RONDALOE & RONDALOE
[2016] FamCAFC 142
•9 August 2016
FAMILY COURT OF AUSTRALIA
| RONDALOE & RONDALOE | [2016] FamCAFC 142 |
| FAMILY LAW – APPEAL – PROPERTY – Where the husband appeals all property settlement orders made – Where it is claimed that the trial judge “double counted” by including in the asset pool the amount of a loan account which had been spent in reducing the balance outstanding on a mortgage, but only taking into account the then outstanding balance of that mortgage – Where the wife submits that this claim was not raised before the trial judge – Where the transcript shows that the issue of a double count was raised by the husband’s counsel with the trial judge and no challenge to that was made by the wife’s counsel – Where the trial judge took no account of this submission in the reasons for judgment – Where in the summary of assets available for distribution the trial judge included the value of the business with the amount of the loan account – Where the trial judge has clearly erred and there is merit in this ground of appeal – Where there is no merit in the remaining two grounds of appeal – Appeal allowed in part and paragraph 1 of the orders of the trial judge varied – Appeal otherwise dismissed. FAMILY LAW – APPEAL – APPLICATIONS IN AN APPEAL – Where the husband seeks to adduce further evidence – Where the wife opposes both applications – Applications dismissed. FAMILY LAW – APPEAL – COSTS – Where there should be no order for costs – Where there was little to choose between the time spent on the first ground of appeal and the remaining two grounds of appeal – Where it is inappropriate for costs certificates to issue given only one ground of three grounds of appeal succeeded. |
| Family Law Act 1975 (Cth) – ss 75(2) and 93A(2) |
| Bevan & Bevan (2013) FLC 93-545 CDJ v VAJ (1998) 197 CLR 172 Gronow v Gronow (1979) 144 CLR 513 Norbis v Norbis (1986) 161 CLR 513 Sharman v Evans (1977) 138 CLR 563 Stanford v Stanford (2012) 247 CLR 108 Zalewski and Zalewski (2005) FLC 93-241 |
| APPELLANT: | Mr Rondaloe |
| RESPONDENT: | Ms Rondaloe |
| FILE NUMBER: | ADC | 1076 | of | 2012 |
| APPEAL NUMBER: | SOA | 91 | of | 2014 |
| DATE DELIVERED: | 9 August 2016 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 23 October 2015 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 14 November 2014 |
| LOWER COURT MNC: | [2014] FCCA 2533 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mrs Read |
| SOLICITOR FOR THE APPELLANT: | Lamont Black Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Richards |
| SOLICITOR FOR THE RESPONDENT: | Harry Alevizos |
Orders
The applications in an appeal filed on 6 August 2015 and 10 September 2015 be dismissed.
The appeal be allowed in part.
Paragraph (1) of the Orders made on 14 November 2014 be varied to provide as follows:
The husband pay to the wife within sixty (60) days of the date of this Order, the sum of TWO HUNDRED AND EIGHT THOUSAND ONE HUNDRED AND TWENTY-EIGHT DOLLARS AND EIGHTY CENTS ($208,128.80).
There be no order as to costs or for the issue of costs certificates.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Rondaloe & Rondaloe has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
|
Appeal Number: SOA 91 of 2014
File Number: ADC 1076 of 2012
| Mr Rondaloe |
Appellant
And
| Ms Rondaloe |
Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed on 12 December 2014 Mr Rondaloe (“the husband”) appeals all orders made by Judge Cole on 14 November 2014, dividing the property of the husband and Ms Rondaloe (“the wife”). The wife opposes the appeal.
On 14 November 2014, his Honour ordered that the property interests of the parties be divided such that the wife received the sum of $248,000, that the proceeds of property and funds held by the parties in Poland be distributed equally between them, and that they otherwise retain their respective interests in property, savings, motor vehicles and superannuation benefits. Outstanding proceedings, including the wife’s spousal maintenance application, were dismissed.
On appeal the husband seeks that all orders be set aside and the matter be remitted to the Federal Circuit Court of Australia for rehearing by a judge other than Judge Cole, that the parties have costs certificates granted pursuant to ss 9, 6 and 8 of the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”), and that the wife pay his costs of the appeal. I note though that there is some confusion here given that it is not possible for costs certificates to issue if there is an order for costs.
On 7 April 2015 the appeal came before me for directions. However, during the hearing it became apparent that the husband, who had recently become self-represented, was not prepared for the hearing, nor was he prepared to deal with the issues that needed to be addressed, and he asked for an adjournment of two weeks to consider his position. That adjournment was not opposed and the matter was adjourned to 1 May 2015.
On 1 May 2015 I made orders preparing the appeal for hearing and listed it for hearing on Monday 6 July 2015.
On 30 June 2015 the husband filed an application in an appeal seeking to stay or adjourn the hearing of the appeal until further order, citing ill-health. That application was supported by an affidavit filed on the same date.
