Planter and Gallagher

[2007] FamCA 1274

FAMILY COURT OF AUSTRALIA

PLANTER & GALLAGHER [2007] FamCA 1274

FAMILY LAW – APPEAL AGAINST DECISION OF FEDERAL MAGISTRATE – PROPERTY SETTLEMENT – Appeal from a discretionary judgment – Section 79 Family Law Act 1975 – Add-backs - Whether the trial judge erred in including the proceeds of a sale of former jointly owned business in calculating the net asset pool – Impact of equal shared parental responsibility order on s75(2) considerations - Appeal allowed.

Family Law Act (1975) Cth

AMS v AIF (1999) FLC 92-852
C and C [1998] FamCA 143
Coghlan v Coghlan [2005] FamCA 429
D & D [2006] FamCA 245
De Winter v De Winter (1979) FLC 90-605
Gronow v Gronow (1979) 144 CLR 513
House v The King (1936) 55 CLR 499
In the Marriage of Clauson (1995) FLC 92-595
In the Marriage of Ferraro (1993) FLC 92-335
In the Marriage of Hickey (2003) 30 Fam LR 355
In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626
La Costa & La Costa [2007] FamCA 1176
Mallett v Mallett (1984) FLC 91-507
Norbis v Norbis (1986) FLC 91-712

APPELLANT: MR PLANTER

RESPONDENT: MS GALLAGHER

FILE NUMBER: BRM 5149 of 2006

APPEAL NUMBER: NA 36 of 2007

DATE DELIVERED:	26 October 2007
PLACE DELIVERED:	Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: MAY J

HEARING DATE: 9 August 2007

LOWER COURT JURISDICTION: Federal Magistrates Court

LOWER COURT JUDGMENT DATE: 23 April 2007

LOWER COURT MNC: [2007] FMCAfam 275

REPRESENTATION

SOLICITOR FOR THE APPELLANT: Appellant appeared in person

COUNSEL FOR THE RESPONDENT: Mr McGregor

SOLICITOR FOR THE RESPONDENT: The Kent Law Firm

Orders

1. That the appeal be allowed.

2. That in lieu of the sum found by the Federal Magistrate to be the value of the assets, the sum of $12,000.00 be added for the purpose of effecting those orders contained in paragraph (1).

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Planter & Gallagher

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 36 of 2007
File Number: BRM 5149 of 2006

MR PLANTER

Appellant

And

MR GALLAGHER

Respondent

REASONS FOR JUDGMENT

1. In a Notice of Appeal filed 21 May 2007, the appellant husband appeals orders made by Federal Magistrate Jarrett on 23 April 2007. In particular, the appellant appeals against order (1) of those orders being the percentage division of property ordered by the learned trial Judge.

2. I mention at this introductory stage that this appeal is to be determined by me as a single Judge of the Family Court pursuant to arrangements made under section 94AAA(3) of the Family Law Act 1975 (“the Act”).

Background

1. The essence of the order from which the appellant husband appeals is that the parties divide the matrimonial assets and their financial resources on the basis of 61.5% to the wife and 38.5% to the husband. An issue in the trial and the appeal is the composition of the pool.

2. The trial Judge recorded the uncontroversial history of the matter. The background facts were that the parties married in June 1984 in Canada and have lived in Australia since 1990. They have four children, the oldest two are over the age of eighteen and on the evidence at trial were self sufficient. The younger two children are both girls born … January 1991 now aged 16 years and born … February 1998 and now aged 9 years respectively.

3. In 1992 the parties purchased the former matrimonial home. The purchase of the property was financed with the proceeds of the sale of a property in British Columbia, some savings and a mortgage from the Westpac Bank.

4. The parties separated on 28 May 2005 with the appellant leaving the former matrimonial home to live in rented accommodation on the Sunshine Coast. The respondent and the two younger children continue to reside in the former matrimonial home.

5. An order was made by consent on 15 March 2007 that the parties have equal shared parental responsibility for the younger child.

