PEMBERTON & PEMBERTON
[2016] FamCAFC 138
•4 August 2016
FAMILY COURT OF AUSTRALIA
| PEMBERTON & PEMBERTON | [2016] FamCAFC 138 |
| FAMILY LAW – APPEAL – PROPERTY – The wife appealed against orders dismissing her application for enforcement of property orders – The Magistrate did not err in his interpretation of the orders – Appeal dismissed – Order for the appellant to pay the respondent’s costs. |
| Family Law Act 1975 (Cth) |
| Hall v Jones (1942) 42 SR (NSW) 203 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 Solution 6 v Industrial Relations Commission of NSW (2004) 60 NSWLR 558 |
| APPELLANT: | Ms Pemberton |
| RESPONDENT: | Mr Pemberton |
| FILE NUMBER: | PTW | 1198 | of | 2013 |
| APPEAL NUMBER: | WA | 17 | of | 2015 |
| DATE DELIVERED: | 4 August 2016 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Thackray J |
| HEARING DATE: | 1 December 2015 |
| LOWER COURT JURISDICTION: | Magistrates Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 22 April 2015 |
| LOWER COURT MNC: | [2015] FCWAM 89 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Anderson |
| SOLICITOR FOR THE APPELLANT: | McAuliffe Legal |
| COUNSEL FOR THE RESPONDENT: | Mr Berry SC |
| SOLICITOR FOR THE RESPONDENT: | Martin Hynes Lawyers |
Orders
The appeal be dismissed.
The appellant pay the respondent’s costs of and incidental to the appeal as agreed and in default of agreement, as assessed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Pemberton & Pemberton has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WA 17 of 2015
File Number: PTW 1198 of 2013
| Ms Pemberton |
Appellant
And
| Mr Pemberton |
Respondent
REASONS FOR JUDGMENT
This appeal concerns the interpretation of orders made in 2014.
The wife challenges Family Law Magistrate Kaeser’s interpretation of the orders, which underpinned an order made in enforcement proceedings in 2015.
Background
The husband instituted property proceedings in March 2013. The wife filed a response in May 2013. Both parties filed an affidavit and Financial Statement.
On 28 February 2014, a Registrar made orders in chambers in terms of a Minute of Consent Orders resolving the entire dispute.
The Minute of Consent Orders contained a preamble noting that the orders were to be made “with the intention that a settlement is reached roughly in accordance with the spreadsheet attached hereto”.
Order 1 provided for the transfer of items of real estate between the parties, with provision for responsibility for payment of liabilities secured against the real estate. The transfers were to take place simultaneously “within 60 days”.
Order 2 provided for:
a)the wife to have the exclusive use of a property at Town B and the husband to have the exclusive use of a property at Town M pending the settlement referred to in Order 1;
b)the husband to pay the mortgage and outgoings on both the Town B and Town M properties; and
c)the husband to receive the income from a property in Town O (which was to become the wife’s pursuant to the settlement) on the basis that the husband would meet the mortgage and outgoings from the income, with any balance to be divided equally.
Order 3 provided for the wife to transfer to the husband her interest in W Pty Ltd and the V Family Trust, with the husband to indemnify the wife “with respect to any liability arising to the Wife out of her involvement with [W Pty Ltd] and or the [V Family Trust]”.