On 6 July 2015 I heard the application in an appeal filed by the husband on 30 June 2015, and delivered ex tempore reasons for judgment dismissing it, noting that at the hearings before me on 7 April 2015 and 1 May 2015 the husband did not make submissions or present evidence to indicate that he suffered from either physical, or mental health difficulties. I made orders extending the time for the husband to file his documents, and adjourned the matter for further directions to 11 August 2015.
On 6 August 2015 the husband filed an application in an appeal and an affidavit in support seeking to adduce further evidence. In that application he sought to adduce evidence in relation to his back injury “and its long term implications and the fact that [sic] believe that His Honour Judge Cole erred in double counting funds that should not have been a credit but a liability”.
On 11 August 2015 the husband was represented by counsel and I conducted a directions hearing and listed the appeal for hearing on 23 October 2015. One of the orders made at that hearing was for the husband to file and serve any further application to lead further evidence by the close of business on 11 September 2015.
On 10 September 2015 the husband filed an application in an appeal and an affidavit in support seeking to lead further evidence in the form of a report of Mr Y, a consultant in neurosurgery and spinal surgery.
At the hearing before me on 23 October 2015 counsel for the wife sought to rely on supplementary submissions filed on 22 October 2015, and I made orders permitting that.
Background
At the time of trial, the husband was aged 40 years and the wife was aged 40 years.
The parties were married in Poland in 1995. They did not cohabit prior to marriage.
There is one child of the marriage who was born in 1996, and who was aged 18 years at the time of trial.
There were periods of separation throughout the marriage as follows (see judgment [63] and [64]):
a)From 1998 to March 2000 the husband lived in Israel and the wife and the child returned to live in Poland.
b)From October 2004 to late 2005 the husband lived in Australia and the wife and the child returned to Poland and lived with the wife’s parents.
c)For a few weeks in October 2007 when the wife left the former matrimonial home and lived in shelter accommodation.
The parties separated finally on 3 March 2010.
At the time of trial the husband was running a business known as A S, and the wife was studying for a PhD at University.
The reasons for judgment of 14 November 2014
His Honour set out the orders sought by each party, the evidence to be relied upon, and the law as it applied to property settlement applications (at [21] – [24]), specifically citing Stanford v Stanford (2012) 247 CLR 108 and Bevan & Bevan (2013) FLC 93-545. At [24] his Honour set out the four step process he would follow, namely:
a) consider the identity and value of the asset pool (noting it has been substantially agreed by the parties);
b) consider the contributions by the parties to the acquisition, conservation and improvement of the assets including their financial and non-financial contribution together with any contribution to the welfare of the family;
c) consider the financial resources and needs of the parties taking into account amongst other things the factors set out in s.79(4)(d)-(g) of the Family Law Act 1975 (“the Act”);
d) Review the proposed division of the matrimonial assets to ensure that the outcome is just and equitable.
As for the assets and liabilities of the parties. His Honour recorded the two items in dispute to be first, the value of the husband’s business, and secondly, how the husband’s legal fees, paid by him, should be treated. The wife’s case was that the legal fees should be added-back to the property available for distribution between the parties. However, at [35] his Honour found that it was “more appropriate to consider this matter when considering the contributions of the parties pursuant to the guidance provided by the Full Court in the matter of Bevan”.
His Honour then discussed the husband’s business, A S, which business was owned by A Family Trust. The husband was the sole trustee of the Trust, the wife having been “removed as a trustee and beneficiary” in December 2007 (at [36]). At [37] his Honour recorded that “[A] Investments Pty Ltd [was] a corporate beneficiary of the trust”, the husband was the “sole director and shareholder of the company”, and the “company was incorporated on 30 June 2010 and [had] no other role”.
At [38] his Honour recorded that the husband was also the sole trustee of F Investment Trust which “was settled to hold the [business] premises at … [S]”.
At [40] – [51] his Honour considered the valuations of the business provided respectively by Mr C, who “was jointly instructed by the parties on 12 November 2012”, and H Valuers. His Honour recorded that Mr C in his first valuation undertaken in 2012 determined that the business “had no goodwill and considered the valuation methodology should be asset based”, and opined that “a market value of the plant and equipment may be appropriate.” His Honour noted that the “book value of the plant and equipment was $82,434.” H Valuers, adopting auction values, valued the plant and equipment at $37,600.
In December 2013 Mr C published a final report, after reviewing the 2012 and 2013 financial statements, and found that there was a goodwill component and “the business could be considered on a going concern basis” (at [44]), and the plant and equipment should be valued at book and not auction value.
His Honour recorded at [46] that counsel for the husband submitted that market value was the preferred method to be adopted in the family law courts and that “book value is a concept for the purposes of tax calculation and nothing more”; that there was no issue with the valuation but “[t]he issue [was] simply the preference for book value or a going concern valuation and importantly the extent to which the wife should share in the value increase created by the husband’s own efforts” (at [48]).
