RAFTER & RAFTER
[2013] FamCAFC 158
FAMILY COURT OF AUSTRALIA
| RAFTER & RAFTER | [2013] FamCAFC 158 |
| FAMILY LAW – APPEAL – PROPERTY – where the appellant husband sought to have consent orders altered pursuant to s 79A of the Family Law Act 1975 (Cth) – where the appellant’s application unsuccessful – where the appellant ordered to pay spousal maintenance and arrears in respect of same – where the appellant appeals those orders – where the appellant contends the trial Judge erred in not finding that the carrying out of the consent orders was impracticable – where the appellant contends the trial Judge made erroneous findings of fact in respect of the spousal maintenance order – whether the trial Judge erred – where no error demonstrated – appeal dismissed – appellant ordered to pay the wife’s costs of the appeal. FAMILY LAW – APPEAL – COSTS – where the appellant ordered to pay the respondent wife’s costs of the s 79A application and her application for spousal maintenance – where the appellant appeals that order – where the appellant claims the trial judge erred in determining that he should pay the respondent wife’s costs – whether the trial judge erred – where no error demonstrated – appeal against costs order dismissed – appellant ordered to pay the respondent wife’s costs of the appeal. |
| Family Law Act 1975 (Cth) |
| Bennett and Bennett (1991) FLC 92-191 |
| APPELLANT: | Mr Rafter |
| RESPONDENT: | Ms Rafter |
| FILE NUMBER: | BRC | 9414 | of | 2008 |
| APPEAL NUMBERS: | NA NA | 61 102 | of of | 2012 2012 |
| DATE DELIVERED: | 9 October 2013 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Finn, Ainslie-Wallace and Murphy JJ |
| HEARING DATE: | 6 August 2013 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 4 June 2012 and 20 November 2012 |
| LOWER COURT MNC: | [2012] FamCA 611 [2012] FamCA 975 |
REPRESENTATION
| THE APPELLANT: | In person |
| COUNSEL FOR THE RESPONDENT: | Mr Galloway |
| SOLICITOR FOR THE RESPONDENT: | Rostron Carlyle Solicitors |
Orders
That Appeal NA 61 of 2012 against the Orders made by O’Reilly J on 4 June 2012 is dismissed.
That Appeal NA 102 of 2012 against the Orders made by O’Reilly J on 20 November 2012 is dismissed.
That the Application in an Appeal filed 23 June 2013 is dismissed.
The appellant husband pay the respondent wife’s costs of and incidental to both appeals in an amount agreed in writing between the parties or, failing agreement, as assessed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rafter & Rafter has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Numbers: NA 61 of 2012 and NA 102 of 2012
File Number: BRC 9414 of 2008
| Mr Rafter |
Appellant
And
| Ms Rafter |
Respondent
REASONS FOR JUDGMENT
On 4 June 2012 O’Reilly J dismissed the self-represented husband’s application to set aside specific paragraphs of consent orders for settlement of property made some four years previously on 14 November 2008. The husband’s application had at its core an assertion that a failed investment, and what was termed his “insolvency”, made it impracticable for two specified components of the orders to be carried out within the meaning of s 79A(1)(b) of the Family Law Act 1975 (Cth) (“the Act”).
The wife sought in the same proceedings an order for periodic spousal maintenance and for the payment of arrears of same arising from earlier interim orders. The husband resisted the wife’s claim for maintenance at trial on a basis related to his case pursuant to s 79A; he admitted that the wife established need to the extent of $1000 per week but asserted that he had no capacity to pay. O’Reilly J ordered the husband to pay to the wife arrears of spousal maintenance totalling $55,500 and periodic spousal maintenance of $500 per week from the date of the orders.
The husband appeals both aspects of her Honour’s orders. For convenience, that appeal will be referred to as “the substantive appeal”.
On 20 November 2012, her Honour ordered the husband to “pay to the wife 90% of her costs of and incidental to these proceedings including her costs application on the party and party basis…” The husband also appeals that order. For convenience, we will refer to that appeal as “the costs appeal”.
Both appeals were heard together. These Reasons relate to both.
The Husband’s Application to Adduce Further Evidence
An application in an appeal filed by the husband on 23 July 2013 seeks an order that he be granted leave pursuant to s 93A(2) of the Act “to adduce fresh evidence” namely that contained in an affidavit by him also filed 23 July 2013.
Errors asserted by the husband in these appeals centre on the trial Judge’s findings in respect of what can broadly be described as the husband’s financial circumstances and his capacity to pay two sums of money contemplated by the consent orders for settlement of property and spousal maintenance and its arrears. The evidence sought to be adduced in these appeals, to use the husband’s words, “represents my current debt position” (emphasis added).
That issue aside, the affidavit contains little more than argument both in reiteration of matters argued before the trial Judge and to the issues on the appeal. Examples are contained within paragraphs 2(b), (c) and (d) and 4 of the affidavit, the last of which deposes to the husband’s view that the trial Judge “failed to understand the nature of [a specified] debt”. In addition, the affidavit deposes (at paragraph 5) to the “poor” state of his mental health.
