Raine & Creed
[2015] FamCAFC 133
•8 July 2015
FAMILY COURT OF AUSTRALIA
| RAINE & CREED | [2015] FamCAFC 133 |
| FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – Where the appellant seeks to appeal against property settlement orders – Where the treatment of the appellant’s contribution of her pre-cohabitation savings to the purchase of the former matrimonial home was not erroneous as the trial judge recognised and considered the significant financial contribution made by the appellant – Where the trial judge did not err in finding that the respondent’s substantial income enabled the parties to undertake extensive renovations to the former matrimonial home – Where the trial judge erred in failing to provide adequate reasons as to why the parties equally contributed to the welfare of the family in circumstances where the respondent conceded the appellant undertook more of the household tasks – Where the trial judge made an error of principle by having regard to matters which were not matters to be taken into account under s 79(4)(a), (b) or (c) of the Family Law Act 1975 (Cth) in assessing the contributions of the parties – Where the trial judge was not entitled to take these matters into account against the appellant – Where there was insufficient evidence for the trial judge to make a finding that the respondent would enjoy a substantially greater earning capacity than the appellant – Where the trial judge was entitled to rely on the unchallenged evidence of the financial relationship between the respondent and his new partner in his assessment of the financial circumstances of the respondent – Where the trial judge failed to take into account the appellant’s indirect contribution to the respondent’s entitlement to receive his insurance disability payments when considering s 75(2)(j) of the Family Law Act 1975 (Cth) – Where the trial judge was required to determine the property claim unaided or unhindered by his view as to the determination of the spousal maintenance claim – Where there is sufficient error established to require appellate interference – Appeal allowed. FAMILY LAW – APPEAL – SPOUSAL MAINTENANCE – Where the appellant seeks to appeal against spousal maintenance orders – Where the trial judge was unable to make a finding on when the respondent would return to work – Where it was appropriate that the order for spousal maintenance be conditional on the respondent receiving disability insurance payments – Where the trial judge was unable to make a finding that the respondent would have ongoing alternate earning capacity once the disability payments ceased or lessened – Where the order for spousal maintenance to terminate after four years was entirely arbitrary and unsupported by the evidence – Where the trial judge failed to provide adequate reasons for imposing a four year limitation on the continuation of spousal maintenance – Where there was a clear denial of natural justice by the trial judge in failing to raise the four year limitation with the appellant or her counsel – Appeal allowed. FAMILY LAW – APPEAL – RE-EXERCISE OF THE DISCRETION – Where there is sufficient unchallenged evidence and findings by the trial judge to enable the discretion to be re-exercised – Where there is no issue as to the agreed asset pool of the parties – Where the greater contributions of the appellant to the welfare of the family must be taken into account and specifically her homemaker contributions – Where the circumstances of the appellant’s occupation of the former matrimonial home prior to separation, the payment of the mortgage in relation to that home subsequent to separation and any proposed spousal maintenance order must not be taken into account here – Where the respective contributions of the parties should be assessed as to 55 per cent / 45 per cent in the appellant’s favour – Where a 5 per cent adjustment on account of the relevant s 75(2) factors should be made in the appellant’s favour – Where the overall percentage entitlements of the parties should be 60 per cent / 40 per cent in the appellant’s favour – Where conditional upon the respondent continuing to receive his disability insurance payments on the basis of a total disability the appellant continue to receive spousal maintenance in the sum of $534 per week – Where given it was not an order sought at trial nor the subject of argument before the Full Court it is not appropriate to order that the spousal maintenance payments be varied in accordance with yearly movements in the consumer price index. FAMILY LAW – APPEAL – COSTS – Where in the event of the appeal being successful the appellant sought an order for costs or in the alternative a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) – Where the respondent opposed any order for costs and also sought a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) – Where the appeal was allowed but not all of the grounds of appeal were found to have merit – Where it is not appropriate to make an order for costs against the respondent – Costs certificates to issue to both parties in relation to the appeal. |
| Family Law Act 1975 (Cth) – ss 75(2)(j) and 79(4)(a), (b) and (c) B and B (No 2) (2000) FLC 93-031 |
| APPELLANT: | Ms Raine |
| RESPONDENT: | Mr Creed |
| FILE NUMBER: | SYC | 2012 | of | 2011 |
| APPEAL NUMBER: | EA | 74 | of | 2013 |
| DATE DELIVERED: | 8 July 2015 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Finn, Thackray and Strickland JJ |
| HEARING DATE: | 17 October 2014 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 24 May 2013 |
| LOWER COURT MNC: | [2013] FamCA 362 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Richardson SC |
| SOLICITOR FOR THE APPELLANT: | Abrams Turner Whelan Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Schonell SC |
| SOLICITOR FOR THE RESPONDENT: | Barkus Doolan Family Lawyers |
Orders
The appeal be allowed.
Orders (1) and (4) made by Aldridge J on 24 May 2013 be set aside and in lieu thereof the following orders be made:
(1)Conditional upon the husband continuing to receive disability insurance payments on the basis of a total disability, the husband pay the wife spousal maintenance in the sum of $534 per week.
(4)On the basis of the parties retaining their respective assets and superannuation interests (including as distributed already in accordance with the orders made by Aldridge J on 24 May 2013), the husband pay to the wife the sum of $121,468 within 60 days of the date of this order.
There be no order as to costs.
The Court grants to the appellant wife a costs certificate pursuant to the provisions of 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 wife in respect of the costs incurred by her in relation to the appeal.
The Court grants to the respondent husband 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 husband in respect of the costs incurred by him in relation to the appeal.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Raine & Creed 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 SYDNEY |
Appeal Number: EA 74 of 2013
File Number: SYC 2012 of 2011
| Ms Raine Appellant |
And
| Mr Creed Respondent |
REASONS FOR JUDGMENT
Introduction
By Amended Notice of Appeal filed on 20 November 2013, Ms Raine (“the wife”) appeals against spousal maintenance and property settlement orders made by Aldridge J on 24 May 2013.
The appeal is opposed by Mr Creed (“the husband”).
In summary, the orders subject to challenge provided for the husband to pay to the wife, until the end of April 2017, the sum of $534 per week by way of spousal maintenance, with those payments being conditional upon the husband continuing to receive disability insurance payments based on him having a “total disability”, and by way of property settlement, that the wife be paid the sum of $749,603 from the parties’ controlled monies account, with the balance of that account being paid to the husband.
Background
The wife was born in 1958 and was aged 54 years at trial, and the husband was born in 1960 and was aged 53 years at trial.
The parties commenced cohabitation in 1987 and married in 1990. There are no children of the marriage.
The wife at commencement of cohabitation was a visual arts consultant, and the husband was a visual arts assistant.
On 20 November 1989, A Pty Limited was incorporated, with the wife and husband as shareholders and directors. The parties gave a personal guarantee to the Westpac Bank and obtained an overdraft of $20,000.
On 2 April 1990, J Pty Limited was incorporated, with the wife and husband as shareholders and directors. The parties obtained an overdraft of $10,000 from the Westpac Bank to enable the wife to operate her business through that company.