At [51] his Honour recorded the wife’s counsel’s summary of the evidence of Mr C as follows:
a)he maintained a strong preference to using the book value;
b)he recognised the possibility of the plant value being different from the book value;
c)in a going concern valuation the auction realisation may not reflect the value of the plant and equipment in situ;
d)ideally he would have preferred to have regard to an in situ valuation of the plant and equipment – it would sit “more comfortably” with his view; and
e)notwithstanding the absence of an in situ valuation, it was inappropriate to utilise an auction realisation valuation and that the book value was clearly more appropriate.
His Honour accepted this submission and the summary provided by the wife’s counsel.
His Honour then turned to consider whether an asset by asset or a global approach was more appropriate, the husband arguing that an asset by asset approach should be adopted, referencing the cases of Norbis v Norbis (1986) 161 CLR 513, Zalewski and Zalewski (2005) FLC 93-241 and Polonius & York [2010] FamCAFC 228
At [62] his Honour recorded that the “argument in this matter centres around the accumulation of assets post separation, as opposed to significant liabilities”, and at [63] recorded the dates the husband asserted that the parties “were separated”, set out at [15] above.
Further, at [65] his Honour noted the husband’s counsel’s submission that “the property should be considered by way of seven pools” as follows:
a)Pool 1, the Polish Apartments, the mortgage, and the bank account (to be divided in such proportions as the Court sees fit);
b)Pool 2, the wife’s … motor vehicle and savings at separation (no accounting sought);
c)Pool 3, the [A] Family Trust (with a 20% allowance to the wife of $2,549);
d)Pool 4, [A] Investments Pty Ltd, the husband’s loan account in [A] Investments Pty Ltd, the husband’s loan account in the [A] Family Trust (with no entitlement to the wife);
e)Pool 5, the husband’s interest in the property at … [S] (with a 20% allowance to the wife of $84,323);
f)Pool 6, the … motor vehicle in the husband’s possession (no accounting to the wife as no equity in the motor vehicle); and
g)Pool 7, the superannuation benefits of the parties as of 30 June 2014 (with a 22.5% split to the wife of $8,655).
At [66] his Honour recorded that he had “a number of difficulties with this submission” and set out the argument put on behalf of the wife by her counsel that what the husband sought to achieve was as follows:
a)seeking to reduce the period of marriage on a notional basis by aggregating and then subtracting the periods of separation occurring prior to final separation …; and
b)seeking to treat as an extra contribution, savings said to have been made by the husband during those periods of separation prior to final separation.
Counsel for the wife further argued that this approach failed to take account of the contributions of the wife to the care of the child during the times when the parties were separated, she making the “sole direct financial contribution to [the child’s] support” and she being “the sole homemaker and parent during these periods” (at [67]), and nor did it take account of “the period post separation in March 2010 for the next 2½ years until shared care arrangements were formalise [sic] by orders of 22 November 2012” (at [68]).
At [70] his Honour set out the wife’s counsel’s submissions as to the creation of the bakery business prior to separation as follows:
a)the husband’s significant skill and expertise developed during the marriage (he commenced work as [an artisan] with [M Business] in Australia in 2002, having previously been employed as a chef);
b)the wife’s lesser but not unimportant contributions as detailed in her affidavit …;
c)the injection of $100,000 of joint funds towards the establishment of the business and acquisition of imported equipment;
d)the husband retaining savings at separation of $125,000 which ultimately formed part of the husband’s capital contribution to the acquisition of the [business] premises at … [S];
e)The wife’s enhanced homemaker and parental contribution arising from the husband being required to work long hours as he acknowledges in his evidence; and
f)The contribution of the wife’s parents in managing the Polish properties.
His Honour found that it was appropriate for him to adopt a global approach.
His Honour turned to consider the contributions of the parties, finding at [107] that “contributions should be assessed at 30 per cent to the wife and 70 per cent to the husband”.
At [108] – [115] his Honour considered the financial resources of the parties and their needs, finding as follows:
a)Both parties were in reasonable health.
b)The wife had significant qualifications and could earn income in the vicinity of $60,000 per annum.
c)The husband was self-employed and had the capacity to earn a good income. His counsel argued that “his future income earning capacity has been capitalised and included. The [sic] business valuation and should not have to account for the same again” (at [110]).
d)Counsel for the wife “concedes … that a portion of the income has been capitalised of [sic] the goodwill figure ascribed to the business by Mr [C]. Care should be taken not to double count”, and submitted that the husband’s financial future “is significantly superior to that of the wife” which submission his Honour found to have “some weight” (at [111]).
e)The parties’ only child was an adult, being over the age of 18 years, and both parties shared his support.
f)Neither party had re-partnered, and neither party had responsibility for the support of anyone else.
g)Counsel for the husband submitted that there should be no adjustment, but counsel for the wife submitted that she should have a 10 per cent adjustment in her favour.
His Honour accepted the submissions of the wife’s counsel and made an adjustment of 10 per cent in the wife’s favour.
His Honour then reviewed his proposed orders finding that the wife would receive 40 per cent of the value of the net asset pool, and the husband would receive 60 per cent of that pool. In dollar terms the husband would pay to the wife the sum of $248,000.