As the husband’s application correctly identifies, this Court’s power to permit further evidence to be adduced on appeal is found in s 93A(2) of the Act. The section provides for the exercise of a discretion. The discretion is not confined by the terms of the section however, principle points to matters that will ordinarily inform that discretion (see, for example, CDJ v VAJ (1998) 197 CLR 172; Wills v Australian Broadcasting Commission (No 3) (2010) 89 IPR 252).
The husband’s affidavit is, for the most part, inadmissible; it contains argument rather than probative facts. To the extent that the affidavit deposes to facts, the evidence pertains to existing debt levels and the husband’s current health. Neither is relevant to the issues to be determined on these appeals (although either or both may be relevant if the appeal is successful and this court was to re-exercise the relevant discretions). In short, the proposed evidence does not bear upon the question of whether the appeal should be allowed (see, CDJ at [56]).
Nothing to which the Court was taken persuades us that leave should be given to receive the affidavit of the husband.
The application to receive further evidence is dismissed.
The Substantive Appeal (NA 61/2012)
Section 79A: The Consent Orders and Overview of Grounds of Appeal
The trial Judge found, and it is not controversial on this appeal, that:
17.The husband says, relevantly, that at the time the consent property order was made [14 November 2008], and indeed at the date of the parties’ separation, he and the wife were insolvent, their debts exceeding their assets, caused by an extravagant lifestyle and living beyond their means.
18.The husband says that by way of their consent property order he gave to the wife “the assets”, meaning their then realisable assets, and he “took all the debt”.
It is also uncontroversial that the relevant effect of the consent order was, as her Honour found (at [20]), that the wife would receive $103,000 in total. The consent order provided:
Cash Payments
3.That the [husband] make the following cash payments to the [wife]:
a.An initial payment of $40,000.00, which has already been paid to the [wife] and the [wife] acknowledges that she has received these funds;
b.A second payment of $40,000.00 immediately upon the date of these Orders;
c.A third payment of $11,500.00 to be made on 31 July 2009;
and
d.A final payment of $11,500.00 to be made on 31 July 2010.
Paragraphs 3(a) and 3(b) of the order were performed.
The essence of the husband’s claim at trial was that, when consent orders were made in 2008, the parties were effectively insolvent, but there was then in existence an investment by the husband in B Company due to mature in the future. He alleged that this was known to the wife as was “an ability to borrow” on the security of that investment “…sufficient to meet the payments required to be made in paragraphs 3(c) and 3(d)” of the consent orders. In April 2009, B Company was placed into receivership. The ability to fund the payments to the wife through that investment was lost as a result. The husband contended that, as the receivership was not reasonably foreseeable by him at the time of the making of the consent orders, and because he neither caused nor contributed to it, the requisite impracticability arose. He contended that, as a result, “…it is just and equitable that that order be varied” (by deleting the requirements to pay the amounts specified in paragraphs 3(c) and 3(d) of the consent order).
The claim just summarised was contained in “Particulars” provided by counsel for the husband[1] to counsel for the wife on the first day of trial. Her Honour found (at [46]) that the husband’s case:
…as particularised … must fail because the two payments were to be made on 31 July 2009 and 31 July 2010, yet the face of the consent order, par 9, makes clear that the proceeds of the [B Company] investment for the period 2002-2008 were not to be realised until 2012: “due to commence in 2012”: consent property order, par 9.
(Emphasis in original).
[1] The husband was represented on the first of the two days of trial but was self-represented thereafter.
Her Honour was entirely correct in making that finding and no ground of appeal (or, more broadly, argument by the husband) suggests error in respect of that specific finding.
However, the trial Judge went on to observe – again, correctly – that the Family Court is not a court of pleading and, as a result, concluded that “[i]t is proper thus that I do not confine the husband’s case to the Particulars of Claim…” Having discussed at some length the relevant authorities, her Honour then summarised the husband’s claim beyond that particularised in these terms:
41.The husband asserted, in effect, common assumption between himself and the wife in relation to his [B Company] investment and its future success, as underpinning the bargain they made represented in the consent property order. The wife, for her part, disputes any such common assumption, indeed swearing that she was advised by lawyers not to enter into the consent property order as it was not sufficiently favourable to her, but that she did so on the basis of the husband’s further promise that he would look after her well in the future in relation to her spousal maintenance needs.
42.It seems to me however that whether or not the parties’ had a common assumption as to what might occur in the future, and even if they did, and even if the [B Company] crash was not reasonably foreseen by the husband and the wife, or contemplated by them, the difficult factual matter which I must decide is whether by the supervening event of the [B Company] crash the husband merely suffered commercial failure or financial misfortune post the making of the s 79 consent order, or even may be facing bankruptcy now as a consequence (which matters do not form a ground for whether performance of the order is impracticable), or whether, on the particular facts of the case, there was, even assuming a common assumption, or even a unilateral assumption on the part of the husband, that his [B Company] investment would be successful, and that the [B Company] crash was not reasonably foreseeable, nor contemplated, this supervening event would cause injustice to the husband if effect is not given to it by setting aside pars 3c and 3d of the consent property order (such that, effectively, it is impracticable for pars 3c and 3d to be carried out).
(Emphasis in original).
