary-educated person. I am confident that she understood the disclosure she was obliged to make and the relevant rules. It became apparent that she had refused to make disclosure of significant assets and refused to provide information which might enable the husband to identify and value them. The wife was obstructive. She treated these proceedings, perhaps from the outset but certainly during this trial, as a game she hoped to win.
(Footnote omitted)
The primary judge also found that the wife’s varying evidence in relation to the sale of the vehicle “proved not to be the case” (at [114]), that information given by the wife through her solicitor about the sale of Business Asset 1 “later proved not to be the case” (at [126]) and that a report prepared on the wife’s instructions served on the husband’s solicitor was “substantially different from the report prepared and issued” (at [127]). Many other findings adverse to the wife were made by the primary judge in relation to the wife’s conduct relevant to the proceedings.
Counsel for the wife acknowledged at the commencement of the appeal that the wife’s failure to provide full and frank disclosure and her combative attitude with respect to the trial made the primary judge’s process that much harder.
Having acknowledged those matters, counsel for the wife submitted correctly that the difficult behaviour and approach of the wife did not negate the requirement of the primary judge to assess the parties’ contributions, make relevant findings and then determine what adjustment, if any, is required pursuant to s 75(2) to ultimately make orders that are just and equitable in the circumstances.
The primary judge’s identification of assets and liabilities of the parties
When considering the relevant legislative requirements for an alteration of property interests, the primary judge first set out the parties’ existing property interests in a Balance Sheet. Her Honour then determined that it was just and equitable to adjust those interests, a matter about which there is no complaint.
In the primary judge’s reasons a detailed table sets out the assets, liabilities, superannuation interests and financial resources contended for by the parties. The table contains 69 items, the vast majority being items about which there was significant dispute between the parties. The parties’ notes in relation to these disputed items consume 20 pages in the 63 page judgment.
It suffices to set out only the “Amended Balance Sheet” that is the primary judge’s finding as to the assets owned by the parties, assets added-back (assets treated as if they were currently owned by the parties), liabilities, and superannuation interests that were considered by the primary judge when determining the respective applications for the alteration of those property interests. Other than a ground of appeal in relation to bank accounts which were added back that was subsequently abandoned, there is no dispute about her Honour’s findings with respect to the items in the Amended Balance Sheet or the values attributed to them. The table setting out the Amended Balance Sheet at paragraph [252] of the primary judge’s reasons is as follows:
Ownership Description Value Item 1. J Balance of sale proceeds 124,428 2. H BX Bank Savings 186 4. W Proceeds of sale of Business Asset 1 150,000 5. W [the vehicle] 130,000 6. W [Company AA NZ] shareholding E444,424 7. W Company W NZ E316,860 8. W Company W USA E223,984 9. W BH Bank 562 16. W 375 shares E2,231 19. W Motor vehicle 1 E11,990 Total $1,404,665 ADDBACKS 35. W AZ Bank Accounts with base number …33 (10 x term deposits and 2 x bank accounts) E196,053 43. H Motor vehicle 2 8,000 Total $204,053 LIABILITIES 55. J Australian corporation Matthews Pty Ltd ACN … – value of shareholding – negative value – liabilities (NAB loans of $646,402) exceed assets E224,000 Total $224,000 SUPERANNUATION Member Name of Fund Type of Interest Value 62. J N Pty Ltd as trustee for the Matthews Superannuation Fund Accumulation 451,929 64. H Superfund 2 Accumulation 19,025 66. W Superfund 5 81,820 Total $552,774
As can be seen, the wife’s shareholding in Company AA (NZ) is given an estimated value of $444,424 while Company W NZ and Company W LLC were given an estimated value of $316,860 and $223,984 respectively. The wife’s total interest in those three items alone valued at $985,268 represents just over 50 per cent of the total net property interests of the parties, a matter about which there is no challenge.
After concluding that it would be just and equitable to make an adjustment to the parties’ property interests, the primary judge then considered the matters in s 79(4) of the Family Law Act 1975 (Cth) (“the Act”) as required.
