Palmer & Palmer - [2009] FamCAFC 129

FAMILY COURT OF AUSTRALIA

PALMER & PALMER (NO. 2)

[2009] FamCAFC 129

FAMILY LAW - APPEAL – PROPERTY – where the trial Federal Magistrate intended to divide the parties’ property 85 per cent to the wife and 15 per cent to the husband – where the parties were married for nearly 40 years – whether his Honour’s reasons adequately established that a 85-15 per cent division of property was just and equitable – whether his Honour erred in calculating the pool of assets available for division between the parties – whether his Honour erred in his approach towards the husband’s “failed business ventures” – found that there were errors in the calculation of the property pool – found that his Honour did not give adequate reasons for not adding back a property sold after separation by the wife to the parties’ son for one dollar – found that his Honour did not provide sufficient analysis to demonstrate that a 90 per cent to 10 per cent contribution assessment was just and equitable – appeal allowed – Federal Magistrate’s orders set aside – application for property settlement remitted for re-hearing.

FAMILY LAW - APPEAL – COSTS – Costs certificates granted to the parties pursuant to the Federal Proceedings (Costs) Act 1981 (Cth).

Family Law Act 1975 (Cth)
Federal Proceedings (Costs) Act 1981 (Cth)

Browne & Green (1999) FLC 92-873
Chorn & Hopkins (2004) FLC 93-204
Kowaliw & Kowaliw (1981) FLC 91-092

APPELLANT:

Mr Palmer

RESPONDENT:

Ms Palmer

FILE NUMBER:

BRC

2059

2007

APPEAL NUMBER:

2008

DATE DELIVERED:

21 July 2009

PLACE DELIVERED:

Canberra

PLACE HEARD:

Brisbane

JUDGMENT OF:

Bryant CJ, Finn and May JJ

HEARING DATES:

15 May 2008; 6 August 2008; 22 April 2009

LOWER COURT JURISDICTION:

Federal Magistrates Court

LOWER COURT JUDGMENT DATE:

8 February 2008

LOWER COURT MNC:

[2008] FMCAfam 86

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Galloway

SOLICITOR FOR THE APPELLANT:

Reardon & Associates

COUNSEL FOR THE RESPONDENT:

Mr Cameron, Ms Maier, Dr Sayers

SOLICITOR FOR THE RESPONDENT:

Harrington Family Lawyers

Orders

The appeal against the orders with respect to property settlement made by Federal Magistrate Lucev on 8 February 2008 be allowed.
The orders be set aside.
The husband’s application for property settlement be remitted for re-hearing together with any cross application which may be filed by the wife by a Federal Magistrate other than Federal Magistrate Lucev.
a) The Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 (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 husband in respect of the costs incurred by the appellant husband in relation to the appeal.
b) The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (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 wife in respect of the costs incurred by the respondent wife in relation to the appeal.
c) The Court grants to each party a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act1981 (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 such part as the Attorney-General considers appropriate of any costs incurred by each party in relation to the new trial granted by these orders.

IT IS NOTED that publication of this judgment under the pseudonym Palmer & Palmer is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 18 of 2008
File Number: BRC 2059 of 2007

Mr Palmer

Appellant

And

Ms Palmer

Respondent

REASONS FOR JUDGMENT

This is an appeal by the husband against orders for property settlement made by Lucev FM on 8 February 2008 following a trial lasting one and a half days in July 2007. His Honour intended by his orders to divide the parties’ property, which he found to have a net value of $1,190,866, in the proportions of 85 per cent to the wife and 15 per cent to the husband.
This division was arrived at on the basis of a 90 per cent - 10 per cent contribution assessment in favour of the wife, with a 5 per cent adjustment made in favour of the husband on account of the matters contained in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).