At [122] his Honour found that the husband had the “capacity to pay off debt at an extraordinary rate” and that he had “the capacity to borrow the sum of $248,000 with which to pay the wife within a reasonable time”.
Grounds of Appeal
The husband advances the following grounds of appeal in his Notice of Appeal filed on 12 December 2014:
1.The learned trial judge erred in double counting the cash assets of [A] Investments Pty Ltd in the net pool of the assets available for distribution between the parties.
2.The learned trial judge failed to take sufficient account of the husband’s post separation contributions.
3.The learned trial judge erred in making a Section 75(2) adjustment in favour of the wife.
Discussion
Before embarking on a discussion of the grounds of appeal I wish to comment on the written summary of argument of counsel for the husband.
First, the summary comprised 15 pages which plainly exceeds the maximum number permitted under r 22.22(2)(c) of the Family Law Rules (2004) (Cth). However, it is apparent that one reason the summary stretched to 15 pages was because counsel included three pages headed “List of Authorities”, and in which extensive quotations from various cases were set out, and that was also a pattern adopted in two of the last three pages of the summary. Frankly, much of that was unnecessary, and the more so because it was entirely unclear how those quotations were relevant to the grounds of appeal.
Secondly, and perhaps more importantly, the summary of argument was extremely difficult to follow. It had almost no structure, and was in parts just a series of assertions. Overall it can only be described as confusing and confused.
Ground 1
Despite the limitations of the husband’s counsel’s summary of argument, it is possible to discern from the same the basis of the complaint that is contained in this ground of appeal. In short, it is claimed that his Honour “double counted” by including in the asset pool a loan account, which the husband had caused to be debited, as part of the value of the business, and then deducting the outstanding amount due and owing on the mortgage over the property at S. The submission of the husband is that the amount debited to the loan account ($100,484) was used to reduce the amount of the mortgage. Thus, what should have been done, according to the husband, was to not include in the asset pool the amount of the loan account, if the amount outstanding under the mortgage at that time was to be taken into account as a liability.
The wife’s counsel’s submission as to this claim is that it was not raised before the trial judge, and indeed pointed out that at trial, counsel for the husband accepted that the business was owed $100,484 being the amount of the loan account, and the mortgage balance that his Honour used was an agreed amount. Thus, it is said, this submission cannot be raised on appeal.
However, the record does not support this argument of the wife’s counsel.
Before referring to that record, it is important to understand that there is no dispute that the relevant loan account was $100,484, and that the evidence of the expert accountant was that without explanation otherwise that amount should be added to the value of the business when considering the assets of the husband.
The first document then to look at in considering this issue is the husband’s counsel’s written submissions provided to his Honour at the conclusion of the hearing. Those submissions were in support of the husband’s case that an asset by asset approach should be adopted, rather than a global approach, and if that was done the asset pool could be divided into seven distinct pools, with the fourth pool comprising all of the relevant loan accounts, including the loan account of $100,484 in A Investments Pty Ltd . The argument put was that the wife had no entitlement to the assets in this pool “having made no direct contribution”. Significantly, the submission continued:
This is particularly so to avoid double dipping as these funds have largely been applied in reduction of the [S] mortgage and the wife is claiming to share in the equity created in the [S] property.
I observe that the fifth pool comprised the value of the property at S less the then mortgage balance of $80,384, and it was submitted that the husband had paid down that mortgage from $350,000 to $80,384, without any contribution from the wife, except by dint of her having an interest in the business which generated the income to make the repayments.
Included in the written submission was a schedule setting out the transactions on the mortgage account from 29 August 2011 to 14 January 2014. It is instructive to repeat that schedule here:
The [S] Mortgage
The husband has mostly applied the trust distributions to the [S] mortgage. The most recent payment being the application of the bank account of [A] Investments Pty Ltd .
The post separation capital payments in reduction of the mortgage are as follows (starting balance $350,000 29/7/11):
(1) 29/8/11 $3,533.74
(2) 5/2/12 $13,000.00
(3) 5/4/12 $119,192.78
(4) 13/4/12 $5,000.00
(5) 20/4/12 $3,000.00
(6) 30/4/12 $2,000.00
(7) 2/7/12 $100,500.00
(8) 2/7/12 (redraw) $100,000.00
(9) 16/8/12 $10,000.00
(10) 13/9/12 $10,000.00
(11) 9/11/12 $6,000.00
(12) 29/11/12 $6,829.44
(13) 13/12/12 $9,000.00
(14) 18/1/13 $7,000.00
(15) 13/2/13 $8,000.00
(16) 4/3/13 $5,000.00
(17) 13/3/13 $3,021.74
(18) 28/6/13 (redraw) $120,000.00
(19) 1/7/13 $80,000.00
(20) 18/7/13 $10,000.00
(21) 9/8/13 $10,000.00
(22) 9/10/13 $5,000.00
(23) 16/10/13 $4,000.00
(24) 16/10/13 $4,000.00
(25) 14/1/14 – date E$10,000.00
$214,077.70In addition, of course, the husband has service [sic] the monthly payments since September, 2011 at the average monthly cost of $750 (x 35 months = $26,250).
