Shaw & Shaw
[2016] FamCAFC 159
•18 August 2016
FAMILY COURT OF AUSTRALIA
| SHAW & SHAW AND ANOR | [2016] FamCAFC 159 |
| FAMILY LAW – APPEAL – PROPERTY – Where the orders made do not effect an alteration of the property interests of the husband and the wife pursuant to s 79 of the Family Law Act 1975 (Cth) – Where the trial judge erred in assessing the contributions of the husband – Where it is not desirable to address the remaining grounds of appeal given the matters will be considered afresh on rehearing – Appeal allowed. FAMILY LAW – CROSS APPEAL – PROPERTY – Where the trial judge found that the husband and cross appellant owned joint property – Where the wife had no equitable or legal interest in the property – Where no order was made for the wife to remove the caveat over the titles of the property – Where the trial judge’s finding is sufficient to ensure the caveat can be discharged – Where appealable interference is not warranted – Where the trial judge gave sufficient reasons for his findings on the cross appellant’s claim – Where the findings made were open on the evidence before the trial judge – Cross appeal dismissed. FAMILY LAW – APPEAL – COSTS – Where the appeal succeeded on an error of law – Costs certificates ordered for the husband and wife – Where the cross appeal was wholly unsuccessful – Cross appellant to pay the wife’s costs of the cross appeal. |
| Family Law Act 1975 (Cth) ss 79, 79(4), 75(2) |
| Biltoft and Biltoft (1995) FLC 92-614 Browne & Keith [2015] FamCAFC 143 Metwally v University of Wollongong (1985) 60 ALR 68 Mullane v Mullane (1983) 158 CLR 436 Water Board v Moustakas (1988) 180 CLR 491 |
| APPELLANT: | Mr R Shaw |
| CROSS APPELLANT: | Mr D Shaw |
| RESPONDENT: | Ms Shaw |
| FILE NUMBER: | ADC | 4867 | of | 2012 |
| APPEAL NUMBER: | SOA | 58 | of | 2015 |
| DATE DELIVERED: | 18 August 2016 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Thackray, Strickland & Ainslie-Wallace JJ |
| HEARING DATE: | 9 May 2016 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 27 July 2015 |
| LOWER COURT MNC: | [2015] FCCA 1989 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Dillon |
| SOLICITOR FOR THE APPELLANT:
| Andrew Hill & Co Lawyers Mr Brohier Sekhon Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms O'Connor SC |
| SOLICITOR FOR THE RESPONDENT: | SE Lawyers |
Orders
The appeal against the orders of Judge Simpson made on 27 July 2015 is allowed and his Honour’s orders (other than Order 4 and Order 5) are set aside.
The matter be remitted to the Federal Circuit Court for rehearing.
The cross appeal against the orders of Judge Simpson made on 27 July 2015 is dismissed.
The cross appellant pay the costs of the respondent wife of and incidental to the cross appeal, such costs to be agreed or assessed and paid within forty-two (42) days of agreement or assessment.
There is no order as to costs as between the appellant husband and the respondent wife and as between the cross appellant and the appellant husband.
The Court grants to the appellant husband a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of the costs incurred by him in relation to the appeal.
The Court grants to the respondent wife a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by her in relation to the appeal.
The Court grants to the appellant husband and the respondent wife a costs certificate pursuant to s 8 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband and the respondent wife in respect of the costs incurred by them in relation to the rehearing ordered.
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 Shaw & Shaw and Anor 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).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE |
Appeal Number: SOA 58 of 2015
File Number: ADC 4867 of 2012
| Mr R Shaw |
Appellant
and
Mr D Shaw
Cross Appellant
and
| Ms Shaw |
Respondent
REASONS FOR JUDGMENT
Mr R Shaw (“the husband”) and his son, Mr D Shaw (“the cross appellant”), each appeal against orders made by Judge Simpson of the Federal Circuit Court on 27 July 2015. Ms Shaw (“the wife”) resists the appeals and seeks to maintain the judge’s orders.
In order to give context to the issues raised on appeal, some traversing of the background facts is necessary.
Background
The husband and the wife met in 1998 overseas in Country A where the wife was then living. In November 2001 the wife came to live in Australia and she and the husband married in 2002. The husband and the wife separated in December 2012.
The husband had been married before and has two adult children, one of whom is the cross appellant.
