Reichstein & Reichstein
[2006] FamCA 1422
•29 November 2006
FAMILY COURT OF AUSTRALIA
| REICHSTEIN v REICHSTEIN | [2006] FamCA 1422 |
| APPEAL – PROPERTY – Whether trial Judge erred in failing to “add back” to pool of assets certain liabilities of husband and not including certain assets acquired by wife after separation – Whether trial Judge failed to give adequate reasons for inclusion of proceeds of sale of shares by husband after separation – Whether trial Judge gave insufficient weight to initial contributions of husband – Trial Judge made erroneous factual finding as to value of initial contribution of husband – Finding underpinned trial Judge’s overall assessment of contributions – Ground established – Whether trial Judge failed to properly assess husband’s contributions in respect of overseas bank account – Husband failed to comply with obligation to make full, frank and complete disclosure – Trial Judge not in error in treatment of account given state of evidence and husband’s substantial non-disclosure – Whether trial Judge erred in failing to take into account as a contribution the welfare of wife’s children from previous marriage – No error by trial Judge in rejecting husband’s submission he should receive weighting for a contribution under s 79(4)(c) – Whether trial Judge erred in failing to take into account husband’s post separation contributions to his superannuation – Trial Judge did not assess and make findings about parties’ post separation superannuation contributions – Failure constitutes appealable error. Whether trial Judge erred in making adjustment in wife’s favour of 13 per cent for Whether trial Judge in error in that overall result not just and equitable – Merit in this ground. Appeal allowed – Re-exercise of discretion – Overall contributions to superannuation and non-superannuation assets assessed at 76 per cent by the husband and 24 per cent by the wife after minor adjustment to pool – Appropriate adjustment under s 75(2) was 6 per cent. |
| Family Law Act 1975 (Cth), ss 75(2), 79 |
A v J (1995) FLC 92-619
Allesch v Maunz (2000) 203 CLR 172; (2000) FLC 93-033
Bennett and Bennett (1991) FLC 92-191
Black and Kellner (1992) FLC 92-287
Briese and Briese (1986) FLC 91-713
Coghlan and Coghlan (2005) FLC 93-220
De Winter and De Winter (1979) FLC 90-605
Gronow v Gronow (1979) 144 CLR 513
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
House v The King (1936) 55 CLR 499
JEL and DDF (2001) FLC 93-075
Kannis and Kannis (2003) FLC 93-135
Norbis v Norbis (1986) 161 CLR 513; (1986) FLC 91-712
Oriolo and Oriolo (1985) FLC 91-653
Robb and Robb (1995) FLC 92-555
Townsend and Townsend (1995) FLC 92-569
Waters and Jurek (1995) FLC 92-635
Weir and Weir (1993) FLC 92-338
| APPELLANT: | AER |
| RESPONDENT: | DLR |
| FILE NUMBER: | ADF | 908 | of | 2004 |
| APPEAL NUMBER: | SA | 15 | of | 2006 |
| DATE DELIVERED: | 29 November 2006 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | BRYANT CJ, KAY & BOLAND JJ |
| HEARING DATE: | 25 SEPTEMBER 2006 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 15 FEBRUARY 2006 |
| LOWER COURT MNC: | [2006] FamCA 61 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | MS M PYKE QC |
| SOLICITORS FOR THE APPELLANT: | ROSEY BATT & ASSOCIATES |
| COUNSEL FOR THE RESPONDENT: | MR D BERMAN |
| SOLICITORS FOR THE RESPONDENT: | ADEY LAWYERS |
Orders
That the appeal is allowed.
That Order 6.1, 6.2 and 6.9 of the orders of the Honourable Justice Mushin of 6 March 2006 being orders pursuant to the “slip rule” amending orders of the Honourable Justice Morgan of 15 February 2006 be set aside and the following orders substituted in lieu:
6.1. In respect of the husband's superannuation entitlement with Colonial Superannuation Fund;
6.1.1That in accordance with s 90MT(i)(a) of the Family Law Act 1975 (Cth) whenever a splittable payment is payable in respect of the superannuation interest of the husband in the Colonial Superannuation Fund the wife is entitled to be paid an amount calculated in accordance with the Family Law (Superannuation) Regulations 2001, using a base amount in the sum of $39,452.00 of the member entitlement and there be a corresponding reduction in the entitlement the husband would have had but for these orders.
6.1.2That the operative time of these orders shall be 4 days after the service of the order upon the trustee.
6.1.3This order binds the trustee or trustees from time to time of the Colonial Superannuation Fund.
6.2That the husband pay to the wife within 60 days of the date of this order by bank cheque the sum of $313,827.00.
6.9That if the husband shall default in payment of the sum of $313,827.00 or any part thereof then interest shall accrue thereon from the date of default until the date of payment at the rate prescribed by the Family Law Rules 2004 and if such default shall continue for a further period of 14 days then:
6.9.1the first property shall be sold upon such terms and conditions as may be agreed and in default of agreement as may be ordered by this Honourable Court and the net proceeds shall be applied:
(a)as to the monies due and owing to the wife pursuant to these orders including interest to the wife; and
(b) the balance to the husband.
PROVIDED THAT if the net proceeds of sale of the said first property shall be insufficient to pay the wife her entitlements pursuant to these orders then
6.9.2the second property shall be forthwith placed for sale upon such terms and conditions as the parties may agree and in default of agreement as may be ordered by this Honourable Court and the net proceeds of sale shall be paid as to:
(a)any balance due and owing to the wife pursuant to these orders to the wife; and
(b)the balance to the husband.
The parties are at liberty to file written submissions with regard to the costs of the appeal in accordance with the following timetable:
(a)on behalf of the appellant within 21 days of the date hereof;
(b)on behalf of the respondent in response thereto within 21 days thereafter;
(c)on behalf of the appellant in reply thereto within seven days thereafter; and
(d)that each submission have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Reichstein v Reichstein.
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
Appeal Number: SA 15 of 2006
File Number: ADF 908 of 2004
| AER |
Appellant
And
| DLR |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an appeal by AER (“the husband”) against orders made by Morgan J under s 79 of the Family Law Act 1975 (Cth) (“the Act”) on 15 February 2006, which orders were amended under the “slip rule” by Mushin J on 6 March 2006. The effect of the orders was to divide the parties’ net assets and superannuation totalling $1,831,785.00 as to 62 per cent to the husband and 38 per cent to DLR (“the wife”). The trial Judge also made orders for the parties’ two children to live essentially in a week about shared parenting arrangement with each of their parents. There is no challenge to her Honour’s parenting orders by the husband.
The husband asserts error by the trial Judge:
·in respect of failure to “add back” to the pool of assets available for division a number of liabilities of the husband, and to include in the pool furniture acquired by the wife after separation;
·in giving insufficient weight to his initial contributions;
·by failing to give weight to his “contribution” to the welfare of the wife’s children of her prior relationship;
·in failing to take into account his post separation contributions to his superannuation;
·in the exercise of her discretion in making an adjustment in the wife’s favour of 13 per cent for s 75(2) factors; and
·in that the overall result was not just and equitable.
The husband seeks that the appeal should be upheld, and that on a re-exercise of the discretion, an adjusted pool of assets and superannuation entitlements of $1,758,895.00 should be divided between the parties as to 80 per cent or $1,407,116.00 to the husband and 20 per cent or $351,779.00 to the wife. The sum of $1,758,895.00 is derived from senior counsel for the husband’s written submissions adjusted to reflect her concession about the quantum of repairs to an investment property claimed by the husband. The husband proposes to achieve the division of the parties’ assets and superannuation entitlements, they should receive the same percentage division of their superannuation entitlements as their net assets. The husband proposes the wife’s entitlement should be satisfied by a superannuation splitting order by which she receives a nominated base amount of the husband’s interest in the Colonial Superannuation Fund when a splittable payment becomes payable, and a cash adjustment for the balance of her entitlement. Although not spelt out in the husband’s proposed orders contained in his senior counsel’s submissions, there does not appear to be any dispute the wife would retain assets and superannuation already in her name, and the balance of her entitlement be satisfied by the splitting order and a cash adjustment from the husband.
Background
There is no dispute about the factual background as set out by the trial Judge.
The parties met in December 1992. The wife had been previously married and had two children a son, A, who was born in 1983 and a daughter, E, born in 1986.
The parties married on 28 August 1993. Their first child, J, was born 1994 and their younger daughter, V, was born in 1998.
The parties separated under the same roof in early 2003 and physically separated on 20 March 2003. At the time of the separation the wife and children left the former matrimonial home.
In August 2003, the wife commenced a relationship with Dr M. At about the same time the husband commenced a relationship with Ms G. In October 2003 Dr M purchased a house in the Adelaide coast area. The wife and children moved into Dr M’s home. The children changed school at the time of moving to the Adelaide coast area.