History of the appeal

This Court initially heard the appeal on 15 May 2008. As it appeared to us during that hearing that the appeal could well have to be allowed – a conclusion that these reasons will confirm – we canvassed with counsel then appearing for the parties the possibility of a re-determination of the matter by this Court rather than a re-hearing of the matter at first instance.
As a re-determination of the matter by this Court was the preferred position of both parties and ourselves at the time, we made orders for the parties to file further written submissions directed to such a re-determination or re-exercise of the discretion by us. Such further submissions were then filed by the appellant husband on 6 June 2008, by the respondent wife on 21 July 2008, and by the appellant husband on 1 August 2008.
However, on 28 July 2008 the respondent wife had filed an application seeking that the hearing of the appeal be re-opened in order that she could apply to adduce further evidence concerning a deterioration in her health since the hearing of the appeal.
There was therefore a further hearing before us on 6 August 2008, at which, notwithstanding the objections of counsel for the husband, we were prepared to receive the greater part of the further evidence sought to be adduced by the wife. At that further hearing both parties continued to press for a re-determination of the matter by this Court (in the event that we found substance in the appeal) on the basis of both parties’ further written submissions and the further evidence adduced by the wife.
In November 2008, while our decision in relation to the appeal remained reserved, the wife suffered a stroke. An application was subsequently filed on her behalf on 18 December 2008 seeking that a case guardian be appointed for her for purposes of the appeal, and also seeking leave to re-open the appeal for the purpose of adducing further evidence regarding her situation.
On 22 January 2009 a friend of the wife, Ms J, was appointed as her case guardian for the purpose of applying to re-open the hearing of the appeal in order to seek leave to adduce further evidence concerning the wife’s state of health, future disabilities and needs. The hearing of the case guardian’s application to re-open the hearing of the appeal was adjourned until the April sittings of the Full Court in Brisbane.
On 22 April 2009 there was a further hearing before this Court. Although counsel for the case guardian was able to adduce some evidence regarding the wife’s state of health (which we ultimately admitted by consent), he sought at that hearing an adjournment to enable further evidence to be obtained concerning the wife’s condition and her future needs.
Such an adjournment was opposed by counsel for the husband. Counsel also informed us that the appellant husband’s position now was that in view of the wife’s greatly changed condition since the original hearing of the appeal, and also the husband’s own deteriorating state of health, there should be a new trial in the event that there was sufficient substance in the grounds of appeal such that the appeal should be allowed.
Having considered the matter, we ruled that we would not grant a further adjournment to the wife, but rather that we would by consent admit the affidavit evidence of a Dr W (filed 7 January 2009) and a Dr A (filed 21 April 2009) “for the limited purpose of establishing the changes to the wife’s health and the extent to which those changes will impede the Full Court in re-exercising the discretion in the event the appeal is allowed”.
It was clear to us by that time that given the evidence concerning the significant changes in the wife’s situation since the trial before the Federal Magistrate, it would be impossible for us to re-determine the matter ourselves. This would be particularly so given that counsel for the appellant husband was unable to concede that evidence concerning the wife’s condition and future outlook would not be controversial. In these circumstances, no good purpose would have been achieved by a further adjournment of the hearing and determination of the appeal.
Accordingly, we now turn to consider the husband’s appeal.

The scope of the husband’s appeal

The husband relied on 20 grounds of appeal (being the 19 contained in his notice of appeal and a further ground on which he was given leave to rely at the hearing on 15 May 2008). However, his counsel was able to argue all these grounds in a number of convenient groups.
In general terms the challenge was to the adequacy of his Honour’s reasoning and to the overall justice and equity of an 85-15 per cent division of assets after a marriage of nearly 40 years.
More particularly, the challenges were to his Honour’s calculation of the pool of assets available for division between the parties, and importantly, to his Honour’s apparent approach to what he described in his reasons as the husband’s “failed business ventures”.

