Paul & Paul
[2012] FamCAFC 64
•11 May 2012
FAMILY COURT OF AUSTRALIA
| PAUL & PAUL | [2012] FamCAFC 64 |
| FAMILY LAW – APPEAL – PROPERTY – Appeal by the husband from property settlement and adult child maintenance orders – Whether the Family Law Magistrate erred by failing to separate the superannuation interests from the other property when identifying the assets of the parties – Whether his Honour erred by failing to specifically address the husband’s post-separation contributions to the superannuation funds – His Honour dealt appropriately with the parties’ superannuation interests – Whether his Honour erred in his assessment of s 79(2) factors – Whether his Honour erred by failing to give sufficient reasons as to why the orders made were, in all the circumstances, just and equitable – No appellable error found. FAMILY LAW – APPEAL – ADULT CHILD MAINTENANCE – Whether his Honour erred in making an order pursuant to s 66L of the Family Law Act 1975 (Cth) for the husband to pay adult child maintenance – There was insufficient evidence to satisfy the legislative requirements of s 66L(1)(a) of the Family Law Act 1975 (Cth) – Appellable error found. FAMILY LAW – APPEAL – Appeal allowed in part – Remitted for rehearing on the discrete issue of adult child maintenance – Costs submissions ordered. |
| Family Law Act 1975 (Cth) Federal Proceedings (Costs) Act 1981 (Cth) |
| Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343 Clausen & Clausen (1995) FLC 92-595 Coghlan & Coghlan (2005) FLC 93-220 House v The King (1936) 55 CLR 499 Woollams & Woollams (2004) FLC 93-195 |
| APPELLANT: | Mr Paul |
| RESPONDENT: | Ms Paul |
| FILE NUMBER: | PTW | 2735 | of | 2008 |
| APPEAL NUMBER: | WA | 10 | of | 2011 |
| DATE DELIVERED: | 11 May 2012 |
| PLACE DELIVERED: | Perth |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | May, Thackray & Crisford JJ |
| HEARING DATE: | 15 November 2011 |
| LOWER COURT JURISDICTION: | Magistrates Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 1 April 2011 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Smith |
| SOLICITOR FOR THE APPELLANT: | O'Sullivan Davies |
| COUNSEL FOR THE RESPONDENT: | Mr Berry |
| SOLICITOR FOR THE RESPONDENT: | Dwyer Durack |
Orders
The appeal against the orders made by Family Law Magistrate Moroni on 1 April 2011 be allowed in part.
Paragraphs 10 and 11 of the orders made by Family Law Magistrate Moroni on 1 April 2011 be set aside.
The matter be remitted for rehearing in relation to the issue of adult child maintenance.
Either party be at liberty to make an application by way of written submissions in respect of costs incurred by him or her in relation to the appeal or in respect to costs certificates under the Federal Proceedings (Costs) Act 1981 (Cth) by filing such submissions and serving them on the other party within 21 days of the date hereof.
The other party have a further 14 days in which to make written submissions in answer thereto by filing such submissions and serving them on the other party.
Either party be at liberty to reply to an answer by way of written submissions by filing such reply and serving it on the other party within a further 7 days.
Each party endorse on the cover sheet the date on which a copy of that submission was served on the other party.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Paul & Paul has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WA 10 of 2011
File Number: PTW 2735 of 2008
| Mr Paul |
Appellant
And
| Ms Paul |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Paul and Ms Paul are unable to resolve how the property, including superannuation entitlements, they accumulated during their marriage of approximately 22 years should be divided. They also disagree about what financial provision the husband should make for maintaining their two adult children.
The Family Law Magistrate divided the parties’ assets (including their superannuation entitlements) totalling $1,866,999 53 per cent to the wife ($989,509) and 47 per cent to the husband ($877,490). To help achieve that result in a practical sense his Honour made a splitting order in respect of the husband’s superannuation in favour of the wife and ordered that each party retain a parcel of real estate.
The Amended Notice of Appeal filed 20 October 2011 contains 15 grounds. Grounds 4 and 7 were abandoned. There were no submissions directed at Ground 11. Counsel for the husband argued the appeal under a number of topics by grouping various of the grounds. He asserted, in essence, that his Honour was in error:
· In failing to treat the superannuation assets in a manner recommended by the Full Court in Coghlan & Coghlan (2005) FLC 93-220 (“Coghlan”) and in doing so failed to consider the post-separation contributions to those assets;
· In failing to adequately identify the specific matters he considered of importance under s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) and dealing with these matters prior to moving to the fourth step in the property exercise;
· In exercising his discretion in the manner he did, in particular, in relation to the sale of a property in suburb E which was left solely to the husband to accomplish, failed to achieve a just and equitable outcome; and
· In failing to give reasons for his orders relating to adult child maintenance, in particular when there was a paucity of evidence to support his decision.
The husband sought that in the event the appeal was upheld, we should redetermine the matter on the basis of the evidence available at trial.