In December 1992 the parties purchased a property, as joint tenants, in the Suburb N property (“the N property”) for $280,000, with the purchase funded by a $224,000 mortgage from the Westpac Bank. At trial, the husband did not dispute that the deposit and balance due at settlement, after discounting the sum borrowed, was paid by the wife. The costs of purchase and stamp duty were shared equally, and until around the late 1990’s the parties equally shared the loan repayments.
In 1993 the husband’s business began to grow, and subsequently he leased a studio and equipment. These leases were guaranteed by the wife, and the N property was used as collateral.
In October 1996 the parties separated briefly, resuming cohabitation on 22 November 1996.
In 1999 the parties renovated the N property, financed by extending the limits on their Westpac bank home loan. The wife asserted that these renovations cost around $440,825, and the husband asserted that they cost in the vicinity of $525,000. The parties each paid approximately half the loan repayments of $5,670, until the wife reduced her share of the repayments to $1,460 per fortnight from April 1999, then to $500 per fortnight from July 2000, until the loan was repaid in March 2002. The husband met the balance of the repayments.
In June 2000 the parties restructured their debts. A business loan with a credit limit of $375,000 and overdraft limit of $75,000 was obtained by the husband, with the wife guaranteeing the loans. The outstanding debt to the bank at this time in relation to the loans mortgaged against the N property was $531,242. The wife said she only agreed to this course of action as the husband and his accountant “promised her that this arrangement would see all of the indebtedness to the bank (that is the entirety of the home loans and the business loans), repaid in two years”. His Honour did not accept that these promises were made because on the income of the husband at that time, it was “inherently unlikely” that all debt would be paid out in two years (at [11]).
In 2001 the husband obtained income protection insurance with Tower Australia Limited. He had previously been refused such insurance as a result of his problems with alcohol. At trial, it was common ground that the husband suffered from alcoholism for the duration of the relationship.
The wife asserted that from about 2005 her business started to decline and she undertook a design course.
In March 2007 the husband started seeing Dr D, psychiatrist, who specialised in addictive behaviours.
In June 2007 the lease on the studio rented by the husband expired and he placed his arts equipment in storage.
In early 2008 the husband was diagnosed with severe depression, and in May 2008 he commenced seeing Dr E, a psychiatrist. At some time during this period the husband enquired of his insurance broker about making a claim against his income protection policy, however no further action was taken.
On 14 March 2009, the parties separated on a final basis with the wife remaining in the N property until its sale. The husband lived in rented accommodation until he moved in with his new partner in July 2011.
Between March 2009 and July 2010 the wife drew down $107,727.34 from one of the Westpac loans to prepare the N property for sale, for joint household expenses, to meet interest payments on business loans and a small portion for her own living expenses. At trial, neither party sought an adjustment in relation to this amount.
In June 2010 the husband’s equipment was damaged whilst in storage. It remains there as a result of the husband not having renewed the insurance policy over these items.
In the same month the husband formally lodged a claim on his disability insurance with Tower Australia Limited, which was accepted in October 2010. The insurer determined that his disability commenced in March 2010.
On 19 October 2010, the husband received a payment of $135,495.32 from Tower Australia Limited to cover the period March to October 2010. From the latter date he has received a disability payment of $3,756 per week.
On 17 February 2011, the N property was sold for $2.5 million. After payment of the mortgage, $150,000 was paid to the wife with a further sum of $100,000 being paid to each of the parties by way of partial property settlement. The balance of $1,385,578.26 was paid into a controlled monies account pending the outcome of the proceedings.
On 25 May 2012, Ryan J made a further partial property settlement order with each party receiving $100,000.
On 13 July 2012, Ryan J made an interim spousal maintenance order in favour of the wife “in the sum of $667 per week plus any income the husband might receive from his art business royalties up to an amount of $1023 per week” (at [22]).
At the hearing before his Honour, neither party sought that any of the sums paid out of the proceeds of sale of the N property by way of interim property settlement be added-back to the pool available for division.
Reasons for judgment delivered on 24 May 2013
His Honour commenced the reasons for judgment by identifying the particular issues in dispute, namely the “add-backs” sought by the wife and “the characterisation of the husband’s entitlements under [his] policy of disability insurance” (at [1]).
His Honour then set out the relevant background and recorded the “applicable principles” in determining property matters (at [23]).
His Honour found that there was “little dispute” between the parties as to their assets and liabilities (at [24]). However, there was an issue in relation to the husband’s arts equipment, and his Honour found its value to be $25,000.
In relation to the furniture and contents in the possession of the wife, her evidence was preferred and his Honour found the value to be $15,000.
Turning to the chattels held by the husband, and significantly the wine that was allegedly removed from the N property, his Honour found that a value of $2,000 should be attributed to this.
In relation to the husband’s unpaid taxation bill of $52,802 for income received since separation, his Honour found that this should be taken into account when assessing spousal maintenance, and not in the alteration of the parties’ property interests.
With regard to the husband’s future income earning potential as a result of royalty payments for his art works supplied to the advertising industry, his Honour accepted the figure of $7,500 as proposed by the single expert appointed to value that income stream. His Honour then found “that the husband has a financial resource in that sum” (at [29]).
Turning to the disability insurance payments received by the husband,
his Honour found that there was no issue that if he remained disabled within the meaning of the policy he would continue to receive the payments up to the age of 70 years. The insurer could, however, at any time cease the payments if the insurer determined that the husband was only partially disabled, or was able to resume work.
The court ordered valuer concluded that in the event that the husband continued to receive payments up to the age of 70 years, and taking into account taxation on those payments, “the present value of the husband’s entitlement to payments from the policy” was $1.6 million. The valuer noted though that this figure “could not be treated as representing a fair market value or value to the owner of the entitlements. The entitlement to total disability ceases if the life insured is no longer totally disabled or if they die” (at [31]).
His Honour noted that the benefits of the policy were not transferable and could not be converted into a lump sum payment of $1.6 million without the agreement of the insurer. Accordingly his Honour found that the “present value of an income stream of $3756.00 per week less tax is neither property of the husband nor a financial resource” (at [32]). His Honour continued, expressing the view that:
33. … in circumstances such as these it is of limited assistance to seek to capitalise such a further entitlement by trying to derive a present value of them. It is appropriate to view the disability payments as potentially continuing and probably not permanent income under s 75(2).
His Honour then recorded an extract from the report of the husband’s treating psychiatrist, Dr E, dated 28 January 2013 and found that “it is more probable than not that the payments to the husband from the insurer will not continue in full until the husband is 70” (at [34]). His Honour further found that the husband did not conceal any information from his insurer in relation to his social activities and overseas trips.
His Honour then said this at [36]:
In summary, I find that the husband is likely to receive income from the insurer for some time but it is more likely than not that it will not be until he reaches the age of 70. I will not take into account its present value of $1.6 million but will take into account, where appropriate, the income stream.
Turning next to “add-backs”, his Honour referred to cases such as Omacini and Omacini (2005) FLC 93-218, Kowaliw and Kowaliw (1981) FLC 91-092 and Chorn and Hopkins (2004) FLC 93-204, where the three categories of “add-backs” were discussed namely, expenditure on legal fees, premature distribution of matrimonial assets, and where a party has acted in a manner designed to minimise the effective value or worth of matrimonial assets.
