Sand & Sand - [2012] FamCAFC 179

FAMILY COURT OF AUSTRALIA

SAND & SAND

[2012] FamCAFC 179

FAMILY LAW ─ APPEAL ─ PROPERY SETTLEMENT ─ Challenge to the jurisdiction of the Court to make orders for settlement of property ─ Where the thrust of the appellant’s challenges is that, if there is no “property” of the parties to the marriage or either of them, there can be no “matrimonial cause” and, accordingly, the jurisdiction to make orders with respect to the property of the parties to the marriage or either of them cannot be enlivened ─ Discussion of the authorities which discuss what constitutes “property” ─ Where the “property” in respect of which the learned Federal Magistrate made orders pursuant to s 79 was represented entirely by “notional” property ─ Where it is difficult to accept that jurisdiction was not limited to property then existing ─ Where the Court is satisfied by the submission currently before it that jurisdiction could not be enlivened in circumstances where the only “property of the parties” was “notional” ─ Where the submissions currently before the Court satisfy the Court that the “jurisdictional” challenges on behalf of the appellant would be entitled to succeed ─ Where the appeal involves a substantial issue of principle and where determining the appeal in the absence of an effective contradictor, may not be in the best interests of justice (see Tryon & Clutterbuck [2010] FamCAFC 80), and possibly erroneous ─ Where the broader interests of justice would be better served by allowing the respondent time to file further submissions, primarily in response to the Court’s preliminary conclusions in these reasons and the appellant having an opportunity to respond.

FAMILY LAW ─ APPEAL ─ PROPERY SETTLEMENT ─ Where the thrust of the “weight” challenges of the appellant is that the 30 per cent s 75(2) adjustment determined by the learned Federal Magistrate exceeded the generous ambit of the undoubtedly broad discretion which his Honour was exercising ─ Where the learned Federal Magistrate carefully, and in this Court’s view accurately considered each of the relevant s 75(2) factors ─ Where there was no error of principle or material errors of fact which vitiated the exercise of his Honour’s discretion ─ Where central to these challenges is the reality that none of the affidavit evidence of the appellant’s siblings was challenged in cross-examination, because neither sibling was required for cross-examination in relation to the evidence given by them ─ Where it is not manifestly obvious on the face of the affidavit evidence of either of the appellant’s siblings that their evidence was so obviously untrue or improbable that it could be rejected ─ Where a significant proportion of the notional property upon which his Honour relied was included because he did not accept the evidence of the husband or his siblings in relation to those events or transactions ─ Where on the submissions before the Court as they currently stand, the appellant would be entitled to succeed.

Family Law Act 1975 (Cth) ss 4, 75(2), 79, 80

Coghlan and Coghlan (2005) FLC 93-220
Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12
Coulton v Holcombe (1986) 162 CLR 1
Duff and Duff (1977) FLC 90-217
Grace and Grace (1998) FLC 92-792
Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Kennon v Spry (2008) 238 CLR 366
Metwally (No 2) v University of Wollongong (1985) 60 ALR 68
Mullane v Mullane (1983) 158 CLR 436
Norbis v Norbis (1986) 161 CLR 513
Paskandy and Paskandy (1999) FLC 92-878
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Tryon & Clutterbuck [2010] FamCAFC 80

APPELLANT:

Mr Sand

RESPONDENT:

Ms Sand

FILE NUMBER:

CAC

1042

2010

APPEAL NUMBER:

2012

DATE DELIVERED:

9 November 2012

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney via video link with Canberra

JUDGMENT OF:

Coleman J

HEARING DATE:

26 October 2012

LOWER COURT JURISDICTION:

Federal Magistrates Court

LOWER COURT JUDGMENT DATE:

18 May 2012

LOWER COURT MNC:

[2012] FMCAfam 454

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Maurice

SOLICITOR FOR THE APPELLANT:

Dobinson Davey Clifford Simpson

THE RESPONDENT:

Self Represented

Orders

Judgment is reserved.
Within 21 days of this date the respondent is to file and serve any further written submissions upon which she wishes to rely.
Within 14 days of the receipt of any such submissions Counsel for the appellant is to file and serve any further submissions upon which he wishes to rely.
Costs are reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Sand & Sand has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY VIA VIDEO LINK WITH CANBERRA

Appeal Number: EA 72 of 2012

File Number: CAC 1042 of 2010

Mr Sand

Appellant

And

Ms Sand

Respondent

PRELIMINARY

REASONS FOR JUDGMENT

introduction

By Amended Notice of Appeal filed 27 August 2012 Mr Sand (“the appellant”), challenged orders made by Coakes FM on 18 May 2012 in proceedings for settlement of property between the appellant, and Ms Sand (“the respondent”).
The orders of the learned Federal Magistrate provided that the appellant pay to the respondent $120,000 by way of settlement of property, such obligation being discharged by payments of $750 per fortnight, provided that in the event of default in the making of three consecutive instalment payments, or a total of five instalment payments at any time prior to payment of the whole of the sum of $120,000, the balance then owing would become due and payable.
The appellant seeks that the learned Federal Magistrate’s orders be set aside. Inferentially, the appellant’s Amended Notice of Appeal sought that the proceedings be dismissed. In oral submissions, Counsel for the appellant confirmed that, if the appeal were allowed, and the orders for settlement of property of the learned Federal Magistrate were set aside, this Court should dismiss the proceedings rather than remit them for re-hearing in the Federal Magistrates Court.
As will be seen, and rarely arises in this Court, if the appeal is successful, the future course of the proceedings will become a contentious issue which is not without complexity.
The respondent, who, though represented at trial, was regrettably unrepresented before this Court, resisted the appellant’s appeal, and sought to maintain the orders of the learned Federal Magistrate.