This appeal raises the general question of how the commonly referred to “four step process” in the determination of an application for property settlement should be approached when there are both superannuation interests and other assets. It also raises the question of the preconditions to be met before the Court will make an order for adult child maintenance.
We propose, after outlining the relevant background material, to examine the issues raised in the appeal as identified by the husband’s counsel. In doing so we will consider the implications of such alleged errors and how, if they exist, they should be addressed.
Background
The background material is largely uncontentious and was mostly common ground between the parties at trial.
At the date of the hearing the husband was aged 54 years and was employed as a project manager. The wife was aged 53 years and was employed as a school teacher.
The parties were married in 1985. They had not lived together before their marriage. They separated on 23 March 2007.
A divorce order was pronounced on 5 August 2008. The husband has re-partnered and has a child who was born in June 2009.
There are three children of the marriage, J, K and A, aged respectively 22, 19 and nearly 16 years at the date of the hearing before the Magistrate. At the time of the trial all three children lived with the wife.
The eldest child is a tertiary student who is expected to complete his studies at the end of 2012. The middle child is a tertiary student who is expected to complete her studies at the end of 2013. The youngest child is a secondary student.
The husband, by private arrangement, pays the eldest child $80 each week to assist him to complete his tertiary studies. He pays child support as assessed for the youngest child at the rate of about $280 each week. He provides no financial assistance at all to the middle child.
In 2004 the parties purchased an investment property in suburb E which was placed in the husband’s name. It was rented during their relationship and the last tenant moved out in September 2007. Some maintenance and renovations were then done to the property.
In March 2008 the husband moved into this property and was living there at the time of trial. The property is unencumbered and the parties had intended to sell it.
The wife remains in the former matrimonial home in suburb I with the three children. The parties built this home on a block of land they purchased in 1992. They moved into their home in late 2000. A subdivision of the land was completed in 2005 and the subdivided area was sold after separation in 2007. At trial the former matrimonial home was unencumbered and the wife wished to retain it.
At trial the parties had each accumulated superannuation entitlements. The husband had a Government Employees Superannuation Benefit (“GESB”) policy with a net value of $484,095. He had a second policy with Colonial First State (“CFS”) with a value of $42,924. The wife had a single policy with West State Super with a value of $68,181.
Appellate principles
This is an appeal against a discretionary judgment. The restrictions on appellate interference with a discretionary judgment are well known.
In House v The King (1936) 55 CLR 499, Dixon, Evatt and McTiernan JJ said at 504-5:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
In Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343, Asquith LJ said at 345:
It is, of course, not enough for the wife to establish that this court might, or would, have made a different order. We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable. It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.
The superannuation grounds
Grounds 1, 2 and 3 all relate to the question of the Family Law Magistrate’s treatment of the parties’ superannuation interests.
There are two main areas of complaint:
· A failure by his Honour to separate the superannuation assets from the other property when identifying the assets of the parties available for division; and
· A failure or refusal of his Honour to assess the husband’s post-separation contributions to his CFS superannuation fund.
(a) The reasons of the Magistrate
His Honour correctly identified and ascribed a value to each of the superannuation policies. He included each policy along with all the other assets of the parties in schedule form in his judgment under the heading “Assets and Superannuation”:
ITEM $ [Property in I suburb] 825,000 [Property in E suburb] (to be sold)
(less likely sale costs)
(less embedded CGT liability)
Likely net return410,000
(10,000)
(21,000)
379,000Applicant’s GESB superannuation policy
(less provision for surcharge)498,095
(14,000)
484,095Applicant’s CFS superannuation policy 42,924 Respondent’s West State superannuation policy 68,181 Respondent’s motor vehicle 7,500 Applicant’s furniture 3,000 Respondent’s furniture 5,000 Add back interest retained by Respondent following sale of block 7,805 Add back – Applicant’s lump sum leave entitlements payment 20,232 Add back – part of Applicant’s retention of proceeds of sale [B] shares 16,327 Add back – penalties for Respondent’s late lodgement of 06/07 income tax return 7,935 TOTAL 1,866,999
The total asset pool is $1,866,999 of which 32 per cent or $595,200 represents the superannuation interests.
As is conceded by the husband’s counsel in his written appeal submissions, throughout his judgment his Honour quite properly makes the distinction between the parties’ “property” and their “superannuation entitlements”.
Very early in his judgment his Honour identified:
20The parties are in dispute regarding the division of their property (including their superannuation entitlements) and regarding the subject of the provision of maintenance by the Applicant for the two children of the marriage who are now adult[s].
When addressing the exercise he was required to undertake in order to resolve this dispute he noted:
22…The parties were in substantial agreement regarding the composition of the relevant pool of assets and superannuation…
He went on to identify the property available for division and concluded:
30Then there are the superannuation entitlements of the parties to consider.
He then canvassed the various superannuation interests.