At the commencement of cohabitation the husband was the registered proprietor of a property in western Sydney (“the first property”). The husband purchased the first property in 1978 for a purchase price of $48,000.00. The purchase price was funded from a small deposit and borrowings from the Commonwealth Bank. There was no evidence of the value of the first property at the date of commencement of cohabitation.
In 1985 the husband purchased a property in north eastern Adelaide (“the second property”). The husband asserted the purchase price was $176,000.00 and that he funded the purchase with a loan of $20,000.00 “and the remainder from repatriated capital”.
In July 1987 the husband purchased a Porsche motor vehicle.
In 1991 the husband entered into an arrangement with friends who were in financial difficulty to purchase their property in eastern Adelaide (“the third property”) for a purchase price of $178,000.00. The purchase price was funded from a mortgage advance of $129,000.00 and the husband’s savings. The friends subsequently repurchased the third property from the husband. There was no admissible evidence of the value of the third property at the commencement of cohabitation, or the mortgage debt in respect of that property.
At the commencement of cohabitation the wife was the registered proprietor of a home in northern Adelaide (“the fourth property”). The wife asserted she had approximately $20,000.00 equity in the fourth property at the commencement of cohabitation. The husband did not challenge that assertion. She also had household goods and a 1981 Toyota Celica motor vehicle.
In 1995 the parties carried out extensive renovations to the second property which property the parties occupied as their matrimonial home. The husband asserted that he had sufficient borrowing capacity to meet the immediate cost of the additions and incidental expenses associated with the renovations.
The husband, at the commencement of cohabitation, had funds and shares invested with CS in Switzerland (“the CS account”). The husband’s Outline of Case document asserted that his interest in the CS account had a value of $224,000.00. The husband asserted that he had no funds held overseas after July 2003. He agreed with a schedule of figures, presented by the wife to the Child Support Agency, which set out transfers by him from the CS account to accounts in Australia totalling $224,000.00. The husband asserted $215,000.00 was transferred during the marriage. The wife produced a statement as at 31 December 2002 showing a credit balance in the CS account in the husband’s name of $348,874.00. No documents in respect of the CS account were produced by the husband.
The husband gave oral evidence that the CS account was established by himself and two colleagues when working in Africa in 1984. He said in 1986 the account was transferred to his sole name. The trial judge recorded the husband’s evidence about the CS account as follows:
64. … He said that he and two colleagues, ‘Mr [S] and Mr [M]’, had set up the fund when working in Africa in 1984. He said they had each invested $50,000 in a numbered account managed by [CS] which made all the investment decisions. In 1986 the account was transferred into the husband's name. From 1990, although the account was still held with [CS], the husband managed the funds and made all decisions about investments. In 1994 the husband began to ‘repatriate’ or transfer funds to accounts in Australia. He said that was done by means of a phone call to a bank officer in Switzerland and verbal instructions as to the account to which the funds would be transferred. When he wished to sell an asset of the fund he would again give telephone instructions and request the transfer of the proceeds to his nominated account. He swore that by July 2003 all of his equity had been transferred to his Australian accounts and expended. He swore that he had no interest in any assets remaining in the fund which, he said, were beneficially owned by Mr [S] and Mr [M].
65. In evidence in chief the husband swore that he received statements every six months until June 2003. He said he did not retain the statements. He swore that he had received no statements since, although the account has not been closed. That was in the face of the statement of investments in the husband's name dated the 31st of December 2003 [sic] to which I have referred.
In about 1993 the parties purchased a Mercedes 380SE motor vehicle. This vehicle was sold in about 2001 when the wife purchased a Toyota Celica motor vehicle.
In 2001 the husband purchased a half share in a home unit at Hobart jointly with Mr C. Mr C is also a director of a company SPL. The husband conceded that SPL was his “alter ego”.
In March 2000 the wife purchased a 12 metre berth at a yacht club for a purchase price of $21,394.50. The wife obtained borrowings to fund the purchase of the berth. The wife sold the yacht berth in early 2004 for a sale price of $21,000.00.
In August 2002 the husband purchased a yacht known as W for a purchase price of $82,000.00.
During the marriage the parties acquired shares in various companies including the Commonwealth Bank, David Jones and TAB.
In March 2003 the husband asserted he was approached by a friend for a loan and that he advanced $20,000.00 repayable on demand. He subsequently agreed to advance a further $32,500.00 and asserted the funds so advanced were used to purchase equipment (“the ERI equipment”). The husband sought to have taken into account as a liability of SPL a Citibank debt of approximately $53,000.00 on the basis this was the sum borrowed pursuant to the agreement.
Grounds of Appeal
The husband relied on his grounds of appeal set out in his Notice of Appeal filed 14 March 2006. Before us, without opposition, the husband sought to add an additional ground, ground 19, in the following terms:
The Learned Trial Judge erred in including as an asset of the parties for distribution the David Jones shares sold by the husband in early 2004 post separation in the sum of $9,100.00. The Learned Trial Judge failed to provide any or any sufficient reasons for so doing.
Before us, senior counsel for the husband argued the grounds of appeal in groups:
·grounds relating to the pool (grounds 1, 2, 3, 4, 5, 10 and 19);
·the contribution grounds (grounds 6, 7, 8 and 9);
·the s 75(2) grounds (grounds 11, 12, 13, 14 and 15); and
·the just and equitable grounds (grounds 16 and 17).
We find it convenient to deal with the grounds of appeal in the groupings identified by counsel and set out by us above.
The Pool Grounds
The husband’s bank account
It was conceded before us by counsel for the wife that the sum of $24,980.00 included by the trial Judge in the parties’ list of assets and liabilities set out in paragraph 86 of her Honour’s reasons for judgment should be excluded as a corresponding borrowing had not been included.
The Citibank liability
Senior counsel for the husband submitted that the trial Judge was in error in her treatment of the husband’s Citibank liability. The trial Judge brought into account the whole of the liability but reduced the liability by the sum of $53,500.00 which her Honour noted was borrowed for the purchase of ERI equipment.
We find it useful at this point to repeat her Honour’s findings about the ERI loan:
76. The husband sought to have a liability of [SPL] to Citibank of some $53,000 taken into account. Once again the husband's evidence emerged only at trial. In March 2003 (at about the time the parties physically separated) he was approached by a friend, [Mr R], who was a director of the company [SSI]. Mr [R] asked for a loan. The husband agreed to advance $20,000 repayable on demand. That agreement was recorded in a letter to the husband from Mr [R] on the 22nd of March 2003 which was produced by the wife. This was very shortly before separation. The letter recited that the loan was to assist with SSI’s “current cash flow problem. Later it was agreed that the husband would advance a further $32,500 to finance the purchase of what was referred to as the ERI equipment. The husband said it was intended that he would own the equipment and lease it back to the company. The company used the funds to buy the equipment in the name of [SPL] (the husband's alter ego). The company made only one lease payment. The husband made no demands on company through Mr [R] or otherwise. The husband sold the equipment to [GSNZ] which was [a] company also controlled by Mr [R]. The price was $15,000 which was a valuation provided by the manufacture [sic].
77. The husband said that, despite being considerably out of pocket, he did nothing to recover the shortfall from SSI. He said that was because Mr [R] had no assets and the company was not trading. Again the husband's evidence was unsatisfactory. Again the person who could have given evidence, Mr [R], was nowhere to be seen. The husband said in oral evidence in chief that he remained a personal friend. I am not satisfied that this was in reality a commercial transaction. If it were it is inconceivable that the husband would take no steps to recover his investment.
78. This issue was raised by the wife in her affidavit of January 2005 but the husband made no response until oral evidence. At trial he produced the letter of March 2003 (to which I have referred), the manufacturer’s valuation and statements showing the withdrawal of funds from Citibank. No other documents were produced regarding the transactions with Mr [R] or his companies. The wife, however, produced an e-mail from the husband to Mr [R] of the 7th of April 2003. That was also around the time the parties physically separated.
79. In it he said that he was prepared to put up an additional $40,000. He said “this option right suits my desire to get some ‘good debt’ and at the same time generate an income stream for my private company”. He asked that the first payments be recorded as a yacht sponsorship because this would solve “another little problem I might have in that the yacht does not look like a real business right now, due to lack of revenue!” He went on to say “that the real upside for me is the value to the business of which I am a shareholder”. The husband has denied he had any interest in SSI.
We also think it relevant to note at this point that the trial Judge made adverse credit findings in respect of the husband, her Honour said: “…in this matter I have no hesitation in making an adverse finding against the husband. He has been guilty of wholesale and flagrant nondisclosure in the face of full knowledge of the issues and the allegations of the wife about concealment of assets. The evidence which supports this finding will become apparent when I consider the issues about the asset pool”.
Her Honour further said:
80. Because of the findings I have made about the husband’s credit, the unsatisfactory evidence of the husband about these transactions, the improbability that if this were a commercial transaction the husband would have taken no steps to recover his funds and the silence from Mr [R] with no explanation, I find on the balance of probabilities that this was not an arm's length commercial transaction. It is more likely than not that this was a transaction with his friend Mr [R] which was designed as the husband himself stated to create a ‘good debt’ for [SPL] with the prospect of property proceedings commencing.
