Radic & Radic
[2007] FamCA 559
•8 June 2007
FAMILY COURT OF AUSTRALIA
| RADIC & RADIC | [2007] FamCA 559 |
| FAMILY LAW - APPEAL – PROPERTY – From decision of Federal Magistrate – Whether Federal Magistrate made an error of fact in respect of appellant’s earnings which error vitiated the exercise of his discretion – No error by Federal Magistrate established by appellant in overall findings about appellant’s income - Whether Federal Magistrate failed to give sufficient weight to appellant’s contributions – No appealable error by Federal Magistrate in initial finding parties’ contributions should be regarded as equal - Whether Federal Magistrate failed to give appropriate weight to relevant s 75(2) factors favouring the husband – Reasons do not disclose a weighing and assessment of relevant factors under s 75(2) and support for finding of 15 per cent adjustment in favour of respondent not evident – Failure to weigh relevant factors under s 75(2) constitutes appealable error - Whether Federal Magistrate erred in that the overall result was not just and equitable – Evidence did not support broad finding of Federal Magistrate that it was not unjust to notionally attribute to the appellant undisclosed assets – Finding of undisclosed assets to value of $104,686.00 unsound – Consequent orders do not satisfy requirements in s 79(4) of being just and equitable. FAMILY LAW - COSTS – COSTS OF APPEAL – Appeal allowed on error of law – Order for both parties to receive certificates under ss 6, 8 and 9 of the Federal Proceedings (Costs) Act 1981 (Cth). |
| Family Law Act 1975 (Cth), ss 75(2), 79 and 94AAA(3) |
Briese and Briese (1986) FLC 91-713
Gronow v Gronow (1979) 144 CLR 513; (1979) FLC 90-716
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
House v The King (1936) 55 CLR 499
K and K [2002] FamCA 1150
Mallet v Mallet (1983) 156 CLR 605
Neil v Nott (1994) 68 ALJR 509
| APPELLANT: | Mr Radic |
| RESPONDENT: | Mrs Radic |
| FILE NUMBER: | SYM | 5614 | of | 2006 |
| APPEAL NUMBER: | EA | 20 | of | 2007 |
| DATE DELIVERED: | 8 June 2007 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | Boland J |
| HEARING DATE: | 7 May 2007 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 19 January 2007 |
| LOWER COURT MNC: | [2007] FMCAfam 14 |
REPRESENTATION
| ADVOCATE FOR THE APPELLANT: | Mr Radic, in person |
| COUNSEL FOR THE RESPONDENT: | Mr Millar |
| SOLICITOR FOR THE RESPONDENT: | Brian Samuel & Associates |
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 Radic v Radic.
Orders
The appeal is allowed.
The matter be remitted for rehearing before a Federal Magistrate other than Federal Magistrate Altobelli as soon as possible.
That the Court grants to the appellant husband a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in relation to the appeal.
The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by her in relation to the appeal.
The Court grants to each of the parties a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of the parties in respect of the costs incurred by them in relation to the new trial ordered.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 20 of 2007
File Number: SYM 5614 of 2006
| Mr Radic |
Appellant
And
| Mrs Radic |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an appeal by the husband against orders made by Federal Magistrate Altobelli on 19 January 2007 at the conclusion of defended property proceedings under s 79 of the Family Law Act 1975 (Cth) (“the Act”). The wife resisted the appeal.
The appeal was heard by me as a single Judge pursuant to a direction made by Chief Justice Bryant under s 94AAA(3) of the Act on 21 February 2007.
Altobelli FM found that the parties’ property of $387,272.00 (in fact $387,727.00) should be divided as to 7.8 per cent or $30,521.00 to the husband and the balance to the wife, principally on the basis that the husband had failed to make a full, frank and complete disclosure of his financial position.
Before me, as before the Federal Magistrate, the husband was unrepresented, and the wife was represented by counsel. At the commencement of the hearing before the Federal Magistrate the transcript discloses the husband said he did not need the services of an interpreter, but the transcript later discloses that the husband gave his evidence through an interpreter. The husband had the benefit of an interpreter for the appeal.
Counsel for the wife, at the commencement of the hearing of the appeal, sought that I should dismiss the appeal as incompetent because the husband had not, in accordance with procedural orders made by me, filed any outline of argument, and particularly because his Notice of Appeal did not disclose proper grounds of appeal.
I rejected counsel for the wife’s application, and permitted the husband to make an oral application to amend his grounds of appeal, which were clarified in discussion with him, and thereafter to make oral submissions (see Neil v Nott (1994) 68 ALJR 509). I indicated that in the event there was any prejudice to the wife by allowing the oral amendment and submissions that I would provide an opportunity for her to file further written submissions. As it transpired counsel for the wife was able to deal with all of the husband’s submissions at the hearing.
At the outset of his arguments, counsel for the wife drew to my attention a number of mathematical errors in the judgment. I will refer to the errors later in these reasons.
The grounds of appeal
The husband relied on four grounds of appeal as follows:
1. That his Honour failed to give sufficient weight to the husband’s contributions.
2.That his Honour failed to give appropriate weight to relevant s 75(2) factors favouring the husband.
3.That his Honour made an error of fact in respect of the husband’s earnings which error vitiated the exercise of his discretion.
4.That his Honour was in error in that the overall result is not just and equitable.
I propose to consider these four grounds in three groups:
·the contribution grounds (including the asserted error in respect of the husband’s earnings);
·the s 75(2) challenge; and
·the just and equitable ground (including his Honour’s treatment of the asserted non-disclosure of the husband’s financial position).
The mathematical errors in the judgment
The mathematical errors referred to by counsel for the wife were as follows:
(a)That his Honour’s addition of the parties’ assets and liabilities in paragraph 4 was in error and should have read $387,727.00.
(b)That the addition in the table of assets held by the husband set out at paragraph 23 was wrong and should have been $48,521.00 rather than $30,521.00 as shown.
(c)The error in the total of assets in paragraph 23, resulted in a further error in the same paragraph in the calculation of the percentage of those assets to the overall pool at 7.8 per cent, when they represented 12.5 per cent of the known pool.
(d)That 8 per cent where appearing in paragraph 25 was in error and should have read 12.5 per cent.
(e)As a consequence of the error identified in the above paragraph that the percentage figures in paragraph 26 were in error and 27 per cent and $104,686.00 where appearing should have read 22.5 per cent and $87,238.00.
(f)That the sum of $104,686.00 where appearing in paragraph 27 was wrong and should have been $87,238.00.
Counsel for the wife submitted that none of the mathematical errors made any difference to the overall result. The husband did not oppose me noting the mathematical errors and made no submissions that the errors impacted on his Honour’s exercise of discretion.
