Rodgers v Rodgers

[1964] HCA 25

HIGH COURT OF AUSTRALIA

McTiernan, Taylor and Owen JJ.

RODGERS v. RODGERS

(1964) 114 CLR 608

17 April 1964

Matrimonial Causes

Matrimonial Causes—Maintenance—Negotiations between parties—Admissibility of evidence thereof—Power of court to award maintenance distinguished from power to determine disputes as to ownership of property—Relevance of amount husband prepared to pay to settle claim of wife—Earning capacity of wife—Conduct of parties—Matrimonial Causes Act 1959 (Cth), ss. 84, 87—Married Women's Property Act, 1901 (N.S.W.).

Decision

April 17.
THE COURT delivered the following written judgments:-
This is an appeal by special leave from an order of the Full Court of the Supreme Court of New South Wales by which an order for maintenance made by Nield J. on 14th December 1961 was set aside and by which other provision for the maintenance of the appellant and her children was made. Substantially the order of the Full Court is attacked on two grounds. In the first place it is said that the order of the learned trial judge was made in the exercise of a judicial discretion and that no grounds appeared before the Full Court justifying an interference with it. Alternatively it is said that the order of the Full Court, in so far as it made other provision for the maintenance of the appellant and her children, should be set aside and that this Court should make such provision as it thinks proper in the circumstances. The original order was made in proceedings before Nield J. when two petitions (one under the Matrimonial Causes Act, 1899-1957 (N.S.W.) and the other under the Matrimonial Causes Act 1959 (Cth)) for dissolution of the appellant's marriage to the respondent and a third petition for dissolution by the respondent was heard together. At the same time Nield J. had before him a summons by the appellant issued under the Married Women's Property Act, 1901 (N.S.W.) and by which she claimed to be entitled to a joint interest in the business carried on by the respondent, or by certain associated companies of which he was for all practical purposes the proprietor, and in a cottage at Northbridge of which the respondent was the registered proprietor. The claim which was made by the appellant also extended to the furniture and other items then in the cottage. (at p609)

2. The parties were married at Sydney on 23rd March 1946, the appellant then being twenty-seven years of age and the respondent twenty years. At the present time the appellant is nearly forty-six years old and the respondent thirty-eight years. There were three children of the marriage, two daughters and one son, and they were born respectively on 13th March 1947; 24th October 1949; and 28th September 1953. They are, therefore, now seventeen, fourteen and ten years of age respectively. It is unnecessary to discuss in detail the circumstances of the married life of the parties but there are a few matters to which it is desirable that reference should be made. The first matter to be mentioned is that the respondent had established an advertising agency which, since 1955, has been carried on through the medium of three, and at one time four, private companies. We do not propose to elaborate concerning the manner in which these companies took over the respondent's business or how the shares in them were held from time to time since each of the companies, either directly or through the medium of one or other of the other companies, were for all practical purposes almost entirely owned by the respondent and there were in evidence consolidated statements showing the profits of these companies and of the earnings of the respondent over a period of seven years to 30th December 1960. There is also ample evidence concerning the respondent's capital position at the time of the hearing. He was then possessed of only two substantial assets, one the cottage at Northbridge already referred to which is valued at 7,000 pounds or 8,000 pounds, whilst his interest in the associated companies was estimated on balance-sheet figures to be worth approximately 15,000 pounds. But it is, to say the least, doubtful whether this figure could in the circumstances be realized and it is not without importance to observe that it takes into account a balance-sheet of nearly 4,500 pounds for goodwill. The cottage at Northbridge was and is the subject of a mortgage to a bank to cover the companies' overdraft indebtedness which at the time of the hearing approximated 4,400 pounds. In addition the respondent owed 2,000 pounds to one of the companies, 800 pounds for taxation and he has incurred a liability for several thousand pounds for legal costs incurred by him and his wife in and in connexion with the proceedings which have led to this appeal. As to earnings the respondent's average income over the seven years to 30th June 1960 was 3,269 pounds, his income for those successive years after tax being 3,154 pounds, 4,238, 2,491 pounds, 2,459 pounds, 3,727 pounds, 2,482 pounds, and 4,332 pounds. This income consisted of profits from his business, and after the incorporation of the companies, salary and dividends as an employee and shareholder. The statements of earnings and profits with which we have been provided seem to indicate that though there have been fluctuations in the profits made from year to year the business is a progressive one. (at p611)