The financial history of the parties

His Honour did not in his reasons for judgment provide a separate history or chronology of the parties’ financial affairs. Rather the background history only emerges from his discussion of various matters which were in dispute in relation to the pool of property to be divided between the parties, and also from his discussion of the parties’ contributions.
It is not always necessary in a property settlement judgment to include a detailed history of the parties’ financial affairs separately from the discussion of items to be included in the pool or of the parties’ contributions or of the other matters referred to in s 79(4), although some brief history is always useful.
However, in a case such as the present, where the parties’ financial affairs have a somewhat complex and ultimately controversial history, it would have been very useful for his Honour to have set out that history in some detail (including his findings in relation to matters in dispute) in order to provide a chronological background to his discussions of, and findings concerning, the pool available for division, and the contributions of the parties.
In order, therefore, to provide a background to the issues which arise in this appeal, we will begin by setting out a history of the parties’ financial relationship. Because of the controversial nature of some of that history, we have, wherever possible, relied on the findings made at various places in his Honour’s reasons.
Both the husband and the wife were born in 1935. They married in 1960; separated in October 1997; and were divorced in May 2005. They have two adult children.
The husband brought to the marriage land at S in Queensland; it is not known if that land was encumbered nor its value at the time. A house costing about $6000 (£3000 at the time) was built on the property. An adjoining property was subsequently acquired by the parties.
The husband also brought into the marriage land at M which was sold early in the marriage.
In the early to mid 1960s the wife bought three properties at B, each costing £1000, as well as a property at G, with monies inherited from her parents. We were told by counsel for the appellant husband during the hearing on 15 May 2008 that the value of the inheritance when received was £15,000.
In the early 1960s the wife funded the purchase by the husband of a business in the service industry in and around Brisbane. That business failed.
Later in the 1960s the husband purchased a business known as “[S] Sales” with funds raised by mortgaging the S property. In the early 1970s that business failed and the wife sold the G property to avoid the bank foreclosing on the family home at S.
The balance of the proceeds of the G property ($11,000) was used to build a house at a property, P, which the wife had purchased in 1974 for $13,300 with a 10 per cent payment and further payments over the next ten years (until paid off in 1984).
By the early 1990s the husband was operating a transportation business known as I. Both the S and P properties were mortgaged to fund the expansion of that business and the purchases of vehicles.
A property at V, which had been purchased in joint names with monies received by the husband on the cessation of his employment with PS, was also mortgaged to fund the I business.
The I business collapsed when the relevant local authority refused to renew its operating permit. The I business then sued the local authority and lost with costs. The I business then sued its solicitors for professional negligence and lost with costs.
The wife paid in excess of $30,000 for legal fees incurred by the I business. Both the S and P properties were re-mortgaged to fund the litigation. The wife paid those mortgages after separation (which was in 1997).
Two of the properties at B (originally purchased with the wife’s inheritance) were sold in the late 1990s to meet debts of the failed I business. The wife sold the remaining third property (apparently worth $70,000 to $80,000) to one of the parties’ sons for one dollar after the parties separated.
In 2000 to 2003 the husband (it is not clear whether or not on behalf of the I business) sold a vehicle for $56,000, though only $49,689 was actually received. The funds were used to pay various fees, outstanding wages of the I business’ employees, repay debts and distributions were also made, including a distribution to the wife.
On the death of the husband’s father in 2003, the husband received an inheritance of $36,130.50 which the husband claimed to have used to repay debts to his new partner, Ms Y (who had loaned monies to help fund the litigation) and on living expenses.
The wife worked throughout the marriage ultimately running her own business and working at a university. During the wife’s employment she accumulated superannuation entitlements (now worth a little over $270,000).
The husband was also employed throughout the marriage until 1992. From 1992-1998 while working at the I business he received no salary and in the years 1999-2001 earned only $6,000-$8,000.

The situation of both parties at the time of the trial

His Honour made the following findings in relation to the position of each of the parties at the time of the trial before him:
63.The Husband is on welfare benefits of $302.50 a week. He is effectively retired, but earns a small income from the sale of … [goods] at fairs and markets, but at a level which does not impact upon his welfare benefits. He owns no property and has no superannuation. He appears to have his rent subsidised to some degree by Ms [Y]. Such money as he has received in recent years (for example, the proceeds of the [vehicle] sale and the inheritance) has been spent on general living and other expenses.
64.The Husband’s capacity for future employment is limited by his age, and he is of an age where many people of that age will have retired.
65.In short, the Husband has a limited income, next to no property or financial resources and very limited future employment capacity, and in any event is well past the “usual” retirement age.
66.The Wife earns more than a [sic] $1,000.00 a week … at the University. She has been in continuous employment for many years at the University, and works privately as a … consultant as well. She is however of retiring age, and evinced an intention to do so within the next few years.
67.The Wife owns the [P] Property and pays its outgoings. She jointly owns and has exclusive use of the [S] Property, on which she pays all of the outgoings. The Wife has a reasonable sum of superannuation. The Wife’s capacity for future employment is limited by her age, and she is of an age where many people of that age will have retired. However, her employment capacity is, by reason of her ongoing employment and capacity to work privately greater than that of the Husband, up until the time that she elects to retire.
68.In short, the Wife has a reasonable income, not insignificant property and financial resources, significant outgoings and a future employment capacity limited only by her age and probable retirement in the next few years, but, in any event, she is well past the “usual” retirement age.