Background
There is little background history set out in the Federal Magistrate’s reasons for judgment. The history can be gleaned from the record and those facts which are set out in the judgment.
The husband was born in Croatia in 1950 and was aged 56 years at the date of trial. The wife was also born in Croatia in 1961 and was aged 45 years at the date of trial.
The parties married in November 1984. The parties’ date of final separation was in dispute. The wife asserted the parties separated on 12 July 2001 and the husband asserted separation occurred on 1 June 2005. The parties were divorced in the Federal Magistrates Court on 24 August 2006.
There are two children of the parties’ marriage, namely S born in 1990 and K born in 1993. The children remained living with the wife after the parties’ separation.
At the commencement of the parties’ cohabitation they had no assets of significance, other than a block of vacant land on the central coast of New South Wales which the husband asserted was acquired by him prior to the marriage.
In 1986 the parties purchased a unit (“the first property”) for approximately $68,000.00. The purchase price was funded by borrowings of $50,000.00 from the Advance Bank and the balance from the parties’ savings.
The parties sold the first property in 1989 for a sale price of $159,000.00. They thereafter applied the net proceeds of sale to the purchase of the second property. The second property was sold on 9 March 2001 for a sale price of $508,000.00. The parties received net proceeds of sale of $380,319.82.
The wife asserted in May 2001 they leased a property (“the third property”) and remained living in the property until 13 November 2001. The wife asserted the parties lived separately and apart in the third property from 1 July 2001.
The husband asserted the parties first separated in July 2001 when they organised an informal property settlement which was not finalised by way of consent orders. The net proceeds of sale of the second property were divided between the parties as to approximately 70 per cent or $270,000.00 to the wife and 30 per cent or $110,319.82 to the husband. In addition, the parties retained their own bank accounts, and the wife retained her then superannuation entitlement of $13,382.13. The husband retained a Toyota Hilux motor vehicle, the land on the central coast of New South Wales, and the contents of the matrimonial home.
In November 2001 the wife purchased in her sole name a home unit (“the wife’s unit”) for a purchase price of $307,000.00. The wife used her share of the proceeds of sale of the second property, together with borrowings of $40,000.00 from the Westpac Bank to complete the purchase.
From July 2001 until 2005 the husband asserted he and the wife cohabited, and he continued to live in the wife’s unit. The wife disputed the husband’s evidence but conceded he lived with her from July 2001 until November 2001, and from June 2002 until March 2003. She asserted she and the husband separated under the one roof in July 2001.
Throughout the marriage the wife was employed as a factory worker or in a nursing home. The wife worked from 1984 until May 1990 when she left that employment during her pregnancy with the parties’ first child. The wife resumed work in July 1991 and remained in employment until November 1992 shortly before the birth of the parties’ second child. The wife thereafter engaged in part-time work from June 1993 until July 1994. The wife resumed work in July 1994. At the date of the trial the wife was engaged in two part-time positions in nursing homes earning approximately $250.00 to $450.00 per week at one home, and $150.00 to $250.00 per week at the second home.
The husband asserted he applied his net share of the sale proceeds of the second property to the purchase of a motor vehicle for the wife and to acquire machinery and equipment, including an Ihi excavator which he used in a business conducted by him as an excavator operator. He asserted the balance of his share was used for family living expenses.
The husband asserted on 10 October 2004 his machinery and equipment was stolen and a report made to the Police. He said the Ihi excavator was not insured.
The husband asserted he thereafter replaced “some of the machinery and equipment by hire purchase/lease of further equipment”.
From July 2001 until the parties’ separation in June 2005 the husband asserted he applied his income for family purposes.
The husband paid child support of $200.00 per week on a voluntary basis from late 2005.
The Federal Magistrate’s reasons for judgment
At the commencement of his reasons the Federal Magistrate noted that the husband sought orders that the wife pay to him “an amount of 35% of the net value” of the wife’s unit:
or if it is not possible for the wife to pay him that amount within 42 days, then for payment equal to an amount of 50% of the current net market value on a sale of the property to take place when the youngest child turns 18, that is on or before 6 January 2011”. (paragraph 1)
The Federal Magistrate noted that the matter proceeded before him with the husband appearing on his own behalf having had “legal assistance at least up to and including 31 October 2006” (paragraph 2).
The Federal Magistrate noted that the wife sought orders that “she be declared the sole beneficial owner to the exclusion of the husband of the [the wife’s unit]” (paragraph 3).
Thereafter the Federal Magistrate reproduced a statement of assets and liabilities which had been handed up by counsel for the wife. I have already referred to the mathematical error in the reproduction of that table of assets and liabilities.
The Federal Magistrate noted the husband did not dispute the statement, including the value of the wife’s unit at $320,000.00. However the Federal Magistrate noted:
As will be seen below there was, however, a real issue in these proceedings about the value of the husband’s excavator business or, to be more precise, the equipment comprised in that business and used by him in its day to day operation.” (paragraph 5)
Having set out the relevant legal principles to be applied in determining an application for settlement of property under s 79 of the Act, the learned Federal Magistrate noted “[i]n essence there were only two real issues in this case”. His Honour identified the matters in issue as:
·the date of separation of the parties; and
·the true extent of the husband’s income and assets.
Thereafter the Federal Magistrate recorded the differing evidence of the parties concerning their final separation and concluded that the parties’ separation did not occur until June 2005 as asserted by the husband. His Honour said:
I find therefore that the final separation is as alleged by the husband in this matter, i.e. on or about 1 June 2005 and that the husband continued to make financial and non financial contributions until that date. If there had been no further issue in this case, I would have assessed the direct and indirect financial and non-financial contributions of both the husband and the wife as at the date of separation to be equal. I would also have assessed that having regard to the matters referred to in s.75(2) of the Family Law Act there should be a further adjustment in favour of the wife in the amount of fifteen percent. (paragraph 16)
The Federal Magistrate then turned to what he described as “the second major issue”, namely whether the husband had “fully and frankly disclosed the true extent of his income and assets” (paragraph 17). The Federal Magistrate noted that as a result of cross examination “a number of real uncertainties about the husband’s finances emerged, e.g. in relation to the husband’s income” (paragraph 17). The Federal Magistrate recorded the discrepancy in the husband’s evidence that his income was $500.00 per week and that he disclosed weekly income in his two Financial Statements of $550.00 and $700.00 per week respectively. The Federal Magistrate recorded his concern that the husband had failed to produce documents pursuant to a subpoena when he had had “more than adequate notice”.