3. The next thing to be mentioned is that the appellant is herself said to be a trained and talented script-writer in the advertising field and she has consistently, over a number of years, been employed at a net salary of approximately 32 pounds per week though upon the hearing she said that she desired to devote her full time and attention to the bringing up of the children of the marriage of whom she has the custody and that she has continued to work up to the time of the hearing only because it was necessary for her to do so. How far these statements can be accepted at face value is open to doubt in view of her professional standing and her long association with the advertising world, but this is a matter to which we shall return shortly. (at p611)

4. It was immediately after the birth of the third child that the marriage broke up. Apparently the respondent commenced to associate with another woman in 1953 and in April 1954 he left the matrimonial home. A year later, after many ineffectual overtures had been made to the respondent to return home, the appellant left Sydney for Hong Kong where she obtained a position with an advertising firm. She and the respondent again met in November of that year in Bangkok from where they proceeded together to Hong Kong. There the respondent stayed with the appellant until February 1956. In April of that year the appellant left Hong Kong and went to England with the children where they remained until March 1957. The evidence concerning the amount allowed by the respondent to his wife during this period is not altogether clear but it appears that her fares to and from England were paid out of the appellant's savings from her earnings and such amounts as were remitted to her by the respondent. In the last-mentioned month the appellant took up residence in Melbourne and in the following month, April 1957, her petition under the New South Wales Act for dissolution of the marriage on the grounds of desertion was filed. From this point on many letters passed between the parties and many discussions took place between them and their solicitors with a view to a reconciliation and later, when it appeared that reconciliation was impossible, with a view to determining what financial provision should be made for the appellant. Against the objection of counsel for the respondent many letters were admitted in evidence concerning these matters as also were several draft deeds which evidenced, inter alia, the respondent's willingness to make a lump sum payment to the appellant of 5,000 pounds and to pay maintenance to her at the rate of 20 pounds per week. Upon these documents great reliance was placed by the appellant at the original hearing and there is no doubt that they provided the foundation for the order which Nield J. made. (at p612)

5. Another matter which should be mentioned at this stage is that in April 1960 the respondent caused a trust fund to be established to provide for his children. In effect, the terms of the trust invested the trustees with a discretion to apply all or any part of the trust fund whether capital or income for or towards the maintenance education benefit or advancement of the children but the extent of the trust fund available for this purpose does not appear from the evidence. (at p612)