In dismissing the husband’s claim as to impracticability within the meaning of s 79A(1)(b), her Honour found, relevant to the arguments on appeal about to be discussed:
a.That there was no express or implied common assumption between the husband and wife to the effect that their “…bargain was contractually premised upon the future success of the husband’s [B Company] investment” (Reasons at [54]-[56]);
b.That she could “…infer that the husband could have paid the wife the 2 amounts due on 31 July 2009 and 31 July 2010 if he had managed his financial affairs more responsibly, so that he cannot rely upon the failure of the [B Company] investment for not paying the 2 amounts…” (Reasons at [61]);
c.That there is no “…‘separate head’ in s79A for an order to be set aside or varied only upon any just and equitable ground, absent the establishment of one of the jurisdictional facts set out in s79A(1)(a)-(e)” (Reasons at [67]);
d.Even if the husband “…is presently, or has become, insolvent, that is not a reason under s79A to set aside or vary the order” (Reasons at [72]).
The s 79A Grounds of Appeal
Although the husband is self-represented on this appeal, the Grounds of Appeal were drafted by a legal practitioner. There are significant deficiencies in many of them. For example, in respect of Ground 1 it is not possible, without particulars, to discern the appealable error alleged. What purports to be a separate Ground 2 appears to be an amplification, or particularisation, of Ground 1. Yet, it too has deficiencies. In light of the fact that the husband was self-represented before us, we permitted the grounds to stand. Counsel for the respondent, sensibly, addressed the grounds by reference to the perceived challenges underlying them, which can be gleaned from the husband’s discursive written outline of argument. We will adopt the same approach.
The husband’s grounds should, nevertheless, be set out as they appear in his Notice of Appeal as being illustrative of what, with respect, are misconceptions or misunderstandings by the husband of findings made by her Honour and, in turn, inaccurate premises for the arguments advanced by the husband on this appeal:
Subsection Section 79A Application
1.That the learned Trial judge erred in finding that a ground of impracticability did not exist in respect of the payments required pursuant to order 3 (c) and (d) of the Consent Order made on 14 November 2008.
2.That the learned Trial Judge erred in not finding:
At the time of the making of the order on 14 November 2008, the Husband disclosed and investment in [B Company] and an ability to borrow on the security of such investment sufficient to meet the payments required to be made in paragraphs 3 (c) and (d).
In April 2009 [B Company] was placed in receivership and the ability of the Husband to obtain repayments of capital and/or income on his investments was lost.
By reason of the receivership the Husband lost his ability to borrow against the security of his investment in [B Company] or to receive any return of capital or income on his investment.
The receivership of [B Company] and its consequences were not reasonably foreseeable by the husband at the time of the making of the order on 14 November 2008.
The receivership of [B Company] and its consequences to the Husband was not caused or contributed to by the Husband and it is just and equitable that the order be varied.
3.That the learned Trial Judge erred in failing to address the failings of impracticability arising from the current insolvency of the Husband.
4.That the learned Trial Judge erred in requiring the existence of a common assumption to pay the Wife from the [B Company] shares as being a necessary to determining impracticability.
…
Grounds
…
11.In relation to the payment of funds by the Husband to the Wife pursuant to paragraph 3 (c) and (d) of the Orders made on 14 November 2008.
12.That the learned Trial Judge erred in finding that there was no ground of impracticability in relation to the payment of funds by the Husband to the Wife pursuant to paragraph 3 (c) and (d) of the Orders dated 14 November 2008 as a result of the Husband’s current and subsequent insolvency.
13.That the learned Trial Judge erred in finding that there was no ground of impracticability in relation to the payment of funds by the Husband to the Wife pursuant to paragraph 3 (c) and (d) of the Orders of 14 November 2008 as a result of the Husband current and subsequent insolvency by finding that it was necessary that there by a common assumption to pay the Wife from [B Company].
…
(Errors in original).
It can be seen that Grounds 1 to 4 appear grouped under the heading “Subsection Section 79A Application”. Ground 11 appears of itself to not be a ground at all but, rather, a preface to Grounds 12 and 13. In any event, each of Grounds 12 and 13 are plainly related to the s 79A challenge and there is no discernible asserted error in those grounds different, or additional to, the errors asserted in Grounds 1 to 4. The husband effectively conceded as much before us.
The B Company “Crash” and Alleged Inability to Pay – Grounds 1 & 2
As we have said, Ground 1, in its unparticularised form, asserts no appealable error. Ground 2 has as its foundation five factual sub-parts (which, in large measure, repeat the matters the subject of the “Particulars” relied upon by the husband at trial). Each (and presumably all) of the matters contained within Ground 2’s sub-parts are said to be matters which her Honour “ought to have found”. The appealable error asserted can be taken to be that her Honour failed to take account of relevant considerations.
Ground 2 must fail. Simply expressed, none of the matters the subject of the ground’s sub-parts was relevant to any issues which her Honour needed to address in order to decide if “impracticability” within the meaning of s 79A(1)(b) was made out. The plain words of paragraphs 3(c) and 3(d) of the consent orders (and the orders read as a whole) cannot be seen as making those payments conditional upon the success or failure of the B Company investment, any other investment, or the husband’s solvency.