The Federal Magistrate also recorded:
The cross-examination revealed significant irregularities about how the husband managed to borrow money to purchase equipment through his business using lease finance and hire purchase facilities, having regard to his disclosed income. It is inconceivable to me that the husband could possibly borrow as much as he could and purchase equipment having regard to the income he has disclosed to the court. In any event, the husband’s Financial Statements simply do not have a ring of truth to them. He claims $75 per week for hire purchase and lease payments and yet acquired new assets in 2005 to the value of $52,042, all using borrowed funds. The written down value of the equipment in his tax return is $67,052. (paragraph 17)
The Federal Magistrate concluded “[i]n short, the husband’s evidence about his finances does not make sense. I am left with absolutely no idea of what the husband’s real income is or what the true value of his equipment is.” The Federal Magistrate further said:
If I accept the husband’s own evidence that he earns $700 per week or $36,400 per annum, and then add back depreciation of $17,585, all in an attempt to get a sense of how much cash the husband actually has available to him, that makes $53,985 per annum ... As for his assets, he says in his Financial Statement that they total up to $37,000, but that allows nothing for his business assets. When I refer to assets here I mean the term at its broadest sense to include both superannuation and non-superannuation assets. (paragraph 18)
Thereafter the Federal Magistrate set out the relevant authorities dealing with the obligation to make a full, frank and complete disclosure. He then extracted from the table he had previously inserted in paragraph 4 of his reasons, the property in the sole name of the husband as follows:
Property
Value
IAG Shares
$4686.00
[The central coast of New South Wales] Property
$10,000.00
Toyota Hi-Lux
$3,000.00
Excavator business
NK
Mitsubishi Truck
$20,000.00
Superannuation
$ 10,835.00
Total
$30,521.00
I have already noted that the total in the table is in error and should read “$48,521.00”. Having repeated his earlier finding that had the pool of assets been known he would have assessed the husband as entitled to 35 per cent of that pool, his Honour then posed for himself the question of whether the husband retaining only the assets set out above was appropriate, saying “I am satisfied there was non-disclosure by him, but am I satisfied that it was to the extent of at least 27% of the asset pool?” (I note that figure by reason of the mathematical error adjusts to 22.5 per cent of the asset pool, being the difference between 35 per cent of the asset pool which the Federal Magistrate found to be the husband’s entitlement, but for the non-disclosure, and the sum to be retained by him). Having noted the husband on his own evidence, after the purchase of the motor vehicle for the wife, retained about $80,000.00 which he expended on plant and equipment for his business, his Honour said “[h]is own evidence, plus his cross examination, indicates that he then spent more money on equipment.” The Federal Magistrate concluded “[t]here is at least $80,000.00 there in terms of potential value that is not presently indicated on the Statement of Property and Liabilities that was not disputed by the husband.” Having noted the purchase price of the equipment bore little resemblance to its current value the Federal Magistrate recorded that adjustment should be off-set by the further purchases made by the husband. The Federal Magistrate concluded:
At the risk of repeating myself I restate that litigants who come to this court to ask for its assistance in determining their disputes about property settlements need to understand that the philosophy of financial disclosure here is summed up by this phrase: “all cards on the table face up”. The husband has not done this in this case. (paragraph 28)
Appellate principles
This is an appeal against a discretionary judgment. The circumstances in which there may be appellate interference with a discretionary judgment are well known. In Gronow v Gronow (1979) 144 CLR 513; (1979) FLC 90-716 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. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge's discretionary decision on grounds which only involve conflicting assessments of matters of weight.
In House v The King (1936) 55 CLR 499 Dixon, Evatt and McTiernan JJ said at 504-5:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.
The contribution grounds
It is convenient to first consider the husband’s complaint that the Federal Magistrate made an error of fact in his findings about the husband’s earnings, and that error affected the whole of his judgment.
Before the Federal Magistrate the husband relied on his affidavit sworn on 30 October 2006, which affidavit was prepared by his former solicitor. The husband did not set out any information concerning his earnings throughout cohabitation in that affidavit. He made a generalised assertion that he “made significant financial and non-financial contributions towards the property from the time of reconciliation in 2001 to the time of final separation in June 2005”. He also relied on two financial statements, one prepared by the husband himself and filed on 11 July 2006 (“the first financial statement”), and a later document filed on 31 October 2006, prepared by his former solicitors (“the second financial statement”).
In the husband’s first financial statement he disclosed average weekly earnings which he estimated to be $700.00 per week, and he inserted “$16” in respect of income tax payable. The husband disclosed his occupation as “excavator”. In his second financial statement the husband disclosed total estimated income of $550.00 per week and disclosed “Nil” for income tax payable.
In cross examination the husband conceded he had not filed an income tax return for the year ending 30 June 2006.
In evidence before the Federal Magistrate was the husband’s income tax return for the year ending 30 June 2005. The income tax return, Exhibit 1, was the only corroborative evidence before the Federal Magistrate about the husband’s assertions concerning his earnings. That return disclosed the husband’s taxable income was a tax loss of $13,558.00. He derived a total disclosed business income of $29,002.00 and total expenses, including lease expenses of $3,765.00 and other expenses of $13,218.00, of $42,560.00. Deducting the depreciation expense of $17,585.00 resulted in the husband having net income of $4,027.00 per annum or $77.44 per week.
The Federal Magistrate noted the husband conceded in cross examination that “for the year ending 2006 his income was roughly close to his income for the year ending 2005”. As I have already recorded, the Federal Magistrate further said “It is inconceivable to me that the husband could possibly borrow as much as he could and purchase equipment having regard to the income he has disclosed to the court. … He claims $75 per week for hire purchase and lease payments and yet acquired new assets in 2005 to the value of $52,042 all using borrowed funds”.
In answer to questions about his income the husband said:
You’ve produced to the Court today a tax return for the year ending 30 June 2005, haven’t you?---Yes.
Yes?---Yes.
You receive income from your work as an excavator, don’t you?---Yes.
And you still do that work?---Yes.
And you say that you now make about $500 a week?---Roughly.
That’s after paying all your expenses?---After, yes, that’s all.
After paying all your business expenses?---Yes.
And that is after you pay for the equipment that you use?---Yes.
You understand my questions?---Yes.
...
Is the amount of income you get in your business now about the same as it was during the 2006 tax year?---Roughly, yes, I believe so, yes.
(transcript 8 December 2006, page 6, lines 38-47, page 7 lines 1-8; lines 47-48)
I note that the Federal Magistrate endeavoured to calculate the husband’s income by using the figure in the husband’s first Financial Statement ($700.00 x 52 = $36,400.00, and adding back depreciation of $17,585.00 to give an income of $53,985.00) and concluded “I am still left wondering whether this is an accurate guess of what his real income is”.