Order 4 is the contentious order, and is therefore set out in full:
4.Simultaneously with the settlement in accordance with paragraph 1 above, the Husband shall transfer to the Wife any right, title and interest he may have in [D Pty Ltd], [S] Pty Ltd, [G] Pty Ltd, the [P] Trust and the [S] partnership including but not limited to any monies in any bank account of [D Pty Ltd], [S] Pty Ltd, [G] Pty Ltd, the [P] Trust and the [S] partnership, stock, plant and equipment owned by [D Pty Ltd], [S] Pty Ltd, [G] Pty Ltd, the [P] Trust and the [S] partnership and loan accounts in the books of [D Pty Ltd], [S] Pty Ltd, [G] Pty Ltd, the [P] Trust and the [S] partnership. The Wife shall indemnify the Husband and forever keep the Husband indemnified with respect to any liability arising to the Husband out of his involvement with [D Pty Ltd], [S] Pty Ltd, [G] Pty Ltd, the [P] Trust and the [S] partnership and where necessary the Wife shall arrange for the Husband to be released from any liability and or any potential liability as guarantor including providing additional or alternative security so as to ensure the release of the Husband. The Wife shall arrange for documents to be prepared so as to provide for the Husband’s resignation as a director of [S] Pty Ltd and [G] Pty Ltd and retirement with respect to his positions in [D Pty Ltd] and the [P] Trust. Notwithstanding the above:
(a)the parties shall cooperate with their accountants so as to distribute equally the earnings of the [P] Trust including for 30 June 2012, 30 June 2013, 30 June 2014 and up to settlement for the purpose of completing tax returns and the parties shall be liable for their own tax debts arising therefrom;
(b)notwithstanding (a) above, within fourteen (14) days the parties shall cooperate to pay to the Husband the sum of $126,904.00 being a share of the sum owed by the [S] partnership to the [P] Trust as at 31 July 2013 and the Husband will pay the tax as to that sum above and the Wife will pay the tax as to the sum she receives;
(c)until the settlement under paragraph (1), the Husband will draw from the business $3,500.00 gross per week but the tax will be distributed equally as to those amounts in accordance with paragraph (a).
Orders 5 to 12 are not material.
Order 13 was not referred to in submissions, but I have set out below what I consider is potentially a relevant part of that order:
That unless otherwise specified in these orders:
(a)each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders…
The enforcement proceedings
In December 2014, the husband filed a Form 2 in which, inter alia, he sought payment by the wife of $24,500 by way of enforcement of Order 4(c).
In his supporting affidavit, the husband drew attention to the fact that the settlement pursuant to Order 1 did not take place until 20 August 2014, but that the payments of $3,500 required pursuant to Order 4(c) ceased on 3 July 2014, and that the wife had thereafter received the drawings from the business. In the meantime, the husband continued to make the mortgage payments which he was obliged to meet. As a result, he claimed he was owed seven payments at $3,500 per week – or an aggregate sum of $24,500.
The wife responded by her own Form 2 filed in February 2015 in which she sought an order “by way of enforcement … that the [husband] do refund to the [P] Trust the sum of $269,582.95 within 14 days”. In support of this application, the wife relied upon her own affidavit and one sworn by a chartered accountant.
The parameters of the dispute in the court below
There was no contest that the wife owed the husband $24,500 pursuant to Order 4(c). However, it was the wife’s contention that Order 4(a) required the husband to repay to the P Trust (“the Trust”) an amount equivalent to the extent to which his drawings exceeded half of the earnings of the Trust for the three years ending 30 June 2014. The husband contended that Order 4(a) merely required him and the wife to ensure that income taxation returns were completed for the three years in question disclosing that they had each derived half of the income from the Trust, and for each to accept responsibility for income tax on the income they declared as earned from the Trust in those years.
The Magistrate’s decision
As there was no contest about the $24,500, the Magistrate made an order requiring the wife to pay that amount to the husband within 14 days. The Magistrate was not persuaded that the husband owed any money to the P Trust or the wife and therefore dismissed her application.
The Magistrate recorded some background including the following:
8The main business entity (which produced an income) is [D Pty Ltd]. The business was operated via a company named [S] Pty Ltd. Half of that company was owned by [G] Pty Ltd (in turn owned by the parties) and the other half by [Mr L] (who was the business partner of the parties).
9[G] Pty Ltd is the trustee of the [P] Trust.
His Honour then noted at [10] the concession of the parties that he was “to look to the wording of the orders rather than any extrinsic material”, and he therefore said, “I must give (as far as possible) the actual words of the orders their plain and proper meaning”.