In considering “initial contributions” the primary judge set out the parties’ assets and liabilities when they began living together in 2008 at paragraphs [256] and [257] as follows:
256. The husband:
•Interests in superannuation with Superfund 3 of $102,241 and Superfund 4 Super of $30,242;
•Shares in Superfund 4 Investments worth $22,976 and BR Bank worth $12,486;
•Shared assets with his former wife including their family home in Suburb BT, a suburb of Newcastle.
257. The wife:
•The wife was the sole director of two companies in New Zealand; Company W NZ which had bought a property in HH Town, New Zealand and Company AA NZ which bought the property JJ Street, City BB, New Zealand, incorporating a hospitality business;
•Some shares estimated at $30,000; and
•Cash of about $20,000.
(Emphasis in the original)
The entirety of the primary judge’s other findings and assessment specifically in relation to contributions is as follows:
Contributions during the marriage and to date of trial
258.The parties lived in an apartment rented by the husband for the first few months of their relationship.
259. From 29 September 2008 to 10 June 2009 the husband states, and the wife concedes, that he transferred to her or to third parties for her benefit, monies totalling $485,144.
260. In March 2009 the parties purchased, in the sole name of the wife, the Suburb F property for $842,500. The purchase was financed by bank loan of $758,250 and cash. The funds provided by the husband were then applied by the wife to reduction of the mortgage.
261.The Suburb F property was the family home for the parties until they moved to WA after which it was leased. The P Town property became the family home until separation.
262.The parties together invested in property in Western Australia and Tasmania which proved to be an unprofitable exercise. Losses were incurred.
263.Both parties worked in a variety of positions. Both cared for the child after she was born in 2010 consistent with each other’s work obligations.
264. Both parties studied and obtained further qualifications.
265.The wife maintained her [overseas assets] through her companies throughout the relationship. She probably developed and enhanced the values of those assets. That is unclear.
266.When the marriage ended in 2015 the parties briefly repartnered and have fought furiously since.
267. The assets of the wife were not brought into any arrangement to the joint benefit of the parties. The husband made no contribution to the acquisition of the New Zealand properties. He may have made an indirect contribution to the property in America acquired by the wife’s US corporation, it is unclear.
268. The husband was left to contend with loss making property investment and debts. The wife resigned as a director of [the jointly owned Australian company], the parties’ company, and walked away from its management.
269. The wife chose to enter voluntary bankruptcy. The costs of the Trustee in Bankruptcy were $102,165. Debts to creditors were comparatively modest. The wife’s only explanation for the decision she made in that regard was that it was done on advice.
270. Overall the contributions during the marriage favour the husband.
When next considering the relevant matters under s 75(2) of the Act, and in particular the standard of living of the parties, the primary judge briefly touched upon the overseas assets of the wife. Her Honour referred to the equity in the parcel of land owned by Company AA (NZ) and noted that this was valued at between $264,380 and $444,424 (though as noted for the purposes of the Balance Sheet this company was valued as $444,424). The primary judge went on to observe (at [302]) that the parcel of land owned by this company was purchased for $900,000 in 2007 and that consent to subdivide the property was granted in 2016. In relation to the matter then under consideration, being the standard of living that in all the circumstances is reasonable, the primary judge recorded:
303.The wife resisted discovery and valuation. She claims that debt exceeds equity, and repeats her mantra that the property should not be taken into account.
304. The wife cannot then be heard to complain if the Court assumes that the wife lives rent free, although paying off debt on the property, that she probably receives rental income for that purpose and that in future she could undertake a profitable subdivision.
(Emphasis added)
When further considering other s 75(2) matters, the primary judge assessed at [312] that “[t]he parties both worked hard during the seven years of the relationship” and at [313] “[t]hey both had periods of unemployment”.
Section 75(2) matters
From [271] the primary judge considers the s 75(2) matters generally. In relation to s 75(2)(b) the following is recorded:
283. Both parties have the physical, mental and academic qualifications to engage in gainful employment.
284. The husband is a general manager earning about $140,000 per year.
285. The wife disclosed no income other than New Zealand Government benefits of $620 per week, “Jobseeker including medical and sole parent support”.
286. The wife did not disclose income from her American company, Company W LLC. The wife made a reference to her two New Zealand companies as debts or loan advances greatly exceeding asset value.