background

Some material facts provide background to the appeal. These find expression in the reasons for judgment of the learned Federal Magistrate, and are not controversial for present purposes.
At the time of trial, the appellant was 38 years of age. The respondent was then 29 years of age. Each party was in employment and living in the Australian Capital Territory.
There is one child living of the parties’ former relationship, R, who was born in 2009.
During the course of the proceedings before the learned Federal Magistrate, parenting issues with respect to R were resolved.
The parties married in India in 2003.
The first child of the parties’ marriage, S, who was born in 2005, sadly, died in 2006.
The parties separated in August 2009, at a time when they were living in the United States of America.
By early 2010, both parties and their child were living in Australia.
For reasons which he articulated in some detail, the learned Federal Magistrate concluded that, as at the date of the parties’ separation in August 2009, they had “property” albeit the evidence did not enable his Honour “to determine with any accuracy the net value” of such property at that time (par 122).
Having traversed the evidence before him in relation to the fate of the property which the parties had at the date of separation, and articulated a number of criticisms of the appellant in relation to those transactions, and the basis of them, the learned Federal Magistrate concluded that the “assets to be brought into account at the hearing” were worth US$171,894.56.
Whilst, in the context of discussing the evidence in relation to dealings with such assets subsequent to the parties’ separation, the learned Federal Magistrate recorded numerous, and well reasoned criticisms of the evidence of the appellant in relation to such transactions, his Honour did not anywhere find that any of the property was currently in the husband’s ownership, possession or control, or held by others on his behalf.
The Federal Magistrate’s general conclusion with respect to the husband’s evidence was:
114. The husband was not a good witness. Some of his answers in cross examination were either vague, implausible or non-sensical. The husband was warned repeatedly by me to answer questions put to him in cross examination when he failed to do so. I am left with the distinct impression the husband sought to avoid answering some questions truthfully. I am also left with the distinct impression that some of the transactions to which the husband deposed are artificial and which lead me to the conclusion that the husband has transferred monies to members of his family without justification possibly to be held for him until these proceedings are concluded at which time he can request their return or to be credited against further family financial transactions. It is this which is the nature of the artificial transactions.
The submissions of Counsel for the appellant were that the only property of any substance found to exist by the learned Federal Magistrate was “notional”, having once existed, but no longer doing so. In her submissions, the respondent conceded that there were “no available assets to distribute to satisfy the wife’s claim” (page 9). Whilst the learned Federal Magistrate found that the husband had an ANZ bank account with $1000 in it, a Chase Morgan (America) account with $855, quantified superannuation benefits of $5,000 and $2,000, and that the respondent had an unquantified superannuation entitlement, and a motor vehicle the value of which had not been established, the case was determined by the learned Federal Magistrate, on the basis that there was no property of any significance, other than “notional” property.
The contributions of the parties to the notional asset pool to which the learned Federal Magistrate had regard was one of equality to the date of separation, which his Honour concluded continued to be equal thereafter.
Pursuant to s 75(2) of the Family Law Act 1975 (Cth) (“the Act”), the learned Federal Magistrate concluded that an adjustment of 30 per cent in the respondent’s favour was appropriate. His Honour concluded that awarding the respondent 80 per cent of the notional asset pool of US$171,894.56 was just and equitable. As there was no property available to satisfy the respondent’s entitlement, the appellant was ordered to do so by instalment payments.

the grounds of appeal

The Grounds of Appeal advanced on behalf of the appellant essentially fall into three categories. The first category relates to the jurisdiction of the Court to make an order for settlement of property. The second comprised “weight” challenges to the exercise of discretion. The third category comprised some challenges to findings of fact, procedural fairness, and adequacy of reasons complaints.

Challenge to the jurisdiction of the Court to make orders for settlement of property