81. I am aware that the general rule is that the assets and liabilities are taken into account as they stand at the date of trial. The Full Court in the recent decision in Omencini [sic] ((2005) FLC 93-218) said that if the trial judge chose to adopt a different course an explanation must be given. I am satisfied in this case that because of the flagrant nondisclosure and unsatisfactory evidence of the husband about the three issues I have just considered it is appropriate that the two assets and the liability to be taken into account as at the date of separation. The two assets existed at separation with a readily ascertainable value. The increased liability as a result of the ERI equipment dealings will not be taken into account because the husband's evidence was again unsatisfactory. In addition I have made the finding of credit against the husband so that I do not accept his evidence about these matters.
In her summary of argument, senior counsel for the husband submitted that the practical effect of her Honour’s treatment of the Citibank account was only to allow a liability of $14,024.67 (being the amount allowed by the trial Judge of $36,500.00 less the amount as at the date of separation of $22,475.33). It was further submitted on behalf of the husband that, as the Citibank account was a revolving line of credit, regard should be had to the fact that the husband paid into the account sums to reduce the company debt and the debt was incurred, not only for matters relating to SPL, but also for maintenance of W. In his written submissions, counsel for the wife noted:
No evidence was presented to the Trial Judge which would assist in what might be described as “an audit” of the debits and credits that related to the Citibank account.
Accordingly, it is trite for the appellant to assert that the difference of $14,024.67 must be compared against a range of expenditure as alleged by the husband. That exercise is of no assistance unless what is also brought to account are the monies paid by way of credit into the Citibank line of credit.
In cross examination the husband conceded the significant expenditures on the Citibank account were for the purchase of the ERI equipment.
The trial Judge determined that she should, having regard to the unsatisfactory evidence of the husband, and his failure to disclose any relevant documents including the purported lease of the ERI equipment, have regard to the value of the equipment at the date of separation, rather than the value the husband asserted he subsequently received for the equipment from his alleged transaction with Mr R. As is apparent from the passage of the trial Judge’s reasons which we have quoted, her Honour referred to the decision of the Full Court in Omacini and Omacini (2005) FLC 93-218. In that case the Full Court (Holden, Warnick and Le Poer Trench JJ) said “[w]e accept that in a particular case there may be reasons which justify the selection by the trial judge of another date and that in some cases that may be the date of separation of the parties”.
We are satisfied, given the unsatisfactory nature of the husband’s evidence, the trial Judge’s credit findings and, having regard to the concession of the husband that the significant expenditure which resulted in the increase in the Citibank debt from the date of separation until the date of the hearing was the expenditure on the ERI equipment, that the trial Judge was not in error in her treatment of that liability in the particular factual circumstances of this case. Accordingly we are satisfied there is no merit in this ground.
The wife’s furniture
The husband’s senior counsel in her written submissions argued that the trial Judge should have included a sum of $14,000.00 to represent furniture purchased by the wife post separation. Senior counsel relied on the wife’s concession that she had, in addition to the $15,000.00 paid to her by the husband (which payment was designed in practical terms to effect an appropriate division of furniture between the parties), spent additional sums of $8,600.00 in 2004 and $5,500.00 in 2005 on furniture. The wife conceded she had spent $8,600.00, but said she could not be certain about the second asserted sum.
In his written submissions, counsel for the wife noted that the trial Judge had not included any current liabilities of the wife which at trial were in the sum of $97,200.00. He further submitted that whilst “the appellant complains of the furniture of the wife acquired post separation not being brought to account, there is no item of property that brings to account any furniture of the husband acquired after separation”.
Before us, senior counsel for the husband conceded that the husband had acquired furniture, including a television set for a purchase price of approximately $8,000.00 after separation which was not included in the list of assets and liabilities as found by the trial Judge.
We find merit in the submissions of counsel for the wife and find no error on behalf of the trial Judge in failing to “add back” into the list of assets and liabilities of the parties furniture acquired by either party after separation.
Repairs to the first property
Senior counsel for the husband submitted to us that “evidence was led by agreement (from the Bar Table)” about expenses relating to the first property. Relevant invoices were marked as an Exhibit although we are unable to identify from the transcript such invoices being tendered. Before us, senior counsel for the husband conceded that the costs associated with the maintenance of the first property, which is owned by SPL, would be properly claimable as a tax deduction and that instead of being included in the list of assets and liabilities in the sum of $5,868.00 that a sum of approximately $4,100.00 should be included as a liability of the parties.
Her Honour does not, in her reasons for judgment, deal with the sum claimed as a liability of the husband. It appears the invoices, if tendered to the trial Judge, were accidentally overlooked by her Honour. If this was the only successful ground of appeal we would not consider it appropriate to disturb her Honour’s findings given the small sum having regard to the total pool. As will become apparent from our reasons later in this judgment, we propose to allow the appeal. In these circumstances we accept there is merit in the submission that the sum of $4,100.00, being referable to a liability which had been incurred in respect of the first property, should be included in the list of assets and liabilities, notwithstanding the assertion made on behalf of the wife that the expenses were incurred after the valuation of the first property had been completed. Given the quantum of the amount in question, we are satisfied that the expenditure was unlikely to have resulted in any material increase in the value of the first property.
David Jones Shares
Post separation the husband sold a parcel of David Jones shares realising the sum of $9,100.00. The shares were noted by the trial Judge as having been sold in early 2004. Her Honour included the value of the 7,000 shares at their sale price of $9,100.00.
On behalf of the husband, his senior counsel submitted that the value of the shares sold should be excluded from the parties’ list of assets and liabilities.
The husband’s evidence, given in cross examination, was that he sold the David Jones shares as an “off market transfer” to a long time acquaintance, Mr L at their market price.
It was asserted on behalf of the husband “the Learned Trial Judge provided no reasons for including the DJ’s shares as an asset at trial – …in face of clear evidence of their sale” (husband’s submissions page 4).
On behalf of the wife it was submitted that the David Jones shares were sold well after separation and without the advice or consent of the wife. It was also submitted there was no evidence that any or all of the proceeds of the shares were applied to maintenance of W.
It was further submitted that the wife sold the yacht berth post separation and that the trial Judge’s action in “adding back” the David Jones shares was consistent with the “add back” of the proceeds of sale of the yacht berth sold by the wife. We find much force in this argument and note the discretion which may be exercised by a trial Judge in dealing with “add backs” (see Townsend and Townsend (1995) FLC 92-569 at 81,654) of a premature distribution of assets. However, the grounds of appeal also assert a failure by the trial Judge to give reasons for the inclusion of the sale price of the David Jones’ shares.
The requirement to give reasons is well established by authority. In Bennett and Bennett (1991) FLC 92-191 the Full Court considered that the test as to the adequacy of reasons propounded by Gray J in the passage appearing hereunder was a useful one and one which applies to discretionary judgments. The Court observed at 78,266:
In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal. Gray J, who delivered the principal judgment, said, at 18:
“The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if: —
(a) the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b) justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.
In A v J (1995) FLC 92-619 at 82,230 - 82,233, the Full Court comprehensively reviewed a number of decisions dealing with adequacy of reasons, specifically to discretionary judgments involving the welfare of a child and said at 82,232 where:
competing proposals are evenly balanced, [it is] important to avoid an overly critical analysis of the reasons of the trial Judge. This is not to detract from the requirement to give adequate reasons. It simply means that there should not be a microscopic analysis of, for example, words used by a trial Judge if, in all the circumstances, it is clear that the trial Judge has considered and evaluated the relevant evidence, taken into account all relevant factors and, importantly, has considered the ultimate welfare of the child as the paramount consideration.
At paragraph 85 the trial Judge noted that it was common ground that the yacht berth sold in early 2004 should be included in the list of assets and liabilities. We accept that the trial Judge did not specifically mention the David Jones shares. However, we find consistency in her Honour’s approach in including both the yacht berth and the David Jones shares in the parties’ list of assets and liabilities. Both assets were ones in existence at the date of separation and were assets to which each party had contributed. We accept there was no satisfactory evidence about how the husband dealt with the proceeds of sale of the David Jones shares. The trial Judge’s adverse credit findings about the husband, which are not challenged in this appeal, add further support to her Honour’s treatment of these shares as forming part of the assets of the parties available for distribution. Accordingly, we find no merit in this ground.
The contribution grounds
Initial contributions
At the commencement of her discussion about the parties’ respective contributions the trial Judge said:
87. The husband made a very large initial contribution. It was not disputed that the assets he brought into the relationship which included several pieces of real estate, the [CS] account and a wine collection had a net value of about $865,000. The wife had the [fourth property] with the net value of about $20,000, a car and small savings. The imbalance in initial contribution is so large that its significance has not been eroded during a nine-year relationship. I will assess it at 75%.