I observe that this schedule was drawn from the husband’s trial affidavit filed on 31 October 2013. The relevant bank statements were annexed to that affidavit, including statements of the other accounts used by the husband to move money around, and in the body of the affidavit the transactions were explained by the husband. Importantly, it seems that none of this evidence was challenged by the wife before his Honour.
Then there are the oral submissions made to his Honour in the context of those written submissions, and to properly appreciate the thrust of those submissions it is appropriate to set out the relevant parts in full, commencing with a question by his Honour as to the schedule of mortgage repayments set out above:
HIS HONOUR: Thank you. And there’s no controversy over the payments that are made to the mortgage that are outlined on page 6; is that correct?
MR JORDAN: Well, I – I took them from the source records myself. I mean, I – if my friend hasn’t looked at that and it subsequently in seven days turns out to be an issue, then I wouldn’t deny that opportunity.
MR RICHARDS: Well, the - - -
MR JORDAN: …..
MR RICHARDS: The statements will – the statements will speak for themselves, but if your Honour reads the figure from the statements, you will see that the husband – what the husband has done is, pre-30 June, has made substantial payments in and then withdrawn them out – sorry, possibly the other way around – on 1 July. So you can’t just total all of the payments in, because they’re massive double counts and - - -
MR JORDAN: Well, I’m not doing that.
HIS HONOUR: I see the redraws are allowed in 18, aren’t they?
MR RICHARDS: Yes. And that’s – more than 220,000 of that sum is simply shuffling money.
MR JORDAN: Yes. I’ve acknowledge that. I - - -
MR RICHARDS: And the husband acknowledged that in his affidavit. What your Honour would need to know – and I don’t think your Honour has that evidence, save for the – save for the reduction in the mortgage over the period from commencement to conclusion, that it has gone from 350 to 82 - - -
HIS HONOUR: Yes.
MR RICHARDS: - - - from profit in the business – that that’s really the only figure your Honour needs to have regard to. And, of course, those payments, we say, have been funded by the business in which we have a continuing interest. So we don’t – we – so – but your Honour has the figure, 350 to 82.
MR JORDAN: That’s common ground.
(Transcript 15.8.2014, page 108, line 43 to page 109, line 37)
Pausing there, it can be seen that the wife’s counsel, Mr Richards, accepts that the repayment of the mortgage has come from the profits of the business.
The exchange then continues as follows:
HIS HONOUR: Thank you. Which brings me to the next point. That the – there was some suggestion in your submissions that the husband in paying the mortgage had substituted one debt for another by racking up a loan account, so to speak; and did I get that right?
MR JORDAN: Well - - -
HIS HONOUR: Racking up – accumulating is probably a more legal term.
MR JORDAN: All I’m – all I’m saying is that the mortgage reduction relates to the profits from the trust which result from his work, and - - -
HIS HONOUR: I understand that. I understand the mortgage reduction. That’s all nice and simple.
MR JORDAN: And a loan account figure, whatever it is, is just a representation of undrawn profit, and - - -
HIS HONOUR: Well, no. The loan account figure would be in respect of moneys that have been taken. It’s not retained profit.
MR JORDAN: Well, the loan account – the – I don’t have an issue with the loan account figure from [A] ….. that’s the loan account figure. It’s 104,000, and - - -
HIS HONOUR: Page 9. That’s what I’m talking about.
MR JORDAN: Yes.
HIS HONOUR: It’s pool 4. Because other than [A] Investments - - -
MR JORDAN: Yes. That’s the [C] [sic] figure; 100,484. And we’ve got an [A] Investments loan account to the – there’s a further $115. I can’t now remember where that comes from.
HIS HONOUR: I don’t know if that’s going to take us anywhere, but the - - -
MR JORDAN: No.
HIS HONOUR: Is your point the wife is not entitled to pool 4 …..
MR JORDAN: That’s right.
HIS HONOUR: Can you walk me through that. I’m - - -
MR JORDAN: Well, the loan account figure is no longer there, effectively. The loan account figure is no longer there, because most of that money is taken out and put off the mortgage at [S], and that’s recorded in the 350 down to 80,000.
HIS HONOUR: So - - -
MR JORDAN: So it’s a ….. it’s a ….. it’s - - -
HIS HONOUR: So you’re saying the evidence is that rather than regard it as a dividend to him which he applied to the [S] mortgage, he treated it as a loan account within [A] Investments Proprietary Limited, which was then paid to the [S] mortgage.
MR JORDAN: Yes. Well, that’s right. But, look, I don’t - - -
HIS HONOUR: But the land is owned by [A] Investments .