His Honour went on to record that at the time the orders were made, the parties had not completed financial statements and tax returns for the various entities for the 2012, 2013 and 2014 financial years. He also noted it was conceded that the husband had “actually received the drawings from the trust over those three financial years”. His Honour said that a number of the consent orders potentially impacted on the determination. He continued:
17Paragraph 4 is the main contentious paragraph. Generally it provides that the husband transfer to the wife all his interest in the various entities. The wife is to retain the share in the business (with the other half being owned by Mr [L]) on an ongoing basis.
18Some of the parts of paragraph 4 have been referred to in submissions by counsel – but not all.
19Paragraph 4 provides that the interest the husband transfers to the wife includes but is not limited to “any monies in any bank account of … the [P] Trust” and to “loan accounts [in] the books of … the [P] Trust”.
20I note that at the time that order was made the amounts sought by the wife to be repaid were not in the bank account of the trust as they had already been paid to the husband. They were also not recorded in any loan account, as the returns [sic] had not been completed for the relevant financial years.
21Paragraph 4 further provided that the wife indemnify the husband (and forever keep him indemnified) “with respect to any liability arising to the husband out of his involvement with … the [P] Trust”.
22On its own, as Counsel for the husband correctly pointed out, that order meant that the wife would have been liable for all debts including all taxation obligations that arose from the [P] Trust. That would have meant that despite the husband receiving the drawings for those three financial years, she would have been liable to indemnify him in relation to the tax payable. That was an unknown liability as the relevant returns had not been lodged at the time.
His Honour observed at [23], “that complete obligation was however tempered by the proviso to paragraph 4”, and his Honour went on to recite subparagraphs (a), (b) and (c) of Order 4. His Honour continued by saying:
24A number of issues arise from that section of paragraph 4.
25The clause does not say “the parties shall equally distribute the earnings” or that “each party shall be entitled to receive half of the earnings” or similar words. It says that “the parties shall co-operate with their accountants so as to distribute equally the earnings”. In my view, the wording used in the order may mean something different to the examples to which I have referred.
26The word “earnings” is not defined in the orders. It could mean a number of things – net profit (after tax); gross profit (before tax); drawings or any overdrawn amounts.
27The [P] Trust received income from [S] Pty Ltd. Clearly the parties were aware that [S] Pty Ltd owed the [P] Trust money at the time these orders were made. That was contemplated in the payment the husband was to receive of $126,904. Subsequently he received that amount and the wife received $180,952. This is, in my view, the amount contemplated as the “sum she receives” in paragraph 4(b).
28The clause that allows the husband to continue to draw $3,500 per week refers to it being drawn from “the business”, but fails to define the term “the business”. There is no clarity as to which entity that money is to be drawn from. Historically that money was drawn from the [P] Trust.
29The wife says that the above clause means that all the distributions received by the husband in those three financial years must be credited to each party equally and, as she is to pay tax on those distributions, she is entitled to actually receive them. That would require a repayment from the husband to the Trust.
His Honour then gave reasons for rejecting the wife’s argument (original emphasis):
30I do not accept that submission by the wife for a number of reasons, including:
(a)She only claims to claw back distributions made to the husband in those three financial years. If I was to accept that argument, the husband would potentially be open to a claim in relation to earlier years as the orders provide for an equal distribution of earnings for the Trust including those three financial years. The order is not limited to those years only.
(b)The wording used in the orders lends itself to a plain meaning that the equal distribution of the earnings was “for the purpose of completing tax returns”. The order specified that each party was to be liable for their own tax debts arising therefrom. The wife argues that this produces an unfair result in that she must pay tax on income she otherwise did not actually receive. She however received, in accordance with the orders, the business (in its various entities). The value ascribed to that asset in the schedule attached to the orders was a total of $800,000 net (excluding the item described as equity – which in my view relates to the amounts owed to the Trust from [S] Pty Ltd and later received by the parties).