Senior counsel for the husband submitted “[i]t was not disputed that at the commencement of the relationship the husband had net assets of approximately $865,000.00, the wife $20,000.00 – paragraph 87 of the judgment”.
It was further submitted on behalf of the husband that the trial Judge fundamentally misunderstood the evidence of the parties in relation to the CS account. The husband’s senior counsel said:
The evidence of the parties differed. The husband maintained that the repatriated funds of $224,000.00 were all that he was entitled to. The wife said that what remained of the funds at separation namely the sum of $348,874.00 (which had increased to $440,672 [sic] at trial) was also the property of the husband which should be included in the asset pool.
We find it appropriate to firstly consider the evidence in respect of the parties’ initial contributions. We will return later to discuss the trial Judge’s treatment of the CS account.
At the commencement of our discussion, we think it is necessary to record the dearth of evidence before the trial Judge about the value of the parties’ assets at the date of cohabitation, and obvious difficulties presented to the trial Judge by the manner in which the parties conducted their respective cases.
Before us, counsel for the wife asserted that there was no evidence before the trial Judge of the value of the husband’s assets as at the commencement of cohabitation. In fairness to her Honour, we note that position was not made abundantly clear to the trial Judge at the commencement of the hearing, or in the wife’s counsel’s final submissions. Her Honour faced further difficulty in that the husband only gave evidence about the CS account and other financial matters by way of oral evidence in chief on the first day of the hearing, and provided no documentary support to corroborate his assertions.
The husband’s Outline of Case document in Schedule A set out the parties’ assets at values asserted by him at the commencement of cohabitation. We find it appropriate to reproduce that schedule:
SCHEDULE “A”
At commencement of Cohabitation
Asset
Notes
Value
[The second property] Bldg (H)
Unencumbered
$145,000.00
[The second property] land
Unencumbered
$80,000.00
[The third property] (H)
Value when sold
$208,000.00
[CS] Account
Estimated from Repatriations
$224,000.00
Porsche (H)
$30,000.00
Charger (H)
Sale price
$2,000.00
Furniture (H)
Estimate
$10,000.00
Wine (H)
Includes 4 doz Grange – half sold 2001 – estimate
$25,000.00
[The first property] (H)
Estimated by rental agent
$20,000.00
[U] (H)
$1,000.00
[The fourth property] (W)
Offers received at $50,000.00 – estimated
$45,000.00
Old Toyota (W)
Sale price
$6,500.00
Furniture and effects (W)
Estimate
$500.00
Subtotal (Husband)
$925,000.00
Subtotal (Wife)
$52,000.00
Total
$977,000.00
Liabilities
Liability
Notes
Value
Citibank (H)
Against [the third property]
$60,000.00
[SL Credit Union] (W)
Against [the fourth property]
$35,000.00
Total
$95,000.00
Net Assets Husband $865,000.00
Net Assets Wife $17,000.00
Total Net Assets $882,000.00
Superannuation
Name of Fund
Notes
Value
MLC (H)
Per Superannuation Statement
$35,000.00
Military (H)
Estimate
$2,500.00
SSS (W)
Minimal, as noted by wife
$1,000.00
Subtotal (H)
$37,500.00
Subtotal (W)
$1,000.00
Total
$38,500.00
TOTAL ASSETS $920,500.00
At this point we note that the net assets listed in Schedule A do not add up to $865,000.00.
The wife set out her assertions about the parties’ assets at the commencement of cohabitation at page 5 of her Outline of Case document. We also reproduce that part of the wife’s Outline:
CONTRIBUTIONS OF PARTIES AT COMMENCEMENT OF COHABITATION
Wife:
· Interest in [the fourth property] (net)
$20,000.00
· Toyota Celica motor vehicle
$7,000.00
· Bank account with [SL] Credit Union
Husband:
· Unencumbered residence [(the second property)]
· Unencumbered interest in [the first property]
· Interest in [the third property]
· 1980 Porsche 928S
· Investment Portfolio with [CS] Switzerland
· Various bank accounts with Commonwealth Bank and [CS]
· Loan account with Citibank
In her opening, senior counsel for the husband said:
…the husband had very substantial assets and schedule A of the outline of the husband sets through [sic] the husband’s assets at commencement of cohabitation, including real estate and land at [the second property], [the third property], a property at – [the CS] account which was savings overseas, motor vehicles, wine, [the first] property. In essence he was a man that had very substantial cash and real estate at the commencement of cohabitation.
The wife conversely was comparatively – or had very modest assets that basically was represented by [the fourth property] subject to a mortgage, a property with very little equity. She had a motor vehicle, furniture and effects. The husband’s assessment of the assets at the commencement of cohabitation are some $865,000 - these are net assets, taking into account the liabilities, of $865,000 vis-à-vis net assets of the wife of $17,000.
Prior to hearing the parties’ evidence, and after senior counsel for the husband’s opening, her Honour said:
Now, [to the wife’s counsel], before [the husband’s senior counsel] calls her client, I am not asking you to give me a full opening but she has outlined the issues to be determined, or the major issues to be determined, from her perspective. Are there any other issues you would wish to add?
Having referred to the fact that the issue of the CS account was raised for the first time that morning, and no documents had been produced by the husband, the wife’s counsel said:
There are other matters which I don’t propose to raise with your Honour at this stage until I receive instructions as to how the matter is to proceed or, at least, how I am to make any application before your Honour, but there are other matters arising out of objections that the husband has taken to certain annexures to the wife’s affidavit, which we say are germane and relevant to these matters and may need to be dealt with at the same time.
From the transcript contained in the appeal books it appears no formal objection was taken to those parts of the husband’s affidavit in which he asserted values for his assets at the date of cohabitation.
We accept that the husband had no relevant expertise to provide valuation evidence of his real estate at the commencement of cohabitation, and the material purporting to do so was inadmissible. However, it appears that no objection was taken by the wife’s counsel to that evidence, nor was it highlighted to her Honour. Whilst the husband was extensively cross examined on many topics he was not specifically cross examined on values asserted by him to various assets at the commencement of cohabitation. In his closing submissions, counsel for the wife raised no challenge to the figures asserted by the husband of value of assets at the commencement of cohabitation. The wife’s counsel said “[c]ontribution, your Honour, is a matter that is obviously significant. My client does not resile from the fact that the husband came into the relationship with substantial assets and must be given substantial weight in respect of them”. In these circumstances we find it readily understandable that her Honour may have mistakenly thought the values set out in the husband’s Outline of Case document and his affidavit material were not disputed.
The wife’s written submissions do not directly address the value of assets as at the commencement of cohabitation, save and except submissions in respect of the husband’s CS account, and her Honour’s treatment of that account. Before us, the wife’s counsel submitted that there was no reliable evidence before the trial Judge of the value of any of the husband’s assets as at the commencement of cohabitation.
It is appropriate therefore that we examine the evidence relevant to the parties’ assets as at the commencement of cohabitation in order to consider the trial Judge’s treatment of the parties’ initial contributions.
CS account
The trial Judge included in the pool of assets available for division between the parties the full value of the CS account at the date of separation (but with the assets contained therein valued at date of trial) in the sum of $444,672.00. Although the husband denied during the course of the proceedings that he had any interest in the existing CS account, and this evidence was not accepted by the trial Judge, there is no appeal against her Honour’s findings on this issue.
In contradistinction to the position before the trial Judge, it is now asserted on behalf of the husband that the trial Judge should have given the husband substantial credit for his initial contribution of the CS account, from which it is asserted he applied $215,000.00 for family purposes, and also give weight, in assessing contributions, to his contribution of the funds held at the date of separation valued by the trial Judge at $444,672.00.
We have already set out the husband’s assertions about the arrangement which led to the formation of the CS account. The only evidence before her Honour about the quantum of the CS account close to the commencement of cohabitation was the concession by the husband in cross examination that, as at 31 December 1994, the husband’s equity in the CS account was about $120,000.00. There is no accurate, acceptable or corroborative evidence as to how much was in the CS account at the time of commencement of cohabitation. We concur with the trial Judge’s finding that the husband’s evidence about the CS account was wholly unsatisfactory.
We are satisfied that the trial Judge was mistaken in finding that the husband had net assets of $865,000.00 at the commencement of cohabitation, even disregarding the mathematical error. That calculation included the sum of $224,000.00, which the husband asserted was repatriated between 1995 and 2001 from the CS account ($215,000.00) and used for family purposes, and the balance of approximately $9,000.00 after the parties’ separation. There was no corroborative evidence to support such assertion.
The first property
Although the husband asserted the first property had a value of $200,000.00 as at the commencement of cohabitation and was unencumbered, there was no admissible evidence to support that assertion. The only evidence was the husband’s evidence that he purchased the property in 1978 for a purchase price of $48,000.00 and that the purchase was “funded by a small deposit, and borrowings from the Commonwealth Bank, I do not recall the amount of the deposit”.
