PALKOVICH & PALKOVICH
[2016] FamCAFC 134
•28 July 2016
FAMILY COURT OF AUSTRALIA
| PALKOVICH & PALKOVICH | [2016] FamCAFC 134 |
| FAMILY LAW – APPEAL – PROPERTY – Where each party sought orders to retain a certain property – Where the trial judge transferred that property to the wife – Where the husband appealed on the basis his contributions were not recognised and the trial judge was biased or had prejudged the matter – Where trial judge found the husband made the overwhelming financial contribution and the wife made the overwhelming parenting and home maker contributions – Where the wife had the almost sole care of the children for extended periods, including a period for their adult son who is unwell – Where the trial judge recognised significant contributions from both parties but that the wife should receive a further adjustment of five percent – Where the trial judge did not prejudge the husband’s application or demonstrate bias to satisfy the test in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 – Where the trial judge had appropriate regard to the contributions of both parties and there is no error – Appeal dismissed. FAMILY LAW – COSTS – Where the wife sought an order for costs – Where the appeal was wholly unsuccessful within the meaning of s 117(2A)(e) of the Family Law Act 1975 (Cth) – The husband should pay the wife’s costs of and incidental to the appeal, if not agreed, to be assessed. |
| Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 |
| Family Law Act 1975 (Cth) ss 79(4), 117 |
| APPELLANT: | Mr Palkovich |
| RESPONDENT: | Ms Palkovich |
| FILE NUMBER: | SYC | 2123 | of | 2013 |
| APPEAL NUMBER: | EA | 38 | of | 2014 |
| DATE DELIVERED: | 28 July 2016 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | May, Ainslie-Wallace & Aldridge JJ |
| HEARING DATE: | 28 April 2016 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 26 February 2014 |
| LOWER COURT MNC: | [2014] FCCA 576 |
REPRESENTATION
| SOLICITOR FOR THE APPELLANT: | Legal Made Easy Pty Ltd |
| COUNSEL FOR THE RESPONDENT: | Mr Moutasallem (direct brief) |
Orders
The appeal is dismissed.
The appellant pay the respondent’s costs of and incidental to the appeal, if not agreed, to be assessed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Palkovich & Palkovich has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)) or to record a variation to the order pursuant to r 17.02, Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 38 of 2014
File Number: SYC 2123 of 2013
| Mr Palkovich |
Appellant
And
| Ms Palkovich |
Respondent
REASONS FOR JUDGMENT
Introduction
By way of Further Amended Notice of Appeal filed 31 October 2014, Mr Palkovich (“the husband”) appeals from property settlement orders of Judge Henderson made 26 February 2014, as between the husband and Ms Palkovich (“the wife”). In essence, the orders the subject of the appeal provided that the husband transfer to the wife properties situated at Suburb A and Suburb B in New South Wales, with the husband to retain the property at Suburb C and in Southeast Europe.
On 10 April 2014, a stay of the orders was granted by the trial judge, pending the outcome of the appeal.
The husband had three grounds of appeal. During the hearing of the appeal, the solicitor for the husband advised the third ground had been withdrawn. The following two grounds were argued:
1.The trial judge erred by appearing to prejudge the contributions and property entitlements of the parties and appearing to be biased.
2.The trial judge erred in the assessment of the parties’ respective contributions pursuant to s 79(4) of the Family Law Act 1975, in that her Honour failed to have regard to relevant considerations, gave inadequate weight to relevant considerations and drew conclusions based on findings that were not reasonably open to the trial judge on the evidence.
On 26 May 2014, the husband filed an Application in an Appeal seeking that the transcript of the hearing of the trial be provided by the Court. It was noted during the appeal hearing it was no longer necessary to hear the application as the transcript had subsequently been provided by the Court. As such the Application was withdrawn.
Background
As the judge explained, the parties are from Southeast Europe, where they commenced cohabitation in 1981. They separated in 2012. There are two, now adult, children of the marriage.
The husband immigrated to Australia for work in 1988, while the wife and children remained in Southeast Europe. In 1990 the family emigrated from Southeast Europe to Australia. They later joined the husband in the Middle East where he was employed in 1994 and where the children completed their schooling. The husband primarily worked and lived in the Middle East from 1993 to 2012. After his job concluded in 2012 he returned to live in Australia.
In 2001, the parties’ daughter returned to Australia to attend university, and her brother joined her in 2003 for the same purpose. The wife regularly travelled from the Middle East to visit the children while they were at university.
In 2006, when aged 22, the parties’ son was diagnosed with a mental illness. He has since spent time in mental health facilities and continues to be quite unwell. The wife remained living in Australia on a permanent basis after the diagnosis. Her care of him ceased in September 2012 after a violent incident when the son attacked the wife. The husband, having finished work at this time, returned to Australia and commenced caring for their son.