Whilst not referring to any item in great detail, his Honour assessed the contributions each party has made to their assets, which, consistent with the balance of his judgment, includes superannuation entitlements. He referred to both initial and post-separation contributions in his evaluation. He also dealt with contributions during the period of cohabitation.
In relation to post-separation contributions his Honour remarked:
118Something briefly may be said of the post-separation contributions of the parties. Whilst the Applicant may have serviced the joint debt of the parties from the time of the separation until about August of the same year, and this is of course a relevant consideration, it needs to be remembered that at the time of the separation there were two children still under the age of 18 years who needed to be cared for and that it was the Respondent primarily who provided such care. Again, it seems to the Court that the respective post-separation contributions of the parties would balance each other out.
His conclusion, which is canvassed in various guises, was that the property acquired during the course of this marriage of some 22 years duration was acquired as a result of the joint efforts of both parties. He concluded that both during the marriage and after separation their contributions “would balance each other out”. Whilst the husband’s contributions were more significant in a financial sense, the wife’s contributions were stronger in her role as parent and homemaker. He found no imbalance against either party. He concluded:
120The task of the Court is to step back and to make a global assessment of all the different types of contributions each of the parties here has made over the course of this long marriage. In the Court’s view, the parties should be considered to have made an equal contribution.
(b) How each party ran their case
As these grounds of appeal contain the husband’s main argument, it is of use to consider how both the parties presented their cases at trial in respect of the superannuation interests.
In the Papers for the Magistrate filed by the husband prior to the trial he had prepared a schedule of assets and liabilities. The husband categorised his superannuation interests under a separate heading called “financial resources”. There was a liability associated with the husband’s GESB superannuation which was included under a general heading “liabilities”. That category also included all the other liabilities of the parties.
In the Papers for the Magistrate filed by the wife in her schedule she separates the superannuation entitlements from the other assets.
Common to both is that in the Papers for the Magistrate their proposed outcomes and percentage divisions are based on a consolidated pool of assets. This is consistent with how each conducted their case. The husband refers to the “asset pool”, encompassing both superannuation interests and other property. The wife considers the effect of the orders sought based on a single consolidated pool.
Neither party provided the Court with clear evidence about the amount by which the superannuation had increased since separation. The husband is silent on the issue. In her trial affidavit the wife deposes that the respective superannuation policies at separation were:
· Her superannuation E$44,000; and
· Husband’s superannuation E$456,000.
At trial it was agreed that the value of the wife’s superannuation was $68,181 and the husband’s GESB policy was a net figure of $484,095. In her closing, counsel for the husband said that there had been an increase of approximately $200,000 in the husband’s GESB policy. However, there is no evidence we can find to support this contention.
(c) Submissions of Counsel on Appeal
The husband argues that whilst his Honour made a distinction between “property” and “superannuation entitlements” when identifying the various assets of the parties throughout his judgment, he failed to maintain that distinction when considering the parties’ respective contributions and also when considering the third and fourth step in the property exercise.
The husband’s counsel submits his Honour was directed to the issue of superannuation by each counsel in their closing addresses, but despite this the Family Law Magistrate did not show in his judgment that he had specifically considered the superannuation interests separately.
The husband’s counsel complains that his Honour’s failure to adopt the approach recommended by the Full Court in Coghlan meant he did not give appropriate recognition to the parties’ respective contributions and as such the real nature of the interests was overlooked.
The husband’s counsel accepts his Honour was not mandated by legislation to follow the Coghlan approach. However, he argues, it was incumbent upon the Magistrate to give reasons for not following a preferred approach.
Whilst the wife’s counsel agrees his Honour did not adopt the suggested approach in Coghlan, he says that such an approach is not an inflexible requirement. In this case the present amount of the superannuation interests was agreed and there was little evidence about the composition of each interest. His Honour dealt with it on the same basis upon which the parties had presented it to him.
Although his Honour made it clear he was aware of the different elements of the consolidated asset pool, he adopted a global or consolidated approach when assessing contributions to the pool.
(d) Discussion
The gravamen of the husband’s complaint is that he made the greater contribution to the parties’ superannuation interests and this has not been recognised by the Court.
The husband’s counsel consistently referred to the preferred approach articulated by the Full Court in Coghlan. This summary and analysis of how a presiding judicial officer might deal with superannuation entitlements was set out thus (at 79,646):
63.However, given the conclusions we have reached above, we consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in s 4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise). This of course is the approach which the trial Judge adopted in this case.
64.Then for the reasons we earlier gave, whether or not a splitting order is sought on either party’s application, the parties’ contributions to both the property (as defined in s 4(1)) and also to the superannuation interests should be assessed. The other factors in s 79(4)(d), (e), (f) and (g) would then need to be considered. Specifically in the context of s 79(4)(e), that is the s 75(2) factors, any division of the property (as defined in s 4(1)) and any “division” of any superannuation interest (in the sense of an allocation of the base amount) based respectively on the assessments of the parties’ contributions to the property and to any superannuation interest, would then be considered. Similarly, the parties’ future superannuation prospects (be they in capital or income form) would also need to be considered. The overall justice and equity of the ultimate award (including any proposed splitting order or the need for such an order) would then be considered.