There is one child of the marriage of the husband and the wife, who was born in 2007. By orders made in September 2013 the child lives with the wife and spends time with the husband.
The significant issue in the trial was the composition of the “pool” of assets of the husband and the wife, and in particular the extent of their interest in properties at 3 and 5 F Street, Suburb S. It is in relation to these properties that the cross appellant claims an interest.
Between 1979 and 1989 the husband was engaged in the construction industry. From about the time that the cross appellant was aged 19 he was employed by the husband in the business. The husband entered the hospitality industry after leaving the construction business, but became bankrupt in 1996. He was discharged from bankruptcy in 1999.
The cross appellant commenced a construction business, “D Constructions”, in his own right in 1994, which he continues to operate. The husband began working in the cross appellant’s business after his involvement in the hospitality industry came to an end. What that work was and whether it was remunerated was a matter in contention before the trial judge.
The cross appellant was joined as a party to the proceedings between the husband and the wife. In his affidavit the cross appellant sought the following findings in relation to the F Street properties:
a. That I [the cross appellant] paid for all outgoings for the properties.
b. Neither [the husband] nor [the wife] have any interest in the properties
c. The properties are beneficially owned by me [the cross appellant] and orders that the properties be transferred into my sole name.
The cross appellant further sought an order that the husband and the wife repay him $55,373, being money he had allegedly lent to them.
The trial judge noted at [88] the orders that the cross appellant sought, namely:
a)That the [husband and the wife] do all things necessary to forthwith transfer ownership for no consideration in the properties at [3 F Street, Suburb S] in the State of South Australia and [5 F Street, Suburb S] in the State of South Australia into the sole name of the [cross appellant].
b)That within twenty eight (28) days the [husband] and [wife] pay to the [cross appellant] the sum of $55,373.17.
3 F Street
In September 1999 the cross appellant bought a property at 3 F Street on which he built a shed and office and from which he conducted his business. The cross appellant did not borrow funds to buy the land although he used an overdraft facility to effect some improvements to the buildings on the site. This was paid out in June 2006.
In June 2009 the cross appellant agreed to transfer to the husband a half share in 3 F Street on payment to him by the husband of $150,000 as the husband and the wife were trying to purchase a property to live in and needed security on which to obtain a loan. Contemporaneously with the change in the title of the property, the husband and cross appellant entered into an agreement in the following terms (as in original):
I [the cross appellant] agree to sell 50% of [3 F Street, Suburb S] to [the husband] for the sum of $150.000 interest free on the condition that [the cross appellant] has full control of property plus all income until [the husband] has deceased where 50% of the land title will be inherited by [the child of the husband and the wife] property will still say under [the cross appellant] control where at this time [the cross appellant] will pay the sum of $200.00 per week and 50% of income from property for [the child] for her further education until [the child] has reached the age of 25 years or until [the cross appellant] sees fit to sell in witch 50% of sale after fee’s will be put in trust for [the child] until the age of 25 years of age.
As it turned out, the husband and the wife were able to purchase a property for themselves without the need to use 3 F Street as security for the loan. It was the husband’s contention that once he did not need to rely on the property as security for a loan he intended to transfer his interest in that property to the cross appellant but did not do so because of the cost of the transaction.
It was uncontentious that the husband paid no money to the cross appellant pursuant to the agreement.
5 F Street
In 2005 the cross appellant decided to purchase 5 F Street. The husband and the cross appellant asserted that the husband proposed that the property be purchased in joint names, the husband saying that he wanted to provide some security for his family. The cross appellant agreed to this proposal. The husband’s share of the purchase price was $45,375. As part of the agreement, the husband was to pay one half of the ongoing costs of the property.
Contemporaneously with the purchase an agreement was entered into between the husband and the cross appellant in the following terms (as in original):
I [the husband] agree to pay [the cross appellant] the sum of $45,375.00 for 50% of Lot 7 [F Street] witch [the cross appellant] will make regular payment’s to [X Financial Services] until $90,750.00 is paid in full.
This agreement, as with the agreement relating to 3 F Street, was witnessed by a conveyancer, Mr M.
The husband made no payments in relation to the purchase of this property or consistent with the agreement.