Her Honour correctly identified the relevant principles established by the authorities. With specific reference to the decisions of this Court in Cawthorn & Cawthorn (1998) FLC 92-805 (and in La Rocca & La Rocca (1991) FLC 92-222, per Kay J, referred to in the earlier decision), her Honour held that potential insolvency of a party in the future or commercial failure of one of the parties rendering them incapable of implementing the orders did not per se render s 79A(1)(b) applicable. More specific to the issues in this case, and the assertions in Ground 2, the reasonable foreseeability of future insolvency or commercial failure does not produce “impractability” within the meaning of the section (see, La Rocca at 85,089, cited with approval in Cawthorn at 85,056-85,059).
In that respect, it is important to note the central factual finding made by her Honour at [61] of the Reasons. That finding was based on an inference (emanating from the finding in the Reasons that precedes it) that “…between the date of the consent property order and early 2010 the husband spent a considerable amount of money on restaurants, holidays and lifestyle.” In that respect, her Honour relied, at least in part, on the husband’s own admission: “Yes, I can’t deny it, up until early 2010 when I was in denial” (Reasons at [60]). Again, no challenge is made to the findings at [60] and [61] of the Reasons nor is any argument addressed to them.
Her Honour discussed the concept of “common assumption” referable to the common law doctrine of frustration in the law of contract by reference to the decision of the High Court in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 357 and the decision of the Queensland Court of Appeal in Hillcrown Pty Ltd & Anor v O’Brien & Anor [2011] QCA 129. Whether a relevant event is reasonably foreseeable may have a bearing on a finding as to common assumption in that context. However, contrary to the husband’s assertion, neither formed the basis of any finding ultimately made by her Honour.
Her Honour correctly found that s 79A(1)(b) is not equivalent to the common law doctrine of frustration but akin to it (Reasons at [38], citing La Rocca and Cawthorn). Her Honour found, again with respect correctly, that common assumption was excluded where the words of the bargain are clear (citing Codelfa and Hillcrown, at [37] of the Reasons). Plainly the words of the bargain embraced in the parties’ consent order were clear and unconditional as to the payment of the two sums of money. Her Honour also specifically found, at [53] of the Reasons, that the husband admitted under cross-examination that he had never discussed with the wife that he proposed to rely on the B Company investment to pay her the two amounts and found as a result that there was no express common assumption.
None of those findings are subject to challenge or, upon the evidence before this Court, could reasonably have been the subject of challenge.
In addition, and notwithstanding all of those matters, her Honour specifically found that even assuming the B Company receivership had the effect that the husband lost the ability to obtain repayments of capital and/or income, the husband’s claim failed because, as particularised, the payments pursuant to the consent order were to be made on 31 July 2009 and 31 July 2010 and neither capital nor income was due to be received from the investment until 2012 (Reasons at [46]). No challenge is made to this finding by her Honour. No ground, or any argument by the husband, addresses it. The finding is plainly correct.
Ground 2 (and “Ground 1”) must fail.
“Insolvency”[2] – Ground 3
[2]“Insolvency” is an expression used by the husband in this appeal and was used by him at the trial. As her Honour was careful to point out, the husband was not, however, a bankrupt.
Ground 3 must also fail. The ground’s premise is false. The premise is contrary to findings made by her Honour which are not challenged on this appeal.
Put simply, it is not true to say that her Honour failed to have regard to the husband’s “current insolvency”. Rather, her Honour, found – with respect, correctly – that whether or not the husband presently did not have the money to pay the wife and whether or not the husband “is presently, or has become, insolvent”, neither constituted the requisite impracticability. It is not the case (as the ground asserts) that her Honour failed to address that issue. On the contrary, her Honour addressed it but rejected it as a basis for the finding contended for. Her Honour was perfectly correct in doing so.
Moreover, as has been pointed out above, the prospect of future insolvency, or the occurrence of future insolvency is, without more, not sufficient to attract s 79A(1)(b). That is so even if there is evidence that insolvency was a prospect at the time of the making of the orders (see, La Rocca and Cawthorn), noting, of course, that enforcement may be a different issue.
“Common Assumption” – Ground 4
The error asserted by the husband is that her Honour “requir[ed] the existence of a common assumption” to pay the wife from the B Company shares “as being a [sic] necessary to determining impracticability.” This ground, too, is built on a false premise. It also involves, with respect, a misunderstanding of the place of her Honour’s discussion of that topic.
Her Honour plainly did not require a finding of common assumption as “necessary to determining impracticability”. Contrary to that which seems implicit in Ground 4, her Honour’s inquiry directed to “common assumption” (or “common intention”), and her Honour’s consideration of “common assumption”, was an inquiry that assisted the husband. Having found, correctly, that the husband’s claim as particularised must fail, her Honour turned to consider if the evidence revealed a basis for the husband’s claim different to that which he himself (with the then assistance of legal practitioners) asserted in a particularised claim.