6. The hearing of the several matters mentioned occupied a period of some eighteen days before Nield J. and in the result he pronounced a decree in favour of the wife and dismissed the husband's petition. So far as maintenance is concerned he made an order directing the respondent to pay to the appellant a lump sum of 1,500 pounds within seven days from 14th December 1961, a further sum of 1,500 pounds within three months from that date, 1,000 pounds on 30th September 1962 and 1,000 pounds on 30th September 1963. The total of these sums was, of course, identical with that mentioned in the draft deeds referred to. Having so directed the order then proceeded to require that the respondent should pay into Court for payment out to the petitioner by way of maintenance the sum of 30 pounds per week for the appellant and 5 pounds per week for each of the children until they should respectively attain the age of 16 years. In the course of his reasons the learned trial judge observed that he found very great difficulties in the way of the application under the Married Women's Property Act. He said: "Even giving the broadest application to the cases to which I was referred, like Wood v. Wood in the Victorian Law Reports and Rimmer v. Rimmer in the English Reports, I would have found very great difficulty in finding in point of fact that Mrs. Rodgers had any real interest or entitlement to a claim in respect of property of her husband, but I think it is unnecessary to go into that question in great detail because there are very much more extended powers under the Commonwealth Act of 1959 than there were under the State law or the Married Women's Property Act. I think the matter should be dealt with under the Federal Act". At a later stage he said: "I said earlier so far as a claim under the Married Women's Property Act was concerned I felt considerable difficulty in the way of making any order in Mrs. Rodgers' favour but there is considerable help in the matter by reason of the fact that for quite a time before the matter was heard in 1960 there were negotiations between the parties as to the possibility of property, maintenance and alimony matters being settled and in point of fact a document was drawn up and almost reached the stage of full agreement between the parties and while I cannot say that document was actually assented to and agreed to, I think it approached that position so closely that it can be taken as a very considerable help in the way of what would be a proper thing to do so far as property and financial matters between the parties are concerned. One provision was for the payment by the husband to the wife of a sum of 5,000 pounds spread over a period. I think that is a most desirable thing to do and that I should adopt the provisions of the proposed deed with regard to the payment of the sum of 5,000 pounds under somewhat similar conditions to the conditions specified in the draft deed". Thereupon his Honour referred to the provision of the draft deed relating to the payment of the lump sum and went on to say: "I think that the provisions there would be reasonable provisions to include in the maintenance order under s. 87 of the Act, s. 87 permitting both a lump sum order and an order for periodical payments. So instead of any order under the Married Women's Property Act I order that the husband pay to the wife 1,500 pounds within seven days from today, 1,500 pounds within three months from today, 1,000 pounds on the 30th September next and 1,000 pounds on the 30th September 1963". As to periodical payments his Honour said that: "provision should be made for the wife to be able to place herself in a position to add to the comfort of the children as well as to merely provide them with food and the essentials of clothing, while recognizing she is quite at liberty to carry on her occupation and to earn what money she can thereby. The draft deed provided for 20 pounds a week. At that time the resources of the husband were nothing like what they have been shown to be quite recently and I think that should become a matter of 30 pounds a week, that he should pay 30 pounds a week to his wife for her maintenance and 5 pounds a week for each of the three children until they respectiv ely arrive at the age of sixteen years, anything subsequent to their attaining sixteen years to be considered when the time arrives if the matter is not amicably arranged between the parties". (at p613)

7. The passages which we have quoted show beyond doubt that the evidence of the earlier negotiations between the parties provided the very foundation upon which the trial judge's order was made. In the Full Court some doubt was expressed as to whether that evidence was properly admitted. Wallace J., who delivered the leading judgment, said that whilst he was clearly of opinion that in other jurisdictions it would not have been admissible he had some doubt whether a judge administering s. 84 of the Matrimonial Causes Act ought, as a matter of law, to have rejected it. He added, "Whether you call it conduct of the parties or other relevant circumstances it seems to me that there is something at least to be said for the view that His Honour correctly admitted it". But, nevertheless, he thought that the trial judge erred in giving the document the weight which he did. For this and other reasons the Full Court thought that his order should be discharged. For our part we are firmly of the opinion that the evidence was inadmissible and that for this reason alone the order made by Nield J. could not be allowed to stand. The evidence shows that for a lengthy period the parties were negotiating by themselves and their solicitors for the purpose of determining what financial provision should be made for the appellant and there can be no doubt that there was under discussion the appellant's claim to maintenance and also possible agreement concerning the wife's claim to an interest in the assets of her husband. In spite of the arguments of counsel for the appellant we are satisfied, as was the learned trial judge, that agreement was never reached between the parties and that their negotiations in an effort to reach agreement must be taken to have been without prejudice. That they were not expressed to be without prejudice is of no consequence; it is sufficient that the wife's first petition was then pending, that claims had been made upon the husband, and that the negotiations took place bona fide with a view to compromise. We do not understand the observation that whilst the "document" would not have been admissible in other jurisdictions there was something to be said for the view that it and the negotiations which preceded it were admissible in the Matrimonial Causes jurisdiction as showing the conduct of the parties. That husband and wife who are parties to a subsisting cause in the Matrimonial Causes jurisdiction, or, who contemplate such proceedings, should be able to negotiate with a view to reconciliation or as to what financial provision should be made for one party freely and without fear that, failing agreement, what is said or done by them may later be used in evidence is, in our view, not open to question. It is, we think, unnecessary to refer to authorities on this point but we mention the comparatively recent cases of McTaggart v. McTaggart (1949) P 94 ; Mole v. Mole (1951) P 21 ; Pool v. Pool (1951) P 470 ; and Henley v. Henley (1955) P 202 in which the purpose and application of the rule in the Matrimonial Causes jurisdiction are discussed. (at p614)