Loans advanced to the husband and the wife by the cross appellant
In 2010 the husband and the wife purchased a house and land package at K Street, Suburb S. The husband asserted that while he had savings of about $40,000, he required a further $40,000 to complete the deposit. The cross appellant and the husband further asserted that the cross appellant agreed to lend that money to the husband and the wife.
It was uncontentious that the husband and the wife had $40,000 in savings but the wife said that she was unaware of any loan of $40,000 from the cross appellant. While she conceded the $40,000 was provided by the cross appellant, she contended it was money paid to the husband because of his work in the cross appellant’s construction business.
The husband further contended that the cross appellant paid an additional $15,373 for fencing, air-conditioning and a driveway at the husband and the wife’s property. They asserted that this was done on the basis that the husband and the wife would repay the cross appellant when they could.
The contention of the cross appellant in the trial was that the husband had no interest, either equitable or legal, in either of the F Street properties. Further, the cross appellant contended that the husband and the wife owed him the money paid by him on their behalf towards the jointly held property of the husband and the wife, namely $55,373.
The husband argued that while he was a joint tenant of both properties, since he had made no financial contribution to either and owed the cross appellant $195,375, being 50 per cent of the purchase price of them and the asserted loans from the cross appellant, he held no interest in the properties.
The wife argued that the husband did indeed hold a 50 per cent interest in both properties and that no funds were owing to the cross appellant.
The trial judge’s reasons
F Street properties
At the outset, the trial judge considered the credibility of the witnesses. He made adverse findings about the reliability of the evidence of the husband and the cross appellant. He found the husband to be untruthful at [16] and found that the cross appellant had tailored his evidence in order to assist the husband’s case at [17]. The trial judge found the wife to be credible and said at [19] that where there was a dispute of fact between her and the husband, he preferred the evidence of the wife unless he indicated otherwise.
As to the written agreements between the husband and the cross appellant, his Honour noted that the witness to both agreements, Mr M, had given evidence that they were signed on the date shown on the document. His Honour said that since there had been no challenge to Mr M’s evidence as to the signing of the agreements between the husband and the cross appellant, he was “unable to assess Mr [M] as a witness” (at [18]).
Later in his reasons, the trial judge found that the agreements signed by the cross appellant and the husband had no “legal effect” (at [82]).
It had been contended during the trial that the agreements relating to the F Street properties were “recent inventions”, that is documents which were created not on the dates which each bore and which were designed to defeat the wife’s claims. Nevertheless, there was ultimately no challenge to Mr M’s evidence that he witnessed the signatures of the husband and the cross appellant to those documents on the dates they bore. Despite the absence of challenge, it is not at all clear that his Honour accepted Mr M’s evidence that he witnessed the husband and the cross appellant signing the documents on the dates shown on the face of the documents because at [31] the trial judge refers to Mr M “purport[ing]” to witness the document in 2009.
Having refused to give the agreements any legal effect, his Honour concluded that the husband had a 50 per cent interest in both properties. The foundations for these conclusions were (at [83]):
·A finding that the husband had “unexplained wealth” that could have been used to purchase an interest in the properties or to repay the cross appellant;
·Despite winning $75,000 in gambling in 1997 the husband did not advise his trustees in bankruptcy of that fact, which reflects on his credibility;
·The husband’s evidence that he gave away money to his family at a time when he was in dire financial straits was not credible as any reasonable person would have used the money to accommodate himself; and
·It was more likely that, as an undischarged bankrupt, the husband gave the money to his mother and the cross appellant to hold for him until his bankruptcy was discharged.
His Honour further concluded that the husband had, for some time, been working in the cross appellant’s business and had been paid for that work (at [86]).
Although his Honour found that the husband and the cross appellant were joint owners of the businesses being operated from the F Street properties, his Honour made no order reflecting these findings about the businesses, as there was an absence of evidence on which his Honour could assess their value (at [87]). However he included in the pool of assets of the husband and the wife a 50 per cent interest in each of the F Street properties as reflecting the husband’s entitlement.
Asserted loans from the cross appellant
While the wife was aware that the husband had received cash from the cross appellant’s business, and had been allowed to purchase items on a business credit card, she asserted that she was unaware that there was any obligation to repay the money. His Honour accepted that the wife had not agreed to be liable for the loan.
His Honour said:
42. …If there was a debt of $40,000, and I make no such finding, it was with the husband alone. I have no reason to believe that the husband had a binding agreement with [the cross appellant] for the sum concerned or at all.