Two aspects of the evidence of the husband’s income and expenditure are difficult to reconcile. First, the husband’s tax return for the financial year ending 30 June 2005, which he conceded was roughly similar to his 2006 income position, disclosed a tax loss, or adjusted for depreciation, a very modest income of $4,027.00 per annum. Secondly, the husband’s claimed expenses for hire purchase and leasing costs apparently differ between his first and second financial statements. In his first financial statement he disclosed weekly payments to C Leasing of $828.44, E Finance of $875.49 and L Finance of $224.41. In cross examination he acknowledged lease payments of $828.44 per month for a Toyota skid steer, but said “[n]ot till the end” which may imply that he was referring to this sum or another sum, as due by way of residual payment on the termination of the lease. He also agreed he had purchased a Bob Cat for $27,000.00 and payments for that piece of equipment were $875.49 per month. If both were monthly lease or hire purchase payments his annual payments would be $20,447.16 per annum. His income tax return disclosed payments of $3,765.00 by way of lease payment and other expenses of $13,218.00, a total of $16,973.00. It is not clear whether the new lease expenses for a whole year were included in his 2005 income tax return, nor is it clear what “expenses” were claimed by the husband as business expenses in addition to motor vehicle expenses, which could account for part of the cash income disclosed by the husband.
It appears to me that the Federal Magistrate’s finding that it was “inconceivable to me that the husband could possibly borrow as much as he could and purchase equipment having regard to the income he has disclosed to the court. … He claims $75 per week for hire purchase and lease payments and yet acquired new assets in 2005 to the value of $52,042 all using borrowed funds”. was perhaps too widely stated. The husband’s income tax return disclosed, disregarding the depreciation expense, his income did cover business expenses in 2005. I also note that the husband was not afforded the opportunity by way of re-examination to clarify any matter raised in the cross examination by counsel for the wife, which cross examination the Federal Magistrate described as “skilful”.
However I accept that the husband’s conflicting financial statements and income tax return were at least confusing and did not clearly or fully explain the husband’s income. The evidence disclosed by the husband’s income tax return was, prima facie, inconsistent with an ability to pay child support or living expenses.
I am not satisfied that the husband has established error by the Federal Magistrate in his overall findings about the husband’s income notwithstanding the comments above.
It is convenient for me at this point to consider the husband’s complaint that the Federal Magistrate gave insufficient weight to his contributions. The Federal Magistrate’s assessment of contributions was brief. He said without reviewing either party’s evidence about contribution throughout their lengthy marriage:
I find therefore that the final separation is as alleged by the husband in this matter, i.e. on or about 1 June 2005 and that the husband continued to make financial and non financial contributions until that date. If there had been no further issue in this case, I would have assessed the direct and indirect financial and non-financial contributions of both the husband and the wife as at the date of separation to be equal. I would also have assessed that having regard to the matters referred to in s.75(2) of the Family Law Act there should be a further adjustment in favour of the wife in the amount of fifteen percent. (paragraph 16)
Later in his reasons, again on the topic of contributions, the Federal Magistrate said:
There is a discrepancy between what I believe the husband’s entitlement would be if there were full disclosure (35%) and what I know he will receive on the basis of what he already has (rounded off to 8%), such discrepancy being 27%. This, of course, is solely attributable to the husband because of his non-disclosure. I am satisfied there was non-disclosure by him, but am I satisfied that it was to the extent of at least 27% of the asset pool? (paragraph 25)
The requirement for a judicial officer determining a claim under s 79 to assess and weigh contributions is not in doubt (see Mallet v Mallet (1983) 156 CLR 605 at 625). The wife’s affidavit evidence, which was not challenged, set out the fact the parties had no assets at the commencement of cohabitation, detailed the acquisition of assets throughout their cohabitation, her cessation of employment shortly before the birth of each child and thereafter part-time employment. That evidence was capable of supporting a finding that the parties’ contributions at least up to the sale of the second property could have been implied to be equal. The husband did depose to the purchase of a motor vehicle for the wife from his share of the proceeds of sale of the second property which he acknowledged in cross examination could have been purchased for $17,000.00. He did not accept the proposition the wife contributed $4,000.00 to the purchase price. He conceded the wife paid the mortgage payments, strata levies and rates in respect of the wife’s unit. He deposed to contributing to family expenses after 2001 until 2005, and thereafter paying child support of $200.00 per week on a voluntary basis. He also gave evidence of applying the share of the proceeds of the second property retained by him to the purchase of an Ihi excavator, and a Daihatsu truck and contributing to family living expenses. Neither party’s affidavit material or oral evidence set out any non financial contributions or contributions to the welfare of the family, including care of the two children.
Although the Federal Magistrate did not analyse the parties’ respective contributions throughout their cohabitation of some 21 years’ duration, particularly post July 2001, or give additional weight to the wife’s contributions post July 2001 as asserted he should by her counsel, it does not appear to me that he fell into appealable error in his initial finding that the parties’ contributions should be regarded as equal absent any countervailing evidence of contributions by the wife which outstripped the contributions of the husband.
I will return to the Federal Magistrate’s overall assessment of contribution including his finding the husband had undisclosed assets to a value of at least $104,686.00 based on the lack of full and frank disclosure by the husband when dealing with the challenge that the orders were not “just and equitable”.
Asserted failure to assess relevant s 75(2) factors favouring the husband
The Federal Magistrate’s discussion of relevant factors under s 75(2) was confined. The Federal Magistrate said at paragraph 24 of his reasons:
Had the pool of assets been known, I would have assessed the husband as being entitled to 35% of that pool, i.e. $135,704.45. This reflects equal contribution, and a 15% adjustment in favour of the wife for s 75(2) factors that include her responsibilities associated with caring for the children, disparity in earning capacity etc. (paragraph 24)
The Federal Magistrate’s reasons do not contain any assessment of s 75(2) factors relevant to the husband. The evidence disclosed that the husband was aged 56 years, and his assertion he was “finding it more difficult to continue to do the hard physical work that I have always done”. There was no discussion by the Federal Magistrate of the parties’ ages or capacity for employment. There was also no discussion of the parties’ relative financial circumstances other than a finding that the husband’s income exceeded that of the wife. The evidence disclosed the wife had the benefit of occupation of the wife’s unit, compared and contrasted to the husband’s living arrangements. No consideration of, or weight given to, the husband’s obligation to pay child support for the two children of the marriage is found in the Federal Magistrate’s reasons, although it was accepted by his Honour that the husband had made voluntary payments of child support. It is clear from the Federal Magistrate’s reasons that he did not make a greater adjustment in the wife’s favour under s 75(2)(o) for the non-disclosure he found established, but rather he made that adjustment in his contribution based assessment, which I discuss later in these reasons.