(c)Subparagraph (c) of paragraph 4 referred to the husband retaining the drawings but for the tax “to be distributed equally” in accordance with the orders in subparagraph 1(a). This was a clear distinction between the husband keeping the earnings, but for the parties to share the tax consequences. This clause does not clearly provide for the wife to retain any portion of those drawings.
His Honour then went on to consider the wife’s argument to the effect that the husband’s interpretation of the orders amounted to tax evasion. The argument, as his Honour found, had no merit at all and was not advanced again on appeal.
His Honour then went on to say:
35The orders in their plain meaning provided for the wife to retain the significant income‑producing asset (being the business in its various capacities). I accept that the equal distribution of earnings for those three financial years was for taxation purposes only. I reach that finding partly because of the clear wording of the relevant clause and partly because the words used do not clearly provide for an accounting back of the previous distributions.
36Had the parties intended to allow previous distributions to be clawed back, they could have used phrases similar to those referred to earlier. They did not do so and as such the Court is left with the phrase that says the co-operation of the parties to reflect equal distributions is for “the purpose of completing tax returns”.
37What the wife has effectively done is accept that she was to receive a notional distribution of income (as she may have done in earlier years when the parties were still together) and that she would retain liability for the tax that arose. There is, in my view, no breach of the taxation legislation. The wife merely accepts responsibility for the legitimate taxation debt that arises because of those distributions.
38Were it not for that proviso in paragraph 4 the wife would have been liable for all the tax attributed to the husband for all the drawings he received. The tax burden would have been reduced by equally distributing the earnings between the parties thereby saving the wife from having to pay tax on the entire amount.
39The wife’s argument would mean that the orders would go a step further and require the husband to repay half of the drawings he received over a three-year period – in accordance with the application, a very significant amount. The plain wording of the orders does not in my view support such a proposition. The wife’s interpretation means that she would be entitled to a further asset or to further distributions of income not otherwise provided for in the orders or the schedule attached thereto.
40The reference in the asset schedule to the “current equity in [D Pty Ltd]” does not assist in the interpretation of the effect of the orders. It is, in my view, merely a reference to the parties’ interest at that stage in the amounts owed by [S] Pty Ltd to the Trust. They were approximate figures only and the actual amounts received have been discussed.
41A similar principle applies in the preamble to the orders which refers to a calculation “roughly in accordance with the spreadsheet”. That is merely an indication that the parties entered into consent orders knowing that certain values were yet to be calculated. The orders provided a mechanism for calculating those amounts. Their plain meaning did not provide for any adjustment of the actual drawings received by the husband.
The Grounds of Appeal
The wife advanced six grounds of appeal.
The final ground of appeal was that:
6.The learned Magistrate was wrong in finding that the wife should be left with a significant tax obligation without it being specifically stated in the orders or surrounding material.
Although counsel for the wife would not abandon the ground, it clearly could not be sustained where it was acknowledged by counsel for the wife that the effect of the orders was that the wife would be liable for the income taxation on her share of the income received from the P Trust in the three years in question. Ground 6 does not require further discussion.
Ground 1
Ground 1 was expressed as follows:
1.The learned Magistrate was wrong in finding that he should look to the wording of the orders [only] rather than extrinsic material. As well as looking at the wording of the orders the Magistrate should have:
(a)Considered whether there was any ambiguity created by the orders; and
(b)Whether there was any ambiguity or not, identify the surrounding circumstances (other than the subjective intentions of the parties) of the making of the orders and what has occurred since.
Counsel for the wife conceded in written submissions that she was “not saying that there is anything wrong with the consideration by the learned magistrate of the court orders and their interaction, other than in relation to some of the findings he made”. However, she submitted that it was open to the court to have regard to extrinsic materials, and that his Honour erred in failing to do so. This argument was at odds with the argument advanced before the Magistrate, since it was common ground at the hearing below that the matter stood to be determined by reference only to the wording of the orders.