As discussed above, her Honour considered leading common law authorities on frustration and the place of “common assumption” within that doctrine. In doing so, her Honour at the same time recognised – appropriately and correctly – that s 79A(1)(b) did not embody the contractual concept but was akin to it. Her Honour, again correctly, recognised that the relevantly analogous common law principles arose so as to inform circumstances in which the contractual doctrine of frustration might assist in the interpretation of impracticability for the purposes of s 79A(1)(b).
The approach of the trial judge in this context was to carefully analyse the evidence with a view to concluding whether the case before her could be seen as one involving “the potential insolvency of one of the parties” or, rather, a case where a common intention (or assumption) of the parties meant that the happening of a future event (the B Company “crash”) might provide relief from the obligations cast by paragraphs 3(c) and 3(d).
Her Honour made clear findings that there was no such express or implied common assumption. Her Honour gave clear reasons for those findings. Those findings were correct. The findings are, in fact, not the subject of challenge on this appeal.
This ground must fail.
Grounds 11, 12 and 13
As earlier mentioned, as was effectively conceded by the husband, there is no material difference between these grounds, and any issues they might raise, and the issues embraced by Grounds 1 to 4 already discussed. For the reasons applicable to those grounds, Grounds 11, 12 and 13 must consequentially fail.
Conclusion as to the s 79A Grounds
There is no merit in Grounds 1 to 4 and Grounds 11 to 13.
Spousal Maintenance
The Challenge to the Trial Judge’s Reasons – Ground 10
It is convenient to deal first with Ground 10 which, in terms, challenges the adequacy of her Honour’s Reasons “…as to [the] determination that the Husband had the capacity to pay spousal maintenance.”
This ground is not the subject of any specific argument in the husband’s written outline. The husband did not seek to adduce oral argument before us, indicating that his filed written outline of argument contained all such arguments as he wished to make. When the husband’s arguments are read in their entirety, it can be seen that the challenge to reasons is, in fact, not a challenge to reasons at all (at least in the sense that inadequacy of reasons might be appealable error) but, rather, a further amplification of what is asserted to be a “failure to understand” evidence by the trial Judge.
For the sake of completeness, we should indicate that her Honour’s Reasons – both in respect of the specific issue referred to in Ground 10 and more generally – are comprehensive, cogent and plainly illuminate the path to her Honour’s findings and orders (see, for example, Bennett & Bennett (1991) FLC 92-191).
Ground 10 has no merit.
Overview of Remaining Spousal Maintenance Grounds
The remaining grounds pertaining to spousal maintenance, as they appear in the Notice of Appeal, are set out in full for the same reasons pertaining to the other grounds earlier referred to. They are as follows:
Spousal Maintenance
5.That the learned Trial Judge erred in finding that the Husband had the capacity to pay spousal maintenance.
Grounds
6.That the learned Trial Judge erred in finding that the Husband had the capacity to pay spousal maintenance during the period 31 March 2012 [sic – 2010] to 17 November 2011.
7.That the learned Trial Judge erred in finding that the Husband had the capacity to pay spousal maintenance during the period 18 November 2011 to 3 June 2012.
8.That the learned Trial Judge erred in relation to the findings relating to the Husband’s superannuation.
9.That the learned Trial Judge erred in that she failed to consider adequately or place sufficient weight to all of the evidence in relation to the Husband’s financial position including and in particular his existing debts[.]
…
It will immediately be seen that the same can be said of each of Grounds 5 through 8 as was said above in respect of Ground 1; in terms, they lack sufficient particularity so as to enable them to be described as grounds of appeal at all. It is not possible to discern what is alleged to be the appealable error contained within any of them. Ground 9 asserts that her Honour’s finding as to the husband’s capacity to pay was contrary to the evidence or the weight of the evidence.
None of the grounds that assert error generally refer to any asserted specific error of fact or challenge any specific findings of fact. Although not embraced by any specific ground, specific assertions of error are, however, made within the husband’s written outline:
At page 9:
Her Honour, it is submitted, failed to take account of the abundance of accounting information available to her, from both the independent expert, Mr [C], and my accountant, Mr [V].
At page 11:
…[I]t is clear that, with respect, Her Honour failed to fully understand the evidence produced by Mr [V], my accountant.
At page 12:
…[I]t is clear that her Honour failed to understand my true financial position in relation to [E] Pty Ltd…
At page 13:
Her Honour also failed to understand my assertion, as clearly set out in my 28 April 2010 affidavit, that I was an employee of the [ML Trust]. It was therefore necessary for the trust to pay superannuation from the $150,000 received from [X Pty Ltd]. Her Honour stated in error:
204.Secondly, the husband, according to Mr [V] is not an employee of [ML], but a privately engaged consultant.
205.Thus, no “compulsory” employer superannuation levy of $12,385, or any compulsory levy payable at all, let alone out of the husband’s income. As is well understood, the 9 per cent compulsory superannuation levy is a contribution to be paid by employers, not employees. In any event, even if the husband were an employee of [ML] (which he is not) he would not be liable to pay the 9 per cent levy. Rather, his employer would be liable to pay the 9 per cent levy.