It appears to me that the Federal Magistrate in identifying only two issues requiring determination at the commencement of his reasons may have caused himself to fall into error. Whilst the Federal Magistrate set out at the commencement of his reasons the preferred approach to determination of an application under s 79 by quoting from Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143, he did not direct his attention to the “relevant matters referred to in ss. 79(4)(d), (e), (f) and (g), (‘the other factors’) including, because of s. 79(4)(e), the matters referred to in s. 75(2) so far as they are relevant”.
The Federal Magistrate’s reasons do not disclose a weighing and assessment of relevant factors under s 75(2) and thus the support for a finding of a 15 per cent adjustment in favour of the wife is not evident. I am satisfied the failure to weigh relevant factors under s 75(2) constitutes appealable error.
The just and equitable ground
In determining that the husband should have his overall entitlement reduced by 27 per cent (in fact 22.5 per cent) the Federal Magistrate posed for himself the question “I am satisfied there was non-disclosure by him, but am I satisfied that it was to the extent of at least 27% of the asset pool?”. As I have noted above the Federal Magistrate referred to this being equivalent to $104,686.00 (in fact $87,238.00). The Federal Magistrate noted that the husband had expended $20,000.00 on the motor vehicle for the wife (which it appears he included in the list of the parties’ assets at E$7,000.00) and spent the balance principally on plant and equipment. Having noted the husband’s evidence in cross examination that he had spent more than that sum on plant and equipment the Federal Magistrate said:
Of course its purchase price often bears little resemblance to its current value. To off-set this there is the evidence that further equipment was purchased the value of which is not known. Having completed this exercise I am satisfied that it is not being unjust to the husband to notionally attribute to him undisclosed assets having a value of at least $104,686.00. (paragraph 27)
It appears to me that if the Federal Magistrate’s findings on non-disclosure, and the broad quantum of assets retained by the husband are not supported on the evidence, then the orders made cannot be “just and equitable”.
The task facing the Federal Magistrate was not easy. The husband was not legally represented and was giving evidence with the assistance of an interpreter. He did not cross examine the wife, nor did he tender any documents to the Court. The transcript reveals he did produce some documents pursuant to a subpoena which were examined by the wife’s counsel, and appeared to form the basis for some of his cross examination of the husband (see transcript, 8 December 2006, pages 3 and 7).
The husband’s first financial statement disclosed under “property owned”, in addition to a claimed interest in the wife’s unit, land on the central coast of New South Wales at a current value of $5,000.00, a bank account with a balance of $927.70, a 1994 Toyota Hilux motor vehicle with a current value of $3,000.00, and a 2001 “Dahtsu [sic] Delt90A $150-000.00”. Under the heading “Your liabilities”, Item 48 of the form was completed “Total income tax assessed and unpaid for the last financial year Date due 1/7/2003 to 30.6.2004 $58,134.00” and Item 49 “Total income tax assessed and unpaid in previous financial years 1.7.2004 to 30.6.2005 $29,009.00”. The husband’s income tax return disclosed gross earnings of $29,002.00 in the financial year ending 30 June 2005. It appears likely the husband inserted his gross taxable income in error under this item, and that he made an error in the value he attributed to the Daihatsu truck.
Significantly, in his first financial statement the husband disclosed the following further liabilities:
50. Loans – [L] Finance Pty Limited $8,008.76
…
52.Hire purchase/lease – [C Leasing] [ ] $44,600.00
Date of final payment 1/2/2010
Full names of all persons named in the Agreement – [Mr Radic]
…
Name of Lender – [E] Finance Corpora [sic] $31.259.88
Date of final payment 3/1/2008
In his second financial statement the husband again disclosed the land on the central coast of New South Wales but at a value “Net 5-10,000”, bank accounts “No A/C”, investments “IAG shares … $4,006”, and the 1994 Toyota Hilux motor vehicle with a joint estimated value of $3,000. He also disclosed in Item 41 “Interest in business... [Mr Radic], sold [sic] trader, c/- [ ], 100% share as $Negligible (lease of equipment with nil residual value)” and a Mitsubishi Truck at a current market value of $20,000. The Financial Statement did not particularise any liabilities.
The schedule to the husband’s income tax return (Exhibit 1) disclosed the following:
Depreciation Worksheet
Title Excavation Equipment
Transfer to Main Business
Pooling General pool Decline in Value STS Tax Payer
| Closing Value of Pool in previous income year | @ 30.00 % = | |||
| New assets allocated in 2005 | 52,042 | @ 15.00 % = | 7,806 | 44,236 |
| Existing assets allocated to pool | 32,595 | @ 30.00 % = | 9,779 | 22,816 |
| Second element costs in 2005 for existing assets | @ 15.00 % = | |||
| Total | 17,585 | 67,052 |
Total termination value of pooled assets no longer held 0
Pool Closing Balance in 2005 67,052
Total Opening Acquisition Acquisition Private
Cost Date Cost %
EXCAVATOR 0.00
49,131 18,019 Existing
DAIHATSU TRUCK [ ] 0.00
35,710 13,902 Existing
TRUCK RAMPS 0.00
0 674 Existing
BOBCAT STOLEN INSURED PAID OUT
40,818 0 Existing
EXCAVATOR
12,015 12,015 New
ROCK HAMMER
9,772 9,772 New
RUBBER TRACKS
1,838 1,838 New
BOBCAT & EXCAVATOR
28,417 28,417 New
Those assets had a total value after depreciation of $67,052.00.
The husband’s cross examination revealed the L Finance loan had been taken out to obtain an English disc program for the children, and that it was returned by the parties as the children did not use it. The husband’s evidence was that he paid $5,000.00, and after, or as a consequence of, some court proceedings, the loan was no longer payable or had been compromised.
The husband’s cross examination in respect of equipment was as follows:
The equipment that you use includes a skid steer?---Yes.
What is that?---A bob cat.
A bob cat. You have a Toyota skid steer, don’t you?---Yes.
You obtained that in February 2005, didn’t you?---Yes.
You bought it for $44,600?---I didn’t bought it, I lease it.
Well, you bought it with lease finance?---Yes.
But that was the purchase price?---The first one yes, and the second one.
And you had to make a lease payment of $828.44 per month, don’t you?---Yes, yes.
And you do make those payments?---Not till the end, otherwise they take the machine away.