Before us senior counsel for the husband submitted that the list of assets contained in Schedule A of the husband’s Outline contained a typographical error and that the first property had a value of $200,000.00, not $20,000.00 as therein set out. Counsel for the wife was, understandably, unable to concede that value. It appears to us irrelevant as it is clear that the finding the husband had net assets to a value of $865,000.00 as at the commencement of cohabitation cannot be maintained for reasons discussed above and following.
The third property
The husband’s evidence about this property was set out in his affidavit of evidence in chief. Before us, senior counsel for the husband conceded the husband’s interest in the property at cohabitation was $67,000.00 rather than the $208,000.00 attributed by him in Schedule A. Counsel for the wife conceded the husband’s interest in the third property was a maximum of $67,000.00.
The second property
The husband purchased the second property in 1985. He asserted that the house was purchased for a purchase price of $176,000.00. There is no admissible evidence of the purchase price.
Conclusions – Initial Contributions
The trial Judge correctly recorded at paragraph 55 “[t]he husband made a significantly greater initial financial contribution”.
However, the trial Judge’s finding “[i]t was not disputed that the assets he brought into the relationship which included several pieces of real estate, the [CS] account and a wine collection had a net value of about $865,000” cannot be maintained. In De Winter and De Winter (1979) FLC 90-605 at 78,091-78,092, the Full Court held that for an error of fact to be relevant it must be one relied on, or given weight to inappropriately, by a trial Judge such that the reliance vitiates the trial Judge’s discretion.
We discern this erroneous factual finding appears to have underpinned her Honour’s overall assessment of contributions at 75 per cent by the husband. Accordingly we are satisfied this ground is established.
The contribution grounds
Asserted failure to properly assess contributions of the husband in respect of the CS account and in particular failing to give credit to the husband for the sum of $224,000.00 “repatriated” to Australia, as well as including the balance in the account of $348,874.00 or its value at trial of $444,672.00, in the pool of assets
We accept that the trial Judge appears to have accepted the submissions of the wife’s counsel to which we will refer shortly in her evaluation of the husband’s contributions in respect of the CS account. Her Honour’s acceptance of that submission was explicable given that the husband:
·failed to make a full, frank and complete disclosure of his interest in the CS account in a proper and timely manner;
·only gave oral evidence on the first day of the hearing about the circumstances in which the account was purportedly established and operated;
·produced no documentary evidence at all notwithstanding he agreed he received documents from CS and could obtain such documents from that bank but failed to do so; and
·the potentially misleading nature of Schedule A to his Outline of Case document.
The wife’s counsel submitted to us there was no inconsistency in including the value of the CS account as at the date of trial at $444,672.00 but not including as a contribution the allegedly repatriated funds of $224,025.00. It was further submitted that there could be no criticism of the trial Judge’s determination that the funds transferred from the CS account in Switzerland to Australia were not applied to “the acquisition or improvement of assets or to the welfare of the family”.
We accept that it was never put to the husband that the family did not have the benefit of funds transferred from the CS account to Australia. We note the husband conceded when cross examined about a CS account statement having approximately $120,000.00 in the CS account in 1994. We also note the husband gave oral evidence, which was not challenged, that he used at least part of these funds to carry out the extensive renovations to the second property which renovations the wife described in detail in her affidavit. It was the wife’s evidence, which was not challenged by the husband, that he had transferred $224,025.00 to Australia between 1995 and 2003. Further, it was not asserted the wife injected any capital to the acquisition or improvement of assets after commencement of cohabitation other than her borrowings for the purchase of the yacht berth.
This was a case where the husband failed to comply with his clear obligation under the Family Law Rules 2004 to make a full, frank and complete disclosure of his financial circumstances in a timely manner. The need for parties in financial matters to make such disclosure is not in doubt. In the seminal passage in Briese and Briese (1986) FLC 91-713 Smithers J said at 75,180 – 75,181:
I believe that a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner. The Regulations, and now the Rules, are not intended as a vehicle to mask the true position, or as an aid to confusion, complexity or uncertainty. They are not intended as the outer limits of the obligation of financial disclosure, but as providing avenues towards disclosure. The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding.
…
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred. Livesey v. Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties.
(See also Oriolo and Oriolo (1985) FLC 91-653; Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338 and Kannis and Kannis (2003) FLC 93-135).
In this matter not only did the husband not effectively disclose the history of the CS account until the commencement of the trial, and after the wife had put evidence of the existence of such account before the Court, his disclosure of his superannuation in his Outline of Case document contained a significant omission, and he made no attempt, until cross examined about the quantum of his Colonial Life superannuation entitlement, to put accurate information about the quantum of that entitlement before the Court notwithstanding he swore a Financial Statement on the day of commencement of the hearing.
As we have already noted, there was no evidence provided by the husband of the amount held by him in the CS account at the date of separation. Further there was no specific or corroborated evidence before the Court that the husband applied sums transferred from Switzerland during the course of the marriage for specific family purposes. His evidence concerning the funding of the renovations was inconsistent. He asserted in his affidavit material that he funded the renovations from his borrowing capacity, and in his oral evidence in chief asserted that the funds were applied to renovation costs from a revolving line of credit secured over the first property.
We are satisfied that the trial Judge was not in error in respect of her treatment of the CS account, given the state of the evidence, and the husband’s substantial non disclosure. We are satisfied that the best the trial Judge could do in the circumstances was to include the known balance in the account at the date of separation, updated to its value at the date of the trial, as a contribution by the husband.
We also find it somewhat disingenuous of the husband, having denied any interest in the CS funds held at the date of separation before the trial Judge, to assert before us that her Honour had failed to give weight to both an asserted contribution by the husband of all funds transferred from Switzerland and the funds remaining in the account.
Whilst we are satisfied there is merit in the husband’s grounds in respect of the weight given by the trial Judge to the parties’ initial contributions, we do not consider for the reasons set out above, that her Honour erred in her overall treatment of the CS account.
Contributions by the Husband to the maintenance of W
Although we have rejected the husband’s assertions that the trial Judge was in error in her treatment of the Citibank account, her Honour did find that the husband produced “detailed records and accounts relating to work done on the boat and berth expenses paid”. She also noted “[n]ot one expense was challenged in cross-examination on the basis that it was an improvement rather than maintenance”. It is unclear to us what weight, if any, her Honour gave to the husband’s post separation contribution to the maintenance of W.
Asserted failure to take into account as a contribution the welfare of the wife’s children from her previous marriage
In her written submissions, senior counsel for the husband noted that the wife’s child A was part of the family unit for a period of one year and her child E was a member of the parties’ household for some nine years. It was submitted on the husband’s behalf:
The husband should receive an adjustment for contribution during the period of the marriage to the support of the wife’s children in particular [E]. It is irrelevant that the wife actually paid for the expenses of the children from her income.
In her reasons for judgment the trial Judge said:
I find that the parties contributed equally during cohabitation. Both worked hard. The husband earned much more than the wife and contributed his income to the welfare of the family. The husband made a greater financial contribution. On the other hand the wife was the homemaker and primary caregiver to the children. The husband claimed an adjustment on the basis that he contributed to the expenses of the wife’s daughter [E]. The wife said she met all the expenses of [E] and [A]. In light of the finding of credit I have made I accept the wife’s evidence. There should be no further adjustment on the basis of contribution during cohabitation.
At this point, we find it useful to set out the relevant provisions of s 79(4):
In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
…
(c) the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
…
(e) the matters referred to in subsection 75(2) so far as they are relevant; [our emphasis]
In Robb and Robb (1995) FLC 92-555 the Full Court considered the question of whether a trial Judge had “double counted” by taking into account contributions under subsections (a), (b) and (c) of s 79(4) in respect of two step children as well as having regard to financial contributions made by the step parent to the step children under s 75(2)(o).
The Full Court (Lindenmayer, Finn and Joske JJ) quoted with approval from the trial Judge who said “[f]or the purposes of subs 79(4)(c) the family does not include the children K and B of the wife's previous marriage as they are not within the usual meaning of the expression, ‘children of the marriage’, used in that paragraph. (See the Full Court of the Family Court of Australia in Mehmet and Mehmet (No. 2) (1987) FLC ¶91-801 but c.f. Cohen J. in Molen and Molen (1993) FLC ¶92-344 at pp. 76,649-76,650.)”.
The Full Court further said:
In relation to Ground 4, just as the husband’s contribution to the welfare (including the financial support) of the wife’s children of her former marriage, for the reasons given by his Honour in the passage from his judgment last quoted (with which we agree), could not be taken into account as a contribution by him under s. 79(4)(c), so too the wife’s contribution to the welfare of those children could not be taken into account on that basis. … [H]is Honour did (in our view correctly) take the husband’s contribution to those children into account under s. 75(2)(o)…
We are satisfied there was no error by the trial Judge in her rejection of the husband’s submission that he should receive weighting for a contribution under s 79(4)(c) having regard to his asserted contribution to the welfare of A and E.