8. This is enough to dispose of the contention that the original order should have been allowed to stand but we feel compelled to say that even if the evidence in question can be said to have been admissible in the proceedings an entirely wrong use was made of it. Much of the evidence before the learned judge of first instance was directed to substantiating the claim of the appellant under the Married Women's Property Act. But this particular claim, based as it was upon evidence going to show that the appellant had assisted the respondent in establishing the business, could not succeed. Nevertheless, Nield J. seems, in substance, to have given effect to it pursuant to what he described as the "very much more extended powers" given by the Commonwealth Matrimonial Causes Act. But the authority given by ss. 84 and 87 of that Act is an authority to make orders with respect to the maintenance of a party to a marriage or of children of the marriage and under s. 87 the Court may order payment of a lump sum or a periodic sum or, as we understand the section, the order may provide for both a lump sum and periodic payments. This is not a "more extended power" than that given to the Supreme Court by the Married Women's Property Act; it is a power entirely different in character, it is in no way concerned with disputes between spouses concerning the title to or possession of property, and, having rejected the claim under the Married Women's Property Act - that is to say the claim which his Honour called "the property claim" - it was quite erroneous to proceed to give effect to it pursuant to the Matrimonial Causes Act. We entertain no doubt that this is what his Honour did. The order for payment of the several sums amounting to 5,000 pounds was made by his Honour upon consideration of "the property claim" and it was made "instead of any order under the Married Women's Property Act", it is not expressed in his reasons or order as given by way of maintenance and it was founded upon evidence of the antecedent "negotiations between the parties as to the possibility of property maintenance and alimony matters being settled". We should add that in any event what a husband may be prepared to pay in settlement of claims made by his wife for maintenance and with respect to property standing in his name in order to avoid protracted and costly litigation at his expense cannot be taken to set the standard of maintenance to which the wife is by law entitled. (at p615)

9. One other and relatively minor matter may be mentioned. The draft deed to which his Honour gave consideration was drawn so as to provide for the payment of maintenance to the appellant at the rate of 20 pounds a week. But the order which Nield J. made was for payments at the rate of 30 pounds a week, together with 5 pounds a week for each of the three children until they should respectively attain the age of sixteen years. The figure of 30 pounds a week was selected by his Honour because he said that at the time when the proposal was made that maintenance should be paid at the rate of 20 pounds a week "the resources of the husband were nothing like what they have been shown to be quite recently". We entertain the view that this was a very considerable overstatement of the husband's financial position, particularly when regard is had to the fact that his Honour was about to make an order which threw upon the husband the entire costs of the very prolonged litigation which had taken place. (at p616)