That’s right. And you have that lease for five years?---It’s now the second.
Five years from the start of the lease?---Yes, but this is the second machine.
You also have a bob cat, an excavator, that you bought with lease money, in January 2005, don’t you?---Yes.
And the purchase price of that was $27,000, want [sic] it?---Yes, I think it is, yes.
But you have it on lease?---Hire purchase.
Well, lease or hire purchase for three years?---Yes.
And the payment you have to make is $875.49 per month?---Yes.
And you are making the payments, aren’t you?---Yes. (transcript, 8 December 2006, page 7, lines 10-45)
...
You have the tax return there again, Mr [Radic]? Mr [Radic], you have your tax return there, don’t you?---Yes.
Do you see it’s open at the page now headed “Depreciation schedule” up in the top left-hand corner?---Depreciation.
Yes. And it lists the equipment you owned during that year.---Yes.
Do you see the last, I think, four items on the page are all described as being new. See the word “new” there.---New, not brand new, but they were new to me.
New, purchased by you?---Yes.
And the purchase price is shown there?---Yes.
And that’s what you paid to buy that equipment during that year, isn’t it?---Yes.
How did you afford to do that if your taxable income was, in fact, a loss of over $13,000?---I borrow from somebody.
I see. Do you own shares in any company apart from IAG?---No.
You do have shares in IAG, don’t you?---Yes, nothing else. (transcript, 8 December 2006, page 9, lines 15-39)
...
Mr [Radic], you presently own some excavators, not leased ones, you own some excavators, yourself, don’t you?---No, just leased.
The ones refers [sic] to in your tax return that I showed you that I new [sic], you bought some new yourself, didn’t you?---With the lease, with the lease.
You also own a Mitsubishi truck, don’t you?---Yes.
You did own, until this year, a Daihatsu truck, didn’t you?---Correct.
And you sold that, didn’t you?---Correct.
How much did you sell it for?---$20,000.
How much did you pay to the [sic] buy the Mitsubishi truck?---About $14,000, and then I have to fix it.
I beg your pardon? About 14?---14 grand, and then I did some work on it, so probably $20,000.00. (transcript, 8 December 2006, page 15, lines 6-24)
...
You insure the skid steer and the bob cat and excavator that you have on lease, don’t you?---They are not insured now, because they cut me off. They don’t want to insure me anymore.
Yes, that follows you making a claim, doesn’t it, about the theft of equipment?---Yes.
From a building site?---Yes.
You reported to police, didn’t you?---True. (transcript, 8 December 2006, page 15, lines 30-39)
...
I see. I suggest, Mr [Radic], that the reason why in early 2005 you took out a lease for the skid steer and a lease or hire purchase for the bob cat and excavator was because you’re very confident about the future of your business?---That’s a [sic] very confident because I didn’t have anyone to work with to do the business.
And you had so much work available to you that you needed both lots of equipment, didn’t you?---Not too much work, it’s only work I can do without the equipment.
And you needed all of the equipment that is referred to in the depreciation page of your tax return that you were just shown, didn’t you?---Yes.
You still have all that equipment, don’t you?---I’ve got a few, yes. Sometimes I work. (transcript, 8 December 2006, page 16, lines 15-29)
...
Right. How much did you pay to purchase the IHI excavator?---Which one, first one or second one?
The one you bought with proceeds of the sale of the property.---Not quite sure. About $50,000, $54,000, something like that, I’m not sure.
You also bought a Daihatsu truck, didn’t you?---Yes.
For $40,000 to $45,000?---$47,000, $48,000.
The rest of the money you used to live on?---To live, yes...
(transcript, 8 December 2006, page 17, lines 36-46)
At paragraph 18 of his reasons the Federal Magistrate commented on the husband’s second financial statement noting “[a]s for his assets, he says in his Financial Statement that they total up to $37,000 but that allows nothing for his business assets.” With respect to his Honour, that summary is not a fully accurate reflection of the husband’s second financial statement having regard to the husband’s disclosure at Item 41. I will return to this finding in light of other evidence before the Federal Magistrate.
The requirement of parties in financial matters before the Court to make a full, frank and complete disclosure of their financial affairs is not in doubt. The husband signed a financial statement before a lawyer affirming he had read
r 24.03 of the Federal Magistrates Court Rules 2001. That rule provides as follows:
(1) A party required under this Part to file a financial statement or affidavit of financial circumstances must make in the statement or affidavit a full and frank disclosure of his or her financial circumstances, including details of:
(a) any vested or contingent interest in property (including real or personal property, superannuation and legal and equitable interests); and
(b) income from all sources, including any benefit received in relation to, or in connection with, the party's employment or business interests; and
(c) the party's other financial resources; and
(d) any trust:
(i) of which the party is, or has been since the separation of the parties, the appointor or trustee; or
(ii) of which the party, or the party's child, spouse or de facto spouse is, or has been since the separation of the parties, an eligible beneficiary as to capital or income; or
(iii) of which a corporation is an eligible beneficiary as to capital or income if the party, or the party's child, spouse or de facto spouse is, or has been since the separation of the parties, a shareholder or director of the corporation; or
(iv) over which the party has, or has had since the separation of the parties, any direct or indirect power or control; or
(v) of which the party has, or has had since the separation of the parties, the direct or indirect power to remove or appoint a trustee; or
(vi) of which the party has, or has had since the separation of the parties, the power (whether subject to the concurrence of another person or not) to amend the terms; or
(vii) of which the party has, or has had since the separation of the parties, the power to disapprove a proposed amendment of the terms or the appointment or removal of a trustee; or
(viii) over which a corporation has, or has had since the separation of the parties, a power mentioned in subparagraphs (iv) to (vii), if the party is a director or shareholder of the corporation; and
(e) any gift or other disposition of property made by the party since the separation of the parties; and
(f) if there is a partnership, trust or company (except a public company) in which the party has an interest, copies of the 3 most recent financial statements and the last 4 business activity statements lodged by the partnership, trust or company.
The purpose behind the obligation to make a full and frank disclosure is succinctly set out in Briese and Briese (1986) FLC 91-713 where Smithers J said at 75,180 – 75,181:
I believe that a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner. The Regulations, and now the Rules, are not intended as a vehicle to mask the true position, or as an aid to confusion, complexity or uncertainty. They are not intended as the outer limits of the obligation of financial disclosure, but as providing avenues towards disclosure. The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding.
…
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred. Livesey v. Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties.