It is appropriate to refer first to what have broadly been described as the challenges to jurisdiction. Variously articulated, the challenges find expression in grounds 1, 2, 3 and 4 of the appellant’s Amended Notice of Appeal which provided:
1. That the Honourable Federal Magistrate fell into error by making orders awarding the Respondent 80% of a pool of assets (including notional assets) being an amount that significantly exceeded the pool of assets actually available for distribution.
2. That the Honourable Federal Magistrate fell into error by making an award to the Respondent in a sum which exceeded by approximately $100,000 the pool of assets actually available for distribution.
3. That the Honourable Federal Magistrate fell into error by treating the Appellant’s income yet to be earned as if it were property within the meaning of the Family Law Act 1975 (Cth).
4. In the alternative to Ground 3 that the Honourable Federal Magistrate fell into error by treating the Appellant’s income yet to be earned as a means of satisfying an award of a lump sum property order under sec 79 of the Family Law Act 1975 (Cth).
A number of Counsel for the appellant’s submissions were directed to the learned Federal Magistrate’s asserted errors in ordering that the respondent’s entitlement to a settlement of property be satisfied by instalment payments. Provided that so doing was not vitiated by a denial of natural justice or failure to afford procedural fairness, and this Court does not perceive there to have been such vitiating factors, if the jurisdiction to make orders for settlement of property pursuant to Part VIII of the Act was properly enlivened, the Court cannot accept that orders made pursuant to s 79 could not properly contain provisions enabling the payment of a party’s entitlement by instalments.
As Counsel for the appellant’s oral submissions confirm, the real thrust of these challenges is that, if there is no “property” of the parties to the marriage or either of them, there can be no “matrimonial cause” and, accordingly, the jurisdiction to make orders with respect to the property of the parties to the marriage or either of them cannot be enlivened.
Counsel for the appellant submitted, correctly in this Court’s view, that, notwithstanding the learned Federal Magistrate’s rejection of the appellant’s evidence as to the fate of the property which existed at the date of separation, and notwithstanding his Honour’s “suspicions” in that regard, his Honour nowhere found in his judgment that the husband had, save to the extent indicated earlier, any “property” in reliance upon which the jurisdiction to make orders for settlement of property could be enlivened. To the extent that there was minimal property, as there was, the jurisdiction to make orders was submitted to be limited to the extent of that property.
It was submitted by Counsel for the appellant that the case raised decisively, the legal and practical distinction between notionally adding back, and adjusting by virtue of “notional” property where jurisdiction is enlivened by virtue of there being “property” of a party or parties to the marriage with respect to which orders can be made, and “notionally” creating property which has not been found to exist. In essence, Counsel for the appellant submitted that jurisdiction could not be enlivened in reliance upon “notional” property.
Counsel for the appellant confirmed the Court’s tentative view that, since the commencement of the operation of the Family Law Act in 1976, there has been no reported decision which addressed or resolved the issue raised in the present appeal. Implicit in Counsel for the appellant’s submissions was the assertion that, although the appellant’s nominal bank accounts and modest superannuation entitlements, whether accessible or not, could constitute “property” enlivening jurisdiction pursuant to s 79 of the Act, so doing did not, as a matter of jurisdiction, permit the learned Federal Magistrate to make orders for settlement of property with respect to property which had not been found to exist.
Not surprisingly, given that she was unrepresented, the respondent was unable to meaningfully engage with the issues to which reference has been made. Also not surprisingly, the respondent in her written and oral submissions, repeatedly asserted the unfairness of the appellant, having had the benefit of the parties’ assets, and utilised them for his own benefit, in not having to make a settlement in her favour.
The respondent submitted in that regard:
… Given that there were no available assets to distribute to satisfy the Wife’s claim, the Court had no option other than to make orders under Section 80 to achieve a just and equitable result. This is especially significant in that the Court found that the Husband had dispersed the funds in the property pool for his own purposes, thus depriving the Wife of her share of these joint marital funds.
The learned Federal Magistrate recorded in that regard:
353. I do not accept Mr Nicholson’s submission that there is a pool of money readily available to the husband parked by him with members of his family and certainly sufficient to pay any order the Court is likely to make. Quite simply, the evidence does not enable me to make a finding of such nature. Whilst there is a degree of suspicion in relation to the monies paid by the husband to his brother and sister and I have found such payments were unjustified and not warranted and it may well have been a means for the husband to divest himself of the proceeds of his superannuation fund, shares and the home with a view to avoiding payment of any likely property settlement to the wife, the evidence falls far short of enabling me to make such a finding.
Having concluded as he did, and for the reasons articulated in his reasons for judgment, the learned Federal Magistrate concluded that it was just and equitable that the respondent receive the sum of $120,000 by way of settlement of property, notwithstanding that his Honour could not find that there was property in existence sufficient to meet such an order.
The learned Federal Magistrate concluded that he had the power:
356. … under Section 80(1)(a) and (b) to order payment of a sum of money by instalments and which I propose should be made monthly.
The learned Federal Magistrate referred to Paskandy and Paskandy (1999) FLC 92-878 and said:
359. I note in Paskandy V Paskandy the Full Court upheld the decision of the trial Judge that as a consequence of a husband not having the capacity to pay the amount of the wife’s property entitlement other than by way of instalments, that it was appropriate to make such an order and was within the trial Judge’s discretion. The husband was ordered to pay an amount of $10,000.00 by monthly payments of $500.00.
In Paskandy (supra) it was uncontroversially found that the property of the parties to the marriage approximated $36,045. There was no question that the order for instalment payments of $10,000 was made in the absence of property of the parties to the marriage of at least that value. With respect to the learned Federal Magistrate, the decision of the Full Court in Paskandy (supra) could not provide support for concluding that there was a jurisdictional basis for the order his Honour made.
With respect to Counsel who appeared at trial, his Honour did not receive the assistance in relation to this issue which this Court has had. As the submissions of Counsel for the appellant before this Court clearly recognise, the source of power for the orders of the learned Federal Magistrate, if the power existed, was s 79 of the Act. Whether jurisdiction was enlivened turned upon whether or not there was a “matrimonial cause” within s 4 of the Act. The introductory words of s 80 of the Act are significant, and provide that “the Court, in exercising its powers (emphasis added) under this Part, may do any or all of the following ...”. The “Part” to which the introductory words of s 80 refer is Part VIII of the Act, which relates to “Property, Spousal Maintenance and Maintenance Agreements”.
It is not in doubt that the only matrimonial cause which could have provided jurisdiction for the learned Federal Magistrate’s order was s 4(ca) of the Act, which provides:
(ca) proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings:
(i)arising out of the marital relationship;
(ii)in relation to concurrent, pending or completed divorce or validity of marriage proceedings between those parties; or
(iii)in relation to the divorce of the parties to that marriage, the annulment of that marriage or the legal separation of the parties to that marriage, being a divorce, annulment or legal separation effected in accordance with the law of an overseas jurisdiction, where that divorce, annulment or legal separation is recognised as valid in Australia under section 104; or ...