Senior counsel for the husband conceded that failure to advance an argument at trial may not be fatal to an attempt to advance that argument on appeal if an error of law is demonstrated. However, he submitted that application of the legal principles now relied upon by the wife would not lead to any different outcome than that reached by the primary judge. He further submitted that the wife had not demonstrated any relevant ambiguity in the orders, nor had she identified the “surrounding circumstances” which she claimed the Magistrate ought to have taken into account.
Ground 1(a) is misconceived. Even assuming, as I am prepared to do, that ambiguity can be gleaned by reference to something other than the wording of the orders (Solution 6 v Industrial Relations Commission of NSW (2004) 60 NSWLR 558 at [81]), it is not the case that the Magistrate failed to consider whether the orders were ambiguous, since he engaged with the argument presented about the ambiguity of the words, as my later discussion will demonstrate.
As to Ground 1(b), it was only in oral argument that counsel for the wife revealed “the surrounding circumstances” it was said the Magistrate ought to have taken into account (even though he had been asked not to take them into account). Essentially, those circumstances were the facts mentioned in the affidavits filed in the property proceedings to the effect that the husband had been receiving more than half the income from the Trust during the three years ending 30 June 2014, and had disclosed no payment of tax on such income. I was also asked to take into account the wife’s statement at [72] of her affidavit sworn 6 May 2013 in which she said, “I propose that I be reimbursed for an equal share of the profit distributed to [the husband] from [D Pty Ltd] since separation”.
Even if it were permissible to consider this extrinsic material, I do not consider that it advances the wife’s case. On a plain reading of Order 4(c), there were three years for which tax returns for the business had not been prepared. The order contemplated that tax would be payable once the returns were lodged. The question of construction was whether the husband was required to reimburse the wife portion of the income he had received during the three years (i.e. such amount as would result in an equal division of the income). Reference to the extrinsic materials does not assist in answering that question. The fact that the wife, at one point, wanted the husband to reimburse her some money does not lead to the conclusion that he agreed to pay what she wanted.
There is therefore no merit in Ground 1.
Ground 2
Ground 2 was in these terms:
2.The learned Magistrate was wrong in finding that the words of paragraph 4 “the parties shall cooperate with their accountants so as to distribute their earnings” were different from the examples given by him that, “the parties shall equally distribute the earnings” or that “each party shall be entitled to receive half of the earnings”.
The learned Magistrate should have found that on an ordinary meaning of the words of the order:
(a)The words mean to distribute equally the earnings, however the word earnings is defined
(b)The inclusion of the words “the parties shall co-operate with their accountants” adds nothing to the meaning of the main part of the paragraph relating to equal distribution of earnings.
(c)The inclusion of the words “for the purpose of completing tax returns” adds nothing to the meaning of the main part of the paragraph.
Counsel for the wife explained the reference to “accountants” in Order 4(a) by submitting that tax returns and financial statements would clearly need to be completed, and that there would need to be expert advice (for example, concerning how to bring about the equal division of the earnings). Counsel further submitted that a person in the position of the wife reading the terms of the order, having regard to the overall settlement, would have thought that she would receive the earnings and pay the tax.
In my view, this ground of appeal, and the arguments advanced in support of it, fail to appreciate that it is a known rule of interpretation that “such a sense is to be made upon the whole as that no clause, sentence, or word shall prove superfluous, void, or insignificant, if by any other construction they may all be made useful and pertinent”: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [71], citing earlier authority. While this rule was stated in the context of construction of the statute, the rule holds good in construction of any instrument.
In my view, it would be impermissible to overlook the inclusion of the words referred to in Grounds 2(b) and (c). While counsel for the wife advanced an ingenious argument to justify the inclusion of the words mentioned in Ground 2(b), nothing she advanced gave any meaning to the words in Ground 2(c). In my view, the Magistrate was right in effectively finding that the inclusion of those words makes it clear that the order is merely laying down a mechanism by which the parties are to prepare their income taxation returns.