At page 14:
[Her Honour totally failed] to understand the financial structure which was in place during the marriage, and which related to the debt to [E Pty Ltd] by the [M Trust] (and by [E Pty Ltd] to [X Pty Ltd])…
Finally, Her Honour puts some emphasis on the commission paid by me to the [ML] trust, in the sum of $7500 per annum, but ignores the fact that I clearly stated in evidence that that is in place to cover my share of accounting and related expenses…
At page 15:
It is submitted that Her Honour failed to adequately address section 75(2)(ha) of the Act…
In summary, those matters might be taken as asserting that her Honour erred in failing to take account of relevant considerations or in making findings contrary to the evidence or the weight of the evidence. Again, no point was taken before us by counsel for the wife in respect of the deficiencies in the grounds and submissions were made on her behalf responsive to a case advanced by the husband by reference to his written outline. Again, we consider it appropriate, in light of the husband’s self-represented status, to treat the appeal as based on the asserted errors contained in his written outline.
Capacity to Pay – The Trial Judge’s Findings
Her Honour accepted that the husband was “…at least technically insolvent as at the date of the consent property order, and it would appear also as at the date of the making of the interim spousal maintenance order…” (Reasons at [145]). Importantly for present purposes, her Honour proceeded to determine the husband’s capacity to pay as at the date of trial by reference to an acceptance that he was, to use his words, “hopelessly insolvent” and “teetering on the verge of bankruptcy” and that “…this situation has obtained [sic] at least since the appointment of receivers to [B Company] in April 2009, some 6-7 months after the parties’ spousal maintenance agreement made in September 2008” (Reasons at [148]). Later in the Reasons, her Honour found that “[u]ndeniably the husband is now insolvent, and potentially facing bankruptcy” and that future bankruptcy “is very likely, if not inevitable” (Reasons at [180]).
However, and again important for present purposes, her Honour considered that position against an expressed necessity to “…look back to the husband’s financial history, and then to [undertake] a close examination of his current financial position” (Reasons at [150]). Her Honour then proceeded to do so extensively in the Reasons which followed.
Contrary to what is asserted in the husband’s written outline, her Honour accepted the evidence of Mr V and Mr C. The husband’s argument fails to take account of the fact that her Honour found:
166.In relation to item 54 in the husband’s financial statement, it is seen by reference to Part O that $502,260 is a debt by [E] Pty Ltd (not designated as [E] Pty Ltd No 1 or No 2) to [X] Pty Ltd. This is not a personal debt of the husband. This debt, it appears, was accumulated progressively by loan account drawings between 2002 and 2008 related to lifestyle of the husband and the wife. The husband said however that he regards himself as personally liable for this debt to [X] Pty Ltd, but at the time of the hearing the husband acknowledged that [X] Pty Ltd was not pursuing [E] Pty Ltd (whether No 1 or No 2) in relation to that debt, adding “not at the moment” and “[E Pty Ltd] has no money to pay it”.
In respect of that debt, her Honour found that it was “not the husband’s debt”, it being a debt of E Pty Ltd. The trial Judge was plainly correct in that finding. The finding by her Honour that X Pty Ltd was not pursuing the debt is not challenged by the husband; indeed that evidence came from him. Further indebtedness asserted by the husband was also examined by her Honour. Findings that a debt to B Company and a $20,000 debt to X Pty Ltd were each not being pursued are not challenged on this appeal. So, too, a finding that a legal bill of $38,000 was met, or being met, by the husband’s current partner’s family is also not challenged.
The asserted creditor X Pty Ltd is the company by which the husband was employed as Chief Financial Officer during and after the marriage. The nature of that employment changed, although the husband still derives income from that company as a consultant. Her Honour’s findings in respect of the current arrangement by which the husband earns income should be set out in full:
187. He now works as a consultant to [X] Pty Ltd.
188.His fees are invoiced to [X] Pty Ltd by “[ML] Pty Ltd”, the trustee of the [ML] Trust ([ML]). [ML], as was acknowledged in evidence by the husband, represents the initials for “[Mr T, Ms L and Mr Rafter]”, [Ms L] being the husband’s partner, Mr [Rafter] being the husband and [Mr T] being [Ms L’s] son.
189.The Trust was established on the advice of Mr [V]. The directors and shareholders of the trustee are Ms [L] and her son [Mr T], such that, as put by Mr Galloway, the husband has “surrendered control” of his income to his partner, and her son, instead of controlling it himself.
190.Mr [V] said that the husband is not an employee of the [ML] Trust, and that the [ML] Trust was set up for accounting purposes. He said that its genesis was that in 2010, Mr [V] advised the husband to cease trading through [E] Pty Ltd (whether No 1 or No 2) because it was insolvent, and that he advised the husband to establish a trust “for [Ms L] and [Mr T]”, to “separate” them from him, because according to Mr [V]’s records, the husband’s “liabilities exceeded his assets” and “his spending pattern exceeded his income”.
191.Mr Galloway asked Mr [V] whether the husband could arrange for the entities and trusts related to him to be wound up, to “cut loose” their debts, and “shed them”, in the sense that the husband has and can have no liability for those debts, meaning, in context, any [E] Pty Ltd and associated trust debts, Mr [V] responding “That’s possible”.
192.If that occurred, the husband would be left with the debts at items 50, 51 and 53 his financial statement (see Part K and Part O).