As Counsel for the appellant submitted, it is arguable that establishing the existence of “property” of the parties to the marriage or either of them is a “jurisdictional fact”, without which there can be no matrimonial cause and the provisions of s 79 cannot be enlivened. The Court is less than satisfied that Counsel then appearing for the appellant squarely raised a jurisdictional challenge before the learned Federal Magistrate at trial. To the extent that he did so, the challenge was not articulated in the way in which it was by Counsel who appeared before this Court.
Particularly as the respondent has been unrepresented, the Court has been concerned to ensure that the appellant does not impermissibly raise a challenge before this Court which he ought not be permitted to. The authorities in this regard are not in doubt (see Suttor v Gundowda Pty Ltd (1950) 81 CLR 418, Metwally (No 2) v University of Wollongong (1985) 60 ALR 68 and Coulton v Holcombe (1986) 162 CLR 1). As the authorities also make clear, challenges to jurisdiction fall into a special category given that, if there was no jurisdiction in the Court below, either agreement that there was, or the failure to suggest that there was not, would not preclude a jurisdictional challenge succeeding on appeal. That is particularly so when, as in this case, there is no suggestion that, had the jurisdictional challenge been squarely raised in the court below, evidence would have been able to be adduced to resist it.
The Court is satisfied that the issue of jurisdiction was raised in the Court below and that, to the extent that it has been raised differently, and more extensively, before this Court, no evidence which the respondent might then have adduced could have changed, or would change anything in relation to the present challenge. As is not in doubt, the present challenge is based on the learned Federal Magistrate’s findings of fact with respect to the property of the parties. The Court sees no reason why the present jurisdictional challenge ought not be raised.
As the Court has earlier noted, the “property” in respect of which the learned Federal Magistrate made orders pursuant to s 79 was represented entirely by the “notional” property which he quantified in the sum of US$171,894.56. His Honour found that property to that value had once existed, and should have remained in existence, but was unable to find that any of the property continued to be within the appellant’s ownership, possession or control. Subject to being persuaded to the contrary, the Court is attracted by the submissions before it that jurisdiction could not be enlivened in circumstances where the only “property of the parties” was “notional”. The Court is attracted to that provisional conclusion for the reasons which follow.
An appropriate starting point for the Court’s consideration of the jurisdictional challenge raised by the appellant is the definition of “property” appearing in s 4 of the Act, which provides:
4(a) in relation to the parties to a marriage or either of them--means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion; or ...
It is readily apparent that, whatever constitutes “property”, the section contemplates present, rather than past or future interests, rights or entitlements. Although, as the section contemplates, the “property” may not have vested in possession, or vest in possession for a potentially long time, the right or entitlement to it presently exists.
The objectives of Part VIII of the Act are not in doubt. Pursuant to the exercise of the powers conferred on the Federal Parliament by s 51(xxii) of the Constitution, Part VIII of the Act is intended to facilitate a just and equitable division of the property of parties to a marriage upon the termination of a marital relationship. Achieving such a just and equitable outcome is informed by the provisions of s 79(4) and, to the extent that they are relevant, s 75(2) of the Act. The source of the legislative power to enact Part VIII of the Act, the objectives of Part VIII, and the terms of s 4, s 79(4) and s 75(2) of the Act suggest that jurisdiction under s 79 is limited to “property” in existence at the time the jurisdiction of the Court is sought to be enlivened.
In Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12 the Privy Council, on appeal from the High Court of Australia, rejected the proposition that a residuary beneficiary of an unadministrated estate had any beneficial “interest” in any property of the estate, though having a chose in action, capable of being invoked for any purpose connected with the due administration of the estate of which she was a beneficiary. Viscount Radcliffe, at 26-27, on behalf of their Lordships said:
... It is not enough for this purpose to speak of an “interest” in a general or popular sense. It is apt to recall what Lord Halsbury said on this point in his speech in the Sudeley Case:- “With reference to a great many things, it would be quite true to say that she had an interest in these New Zealand mortgages ─ that she had a claim on them: in a loose and general way of speaking, no one would deny that that was a fair statement. But the moment you come to give a definite effect to the particular thing to which she becomes entitled under his will, you must use strict language, and see what it is that the person is entitled to; because upon that in this case depends the solution of the question. ... (Footnote omitted)
In Duff and Duff (1977) FLC 90-217 the Full Court, at 76,131, said:
Part VIII of the Act carries the heading “Maintenance and Property” and in that Part there is no further definition of property nor any expressions which can themselves amplify, extend or, for that matter, limit the definition appearing in sec.4. ...
Their Honours later, at 76,132 - 76,133, said:
It seems unnecessary to attempt to set out a catalogue of what “property” may include in the context of sec. 79. It is sufficient for the purposes of this case to say that “property” means property both real and personal and includes choses in action.
The word “property” has been the subject of a very large volume of judicial interpretation. A compendious description of it is to be found in Halsbury, 3rd ed., Vol. 3, para. 541 with multiple references to cases. It is sufficient for our purposes to refer to that definition which states: —
“Property is that which belongs to a person exclusive of others and can be the subject of bargain and sale. It includes goodwill, trademarks, licences to use a patent, book debts, options to purchase, life policies and the rights under a contract.”
Chitty J. in Re Earnshaw-Wells (1894) 3 Ch. 156 at 157 said: —
“The expression ‘property’ is not a term of ancient art. The word is discussed in Williams On Real Property and incorporeal hereditaments are found under the title of real property. In that work there is a well-reasoned explanation of the word ‘property’ which says that it is used in three senses. ‘Property’ may denote the thing to which a person stands in a certain relation, and also the relation in which the person stands to the thing.”
The word has also been comprehensively defined in statutes both State and Imperial relating to married women’s property. We do not propose to instance those definitions here, but in Jones v. Skinner (1835) 5 L.J. Ch. 90 Langdale M.R. said: —
“Property is the most comprehensive of all terms which can be used inasmuch as it is indicative and descriptive of every possible interest which the party can have.”
This is a definition which commends itself to us as being descriptive of the nature of the concept of “property” to which it is intended that the Family Law Act 1975 should relate and over which the Family Court of Australia should have jurisdiction to intervene when disputes arise in relation to the property of spouses as between themselves or when the Court is asked to exercise the powers conferred upon it under Part VIII or its injunctive powers under sec. 114 so far as they are expressed to relate to a property of the party to a marriage.