287. At least after the wife’s younger child, Z, starts school, if not before, the wife will be able to re-enter the workforce.
288. Some adjustment is made for the current disparity in income between the parties but balanced by undisclosed levels of income received by the wife from the units in the JJ Street property in which she lives.
(Footnotes omitted)
After considering the s 75(2) factors, the primary judge analysed the approach to be taken to the respective applications for property adjustment as follows:
ANALYSIS
338. The wife retained her overseas assets throughout the relationship. She received whatever benefit those assets delivered and used her income to maintain them.
339. The husband provided the majority of funds for the parties’ first home in Suburb F although it was purchased in the name of the wife.
340. When the wife decided to resign as a director of [the jointly owned Australian company] she left the husband with debts to manage and properties worth less than the purchase prices. To be able to access funds to manage those assets the husband has been obliged to make relevant applications to this Court.
341. The wife went into voluntary bankruptcy, by choice, which cost the parties $102,165 in associated professional costs.
342. Both parties were engaged by the care of their child and cooperated during the marriage to enable both to work.
343. By the date of separation the contribution favours the husband particularly as a result of the use of the funds from his property settlement.
344. Post-separation the wife has worked to hide and sell assets and conceal her financial position. She was determinedly secretive about her US corporation, Company W LLC.
345. The Court cannot come to a fully informed conclusion.
346. In the circumstances the appropriate course is for the husband to retain certain items including the trust funds, the parties’ self-managed superannuation fund and receive a payment accounting for the proceeds of sale of Business Asset 1 and the attributed value of the [vehicle].
347. The wife will retain her three foreign companies and their assets and her Australian superannuation.
348. The husband has debts owed to his parents relating to legal and living costs of $250,000.
4. Analysis of whether the adjustment contemplated is just and equitable
349. The parties presently have the following assets and liabilities:
350. The husband:
2. BX Bank Savings 186 43. Motor vehicle 2 8000 64. Superfund 2 19,025 TOTAL 27,211
351. The wife:
4. Proceeds of sale of Business Asset 1 150,000 5. [the vehicle] 130,000 6. [Company AA (NZ)] E444,424 7. Company W NZ E316,860 8. Company W USA E223,984 9. BH Bank 562 16. 375 shares E2,231 19. Motor vehicle 1 E11,990 35. AZ Bank Accounts with base number …33 (10 x term deposits and 2 x bank accounts) E196,053 66. Superfund 5 81,820 TOTAL 1,557,924
352. There are joint assets:
1. Balance of sale proceeds 124,428 62. N Pty Ltd as trustee for the Matthews Superannuation Fund 451,929 TOTAL $576,357
353. There are joint liabilities:
55. [the jointly owned Australian company] – value of shareholding – negative value – liabilities (NAB loans of $646,402) exceed assets E224,000 TOTAL $224,000
354. The husband should retain the items in his possession, the joint assets and the joint liabilities.
Assets in possession (Items 2, 43, 64) $27,211
Joint assets (Items 1, 2) $576,357
Total $603,638
Less joint liabilities (Item 55) $224,000
TOTAL $379,568
355. The wife should retain the assets in her possession and those brought back into account, less an adjustment in favour of the husband
Assets in possession (Items 4-9 incl, 16, 19, 35, 66) $1,557,924
Total net assets $1,937,492
356. There should be a payment of $589,178 to the husband by the wife to achieve an outcome approximating an equal division of net assets.
357. I am satisfied that the adjustment proposed is as just and equitable as possible given the circumstances of the case.
(Emphasis in the original)
THE APPEAL
In the wife’s Summary of Argument filed 6 September 2021, it is submitted on her behalf that there are four grounds of appeal, each related to the primary judge’s assessment of the wife’s contributions and the reasons given by the primary judge for the weight that was attached to those contributions in determining a just and equitable resolution of the dispute.
Although four grounds are articulated in the wife’s Summary of Argument, in the course of oral argument it became apparent that the appeal rests upon the fourth ground being that the primary judge gave inadequate reasons with respect to:
· The import or otherwise of the wife’s initial contributions;
· The overall assessment of contributions;
· The overall assessment of the matters listed in s 75(2); and
· Why an equal division of the parties’ assets was just and equitable.