The structure and the contents of the Federal Magistrate’s reasons for judgment

Given the scope of the grounds of appeal, it will be useful before considering the principal complaints raised by the grounds, to provide a brief overview of the Federal Magistrate’s reasons for judgment.
His Honour commenced his reasons by recording the dates of the parties’ births, marriage, separation and divorce. He then set out the orders sought by the husband, the effect of which would apparently have been an equal division of property, and went on to explain that the wife “simply” sought the dismissal of the husband’s application.
Under the heading “Valuation of property” his Honour referred to the agreed value of two real estate properties (at P and S) and to the mortgages over those properties, before referring to some nine items in relation to which there was a dispute between the parties as to whether such items should be included in the pool. Having decided which items would and would not be included in the pool, his Honour concluded that the pool had a net value of $1,190,866.
His Honour then turned to a consideration of the parties’ contributions, doing so under a number of headings, which included “Husband’s failed business ventures”, “Post separation contributions”, “Employment” and “Domestic contributions”. Then under the heading “Assessment” his Honour provided what was apparently intended to be a summary of his findings in relation to the parties’ contributions. He concluded:
59.In all the circumstances there must be a very substantial adjustment in favour of the Wife. In the Court’s view that adjustment should be forty percent.
It becomes clear from what is said later in his reasons, that the “adjustment” of 40 per cent referred to by his Honour was an adjustment from a base of 50 per cent (that is, equality) and that his contribution assessment was in fact 90 per cent - 10 per cent in favour of the wife.
Then having reviewed (in the terms set out in paragraph 37 above) the matters contained in s 75(2) of the Act, his Honour concluded that having regard to the husband’s “health, limited means and the Wife’s ongoing employment and income earning capacity”, there should be a five per cent adjustment in favour of the husband.
Finally, his Honour endeavoured to satisfy himself that the 85 per cent - 15 per cent division which he had arrived at was just and equitable. In this context he referred to an apparently lost letter which set out the arrangements intended at separation, but he indicated that no weight would be given to the wife’s claims regarding the alleged letter.

Asserted errors in relation to the pool of property

While we understand his Honour to have referred in his reasons to each agreed asset and liability of the parties, and to have made a decision concerning each asset or liability which was the subject of dispute, he did not include in his reasons a schedule or table of such assets and liabilities.

It is, of course, not essential that such a schedule or table be included in reasons for property settlement orders. Nevertheless, it is a useful device, particularly as it can provide an easy checklist for calculations made in the reasons and also for ensuring that the orders ultimately made cover or take into account all assets and liabilities.
In his written outline of submissions, counsel for the wife helpfully provided us with the following table of assets and liabilities as found by his Honour together with an explanatory note to each item. We have included such notes in a final column to the table below.

ASSETS
1.	[P] property	$900,000.00	Agreed value
2.	[S] property	332,500.00	Agreed value
3.	Wife’s superannuation	271,076.00	[As found by his Honour]
S/T	$1,503,576.00
LIABILITIES
4.	[P] mortgage	($173,330.00)	Agreed value
5.	[S] mortgage	(61,021.00)	Agreed value
6.	Wife’s debt to a friend	(16,500.00)	As found by his Honour
7.	Wife’s debt to [B & B]	(3,500.00)	As found by his Honour
8.	Husband’s debt to Wife	(4,600.00)	As found by his Honour
9.	Husband’s debt to [B & B]	(40,079.00)	As found by his Honour
10.	Husband’s debt to [T]	(10,000.00)	As found by his Honour
S/T	(312,710.00)
NETT	$1,190,866.00