The husband was self-represented at trial, whereas the wife had the benefit of counsel on a direct brief. It was no doubt difficult for the husband to represent himself.
The Decision of the Trial Judge
Parties’ Proposals
Each party asked that the Suburb A property be transferred to their sole name. At the conclusion of the trial, the wife submitted that she did not seek an exact percentage split of the net value of the assets, and simply wanted to retain the Suburb A property. The wife lives in the Suburb A property and had a casual job in that area.
The husband sought orders that he retain the Suburb A property, which he would renovate to provide separate living arrangements for himself, the wife and their son. The husband also sought to retain the Suburb B property. On his proposal the wife would therefore retain the Suburb C property; a $200,000 cash payment from the husband, and the husband would transfer the property in Southeast Europe to the wife. In his submissions the husband estimated that the effect of his proposal was that he would receive 58 per cent of the value of their assets.
The major issues for the judge were the valuation of the assets and how they should be distributed, considering the contribution of the parties and their future needs.
The property of the parties
The trial judge recorded the assets of the parties (at [30]). At the commencement of the trial the assets and their values were agreed.
During cross-examination of the wife, the husband disputed the value of the Suburb A property, and sought an adjournment to obtain an updated valuation. The husband submitted that the Suburb A property was undervalued. Similarly, the husband believed the Suburb B property was also undervalued. The trial judge observed the following:
a)The husband conceded in the trial he had taken no steps to advise the wife of these beliefs prior to the trial, nor had he attempted to obtain updated valuations (at [11]);
b)The husband only agreed to the valuations set out by the wife because he expected the matter to settle and not proceed to court (at [12]);
c)The evidence the husband based his beliefs upon had “no basis in reality or fact.” (at [13]);
d)The husband only challenged values relating to properties the wife sought to retain (at [14]);
e)The parties agreed that there should not be orders for properties to be sold when a division of the asset pool was effected by the judge (at [15]);
f)The husband first challenged the values mid-way through cross-examination of the wife (at [16]); and
g)The husband agreed to the existing values months before the trial, and presented no evidence for the change in his opinion (at [17]).
The husband’s challenge to the values was rejected by the trial judge. The “matrimonial pool” was determined to be as follows:
59. …
ASSETS
VALUE
[Suburb A] property
$700,000
[Suburb B] property
$590,000
[Suburb C] property
$880,000
[The] property [in Southeast Europe]
$90,000
Wife’s savings
$22,460
Husband’s savings, including retirement package
$242,423
Furniture
$5,000
[The] car
$6,000
TOTAL
$2,535,883
Contributions
As the background to this dispute reveals, the husband spent considerable periods of time overseas working while the wife had the primary care of the children. This care continued even when the children became adults, with the wife caring for the parties’ son (with the assistance of their daughter) from 2006 to 2012. In relation to the wife’s contribution, the trial judge noted:
36.It is clear that the husband only returned in 2012, because he no longer had a job. Had he still had a job I accept he would be working in [the Middle East] or elsewhere overseas. For those 6 years and prior to that time the husband had little or nothing to do with the day to day care of the children whilst under the age of 18 years or over that age. For those 6 years the husband had nothing to do with the care of [the son] who although an adult was and is still unwell and this burden was left to the wife.
37.As I have said, the parties acquired valuable assets from the monies the husband earned overseas and he worked overseas in [the Middle East] from 1993 to 2012 a period of nearly 20 years and here in Australia for two years before the wife joined him. Thus for the entire time of the children growing up the [husband] was working overseas. The husband, wife and children lived together at best for ten years whilst the children were growing up, in [the Middle East] in the main. The husband was basically absent from the children’s lives for 10 years and this gap was filled solely by the wife.
After concluding that the wife had made the overwhelming parenting and home maker contributions and the husband made the overwhelming financial contribution, the trial judge decided that the property of approximately $2.5 million should be divided as to 55 per cent to the wife and the balance to the husband. The decision was based on a finding that an adjustment of five per cent should be made in the wife’s favour by reason of her “arduous” non-financial contributions in caring for the children in foreign countries for most of the marriage (at [66] – [67]).
The contributions were described by the trial judge in [43] as follows:
43.There is no doubt that the husband has made the overwhelming financial contribution to the assets of this marriage. However, the wife’s arduous parenting and homemaking role is a matter which outweighs the husband’s financial contribution, on the evidence before me.
In addition, the wife had limited capacity to earn income in the future and was currently earning a very modest income.