Grounds of appeal

1. The grounds of appeal which were at Attachment “A” to the Notice of Appeal filed by the appellant husband on 21 May 2007 are as follows:

   1.Order (1) sets out a percentage division of assets as 61.5% to the Wife; and 38.5% to the Husband. The reasons for judgment are that the Wife will bear a more significant cost associated with our daughters 9-year-old [child A’ and 16½-year-old [child B’s] upkeep. I contend that the orders do not take into consideration the responsibility of the Father with respect to Sect 65DAA. In this case there are final orders for 50/50 shared parenting in place, the Magistrate has clearly applied his discretionary decision wrongly by not giving a presumption that the husband will contribute equally financially to the well-being and best interests of the children. Following the logic of the orders with respect to post separation costs (ie 3% differential for care of 3-children over 24 months) an amount of 1% differential for full time care of [child B] for the next 20 months (until [child B’s] 18^th birthday) would be a logical adjustment.

   2.In determining the asset pool (Reasons for Judgement) items 11 & 12 specify a part of the former jointly owned business be added back to the asset pool. In this case there were no submission [sic] listed in either the applicants affidavit or case outline to identify this issue as a matter to be considered. As no evidence was either presented by the applicant nor an opportunity to present evidence by the respondent to dismiss this ‘add back’ the matter was a discretionary decision which was wrongly applied post arguments. It involved no consideration of contested evidence; there were no submissions about it; there was no exercise of judgment. [Original emphasis]

   3.In determining the asset pool (Reasons for Judgement) item 10 the magistrate adopted a schedule of assets that counsel for the wife handed up during her submissions. Asset pool lists were previously provided in both affidavits, as there was no opportunity to scrutinize this submitted schedule it should not have been relied on for the purposes of these orders. The schedule does not include current liabilities such as credit card debts listed on the respondent’s affidavit. The Magistrate wrongly did not consider these liabilities in the orders.

2. The orders sought by the appellant are as follows:

   1.The parties divide the matrimonial assets and their financial resources between themselves on the following basis:

   (a)52% to the Wife; and

   (b)48% to the Husband.

   2.In determining the asset pool there should be no add backs considered.

   3.In determining the asset pool, the current liabilities listed in the respondent’s affidavit should be added to the pool.

Judgment

1. It is necessary to set out substantial parts of the judgment to appreciate the arguments. In relation to grounds 2 and 3 relating to “asset pool” and particularly the inclusion of money received by the husband from the sale of a business the trial Judge said as follows:

   10.I turn then to the asset pool.  The parties agreed, by and large on the assets to be divided between them.  Counsel for the wife handed up a schedule of assets in the course of her submissions which was, subject to the matters set out below, agreed between the parties.  I adopt that schedule, save as set out below.

   11.The only significant issue between the parties in terms of the available assets and liabilities is whether I ought to add back to the asset pool the sum of $30,000 which is the amount received by the husband when he sold his interest in the parties' café business earlier this year.  Other than that, there is an agreed asset pool which includes motor vehicles, sporting equipment, other miscellaneous chattels and some agreed liabilities. 

   12.In my view, I ought to add back to that asset pool a portion of the amount received by the husband from the sale of his interest in the café business.  I do not think that I should add back the amount he used of that sum to discharge credit card liabilities.  Thus, the amount to be added back to the asset pool ought to be $12,000. 

   13.I take that approach for these reasons. First, there is no doubt that the interests of both of these parties in the café business were an interest in the nature of property for the purposes of the Act. It had real value to both of them.

   14.The wife sold her interest in about August, 2005 to a family friend for $35,000.  Since that time, her $35,000 has been expended upon ordinary living expenses.  There is really no evidence to suggest to the contrary and, as the cases make clear (see for example D & D [2006] FamCA 245, a case to which the husband referred me in the course of his submissions) there ought not be add backs to an asset pool unless it can be demonstrated that the amount to be added back is properly characterised as a premature distribution of matrimonial property to one of the parties.

   15.In this case, whilst the wife received a capital sum which might have been in other circumstances treated as property, it was expended by her in the ordinary course of living, she not having any other appropriate means of financial support.  That is not to disregard the matters to which the husband referred, namely, the receipt by her of government benefits and loan funds provided to her by her family, but it does recognise the stark reality of the position that the wife was receiving very little by way of assistance from the husband financially, and so it was necessary for her to fund her existence and, more particularly, that of the children in some way.  Resort to the $35,000 in those circumstances was reasonable.

   16.The husband's receipt of $30,000 occurred earlier this year.  Of the $30,000, $11,000-odd was paid back to his parents.  It represents $CAD10,000  that they gifted to him post separation.  His evidence was clear that it was a gift.  He was not expected to pay it back and there is no evidence before me that there was any demand made for repayment of the gift.  