His Honour noted that the use of add-backs should be “exceptional”, their use was “ultimately a matter for the exercise of discretion of the trial judge” (at [44]), and that they “should be approached with care and with the aim of achieving an equitable result in the interests of justice. The use of add-backs should not lead to an absurd result as the facts in this case illustrate” (at [52]). It was his Honour’s view that add-backs “should generally be confined to the premature distribution of assets and [the] matters that are akin to them” (at [50]). On the other hand matters that do not fall into that category are better dealt with under s 75(2)(o) of the Family Law Act 1975 (Cth) (“the Act”).
At trial, the wife sought to add-back $725,206 to her list of matrimonial assets, which the wife said totalled $1,355,380, or an adjusted figure for total net assets of $2,080,586. His Honour found that none of the items proposed by the wife could be “categorised as premature distributions of property – they were losses” (at [53]). The wife’s counsel then sought that a distribution of 85 per cent of the adjusted pool be made in the wife’s favour, namely $1,768,498, which would result in her receiving an amount of $413,118 in excess of the assets “that presently, or had, existed”. His Honour found this result to be clearly “untenable”.
The first “add-back” sought by the wife was “the sum of $292 000.00 said to be the loss arising from the husband’s failure to claim disability insurance from December 2007 to March 2010” (at [55]). It was the wife’s submission that this failure to claim was “reckless, negligent or wanton conduct” as set out in Kowaliw. His Honour found that this was “not an appropriate add-back” (at [56]).
In any event, the husband disputed this, submitting that he did not cease work in December 2007 and in fact continued to work up to August 2010. He tendered invoices supporting this claim.
His Honour found that the husband was working, and looking for work during this period. Further, his Honour recorded that if the husband had tried to make a claim on his insurance policy, it was “difficult to see … that the insurer would have found a total disability” (at [59]). Thus his Honour found that the wife “failed to establish the factual basis for seeking to have the failure to make a claim on the policy in December 2007 found to be wanton, reckless or negligent conduct of the husband” (at [60]).
Next, the wife sought that $90,006 be added back, comprising the loss suffered as a result of the husband not re-insuring his equipment which suffered water damage whilst held in storage. The only evidence provided as to value on this issue was given by the husband, who asserted that “much of the equipment was outdated and of little or no value” (at [62]). His Honour accepted the husband’s evidence, and stated that he was “not satisfied that the quantum of this claim has been made out or that it should be taken into account as an add-back”.
The final “add-back” claimed by the wife was $343,200 for “waste on alcohol” calculated on the basis of $200 - $300 for every week of the marriage (at [63]). As set out above, it was not in dispute that the husband suffered from alcoholism for the duration of the marriage. His Honour noted that the wife “brought no evidence that would enable any rational consideration of this issue” (at [64]). His Honour then stated:
65… I am quite unable to determine from the evidence, or from any other basis, what would be a reasonable expenditure on alcohol. What people would regard as a reasonable expenditure on alcohol would vary from person to person. There are no doubt people that drink extensively but cheaply and people who drink sparingly but expensively … I am unable to make any findings on the evidence before me or otherwise that would allow me to quantify such a claim let alone consider what would be a reasonable amount of alcohol for the parties in this case to have consumed and what was a wasteful amount. …
His Honour referred to [77] and [78] of Mayne & Mayne (2011) FLC 93-479 before concluding that he “was not satisfied that any of the matters asserted should be added back to the property of the parties” (at [66]).
His Honour then recorded the assets and liabilities of the parties at [66], with the net assets totalling $1,583,106. His Honour noted that the wife sought to have the disability insurance payments taken into account as a financial resource of the parties in the sum of $1.6 million (at [67]); however, his Honour referred to his earlier reasons and repeated that the payments should be taken into account pursuant to s 75(2) of the Act (at [68]).
His Honour referred to the High Court decision of Stanford v Stanford (2012) 247 CLR 108 and concluded as follows:
70.In the present case I am satisfied that it is just and equitable to make orders altering the interests of the parties to the marriage to the property held by them. They are no longer living in a marital relationship. The basis on which the ownership of their property and the use of it by reason of them being in a married relationship and living together has ended and it is appropriate that their property interests are altered so as to meet their new needs and circumstances. The parties join in seeking such an order.
His Honour next considered the contributions of the parties pursuant to
ss 79(4)(a), (b), (c) and (d) of the Act at [71]-[76]. Relevantly, his Honour found that the wife paid approximately $50,000 towards the purchase of the N property. The parties were in dispute as to whether this amount came from the wife’s savings before marriage or was saved by her early in the marriage. His Honour found that nothing turned on this, and in either event there was a “significant financial contribution” by the wife. The “acquisition of this property and its subsequent renovation and extension has generated the bulk of the property … the subject of these proceedings” (at [71]).
His Honour found that the husband’s income increased over time and that it was “the substantial income of the husband that enabled the extensive and, on either party’s evidence, expensive renovations to take place to the [Suburb N] property” (at [72]). Further, his Honour found that from 1999 the husband made greater contributions toward reducing the mortgages than the wife.
The wife asserted that, “as a result of the husband’s wastage”, debts in the total sum of $584,000, which were repaid out of the proceeds of sale of the N property, would have otherwise been paid out in full during the marriage (at [73]). However, these amounts did not appear in the joint balance sheet as add-backs sought by the wife. Ultimately, the wife’s assertions were not accepted by his Honour and he was “satisfied that each of the parties made a significant financial contribution to the acquisition of their assets” (at [76]).
Turning to non-financial contributions, his Honour found that the wife “put more time and effort into the renovations than the husband and that, in particular, it was her skills and efforts that ensured their success” (at [77]).
His Honour recorded that the husband developed his skill in the visual arts during the marriage as a result of the support he had from the wife (at [78]), and although the wife put time and effort into preparing the N property for sale, her evidence did not convince his Honour that it “required two years full-time work” (at [79]). In the end result though, his Honour was satisfied that the wife had made greater non-financial contributions (at [80]).
His Honour found that “each of the parties contributed equally to the welfare of the family” (at [81]).
His Honour, under the heading of “Other Matters”, said this at [82]:
I take into account the wife living for two years in the property post separation with the mortgage being paid from joint funds and that she has received the benefit of spousal maintenance.
His Honour thus found that “the contribution to the assets of the parties is equal” (at [83]).
Turning next to the relevant factors in s 75(2) of the Act, his Honour had regard to the wife’s reasonable health and the husband’s depression and resulting disability payments. His Honour could not conclude when the husband may be able to return to work, but accepted this was “more likely than not” (at [85]).
His Honour found that the wife had retained some earning capacity. The wife last sought work in January 2011. She gave evidence that she wanted to start up a design and manufacturing business and hoped that she would receive sufficient funds from these proceedings to allow that. His Honour was not satisfied on the evidence that “there [was] any reasonable basis that making a provision of funds for that purpose [was] likely to lead to any benefit” (at [86]).
His Honour recorded that the husband now lived with his new partner in a property owned by her, and that he paid her $250 per week for board in addition to some expenses for groceries and household items. The husband and his new partner otherwise each had sole responsibility for personal expenses. The husband’s partner travelled overseas for work and he often accompanied her, but paid for his own airfares and sometimes his accommodation.