His Honour concluded at [83] that the asserted debts to the cross appellant would not be deducted from the property of the husband and the wife.
His Honour thus constructed the balance sheet at [94] to include the husband’s 50 per cent interest in both F Street properties and without deduction for the asserted loans.
The division of the property
In accordance with his Honour’s findings, the balance sheet, apart from some minor items of property of insignificant value, comprised the marital home at K Street, which was valued at $340,000 and on which a debt of $207,400 was owed, the husband’s interest in 3 F Street valued at $160,000 and his interest in 5 F Street valued at $85,000.
The net value of all of the assets of the husband and the wife was found to be $358,034, of which $245,000 comprised the interests in the F Street properties.
His Honour considered the contributions of the husband and the wife and their future needs and concluded that the assets of the husband and the wife should be divided as to 65 per cent to the wife and 35 per cent to the husband.
The trial judge referred to the cross appellant’s submissions that because neither the husband nor the wife had made any financial contribution to either of the properties, despite the agreements, the court should order that the husband forthwith transfer his interest in both properties to the cross appellant (at [88]).
His Honour concluded that it was “not appropriate” to make the order that the husband transfer his interest in the property to the cross appellant and said:
89. …The wife clearly has no legal or equitable interest in these properties. The only parties that may have such an interest are the husband and [the cross appellant]. I do not consider it necessary or desirable that this Court make such an order as I would expect that the husband and [the cross appellant] will be able to agree what, if any, changes need to be made to the Certificates of Title.
Turning then to the asserted debts owed to the cross appellant, the trial judge referred to his earlier finding that the wife did not agree to borrow $40,000 from the cross appellant. His Honour then referred to Biltoft and Biltoft (1995) FLC 92-614, in considering whether the debts ought (at [91]):
…in justice and equity, to be wholly or partly disregarded in determining the appropriate order to be made under s.79. Such a result can be reached where, as here, the debts, if there are debts, are to a family member which is unlikely to be required to be paid and, further, there is uncertainty about whether there are debts in the first place.
He thus again concluded that he would not include the asserted debts in the pool of the property of the husband and the wife. After his Honour expressed concern that the cross appellant might seek to recover the money from the wife in separate proceedings, he indicated his intention to order the husband to indemnify the wife in respect of any such claim (at [93]).
The husband’s appeal
The husband had seven grounds of appeal, although Ground 6 was not pressed. While not raised in the husband’s Notice of Appeal, counsel for the husband supported the cross appeal as to the challenge to the competence of his Honour’s orders.
Ground 1 - Contributions
This ground challenges the trial judge’s assessment of the husband’s contributions, both those made at the outset of the relationship and during the marriage.
Under this ground, the husband contended that the trial judge failed to take into account:
·The introduction of 50 per cent of the value of 3 F Street at the commencement of the relationship;
·The introduction of 50 per cent of the value of 5 F Street during the relationship;
·The payment of $40,000 to the husband and the wife to make up the deposit necessary for constructing the home of the husband and the wife;
·The distribution of the husband’s gambling winnings; and
·The payments to the wife’s family overseas
and thus his Honour erred in his assessment of the husband’s contributions pursuant to s 79(4) of the Family Law Act 1975 (Cth) (“the Act”).
The F Street properties
There can be no doubt that 3 F Street was purchased by the cross appellant in September 1999 and, that by June 2006, any indebtedness on the property had been discharged. In 2009 the title to that property was changed to reflect joint ownership with the husband.
His Honour rejected the contention of the husband and the cross appellant that this was nothing more than the transfer of a bare legal title, with the husband holding his interest in trust for the cross appellant. That being the case, his Honour concluded that the husband was entitled to a 50 per cent interest in that property.
His Honour found that the reason why the properties were not put into the cross appellant’s sole name was because they were jointly owned by the husband and the cross appellant.
However, when his Honour came to assess the contributions of the husband and the wife pursuant to s 79(4), he made no mention of the husband’s interest in this property as a contribution, either of itself or as a reflection of income earned by the husband from working in the cross appellant’s business (notwithstanding the fact that the husband disputed this was the case).
Equally, although his Honour found, as with 3 F Street, that the husband had a 50 per cent interest in 5 F Street and included that interest in the balance sheet of the assets of the husband and the wife, he made no reference to the introduction of this property as a contribution by the husband.