Counsel then asserted that the sub-total for the liabilities, and thus the nett total value, involved mathematical errors. According to counsel, those figures should in fact have been $309,210 and $1,194,366 respectively. However on our calculation the liabilities total should be $309,030, and thus the total nett value should be $1,194,546.
It was also asserted on behalf of the husband in his additional ground of appeal (added with leave at the hearing before us) that the terms of his Honour’s order, which was intended to effect the 85 per cent - 15 per cent division of the pool (as found by him), and which provided that the wife should retain the S and P properties on payment of “the sum of $148,858.25”, were also erroneous. The asserted errors in this regard were said to be that 15 per cent of $1,190,866 (being the nett pool as found by his Honour) is $178,629.90 (not $148,858.25), and that after the discharge of his debts to B & B ($40,079) and to T ($10,000) the husband would be left with $98,779.25 which, it was submitted, is only 8.29 per cent of the nett pool.
His Honour did not explain how he had calculated the sum to be paid by the wife to the husband, saying only:
76.The proposed order arising from the Court’s conclusions above will distributes [sic] the asset pool 85 per cent to the Wife and 15 per cent to the Husband. To reflect that there will be an order that the Wife retain the [S] and [P] properties, and pay the Husband $148,858.25 by 4:00pm on 31 May 2008, failing which the [P] Property is to be sold or auctioned and the proceeds distributed to allow the Husband to be paid the $148,858.25.
The figure of $148,858.25 represents, on our calculations, 15 per cent of $992,388.33. This figure equates closely to the total of the equities in the real property at S and P ($900,000 - 173,330 + 332,500 - 61,021 = $998,149). But we cannot be certain whether his Honour in fact intended to use the figure of $148,858.25 in his orders or whether this figure was a mathematical error or even perhaps a typing error.
However, given the errors of substance which we will shortly identify, it is unnecessary that we endeavour to understand further his Honour’s calculations, other than to note the errors which we have identified.
One of the errors of substance asserted by the husband relating to the pool of property to be distributed concerned the third of the three B properties, which had been originally purchased with the wife’s inheritance received in the 1960s, which the wife had sold for one dollar to one of the parties’ sons after separation, and which was accepted before his Honour to be valued in the region of $70,000 to $80,000.
The husband sought unsuccessfully before his Honour that there should be an “add-back” to the asset pool of $80,000 to take account of the sale of this property by the wife. In refusing to take account of this property in calculating the value of the pool, his Honour said:
17.In circumstances where the [B] Property was purchased with the proceeds of the Wife’s parents inheritance, there is no evidence of the Husband contributing to its upkeep in the succeeding years, and the other two [B] properties similarly purchased and kept by the Wife were sold to pay the debts of the Husband’s failed [I] business, a sale to the son of the final property for nominal consideration is unsurprising. The sale occurred after separation but before divorce. In those circumstances the Court does not consider it appropriate to add back the [B] property to the asset pool.
It should be noted that there was no further discussion in his Honour’s reasons concerning that property or the wife’s disposal of it.
The discretion in relation to claims for “add-backs” is, of course, wide and an appellate court will be reluctant to interfere with the exercise of that discretion if sound reasons for such an exercise are provided (cf Chorn & Hopkins (2004) FLC 93-204). In the present case, his Honour endeavoured to provide reasons for not adding back into the pool the value of the B property.
However, we agree with the husband’s claim that (contrary to his Honour’s reasoning) he could not be said to have made no contribution to that property. Even if there was no actual evidence of the husband “contributing to its upkeep” following the property’s purchase, it would have to be inferred (as we explored with counsel at the hearing of the appeal) that he had made some contribution to the “conservation” of that property over the period of some 30 or more years during which it was retained by the parties.
Counsel for the wife endeavoured to support his Honour’s decision that the property in question should not be included in the pool on the basis that there was some evidence which suggested that the son to whom the property was transferred had given some assistance to the parties in relation to their financial difficulties arising out of the I business enterprise. But if this was the situation, it should have been referred to in his Honour’s reasons.
Moreover, and again as discussed at the hearing of the appeal, if this property was to be excluded from the pool, some regard should have been had in the context of the s 75(2) matters, to the fact that the wife had chosen to dispose of an asset of some value, which would otherwise have been available to her to be used for her benefit.
Overall, it was necessary for his Honour to have examined in greater depth the evidence concerning the disposition of the B property, and then to have explained more fully his reasons for excluding that property from the pool. There is, therefore, substance in the husband’s grounds which complain about the exclusion of this item from the pool.