His Honour recorded that the husband presently had a financial resource by way of royalties received from his art works, and that he also had the benefit of his disability insurance payments which “constitute a valuable income stream … from an insurance policy entered into during the marriage and the premiums were paid from the parties’ funds” (at [90]).
Turning to the wife, his Honour recorded that she lived in rented premises, and would be responsible for providing her own accommodation. However, the wife sought that an adjustment be made in her favour pursuant to s 75(2)(o) of the Act “because her contributions … were rendered more onerous by the conduct of the husband because of his alcoholism throughout the marriage” (at [91]).
His Honour referred to Kennon v Kennon (1997) FLC 92–757 at 82,924 and Baldwin & Baldwin [2010] FamCAFC 227 at [102] and said this at [97]:
… there must be a link between the conduct of one party and the contributions which have been rendered more onerous because of that conduct. Here there is no evidence that the contributions of the wife, that is her financial contributions or the non-financial contributions in relation to the renovations were made more onerous in any particular way by the alcoholism of the husband.
Taking account of all the matters set out above, his Honour found that there should be an adjustment in favour of the wife such that she receive 52.5 per cent of the asset pool, acknowledging that “[w]hilst this adjustment reflects, in part, the income stream presently available to the husband and the limited income earning capacity of the wife it takes into account the limited spousal maintenance that I will be making order [sic]” (at [99]).
As to the form of orders, at [100]-[103] his Honour found that the husband should retain the art equipment, the wife should retain the furniture and it be taken into account as property received by her upon division. Furthermore, his Honour found that it was not appropriate to make a superannuation splitting order pursuant to s 90MT of the Act as sought by the husband, given both parties had a source of income, and that it was “preferable that the superannuation be taken into account by way of adjustment to the overall pool” (at [102]).
As a result his Honour found that the wife received 52.5 per cent of the total asset pool, or $831,130.65. She retained her superannuation entitlement of $66,527, and furniture valued at $15,000, and thus an amount of $749,603 was required to achieve that percentage division, and that amount was to come from the controlled monies account, the balance of which would go to the husband (at [103]).
His Honour was satisfied that these orders were just and equitable, as required by s 79(2) of the Act, and that they met “the obligation under s 81 finally to determine the financial relationship between the parties and avoid further proceedings between them to the extent possible” (at [104]).
Turning next to the spousal maintenance application by the wife, his Honour recorded that such an order could only be made if the party seeking that order “is unable to support herself or himself adequately” (at [105]).
His Honour then set out the income of the wife since separation at [106]-[108] noting that her unchallenged evidence was that most of her income came from interest earned on the controlled monies account, and that her business had incurred losses for the financial years ending 30 June 2009, 2010, 2011 and 2012.
His Honour found that the wife’s annual income was $30,000 or $577 per week. It was conceded by senior counsel for the husband that the wife had an income of around $550 to $600 per week.
His Honour then proceeded on the basis that the money received by the wife from the controlled monies account would be used by her to purchase accommodation, “removing rent from her expenses because it is more likely than not she would take the more prudent and tax effective course of buying a home even if some of the funds were used to acquire a small business” (at [110]). His Honour then concluded that the wife’s weekly expenses would exceed her income by $536 per week after the property orders were carried out (at [116]).
It was the husband’s case that the wife was “capable of earning more” (at [117]). His Honour found that, on the evidence, there was not “a business venture in which the wife is likely to engage that will earn her a significant income” (at [118]).
His Honour found that the parties had “enjoyed a good standard of living in a very stylish house” (at [119]), and that “[h]aving regard to the property the wife will receive, as a result of these proceedings, that property will not be sufficient for her to maintain that same standard of living in a dwelling of similar comfort” (at [120]).
His Honour was satisfied that the wife was unable to support herself adequately “having regard to the manner in which the parties lived prior to separation, her earning capacity and the income presently available to her” (at [121]).
His Honour recorded that the husband had a weekly income of $3,756 (not taking into account any royalty payments he might receive, they being accounted for as a capital sum in the property settlement) (at [127]). Further, the husband paid $250 board per week to his new partner and, taking into account his earnings and expenditure, his “income [exceeded] his expenses by some $524 per week” (at [126]).
His Honour further recorded that the husband’s income came from the disability insurance payments he received, and that his accommodation expenses were less than the wife’s. The husband was also in a stable relationship, and his new partner earned $4,484 per week from which she was able to provide him with financial support (at [129]).
His Honour thus found that it had “been established that the husband’s income exceeds his expenses by such an amount as to be able to pay the wife by way of maintenance the sum that she needs to maintain herself adequately” (at [130]). His Honour then found that it was appropriate to make a spousal maintenance order for the following reasons:
131.… It is appropriate that the wife have financial support as she adjusts to her new circumstances and determines her future course. I take into account that she is 54 years old and her career options are limited. The husband, on the other hand, has the possibility a [sic] significant income until he reaches the age of 70. I have earlier found that it is, however, more probable than not that the payments will cease or diminish in the future. I do not think it appropriate to make an order for maintenance for an indefinite period. A period of fours [sic] years will give the wife time to adjust to her new circumstances and for her lifestyle not to be suddenly affected.
132.I shall make an order therefore that the husband shall pay the wife spousal maintenance in the sum of $534 per week until the end of April 2017.
Finally, given his Honour’s previous finding that the disability payments would “more probably than not … cease, or at least diminish, at some time in the future” his Honour found that, as a result, the husband’s capacity to make the spousal maintenance payments would be adversely affected, and thus the payments of spousal maintenance were to be conditional on the husband receiving disability payments on the basis of “total disability”. In the event that the payments ceased or were reduced, the issue of spousal maintenance would have to be considered “afresh” (at [133]).
Grounds of Appeal
The grounds of appeal as contained in the Amended Notice of Appeal filed by the wife on 20 November 2013 are as follows:
1.That his Honour erred in principle in ordering that the appellant receive a fixed sum from the Controlled Moneys Account rather than a percentage calculated to give effect to his Honour’s Reasons against the pool at trial.
2.In framing orders for a fixed sum to the appellant from the Controlled Moneys Account his Honour’s discretion miscarried in that he failed to take into account relevant facts namely the injustice that would be occasioned to the appellant arising from:
2.1interest accruing between the time of the hearing and judgment would, by default, accrue to the respondent; and,
2.2interest accruing from the time of the hearing to judgment would occasion upon the appellant a 50% share of the tax burden on the same interest.
Contributions
3.That his Honour erred in failing to find on the evidence before him that the appellant held savings of $56,000 at the time of commencement of cohabitation.
4.That his Honour’s evaluation of the contributions of the parties miscarried as a consequence of the erroneous view that the disputed question of fact as to whether $56,000 was held by the appellant prior to cohabitation or whether it was saved by her in the early days of the marriage would not occasion a “significant difference”.
5.That his Honour erred in failing to find on the evidence that the appellant’s contribution had in a substantial way been made more arduous as a consequence of the respondent’s alcohol consumption and its effect on his behavior and his ability to contribute.
6.His Honour erred in finding that it was the financial contribution of the respondent that enabled the renovations to the [Suburb N] property.
7.That his Honour erred in principle in failing to give adequate reasons for his conclusion that the parties contributed equally to the welfare of the family.