There is no doubt that the trial Judge gave full weight to the substantial financial contributions made by the husband in her findings “[t]he husband earned much more than the wife and contributed his income to the welfare of the family”. We are satisfied that her Honour gave appropriate weight to all the husband’s financial contributions. Her Honour, who had the benefit of seeing the parties in the witness box, was in a unique position to assess the credibility of the parties and her finding that she accepted and preferred the evidence of the wife that she was solely financially responsible for her children of her previous marriage was in these circumstances well open to her. We do however accept that the husband’s role in the care of the wife’s children, particularly E, was a relevant matter to be considered under s 75(2)(o). We will turn to that matter when we consider the trial Judge’s treatment of relevant matters under s 75(2)(o).
The Husband’s post separation contributions to superannuation
In her written submissions senior counsel for the husband noted that in his affidavit sworn 11 March 2005 the husband provided details of his superannuation entitlements.
The evidence from one of the husband’s superannuation funds as at 1 January 2003 was that he had an entitlement of $67,241.45. As at 11 May 2004 the husband had a superannuation entitlement of $115,621.84. The husband’s affidavit did not identify the fund which he asserted had increased, however the annexure to the affidavit described the fund as the MMT.
There is no discernable identification of the name of the fund referred to as having a balance of $67,241.45 although the statement itself shows an increase from 1 January 2003 to 30 June 2003 from $67,241.45 to $83,772.19. The husband asserted “I joined the fund on 1/7/2000, and have since at least 1/1/2002 made significant salary sacrifice contributions, given my age, to build the fund as quickly as possible”.
In the schedule of assets and liabilities set out by the trial Judge at paragraph 86 of her Honour’s reasons for judgment, she included the husband’s Colonial/S/FL superannuation entitlement at $183,926.00.
In his Financial Statement sworn 9 January 2006, that is, the first day of the hearing, the husband deposed to having a superannuation entitlement with FL (as at 30 June 2004) of $122,651.00. He also included as personal expenditure the sum of $500.00 per week paid to S. It appears from the husband’s cross examination that his employer originally made compulsory superannuation contributions to a fund known as FL, but subsequently changed funds to S and by the date of the hearing, the husband’s entitlement was with Colonial Mutual. The husband did not disclose until after his cross examination, his current superannuation entitlement in the Colonial Mutual fund.
When cross examined about his contributions to superannuation the husband’s evidence was that his employer paid the statutory amount of 9 per cent on the cash component of his salary of $106,000.00, that he authorised expenditure of $500.00 per week by way of salary sacrifice to superannuation and that he salary sacrificed approximately $25,000.00 per annum.
It is clear from the husband’s Financial Statement provided on the first day of the trial that the husband did not made a full, frank and complete disclosure of his superannuation entitlement updated to the date of the hearing. As the Full Court noted in Oriolo and Oriolo (supra), quoting from Briese and Briese (supra), mere compliance with the rules is insufficient, that is, in this case by disclosing an out of date superannuation entitlement. The husband’s disclosure of his actual superannuation entitlement was inadequate and only rectified during the course of the hearing after cross examination.
In these circumstances the trial Judge was faced with a difficult task. However, her Honour did not, in her reasons for judgment, discuss either parties’ pre or post separation contributions to superannuation.
We accept that the husband made significant financial contributions by way of salary sacrifice which increased his superannuation entitlements.
On behalf of the wife it was submitted that the husband’s post separation superannuation contribution “should be tempered by his non-disclosure in respect of his income and accordingly the likely underpayment of child support to the wife”. Whilst we accept on the evidence before the trial Judge she was clearly entitled to make adverse credit findings about the husband in respect of significant non disclosure, we consider the trial Judge did not assess and make findings about the parties’ post separation superannuation and other contributions, and such failure constitutes appealable error.
Conclusions contribution grounds
We are satisfied that:
·her Honour’s assessment of the husband’s initial contribution was based on a factual error which may have vitiated her assessment of contribution; and
·the trial Judge failed to assess post separation contributions, and in particular the husband’s contributions to superannuation.
The s 75(2) grounds
The trial Judge dealt with relevant s 75(2) matters in paragraphs 90 to 94 of her Honour’s reasons for judgment. She noted the age differential between the parties, and their secure employment. In respect of the wife she noted her income comprised her salary, payment of child support, and rental received by her from the fourth property.
In respect of the husband’s income her Honour noted that his “package is in the order of $147,000 per annum”.
The trial Judge noted the husband’s Financial Statement did not provide a true picture of his income, that his salary package had increased to $137,000.00 and he was entitled to “a substantial performance bonus”. Her Honour also noted the husband, as a condition of his employment, was provided with a fully maintained car, home and mobile telephone, superannuation levy and a laptop computer. In respect of the motor vehicle, her Honour noted it was owned by SPL and leased to the husband’s employer for $10.00 per annum. Her Honour concluded “[t]hus the husband and [SPL] (his alter ego) together earn about $147,000 per annum”. The trial Judge concluded that the husband’s financial position was significantly better than that of the wife, even without taking into account the fact that he had the benefit of the CS account and the proceeds of sale of the half share in the Hobart unit.
The trial Judge found that the wife received a benefit as a result of her relationship with Dr M.
The trial Judge concluded that s 75(2) factors favoured the wife and that an adjustment of 13 per cent in the wife’s favour was appropriate.
In her written submissions, senior counsel for the husband put in issue the trial Judge’s findings in calculating the husband’s salary package at $147,000.00 and asserted the trial Judge should have found his salary package was $137,000.00. Senior counsel for the husband submitted “[t]he lease payments to SPL for the motor vehicle was consumed by the necessary cost of purchasing and maintaining the vehicle”. On behalf of the wife it was submitted that the trial Judge was not in error in calculating the husband’s salary package at $147,000.00.
In cross examination the husband conceded his original salary package, negotiated with his employer in 2001 at $131,000.00 per annum, included a maintained company vehicle. The husband conceded in cross examination that as from 2003 the salary component of his package was increased from $100,000.00 to $106,000.00 and he received other benefits. He said “[t]he benefits that I received from the company are a maintained company vehicle. The salary package, as noted here, actually includes the superannuation guarantee levy. It also includes payment of my home telephone expenses, and I’m provided with a mobile telephone and a laptop for business use”. The husband said that the package, depending on how the vehicle was valued, totalled $137,000.00.
Further, during his cross examination the husband conceded that the remuneration package of $137,000.00 did not include income paid to SPL for the benefit of the motor vehicle that SPL leased to the husband’s employer. The husband said that the cash paid to SPL was approximately $10,000.00. When asked to concede that he in effect received a total package of $147,000.00 the husband asserted there were expenses in relation to the vehicle including depreciation and his obligation to renew the vehicle. He conceded he received other benefits for the day to day running of the vehicle, petrol, maintenance and repairs. Further, the husband conceded that the company had “a very good year and I expect to achieve a bonus in the region of $15,000”.
We are satisfied that there was no significant error by the trial Judge in her recording of the husband’s substantial salary entitlements, nor her conclusion that the husband’s financial position was significantly better than that of the wife even if her Honour did not specifically mention the expenses to SPL associated with the motor vehicle provided to the husband.
The husband also sought to challenge the trial Judge’s findings in respect of the wife’s income. It was asserted that the wife had the capacity to earn on a full time basis and her income total should be assessed at $62,000.00. It was also submitted that the trial Judge should have had regard to the husband’s more limited earning capacity having regard to the age differential between the parties.
It was also asserted that the trial Judge should have taken into account as a relevant factor under s 75(2) the wife’s and Dr M’s “failure to disclose a significant purchase of an asset and in particular as to the wife’s contributions” (husband’s submissions page 9).
This is an appeal against a discretionary judgment. The circumstances in which the Full Court should interfere with a discretionary judgment are well known. In Gronow v Gronow(1979) 144 CLR 513 Stephen J said at 519 - 520:
The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight.
In House v The King (1936) 55 CLR 499 Dixon, Evatt and McTiernan JJ said at 504-5:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.
In this case the trial Judge assessed factors requiring an adjustment in the wife’s favour at 13 per cent or $238,132.00.
The factors the trial Judge considered relevant in making the adjustment pursuant to s 75(2) favouring the wife were the disparity in the parties’ income and the husband’s superior financial position. Her Honour found the s 75(2) factors favouring the husband were the financial circumstances of the wife’s relationship with Dr M.
As a result of her Honour’s contribution based findings the husband was found to have an overall entitlement to 75 per cent of the net assets and liabilities and 75 per cent of the parties’ combined superannuation entitlements, a total of $1,373,839.00. The wife’s contribution based entitlements to the parties’ net assets and superannuation was assessed as $457,946.00.