The challenge to the 90 per cent - 10 per cent contribution assessment

The principal challenge by the husband to his Honour’s 90 per cent - 10 per cent contribution assessment in favour of the wife related to the manner in which his Honour appears to have treated what he referred to as the husband’s “failed business ventures”.
It will be recalled from the history of the parties’ financial affairs earlier set out, that in the early 1960s the wife had funded the purchase by the husband of a business in the service industry which had failed; and that the husband had subsequently purchased a business, S Sales, with funds raised by mortgaging the S property (which he had brought into the marriage), that business had failed and the wife had sold the G property (which had been bought with part of her inheritance) to avoid the bank foreclosing on the S property (which was the family home).
It will also be recalled that in the 1990s the husband operated a transportation business which was funded by mortgages on the S and P properties; that that business collapsed when the local authority did not renew the operating permit; that there was subsequent unsuccessful litigation (funded by re-mortgaging the S and P properties) against both the local authority and the solicitors who had acted for the business; and that the wife paid over $30,000 for legal fees incurred by the business and also the mortgages on the S and P properties.
His Honour began his consideration of the parties’ contributions with the following undoubtedly correct observations:
39.The marriage was a long one of 37 years until 1997. In that regard it can be said that any initial contributions, or any contributions by one party or the other early in the marriage, might be eroded over time (Money and Money (1994) FLC 92-485; Bremner and Bremner (1995) FLC 92-560; Pierce and Pierce (1999) FLC 92-844). It must also be said that in a general sense the parties must take the good with the bad and share (but not necessarily equally) the liabilities.
A little later his Honour made the following findings concerning the husband’s unsuccessful sales and transportation businesses:
42.…Sometime in the 1960s the property was mortgaged to fund the Husband’s business “[S Sales]”. In the early 1970s when this business went bad the Wife sold another property at … [G], so that the bank did not foreclose on the family home. The [G] property had been put into joint names with the Husband, but had been purchased with money inherited by the Wife on the death of her parents. The balance of the proceeds of the sale of the [G] property ($11,000.00) went to fund the building of a house at the [P] Property. Thus the property that the Husband brought into the marriage was saved by the sale of a property the Wife had purchased with her inheritance moneys, and a house was built on the [P] Property with the balance of the proceeds of the sale of the property purchased with the Wife’s inheritance. In 1995 the [S] Property was mortgaged to fund the purchase of a second [vehicle] for the Husband’s [I] business. In 1998 the property was remortgaged involving a transfer of the Husband’s interest to the two sons of the marriage so as to prevent foreclosure on loan default by the Husband arising from the failure of the [I] business. Since that time the Wife has paid the mortgage on the [S] property.
43.The Wife purchased the [P] property in 1974 for $13,300.00 with a ten percent payment and further payments over the next ten years. The property was mortgage free by December 1984. Despite paying for the property the Wife had it put in joint names with her Husband. As indicated above the Wife spent $11,000.00 of the proceeds of the forced sale of the [G] property (which had been bought with her inheritance from her parents) to build a house on the property. On the evidence (and particularly that of the Wife and [M]) the Court is satisfied that the overwhelming majority of the design, construction and labouring on the building of the [P] Property was done or organised or supervised by the Wife. The Husband may have made some contribution, but on all the evidence it does not appear to have significant. Eventually the [P] Property was mortgaged to secure loans for the [I] business. In 2000 the [P] Property was transferred to the Wife, secured by two mortgages. The Wife has been solely responsible for the mortgage payments on the [P] property since at least that time (that is, 2000). Moreover, on the evidence she went through substantial hardship and sacrifice to maintain the mortgage payments on the [P] and [S] properties, at one point in 2004 not owning a motor car and not being able to afford new clothes or go on a holiday.
Then immediately under the heading “Husband’s failed business ventures”, his Honour continued (but with some repetition of what he had said in paragraphs 42 and 43 of his reasons):
44.The Husband has had a number of failed business ventures during the marriage.
45.In the early 1960s the Wife funded the purchase by the Husband of a …[business in the service industry in] Brisbane and surrounding country areas. The business failed.
46.Later the Husband commenced [S Sales], the purchase mortgaged against the [S] Property. As explained above the Wife had to sell property purchased with her inheritance from her parents to ensure that the bank did not foreclose on the family home.
47.The [I] business was a… [transportation] business. It was, essentially, the Husband’s business (there were others involved but they are not relevant for present purposes). As the business expanded in the early 1990s the [P] Property and [S] Property were both mortgaged to fund the expansion, and in particular the purchase of …[vehicles] and infrastructure. A property at [V] which was in the joint names of the Husband and the Wife but which had been purchased with the money Husband had received on cessation of employment with PS was also mortgaged to fund the [I] business.
48.The [I] business collapsed when the relevant local authority refused to renew its permit to operate. It is not necessary to traverse the history of the litigation that followed. Suffice to say that [the business I] sued the local authority and lost with costs. [The business I] then sued its solicitors for professional negligence and lost with costs. The litigation by [I] was professionally advised at all times and the professional negligence action was conducted by Senior Counsel.