8.That his Honour’s finding that the parties contributed equally to the welfare of the family was in error and was contrary to evidence which required a finding that substantially favoured the appellant.
9.That his Honour erred in principle in failing to make any finding recognising the homemaking contributions of the parties and in particular the homemaking contribution of the appellant which required a finding substantially in her favour.
10.That his Honour erred in principle in taking into account, without statutory warrant, the “other matters” identified in paragraph 82 in the process of assessing the contributions of the parties.
11.In the alternative in the event that the Ground in paragraph 10 be rejected, then his Honour’s discretion miscarried in his approach in taking into account the “other matters” in paragraph 82 in that his Honour failed to recognise that the maintenance payments and mortgage payments subsequent to separation were funded from the disability insurance policy and income received from copyright payments of [art works created] during the marriage; that the respondent had received the sole benefit of payments post separation from the same sources and that they were each to be recognised as having contributed to the existence of the disability entitlement in the way his Honour described at paragraph 122.
Other Factors – s.79(4)(e)
12.His Honour’s discretionary decision miscarried in relation to the assessment of factors relevant pursuant to s.75(2) Family Law Act in that his Honour failed to take into account:
12.1that upon the respondent returning to work he would enjoy a substantially greater earning capacity than the appellant;
12.2that the respondent enjoyed the benefit of a joint household with his partner who has a very substantial independent income;
12.3that the appellant had made indirect contributions to the respondent’s earning capacity required to be recognised pursuant to s.75(2)(j) being a contribution to his earning capacity as a [visual artist] and his earning capacity constituted from his entitlement to receive payments from the insurer arising from a policy to which they had each contributed.
12A.His Honour erred in principle in determining the s79 claim by taking into account aspects of the outcome of the spouse maintenance proceeding.
Manifestly Unjust
13.That the order embodied in his Honour’s Reasons and on the evidence before him, including his Honour’s conclusions as to the assessment of contributions and adjustments arising pursuant to s.79(4)(e) was plainly wrong and manifestly unjust.
The Maintenance Order
14.That his Honour’s discretionary decision miscarried by making the respondent’s obligation to pay maintenance contingent upon his receipt of disability insurance on the basis of a total disability when such a termination:
14.1had no regard to the substitute capacity of the respondent from a return to employment;
14.2involved no finding that the needs of the appellant had diminished;
14.3and would subject the parties to further litigation.
15.That his Honour’s discretion miscarried in ordering that the spouse maintenance order terminate at the end of April 2017 or indeed before this date in the event the respondent’s disability payments cease.
16.That his Honour’s discretion miscarried as a consequence of a denial of procedural fairness to the appellant in proceeding to find that a period of four years of spouse maintenance will afford the appellant “time to adjust to her new circumstances” in circumstances where his Honour failed to raise that contention with the appellant or her counsel.
In the wife’s summary of argument filed on 20 November 2013, Ground 5 is abandoned. Further, at the hearing before us we were told that Grounds 1 and 2 had been resolved consensually and were thus not pursued.
Orders Sought
The wife seeks the following orders:
1.That the Appeal be allowed.
2.That Orders 1 and 4 of the Orders made by the Honourable Justice Aldridge on 24 May 2013 be set aside.
3.That in substitution for Orders 1 and 4 of the Orders made by his Honour, the following orders be made:
3.1That the husband pay the wife spousal maintenance in the sum of $534.00 per week.
3.2That the spousal maintenance payable by the husband pursuant to Order 3.1 is to be varied on the review date commencing one year from the date of this Order and annually thereafter to such sum as shall be determined by multiplying the spousal maintenance being paid on the review date by the fraction N/B where “N” is the Consumer Price Index (All Groups for Sydney) published by the Australian Bureau of Statistics (“CPI”) in respect of the quarter year immediately preceding the review date and “B” is the CPI in respect of the quarter year ending 12 months prior to the review date.
3.3That within seven (7) days of the date of these Orders, the parties do all acts and things and sign all documents necessary to direct Barkus Doolan Kelly to distribute the funds held by them in the controlled monies account on behalf of the parties (“the controlled monies account”) as follows:-
3.3.1In payment to the wife of the sum of $947,491.90;
3.3.2In payment to the wife of 65% of the interest earned on the controlled monies account from 11th February 2013 until the distribution of the said controlled monies account.
3.3.3In payment of the balance then remaining to the husband.
4.That in the event that the Full Court refuses to make the orders sought in paragraph 3 then these proceedings be remitted for re-hearing by another judge of the Family Court of Australia other than the Honourable Justice Aldridge.
5.That the Respondent pay the Appellant’s costs of and incidental to this Appeal.
6.In the event that the relief sought in paragraph 5 be refused then:
6.1that the appellant be granted a cost certificate pursuant to s.9 of the Federal Proceedings (Costs) Act (1981) in relation to the appeal.
6.2that the appellant be granted a cost certificate pursuant to s.8 of the Federal Proceedings (Costs) Act (1981) in relation to the re-trial (if any).
Discussion
Grounds 3 and 4
The complaint here is that on the evidence his Honour should have found that the wife had $56,000 in savings at the commencement of cohabitation, and the contribution of those funds to the purchase of the N property should have been clearly recognised by his Honour in his assessment of the contributions of the parties.
The evidence of the wife was unequivocal. In paragraph 11.1 of her affidavit filed on 25 January 2013 she asserted that she had $56,000 in interest bearing deposits with Westpac, which she subsequently in December 1992 put towards the purchase of the property.
The evidence of the husband was simply that as far as he was aware the wife had limited savings in her bank accounts, and thus the funds put towards the purchase of the property “had accrued during [the] relationship” (affidavit filed 23 January 2015, at [37] and [75]).
In cross-examination, the evidence of the wife in this regard was not directly challenged or contradicted.
In these circumstances should his Honour have found in accordance with the wife’s evidence? As senior counsel for the wife pointed out, there is no requirement that a trial judge must accept evidence which is unchallenged, but unless there is something “inherently incredible or improbable” in that evidence, it can be a mistake of fact to reject it (Scott and Scott (1994) FLC 92-457 at 80,729-80,731).
His Honour addressed this evidence at [71] as follows:
It is not disputed that the acquisition of the [Suburb N] property in December 1992 was funded by the wife paying approximately $50 000 towards its purchase. Whilst there was a dispute between the parties as to whether this sum came from savings held by the wife prior to the marriage or was saved by her in the early days of the marriage there is not a significant difference in the effect of either position. The husband concedes that the wife had a higher income than him in the early days of the marriage. It was either sufficiently high to enable that money to be saved or the wife already had those funds. In either event it is a significant financial contribution made by the wife. It is true that it was made some twenty years ago but it is the acquisition of this property and its subsequent renovation and extension that has generated the bulk of the property that is the subject of these proceedings.
Despite the attempt by the husband’s senior counsel to demonstrate that the wife’s evidence as to what money she had pre-cohabitation was inconsistent, we are receptive to the wife’s complaint that his Honour should have accepted her evidence about this issue. However, we are not persuaded that his Honour’s treatment of this contribution by the wife was erroneous. It is said by the wife’s senior counsel that “[t]he failure to recognise this important initial contribution could only have the effect of unfairly leaving the appellant to have her contributions undervalued”. However, as can be seen, his Honour recognised the input of the $56,000 as “a significant financial contribution made by the wife”, and noted that, “[i]t is true that it was made some twenty years ago but it is the acquisition of this property and its subsequent renovation and extension that has generated the bulk of the property that is the subject of these proceedings” (at [71]).