We are of the view that the intention of sec. 79 is to enable the Court to take into account and assess all the property of the parties upon being asked by either of them to make an order altering the interests of the parties in property. We are further of the view that when sec. 4 defines property as being “property to which the parties are entitled whether in possession or reversion” the words “whether in possession or reversion” are not intended to indicate that the kind of property with which this Act can deal must be property to which a party is entitled in possession or reversion but rather the phrase “whether in possession or reversion” is, as a matter of grammar, an adverbial phrase which qualifies the word “entitled”. The phrase means that the entitlement to the property may be either in possession or reversion; i.e. the phrase is descriptive of the entitlement and not of the property and it removes any fetter upon the Court in dealing with property under this Act by limiting the nature of the entitlement thereto to entitlement in possession.
As the High Court’s judgment in Mullane v Mullane (1983) 158 CLR 436 makes clear, not everything appearing to be a “chose in action” could be regarded as “property” for the purposes of s 4 of the Act. Pursuant to orders of the Matrimonial Causes Division of the Supreme Court of New South Wales made under the Matrimonial Causes Act, which the Family Law Act replaced in 1975, the wife and the children of the marriage had occupied the former matrimonial home of the parties for fifteen years, after the parties had separated. The High Court, at 445, said:
In our opinion, therefore, s. 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere –personal right: Stow v. Mineral Holdings (Aust.) Pry. Ltd.; Reg. v. Toohey; Ex parte Meneling Station Pty. Ltd. It does not exclude every interest which is not assignable or transferable (cf. per Mason J. in Meneling Station. Thus an order under s. 79 may give rise to an interest in property which is defeasible on assignment or transfer to a third party, or on the occurrence of some other event, or which the holder is enjoined from assigning or transferring.
It follows, then, that s. 79 does not authorize a mere modification of a liberty to enjoy property. An order which merely excludes one spouse from the enjoyment of property, albeit for many years, in order to permit its better enjoyment by the other does not alter an interest in that property, though a spouse acquiring an interest in property under a s. 79 order may be entitled, in virtue of that interest, to exclude the other from its enjoyment. Where the section refers to a settlement of property, it should be understood as using that expression in a sense which is closely related to the meaning which the expression bears in the law of real and personal property. (Footnotes omitted)
In Grace and Grace (1998) FLC 92-792 (“Grace”) at 84,888 the Full Court said:
...
·The Act draws a distinction between “property” and “financial resources”. The Court is able to make orders that settle the property of the parties but not their financial resources. Thus, in making orders that settle the property, the Court is required to have regard to each party’s financial resources but can only settle the property of the parties, which is in existence. ...
In Grace, the husband was a discretionary beneficiary of a trust which he did not and could not control, being neither a trustee nor an appointor. The husband also had a 50 per cent interest in remainder in the estate of his late father, subject to the life estate of his mother. The tangible assets of the estate and the trust were substantial (approximately $23million). The husband and wife themselves had no property of substance. Although, for reasons which the Full Court advanced relating to the operation of s 79(5) of the Act, it was unnecessary to express a concluded view, there seems little doubt that the husband’s interest in his late father’s estate was regarded as “property” within s 4 of the Act. So doing was unsurprising.
In Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 the Full Court said:
39. The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s. 79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss. 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. ...
In Coghlan and Coghlan (2005) FLC 93-220 the majority of the Full Court (Bryant CJ, Finn and Coleman JJ) said:
52. ... superannuation interests [which have not vested in possession] are but another species of asset (in addition to property as defined in s 4(1)) in relation to which orders can be made in proceedings between parties to a marriage.
...
61. Nothing we have said in this judgment would prevent a court in the exercise of its discretion from including a superannuation interest as an item of property in the list of property which is drawn as “the first step” in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. This approach could be adopted where the parties agree that it should be adopted, or where the court is satisfied that the superannuation interest is indeed property within the meaning of the definition of property contained in s 4(1), or if the interest is not within that definition, but is of relatively small value in the context of the value of the other assets in the case, or there are features about the interest which leads the court to conclude that this would be an appropriate approach.
In Kennon v Spry (2008) 238 CLR 366 (“Spry”) although for somewhat different reasons, French CJ, Gummow and Hayne JJ accepted that, once a number of dispositions and instruments were set aside, the husband’s power as trustee to apply the not inconsiderable tangible assets of a discretionary trust of which the wife was a discretionary beneficiary, to the wife was sufficient for the assets of the trust to constitute “property” of the parties to the marriage within s 4 of the Act. Whilst, as Heydon J explained in his dissenting judgment, the conclusion of the majority could be seen as approving an “extended meaning” of “property” for the purposes of s 4 of the Act, the decision of the majority in the High Court binds this Court.
To the extent that the respondent might assert that the decision in Spry assists her in this appeal, the Court cannot accept that to be so. With respect to the learned Federal Magistrate, and for commendable reasons, his Honour’s orders related to property which, as he correctly found, was not then available. His Honour’s orders applied to property which may come into existence in the future, as and when it did so. Whilst the assets of the trust in Spry had not vested, in the wife, and could only do so in the future upon the happening of further events, the “property” was in existence. It is tempting to think that Spry would have been decided differently had the husband lacked the legal ability to vest trust property in the wife, thereby leaving the wife with no more than a mere expectancy, and right to due administration of the trust, but the Court need not speculate about that.
Whilst, as is the case of a reversionary or remainder interest, present entitlement to possession of the property to which a legal or equitable estate or right relates is not necessary for the entitlement, interest or right to be “property”, the authorities suggest that the entitlement, interest or right must presently exist. It is improbable that an “expectation”, or right to “due administration” of a trust or estate which might in the future result in the vesting of “property” in a party to a marriage, in the absence of any legal entitlement by a party to facilitate such vesting could enliven the jurisdiction to make orders for settlement of property pursuant to s 79 of the Act. For a Court to have jurisdiction to make orders pursuant to s 79 of the Act property must be in existence when the jurisdiction to do so is sought to be exercised. If “property” (using the term in the extended sense discussed above) which has not come into existence cannot found jurisdiction under s 79 of the Act, it is difficult to see how “property” which no longer exists could do so.
To the extent that it could be argued, although the learned Federal Magistrate did not proceed on this basis, that the existence of “actual” or “tangible” property could found jurisdiction, the Court cannot accept on the submissions before it that finding property, the quantified value of which did not exceed $7,855, enabled the learned Federal Magistrate to make an order for settlement of property in favour of the respondent of $120,000, or indeed any sum in excess of $7,855. It is difficult to accept that the jurisdiction was not limited to the property then existing.
The submissions currently before the Court satisfy the Court that, were the appeal to now be finally determined, the “jurisdictional” challenges on behalf of the appellant would be entitled to succeed.