   17.In those circumstances, whilst he is absolutely entitled to repay the gift to his parents if he chooses to do so, that is a decision for him but which ought not reflect on the wife's entitlement in these proceedings.  To put it another way, it is not for him to decide that she should subsidise the repayment of that gift to his parents.  The amount of $CAD10,000 and the balance of the amount received from the café business less the amount paid to the parties' credit cards is appropriately added back to the asset pool in my view.

   …

   19.The liabilities ought to be reduced by the amount of the husband's credit card liability discharged by the capital received from the café business.  The credit card debt as at the date of separation stood, according to exhibit 3, at a little less than $17,000.  Even if it stood at $14,000 as the wife contends, having regard to the period of time that has elapsed since separation and the interest rate attracted by the debt, I am satisfied that a repayment of $18,000 was appropriate.  In those circumstances the net asset pool is, I find, $637,840.00. 

2. Ground 1 asserts that as there is a shared parenting order it should also have been presumed that that child’s expenses would also be shared equally. The appellant’s argument in this respect is contained in a number of allied arguments to which I have later referred. The impact of the two younger girls needs was carefully considered by the trial Judge as follows:

   23.The real issue in this case is how I should treat post separation contributions.  The wife says she is entitled to an adjustment of 2.5 per cent or something in the order of $15,000 to take account of the post separation contributions she had made to the welfare of the family.

   24.She has been the primary provider for the children since separation.  [The child A] has lived most of the time with her until recently and so has [child B].  The parties' eldest child, [child M], moved out shortly prior to separation.  [The child H] moved out during the course of separation.  [The child A] now spends equal time, more or less with her father and her mother.

   …

   28.In those circumstances, I am satisfied that some adjustment is called for in the wife's favour, although not 52.5 per cent/47.5 per cent as was suggested by counsel for the wife.  In my view, the difference between the husband's contributions and the wife's contributions ought to be seen in the region of some 3 per cent differential and accordingly I find that the wife's contribution based assessment is 51.5 per cent; the husband's is 48.5 per cent that being a 3 per cent differential.

   29.I turn now to s.75(2) factors. This is plainly a case, in my view, where there is an assessment called for in favour of the wife to take account of the fact of her care and control of the children and the prospect that she will continue to support [child B] for some little while. I do not lose sight of the fact that [child B] tends to provide for some of her own needs given her age and her ability and, perhaps, her enthusiasm for part time work.

   30.The wife, I am satisfied, will also continue to bear more significantly the costs associated with [child A’s] upkeep.  She will live between the two households of the mother and the father in this case more or less equally, but I suspect that as a matter of practicality, much of the financial expense associated with things such as education will fall to the wife rather than the husband. 

   31.I am not satisfied that the husband, in this case, will provide over and above anything that he feels that he is legally able or legally obliged to provide having regard to the Child Support Agency's assessment of his child support liability from time to time.  So much was his evidence in cross-examination.  He took the view that the Child Support Agency's job was to provide an assessment of an appropriate level of child support and one need not look beyond that.

   32.It is clear in the case, and it is often recognised in this Court and in the Family Court of Australia that child support assessed pursuant to the legislative formula goes nowhere near providing what is necessary for the proper financial support of children, and so an adjustment under s.75(2) is often made for the purposes of ensuring that the financial impost on a party of caring for children is properly provided for.

   …

   37.The upshot of all of that is that I am not satisfied that there is a disparity in earning capacity between these parties. …

   …

   42.In all the circumstances, I am satisfied that there ought to be an adjustment under s.75(2) of 10 per cent in favour of the wife. Ten per cent of this property pool is about $63,000 which is about three times the level of the husband's earnings over the last couple of years. In my view, that is an appropriate adjustment in this case.

Submissions of the appellant

1. At the commencement of submissions the appellant acknowledged that there is no appeal related to the conclusion reached by the learned trial Judge that the parties’ contributions as at the date of separation were equal or his assessment to the time of trial contained in paragraph 28.

2. In relation to s.75(2) factors the appellant referred to the reasons for judgment at paragraph 29 and 30.

Ground 1

1. There are no parenting orders in place concerning the children other than the child A. At the time of trial there were orders in place for shared parenting of the child A, being those orders made by consent in the Federal Magistrates Court on 15 March 2007.