Although the husband’s contribution to the care of the parties’ adult son was acknowledged, the trial judge emphasised that the husband only returned from [the Middle East] in 2012 because his job had concluded (at [36]). This was reinforced by the husband’s submissions that if he did not get the orders he sought, then he would return overseas for a job as he would not be able to afford to live in Australia (at [47]). The trial judge found:
58.…[T]he prospect of the husband returning overseas to work is a real prospect after hearing his submissions, and particularly if I do not make the orders he seeks.
No further adjustment was made in favour of the husband for the future care of their son, for the following reasons:
68.I will not make any adjustment to either party under section 75(2) or for post-separation contribution. [The son’s] care is not an issue, as if the husband does return overseas to work, the wife will care for him and if he does not, he and the wife will care for him to the best of their ability as they have always done. The prospects are most sadly that [the son] may be involuntarily interned on a regular and ongoing basis.
Conclusion
After making findings in relation to contributions and the parties’ current circumstances, her Honour concluded the following division of the matrimonial pool:
70.The asset pool is $2,535,883. The wife seeks she retain [the Suburb A property], [the Suburb B property], the car, furniture and money in the bank which is a total of $1,323,460. She says the husband should have [the Suburb C Property], money in the bank and the [property in Southeast Europe] totalling $1,212,423.
71.The wife seeks no further adjustment even if she is not receiving 55% of the asset pool to which I have found she is entitled.
72.If the wife retains those assets she wishes to retain totalling $1,323,240 this equates to about 52% of the net asset pool, not 55% I have said she is entitled to. This leaves the husband with 48% of the asset pool namely $1,212,423 when I have found his entitlement to be 45%.
73.Given that the wife says, “I do not want a percentage adjustment precisely, all I require is this property” I will accept the wife’s position and thus I find these orders are just and equitable in all the circumstances.
The Appeal
Ground 1
The written submissions for the husband set out numerous statements of the trial judge made during the hearing, which it is asserted demonstrated the judge had pre-formed a “favourable view of the wife’s application”.
It is not necessary to set out all of the statements in full to deal with this ground. In relation to proposals by the wife’s counsel for the distribution of the property, the trial judge said “It seems to be, to use the vernacular, on the money”. The quote makes more sense when considered in the context in which it was said:
HER HONOUR: Thank you, Mr Nagle. Now, I’ve had a look at this matter. Take a seat. We are in substantial agreement as to matrimony [sic] assets. I added up both parties, and there was only about $40,000 difference, and these difference in some assets, but at the end of the day – is your client contending for a fifty-fifty split?
MR NAGLE:Your Honour, it’s about 42-48 to the - - -
HER HONOUR: Your client wants the matrimonial home and the property in [Suburb B]?
MR NAGLE:Yes, your Honour.
HER HONOUR: All right. Right. I have no – I can’t see why I wouldn’t make that order.
MR NAGLE:.....
HER HONOUR: It seems to be, to use the vernacular, on the money.
(Transcript 21 February 2014, p.2, l. 14 – 31)
The statement out of context could be viewed as a prejudgment in the wife’s favour. But it is clear upon review of the transcript that her Honour was merely expressing a tentative view that the order proposed by the wife made sense in the scheme of the matrimonial asset pool, particularly where neither party wanted any of the properties sold. The primary judge concluded this preliminary exchange with the following:
HER HONOUR: …So you don’t agree with that. That’s fine. I will conduct the hearing now, and I will hear the evidence, and I will see what the evidence tells me to do.
(Transcript 21 February 2014, p.7, l. 17 – 19)
Another example complained of is the following:
HER HONOUR: You know, when you’ve been at home, caring for children for 15 or 16 years, it’s very hard to get back in the workplace in a professional career of something as highly skilled as what you’re doing. You haven’t got a clue. You haven’t got a clue what you’re asking.
MR [PALKOVICH]: I was vacuuming, housecleaning. I know I - - -
HER HONOUR: No. Anyone can vacuum and clean.
(Transcript 21 February 2014, p.23, l. 37 – 44)
The husband regarded this exchange as her Honour being “dismissive” of his non-financial contributions. Such challenge is not sustainable by reference to the transcript. Just prior to this interchange, the husband asserted “she never wanted to work”. It is clear from the evidence that the wife contributed overwhelmingly to the children’s care and the husband similarly made the overwhelming financial contribution. To suggest his contribution to cleaning was in the vicinity of the wife’s contributions is unsustainable. The same would be in reverse; to suggest the wife had made any financial contribution in the same sphere as the husband would have been inappropriate.
The solicitor for the husband relied on Johnson v Johnson (No 3) (2000) FLC 93-041, suggesting that the trial judge in this case went beyond the evidence and demonstrated bias. While that authority is certainly relevant to this issue, the principle is best articulated in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 (“Ebner”) at 345:
8.The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an "interest" in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.