The “weight” challenges

A number of the appellant’s grounds of appeal constitute “weight” challenges.
These challenges were articulated in grounds 5, 6 and 7 of the Amended Notice of Appeal which provided:
5. That the Honourable Federal Magistrate fell into error in the exercise of his discretion by making orders that were manifestly outside the range of results required to effect a just and equitable division of property between the parties.
6. That the Honourable Federal Magistrate fell into error in the exercise of his discretion by making an adjustment under sec 75(2) that was manifestly excessive in all the circumstances.
7. That the Honourable Federal Magistrate fell into error by incorrectly calculating the adjustment under sec 75(2) in favour of the Respondent.
At least inferentially, the thrust of these challenges is that the 30 per cent s 75(2) adjustment determined by the learned Federal Magistrate exceeded the generous ambit of the undoubtedly broad discretion which his Honour was exercising (see Norbis v Norbis (1986) 161 CLR 513).
Albeit somewhat differently based, Ground 8 of the Amended Notice of Appeal relates to the s 75(2) challenge. That ground provided:
8. That the Honourable Federal Magistrate fell into error by failing to take into account the reduction in the Appellant’s after tax income (of approximately $18,000 per annum) as a result of the orders he made.
The submissions of Counsel for the appellant in relation to these challenges were brief, and succinct, and asserted:
Coakes FM found that the parties’ contribution based entitlement was equal. He then made a 30% adjustment in favour of the wife under sec 75(2) based largely on the differential between the pre-tax incomes of the parties so that the final outcome was an 80% adjustment of (notional) property in favour of the wife.
Whilst the authorities make it clear that the Court is afforded a generous ambit of discretion in effecting a just and equitable division of property, as a result of these orders only one party, the wife, receives anything tangible receiving about $120,000 payable by way of instalments paid out of the husband’s future income. As the husband retains no tangible assets in a real and practical sense he received no property adjustment at all as well as being deprived of part of his income for a sizeable number of years.
Whilst the Appellant was criticised over certain financial transactions during and after the marriage, for the reasons above the overall effect of the orders is extremely punitive and out of proportion with the matters about which he was criticised. In some of the authorities earlier quoted the central complaint was that the orders wrongly expanded the net asset pool beyond its tangible size. In some instances the expansion relative to the value of the rest of the tangible pool was quite small.
However in this case, by the orders the wife’s 80% share of the “pool” is to be constructed out of the husband’s future income. In that sense the wife is receiving a sum well in excess of anything capable of being characterised as a just and equitable division.
…
The Federal Magistrate’s reasons for arriving at a 30% sec 75(2) adjustment favouring the wife were that it was calculated as being equal to 3 months of the husband’s pre-tax salary. As this figure of $51,568 was equated to 30% of the (notional) pool it was directly transposed into a 30% sec 75(2) adjustment in favour of the wife.
There are no other indications in the judgment about the reason for the 30% figure and the reasons for the choice of a 3 month period and disregarding the husband’s taxation liability when making the calculation are not explained
The husband was earning pre-tax $4,400 per week and the wife $1,056 per week. When referring to this Coakes FM did not take into account the Appellant’s taxation obligations nor the effect on his income of the orders he proposed to make requiring payment of $750 per fortnight by the husband to the wife for approximately 6.6 years (total $120,000).
As the husband was paying $1,337 per week tax his net weekly income was about $3,063. From this was to be deducted an additional $750 per fortnight periodic payments as ordered by the Federal Magistrate.
The calculation upon which the 30% adjustment was based therefore was therefore neither mathematically valid nor, the Appellant submits, an appropriate way to calculate a sec 75(2) adjustment. Ignoring taxation obligations in particular is unfair since these are unavoidable for a salaried person.
The choice of a 3 month period and the use of pre-tax income also was not explained. It is not possible to ascertain from the judgment the reason it was chosen and why another period would not have been appropriate.
The arbitrary nature of the method employed can be illustrated as follows. Had Coakes FM used after tax income, the $51,568 figure would have been reduced to $35,524, If the payments to be made to the wife also were deducted the figure forming the basis of the sec 75(2) adjustment would be reduced to $31,024 which equates to about 18% of the notional pool of assets rather than the 30% figure calculated by the Federal Magistrate.
Counsel for the Appellant specifically submitted to Coakes FM in the context of a sec 75(2) adjustment that any order for payment by instalments would diminish the husband’s available income. (Footnotes omitted)

