Petrellis & Petrellis

Case [2023] FedCFamC1A 104

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Petrellis & Petrellis [2023] FedCFamC1A 104

Appeal from: Petrellis & Petrellis [2022] FedCFamC2F 1375
Appeal number(s): NAA 253 of 2022
File number(s): SYC 4713 of 2021
Judgment of: MCCLELLAND DCJ
Date of judgment: 30 June 2023
Catchwords: FAMILY LAW – APPEAL – PROPERTY – Whether the primary judge erred in adopting a two pool approach to the adjustment of the parties’ property in treating the parties’ superannuation as separate to the remaining assets – Where both parties advanced a one pool approach – Inadequate reasons for departing from a one pool approach – Appeal allowed – Re-exercise of discretion – Consideration of contributions and future needs – Finding of 65 per cent adjustment in favour of the appellant as just and equitable – 65 per cent to the appellant and 35 per cent to the respondent adjustment to apply to the totality of the parties’ property, including superannuation – Written submissions as to costs.
Legislation:

Child Support (Assessment) Act 1989 (Cth)

Family Law Act 1975 (Cth) ss 75, 79

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 35(b), 36

Federal Proceedings (Costs) Act 1981 (Cth)
Cases cited:

Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40

Anson and Meek (2017) FLC 93-816; [2017] FamCAFC 257

Arcand & Boen (2021) FLC 94-046; [2021] FamCAFC 155

Bachman & Self [2023] FedCFamC1A 50

Barnell & Barnell (2020) FLC 93-961; [2020] FamCAFC 102

Beck and Beck (No 2) (1983) FLC 91-318; [1983] FamCA 7

Best and Best (1993) FLC 92-418; [1993] FamCA 107

Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49

Cabbell & Cabbell [2009] FamCAFC 205

Calder & Calder (2016) FLC 93-691; [2016] FamCAFC 36

Candle & Falkner (2021) FLC 94-069; [2021] FedCFamC1A 102

Casper & Casper [2009] FamCA 989

Chan & Chih [2020] FamCAFC 31

Chan & Lee (2022) 66 Fam LR 75; [2022] FedCFamC1A 85

Clauson and Clauson (1995) FLC 92-595; [1995] FamCA 10

Coghlan and Coghlan (2005) FLC 93-220; [2005] FamCA 429

Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154

Douglas and Douglas (2006) FLC 93-300; [2006] FamCA 1291

Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143; [2003] FamCA 395

Horrigan & Horrigan [2020] FamCAFC 25

Hurst & Hurst (2018) FLC 93-851; [2018] FamCAFC 146

Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78

Lenehan and Lenehan (1987) FLC 91-814; [1987] FamCA 8

Lindfield & Romano (2022) 65 Fam LR 233; [2022] FedCFamC1A 81

Lovine & Connor (2012) FLC 93-515; [2012] FamCAFC 168

Mickelberg v The Queen (1989) 167 CLR 259; [1989] HCA 35

Minister for Immigration and Border Protection v SZMTA (2019) 264 CLR 421; [2019] HCA 3

Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17

Partington & Cade (No 2) (2009) FLC 93-422; [2009] FamCAFC 230

Petruski & Balewa (2013) 49 Fam LR 116; [2013] FamCAFC 15

Pierce & Pierce (1999) FLC 92-844; [1998] FamCA 74

Pollard v RRR…

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AGLC
Petrellis & Petrellis [2023] FedCFamC1A 104
Case
[2023] FedCFamC1A 104
Decision Date

CaseChat Overview and Summary

In the matter of Petrellis & Petrellis, the appellant challenged the primary judge's determinations regarding the distribution of property and spousal maintenance. The court had to decide on the appropriate division of the parties' assets, including their superannuation entitlements, and whether the appellant was entitled to further adjustments for her future needs. The legal issues involved interpreting and applying sections 79 and 75 of the Family Law Act 1975, considering both financial and non-financial contributions, as well as future needs of the parties.

The court, in re-exercising its discretion, found that the appellant's contributions to their superannuation were equivalent to her contributions to their non-superannuation property. Furthermore, it was determined that the appellant should receive an additional adjustment for future needs due to the disparity in the parties' incomes and earning capacities, considering the appellant's focus on homemaking and parenting responsibilities during their marriage. The court found that the appellant's family's financial assistance significantly contributed to the acquisition and renovation of the parties' most valuable asset, their home, but also noted that market forces played a substantial role in increasing the property's value.