65.In summary, then, the trial Judge has a discretion as to how superannuation interests will be treated in a particular case. If superannuation is not included in the list of property but rather made the subject of a separate pool, it will be necessary where a splitting order is sought, or extremely prudent where no such splitting order is sought (in order to ensure that justice and equity is achieved) to:
(a)value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);
(b)consider and make findings about the types of contributions referred to in s 79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;
(c)consider the other factors in s 79(4) being the matters in s 79(4)(d), (e), (f) and (g); and
(d)ensure that pursuant to s 79(2) the orders in relation to the parties’ property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.
66.In the context of a consideration of the matters referred to in sub-paragraphs (b) and (c) of the last paragraph, the following matters may well be relevant: the relationship between years of fund membership and cohabitation; actual contributions made by the fund member at the commencement of the cohabitation (if applicable), at separation and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse’s present and/or future entitlements under the fund.
67.If this approach is adopted, whereby superannuation interests are dealt with separately from property as defined in s 4(1), but are subject to the considerations in s 79(4), then not only will any contributions, both direct and indirect, by either party to such superannuation interests be more likely to be given proper recognition, but the real nature of the superannuation interests in question can also be taken into account, both in consideration of the s 75(2) matters and in the final assessment of whether the ultimate order is just and equitable.
68.When we refer to “the real nature” of the relevant superannuation interest, we are referring to the fact that notwithstanding that its value according to the Regulations may well be calculated to be a very significant amount, that superannuation interest may be no more than a present or future periodic sum, or perhaps a future lump sum, the value of which at date of receipt is unknown.
The applicable legislation itself does not mandate a particular approach. The Full Court provides a suggested approach to be followed in cases involving superannuation interests. It is simply a suggested approach, although one which, in our view, has merit.
Acknowledging that the approach has merit does not exclude other ways of dealing with the issue, especially when a case is presented and argued in such a way that another approach may be more appropriate.
We consider this happened here. Each party presented the evidence on contributions to particular assets in an holistic way and that is how his Honour dealt with it.
The husband acknowledged that the approach in Coghlan need not be followed, yet his argument actually presupposes error on the part of the Magistrate simply because of the failure to adopt one particular approach approved by the Full Court. We cannot agree with this.
True it is that his Honour neither separated the superannuation interests from the other assets nor specifically addressed post-separation contributions to superannuation in his judgment, yet in so failing, in our view, he did not fall into appellable error. He had made it clear he was aware of the two different types of interests but appropriately here, over this long marriage dealt with them together.
We acknowledge that the superannuation had increased in value after separation, but we do not accept that the manner in which his Honour dealt with such an increase was inappropriate in the circumstances of this case. We find his Honour applied the statutory provisions to the evidence adduced. In doing so he correctly identified the asset pool available for division and the parties’ respective contributions to it.
The wife’s superannuation had increased post-separation to the extent of about $24,000. The evidence supports the husband’s two policies collectively increasing by about $71,000. On the available evidence the actual disparity in the post-separation increase is $47,000.
The husband’s GESB interest had increased post-separation based on what appears to be market forces. The increase in the value of the CFS policy is a result of an employer generated contribution rather than any discrete voluntary contribution by the husband. Over this long marriage his Honour found the husband’s “skill set was acquired during the course of the marriage”. The wife had already qualified as a teacher when they met.
His Honour was acutely aware of the attempt by each party to dissect their respective contributions “of all kinds made throughout the course of the marriage and beyond”. He remarked:
108To a large extent, the evidence given by each of the parties was not really in dispute. There may have been some dispute at the margins regarding relatively minor issues, such as, the precise amount of time the Applicant may have spent at the gym. However, largely, the Respondent did not dispute what it is that the Applicant said he has contributed and the Applicant did not dispute what it is that the Respondent said she has contributed. The real dispute between the parties goes to the qualitative question of whether the various contributions of each of the parties respectively should be considered to carry more weight that the various contributions of the other.
109In this case each of the parties considers that his/her contributions respectively should be considered to carry more weight. It is common ground that the parties have made various contributions of a different kind. The Court is satisfied that the Applicant has been the principal breadwinner during the course of the marriage and beyond and that the Respondent has been primarily responsible for the care of the three children during the course of the marriage and beyond.
110It is generally accepted that the Court has a wide discretion when it evaluates the different kinds of contributions each party to a marriage may make. Further, it is generally accepted that no single particular class of contribution to be found in sub-paragraphs (a), (b) and (c) of s 79 of the Act should be presumed to carry more weight than any other individual class of contribution. There is a long line of authority which cautions Courts at first instance of the dangers of undervaluing the importance of work done as parent and homemaker.
111With all due respect to the parties, it seems to the Court that on the subject of contributions each of them has failed to see the forest for the trees.