The relevant authorities, including the above statement in Briese and Briese (supra), are conveniently and fully discussed in the decision of the Full Court in K and K [2002] FamCA 1150. Although lengthy, the discussion is apposite to this matter, particularly to the issue of value to be attributed to undisclosed assets:
47.There have been a series of reported cases in which the Full Court has discussed the task of a trial judge in a property case where the trial judge is unable to ascertain the extent of the pool of assets due to a lack of full and frank disclosure on behalf of one of the parties. Those cases were most recently summarised in the decision of Chang and Su (2002) Fam CA 156. Mr Chang was a Taiwanese businessman who, in an application to immigrate to Australia lodged in 1991 indicated that his net assets exceeded A$4.55 million. After his marriage to Ms Su broke down and she brought property proceedings in Australia he asserted that his financial position had deteriorated. He was eventually ordered by Moore J to transfer a home to the wife and to discharge an encumbrance upon it. He asserted that there was no evidence before the trial Judge of his capacity to discharge the mortgage. The trial Judge had said:
“I am satisfied that the husband has not made a full and proper disclosure of his financial position and I could make no finding as to the extent of his assets now…but it is likely he remains a person of substantial means in Taiwan.”
48.In the course of dismissing the appeal the Full Court quoted extensively from a line of cases discussing how the Court can make orders where there is no visible pool of assets. The Court said:
“Ground 2 - no visible pool of assets.
57. The submissions put to us were that as a necessary prerequisite to making an order under the provisions of s 79 of the Act the Court must determine that there exists adequate property to meet the order and make the order appropriate in the circumstances of the case. An order can only be seen to be appropriate or just and equitable if it can be measured against the whole of the available assets of the parties.
59. Counsel acknowledged that there exists a class of cases where the Court cannot be satisfied as to the extent of the property and can thus be less cautious than might otherwise be the position when making an order. Particular reference was made to Mezzacappa v Mezzacappa (1987) FLC 91-853; 11 Fam LR 957. In that case the trial Judge held that the husband had failed to adequately account for $200,000 which had been in his possession some 15 months earlier. The trial Judge said:
‘I can only conclude that the husband has the vast bulk of that money and has invested it wisely over the last two years since he removed it from the parties' bank accounts.’
…
67. The law to be applied and the approach that may be adopted in cases where, through the lack of a full and frank disclosure, the Court is unable to fully ascertain the extent of a party's wealth, is well settled (see Stein v Stein (1986) FLC 91-779; 11 Fam LR 353; Mezzacappa v Mezzacappa (1987) FLC 91-853; 11 Fam LR 957; Black and Kellner (1992) FLC 92-287; 15 Fam LR 343 and Weir v Weir (1993) FLC 92-338; 16 Fam LR 154).
68. In Black and Kellner (supra) the appellant had submitted that, absent findings as to the extent of his wealth, the order made by the trial Judge was plainly unjust. The key finding of the trial Judge was:
‘...the failure on the part of the [husband] to disclose his financial position to the court and his attempts to conceal this matter from the court, which has left the court in the position of not knowing what the [husband’s] financial position is, except that he deliberately underestimated it.’
69. Chief Justice Nicholson (with whom Ellis and Cohen JJ agreed), said in dismissing the appeal:
‘As senior counsel for the wife pointed out, the first step in proceedings for a property settlement is for the court to ascertain the wealth of the parties and in this regard it is of interest to note the remarks of the Full Court in the case of Giunti and Giunti (1986) FLC 91-759, particularly at 75,555 where the court commented:
“It is obviously desirable as a general principle that the court should first of all identify the pool of assets available and evaluate it. If each party complies with his or her obligation to make a full and substantive disclosure of their financial affairs- see Briese and Briese; (1986) FLC 91-713, affirmed by the Full Court in Oriolo v Oriolo (1985) FLC 91-653, there is no problem, although there may be disputes as to valuation.
However if, as here, one party fails to fulfil that obligation, is it open to that party then to rely on the absence of satisfactory evidence to prevent the making of an order against him or her which otherwise justice and equity would require? It would be simple, if that were the case, to evade the jurisdiction of this court, not by outright refusal which would attract sanctions but by obfuscation and evasion.”
The Full Court in Oriolo and Oriolo, supra, referred with approval to the remarks of Smithers J in Briese and Briese, and it is perhaps worth reiterating a portion of his Honour's statement at 75,181 where he said, after referring to the decision of the House of Lords in Livesey v Jenkins (1985) All ER 106:
“... I believe that the conclusion of the House of Lords in the case of Livesey v Jenkins… is apposite, namely that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of discretion. This is quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations would only exist in so far as statute or court rules required.
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred.”
Regard also may be had to the decisions of this court in Stein and Stein (1986) FLC 91-779 at 75,676 and Mezzacappa and Mezzacappa (1987) FLC 91-853.
In the present case a similar situation arose. The assets of the parties could not be ascertained in full because of obvious non-disclosures.
It is apparent that if his income was more substantial than he claimed, then this would be reflected in the value of his practice and in this regard it is perhaps of interest to note that the wife's former husband's practice of a similar nature, was capable of being sold for a figure in 1973 terms which would if reflected in 1991 terms, represent a very substantial asset indeed. Finally, another part of a judge's obligation in cases of this nature in considering s 75(2) factors is to consider the respective incomes of the parties. Again, through the behaviour of the husband, this was something which the learned trial judge could not do.
It follows from what I have said that I do not believe that his Honour's judgment can be attacked upon the basis relied upon by the husband.’
70. In Weir v Weir (1993) FLC 92-338;16 Fam LR 154 the Full Court (Nicholson CJ, Strauss and Nygh JJ) dealt with an appeal against the refusal by the trial Judge to make orders in respect of unascertained property because he could not quantify it. The Court said at 79-593:
‘This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black and Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs. See also Giunti and Giunti (1986) FLC 91-759, and Mezzacappa and Mezzacappa (1987) FLC 91-853. It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
It is true that in the case of Monte and Monte (1986) FLC 91-757, the Full Court said that to found jurisdiction under s. 79 in relation to property other than that which had been identified, the trial judge was obliged to make a finding as to the existence and value of other undisclosed property, even though the unsatisfactory nature of the evidence made it necessary to express that finding in the most general terms both as to identify and value.
We confess to some difficulty with this proposition. We should have thought that the Court's jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.
The difficulty then arises as to what order should be made. However, we are troubled by the proposition which seems to arise from Monte and Monte that if a party is either cunning enough or vague enough to cover his or her tracks sufficiently to prevent a Court making a finding as to the amount that has not been disclosed, then the other party fails. We do not believe this to be the law and in so far as the decision in Monte and Monte supports such a proposition, we do not believe that it should be followed.’