Ultimately, the Full Court adjusted the division of the parties' property and superannuation, awarding the appellant a larger share, and ordered the respondent to pay spousal maintenance and child support. The court's decision recognised the appellant's contributions and future needs, balancing these against the respondent's contributions and the overall property pool. The final orders reflect these considerations, ensuring a fair and equitable distribution of the parties' assets.

Orders

Orders of the court

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Background

Background to the litigation

In re-exercising discretion, I have made an adjustment in favour of the appellant over and above that made by the primary judge as a result of the following. Firstly, determining that the parties’ contributions to their superannuation are equivalent to that which they have made to the balance of their property and, secondly, determining that the appellant is entitled to an additional adjustment for future needs primarily as a result of disparity in the parties’ incomes and earning capacity, including the fact that the appellant’s earning capacity has been adversely impacted by her focus upon homemaking and undertaking parenting responsibilities during the course of the parties’ lengthy marriage.BACKGROUND TO APPEAL The background to the parties’ relationship and an outline of the manner in which they conducted themselves during the course of their relationship is summarised in the primary judge’s reasons for judgment dated 28 October 2022 (“the reasons”) from [3]–[12]. Relevantly for the purpose of this appeal, with some modifications, I have drawn upon the helpful summary provided by senior counsel as contained in the respondent’s Summary of Argument filed 9 March 2023 as follows: ·The appellant was born in 1974 (now 49 years) and the respondent was born in 1969 (presently 53 years). The parties commenced cohabitation and married in November 2002 and subsequently separated in October 2020. The parties have two children, who are 14 and 16 years of age (in Years 9 and 11 respectively).·On 25 June 2021, the respondent commenced proceedings for relief pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). On 14 September 2021, the appellant filed a response joining issue in relation to the s 79 relief sought by the respondent and seeking orders for the payment of spouse maintenance and ‘child support departure’ pursuant to the Child Support (Assessment) Act 1989 (Cth).·A final hearing occurred on 25 and 26 July 2022, with reasons being delivered on 28 October 2022.·The primary judge found the net non-superannuation property of the parties to have a value of $14,060,433 and their superannuation entitlements to have a total value of $1,023,785.·The primary judge determined to alter the parties’ interests in their non­superannuation property such that the appellant receive or retain 62.5 per cent and the respondent receive 37.5 per cent.·That adjustment reflected, firstly, an assessment of the parties’ respective s 79(4) contributions during the course of their relationship and subsequent to their separation, by reference to the non-superannuation assets, as to 57.5 per cent on the part of the appellant and 42.5 per cent on the part of the respondent (at [76]) and, secondly, an adjustment of 5 per cent on account of s 75(2) factors in favour of the appellant (at [108]).·In addition to that adjustment, the parties were to retain their existing entitlements to a joint self-managed superannuation fund, which was valued at $1,023,785 as at the date of the hearing. The appellant’s interest in the fund at that date was accepted to be $370,185, or 36.2 per cent, and the respondent’s interest in the fund as at that time was assessed to be $653,600, or 60.7 per cent (at [109]). ·Additionally, unchallenged orders were made for the payment of spousal maintenance by the respondent to the appellant until the sale of the parties’ former matrimonial home and, by way of child support departure order, for the respondent to pay periodic child support of $550 per week as indexed in accordance with agency guidelines, together with the children’s school fees and related costs, health insurance and the payment of medical expenses over and above that covered by Medicare, together with the children’s mobile phone expenses.GROUNDS OF APPEAL