Thus, although Ground 3 is in effect made out, Ground 4 is not, and that is where there was a need for appellate interference, if there was to be any.
Ground 6
It was common ground that the entire cost of the renovations was met by the parties extending their existing Westpac home loan, but plainly what his Honour was addressing in finding that “it was the substantial income of the husband that enabled the extensive and, on either party’s evidence, expensive renovations to take place to the [Suburb N] property” (at [72]), was the uncontroversial fact that the husband contributed more to the mortgage repayments than the wife, because of his greater income.
Thus, there is no appealable error in his Honour’s finding in this regard.
We also observe, as emphasised by the husband’s senior counsel, that the wife did not contend at trial that there was an equal contribution by the parties to the husband’s income. Thus, that cannot be a basis for challenging his Honour’s finding.
Grounds 7, 8 and 9
The primary challenge here is an alleged lack of reasons by his Honour.
The extent of his Honour’s consideration of the respective parties’ contributions to the welfare of the family (s 79(4)(c) of the Act) is comprised at [81] of the reasons, namely:
On the evidence I am [sic] find that each of the parties contributed equally to the welfare of the family.
Plainly this is a conclusion, but nowhere does his Honour identify and assess the evidence that he says has led to that conclusion. That does not conform to the settled principles relating to the obligation of a judicial officer to provide adequate reasons (Bennett and Bennett (1991) FLC 92-191, at 78,266-78,277).
However, senior counsel for the husband submits, in effect, that it was unnecessary for his Honour to say more than he did. There was no real dispute about this issue, and the evidence of the parties was brief, given that the focus of the case was on their respective financial contributions and their contributions to the renovations of the N property. In this context, Mr Schonell SC referred us to [57] of the judgment of Coleman J, sitting as a single judge exercising appellate jurisdiction, in Wen & Thom [2010] FamCAFC 81. There his Honour said this:
57.As the authorities make clear, there is no absolute standard by which the adequacy of judicial reasons can be gauged. The authorities suggest that the essential requirement is that judicial reasons reveal why a case was decided the way it was. How much needs to be said for that requirement to be met will vary from case to case in the light of the issues raised which require adjudication. In many cases, very little will need to be said whilst in other cases a good deal of the reasoning process which leads to the ultimate decision will need to be revealed.
However, given the evidence, the wife’s case, and a concession made by the husband, we consider that it did behove the trial judge to say more than he did in finding that the parties contributed equally to the welfare of the family.
The evidence of the wife was contained in paragraphs 210 - 217 of her affidavit filed on 25 January 2013, and the husband’s evidence was set out in paragraphs 131 - 137 of his affidavit filed on 23 January 2013. The wife’s case was set out in her case outline where in paragraph 2.10 she promotes her greater contribution as “the primary homemaker throughout the marriage” (confirmed in her counsel’s final address). The concession made by the husband appears in paragraph 132 of his affidavit where he says, “I concede that [the wife] probably undertook more of these [household] tasks then [sic] me in circumstances where I was working and [the wife] was in irregular paid employment”.
Thus, not only should his Honour have said more in his reasons, but it is plain that his Honour’s finding was in error. At the very least, with the husband’s concession, his Honour should have found that the wife’s contribution exceeded the husband’s.
Accordingly, we find merit in these grounds of appeal.
Grounds 10 and 11
The two challenges here are first, there is no statutory warrant for his Honour to take the “other matters” referred to in [82] into account when assessing contributions; they are not matters to be found in s 79(4)(a), (b), or (c) of the Act. Secondly, it seems that his Honour took these matters into account in a negative way vis-a-vis the wife; i.e. she was living in the jointly owned home, the mortgage was being paid from joint funds, and she was receiving spousal maintenance. Yet, on the evidence, that approach was not justified.
Although we have set out [82] of his Honour’s reasons above, for convenience we set that paragraph out again as follows:
I take into account the wife living for two years in the property post separation with the mortgage being paid from joint funds and that she has received the benefit of spousal maintenance.
Despite the valiant efforts of the husband’s senior counsel, it is apparent that his Honour has made an error of principle here; the matters that his Honour had regard to are not matters to be taken into account under s 79(4)(a), (b) or (c) of the Act in assessing the contributions of the parties.
Further, and in any event, it was not open to his Honour to take these matters into account against the wife, but that is the clear tenor of what his Honour says at [82] when read in the context of [76], [80], [81] and the ultimate conclusion on contributions in [83]. In doing so his Honour has apparently overlooked a significant part of the history of the financial contributions of the parties, namely that following separation in March 2009, the mortgage loan was being serviced by funds from copyright payments received in respect of art works created during the marriage; and by March 2010, the husband’s disability insurance claim was recognised; and thereafter, until the sale of the property in February 2011, the mortgage repayments were met from funds received by the husband from that claim, which had its genesis in contributions made jointly by the parties (at [122]). Further, the spousal maintenance payments were only during a limited period and they also came from the disability insurance payments.
Thus, there is merit in these grounds of appeal.
Grounds 12 and 12A
His Honour determined that, after taking into account the matters that he had regard to, there should be an adjustment of 2.5 per cent in the wife’s favour on account of the s 75(2) matters.
The wife here complains that his Honour failed to take into account at all three matters that favoured the wife, and that he took into account one matter that he should not have.
As to the first of the three matters, the difficulty facing his Honour was that, on the evidence, he was not able to find when the husband would be able to return to work (at [85]). All he was able to do was to “find that it is more probable than not that the payments to the husband from the insurer will not continue in full until the husband is 70” (at [34]). Thus, his Honour took into account what he could, namely the evidence as to the husband’s current income, and this was flagged earlier in his Honour’s reasons when he said at [33], “[i]t is appropriate to view the disability payments as potentially continuing and probably not permanent income under s 75(2)”.
We also note that the evidence did not establish that upon his return to work the husband would enjoy “a substantially greater earning capacity than the [wife]”.
Accordingly, we are not persuaded that his Honour erred in taking this approach.
As to the second of the three matters, it is plain that the unchallenged evidence of the financial relationship between the husband and his new partner did not permit his Honour to take into account what it is suggested his Honour should have taken into account. The complete answer to this complaint is as his Honour set out at [88], namely:
The husband is living with his partner at premises owned by her. The husband pays her $250 per week by way of board and pays for some grocery and household items. Otherwise, save for the cost of joint entertainment expenses, each is solely responsible for their own personal expenses. The partner travels extensively for work purposes, often overseas. In respect of those trips the husband pays the cost of his own air fare and sometimes his accommodation costs.
However, with the third of the three matters, we consider that there is some merit in the complaint.