2. The appellant argues that the decision does not take into account the responsibility of the father and the provisions of s.61DA of the Act as follows:

   (1)When making a parenting order in relation to a child, the court must apply a presumption that it is in the best interests of the child for the child’s parents to have equal shared parental responsibility for the child.

   Further, the appellant referred to s.61B of the Act in relation to parental responsibility where it provides:

   In this Part, parental responsibility , in relation to a child, means all the duties, powers, responsibilities and authority which, by law, parents have in relation to children.

3. It was submitted that there must be an assumption of responsibility and in this context that there must also be an assumption of shared financial responsibility. The appellant asserted that the learned trial Judge did not have any knowledge of the history of the previous family unit and relied instead on arguments put forward by counsel for the wife who also had very little knowledge of the workings of the previous family unit. It was submitted that the decision of the learned trial Judge that the mother might have to make a greater financial contribution is totally without merit and that the trial Judge has added an incorrect additional consideration of who might shoulder a greater burden of child care expenses.

4. The appellant submitted that the decision of the trial Judge does not take into account sworn evidence provided by the father. He referred to his affidavit in response filed 19 July 2006 where it says:

   4.5During the trial separation up until 19 September 05 the husband made an additional contribution of $100 per week toward family support, paid into the joint bank account. This amounted to $1,500.

   4.6The husband has made a contribution of 50% of the mortgage of the former matrimonial home totalling $11,858 to date. In April 2006 he was advised by his previous solicitor that it was common practice for the wife to pay the mortgage if the amount was similar to the amount the husband had to pay in rent. He advised the applicant but she refused to pay more than 50% of the mortgage. In August 06 he paid the arrears amounts and has continued to pay 50% since that time.

5. The appellant takes issue with the s.75(2) adjustment of the trial Judge, as outlined in paragraph 42 of the judgment.

6. The appellant submitted that the formula that the learned trial Judge used to calculate the 10 per cent adjustment was unclear. Using the 3 per cent adjustment that was made by his Honour (para 28) in relation to the post separation contributions the appellant submitted that equated to 0.5 per cent per child per year or a figure of $19,135.

7. With respect to the adjustment of 10 per cent in favour of the wife, the appellant submitted that the percentage adjustment as found by the learned trial Judge in favour of the respondent should have been in the order of 1 per cent for the child B (which equates to $6,378) which would cover the period from the date of trial to her 18^th birthday, and a 4.5 percent differential for the child A ($28,703), making the combined amount of percentage adjustment the sum of $35,081, considerably less than what was ordered by the trial Judge. The percentage for the child A would only apply if the financial responsibility for the child was the mother’s alone. The appellant submitted that since there is an order in place for shared parenting of the child A then there should be no adjustment made with respect to the child.

8. The appellant challenged the findings of the trial Judge contained in paragraph 30 of the reasons.

9. In addition, the appellant submitted that the Federal Magistrate had demonstrated bias in making the percentage adjustment and referred to the transcript of an earlier appearance before the learned trial Judge on 22 January 2007 where it was said by the Federal Magistrate to counsel for the husband (transcript p.10 l.5):

   FEDERAL MAGISTRATE: …Anyway Mr Blond, what’s your client’s position? In terms, just give me the percentages.

   MR BLOND: Fifty/fifty, your Honour.

   FEDERAL MAGISTRATE: He’s dreaming too. No wonder you couldn’t settle.

1. Apart from the difficulty for the appellant that he did not raise this bias point at the time of the trial, it is quite clear from the transcript that the Federal Magistrate on this earlier occasion was merely attempting to assist the parties to resolve their differences.

2. In relation to child support arrangements the appellant made reference to paragraphs 31 and 32 of his Honour’s reasons for judgment where he said:

   31.I am not satisfied that the husband, in this case, will provide over and above anything that he feels that he is legally able or legally obliged to provide having regard to the Child Support Agency's assessment of his child support liability from time to time.  So much was his evidence in cross-examination.  He took the view that the Child Support Agency's job was to provide an assessment of an appropriate level of child support and one need not look beyond that.

   32.It is clear in the case, and it is often recognised in this Court and in the Family Court of Australia that child support assessed pursuant to the legislative formula goes nowhere near providing what is necessary for the proper financial support of children, and so an adjustment under s.75(2) is often made for the purposes of ensuring that the financial impost on a party of caring for children is properly provided for.