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The appropriate approach of the Full Court in re-exercising discretion was described in Trevi & Trevi (Re-Exercise) [2019] FamCAFC 51 (“Trevi”) at [20] in the following terms: Once error is established[17] “an appellate Court can substitute its own decision based on the facts and the law as they then stand”.[18] The Court’s power to do so is statutory. Section 94(2) provides, relevantly, that this Court may “make such decree or decision as in the opinion of the court, ought to have been made in the first instance”.(Emphasis in original)[17] Allesch at [23]; Simpson & Brockmann (2010) 43 Fam LR 32 at [40] (“Simpson”): “notwithstanding that the appeal to this court is by way of rehearing, the appeal will succeed only if error is found in the making of the orders appealed”.[18] Allesch at [23] (emphasis added). The reference to s 94(2) of the Act is now to be replaced by reference to s 36(1) of the FCFCOA Act, which empowers the Court to:(a) affirm, reverse or vary the judgment appealed from; or(b)give such judgment or make such order as, in all the circumstances, it thinks fit. In that event, s 35(b) of the FCFCOA Act provides that the Court “has the power to draw inferences of fact and, in its discretion, to receive further evidence”. As noted in Trevi at [14], referencing Partington & Cade (No 2) (2009) FLC 93-422 at 83,852, “[for] all practical purposes, if this Court is to re-exercise it must ‘draw inferences of fact from, and conclusions from, facts as found by the trial judge and uncontroversial evidence admitted upon the re-exercise”. In undertaking that task I am “assisted, although not bound” by the findings and analysis of the primary judge which have not been impugned in this appeal.[19][19] Chan & Lee (2022) 66 Fam LR 75 at [92].Legal principles Both parties contend that, in the re-exercise of discretion, orders should be made for the adjustment of their property. The task before the Court in re-exercising discretion is to make such orders as are appropriate, just and equitable, having regard to the language of both ss 79(1) and (2) of the Act.[20] [20] Zao & Lee [2019] FamCAFC 169 at [48]. In exercising its discretion, the Court is required to take into account the matters set out in s 79(4) of the Act. Section 79(4) is divided into two limbs. The first limb is in respect to those matters set out in subsections (a) to (c), which deal with what are commonly known as the ‘contribution’ factors. Contributions can be direct or indirect, financial or non-financial contributions to the matrimonial property. The second limb of s 79(4) is in respect to those matters set out in subsections (d) to (g), which primarily relate to the future needs of the parties but can include any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account. As both parties are seeking orders for the adjustment of their property upon the breakdown of their marital relationship, with a view to moving on with their lives free of financial commitment to the other, the just and equitable requirement set out in s 79(2) is readily satisfied.[21] [21] Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) at [42] (French CJ, Hayne, Kiefel and Bell JJ) (“Stanford”).

Ratio Decidendi

Legal Principle Established

It was further submitted that the Court would have regard to the fact that in 2018, just over two years prior to the parties’ separation, the appellant’s family made further payments by way of gift totalling $740,000, which was applied to loans that were undertaken for the payment of renovations.[33][33] Appellant’s Summary of Argument filed 15 February 2023, paragraph 27.Consideration of contributions In Pierce, the Full Court stated at [28]:…It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. To similar effect in Cabbell & Cabbell [2009] FamCAFC 205, the Full Court stated at [54] that, in considering the parties’ contributions, it is necessary to trace the use of those assets and consider the foundation that they laid or the subsequent accumulation of wealth by the parties. In this matter, I have traced the application of the additional capital contributions provided by the appellant’s family to the appellant to the enhancement of the value of the parties’ former matrimonial home, which is unquestionably the most substantial asset of the parties. There is, with respect, substance in the submission of senior counsel for the appellant that “these funds [from the appellant’s family] provided a powerful springboard to not only the most valuable asset of the parties of the lifestyle that the family enjoyed in a prestige property”.[34] That submission is soundly based on the evidence presented at the trial. [34] Appellant’s Summary of Argument filed 15 February 2023, paragraph 28. At the same time, while there is no doubt that the funds provided to assist the parties to acquire and renovate the property increased the value of the property, as noted by Fowler J in Casper & Casper [2009] FamCA 989 at [91], it is notorious that the intrinsic value of real property will also increase “in part by the effluxion of time”. Where there is a substantial increase in the value of real property that arises other than from the efforts of the parties, including external market forces, authorities point to the increase being categorised as a contribution by both parties and not necessarily the party who contributed the greater proportion of funds to acquire that property.[35] [35] Bachman & Self [2023] FedCFamC1A 50 at [125]–[127], Hurst & Hurst (2018) FLC 93-851 at [26]; Whiton & Dagne (2019) FLC 93-923 at [34]; Jabour at [44]–[47] and [84]; Barnell & Barnell (2020) FLC 93-961 at [41]–[42]. Accordingly, while the capital contributions by the appellant’s family to the appellant, which were applied to the acquisition and improvement of the parties’ primary asset, are unquestionably a significant contribution that requires appropriate weight, it is not the sole reason for the substantial increase in the value of the parties’ former matrimonial home, which has now significantly increased in value due to market forces, not simply due to the improvements made by the parties.