It is beyond doubt that the wife made the indirect contributions to the husband’s earning capacity referred to in the ground of appeal (e.g. see [122]), and it is clear that, when assessing the relevant s 75(2) factors, his Honour failed to identify this at all. However, as was pointed out by the husband’s senior counsel, his Honour did take into account the wife’s indirect contributions to the husband’s earning capacity as a visual artist when considering contributions, and thus it was not open to his Honour to again take that into account when determining any s 75(2) adjustment. That leaves though the important contribution by the wife to the husband’s entitlement to receive his insurance disability payments. His Honour recognised this in his reasons at [122], but that was in the context of his consideration of spousal maintenance, and there is no doubt that his Honour did not refer to it when considering the relevant s 75(2) factors.
The relevant paragraph is s 75(2)(j) which provides as follows:
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity property and financial resources of the other party; and
In suggesting that his Honour erred in that regard, the wife’s senior counsel referred to and relied on the Full Court decision of B and B (No 2) (2000) FLC 93-031, and in particular at [58]-[70].
However, the husband’s senior counsel submits that it is not open to a trial judge to take into account s 75(2)(j) when considering property settlement, and that it can only be taken into account when addressing a claim for spousal maintenance, and thus his Honour was not in error here. Mr Schonell relies on the Full Court decision of C v C (Nullity) (1998) FLC 92-824 where their Honours (Baker, Kay and Burton JJ) said this (at [147]):
Insofar as s 75(2)(j) is concerned, the matter has no application in the present circumstances as the determination of the property matter was not affected by s 75(2) considerations. In any event, it should be borne in mind that s 75(2) serves two masters. It has application in maintenance cases as well as in property cases. It is incorporated into the s 79 property considerations only insofar as it is relevant. Sub-par 75(2)(j) has more relevance to maintenance proceedings than to property proceedings. The matters to be considered under this sub-paragraph will almost always have been given weight in the determination of s 79(4)(a) and (b) contributions. It would be inappropriate for there to be a further counting of such contributions other than insofar as they may apply to the building up of the future financial resources of each party.
(Authorities omitted)
Mr Schonell also submits that in B and B (No 2), the court did not directly engage with s 75(2)(j), and we should not put any weight on that decision.
We reject these submissions of the husband’s senior counsel. First, with B and B (No 2), it is plain that the Full Court did engage with the paragraph. Ground 2 of the Notice of Appeal in that case was solely about the failure by the trial judge to take into account the matters referred to in s 75(2)(j) when considering what adjustment to make to the property settlement entitlement of the wife. Secondly, the passage at [147] of the reasons of the Full Court in C v C was dicta, and in any event did not exclude the applicability of s 75(2)(j) to property settlement cases.
We observe though, that as the Full Court said in C v C, it is usually the position in property settlement cases that the matters to be considered under the paragraph are best considered when addressing the respective contributions of the parties, rather than the s 75(2) factors. Here, his Honour did neither, albeit it was a significant issue.
As to the final matter (Ground 12A), it is apparent from his Honour’s reasons that he took into account the spousal maintenance that he proposed ordering when arriving at the adjustment that he did. At [89] his Honour said this:
The wife will be responsible for providing her own accommodation and presently lives in rented premises. As will be seen the wife will secure a measure of success in her application for spousal maintenance.
Then, at [99], when referring to the adjustment of 2.5 per cent his Honour said this:
… Whilst this adjustment reflects, in part, the income stream presently available to the husband and the limited income earning capacity of the wife it takes into account the limited spousal maintenance that I will be making order [sic].
This is clearly an error of principle. As submitted by the wife’s senior counsel, his Honour was obliged to “determine the property claim unaided or unhindered by his view as to the determination of the maintenance claim, but then have regard to the outcome in considering the maintenance application” (see Clauson and Clauson (1995) FLC 92-595, at 81,906-7).
Thus, although some aspects of the challenge have no merit, there is sufficient error established otherwise to require appellate interference.
Ground 13
We are somewhat bemused by this ground and the fact that it was pursued. Nothing has been put to us either in the written or oral submissions of the wife which persuades us that this ground has merit as a stand-alone ground, and no attempt was in fact made to link it with any of the other grounds of appeal. The high point of the wife’s submission in support of the ground was that the 2.5 per cent adjustment for the s 75(2) factors was “not enough”.
Grounds 14, 15 and 16
These grounds challenge his Honour’s order for spousal maintenance.
There are two areas of complaint. First, that his Honour should not have made the payment of maintenance conditional upon the husband continuing to receive his disability insurance payments, and secondly, that his Honour should not have provided that the maintenance payments cease at the end of April 2017.
As to the first issue, his Honour said this:
133.The husband’s source of income to make these payments is the disability insurance payments. I have found that it is more probably [sic] than not that these payments will cease, or at least diminish, at some time in the future. If they do the husband’s ability to make these payments will be adversely affected. I will therefore make the payments of spousal maintenance conditional upon the husband continuing to receive disability insurance payments on the basis of a total disability. If the payments cease or are reduced the issue of spousal maintenance will have to be considered afresh.
Consistent with his Honour’s inability to find when the husband would be able to return to work when assessing the relevant s 75(2) factors, his Honour was in no better position when addressing spousal maintenance. His Honour was of course able to say that it was “more probable than not that the payments to the husband from the insurer will not continue in full until the husband is 70” (at [34]). Thus, given that his Honour found that the husband’s ability to make the payment of spousal maintenance “will be adversely affected” when the insurance payments cease or lessen, we consider that it was appropriate for his Honour to make his order conditional upon the receipt of those payments.
Again, it was not open to his Honour to continue those payments by finding that the husband would have an ongoing alternate earning capacity once the disability payments ceased or lessened. That would involve impermissible speculation on the part of his Honour.
It is also not to the point that the needs of the wife may not diminish, or that the order may result in further litigation. It was about the husband’s capacity to pay, and in the circumstances, although we accept it is not ideal, the parties may need to return to court.
Thus, there is no merit in this aspect of these grounds of appeal.
As to the second issue, his Honour said this:
131.It is appropriate to make a spousal maintenance order for these reasons. It is appropriate that the wife have financial support as she adjusts to her new circumstances and determines her future course. I take into account that she is 54 years old and her career options are limited. The husband, on the other hand, has the possibility of a significant income until he reaches the age of 70. I have earlier found that it is, however, more probable than not that the payments will cease or diminish in the future. I do not think it appropriate to make an order for maintenance for an indefinite period. A period of fours [sic] years will give the wife time to adjust to her new circumstances and for her lifestyle not to be suddenly affected.
It is said that his Honour should not have ordered that the spousal maintenance terminate after four years, and in any event there was a denial of natural justice in his Honour’s failure to raise this prospect with the wife or her counsel.
Just as it would have been impermissible speculation to continue the maintenance payments beyond any cessation or diminution of the husband’s disability insurance payments, there was no basis on the evidence to terminate the spousal maintenance in any event after four years. As emphasised by the wife’s senior counsel in his written submissions at paragraph 41:
·There was no evidence to suggest that the wife’s needs would be any different in four years time;
·There was no evidence to suggest that the insurance payments were likely to cease in four years time;
·The joint contribution to the events that entitled the respondent to the insurance payments, recognised by his Honour at para 122, would not suggest that it is unjust for the appellant to continue to receive part of that income stream whilst it is available;
…
The limit of four years was “entirely arbitrary and unsupported by any view of the evidence”. The only cap that is justified on the evidence is the imposition of the condition of the continuation of the disability insurance payments. We note of course that this is challenged by the wife, but as set out above, we do not accept that his Honour erred in imposing that condition. We are persuaded otherwise in relation to the four year limitation.