3. The appellant submitted the learned trial Judge took the view that the current child support arrangements were inadequate and that he must have felt obliged to offer some correction to the perceived injustice. It was further submitted that the Child Support Agency is a separate organisation from the courts and has a mandate to provide equitable assessments for child care contributions as approved by legislation. The appellant submitted that his evidence at trial was that he had paid substantial sums in child support which was well in excess of the child support assessment over that period.

4. The appellant made reference to paragraphs 37 and 38 of the judgment where his Honour said:

   37.The upshot of all of that is that I am not satisfied that there is a disparity in earning capacity between these parties.  The wife has a capacity to earn.  She gave evidence that there were establishments on the Sunshine Coast at which she might work and that opened during the daylight hours and it is not too great an inference, in my view, to draw that at least the wife would be able to find some work during school hours which would provide her with an income.

   38.She has chosen to study, and ultimately, that might leave her with a greater income, or greater job satisfaction in some years' time but, in my view, that is not something which in this particular case ought figure very strongly in the assessment of matters under s.75(2) of the Act.

5. The appellant submitted that the learned trial Judge did not consider that the respondent’s course of study might leave her with a greater income than that of the appellant’s at some time in the future. He argued his Honour made no reference to the respondent’s contribution in relation to a Child Support Agency assessment and clearly was only considering the traditional support role from the appellant’s contribution assessment.

Ground 2 and 3

1. As grounds 2 and 3 were argued concurrently it is appropriate to deal with them together.

2. It was submitted that the manner in which the issue of the pool of assets had been dealt with was unfair to the husband.

3. The appellant referred to a document marked “A” and titled “Gallagher and Planter Net Asset Pool” which was handed to the Federal Magistrate by counsel for the wife at the commencement of her submissions. The appellant referred to the transcript from the commencement of the proceedings (Transcript p.3 l.28) where the trial Judge said:

   FEDERAL MAGISTRATE: …It is no good telling me things from the Bar table because you are not under oath and it is not a question of evidence.

4. The appellant asserted that the document was submitted without his review or consent after evidence was completed which he thought should not have been allowed in view of the Federal Magistrate’s remarks. The appellant conceded that as the document was handed up during counsel for the wife’s submissions he did have an opportunity to make submissions about the document. He asserted that there was information in the document that was not contained in the affidavits filed for the trial which may have led to confusion by the trial Judge. Further, that the document was misleading as it lists the husband’s share in the café and not the share of the wife. The appellant submitted that document amounted to evidence from the bar table and that it was wrongly accepted by the trial Judge as an aide.

5. The other complaint is that this document was also misleading as it did not correctly reflect the husband’s credit card debt at the time of the trial.

6. In relation to the credit card debt the appellant submitted that the amount owing by him at the date of trial was $16,392.00 (transcript p.82 l.23). In relation to the respondent’s share of the café the appellant conceded that (transcript p.66 l.4):

   MR PLANTER: …However to answer your question, I have no doubt that [Ms Gallagher] has spent the money and she has spent it as she sees fit on household and personal for the children, for her, trips, whatever. I agree that the money, the $35,000 has been spent.

   MS MCDIARMID: On living expenses for herself and the children?

   MR PLANTER: I agree with that statement.

7. The appellant made reference to D & D [2006] FamCA 245 where Carmody J said:

   20.I do not think that in these circumstances, the wife should bear sole responsibility for the post-separation increase in the mortgage and credit card indebtedness.  Both liabilities should be brought to account in ascertaining the net assets of the parties.  In Chorn and Hopkins (2004) FLC 93-204 at par [24] the Full Court approved the following statement in M and M [1998] FamCA 42:

   “42.. . . Neither the Family Law Act nor the case law requires that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide their own support.”

8. The appellant also made reference to C and C [1998] FamCA 143 where Nicholson CJ, Ellis & Kay JJ said:

   46.Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule.  The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives.

9. The appellant submitted that the only reference to the cafe in the wife’s material was in the affidavit filed on 12 April 2007 at item 42 and 108 where it said:

   42.On 12^th August, 2006 [Mr Planter] and I signed a Business Contract under which my half share was sold to [Ms N] for $35,000.00.