10. Having reached the conclusion that the original order could not be allowed to stand it is necessary to consider whether the order made by the Full Court, in so far as it made provision for the maintenance of the appellant and her children, should be set aside. It will be observed that the original order, having regard to the ages of the children, cast upon the respondent an obligation to pay a total weekly sum of 45 pounds until 13th March 1963, 40 pounds until 24th October 1965 and 35 pounds until 28th September 1969. The order envisaged, however, that some further provision might be made for the children after they attained the age of sixteen years. The order of the Full Court, on the other hand, throws upon the husband the obligation to pay to the wife the sum of 12 pounds a week for her maintenance and the sum of 5 pounds a week in respect of each of the children. In so far as the order relates to each child, no time limit is expressed and we assume that it was intended to operate during minority so that the husband will be under an obligation to pay a total sum of 27 pounds a week until 13th March 1968, 22 pounds a week until 24th October 1970 and 17 pounds a week until 28th September 1974. These are not insignificant sums and at the outset we observe that, although we do not agree with some observations of no significance in the case made concerning the meaning and effect of certain provisions of the Act, it is not possible to say that the order of the Full Court proceeded upon any apparent misapprehension of principle. Indeed, with the exception possibly of two matters to which we shall refer presently, no such complaint was made. In substance, the complaint made by the appellant, as we see it, was that the Full Court failed to make a proper assessment of certain vital facts. These related to the earning capacity of the parties which the Court was required to take into consideration by the provisions of s. 84. There may be some substance in this complaint for the Full Court seems to have regarded the respondent's average net income over the seven years to 30th June 1960 as the full measure of his earning capacity. Of course, averaging over a period is permissible and, indeed, may be necessary to provide a true reflection of a person's present and future earning capacity. But in other cases it will produce distortion and this will inevitably occur in a case of a growing or developing business. In this case the picture presented to us by the various statements of accounts which were tendered in evidence is that, notwithstanding fluctuations in profits from year to year, the business has steadily progressed in spite of the fact that over a considerable part of the period covered by the accounts the respondent's business activities must have been impeded to a not inconsiderable extent by the consequences of his own matrimonial shortcomings. There is, we think, little reason to doubt that when this litigation comes to an end and he is at liberty to devote his full time and attention to his business it will make further progress. Accordingly, we are of the opinion that his earning capacity for the foreseeable future cannot be properly measured by averaging his income over the seven successive years up to 30th June 1960 and that, in all the circumstances, it would be reasonable to assess his future income at not less than 4,000 pounds per annum. This estimate is considerably in excess of the estimate obtained by averaging his income over the period mentioned but for reasons which will appear this circumstance is not by itself sufficient to invalidate the order of the Full Court. (at p617)

11. In making its order the Full Court took into consideration, as it was required to do by s. 84, the earning capacity of the appellant. Consistently with principle it was observed that the extent to which a wife's earning capacity should be taken into consideration or the extent to which it should be discounted depends upon a great many circumstances such as age, family responsibilities, training and opportunity, consideration of what the wife has done in the past and her future intentions. However, the extent to which the Court did, in fact, discount the appellant's earning capacity does not appear but it would seem from the order which was made in her favour that it was by no means wholly disregarded. As already appears the appellant's evidence at the hearing was to the effect that she desired to devote her full time and attention to her family. But we have formed the view, upon the evidence as a whole, that it was open to the Full Court to conclude that it was quite unlikely that she would abandon her professional career precipitately. Nevertheless she is now nearly forty-seven years of age and it is probable that her professional career will come to an end in the foreseeable future and this is a factor which we think is not without importance in the case. (at p618)

12. Two other matters remain to be mentioned. The first is that it was pressed upon us that if, as the appellant alleges, she is now desirous of abandoning her professional career no account should have been taken of her earning capacity and that the Full Court was in error in taking this factor into consideration in any way at all. This submission was made to us as though it involved a proposition of law but while we think that no order should be made which would compel the appellant to continue to work against her will the question must finally be resolved by what a Court thinks it is probable will occur. We think that it was open to the Full Court to conclude that it was probable that the appellant would continue to work for a time. No doubt as her age increases her activities will diminish until finally her professional career will come to an end. But when it does any existing order for her maintenance may be reviewed. We add that it is impossible to lay down any precise rules as to the manner in which the earning capacity of a wife should be taken into account under s. 84 in such a way as to make provision for the infinite variety of circumstances which must occur. (at p618)

13. The other matter which was advanced against the order of the Full Court was that it was at liberty to and should have included some provision in the order as a "punitive element". This argument was based upon an observation made by Harvey J. in Gardiner v. Gardiner (No. 2) (1933) 33 SR (NSW) 400; 50 WN 144 when he said: "As we understand the position, the Court has said, in fixing the matter of alimony, that the conduct of the husband may be of such a character that the Court is disposed to apply to him a somewhat punitive method of assessing alimony, and that it may make him pay a larger sum, if the circumstances justify the Court in taking that attitude towards the husband" (1933) 33 SR (NSW), at p 406; 50 WN, at pp 144, 145 . Counsel for the appellant was somewhat reluctant to accept as a paraphrase of this contention that, in making provision for maintenance, the Court should have awarded some sum by way of punishment for what was said to be the husband's opprobrious conduct. We do not think that Harvey J. intended to suggest that some amount might be added to what would otherwise be an appropriate order for maintenance in order to punish a guilty husband. If he did so intend then his Honour's opinion was, we think, inconsistent with authority. Of course, it has been said on many occasions that a blameless wife is entitled to liberal maintenance as against a guilty husband and it may often be that the husband's conduct may result in a more liberal grant of maintenance to his wife than would otherwise be awarded. This would be so, for instance, where the husband had dissipated his means in extravagant living when his wife might well be entitled to a more liberal award out of his remaining means than would otherwise be justified. On the other hand, the wife's conduct may have been such as to disentitle her to maintenance at all. But we are firmly of the opinion that the bare proposition that it is proper to include in an award by way of maintenance some amount by way of penalty for a husband's reprehensible conduct must be rejected. (at p619)