The real issue is whether his Honour, whilst exercising his broad discretion, treated the superannuation interests in an appropriate fashion. Did he address the real issue? We find the answer to this question is yes and find no substance in these grounds.
Asserted error in assessing relevant s 75(2) factors
Grounds 5, 6 and 8 all relate to how the Family Law Magistrate dealt with the primarily prospective factors set out in s 75(2) of the Act.
Again, in relation to these grounds there are three main areas of complaint:
· Although his Honour identified a number of relevant s 75(2) factors he did not adequately identify which of those factors impacted on the reasons he gave for his decision;
· In considering any disparity in income between the parties his Honour made a factual error about the net income of the husband; and
· His Honour addressed matters relevant to the fourth step in the property exercise before he had completed the third step of the exercise and in doing so ignored an approach set out in Woollams & Woollams (2004) FLC 93-195 (“Woollams”).
(a) The Magistrate’s treatment of s 75(2)
In his judgment his Honour set out the content of s 75(2). He then identified the particular paragraphs of that section he considered to be of most relevance here:
124Looking down the list of s 75(2) matters, it seems to the Court that sub-paragraphs (a), (b), (c), (d), (l), (m) and (na) thereof are particularly relevant in this case.
His Honour then discussed the various matters he isolated as particularly relevant and concluded:
147Having identified the relevant s 75(2) matters, the more difficult task for the Court is to weight them appropriately and to translate such weighting into quantitative terms. In the Court’s view, the preponderance of the relevant s 75(2) matters mandate an allowance in favour of the Respondent to the extent of 3% of the pool of assets and superannuation.
In dealing with a number of the matters he considered particularly relevant under s 75(2) his Honour referred to the net income each party earned at the date of trial. He based the net income on gross income per annum less the tax each paid. On that basis he found the husband currently earned $96,354 and the wife $68,042. Over and above this the husband had the benefit of a fully maintained motor vehicle.
His Honour also noted that the husband confirmed that if he worked full-time hours his salary package would carry a gross value of $193,000 per annum instead of his present income of $138,000 per annum. His Honour accepted the husband presently had commitments to his young child and had adjusted his work hours accordingly.
It is common ground that his Honour did not specifically reduce the gross income amount of the husband by $22,880, which figure represented his combined mandatory child support payment for A and the adult child maintenance he was ordered to pay.
His Honour then concluded his assessment of the s 75(2) matters thus:
148In reaching this determination, the Court should record that, for reasons which will be outlined below in the final step of the usual four step process, it has decided on a 3% allowance taking into account that the Respondent will be taking the [I suburb] property as part of her ultimate entitlement whereas the Applicant will be taking a much higher share proportionately of his ultimate entitlement in the form of superannuation. If the form of the division had been different, then most likely the Court would have made a higher s 75(2) adjustment in favour of the Respondent than the 3% it will award.
(b) Discussion
In our view, his Honour applied the broad principles required to give effect to the matters set out in s 75(2). A judicial officer is not obliged to give separate weighting to or to analyse each relevant s 75(2) factor with mathematical precision.
His Honour correctly identified the matters of importance in this case and entered into a discussion about each factor. The Act does not mandate that a relative weighting is to be given to each consideration.
Paragraphs 147 and 148 encapsulate the process his Honour undertook. We are not critical of his approach.
The husband’s more specific complaint is a failure of his Honour to consider the correct figure when comparing any disparity in income between the parties. This can be distilled to a complaint that his Honour failed to consider the real financial circumstances of each party.
It is clear there is a disparity in the income of these parties, no matter what their obligations are from post-tax income. The disparity arises not only from what each of the parties was earning at the time of trial but also from the potential of each of them to earn in the future. Each party has financial obligations they need to service from their post-tax income.
His Honour correctly assessed the impact of the husband’s child support payments:
137The financial burden upon the Respondent in respect of the care of the youngest child of the marriage is eased by the child support contribution of the Applicant, recorded in his financial statement filed 11 May 2010 as being $280 per week.
The husband says the adult child maintenance payments his Honour later dealt with and then ordered to be paid also needed to be considered. The wife says it was not inappropriate to leave a consideration of the adult child maintenance out of the equation. In dealing with spousal maintenance, which here, she says, is akin to the issue of adult child maintenance, the Full Court in Clausen & Clausen (1995) FLC 92-595 at 81,907 said:
Where spousal maintenance is sought in addition to a property order it becomes, in effect, the fourth step in the process. It is only to be exercised after the three step process under s. 79 has been completed and it is not to be confused with the s. 75(2) component in that latter exercise. The reason why it must be exercised after the s. 79 exercise is because that latter exercise establishes the background against which s. 74 must operate, that is, the financial circumstances of the parties.
We are not satisfied his Honour fell into appellable error in the manner he dealt with the respective incomes of the parties. We consider it was open to him to consider any adult child maintenance order after he had decided the property settlement. At the time of considering the property settlement the husband had an existing obligation in relation to the payment of child support for A. This needed to be taken into account and was taken into account. The adult child maintenance was an independent exercise after the property settlement.