We accept, as a result of the contribution based findings, there was a significant disparity between the parties’ capital and income positions. However, the trial Judge found the wife was engaged in secure permanent employment, which on her own evidence would increase to full time employment on the cessation of the proceedings. As a result of her Honour’s orders both parties had equal shared responsibility for the children of the marriage and, because of the husband’s superior income position, he would have an ongoing obligation to pay child support.
The wife was in a de facto relationship with Dr M and although she asserted they kept their finances separate, conceded she had the benefit of rent free occupation in the home purchased by Dr M as well as the ability to share day to day expenses.
The trial Judge did not take into account the husband’s contribution to A and E, although she gave weight in assessing contributions to the commitment of the husband of his income for family purposes.
We are acutely conscious of the limitations on an appellate court in interfering with a discretionary judgment. In this case whilst there was significant disparity between the parties’ income and capital positions there were countervailing considerations. The wife had a history of secure long term employment at a reasonable rate of remuneration. She expressed the intention to increase her working hours to full time at the completion of the litigation. The husband had, and would continue to have an obligation to pay child support to the wife notwithstanding the children would live in an equal shared parenting arrangement. Thus the greater financial burden for the care of the children would fall to the husband. Under the trial Judge’s orders, the husband was to retain, subject to a splitting order of $67,892.00 the balance of his superannuation. Thus the husband retained as part of his share of assets and superannuation a significant portion, $220,409.00, of his entitlement in superannuation which would not be accessible to him for approximately three to eight years. The wife had the benefit of rent free accommodation and ability to share expenses with Dr M.
In these circumstances, we are satisfied that the adjustment of 13 per cent in favour of the wife was outside the reasonable ambit of her Honour’s discretion and that the appeal insofar as it related to her Honour’s treatment of the factors under s 75(2) should be allowed.
Just and equitable
The overall effect of the trial Judge’s orders was to divide the parties’ net assets and superannuation of $1,831,785.00 in the proportions of 62 per cent or $1,135,707.00 to the husband and 38 per cent or $696,078.00 to the wife.
On behalf of the husband it was submitted that the final order was not just and equitable having regard to the husband’s substantial initial contributions. It was asserted that the husband had, during the course of the parties’ cohabitation, having regard to the assets introduced by him into the marriage, which were asserted to have a value of $865,000.00, to have increased his overall asset position by only approximately $270,000.00 in contrast to the wife who had introduced $20,000.00 worth of assets and increased her worth by $676,084.00.
Having regard to our conclusions in respect of the contribution findings of the trial Judge, and as we have found her Honour’s assessment of relevant factors under s 75(2) was outside the reasonable ambit of her discretion, we are satisfied that her Honour did not and was not able to properly assess the overall result to see whether the orders proposed by her were just and equitable, and there is merit in this ground.
Re-exercise of the discretion
Before us both parties agreed in the event that the appeal was allowed that we should re-exercise the discretion. Neither party wished to put any further evidence before us on the re-exercise of the discretion (see Allesch v Maunz (2000) 203 CLR 172; (2000) FLC 93-033).
We have already set out earlier in our reasons the adjustments we consider should be made to the table of assets and liabilities of the parties together with their superannuation entitlements. For convenience we set out the table as found by the trial Judge, as amended in these reasons for judgment.
ASSETS [The second property] H 445,000 [The first property] H 290,000 [The fourth property] W 125,000 Proceeds of sale of half share Hobart unit H 39,500 Proceeds of sale of yacht berth W 21,500 Time share H 8,000 1980 Porsche 928S H 11,000 1991 Toyota Sahara Land Cruiser H 20,000 1981 Adams 40 (W) H 70,000 Toyota Celica W 13,000 CS account H 444,672 Commonwealth Bank 505 at 1.12.05 H 20,000 Telstra 750 H 3,500 UMS H 6,700 David Jones 7000 H 9,100 TAB W 4,050 Total Assets 1,531,022 LIABILITIES Citibank Cash Management SPL H 36,500 SL Credit Union W 43,215 House repairs H 4,100 Total Liabilities 83,815 TOTAL ASSETS AND LIABILITIES 1,447,207
SUPERANNUATION O H 45,734 MLC H 56,094 Military H 2,547 Colonial/S/FL H 183,926 SSS W 67,197 Total Superannuation 355,498
Assets at the commencement of cohabitation
We have already discussed the fact that there was no admissible evidence before the trial Judge of the quantum of the husband’s assets at the commencement of cohabitation. At its highest, the evidence was that the husband had an interest in the CS account of an unknown value at the commencement of cohabitation. He also personally, or through SPL, owned the second property purchased in 1985, and the first property purchased in 1978. The wife acknowledged both of these properties were unencumbered at the commencement of cohabitation. The husband also owned a Porsche motor vehicle, a wine collection, furniture and had cash savings. It was conceded before us that the maximum interest the husband could claim in respect of the third property was $67,000.00. His assets were conceded by the wife to be substantial.
In accordance with established principle, we give substantial weight to the husband’s initial contributions, but we are hampered in our assessment by the husband’s failure to adduce evidence of the value of those assets at the relevant time. We do take into account the use to which those assets were put, or retained, so far as we can from the limited evidence presented by the husband. The present agreed value of the retained assets gives some rough guide to assessing initial contributions.
Asset by asset or global approach
It is clear that a judicial officer assessing contributions under s 79 is not limited to an assessment referable to a particular asset (see Norbis v Norbis (1986)
161 CLR 513; (1986) FLC 91-712 per Mason and Deane JJ at 523), but there is a requirement either on an asset by asset or global approach under s 79(4)(a) to “know the circumstances in which assets were acquired and the general extent of each party's contribution to them” as well as assessing contribution under s 79(4)(b) and (c) and to express the contribution findings as a percentage of the net property.
Neither party suggested on the re-exercise of the discretion we should adopt anything other than a global approach. Given the inherent difficulties we have identified by reason of the husband’s non disclosure, we are satisfied the only practical assessment we can conduct is to adopt a global approach.
Contributions during cohabitation to assets and the welfare of the family
The evidence discloses both parties contributed income earned for the benefit of the family. We accept the wife adopted the role of primary caregiver of the children during the marriage, and post separation. We accept that the husband’s earnings were greater than those of the wife. Our assessment of the parties’ contributions to the assets (or s 4(1) property) throughout the marriage accords with that of the trial Judge, that is that the parties’ contributions should be regarded as being equal. We also note the husband’s senior counsel’s concession before the trial Judge that the parties’ contributions during cohabitation were equal.
Post separation contributions to assets and the welfare of the family
Post separation the husband asserted he made financial contributions to the maintenance of W. We accept, as did the trial Judge, that the husband produced evidence of expenditure on W. We have already noted the difficulties caused by lack of evidence of the source of funds asserted by the husband to have been applied to the maintenance of W. We accept the husband’s contribution in this regard should be taken into account, but not in a substantial way.
We accept that post separation the wife made the major contribution to the welfare of the children.
Conclusions – contributions to assets and the welfare of the family
We give significant weight to the husband’s substantial initial contribution, and some weight to his post separation contributions. We are hampered in coming to a careful assessment of the husband’s contributions by reason of his failure to make a full, frank and complete disclosure of his financial affairs, including providing corroborative evidence which was clearly obtainable by him, for example CS account statements. We think in the circumstances of this case, that an appropriate overall assessment of contributions to the assets (or s 4(1) property) is in the ratio of 80 per cent, or $1,157,766.00 to the husband and 20 per cent, or $289,441.00 to the wife.
Contributions to superannuation
We have already commented on the unsatisfactory nature of the husband’s disclosure of his superannuation interests. There was no evidence of the value of the wife’s superannuation at the date of commencement of the hearing, or at separation.
In Coghlan and Coghlan (2005) FLC 93-220 at 79,646 the majority noted the following as relevant to assessment of contributions to superannuation entitlements:
63. … [W]e consider that the preferred approach to the determination of property settlement cases must be to prepare in addition to the list of items of property (which would clearly fall within the definition of that term in
s 4(1)), a separate list containing any superannuation interest or interests (valued according to the Regulations if a splitting order is sought in any application before the Court, or if no such order is sought, valued either according to the Regulations or otherwise). This of course is the approach which the trial Judge adopted in this case.64. Then for the reasons we earlier gave, whether or not a splitting order is sought on either party's application, the parties' contributions to both the property (as defined in s 4(1)) and also to the superannuation interests should be assessed. The other factors in s 79(4)(d), (e), (f) and (g) would then need to be considered. Specifically in the context of s 79(4)(e), that is the s 75(2) factors, any division of the property (as defined in s 4(1)) and any “division” of any superannuation interest (in the sense of an allocation of the base amount) based respectively on the assessments of the parties' contributions to the property and to any superannuation interest, would then be considered. Similarly, the parties' future superannuation prospects (be they in capital or income form) would also need to be considered. The overall justice and equity of the ultimate award (including any proposed splitting order or the need for such an order) would then be considered.