   …

   108.I obtained $35,000.00 from the sale of the half share of the business […] and have used that money to pay the daily living expenses of myself, [the child B] and the [child A].

10. The appellant submitted that as his share of the business was sold on 31 December 2006 it was clear that this was not an asset at the date of trial. The proceeds were used to reduce credit card debt and to repay moneys to his parents. At paragraph 5.3 of the appellant’s affidavit it reveals:

    5.3The husband continued to work in the business for 1½ years with Ms N, selling his share on 31 December 2006 for $30,000.00. With that money the husband paid off $18,000.00 of his credit card debt and returned the $11,150 received from his parents.

11. The husband’s financial statement demonstrated that the moneys from the sale of his share of the café were fully expended.

12. His Honour’s reasons for judgment at paragraph 11 and 12 reveal that he did make an allowance for the discharge of the credit card debt but did not allow an amount for the repayment of moneys to the appellant’s parents. His Honour was correct in describing it as a gift from the husband’s parents.

13. The appellant submitted that there should not have been an add back of the $12,000.00 because the appellant no longer held an interest in the cafe at the time of the trial and where the wife’s interest in the café was not included in the asset pool.

Respondent’s submissions

1. It was submitted that his Honour was correct in finding (paragraph 18) that the gross assets of the parties were $758,149.00.

2. Counsel for the respondent correctly submitted that the learned trial Judge had not included the current credit card debts of either party. Although the parties’ current credit card debts were not explicitly referred to in his Honour’s reasons for judgment, counsel submitted that the fact that his Honour had disregarded both the parties’ credit card debts was within his discretion.

3. In relation to the adjustment for s.75(2) factors counsel for the respondent referred to various parts of the transcript of the husband’s evidence in relation to his contributions towards the costs of all the children’s education since separation. It is clear that the husband’s evidence at trial demonstrates that whilst he had made some contributions they were minimal.

Appellate Principles

1. It is appropriate at this stage to identify the principles governing an appeal such as this from a discretionary judgment. The law in this respect is not in doubt.

2. It was clearly enunciated in House v The King (1936) 55 CLR 499, at 504-505 that:

   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.

3. In Gronow v Gronow (1979) 144 CLR 513 Stephen J said at 519:

   The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion.

4. Thus, as a matter of firmly established appellate process it is necessary first to establish whether there is any recognised ground for reviewing the Federal Magistrate’s discretionary decision consistent with these principles. If there is then, unless the result is plainly right notwithstanding an appellable error, per Gibbs J (as he then was) in De Winter v De Winter (1979) FLC 90-605 at 78,091, I am obliged to allow the appeal, set the orders aside and, if possible, substitute my own decision after considering the matter afresh, as was explained by Kirby J in AMS v AIF (1999) FLC 92-852, who said at 86-043:

   [A]n appellate court, invited to review the exercise of discretion at first instance will avoid an overly critical, or pernickety, analysis of the primary judge’s reasons, given the large element of judgment, discretion and intuition which is involved.  Only if a material error of the kind warranting disturbance of a discretionary decision is established is the appellate court authorised to set aside the primary decision, to substitute its own exercise of discretion or to require that it be re-exercised on a retrial.

5. The original decision and orders will stand unless they are manifestly wrong or unjust even though no obvious legal or factual error can be identified. In Mallett v Mallett (1984) FLC 91-507 at 79,111 the Full Court said:

   It is necessary for the Court, in each case, after having had regard to the matters which the Act requires it to consider, to do what is just and equitable in all the circumstances of the particular case.

   Disagreement only on matters of weight or a preference for a different result do not usually justify the reversal of a first instance discretionary judgment.

6. In the case of discretionary decisions, it is only where the effect of the orders exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere, per Brennan J in Norbis v Norbis (1986) FLC 91-712 at 75,178.

Conclusions

1. As the issues raised by the appellant contain a number of discrete points it is convenient to deal with them under their separate grounds.

Ground 1

1. This ground takes issue with the findings made by the learned trial Judge on the evidence and in addition a matter of principle that he ought to have assumed that in view of the shared parental orders in relation to the child aged nine that the financial burden would also be shared.

2. As to the findings made by the trial Judge they were entirely open to him on the evidence in view of the husband’s affidavit and his oral evidence. It is quite clear that the wife will receive little or no money from the husband through the Child Support Agency in view of the order about the younger child and that based on past history little or none voluntarily. The wife is dependent on a pension and is currently a student.