14. The question finally to be resolved is whether upon the view which we have taken of the case the order of the Full Court, in so far as it makes provision for the appellant's maintenance, should be set aside. In pursuing this inquiry it must be borne firmly in mind that the order complained of was made in the exercise of a judicial discretion and that it is not for us, merely, to review the case and make such an order as we would have made, or, which we think we would have made, if we had been seised of the case in the first instance. The principles applicable in appeals from orders involving discretionary judgments have been stated and restated in a multitude of cases and a convenient summary is to be found in the reasons of Kitto J. in Australian Coal and Shale Employees' Federation v. The Commonwealth (1953) 94 CLR 621, at p 627 : "I shall not repeat the references I made in Lovell v. Lovell (1950) 81 CLR 513, at pp 532-534 to cases of the highest authority which appear to me to establish that the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance: House v. The King (1936) 55 CLR 499, at pp 504, 505 ." The application of these principles to the present case make it plain that the appeal cannot succeed unless we are clearly satisfied that the order of the Full Court provided for maintenance at a rate so inadequate that we must conclude that there was a miscarriage of the Court's discretion. This, of course, was the burden of the appellant's primary argument which asserts that justice requires the award both of a lump sum payment and increased periodical payments by way of maintenance. Indeed, counsel for the appellant went so far as to ask us to make provision identical with that originally made by Nield J. For our part we are satisfied that not only was no case made out to justify the award of a lump sum but that to make such an award would, having regard to the respondent's means and the other circumstances of the case, be quite unreasonable. (at p620)

15. Viewed in isolation the amount of 12 pounds a week awarded to the appellant seems, at first sight, low. But the order requires him also to pay three sums of 5 pounds per week during the respective minorities of his children and, additionally, all school fees and all medical and dental expenses incurred on behalf of the children. What liabilities will be incurred in respect of these last-mentioned matters does not appear but compliance with the order will, no doubt, involve the respondent in a substantial liability. Assuming then that in the foreseeable future the respondent's earning capacity will be in the vicinity of 4,000 pounds a year - that is to say 80 pounds a week - it seems that the obligation imposed by the order will, so long as the appellant continues in her present employment, result in more money coming into the wife's household than into the husband's household. Out of an income of 80 pounds a week the respondent will be obliged to pay to his wife 27 pounds, leaving him with a net amount of 53 pounds a week, whilst so long as the wife continues to work there will be approximately 59 pounds a week coming into her household. Additionally, out of the residue of his income the husband will be obliged to pay the children's school fees and medical and dental expenses. In these circumstances we are driven to the conclusion that it is impossible to say that the order was so inadequate as to make it appear that there has been a miscarriage of the Full Court's discretion. We add that although the Full Court may have, to some extent, underestimated the husband's earning capacity, this did not, so far as we can see, result in any injustice to the appellant. (at p620)

16. It is, of course, possible that the wife's earnings may be diminished at some future time or that circumstances may arise in which she finds it impossible or undesirable to continue in her present employment. It was, however, impossible for the Full Court to foresee when this might occur and we, ourselves, think it would be futile to speculate as to when it may happen. When it does the order may be reviewed having regard to the circumstances then existing, including her husband's means and earning capacity at that time. (at p621)

17. For these reasons the appeal should be dismissed but we think that, in the circumstances of the case, there should be an order that the appellant's costs be paid by the respondent. (at p621)

Orders

Appeal dismissed. Costs of the appellant to be paid by the respondent.