Although his Honour purports to explain at [131] why he imposed the limitation, in reality there is a lack of adequate reasons. For example, why was it not “appropriate” to make an order for an indefinite period, and what is meant by the last sentence of the paragraph?
Thus, we find merit in this ground of appeal (Ground 15). The error is also compounded by his Honour’s failure to raise the proposal of a four year limitation with the wife or her counsel; that is a clear denial of natural justice (Ground 16).
Conclusion
Having found merit in Grounds 7, 8, 9, 10, 11, 12A, 15 and 16, and in respect of one aspect of Ground 12, the appeal must be allowed. The question then becomes whether the matter should be remitted to another judge of the Family Court of Australia for rehearing, or whether we can re-exercise the discretion. The wife urged us to do the latter, but the husband suggested that we have to do the former, and particularly in relation to the issue of spousal maintenance, if we found that the relevant property settlement orders should be set aside.
We consider that we are able to re-exercise the discretion. There is sufficient unchallenged evidence and findings by his Honour to enable us to do that. Further, there was agreement between the parties that the only additional evidence to be placed before us was the husband’s affidavit filed on 5 July 2013, and counsel for the wife informed us that he did not want to cross-examine the husband on that affidavit. That affidavit was filed in support of an application seeking the enforcement of one of the orders made by his Honour, and it updates the husband’s financial circumstances.
Re-exercise of the discretion
There is no issue as to the net asset pool of the parties, and indeed, following the hearing of the appeal, we were provided with schedules identifying the agreed asset pool as between the parties. In that regard the agreed asset pool is as follows:
LIST OF ASSETS AND LIABILITIES
Assets Joint Wife Husband Proceeds of Suburb N property $1,290,380 Art business equipment $25,000 Furniture – contents $15,000 $2,000 Total $1,290,380 $15,000 $27,000 Total assets $1,332,380 Liabilities – NIL Superannuation ING Integra $66,527 AXA $49,663 ING Integra $134,536 Total Superannuation $250,726 Total net assets $1,583,106 Plus interest on controlled monies account $36,370.64
Total net assets plus interest $1,619,476.64
That schedule clearly identifies the respective interest of the parties in the assets set out, and neither before his Honour, nor before this Court, was there any suggestion that it was not just and equitable to make orders dividing these assets between the parties; indeed, we are satisfied that that is the case here, and we agree with what his Honour said in this regard in his reasons at [70].
Turning to the issue of the respective contributions of the parties, given our findings in relation to the grounds of appeal, one specific issue that we have to take into account is the effect of the greater contributions of the wife to the welfare of the family, and in particular her homemaker contributions.
Further, in assessing the contributions of the parties, we must be mindful not to take into account, against the wife, the circumstances of her occupation of the former matrimonial home subsequent to separation; and the payment of the mortgage in relation to that home, also subsequent to separation; and any proposed spousal maintenance order.
The wife submits that the contributions of the parties should be assessed at 60 per cent / 40 per cent in her favour. On the other hand, the husband submits that if error is found, and there is a re-exercise of the discretion, then the contributions assessment of his Honour should not be altered, and it should remain equal.
In our view, the appropriate percentage division on account of the respective contributions of the parties should be 55 per cent / 45 per cent in the wife’s favour. That division would account for the wife’s conceded greater homemaker contributions as a relevant matter to be taken into account, along with all of the other unchallenged contributions of the wife, including her initial contribution to the purchase of the N property, when weighed against the unchallenged contributions of the husband, including his financial contributions during the relationship.
Turning to the relevant s 75(2) factors, given our findings in relation to the grounds of appeal, a specific issue to be addressed is the effect (if any) of the wife making an indirect contribution to the entitlement of the husband to receive the disability insurance payments (s 75(2)(j)). It was a joint decision by the parties to take out such insurance and for the premiums to be met from joint funds.
The wife submits that there should be a 15 per cent adjustment in her favour on the basis of the relevant s 75(2) factors taking her overall entitlement to 75 per cent. So far as the husband is concerned, he seems to be suggesting that the percentage found by his Honour, namely an adjustment of 2.5 per cent should be maintained, regardless of any error found in accordance with the relevant grounds of appeal.
In our view, the appropriate percentage adjustment for all of the relevant s 75(2) factors is 5 per cent in the wife’s favour. The husband’s only income is his disability insurance payment, and thus the wife’s indirect contributions thereto are significant. However, the outcome on contributions alone leaves the wife with in excess of $160,000 more than the husband and a large proportion of the husband’s entitlement will be taken in the form of superannuation which he cannot yet access.
Thus, we find that the overall percentage entitlements of the parties should be 60 per cent / 40 per cent in the wife’s favour. Applying that to the agreed asset pool (including interest) provides the result that the wife is entitled to $971,685.98 and the husband is entitled to $647,790.66.
According to the agreed schedules provided to us by the parties following the hearing of the appeal, it seems that the wife has received and retained a total of $850,217.83 of the asset pool (including interest), and the husband $769,258.81. Thus, to achieve the result that we have arrived at, the wife is entitled to receive from the husband the sum of $121,468 (to the nearest dollar), and that should be paid within 60 days. That is the order that we propose as to the issue of property settlement.
Finally, on the issue of property settlement, taking into account the history of the parties and their relationship, their respective contributions and the relevant s 75(2) factors, we are satisfied the order that we propose by way of property settlement is just and equitable in all the circumstances.
In relation to spousal maintenance, as can be seen, the order sought by the wife is an indefinite weekly payment of $534, namely the amount ordered by his Honour, but without the conditions.
We have found that his Honour erred in ordering the spousal maintenance to cease at the end of April 2017, but that his Honour did not err in making the payment conditional on the husband’s continued receipt of his disability insurance payments.
In these circumstances we propose to order that conditional upon the husband continuing to receive disability insurance payments on the basis of a total disability, the husband pay the wife spousal maintenance in the sum of $534 per week.
We note that one of the orders sought by the wife in the appeal is an order providing for a variation of the amount of spousal maintenance in accordance with yearly movements in the consumer price index. We are not prepared to make such an order given that it was not an order sought at the trial and it was not the subject of argument before us.
There is nothing in the affidavit of the husband filed on 5 July 2013, or that emerges from the submissions of the parties, which would alter the appropriateness of these orders.
Costs
At the conclusion of the hearing we sought submissions from the parties as to the issue of costs depending on the result of the appeal.
In the event that the appeal was successful, the wife sought an order for costs, but if no order for costs was made then she sought a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”).
For the husband’s part, he opposed an order for costs being made in the event that the appeal was successful, and sought a costs certificate.
Although we have allowed the appeal, not all of the grounds of appeal were found to have merit, and we do not consider that it is appropriate to make an order for costs against the husband. The appeal though has succeeded on a question of law, and accordingly we propose to order that costs certificates pursuant to the Costs Act issue to both parties in relation to the appeal.
I certify that the preceding one hundred and fifty nine (159) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 8 July 2015.
Legal Associate:
Date: 8 July 2015
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