Initially it had also been submitted that the primary judge gave inadequate reasons in relation to “adding back” a particular sum but this contention was abandoned in the course of oral argument.
Inadequate reasons
Initial contributions/overall assessment of contributions
As was further articulated by the wife’s counsel in the course of oral argument, the contention that the primary judge gave inadequate reasons with respect to each of the four matters identified depends upon the findings that were made (and more particularly from the wife’s perspective, findings that were not made) by the primary judge.
As noted previously, the primary judge touched upon the issue of initial contributions and contributions more generally at various places in her reasons for judgment. In particular (as set out at [108] and [109] of these reasons) the primary judge considered initial contributions and then made further observations about contributions in a similar vein later in the judgment (from [338]– [344] in the primary judge’s reasons, as set out at [113] of these reasons). It is contended, however, that the primary judge critically made no ultimate finding with respect to contributions.
It is clear that the primary judge did not express any findings as to the parties’ respective contributions in percentage terms or place any specific value on them. The primary judge also did not make any finding about initial contributions in relative terms but rather set out a list of the respective initial contributions. Under the heading “[c]ontributions during the marriage and to trial” the primary judge made various observations and findings, concluding at [270] that “[o]verall the contributions during the marriage favour the husband”. Under the heading of “[a]nalysis” later in the judgment, the primary judge described her assessment in almost identical terms when she said at [343] “by the date of separation the contribution favour the husband”.
Although it was conceded by the wife’s counsel that a primary judge is not obliged to express a party’s contribution in percentage terms, when considering the adequacy of reasons it was submitted that the primary judge is obliged to say more than simply “contributions favour the husband”.
The primary judge made the finding that “contributions favour the husband” at two places in her reasons being [270] and [343]. The first of these findings at [270] is the final paragraph under the heading “[c]ontributions during the marriage and to date of trial”. In our view, when considered in context including the heading, this must be a finding related to an assessment of contributions as at the date of final hearing.
The second of the primary judge’s findings that “contributions favoured the husband” at [343] is followed by two further paragraphs in these terms. Her Honour states:
344. Post-separation the wife has worked to hide and sell assets and conceal her financial position. She was determinedly secretive about her US corporation, Company W LLC.
345. The Court cannot come to a fully informed conclusion.
Although as argued on behalf of the husband there is a lack of clarity concerning the matters about which her Honour could not come to a fully informed conclusion, we agree as contended by the wife that the assessment of contributions at [343] must include the parties’ initial contributions. We also agree, as submitted by the wife’s counsel, that the primary judge did come to fully formed conclusions about the following matters:
· The wife had assets in New Zealand before the parties met. She has retained those assets and also acquired assets in North America (at [13]).
· The wife’s company Company W NZ purchased a property in New Zealand for $350,000 in March 2006 (at [53]).
· The wife’s second New Zealand company, Company AA (NZ), purchased a property in New Zealand for $900,000 in 2007 (at [54]).
· The husband made no contribution to the acquisition of the New Zealand properties (at [267]).
· The company incorporated by the wife in the USA, Company W LLC, bought the USA property in July 2014 from which the wife receives a rental income (at [87]).
· The husband may have made an indirect contribution to the property in America acquired by Company W LLC though this is unclear (at [267]).
· The wife maintained her overseas assets through her companies throughout the relationship. She probably developed and enhanced the value of those assets though that matter is unclear (at [265]).
· The assets of the wife were not brought into any arrangement to the joint benefit of the parties (at [267]).
· The wife’s overseas assets held at the date of trial had a value of $985,268 which represented just over 50 per cent of the total net property interests of the parties (at [252]).
In light of the foregoing findings by the primary judge, and in particular the husband’s negligible contribution to the overseas assets which amount to just over half of the total net property interests of the parties, the wife submitted that the primary judge did not grapple with the input of these contributions or explain why they did not justify a significant assessment of contributions in the wife’s favour.