The husband’s complaint that his Honour ought first determine the percentage division before looking at the overall justice and equity of the orders by reference to Woollams is unhelpful, in our view. In any event, Acting Judge Thackray (as he then was) commented at 79,244:
53Whilst I accept that s 79(2) is cast in the negative, the corollary of the fundamental proposition contained in that section is that the Court must make an order that is just and equitable. Just where in the process the Court ensures this is done is a matter of legal interest but arguably of little practical effect. Nevertheless, in the event I am in error in electing to deal with the issue at the fourth step, I can say the same result would be achieved if I had instead done so at the third step.
One reading of paragraph 148, and one with which we find favour, is that it is simply an attempt to avoid repetition of his Honour’s reasons. It is artificial to assume that different parts of a judgment are written in isolation. There is inevitably a need for some dual consideration of matters that impact on more than one of the four steps in a property settlement determination. His Honour adequately deals with the fourth step later in his judgment commencing at paragraph 150 and concluding at paragraphs 165 and 166:
150The final step in the usual four step process requires the Court to make an order which is just and equitable. It is in this context that the Court will determine the argument between the parties as to the way in which the superannuation entitlements should be shared, and will explain the reasons why the embedded capital gains tax liability will be treated as foreshadowed in the first step of the usual four step process.
…
165This final step in the usual four step process requires the Court to stand back and to look at the big picture created by the making of its proposed orders. The Applicant will leave this marriage with about $379,000 in cash (after payment of the capital gains tax liability), substantial superannuation entitlements which are capable of being accessed in the medium term, a very substantial earning capacity and the benefit of living with a partner who has a reasonably solid asset base and a good earning capacity. Conversely, the Respondent will leave this marriage with an unencumbered home worth $825,000, a modest car and furniture, much more modest superannuation and an earning capacity which is probably less than 50% of the gross earning capacity of the Applicant if he worked full time.
166On balance, the Court is satisfied that its proposed orders will produce a just and equitable outcome.
His Honour’s mere reference to the final stage in paragraph 148 does not mean it was considered and concluded then as can be seen from these paragraphs.
As we appreciate the arguments associated with this ground of appeal, we can find no error in the manner in which his Honour approached the task of considering the relevant s 75(2) matters.
Asserted error in failing to achieve a just and equitable outcome
Grounds 9, 10, 12 and 13 all relate to the question of the Family Law Magistrate’s application of s 79(2). The gravamen of the husband’s complaint is that his Honour fell into appellable error in that he gave insufficient reasons as to why the orders he made were, in all the circumstances, just and equitable.
In his oral submissions counsel for the husband condensed the areas of complaint into what really amounted to one alleged error; that the orders actually made by his Honour, in accordance with his percentage division, had the effect of leaving the husband with the bulk of the non-realisable superannuation assets and also the burden of realising the investment property. In all the circumstances this was not just and equitable.
(a) The reasons of the Magistrate
In concluding his determination as to the appropriate s 75(2) adjustment, his Honour identified how the percentage split would translate in real terms:
149Thus, as a consequence of the determination immediately above, the Applicant will be left with assets and superannuation (including add backs) to a total value of about $877,489. On the other hand, the Respondent will be left with assets and superannuation (including add backs) to a total value of about $989,509.
His Honour made a splitting order such that the wife would receive $68,088 of the husband’s GESB interest. The husband would retain $458,931 of the interest.
The Magistrate identified and considered the preference of most litigants in wanting more easily realisable assets than a superannuation entitlement:
151In this case, as in so many other cases to come before the Court, parties leaving a marriage place a premium upon the cash component of their ultimate entitlement, mainly because of the need to re-house and because of an aversion (natural enough) to the carrying of secured debt into the future. Thus, both of the parties in this case would prefer to take more cash/property/hard assets than superannuation entitlements. Neither party could be criticised for this. It is perfectly understandable.
His Honour then went on to consider the position of each party in terms of ability to rehouse. He referred to the husband’s ability to rehouse himself adequately with the settlement proposed and considered matters going to the appropriateness of the orders he intended to make.
His Honour allocated the agreed value of the E suburb property to the husband taking into account an estimate of likely sale costs and an amount that his Honour calculated for a capital gains tax liability. That latter amount coincided with the amount estimated by the husband in his Papers for the Magistrate.
In his written reasons delivered 17 March 2011 his Honour set out the orders he proposed making, but invited the parties to make submissions in relation to them if they wished. The final orders were made 15 days later in a form prepared and signed by both parties on 1 April 2011. No further submissions were made.
(b) Counsels’ submissions on appeal
The husband’s counsel advanced a mixture of arguments which, taking into account both his written and oral submissions, focus on:
· His Honour’s failure to give adequate reasons for his determination about which assets each party would keep;
· His determination of the fourth step in the property exercise before undertaking the third step which then hampered his ability to do justice between the parties;
· His failure to adequately consider the unfairness to the husband of retaining all his superannuation entitlements and having to singlehandedly sell the E suburb property; and
· The husband having no opportunity to be heard about the orders to be made.