3. The wife’s evidence contained in her affidavit was that the husband had not contributed to the education of the children or their after school activities since their separation. After separation the assessment for child support was $21.00 per month which the husband paid however following the parenting orders made on 15 March 2007 it was expected that the child support would be reduced. In the husband’s affidavit he said in paragraph 4.9 that he had provided financial support for the older children and the 16 year old girl. He asserted that he had made some payments for school fees for them. It seems that in relation to the second oldest child he had met some expenses related to social events at the school and Schoolies Week.

4. As to the 16 year old daughter, the husband’s contention was that as she had two part time jobs and was receiving some government allowance she was virtually self-supporting.

5. In view of the appellant’s assertions that the conclusions were not open to the trial Judge it is of assistance to refer to particular parts of the transcript. The wife in her evidence certainly denied the extent of the husband’s contribution to the children’s expenses which in any event ultimately distilled into the contributions to which I have already referred for social events. It seems that he did concede when asked by the Federal Magistrate that these were very small amounts (Transcript p.23).

6. The 16 year old daughter visits the husband but entirely lives with the wife. The evidence did not reveal that he had made any financial contribution for her in recent times other than the purchase of a book for $20.00. It was his view that the child should provide her own uniforms and other expenses. The child A is apparently enrolled in drama and ballet, the costs of which are met by the wife.

7. It can be seen that not only were the conclusions of fact open to the trial Judge but that also he was entirely correct in concluding that for a 16 year old girl and nine year old girl the wife would be bearing significant costs associated with both the children and was entirely correct in the conclusions that he came to in paragraphs 30 and 31. This factor is rightly of significance in relation to a consideration of s.75(2) factors. Consequently the appeal in relation to ground one must fail.

Grounds 2 and 3

1. It is understandable that the husband may have thought that counsel for the wife should not have been allowed to place before the trial Judge at the end of the proceedings a document which included as an asset to be divided the husband’s share in a cafe valued at $30,000.00. This is particularly so since the wife said in her affidavit filed 12 April 2007 that the parties had agreed at a directions hearing the value of the pool. Those assets and asserted values were then listed but did not include the $30,000.00. In addition no reference was made to this as an issue in the case outline document.

2. The discussion about the course of evidence and the directions given by the trial Judge whilst entirely correct may have added further confusion at least in the mind of the appellant.

3. The facts as correctly recounted by the trial Judge are that the parties separated on 28 May 2005, the wife sold her share in the business in August 2005 for $35,000.00. This was fully expended on living expenses which was accepted by the husband and properly referred to by the trial Judge. The husband sold his share of the business in December 2006 for $30,000.00 and it was correctly found by the trial Judge that of that sum approximately $18,000.00 was used to pay off his credit card and largely the balance of $11,150.00 to pay his parents. It is clear for the husband’s Form 13 Financial Statement filed 11 April 2007 that those moneys had been fully expended.

4. The principle reason the Federal Magistrate added back the sum of $12,000.00 was that given by the husband, how he used the balance of the moneys. It was clear that he repaid these moneys to his parents even though they did not request it.

5. As the moneys had been fully expended the inclusion of $12,000.00 in the pool is what is generally described as an add back. In the matter of La Costa & La Costa [2007] FamCA 1176 the Full Court said:

   39.In Chorn & Hopkins (2004) FLC 93-204 the Full Court considered add-backs in the context of post-separation expenditure and after referring to earlier decisions referred directly to two other Full Court decisions (at paragraph 24):

   24.We will refer again later in these reasons to the decision in Townsend, but we would in the present context draw attention to the following observations by later Full Courts:

   2.11There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge. (Marker [1998] FamCA 42, 1 May 1998, per Baker, Kay and Chisholm JJ.)

   …

   46.Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule.  The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. (Cerini [1998] FamCA 143, 8 October 1998, per Nicholson CJ, Ellis, Kay JJ.)

   40.In SMB and MFB [2006] FamCA 46 the wife had benefited from several Court orders to the effect that $102,000 would be made available to her pending trial. As the Full Court explained:

   18.The wife filed an application in September 2001 seeking, inter alia, interim orders for spousal maintenance.  By consent, the husband agreed to pay the wife a total of $25,500 in two instalments.  A series of further orders, all made by consent, required the husband to make lump sum payments to the wife.  In all, between September 2001 and June 2002, a total of $102,500 was paid by the husband to the wife.  Each order reserved discretion to the judicial officer dealing with the final issues of property settlement and spousal maintenance as to how, and in what proportions to classify the payments (be it spousal maintenance, interim costs or interim property settlement).