MR JORDAN: Yes. You know, I don’t even need to get too concerned with the – with the structure. All I’m putting, your Honour, is that the husband works; he earns money. He saves the money, and then he pays it off the mortgage. The money he saved, if you like is – from his labours is recorded – is – is the loan account figures, and nothing more than that. So it’s a double dip. If he’s saying, “Well, I want to add 104 - $100,000 in as a loan account,” I’m saying, well, that – that – okay, that’s fine, but it has actually gone off the mortgage, so that’s why it’s 80,000 and not, say, 180,000. So they’re related. The equity figures are related. And because the equity figures are related, it would be unjust, in my respectful submission, to say, “Well, look, I will – I will take into account the loan account figures as Mr [C] [sic] has considered them in his report, and then – and then give the wife a share of the equity.”
I mean, I’m just saying this is a balance your Honour has got to come to. But I just want your Honour to understand that the only reason that the mortgage has come down from 350,000 to 80,000 – and I acknowledge my friend is right about the – the interest or service during – as a business expense. That’s the $700 a fortnight or a week or whatever it was. That’s perfectly true. But the only reason it has come down from 350,000 to 80,000 is because the husband has made the money in the bank. I mean, he has applied ….. reduction of debt. And our case, of course, is that she has done precious little in relation to this [business]. She was overseas when it was created. She has never worked there. And she ought not to be sharing in the benefits to any significant extent, if that helps your Honour.
(Transcript 15.8.2014, page 110, line 14 to page 112, line 7)
Thus, it can be seen that the issue of a double count is raised squarely with his Honour by the husband’s counsel, and there is no challenge to that by the wife’s counsel. Yet his Honour took no account of this in his reasons for judgment. In his Honour’s summary of the assets available for distribution his Honour includes the value of the business with the loan account of $100,484 added in, and includes the property at S less the mortgage of $80,384. Thus, plainly his Honour has erred.
There is of course the application in an appeal to lead further evidence filed on 6 August 2015 by the husband, which in part is directed to this issue. The further evidence comprises bank statements annexed to the affidavit filed on the same date, first, from the account which the husband used to deposit the redraws from the mortgage and to then pay that money, or most of it, back off the mortgage, secondly, from the mortgage account showing the redraws and the repayment, and thirdly, from a further account through which the money was moved. There were also several paragraphs of the affidavit which sought to explain the movement of money between the accounts.
However, I do not consider it necessary to receive this further evidence, even if I could pursuant to s 93A(2) of the Act, and the principles set out in the High Court of Australia decision of CDJ v VAJ (1998) 197 CLR 172. The error of his Honour is apparent, without this further evidence.
Ground 2
This is plainly a weight challenge, and it is unnecessary to repeat the well-known principles applicable to such a challenge, save and except to say that what needs to be established is that the trial judge was plainly wrong, his decision being no proper exercise of his discretion. Further, where no error of law or mistake of fact is present, it is never enough that an appellate court, left to itself, would have arrived at a different conclusion (see Gronow v Gronow (1979) 144 CLR 513 at 519 per Stephen J).
The difficulty here is that no foundation has been established to enable an appeal court to find that the trial judge’s discretionary conclusion is wrong. For example, none of the facts on which the conclusion is based are challenged. Further, it is not suggested that his Honour failed to take account of relevant considerations, or took account of irrelevant considerations. Indeed, it is not made apparent either in the ground of appeal itself, or in the written or oral submissions that support it, on what basis the trial judge can be said to be plainly wrong. Thus, for this court to interfere with the trial judge’s decision I would be doing nothing more than substituting my own discretionary conclusion for that of the trial judge, and that is not the function of an appeal court. As Barwick CJ said in Sharman v Evans (1977) 138 CLR 563, at 565:
…[T]he function of a court of appeal, in my opinion, is not to offer what in connexion with another discipline would be called “a second opinion”. Such a court is strictly confined to the remedy of error in the trial or in the assessment of the trial judge. It cannot be too strongly said that a mere difference of opinion … does not indicate error on the part of the trial judge.
His Honour was well aware of the post-separation contributions of the parties, and of the arguments put on behalf of the husband that this was a case in which “substantial new assets” were introduced and built up by the husband after the parties separated, and there was virtually no link between this contribution and the contributions of the wife prior to separation (see [62]). The asset identified by the husband in this regard was the business, but again his Honour was well aware of the provenance of that asset.
His Honour spent some time in his reasons identifying and assessing all of the respective contributions of the parties. His Honour then concluded that overall (at [74] – [107]) those contributions should be reflected in a 70 per cent / 30 per cent division in the husband’s favour. The submission of the husband is that his Honour gave too little weight to the husband’s post-separation contributions, and too much weight to the pre-separation contributions of the wife, and there should be an extra 10 per cent allocated to the husband, taking his entitlement to 80 per cent. However, that is the be all and end all of the argument, and to repeat, it fails to demonstrate a basis on which this court can interfere with his Honour’s discretionary conclusion.
For completeness, I note that in the husband’s counsel’s written summary of argument it is said that there was an issue about “the wife’s outstanding legal fees”, and that although his Honour considered it appropriate to address that matter in the context of the respective contributions of the parties, his Honour failed to “provide reasons in his Judgement [sic] which include reference to examination of this issue.” However, this claim is misconceived in that what his Honour was referring to was the treatment of the husband’s legal fees, and not the wife’s (see [27], [28] and [29]). In any event, doing the best I can to understand the point being made, it is apparent that the ground of appeal is not directed to that issue, and there is no other ground of appeal to which it is relevant, and thus it is not open for this court to address it.