The wife’s counsel denies the Magistrate failed to achieve a just and equitable outcome. He submits that dissatisfaction with an outcome does not translate to appellable error. He says that the impact of some of the issues on the final outcome should be treated as de minimus, especially in view of the fact that his Honour invited further submissions.
(c) Discussion
We have earlier referred to paragraphs 165 and 166 of his Honour’s judgment. Taken as a whole we are of the view that his Honour has complied with his obligation to assess whether the orders he intended to make were just and equitable. He detailed the consequences of the proposed orders he intended to make and assessed the impact of those orders on the parties. In doing so he addressed the relevant statutory requirements.
At the end of the trial his Honour engaged with counsel about the implementation of any order he was likely to make.
The husband had sought an order that the E suburb property be sold. The wife sought the property be retained by the husband, but accepted it would then be sold. His Honour identified that he would make an order for the sale of the E suburb property and that he would order capital gains tax and the selling costs to be quarantined or to be paid off by the husband. He acknowledged the difficulty of the value of the property changing. He was aware this could impact on the I suburb property as well, but it is clear to us that given both had an agreed value his orders reflect the need to achieve a practical and final outcome.
The manner in which his Honour dealt with the allocation of all property achieves this end of finality and practicality. To do otherwise would have required a likely revaluation of the property the wife sought to retain.
We cannot agree with the proposition that the husband had no opportunity to make submissions about the form of orders, including the mechanics of the sale of the E suburb property. Not only was there an exchange of views in closing submissions between counsel for the parties and his Honour, but after the judgment was published the parties had a further 15 days within which to consider their position. They provided an agreed minute of orders. There was every opportunity to talk about the mechanics of the sale of the E suburb property and, if appropriate, the introduction of further evidence as to sale costs or capital gains tax.
We find no substance in these grounds.
Adult child maintenance grounds
Grounds 14 and 15 both relate to the question of the Family Law Magistrate’s order relating to the payment of adult child maintenance by the husband.
His Honour made an order that pursuant to s 66L of the Act the husband pay to each of the children J and K an amount of $80 per week for so long as each continued to be enrolled as a fulltime student at B tertiary institution, making satisfactory academic progress.
The two grounds which were argued together revolve around the proposition there was no or no proper or sufficient basis upon which for his Honour could utilise s 66L of the Act to make any orders for the maintenance of the adult children in this case.
A court is prohibited from making an order for the payment of maintenance to a child over the age of 18 years unless one of two possible pre-conditions are met, as set out in s 66L(1) of the Act:
A court must not make a child maintenance order in relation to a child who is 18 or over unless the court is satisfied that the provision of the maintenance is necessary:
(a) to enable the child to complete his or her education; or
(b) because of a mental or physical disability of the child.
The court may make such a child maintenance order, in relation to a child who is 17, to take effect when or after the child turns 18.
(a) The Magistrate’s treatment of s 66L
His Honour dealt with the matter in a succinct fashion. He was provided with little evidence about the issue by either party. The wife dealt with it in a cursory manner in her affidavit material. There was no evidence about the proper needs of the children. Neither of the adult children swore affidavits nor gave evidence at trial. His Honour said:
167The final issue to be determined concerns the Respondent’s application for formal orders under s 66L of the Act which would require the Applicant to pay maintenance for the two eldest children of the marriage at the rate of $80 per week for each of them. This is not a particularly difficult issue for the Court.
168It is common ground that the Applicant has a good relationship with the eldest of the three children and has by private arrangement been paying to him the sum of $80 per week to assist him to complete his medical school studies.
169Unfortunately, it would appear that the Applicant does not enjoy a particularly good relationship with the middle child, whom the Applicant considers to be a poor money manager.
170The fact that the Applicant has been providing regular financial support to the eldest child and has also provided some financial support for the middle child would appear to represent an acknowledgment on his part that both children require financial support in order to complete their education.
171Both of these parties are themselves tertiary trained. Both of the parties are not without reasonable financial resources. The Court is satisfied that the Respondent has and continues to provide reasonable financial support to the two adult children. The quantum of support the Respondent is seeking in respect of the middle child is a very modest $80 per week, in circumstances where the assessed child support rate for the youngest child is something like $280 per week.
172In the particular circumstances of this case the Court does not propose to conduct the more thorough financial analysis one might expect to see in a stand alone maintenance case. The quantum of support sought for the middle child is very modest and matches the rate of support which the Applicant is voluntarily providing for the eldest child. The evidence satisfies the Court that the middle child requires at least $80 per week from the Applicant in order for her to complete her studies. Clearly, both parties have the capacity to assist the middle child to complete her tertiary education, and both should do so. The Respondent has been providing support and now it is time for the Applicant to provide regular support under a formal arrangement.