In relation to the second area of contended inadequate reasons it is submitted on behalf of the wife that it is not possible to discern from the judgment the overall assessment of contributions. It is submitted that it is not possible to ascertain the extent to which it was assessed that the husband made the greater contributions to the parties’ property and marriage from the primary judge’s description that the contributions “favoured” the husband up to separation (or arguably as at the date of trial).
In relation to the overall assessment of contributions, there was significant focus upon the primary judge’s revisiting the issue of contributions when analysing the approach to be taken to the property settlement proceedings when her Honour stated that “[b]y the date of separation the contribution favour the husband” at [343]. It is to be remembered that this finding is immediately followed by [344] which deals with the wife’s conduct post separation and the statement at [345] that “[t]he Court cannot come to a fully informed conclusion”.
Although the wife’s counsel conceded that a judge is not obliged to assess the matter in percentage terms, it was contended on the wife’s behalf that the primary judge did not make any findings in relation to the post separation period.
In summary, it is argued that the primary judge did not make an overall assessment of the parties’ contributions or identify how her Honour formed the view that she did having regard to her findings as to contributions.
The main focus of oral argument on behalf of the husband as to these matters related to his contention that it was open on the evidence for the primary judge to find properly that overall the contributions during the marriage favour the husband. In relation to the question of adequacy of reasons, it was also maintained on behalf of the husband that as the primary judge assessed that overall the contributions favoured the husband but the ultimate division between the parties was an equal distribution it must be inferred that the Court gave weight to the wife contributing property of some value at the commencement of cohabitation which now has an estimated value. For this reason it was argued on behalf of the husband that the Court had given some weight to the wife’s initial contribution.
The difficulty with the last mentioned submission is that it does not respond to the thrust of the wife’s argument.
Further, this issue was touched upon in the course of an interchange with this Court when it was also raised that a possible interpretation for the final distribution of equality is that her Honour must have given some weight to the initial contribution of the wife through her overseas assets. However, as was emphasised by the wife’s counsel, the primary judge did not analyse her final distribution in this manner or articulate it in that way in the judgment and this inferential pathway to the primary judge’s conclusions is also inconsistent with some of her Honour’s findings.
The husband’s counsel did not make any other submission in relation to the issue of the adequacy of reasons in relation to the wife’s initial contributions and an assessment of contributions more generally.
Discussion
The Full Court of the Family Court of Australia (“the Full Court”) held in Bennett and Bennett (1991) FLC 92–191, relying upon the weight of judicial authority, that an appellate court should be able to discern either expressly or by implication the path by which a result had been reached.
In other words, in relation to this appeal, we should be able to discern either expressly or by implication how the primary judge assessed that the husband made the greater contributions to the parties’ property and marriage.
The wife also contends that the language used by the primary judge in making the assessment that “contributions favour the husband” of itself also does not amount to a proper assessment of the parties’ contributions.
In Holland & Holland (2017) FLC 93-798 (“Holland”) when considering a primary judge’s approach to an assessment of contributions of the parties and a conflation between this matter and a s 79(4)(e) assessment, the Full Court said this in relation to the language used when making such an assessment:
66. We have not been directed to, nor can we see for ourselves, any findings by which it is possible to discern how her Honour’s qualitative description of a “slightly greater” contribution by the wife during the post-separation period can be assessed in terms of its meaning or impact in dollar terms. Quite apart from the obvious difficulty that “slightly greater” might mean different things to different people – including the parties – the property and superannuation to be divided has a modest net value. The consequence of the latter is that what some judges, or the parties, might regard as “slightly greater” in dollar terms may represent a percentage disparity that might not be so described.
In our view it is not possible to discern either expressly or by implication the path by which the primary judge reached the conclusion that contributions favour the husband which we take as meaning that he made the greater contribution to the parties’ property and the marriage either at the date of separation and/or at the date of trial.
The primary judge attributed an estimated value to the wife’s overseas assets of $985,268 which represented just over 50 per cent of the total net property interests of the parties. The primary judge also found that the husband made no contribution to the acquisition of the most valuable of these assets and may (only) have made an indirect contribution to one of those assets. Her Honour made other findings, summarised at [123] of these reasons. Having made these findings, we are unable to discern how her Honour then concluded that the husband made the greater contributions.