This ground of appeal has no merit.
Ground 3
The complaint here is that his Honour erred in making an adjustment pursuant to s 75(2) of the Act in favour of the wife. As referred to above, the husband submitted to his Honour that there should be no adjustment, whereas the wife sought that there be an adjustment of 10 per cent, and his Honour accepted that submission.
Prima facie, this is yet another weight challenge with the husband suggesting in his written summary of argument that his Honour failed to have sufficient regard to a number of factors. However, apart from having great difficulty in understanding and following what is set out in that summary of argument, some of the factors referred to can have no relevance to whether there should be an adjustment pursuant to s 75(2). For example, it is completely irrelevant that the husband may have “worked hard during each period of separation and upon the resumption of the relationship had assets to contribute to the immediate care and support of the wife and child.”
However, in oral submissions, the husband’s counsel confined the argument to the issue of the husband’s health, and the impact of that on his earning capacity, together with the suggestion that the wife was “under-employed” and could have found other work. As to the latter, I can immediately dismiss that from any consideration, given that it was not a matter that was raised with the trial judge.
Putting aside for the moment the issue of the husband’s health and any impact thereof on his earning capacity, I can indicate that I can find no error by the trial judge in how his Honour dealt with whether there should be an adjustment pursuant to s 75(2).
At [108] – [114] his Honour adequately and appropriately addressed the relevant factors arising from the evidence and the submissions of the parties, and the husband has failed to overcome the hurdles which I set out above in addressing Ground 2, and which equally block the path of this weight challenge.
In any event, turning to the husband’s health and any impact thereof on his earning capacity. As is conceded by the husband’s counsel, a successful outcome in that regard is entirely dependent on the receipt of the further evidence the subject of the husband’s applications in an appeal filed on 6 August 2015 and 10 September 2015.
The further evidence sought to be adduced comprises the following:
a)The husband’s affidavit filed on 6 August 2015 in which he deposes to him sustaining a back injury in 1993, the consequences of that, and the health professionals he consulted. In regard to the latter, annexed to the affidavit is a letter from L, physiotherapist, dated 22 July 2015, an email from him dated 14 November 2013, a letter from Dr T dated 11 June 2015, a letter from Dr K dated 5 June 2015, and a letter from J N, psychologist, dated 7 July 2015.
b)The husband’s affidavit filed on 10 September 2015, in which he again deposes to the consequences of his injury and attaches a report of Mr Y, consultant in neurosurgery and spinal surgery, dated 7 September 2015.
I note that in the affidavit of 6 August 2015, the husband also raises matters which are completely irrelevant to the issues of his health and his earning capacity, and which cannot be related to any ground of appeal. For example, he deposes to having “[i]ncompetent legal representation”, having “tax liabilities”, and challenging the figures that were agreed at trial. There is no basis to admit any of that evidence, even if it is admissible, which I seriously doubt.
Section 93A(2) of the Act provides that in an appeal the Full Court can, in its discretion, receive further evidence upon questions of fact. In CDJ v VAJ, the High Court discussed the circumstances in which an appellate court may exercise its discretion to admit further evidence. Relevantly, McHugh, Gummow and Callinan JJ said this:
109.One consideration in construing s 93A(2) is its remedial nature. Its principal purpose is to give to the Full Court a discretionary power to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors which cannot be otherwise remedied by the application of the conventional appellate procedures. A further, but in practice subsidiary, purpose is to give the Full Court a discretion to admit further evidence to buttress the findings already made.
…
111.…Nor can the availability of further evidence relevant to the issues in the appeal be treated as equivalent to a ground of appeal, proof of which prima facie entitles the appellant to a new trial. The power to admit the further evidence exists to serve the demands of justice. Ordinarily, where it is alleged that the admission of new evidence requires a new trial, justice will not be served unless the Full Court is satisfied that the further evidence would have produced a different result if it had been available at the trial. Without that condition being satisfied, it could seldom, if ever, be in the interests of justice to deprive the respondent of the benefit of the orders made by the trial judge and put that person to the expense, inconvenience and worry of a new trial.
…
116.The failure to have adduced the evidence before the primary judge will be a variable factor, the weight of which will depend upon all the other factors pertinent to the case. Where the evidence has been deliberately withheld, the failure to call it will ordinarily weigh heavily in the exercise of the discretion. In other cases, the failure to call the evidence even if it could have been discovered by the exercise of reasonable diligence may be of little significance. No invariable rule concerning the failure to call the evidence can or should be laid down in view of the wide discretion conferred on the court by the section.
The wife opposes both applications to adduce further evidence.