173Frankly, it has been difficult for the Court to comprehend just why it is that the Applicant has been so resistant to the making of an order which would assist the parties’ daughter to complete her tertiary education. It would appear that there is some problem in the relationship between the Applicant and the middle child, but the pathology of such difficulty is not apparent to the Court. Suffice it to say that the Court is not persuaded on the evidence presented that the conduct of the middle child towards the Applicant would disqualify her in any way from receiving the reasonable financial support necessary for her to complete her tertiary education.
174The Court does propose to make a formal order for the Applicant to help maintain the middle child. For the sake of completeness and to eliminate the slim prospect of there being some dispute in the future regarding the support of the elder child, there will be the same order made in respect of the eldest child.
The wife had been cross-examined about the issue (Transcript, 24 November 2010, pages 17 & 22):
[COUNSEL FOR THE HUSBAND]: Well, your order says the husband pay to the wife a child maintenance for the children, so not to you. $80 to [J] and [K]. Is that what you’re saying? - - -
[WIFE]: Well, he’s giving 80 to [J] and I thought that [K] should get 80 too.
[COUNSEL FOR THE HUSBAND]: Okay. And why do you say [K] should get 80 as well? - - -
[WIFE]: Well, she’s doing a double degree at uni, she’s got a lot of emotional problems, she’s just, you know, a distraught, emotional wreck from this whole thing and I think she doesn’t understand why [J] is getting 80 and she’s getting nothing.
…
[COUNSEL FOR THE HUSBAND]: Well, okay, so this is, in your mind, this is an evening up? - - -
[WIFE]: Well, it just - there’s three children, you feel they should be treated equally.
…
[COUNSEL FOR THE HUSBAND]: And why do you say it is necessary for [K] to have $80 a week to complete her studies? - - -
[WIFE]: Well, it’s - it is tough. She’s got - she’s doing a double degree, it’s a lot of study, you know, she’s - girls - oh, she does have a - you know, she’s running a car.
She went on to say K has part-time work, she had been on holiday to Bali on a couple of occasions in the 12 to 18 months preceding the trial and she was able to pay for the trips herself. J had access to a capital sum of just over $8,000. He is also engaged in part-time work.
(b) Discussion
The legislation anticipates that teenagers and young adults undertaking tertiary study may require, quite legitimately, the financial assistance of their parents.
However, there is no presumption that any such payment is automatic, even if needed or desired. Quite to the contrary, it is for the applicant for an adult child maintenance order to persuade the Court that the provision of maintenance is necessary, here, to enable the child to complete his and her education.
The wife carries the onus of establishing the payments of maintenance by the husband are “necessary” to enable the children to complete their education.
Whilst we do not construe the word “necessary” as meaning completely indispensible, it does seem to us that a base level of necessity does have to be established before the Court is able to exercise a general discretion about the reasonableness or otherwise of making the order.
The fact the father voluntarily agreed to contribute to J’s support for the time being does not by itself establish that payment of maintenance either for J or K is “necessary” in order to allow them to complete their respective tertiary educations.
The capacity of the children to undertake employment is something to be taken into account. Both adult children had part-time work. One had savings and the other was able to fund holiday travel. These aspects were never adequately identified or explored. His Honour had no specific evidence about the income of the children or their respective earning capacities.
There was no evidence as to the children’s respective needs, their ability to support themselves, their current expenses and their contribution to the household. The issue received only scant attention in the affidavit of the wife. That information which is included is of little evidentiary value to the issues directly raised by s 66L of the Act.
It is, in our view, understandable why his Honour made the orders he did. Given the husband’s financial circumstances and his voluntary payment to one child, his Honour was minded to adopt an egalitarian approach to the issue. However, the legislative requirements seek something more concrete.
We are of the view that there was little but speculation to suggest each child needed support to complete his or her education.
The evidence in support of the application, in our view, fails to satisfy the legislative requirements of s 66L(1)(a) of the Act. We consider there is merit in this ground. The appeal should be allowed and the orders set aside.
Although the husband sought that in the event this Court found appellable error, it should simply redetermine the matter, we are of the view that there was insufficient evidence available at trial for a redetermination to now take place. The matter will be remitted for further determination on the issue of adult child maintenance.
There was nothing said in the course of submissions to suggest it would be inappropriate for the Family Law Magistrate who conducted the trial to deal with the rehearing of the adult child maintenance issue. However, we propose simply making an order remitting the matter, and it will then be for the Magistrates Court of Western Australia to decide which Magistrate will undertake the re-hearing.
Costs
Without the benefit of the submissions of either party, our preliminary view is inclined towards there being no order for costs and that there be orders made granting costs certificates under the Federal Proceedings (Costs) Act 1981 (Cth) for both the appeal and rehearing.
However, we will allow each party time to make any other submissions as to costs if either considers it appropriate.
I certify that the preceding one hundred and thirteen (113) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Thackray & Crisford JJ) delivered on 11 May 2012.
Associate:
Date: 11 May 2012
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