His Honour’s failure to mention either of the F Street properties in his discussion suggests that he failed to have proper regard to them in his assessment of the contributions. This failure is of particular importance given that the husband’s interest in the properties constitutes a major part of the pool of assets.
$40,000 loan from the cross appellant to the husband and the wife
While it seemed beyond contest that the husband and the wife needed a deposit of $80,000 for the construction of a house which became their marital home, it was undisputed that the husband and the wife had only $40,000 in savings. It was not disputed that either in cash or by direct deposit, the cross appellant paid a further $40,000 to the husband and the wife to make up the deposit.
The characterisation of that payment was a matter in dispute between the husband and the wife. The husband and the cross appellant contended that it was a loan from the cross appellant to the husband and the wife which they are liable to repay, while the wife argued that it was remuneration for the husband’s work in the cross appellant’s construction business.
His Honour rejected the assertion that the money was a loan, finding that the husband did not tell the wife it was a loan, and thus if there was a debt of this amount it was a debt as between the husband and the cross appellant.
Having found that the money given to the husband and the wife was not a loan from the cross appellant, it is reasonably clear that his Honour, accepting the wife’s evidence in preference to that of the husband consistent with his indication at [19], must have concluded that the money came to the husband as a result of his work in the business. Indeed, it was submitted to his Honour on behalf of the wife, that the whole of the $80,000 was derived in this way.
The thrust of the husband’s argument was that, having found that the $40,000 transferred from the cross appellant to the husband was in effect money that the husband earned from working in the cross appellant’s business, his Honour failed to take it into account as a contribution by the husband to the finances of the husband and the wife.
Thus, it was argued that his Honour erred, having made the finding as to the provenance of the money, in failing to take it into account. We agree. While the trial judge made findings that the husband had “unexplained wealth” and had “shared the profits” of the cross appellant’s business, it is not apparent from his Honour’s reasons that he took that wealth and income into account in assessing contributions.
Gambling win
In about 1997 the husband and his brother, between them, won $150,000 gambling. The husband and his brother agreed to give their mother $20,000 from the win and, of the husband’s share of the balance, he said he gave $50,000 to the cross appellant retaining $15,000 (at [26]). The cross appellant’s evidence was that the $50,000 gift to him was in repayment for the financial assistance that the cross appellant had given the husband over the years (at [63]). The wife did not dispute that the husband had given the money to the cross appellant, however she contended that the reason why the husband gave the money to the cross appellant was to repay the cross appellant for working in the husband’s construction business (at [70]). The wife’s evidence at trial was that the husband told her that the cross appellant had used the gift of the gambling money to purchase 3 F Street.
It was the wife’s further contention at trial that the husband had given the money to the cross appellant to hold for him pending the discharge of his bankruptcy.
For the husband it was argued before his Honour that there was no evidence that the money was advanced to the cross appellant other than as a gift from the husband.
The trial judge concluded that the money given by the husband to the cross appellant was to enable the cross appellant to hold the money on the husband’s behalf because the money was won at a time that the husband was an undischarged bankrupt (at [83]).
On appeal it was argued for the husband that his Honour was wrong to treat the payment to the cross appellant as anything other than a gift by reason of the presumption of advancement. Nowhere in submissions to his Honour on this point was the presumption of advancement raised; nor were its implications in assessing the nature of the payment to the cross appellant by the husband. Thus, the question is whether this argument can be raised on appeal. The principle that a party is bound by the conduct of its case below (Metwally v University of Wollongong (1985) 60 ALR 68) does not apply if the point is one of law and it could not have been met by the calling of evidence at first instance (Water Board v Moustakas (1988) 180 CLR 491 at 497). It seems to us that that is the position here, and the argument can be put.
However, given the trenchant credit findings made against both the cross appellant and the husband, it was open to the trial judge to reject the assertion that the part of the gambling winnings given to the cross appellant was a gift. However, we agree that the rejection of that contention was not the end of his Honour’s consideration of the issue and, if his Honour accepted the wife’s contention that the money was used to purchase 3 F Street, it was a further contribution by the husband necessary to be taken into account. As we have already indicated, to fail to proceed and consider the effect of the contribution of the husband to the acquisition of that property resulted in appealable error.