Had the intention been for the husband to be obliged to make a payment by way of reimbursement to the Trust or to the wife, as the wife now contends, it would have been expected that the provision would contain express words to that effect and would have stated a date by which the payment was to be made. No such provision is contained in the orders, although in every other instance in which there is to be an exchange of funds or a transfer of property, a time period is specified in the orders.
Counsel for the wife essentially argued that it was unfair the wife had to pay tax on more income than she had in fact received. Subjective notions of “fairness” do not enter into the proper interpretation of the terms of an order, save where one available interpretation would result in an outcome so absurd that it could not have been the intention of the parties to come to such an agreement or for the court to make such an order: Hall v Jones (1942) 42 SR (NSW) 203 at 208.
The “fairness” argument also overlooks the fact that there is no basis upon which the Magistrate could have concluded that the income the husband had received from the business after the separation had been used entirely for his benefit. Nor would there be any reason to conclude that the income was not, at least in part, represented in the assets to be divided. One need only look at Order 4(c) to see an example of how the husband had the benefit of $3,500 per week from the business up until the settlement, but on the basis that he was continuing to meet mortgage payments and other outgoings relating to properties referred to in Order 1.
Even if the husband had all of the benefit of the income, and even if the assets that were divided had not been augmented as a result of the husband having the benefit of the income, there would be no reason to conclude that these factors were not taken into account in the way the parties agreed to divide the assets. It is not appropriate for the court to speculate about how the parties arrived at their consent arrangement.
Ultimately, I accept the submission of senior counsel for the husband that what the wife is, in fact, endeavouring to have the court do, is to imply a term into the agreement requiring the husband to make a large payment to the wife. There is no basis for such an implication, especially in light of Order 13.
Accordingly, there is no merit in this ground.
Ground 3
By this ground it is asserted that:
3.The learned Magistrate was wrong in finding that the indemnity in Paragraph 4 further provided that the wife indemnify the husband (and forever keep him indemnified) “with respect to any liability arising to the husband out of his involvement with … the [P] Trust” meant all debts including all taxation obligations that arose from the [P] Trust.
The learned Magistrate should have found:
(a)That the indemnity referred to the operational and trading matters of the company rather than the personal obligation of the husband to pay tax on income from the trust.
(b)In the circumstances it should have been expressly stated for there to be an indemnity by the wife to the husband in relation to the tax on any income of the trust paid to the husband.
In advancing this ground, counsel for the wife submitted that:
The provisos to order 4 “Notwithstanding…” cannot be readily connected to any part of the unwieldy wording above.
It was contended that in order for the Magistrate to have relied on the indemnity contained in Order 4, “it should have made specific reference to tax liabilities”. It was therefore asserted that his Honour erred at [38] in concluding that “were it not for that proviso in paragraph 4 the wife would have been liable for all the tax attributed to the husband for all the drawings he received”, and it was further contended that this error contributed to his Honour’s refusal to enforce the orders as sought by the wife.
The words constituting the indemnity in Order 4 have wide application, referring as they do to “any liability arising to the Husband out of his involvement with [the various entities]” (emphasis added). They are clearly wide enough, as his Honour found, to cover “all taxation obligations that arose from the [P] Trust”. Even if I am wrong in construing the indemnity so widely, nothing turns on it, since the question for determination is whether the words in Order 4(a) are to be construed to require the husband to reimburse the wife for portion of the earnings of the trust for the three years in question.
Order 4(a) is, in reality, a standalone provision. Its meaning does not depend upon the meaning given to the words appearing before it.
Ground 4
This ground asserts that:
4.The learned Magistrate was wrong in finding:
(a)That if he accepted that the wife’s claim to claw back distributions made to the husband in FYE 2012, 2013 and 2014 the husband would potentially be open to a claim for earlier years because of the word ‘including’ those 3 financial years. The magistrate should have found that the claim was confined to those years because:
(i) The wife’s evidence stated this
(ii) The parties had separated in 2011
(iii)The word ‘including’ can be read in the context to ‘include’ and up to settlement.