71. It was clearly open to Moore J to apply these principles to the matter before her. Her Honour concluded that the extent of the husband's wealth, whatever it might have been, was sufficient to justify the order she was proposing to make. This is not an appeal based upon the lack of reasons why her Honour concluded it would be just and equitable to put the wife in a position of having an unencumbered home. It is an appeal which is based upon the inability of the trial Judge to make any order under s 79 without first ascertaining the pool of assets.
72. For reasons which we have explained, we conclude that her Honour made findings sufficient to indicate that the husband was a man of substantial wealth and well able in the circumstances to meet the order made and still retain for himself adequate assets so as to make the outcome in the proceedings just and equitable, having regard to the matters highlighted by her Honour that she was obliged to give consideration to under s 79. These were issues of contribution and factors that could be identified under s 75(2). She was extremely hampered in the exercise of that discretion by the non-disclosure by the husband of his financial position and in those circumstances was entitled to take the more robust view that she did. Accordingly this ground of appeal has not been established.”
49.On 5 November 2002 the High Court dismissed an application by Mr Chang seeking Special Leave to appeal from the Full Court’s decision. In the course of argument Callinan J observed:
“It does not matter what the principle might be said to be, a court has to do the best it can. It does the best it can, having regard to the evidence that is adduced and if the parties are not frank then naturally there is going to be a measure of imprecision about any findings that the court can make.”
50.[Counsel for the appellant] submitted that the cases discussed above were authority for the proposition that where there was a finding of deliberate non-disclosure the Court could act more robustly in making findings adverse to the party who had actively misled it. We do not see that the principle should be so confined.
51.Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour. This is the course the trial Judge adopted. It was a course clearly open to him and one that does not merit appellate interference.
The evidence before the Federal Magistrate in this case disclosed:
· the husband had been served with a subpoena to produce documents;
· the husband brought documents to the Court which are not identified in the transcript and they were inspected by the wife’s legal representative;
· the husband did not bring bank statements to the Court in accordance with the subpoena and said he did not do so on the basis of legal advice;
· the husband’s tax return disclosed he held equipment having a cost price of $32,595.00 prior to 2005 and acquired equipment in 2005 for $52,042.00. The total assets had a written down value after depreciation of $67,052.00;
· the husband gave evidence he acquired an Ihi excavator for about $50,000.00. His income tax return corroborated his evidence disclosing an excavator purchased for $49,131.00;
· the husband disclosed the theft of a Bob Cat purchased with proceeds of sale of the second property, and an insurance payout in respect of that equipment. That evidence was corroborated by his income tax return;
· the husband disclosed in his first financial statement ownership of a Daihatsu truck. His income tax return disclosed a Daihatsu truck with a slightly different registration number acquired for $35,730.00 but written down to $13,902.00;
· the husband’s evidence was he had sold the Daihatsu truck for $20,000.00 and purchased a Mitsubishi Truck for $14,000.00 which he estimated to have a value after repairs of $20,000.00; and
· the husband’s affidavit evidence was he replaced some of the machinery/equipment by hire purchase/lease of other equipment, and his first financial statement disclosed hire purchase/lease commitments to C Leasing and E Finance Corporation totalling $75,859.88.
It appears to me the evidence, carefully analysed, did not support the broad finding of the Federal Magistrate that “it is not being unjust to the husband to notionally attribute to him undisclosed assets having a value of at least $104,686.00”. First, the Federal Magistrate’s reasons disclose he accepted the husband retained known assets and superannuation, including the Mitsubishi Truck having a total value of $30,521.00 (in fact $48,521.00). There was clear evidence in the husband’s tax return of plant and equipment having a purchase value of $84,637.00 and a written down value of $67,052.00, which included the husband’s Daihatsu truck at a written down value of $13,902.00. There appeared to be no issue the husband paid lease payments as recorded in the extract of his cross examination set out earlier in these reasons, and his first financial statement disclosed indebtedness pursuant to leasing or hire purchase contracts with C Leasing and E Finance of $75,859.88. That evidence supported the brief notation in his second financial statement that his interest in the business was “[n]egligible (lease of equipment with nil residual value). There was no evidence to support a finding the husband had the ability to purchase other equipment, or had done so. Accordingly I am satisfied that the Federal Magistrate’s finding of undisclosed assets to the value of $104,686.00 is unsound, and the consequent orders made do not satisfy the requirement in s 79(4) of being just and equitable.
The ability of a judicial officer to make broad findings about the value of undisclosed assets in the case of non-disclosure is not in doubt, and in appropriate cases it is often necessary to do so. It appears to me having regard to the husband’s evidence, both oral and documentary, that whilst it did not paint a precise picture of his business, and the equipment used therein, there were militating factors. The husband’s mistakes on his first financial statement do not suggest wilful or deceptive non-disclosure but rather confusion. English is not his first language. There was no evidence led by the wife which contradicted the husband’s evidence that indicated he had not disclosed assets. The evidence supported findings that he had incurred significant liabilities to acquire equipment. In these circumstances findings that the husband had not, using the Federal Magistrate’s expression, put “all cards on the table face up”, and a finding of undisclosed assets required careful consideration.
In concluding this appeal, I note the matter was not without difficulty for the Federal Magistrate. The proceedings were truncated. Both parties’ affidavit evidence of their respective contributions was brief, and in the case of the husband’s affidavit evidence so generalised as to be of little evidentiary worth. The husband’s understanding of the processes involved in the hearing, and his ability to properly conduct his case was limited. The wife was represented by experienced counsel who provided most appropriate and proper assistance to the Court. However, the Federal Magistrate’s findings of lack of full and frank disclosure were most serious findings with significant consequences for the husband in circumstances where, from the transcript, it is obvious the husband did not have the opportunity clarify any matter arising in cross examination in re-examination, or receive any information about his ability to tender documents which he had brought with him to the Court.
Having found appealable error in respect of the learned Federal Magistrate’s s 75(2) assessment, and in respect of the undisclosed assets, the appeal must be allowed.
Regrettably by reason of lack of relevant factual findings I am unable to re-exercise the discretion, and the matter must be remitted for rehearing.
Costs
At the conclusion of the hearing I sought submissions from each party as to costs. Counsel for the wife sought that his client should receive a certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) in the event the appeal succeeded on an error of law. I am satisfied, the appeal being allowed on an error of law, that both parties should be entitled to certificates and will order accordingly.
I certify that the preceding eighty four (84) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Boland.
Associate:
Date: 8 June 2007
Key Legal Topics
Areas of Law
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Family Law
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Statutory Interpretation
Legal Concepts
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Appeal
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Jurisdiction
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Procedural Fairness
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Remedies
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Statutory Construction
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