In written submissions, counsel for the wife noted that while the husband was self-represented at the trial and no doubt found that process challenging, he nevertheless failed to make an application during the trial for the judge to disqualify herself and only raises allegations of bias on appeal. It is correct that usually, if an application has not been made during the trial that a judge recuse themselves, it cannot be first made on appeal (Vakauta v Kelly (1989) 167 CLR 568). However, in this case there are other reasons why this ground should not succeed.
The statements made by the primary judge were tentative views. Just because the final orders reflect orders in similar terms, this does not on its own indicate pre-judgment. The “dots have not been joined” as Ebner requires. The husband has been unable to demonstrate a logical connection between any of the statements referred to and his assertion that the case was not decided on its merits.
Ground 2
The second ground of appeal contends that the trial judge erred in the assessment of the parties’ respective contributions pursuant to s 79(4) of the Family Law Act 1975 (Cth) (“the Act”), on a number of aspects:
a)That her Honour failed to have regard to or gave inadequate weight to relevant considerations; and
b)That her Honour made findings which were not reasonably open on the evidence.
This of course is a classic challenge to a decision where a trial judge has a wide discretion within the parameters of the legislation.
The husband submits that the trial judge either failed to have regard, or gave inadequate weight to, a number of relevant considerations. These include factors such as the husband’s non-financial contributions; that the children lived with their grandparents for a period of time; that their daughter assisted the wife with the care of their son from 2006 to 2012; that the husband now cares for the son; that when the children first moved to Australia the wife had less arduous duties; and that the husband made significant financial contributions which meant he could not spend as much time with the family.
With respect to the husband, these submissions demonstrate no error. These matters were expressly dealt with by her Honour, at [35], [42] and [43]. Additionally, as noted by counsel for the wife in written submissions, the husband himself put to the trial judge that he would have the “burden” of caring for their son – a burden he may not continue with if he again goes overseas.
It was entirely within her Honour’s discretion to find that the wife’s non‑financial contributions were superior and that an adjustment of five per cent should be made in that regard. Such adjustment was modest in the circumstances, and although the wife on her Honour’s findings would have been entitled to more, she will in fact receive 52 per cent of the net assets.
It was further argued that the trial judge made a number of findings which were not reasonably open on the evidence. In particular, the findings about the husband’s lack of involvement in the children’s lives. It can be recalled that the trial judge remarked at [37] that the husband “was basically absent from the children’s lives for 10 years and this gap was filled solely by the wife.” The husband’s submissions dispute this period, arguing it was closer to just under nine years. Additionally, it is submitted the time spent apart from the children before they turned 18 was a period closer to three years.
The husband also submits that for the period of 2002 to 2006, the children lived in Australia while the wife remained in the Middle East (visiting periodically) and therefore the wife’s duties were less arduous.
The husband’s submissions, with respect, entirely miss the point of her Honour’s conclusions. Whether it be nine or 10 years, it can still be regarded as a significant period of time that the wife had the sole care of the children. Additionally, while three or more years may have only occurred while the children were under 18 years of age, the wife (with support from their daughter) solely cared for their son from 2006 to 2012, when he was suffering from a mental illness. What might be minor calculation errors on the part of the trial judge in no way affects the discretion exercised. No error has been established in this respect.
As to the composition of the property each party received – it was entirely appropriate that the wife received the Suburb A property, as the wife was then living in the property and was employed locally in that area. These factors, coupled with her Honour’s findings at [50] – [51] and [54] – [56], make clear it was entirely proper for her Honour to order that the wife retain the Suburb A property.
Conclusion and Costs
As has become clear, the appeal must fail.
At the conclusion of the hearing of the appeal, we asked the parties for submissions on costs. Bearing in mind that costs do not follow the event in this Court (per s 117 of the Act), the wife sought costs.
The husband resisted any order for costs, raising a number of issues in relation to the s 117(2A) factors. The husband continues to care full time for the parties’ son, and his solicitor submitted the appeal was not “wholly unsuccessful” as he was successful in his stay application on 10 April 2014. The purpose of a stay is to preserve the subject matter of the litigation pending the appeal. It is not correct that the granting of a stay where the appeal is ultimately dismissed would influence a decision as to whether a costs order should be made.
Counsel for the wife, in response, argued that the appeal was wholly unsuccessful, as it was dismissed, and that a whole ground of appeal was abandoned during the hearing. Counsel also noted that impecuniosity is not a bar to costs orders, and the husband was left with savings that could meet a costs order. Reference was also made to the wife’s financial circumstances.
It is appropriate that the husband pay the wife’s costs if not agreed, to be assessed.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Ainslie-Wallace & Aldridge JJ) delivered on 28 July 2016.
Associate:
Date: 28 July 2016
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