Although it was raised by the husband’s counsel in the course of an interchange with the Court that a possible interpretation for the final distribution by the primary judge of equality is that some weight was given to the initial contribution of the wife through her overseas assets, the primary judge did not articulate her assessment in that manner. This inferential pathway to the primary judge’s conclusions is also inconsistent with some of her findings and thus cannot be utilised to discern the way in which her Honour reached the finding of greater contribution by the husband.
The overall assessment of matters listed in s 75(2)
The next argument advanced on behalf of the wife was that the inadequacy of the primary judge’s reasons concerning the input or otherwise of the wife’s initial contributions and the overall assessment of contributions had flow on effects when s 75(2) was considered by the primary judge. As a result, it was submitted that her Honour’s overall assessment of the matters listed in that section was also inadequately addressed in the reasons for judgment.
It was argued on behalf of the wife that as the primary judge did not make a mooted assessment of contributions, there was no foundation for her Honour’s consideration of s 75(2) matters and ultimately her Honour could not and did not make any assessment as to those matters.
This argument was developed in the course of an interchange between the Court and the wife’s counsel concerning the requirement of a judge to make firm conclusions with respect to contributions prior to moving on to an assessment of the matters in s 75(2). In relation to this issue the wife’s counsel relied in particular upon the Full Court decisions in Willis & Wills [2007] FamCA 819 (“Willis”) and Marsh & Marsh (2014) FLC 93-576 (“Marsh”).
In Willis it was held by the Full Court that a judge is required to consider the effect of findings as to contributions on the respective positions of the parties before proceeding to determine whether any adjustment is warranted pursuant to s 75(2).
In Marsh the Full Court held that a court is required to consider its mooted assessment of contributions when considering the nature and effect of the orders that might flow from it.
It was submitted on behalf of the wife that in the present case as no quantitative assessment of contributions was made by the primary judge (as there was only a finding that contributions favoured the husband), her Honour was then unable to consider properly the s 75(2) factors. In this regard the wife also relied upon the following extract from the Full Court decision in Holland:
69.Without an overall assessment of contributions it is not possible to discern the prospective entitlements of each of the parties based upon that assessment. Without a finding as to the prospective entitlements of each of the parties based upon an overall assessment of contributions it is not possible to discern the foundation for her Honour’s assessment of s 75(2) including, importantly but not exclusively, s 75(2)(b), or how that assessment was reflected in dollar terms.
(Footnote omitted)
It was not suggested in the course of argument that the primary judge did not deal at all with the s 75(2) matters. It was identified that at [288] her Honour did record making “some adjustment” for the parties’ respective disparity in income and at [334] that the unlikelihood of the wife paying child support in the future was a matter taken into account “in favour of the husband”. It was accepted that these are examples of the primary judge’s assessment of the s 75(2) matters but argued that the reasons do not then identify the overall assessment made by the primary judge with respect to those matters.
In relation to this ground of appeal, the husband’s counsel referred to those parts of the primary judge’s reasons which record the matters in s 75(2) considered by her Honour and set out in the foregoing paragraph.
In summary, it was contended on behalf of the husband in relation to this matter that the primary judge did make a finding with respect of contributions and then “clearly didn’t make an adjustment for future needs” or, alternatively, made “a slight adjustment”. In this regard, the husband’s counsel noted that overall the primary judge did determine that there would be an approximate equal division of the property.
Discussion
We are of the view that it is not possible to discern the assessment made by the primary judge of the s 75(2) matters or whether a consideration of such matters required that the mooted assessment of contributions be adjusted one way or another. Although the primary judge had assessed that contributions “favoured the husband” and ultimately concluded that an equal division of the parties’ property was just and equitable, it is not possible to discern how this conclusion was arrived at on the basis of the s 75(2) matters.
Overall equal division
The final submission made on behalf of the wife with respect to the inadequacy of the primary judge’s reasons is also related to the earlier submissions with respect to the adequacy of reasons concerning contributions and s 75(2) matters.
As discussed at some length, the primary judge did not quantify in percentage or dollar terms her assessment of the parties’ contributions and any adjustment as a result of a consideration of the s 75(2) matters. As set out in [113] of these reasons, after considering contributions and the s 75(2) factors, the primary judge analyses the approach to be taken to the parties’ respective application between [338] and [357].