193.The husband explained, and Mr [V] confirmed, that through the [ML] Trust the husband, as an independent consultant, invoices [X] Pty Ltd $150,000 per year, and Ms [L] invoices $80,000 per year, although Ms [L], in her oral evidence, said that she invoices between $80,000-$90,000 per year.
(Emphasis in original).
Her Honour thereafter made adjustments to the husband’s asserted income – for example by finding that an “administration fee” deducted by him from the gross amount paid to him is “wholly avoidable by the husband.” Her Honour also found (adopting the husband’s own evidence in cross-examination) that a claimed $25,000 in “conservative business expenses” is “…not an amount deducted from his income, but are expenses separately invoiced by [ML] to [X] Pty Ltd” (emphasis in original). Her Honour held that this amount too was available to meet the husband’s primary legal obligation to maintain the wife.
In addition, her Honour found that a claimed deduction by the husband for “Compulsory Employer Super 9%” ought not be deducted in assessing the money available to the husband from which he could meet his legal obligation to the wife. Again, her Honour’s Reasons should be cited:
203.In his oral evidence, Mr [V] agreed with [counsel for the wife] that the husband’s arrangement with [X] Pty Ltd is a “pretty irregular arrangement”, and “not a common practice”, but is “a method” of “converting income into capital”.
204.Secondly, the husband, according to Mr [V], is not an employee of [ML], but a privately engaged consultant.
205.Thus, no “compulsory” employer superannuation levy of $12,385, or any compulsory levy payable at all, let alone out of the husband’s income. As is well understood, the 9% compulsory superannuation levy is a contribution to be paid by employers, not employees. In any event, even if the husband were an employee of [ML] (which he is not) he would not be liable to pay the 9% levy. Rather, his employer would be liable to pay the 9% levy.
…
207.So far, thus, the asserted deductions from the husband’s $150,000 income of $7,500 (administration fee), $12,385 (alleged compulsory superannuation levy) and $25,000 (which the husband acknowledges is not a deduction from his income), totalling $44,885 per year, are not established as necessary or proper deductions, and in the case of the $25,000, not a deduction at all. The aggregate of these amounts, $44,885, would see the husband with further disposable income of $863 per week, less marginal rate income tax on that amount, if he arranged his affairs differently, at least from the time of the establishment of [ML] in 2010, and potentially since 31 March 2010, the date of the interim spousal maintenance order, subject to consideration only of the husband’s personal tax liability, if the “deductions” he claims were not available to him, and increased tax on his marginal rate accordingly.
(Emphasis in original).
Her Honour then turned to consider the husband’s claimed “conservative living expenses”. Her Honour did so, with great respect, with significant attention to detail. No challenge is made to the findings made by her Honour in that respect. The findings appear to us to be unimpeachable.
As reference to [223] of her Honour’s Reasons reveals, her Honour was specifically alive to the provisions of s 75(2)(ha) of the Act and the obligation upon the court it imposes. Her Honour carefully considered the husband’s submissions in respect of that section and correctly applied the law and made correct findings on the evidence before her.
Nothing contained within the husband’s written submissions (which were the only submissions made in support of the appeal) nor their totality persuades us that her Honour erred in any of the respects asserted by the husband. There is no proper foundation for the assertion that her Honour “failed to understand” either the husband’s evidence or, the evidence of either the husband’s accountant or the single expert accountant. There is no proper foundation for the assertion that her Honour failed to understand the husband’s corporate structure or what it meant, as a matter of law, in terms of the husband’s indebtedness. Specifically, there is no proper foundation for the assertion by the husband that her Honour erred in respect of superannuation; indeed we consider her Honour was correct to treat the asserted expenditure as she did.
Her Honour’s careful analysis of the husband’s income and expenses led to a correct assessment of the husband’s capacity to pay spousal maintenance. Although no ground of appeal challenges specifically her Honour’s orders with respect to arrears of spousal maintenance, we would add for completeness that her Honour’s findings and order in that respect were entirely open to her.
A further assertion in the husband’s written outline of argument pertains to something not at all mentioned in any ground of appeal. At page 20 of the outline it is, it seems, asserted that her Honour made an error of law in “…assuming that the only basis on which she should deal with my application was that there had been a change in circumstance.” The husband cites the decision of this Court in Caska & Caska (1998) 23 Fam LR 659. It is by no means clear how it is said that the decision in that case affects the findings made by her Honour. Nor, more generally, can we see any error of law – or, indeed, any error – in the manner in which her Honour dealt with the question of arrears of spousal maintenance.
Conclusion as to the Spousal Maintenance Grounds
No error is demonstrated in respect of capacity to pay or “relating to the husband’s superannuation”.
No error is demonstrated in the weight attached to evidence by her Honour nor is it established that her Honour took account of irrelevant considerations of failed to take account of relevant considerations.
Grounds 5 through 9 fail.
Conclusion as to the Substantive Appeal
For the reasons outlined, the substantive appeal should be dismissed.
The Issues in the Costs Appeal (NA 102/2012)
By orders made by her Honour on 20 November 2012 the husband is required to “…pay to the wife 90% of her costs of and incidental to these proceedings including her costs application on the party and party basis…”
The Grounds of Appeal
It is again appropriate in this appeal to quote the grounds of appeal in full:
1. That Her Honour failed in determining that there were circumstances which justified the making of the order for costs.