49.The Wife has paid in excess of $30,000.00 for legal fees incurred by [I], and still has various debts outstanding (see above) associated with the litigation. To fund the litigation the properties at [S] and [P] have had to be re-mortgaged, and it is the Wife who has been paying those mortgages since separation.
50.Put shortly, on each occasion the Husband has been involved in a failed business he has either been bailed out or supported by the Wife (even after separation) who has had to sell or mortgage property she has paid for or prevented foreclosure on, and then (certainly post separation) make the mortgage repayments herself.
Then under the heading “Post separation contributions” his Honour can be seen as continuing his consideration of, and findings in relation to, the wife’s contributions to the failed businesses:
51.The Wife has made significant post separation contributions.
52.She has maintained the payment of the mortgages on the [S] and [P] properties. The Court accepts that the Wife has paid considerable sums on the mortgage and upkeep of these properties. She is the one who maintained and kept these properties since separation. Whilst the Court does not accept that she has spent a sum which would appear to exceed her net income in some years on those properties the Court does accept that the outlays would have been considerable, and certainly in excess of $200,000.00.
53.The Court accepts that the Wife has paid many of her Husband’s creditors since separation and that the total sum paid exceeds $70,000.00.
His Honour concluded his consideration of the parties’ contributions under the heading “Assessment” by saying:
58.The Court recognises that marriages are partnerships and that even following separation there may be to varying degrees joint contributions. In this case however the overwhelming preponderance of the evidence indicates that:
a)the Wife has been responsible for ensuring that the [S] and [P] Properties (which are the principal property assets) were not lost to the mortgagors;
b)the other major asset, the Wife’s superannuation, has substantially accrued since separation;
c)the Wife maintained the Husband, particularly over the last five years of the marriage when he had no income, and to a significant degree since separation by partially paying for the [business I’s] litigation and paying many of the Husband’s creditors; and
d)the Wife made the major domestic contribution, while working herself.
59.In all the circumstances there must be a very substantial adjustment in favour of the Wife. In the Court’s view that adjustment should be forty percent.
As mentioned earlier, it becomes clear later in his Honour’s reasons that his Honour’s contribution assessment was 90 per cent - 10 per cent in favour of the wife.
Also apparently relevant to his Honour’s contribution assessment were the following observations and findings which he had earlier made in relation to the wife’s superannuation entitlements in the context of his determination of “the pool” and the husband’s application for a splitting order in relation to the wife’s superannuation:
32.The Court was asked to consider an order for splitting of the superannuation. At the time of separation in 1997 the value of the Wife’s superannuation seems to have been around $50,000.00. Since then her employer has continued to make compulsory contributions. All of the contributions relate to the Wife’s employment, that is one hundred percent of the contributions are hers. A personal superannuation fund that the Wife had she closed [sic] in 1997 withdrawing approximately $25,125.00. It is likely that sum would have grown considerably in recent years had it not been withdrawn. This sum was used to pay the unpaid wages of employees of the Husband’s failed [I] business. As indicated elsewhere the Wife has also expended considerable sums in payment of the Husband’s litigation (and other) debts. In all the circumstances there will not be a superannuation splitting order.
The husband’s essential case before us was that although there was no evidence before his Honour, nor finding by him, of conduct on the part of the husband in relation to the various failed businesses such as would amount to “wanton” or “reckless” conduct for which the husband alone should bear responsibility according to the principles in Kowaliw & Kowaliw (1981) FLC 91-092 (see also Browne & Green (1999) FLC 92-873), nevertheless his Honour in fact treated the business losses as if they were the husband’s losses alone.
In his oral submissions directed to this complaint, counsel for the husband particularly emphasised the circumstances of the ultimately unsuccessful I business litigation and the expert legal advice which the parties had had before embarking on such litigation, with it being submitted that had the litigation been successful, its proceeds would have been available in property settlement proceedings between the parties to be shared by both of them.
We understood counsel for the husband to have been prepared to concede that the wife’s financial contributions following separation may well have entitled her to some adjustment from what should otherwise have been a finding of equality of contributions overall up until separation. However, it was submitted that an adjustment of 40 per cent on account of post separation contributions could not be justified, and certainly was not just and equitable.
It is true, as was submitted by counsel for the wife, and as will have been seen from his Honour’s discussion of the failed businesses (which we earlier set out), that nowhere did his Honour expressly “sheet home” any blame to the husband in relation to such failures.
It is also true that the wife brought a very significant inheritance into the marriage at an early stage and that properties which were acquired with that inheritance were available to ameliorate the results of the business failures (‑ although it must be remembered that the husband brought into the marriage the S property which has also been used as security for various ventures and of which the wife continues to have the use).
But notwithstanding the various considerations which favour the wife, we have great difficulty in understanding how his Honour could have arrived at the 90 per cent - 10 per cent contribution in her favour, unless he did in some way “sheet home” to the husband alone responsibility for the various business failures including the failure of the I business litigation. Put simply, it is impossible for us, at least on the basis of his Honour’s stated reasons, to be satisfied that his contribution assessment was just and equitable.