After reciting some of the matters related to contributions and repeating the assessment that as at the date of separation the contributions “favours the husband”, the primary judge then recorded that following separation the wife had worked hard to hide and sell assets and conceal her financial position and that the Court cannot come to a fully informed conclusion. Her Honour then went on to record that she considered “the appropriate course” would be that the husband and the wife each retain certain assets and that the husband receive a payment accounting for the proceeds of sale of Business Asset 1 and the attributed value of the vehicle which had been retained by the wife.
After setting out the proposed distribution in dollar terms, the primary judge then stated at [356] “[t]here should be a payment of $589,178 to the husband by the wife to achieve an outcome approximating an equal division of net assets”, which the primary judge records at [357] as bringing about a result that she was satisfied is “as just and equitable as possible given the circumstances of the case”.
The wife’s contention in summary is that once again it is not possible to discern how her Honour concluded an equal division to be just and equitable. In this regard, the following extract from Coleman J on appeal in Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234] is relied upon:
234.Given that the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion, whether it be in the assessment of contributions in the matrimonial cause, assessment of damages in a personal injuries case, or determination of compensation in a land resumption case. In some cases, the “leap” is so great, and so unheralded by the discussion which precedes it as to render the reasoning process defective. In this Court’s view this is not such a case.
It is argued that in the absence of any proper conclusions with respect to contributions and s 75(2) factors the primary judge’s “leap” to an equal division at [356] is so unheralded by the discussion that precedes it that the reasoning process is rendered defective.
The wife’s counsel noted further difficulties and uncertainty in relation to her Honour’s analysis at [338]–[348], and the following paragraphs [349]–[357] under the heading “[a]nalysis of whether the adjustment contemplated is just and equitable”, which are relevant to the contended inadequacy of reasons. At the conclusion of the general analysis (in [346] and [347]) the primary judge sets out the “appropriate course” being that the husband and wife each retain certain assets and that the wife make a payment accounting for the proceeds of the sale of Business Asset 1 and the vehicle, whereas in [356] her Honour also adds that there should be a further payment of $589,178 made by the wife to the husband to achieve an equal division of net assets. Such a division as explained by her Honour is as just and equitable as possible in the circumstances. It is submitted that these two paragraphs do not appear on their face to be consistent with one another.
On behalf of the wife her counsel posed the question, if the contributions up until separation were seen to favour the husband why then was an equal division justified?
Although various possible answers were a matter of some speculation in the course of the hearing it was submitted that the central problem remains, which is ultimately determinative, that it is not possible to determine from the primary judge’s reasons how her Honour arrived at the outcome that she did. In these circumstances, it is submitted that the primary judge’s reasons are inadequate and the appeal must succeed.
In our view, it is not possible to discern from the primary judge’s reasons and in particular her Honour’s analysis from [338]–[355] how her Honour comes to the conclusion that an outcome considered just and equitable (approximating an equal division of net assets), is arrived at. In short, accepting that her Honour assessed that the husband’s contributions were greater than those of the wife and some adjustment may have been made thereafter, it is not possible to discern either expressly or by implication the path by which the primary judge reached the conclusion that a roughly equal distribution of the parties’ property interests represented a just and equitable resolution of the parties’ dispute.
CONCLUSION
Given our acceptance of each of the wife’s arguments with respect to the inadequacy of reasons in relation to the wife’s contributions, an assessment of contributions generally, the s 75(2) matters and ultimately the conclusion as to a just and equitable distribution, the wife’s appeal must be allowed.
COSTS
The wife did not seek an order for costs. Each party sought that, in the event the appeal succeeded, the Court grant them appropriate certificates under the Federal Proceedings (Costs) Act 1981 (Cth). Given that we are satisfied that the preconditions for the grant of certificates under the applicable sections of this Act are satisfied, we are satisfied that the parties should be granted certificates in respect of the appeal and the new trial.
I certify that the preceding one hundred and sixty-one (161) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Aldridge, Hogan & Hannam. Associate:
Dated: 3 March 2022
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