The submissions on behalf of the respondent referred to the fact that the learned Federal Magistrate:
… also took into account the Wife’s major role as primary carer of two very young children, including one who suffered from, and ultimately died as a result of, complications associated with, Down’s syndrome. ”
It was sensibly conceded by the respondent that the s 75(2) adjustment in her favour was “generous”. However, it was submitted that there was no reason for the Court to disturb the learned Federal Magistrate’s conclusion with respect to s 75(2), either as a matter of discretion or otherwise.
As the appellant submitted, and the authorities recognise, the “generous ambit” within which disagreement is permissible, was potentially broad in this case, particularly considering the very modest quantum of the notional property to be apportioned between the parties and the s 75(2) factors of relevance (see Norbis v Norbis (supra)).
The 30 per cent adjustment in the respondent’s favour determined by the learned Federal Magistrate approximated $51,000 in monetary terms. It has not in this Court’s view been demonstrated that either the factual basis upon which that determination was reached, or the weight given, or not given to the factors which informed it, should enliven appellate intervention.
The learned Federal Magistrate carefully, and in this Court’s view, accurately considered each of the relevant s 75(2) factors. Fairly, it has not been suggested that his Honour had regard to extraneous or irrelevant matters, or failed to have regard to relevant matters. Nor did any error of principle vitiate the exercise of his Honour’s discretion. Nor did any material errors of fact. If jurisdiction to make the order existed, the Court is not persuaded that challenges to the s 75 adjustment determined by the learned Federal Magistrate should result in the order being disturbed. As noted earlier, the contribution finding of equality has sensibly not been challenged in the appeal.
Grounds 9, 10 and 11 of the appellant’s Amended Notice of Appeal provided:
9.        That His Honour erred by rejecting or giving little, if any, weight to the unchallenged affidavit evidence of [V] and [E] (“the siblings”).
10.      That his Honour erred by failing to give any or any sufficient reasons for rejecting or giving little, if any, weight to the unchallenged affidavit evidence of the siblings.
11.      That His Honour failed to afford the Appellant natural justice by failing to inform the Appellant’s Counsel that he was considering rejecting or giving little, if any, weight to the affidavit evidence of the siblings notwithstanding that they were not cross examined.
Central to these challenges is the reality that none of the affidavit evidence of the appellant’s siblings was challenged in cross-examination, because neither sibling was required for cross-examination in relation to the evidence given by either of them. It was conceded, sensibly, by Counsel for the appellant that the learned Federal Magistrate was not obliged to accept the evidence of the appellant’s siblings simply because they were not required for cross-examination. Such concession is consistent with authority.
Whilst the learned Federal Magistrate, for reasons which he cogently articulated, rejected, and was entitled to reject, evidence of the appellant in relation to matters which were referred to in the affidavits of his siblings, that did not preclude the making of findings in the terms sought by the appellant.
In the absence of the learned Federal Magistrate suggesting, during the course of the trial, that he was unlikely to accept the evidence of the appellant’s siblings, and not recording reasons for doing so in his reasons for judgment, as his Honour undoubtedly did not, the findings of fact which were inconsistent with the assertions of the appellant’s siblings were entitled to be accepted. It is not manifestly obvious on the face of the affidavit evidence of either of the appellant’s siblings that their evidence was so obviously untrue or improbable that it could be rejected.
As is not in doubt, these findings of fact were not immaterial to the determination of the proceedings before the learned Federal Magistrate. A significant proportion of the notional property upon which his Honour relied was included because he did not accept the evidence of the husband or his siblings in relation to those events or transactions.
Were it necessary to do so, these challenges would, on the submissions before the Court as they currently stand, be entitled to succeed.