Addressing the further evidence referred to in the first application, there are a number of significant impediments to that evidence being received. First, neither the evidence of the husband, nor the contents of any of the letters demonstrate that because of the husband’s back injury, or any psychological issue from which he is suffering, he is not able to continue to operate his business on a daily basis in the same way that he has always done. Thus, to apply what was said by their Honours in CDJ v VAJ, it is not apparent that this further evidence “would have produced a different result if it had been available at the trial”.
Secondly, it is beyond doubt that much of this evidence is inadmissible in any event, and again, applying what was said by their Honours in CDJ v VAJ, there would be little or no evidence that would be “accepted” that could “demonstrate that the order under appeal is erroneous”.
Thirdly, the evidence is highly controversial, and if received there would inevitably be extensive cross-examination of not only the husband, but also the authors of the letters, as well as the presentation of further evidence on behalf of the wife. To illustrate that, I note that the letter and the email from the physiotherapist set out almost identical information, but at the commencement of the letter Mr L indicates that the husband presented initially in 2006, whereas in the email he states that the husband first presented in 2012.
I also point out that the letter from Dr T is in fact a radiology report which indicates no significant issue with the husband’s alleged condition, and the letter from Dr K is merely a referral to the psychologist. It is also important to note that the psychologist only saw the husband in July 2015, namely we ll after the trial before his Honour, and there is no mention of any psychological effects of his back injury or its consequences. Indeed, in his report the psychologist says that “[m]ost of [the husband’s] problems centre around his ex wife and her behaviour towards him”.
None of this evidence will be admitted, and I propose to dismiss the application filed on 6 August 2015.
Turning to the second application, I do not propose to admit any of the husband’s self-serving and generally inadmissible statements contained in his affidavit. That evidence fails to come within any of the principles emanating from CDJ v VAJ.
That leaves the report of Mr Y. The first point to note is that Mr Y was not able to be definitive as to what was now causing the back pain that the husband claims to suffer, and he recommended further investigative procedures. Secondly, from his examination of the husband, and after perusing the letters referred to above, Mr Y assessed the husband’s “whole person impairment to be 6%”. Pausing there, this of course says nothing about the husband’s earning capacity.
Thirdly, and finally, under the heading of “Effect on future earning capacity” Mr Y says this:
He is likely to continue to have a component of low back pain. This may worsen in time, but will relate to the natural course of degenerative changes. Low back pain in relation to physical employment would mean a potential limitation in quality and quantity of work and hence future earning capacity.
Now, although Mr Y may be eminently qualified as a neurosurgeon, he has no qualifications to provide an opinion as to what impact there is, if any, on the husband’s earning capacity of his back injury and/or the pain associated with that. As can be seen, understandably, and perhaps for that reason, Mr Y’s comment in that regard is extremely guarded, and does not establish that the husband’s earning capacity would be so affected that if put before the trial judge this “further evidence would have produced a different result”. It is also necessary to bear in mind that the husband has continued to work in and operate the business as always.
In these circumstances this evidence will also not be admitted, and I propose to dismiss the application filed on 10 September 2015.
Given that none of the further evidence is being admitted, there can be no merit in this ground of appeal.
Conclusion
Having found merit in the Ground 1, but not in Grounds 2 or 3, the appeal will be allowed in part, but otherwise dismissed.
The question then becomes how should the error of the trial judge identified in Ground 1 be addressed. Both counsel submitted that in the event of Ground 1 being successful, it was appropriate for me to re-exercise the discretion rather than remit the proceedings, and particularly given that neither party sought to present further evidence in relation to that matter.
I am comfortable to adopt that approach, but it is not strictly a matter of re-exercising the discretion, but rather of simply varying the order made by his Honour. That should be done by first reducing the asset pool as found by his Honour by the amount of the loan account, namely $100,484. Thus, in [117] the value of the business becomes $83,353 in lieu of $183,837, the total of the assets of the husband reduce from $744,637 to $644,153, and the total of the asset pool becomes $726,707.
The wife is then to receive 40 per cent of this asset pool, namely $290,682.80 (rather than $330,876.40 as calculated by his Honour in [119]). The wife has or will have assets, according to his Honour (at [119]), valued at $82,554, and thus the husband will need to pay her the sum of $208,128.80 (again, instead of $248,322.40 as his Honour calculated in [119]).
Accordingly, paragraph 1 of the orders made by his Honour will be varied to provide for the husband to pay the wife $208,128.80 within 60 days of the date of this order.
Costs
At the conclusion of the hearing I sought submissions from the parties as to the question of costs depending upon the outcome of the appeal.
If Ground 1 succeeded, but not Grounds 2 and 3, the husband sought an order for costs on a proportionate basis. For the wife’s part, her counsel submitted that in that event there should be no order for costs either way.
In my view there should be no order for costs. There was little to choose between the time spent on Ground 1 compared with the time spent on Grounds 2 and 3.
In the event that there was no order for costs, both parties sought costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth). However, I consider that it is inappropriate for costs certificates to issue given that only one ground of appeal of three grounds succeeded.
I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 8 August 2016
Associate: FM
Date: 9 August 2016
0
6
6