65. In summary, then, the trial Judge has a discretion as to how superannuation interests will be treated in a particular case. If superannuation is not included in the list of property but rather made the subject of a separate pool, it will be necessary where a splitting order is sought, or extremely prudent where no such splitting order is sought (in order to ensure that justice and equity is achieved) to:
(a) value the superannuation interest (according to the Regulations if an order under Part VIIIB is sought or according to the Regulations or otherwise if no order is sought);
(b) consider and make findings about the types of contributions referred to in s 79(4)(a), (b) and (c) which have been made by the parties to the superannuation interests on either a global approach or an asset by asset approach depending on the circumstances;
(c) consider the other factors in s 79(4) being the matters in s 79(4)(d), (e), (f) and (g); and
(d) ensure that pursuant to s 79(2) the orders in relation to the parties' property, and any order under Part VIIIB in relation to superannuation interests are just and equitable.
66. In the context of a consideration of the matters referred to in sub-paragraphs (b) and (c) of the last paragraph, the following matters may well be relevant: the relationship between years of fund membership and cohabitation; actual contributions made by the fund member at the commencement of the cohabitation (if applicable), at separation and at the date of hearing; preserved and non-preserved resignation entitlements at those times; and any factors peculiar to the fund or to the spouse's present and/or future entitlements under the fund.
67. If this approach is adopted, whereby superannuation interests are dealt with separately from property as defined in s 4(1), but are subject to the considerations in s 79(4), then not only will any contributions, both direct and indirect, by either party to such superannuation interests be more likely to be given proper recognition, but the real nature of the superannuation interests in question can also be taken into account, both in consideration of the s 75(2) matters and in the final assessment of whether the ultimate order is just and equitable.
The wife’s solicitor swore an affidavit to which he annexed a superannuation form completed by MLC in respect of the husband’s interest in that fund. The form disclosed the husband commenced contributing to the fund in 1991, that is, not long prior to the parties’ marriage. The husband asserted he commenced contributing in 1986 (this date is shown on the form as his commencement of employment date) with ES which was taken over in 1986 by MLC. The form contained no information about the value of the husband’s interest in 1986, 1991, or at the commencement of cohabitation, or at the date of separation.
The husband asserted no contributions were made to the MLC fund after cohabitation. We are satisfied that the substantial contribution to both the husband’s MLC policy, and the military pension were made by the husband.
The husband’s O interest of $45,734.00 was totally acquired during the course of the parties’ cohabitation. Given the concession that the parties’ contributions throughout their cohabitation were equal, and the husband’s assertion that no contributions were made to this fund after 1997, we assess contributions to this fund as equal.
Whilst the husband’s evidence about his interest in the Colonial fund was unsatisfactory, the documentary evidence in respect of this fund, which we have already discussed, disclosed in May 2004 the husband’s interest in the fund was $115,621.00. His entitlement in the fund at the date of the hearing was $183,926.00. Given the concession previously mentioned we would assess the parties’ contributions to this fund, up to separation as being equal. Post separation we accept that the husband made substantial financial contributions to the fund. Those contributions were partially offset by the wife’s greater role in the care of the children post separation.
The wife was a member of the SSS fund for 21 years. As with our assessment of contributions to the husband’s superannuation interest, we are hampered by lack of evidence of the value of the wife’s interest in this accumulation fund as at the commencement of cohabitation and at the date of hearing.
We accept the wife was responsible for contributions to this fund in the pre cohabitation and post separation period, but accept the husband made an indirect contribution to the fund during the course of the parties’ cohabitation.
Having regard to our analysis set out above we would assess the parties’ contributions overall to the total superannuation entitlements should be assessed as 60 per cent or $213,299.00 to the husband, and 40 per cent or $142,199.00 to the wife.
Adopting the suggested approach in paragraph 64 in Coghlan and Coghlan (supra) in the circumstances of this case, (where the parties agreed before the trial Judge that any splitting order affecting the husband’s superannuation interests should be in the same proportion as the overall adjustment of their assets evaluated on a global basis) and having regard as best we can from the evidence the nature of the superannuation entitlements, we are satisfied it is appropriate to combine our contribution evaluation of the non superannuation and superannuation assets to arrive at our overall determination of contributions.
The combined assessment results in the husband’s entitlement being $1,371,065.00 and the wife’s entitlement being $431,640.00. Those sums result in a contribution based entitlement of approximately 76 per cent to the husband and 24 per cent to the wife. In the exercise of the broad discretion available to us we therefore assess the parties’ respective contribution based entitlement to their assets and superannuation to be 76 per cent or $1,370,056.00 to the husband and 24 per cent or $432,649.00 to the wife.
Section 75(2) factors
We have discussed the trial Judge’s assessment of relevant factors under s 75(2) and determined appealable error in her Honour’s assessment. As we have already noted whilst there is a significant disparity in the parties’ capital positions, and the husband has a superior earning capacity to that of the wife and these factors require significant weight, we discern the following factors are also relevant to assessment under s 75(2):
·the wife who is presently aged 42 has a longer working life expectancy than that of the husband;
·the wife is in secure, long term employment which she proposes to increase to full time employment;
·the husband will receive a substantial proportion of his entitlement by way of retention of his superannuation entitlements which are not presently available to him, and which are likely to have a greater tax liability than that attaching to the wife’s superannuation interests;
·although each party will have shared care responsibilities for the children, the husband will have a larger financial responsibility by reason of his obligation to pay child support;
·the wife has the benefit of accommodation provided by Dr M and an ability to share living expenses with him; and
·the husband made a contribution to the care of the wife’s children from her former marriage, particularly E.
We discern in balancing the relevant factors, that an adjustment of 6 per cent or $108,162.00 of the non superannuation assets and superannuation interests should be made in the wife’s favour.
Just and equitable considerations
In making an order under s 79, the overall result of the orders must be considered, to ensure the result achieved is just and equitable (see JEL and DDF (2001) FLC 93-075 and Waters and Jurek (1995) FLC 92-635). This process is described by the Full Court in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 as follows:
… Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC ¶91-626; Ferraro and Ferraro (1993) FLC ¶92-335; Davut and Raif (1994) FLC ¶92-503; Prpic and Prpic (1995) FLC ¶92-574; Clauson and Clauson (1995) FLC ¶92-595; Townsend and Townsend (1995) FLC ¶92-569; Biltoft and Biltoft (1995) FLC ¶92-614; McLay and McLay (1996) FLC ¶92-667; JEL and DDF (2001) FLC ¶93-075 and Phillips and Phillips (2002) FLC ¶93-104.
On our assessment of contribution to the non superannuation assets, and the superannuation entitlements, adjusted to take into account relevant factors under s 75(2), results in an overall division of 70 per cent or $1,261,894.00 to the husband and 30 per cent or $540,811.00 to the wife.
In order to consider whether this division results in an order which is just and equitable, we consider the assets, both non superannuation and superannuation to be retained by each of the parties. In so doing we have regard to the parties’ position before the trial Judge that their superannuation entitlements should be in the same proportion as the overall percentage division of their non superannuation assets. The husband maintained we should adopt such a course in the re-exercise of our discretion, and the wife did not oppose that course.
The husband will retain:
HUSBAND WILL RETAIN The second property 445,000 The first property 290,000 Proceeds of sale of half share Hobart unit 39,500 Time share 8,000 1980 Porsche 928S 11,000 1991 Toyota Sahara Land Cruiser 20,000 1981 Adams 40 (W) 70,000 CS account 444,672 Commonwealth Bank 505 at 1.12.05 20,000 Telstra 750 3,500 UMS 6,700 David Jones 7000 9,100 Total Assets 1,367,472 LIABILITIES Citibank Cash Management SPL 36,500 House repairs 4,100 Total Liabilities 40,600 TOTAL ASSETS AND LIABILITIES 1,326,872 Adjustment by Husband 313,827 Husband's entitlement net assets 1,013,045
HUSBAND'S SUPERANNUATION O 45,734 MLC 56,094 Military 2,547 Colonial/S/FL (after split) (183,926-39,452) 144,474 TOTAL HUSBAND'S SUPERANNUATION 248,849
The wife will retain:
WIFE WILL RETAIN The fourth property 125,000 Proceeds of sale of yacht berth 21,500 Toyota Celica 13,000 TAB 4,050 Total Assets 163,550 LIABILITIES SL Credit Union 43,215 Total Liabilities 43,215 TOTAL ASSETS AND LIABILITIES 120,335 Adjustment by Husband 313,827 Wife's entitlement net assets 434,162 WIFE'S SUPERANNUATION Colonial/S/FL (after split) (39,452) 39,452 SSS 67,197 TOTAL WIFE'S SUPERANNUATION 106,649
Overall we are satisfied this division results in orders which are just and equitable.
I certify that the preceding one hundred and fifty eight (158) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 29 November 2006
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