Specific “add-back” challenges

Grounds 12, 13 and 14 articulated a number of specific challenges to the learned Federal Magistrate’s conclusions with respect to add-backs, and provided:
12.      That His Honour erred by adding back as an matrimonial asset the Appellant’s paid legal fees not incurred in Family Law proceedings.
13.      That His Honour erred by failing to give any or any sufficient reasons for adding back as an [sic] matrimonial asset the Appellant’s paid legal fees not incurred in Family Law proceedings.
14.      That His Honour erred by adding back legal fees paid by the Appellant to defend criminal proceedings arising out of a complaint by the Respondent which she ultimately abandoned.
The crux of these challenges is that the learned Federal Magistrate added back the appellant’s paid legal fees on the basis that the “proceedings were dismissed and that the respondent wife apparently withdrew her complaint”.
As is not in doubt, pivotal to the success of this challenge is whether or not “the respondent withdrew”, or seemed to withdraw her complaint. Counsel for the appellant did not refer the Court to any passage of the transcript of the trial where the respondent conceded, or may have appeared to concede that she had withdrawn her complaint.
In her submissions, the respondent inferentially confirmed that she had not persisted with the proceedings on the basis that “it wasn’t practicable or financially possible for the respondent to pursue the Court proceedings in [a state in the USA]”.
In the absence of finding, and the Court does not understand that the learned Federal Magistrate did, that the appellant incurred the legal fees in question as a consequence of unmeritorious proceedings capriciously instituted by the respondent in the United States, the broad discretion to notionally “add-back” those fees should not be disturbed. His Honour’s reasons for judgment adequately reveal (pars 288-291) why he concluded as he did in relation to this issue.

conclusion

Were the appeal to be determined on the submissions currently before it, for the reasons which have been articulated, the appeal would be allowed, and the orders for settlement of property of the learned Federal Magistrate set aside. The respondent would then seek that the proceedings be remitted for re-hearing by a Federal Magistrate other than Federal Magistrate Coakes.
Counsel for the appellant submitted that the proceedings should not be remitted but dismissed, on the basis that, on the undisturbed findings of the learned Federal Magistrate with respect to the property of the parties to the marriage, there would either be no jurisdiction to re-determine the proceedings or, to the extent that there was jurisdiction, remitting the proceedings for re-determination would involve expense which was entirely disproportionate to the quantified property of the parties (some $7,855).
Given the Court’s tentative conclusion with respect to the appeal, the evidence before this Court suggests that the only way that there could be “property” in respect of which any but a nominal, or token order could be made, would be if the respondent were to launch and successfully prosecute an application against the husband’s brother, E, pursuant to s 106B of the Act to set aside the transfer by the husband to his brother of $US111,843 subsequent to separation, and recover such sum. As is not in doubt, that sum was notionally added back by the learned Federal Magistrate, and constitutes a very substantial proportion of the notional property by reference to which his Honour determined the proceedings.
As is not in doubt, albeit he did not deal with this topic in it, the husband’s brother swore an affidavit which was read in the proceedings before the learned Federal Magistrate. The husband’s brother was not required for cross-examination before the learned Federal Magistrate. Had he been, the question of the circumstances in which $US111,843 was paid to him, and what became of it, could have been agitated, as could any suggestion that he was holding funds for the husband until after the completion of the case.
The fact that the opportunity was clearly available for Counsel then representing the appellant to pursue what ought to have been reasonably apparent as an avenue needing to be pursued, militates against remitting the proceedings in order that such avenue might then be explored. It may be that, pursuant to the accrued jurisdiction of the Court, the respondent might seek relief on some other basis, but the Court cannot speculate about that.
Were the appeal to succeed, and the learned Federal Magistrate’s orders to be set aside, the Court would need to be persuaded to order that the respondent’s application be remitted and re-heard, in the light of the submissions currently before the Court.

Preliminary conclusion

The importance of the “jurisdictional issues” raised in this appeal renders it particularly unfortunate that the respondent has been unrepresented before this Court. Why she has been is unclear, and nothing the Court records is in any way intended to be critical of the Legal Aid authority.
The appeal involves a substantial issue of principle. Determining the appeal in the absence of an effective contradictor, which is not in any way said critically of the respondent, may not be in the best interests of justice (see Tryon & Clutterbuck [2010] FamCAFC 80), and possibly erroneous in any event.
The Court raised the prospect of the respondent having the opportunity, within a short time, to file and rely upon written submissions prepared by a senior member of the junior Bar on her behalf, either with legal assistance or pro bono. Not surprisingly, Counsel for the appellant could not consent to such a course. However, fairly, as the Court would expect of Mr Maurice of Counsel, nothing was said in opposition to such an approach.
The broader interests of justice would be better served by allowing the short time, 21 days having been raised, in which the respondent may file further submissions, primarily in response to the Court’s preliminary conclusions as articulated earlier in these reasons. Clearly, the appellant must then have the opportunity, as also foreshadowed to respond.

I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman delivered on 9 November 2012.

Associate:

Date: 9 November 2012