(b)That the wording of paragraph 4(c) assisted with the interpretation of 4(a) in circumstances where the payment was for a defined (and modest) amount and a finite period.
The first limb of this ground is directed to his Honour’s remarks at [30(a)]. With respect, the argument is something of a red herring. The Magistrate obviously recognised that the wife was not seeking to claw back distributions from earlier years, and made the remarks at [30(a)] to illustrate the potentially wider ramifications if the wife’s interpretation was to be preferred.
The second limb of the ground is directed to the Magistrate’s remarks at [30(c)] of his reasons, but I find no merit in this complaint since it was clearly open to his Honour to call Order 4(c) in aid to bolster his interrelation of Order 4(a). Order 4(c) contained an internal reference to Order 4(a) and, in my view, put beyond doubt that the fact that one party was to actually receive income from the business did not mean that they would pay the tax on that income. The use of the word “but” in Order 4(c) is crucial in that regard.
Ground 5
By this ground the wife asserts that:
5.The learned Magistrate was wrong in finding that the wife should not be permitted to claw back the actual income on which she is required to pay tax because this was not contemplated in the asset schedule. The Magistrate should have found:
(a)that if the orders intended that the wife would be obliged to pay a significant tax debt which could only come from her assets this should have been specifically stated in the asset pool
(b)the husband in particular because he claims the benefit of the clause should have ensured that the financial effects of the order were clear and unambiguous
(c)the husband [had] the benefit of the income for a number of years and should have made provision for the tax on it.
(d)The distribution of half of the income to the wife is a consequential order which flows from the wording of the order.
The proposition in Ground 5(a) lacks merit. The reference to the “asset pool” is in fact a reference to the spreadsheet entitled “Final [Pemberton] Asset Split – 30/06/2013”, which was attached to the consent orders. The preamble to those orders referred to the spreadsheet only by saying it was the intention that the settlement would be “roughly in accordance with the spreadsheet”. At that time the tax returns had yet to be prepared, let alone lodged. There was accordingly no amount that could have been included in the spreadsheet to reflect the tax payable.
In any event, the orders as properly interpreted meant that the parties would both have to pay the tax on the same amount. To take the wife’s argument to its logical conclusion, it could also be said that if the orders intended that the husband would be obliged to pay a significant tax debt which could only come from his assets, this too should have been specifically stated in the spreadsheet. The absurdity of the argument is further demonstrated by the fact that the wife contends that the husband should reimburse her for the money he received from the business, but that is not reflected in the spreadsheet either.
Ground 5(b) presupposes that the financial effect of the orders was not clear. The Magistrate, properly as I have found, rejected this proposition. In any event, the argument is nonsensical, since neither party carries any greater burden in proposing consent orders that are clear and unambiguous.
Ground 5(c) proceeds on an approach to construction unknown to the law. I also refer to my earlier discussion about how it cannot be assumed that the husband had the income of the business entirely for his own benefit.
The proposition in Ground 5(d) is meaningless.
Conclusion and costs
For all of these reasons, there is no merit in the appeal and it will be dismissed.
At the conclusion of the hearing I took submissions in relation to costs. Counsel for the wife submitted that I should take into account the wife’s financial circumstances, but she was not in a position to inform me what those circumstances were. She also asked me to take into account what she submitted was arguable merit in the grounds of appeal.
I directed the wife to file a Financial Statement, which was subsequently filed. The statement discloses that the wife has substantial assets (with equity well in excess of a million dollars). She has been wholly unsuccessful in this appeal and, in my view, there was no merit in any of her complaints.
The wife will pay the husband’s costs, to be assessed if not agreed.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Thackray delivered on 4 August 2016.
Associate:
Date: 4 August 2016
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