We acknowledge that this was a very difficult and unusual case. It was one which required the provision of a detailed history and analysis (so far as was possible on the evidence) of both parties’ initial and subsequent direct financial contributions (both through earned income and through inheritances), and of their direct and indirect involvement in the various businesses and in the unfortunate I business’ litigation.
His Honour can be seen as endeavouring to provide such an analysis in the various paragraphs from his reasons cited above. Regrettably, however, that analysis is not sufficient to persuade us that his ultimate 90 per cent - 10 per cent contribution assessment was just and equitable, particularly when regard is had to his Honour’s recognition of the general principle (expressed in paragraph 39 of his reasons) that parties to a long marriage “must take the good with the bad and share (but not necessarily equally) the liabilities”.

Conclusion

Accordingly, the appeal must be allowed, essentially because on the basis of his Honour’s reasons, his orders cannot be said to be just and equitable.
Given the conclusion just reached, it is unnecessary that we say anything regarding a number of more minor matters raised by the husband in his grounds of appeal – although it should be noted that counsel for the husband was prepared to concede that it was within his Honour’s discretion not to make a splitting order in relation to the wife’s superannuation.
As we explained at the commencement of these reasons, we understand it now to be accepted by the parties that it is impossible given the very significant change in, and continuing uncertainty about, the wife’s circumstances for us to attempt to re-exercise the discretion. There will therefore have to be a new trial.

Costs of the appeal

At the conclusion of the hearing on 15 May 2008 we received submissions in relation to the costs of the appeal. At that time both parties sought and we indicated that we were prepared to grant them certificates under the Federal Proceedings (Costs) Act 1981 (Cth), in respect of the appeal and of any new trial. We propose to so order.

I certify that the preceding eighty-two (82) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court

Associate:

Date: 21 July 2009