2. That Her Honour failed to adequately consider pursuant to section 117(2)(A)(a) [sic] the applicant’s impecunious financial position in making the orders.
3. That Her Honour failed to take account that the respondent was not wholly successful in her application.
There is no merit in this appeal; our Reasons will be brief.
Failure to Determine Circumstances – Ground 1
Reference to her Honour’s Reasons reveals a careful and comprehensive consideration of the factors prescribed by s 117(2A) of the Act. Her Honour correctly applied the relevant principles having set out the terms of s 117 of the Act and thereafter carefully weighed all of the factors relevant to a determination of the wife’s claim.
The husband cannot reasonably contend that her Honour failed to take account of a relevant consideration or took account of any irrelevant considerations. Ground 1 is nothing more than an assertion that her Honour made an order contrary to that contended for by the husband. That assertion is plainly insufficient to attract intervention by this court. No error by the trial Judge is evident.
The Husband’s Impecuniosity – Ground 2
It will be apparent that the arguments advanced under this ground mirror those advanced on the substantive appeal.
In the context of orders for costs, the challenge encompassed by Ground 2 is a challenge to the weight which her Honour attached to “financial circumstances” as a factor in informing the broad discretionary decision as to whether there was a justifying circumstance in making a costs order and, if so, its terms.
Her Honour found, with respect correctly, that the circumstances justifying an order for costs were that the husband’s case was “hopeless from inception” and, within that context, that the wife was compelled to come to court in order to obtain arrears of maintenance previously ordered and an order for periodic spousal maintenance.
Having correctly found justifying circumstances, her Honour, again with respect correctly, considered each of the factors relevant to the exercise of a broad discretion. Asserted impecuniosity was one. Her Honour found (at [18]) that “[b]oth parties are impecunious.” In arriving at that finding her Honour cross-referred, at [19], to a number of passages from her extensive Reasons for Judgment in the substantive proceedings. Her Honour then considered, at [20]-[22] of the Reasons, the evidence relating to impecuniosity. Her Honour specifically, for example, referred to the fact that, as a result of the husband’s depression, he was seeking treatment from a psychologist and a psychiatrist and specifically referred without demur to his deposition that he is “not in receipt of an income at present” and that his work was spasmodic.
As the Reasons plainly reveal, the husband’s impecuniosity was uppermost in her Honour’s mind among the relevant considerations to be taken into account and balanced in arriving at the decision in respect of costs which her Honour “considered just” within the meaning of s 117(2).
In our opinion, her Honour carefully considered and weighed both the financial circumstances of each of the parties to the proceedings. Her Honour correctly considered it as but one of the factors, albeit an important factor, relevant to deciding whether an order for costs should be made and its terms “just”. Nothing to which we have been taken by the husband, nor anything evident on the record, suggests that her Honour’s approach was anything other than careful, measured and appropriate.
Ground 2 fails.
The Wife Was Not Wholly Successful – Ground 3
The Reasons plainly reveal that her Honour took account of the fact that the husband was “wholly unsuccessful in relation to his [s 79A] application” and the wife was “wholly successful in holding pars 3c and 3d” of the s 79 consent property orders. The trial judge described that lack of success by the husband as “significant”.
Her Honour also determined that the husband was “wholly unsuccessful” in his application for discharge of the arrears of interim spousal maintenance. Her Honour fortified those findings by a finding that “[t]he husband’s claim in relation to variation of the s 79 consent property order … in my view was misconceived and hopeless from inception such that, properly advised, [it] ought not have been made” (emphasis in original).
Her Honour records that the wife was “wholly unsuccessful” in relation to her claim that the husband pay to her the costs of a single-expert report. Her Honour referred to and assessed “the relative extent or degree of the wife’s/husband’s success/lack of success” and attributed to the issue on which the wife was wholly unsuccessful a “nominal” amount. Generously to the husband, her Honour then consequentially ordered that the husband pay 90 per cent of the wife’s costs.
No error is demonstrated.
Conclusion as to the Costs Appeal
Nothing to which we have been taken by the husband suggests that her Honour’s findings are erroneous or that her Honour failed to take account of relevant considerations or took into account irrelevant considerations.
We consider that her Honour’s findings and order were plainly open to her.
No error is demonstrated and the appeal must fail.
Costs of the Appeal
As is customary, at the conclusion of the hearing we sought submissions in respect of costs.
Each of the husband’s appeals has been wholly unsuccessful. We are of the view that neither enjoyed any reasonable prospects of success.
The husband reiterated before us the matters agitated by him before her Honour in relation to financial circumstances. Again, we emphasise that financial circumstances is but one of the matters to be taken into account.
When regard is had to all of the circumstances, including the respective financial circumstances of the parties, we consider it appropriate that the appellant husband pay the respondent wife’s costs of and incidental to both appeals in an amount to be agreed, or failing agreement, as assessed.
I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, Ainslie-Wallace and Murphy JJ) delivered on 9 October 2013.
Associate:
Date:9 October 2013
0
5
0