   …

   69.In Chorn and Hopkins (supra), the Full Court considered the issue of add- backs to the asset pool, particularly in relation to post-separation expenditure and legal costs. At paragraph 42 and following they cited extensively from M and M [1998] FamCA 42, 1 May 1998, (per Baker, Kay and Chisholm JJ.)

   2.10It is well settled that save in exceptional circumstances a trial Judge should deal with the property as at the date of the hearing and make adjustments taking into account the various matters set out under s.79. (Wells v Wells (1977) FLC 90-285; Wardman v Hudson (1978) FLC 90-466; In the Marriage of Geyl 7 Fam LR 219). However, the particular justice of the case may make it appropriate to notionally add back assets which have been demonstrated to have been dissipated either during the marriage or post-separation. Normally it is necessary to demonstrate an appropriate basis for doing so, for example by wastage such as gambling or extravagant living. (Kowaliw v Kowaliw (1981) FLC 91-092; Fane-Thompson v Fane-Thompson (1981) FLC 91-053; Winnel v Winnel (1984) FLC 91-580; Townsend v Townsend (1995) FLC 92-569; Doherty v Doherty (1996) FLC 92-652) Additionally, because of the requirement for each party to bear their own costs, it is generally appropriate to add back to the pool of assets notionally any legal costs that have been spent on the litigation and to deal with the costs as a separate issue at the end of the litigation. (see Farnell (1996) FLC 92-681).

   2.11There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge (M and M [1998] FamCA 42, 1 May 1998, Per Barker, Jay and Chisholm JJ).”

   …

   71.In the present case, no finding was made by the trial Judge that the wife had either embarked on a course of conduct designed to minimise the value of the matrimonial assets, or that her expenditure was reckless, wanton or negligent. 

   72.Thus, we think that there is a fundamental flaw in the pool created by the trial Judge which included a notional add back of the monies that the wife had received on account during the hearing. Absent any negative finding about the wife’s expenditure which she had detailed in her affidavit and which she asserted to be her reasonable annual expenses, we cannot see any basis upon which his Honour ought reasonably to have added back the sum of $102,500 to the asset pool.

1. As it could not be said that the use to which the husband put these moneys were in some way wasteful or extravagant and although they did not advantage the wife, it is clear from the authorities that parties are entitled to both continue to provide for their own support post separation and to get on with their lives. In this case absent extravagance, the manner in which the husband used these moneys is not of any great significance. This is particularly so since the wife had received a slightly larger amount which she had used quite properly for living expenses.

2. In the circumstances of this case, his Honour erred in adding back the sum of $12,000.00 to the pool. A better approach would have been to simply take it into account as part of the post separation factors. His Honour in his discussion of the circumstances post separation to a large extent took this course. The circumstances of the wife and the husband were described and an adjustment in the wife’s favour was given in the order of a three per cent differential. Taking into account each of their circumstances up to the date of trial this was an appropriate exercise of his Honour’s discretion.

3. The remaining argument of the husband is that there should have been deducted from the pool each of the parties outstanding credit card debts. There was no unfairness to either party in this respect as the trial Judge did not deduct either outstanding debts. The husband having already had the benefit of his credit card being deducted from the sum received from the sale of the café and the wife needing those moneys to support herself and the children, it would not have been appropriate for moneys further expended to be deducted in some way from the list of assets. The husband appeal in that respect cannot succeed.

4. Having found some merit although in only one ground of the husband’s appeal, it is necessary to consider whether the discretion of the Federal Magistrate should be re-exercised.

5. In this case the error is such that the sum of $12,000.00 should not have been added to the pool. There are no grounds of the appeal that should otherwise succeed and would lead to a re-exercise of a percentage division of the property to be received by each of the parties.

6. The only remedy is to subtract the sum of $12,000.00 from the pool of $758,149.00 so that when the house is sold and the parties divide the proceeds, other property to be taken into account would not include the moneys received by the husband from the sale of the business.

I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court 

Associate:     

Date:  26 October 2007