Money sent by the husband in support of the wife’s family overseas
The husband contended that he had sent significant sums of money to support the wife’s family overseas. His Honour sets out the evidence of the husband as to this at [47] to [54]. His Honour further noted the wife’s evidence that her family was concerned that they would lose her financial support should she leave Country A and that she said that she would continue to provide financial support for them. She did not dispute that the husband had sent money to her parents for their support (at [66]).
His Honour did not take these contributions into account. However, no submission was made to his Honour as to how these contributions should be taken into account. His Honour prefaced his discussion of these contributions by noting: “Counsel for the husband stated in his Addendum Case Outline that the husband does not seek to have property held overseas by the wife’s family to be counted towards matrimonial property” but sets them out to demonstrate, in his Honour’s words “that the husband was not short of cash” (at [47]).
In the husband’s case outline document which was before his Honour it was asserted under the heading “relevant contributions”: “[i]n addition the [husband and the wife] provided financial support to the [wife’s] parents [overseas]”. Apart from this reference, there was no submission made to his Honour as to how or by reference to what legal principle these payments were to be taken into account in determining the property issues. In those circumstances, it is difficult to understand how his Honour erred in not taking the payments into account.
Procedural Fairness
Also argued under this ground was an assertion that his Honour failed to afford the husband procedural fairness by “departing from the equal contribution position promoted by the wife”.
The essence of this submission is that the wife contended to his Honour for a finding of equality of contribution. In final argument before his Honour, counsel for the wife submitted that there was equality of contribution but further submitted that if the trial judge found that the husband made a greater contribution to the acquisition of assets then an adjustment should be made under s 75(2) in favour of the wife. While counsel for the wife did not suggest what such an appropriate adjustment would be, it was submitted that any adjustment under these factors should take into account that the child of the husband and the wife is very young and that the wife would be the sole carer for the child in the future, and that she will only ever have low earning capacity.
The husband contended that the trial judge should find that he had no interest in the F Street properties and, if he did so find, then there should be an equal division of the property pool taking into account s 75(2) matters. However, the husband submitted that if his Honour brought those properties into account, then there “would have to be a significant adjustment made in respect of contributions” (transcript 5 March 2015, page 73 lines 37 - 38).
The thrust of this challenge is that if his Honour had concluded that he would not make findings in accordance with what the husband submitted was a mutual position that there should be a finding of equal contributions, he was then obliged to give notice to the husband and the wife of that intention and to fail to do so was a denial of procedural fairness.
It must be observed that the positions of the husband and the wife before his Honour were not concluded that there should be a finding of equal contributions and no adjustment for s 75(2) factors. Counsel for the wife left that option open to his Honour and counsel for the husband put two scenarios, only one of which would lead to that result depending on how the trial judge constructed the pool of assets. In the appeal hearing, counsel for the husband fairly conceded that the effect of his submissions was to leave contributions in issue (appeal transcript 9 May 2016, page 42 lines 40 - 44, page 43 lines 1 - 7).
As to whether counsel for the husband would have conducted the trial differently had he believed his Honour might depart from the wife’s contention of an equal division, he said:
Potentially – obviously I wouldn’t have notice of that during trial, but potentially in closing submissions I could have properly accounted for my client’s position in respect of those two issues before his Honour.
(appeal transcript 9 June 2016, page 42 lines 30 - 32)
It is difficult to see in what way the husband would have conducted the case differently when it was he who put contributions in issue. Neither party was deprived of an opportunity to put his or her case. Further, counsel for the husband accepted that it was open for the trial judge, as a matter of the exercise of his discretion, to make orders which are not in accordance with the submissions of either party.
In those circumstances, this challenge is not sustained.
Other grounds
His Honour’s errors in assessing the contributions pursuant to s 79(4) are of such significance that the decision cannot stand. It was accepted that if the appeal succeeded and his Honour’s orders are set aside, the matter should be remitted for rehearing. We are mindful then of the undesirability of expressing views about the assessment of contributions or the nature and extent of his Honour’s consideration of the s 75(2) factors given that they will be considered afresh on a rehearing of the application. We therefore do not propose to consider the further challenges brought by the husband.
The cross-appeal
The cross appellant made four challenges to his Honour’s orders.
Ground 1
This ground contends that his Honour’s orders are incompetent in that they do not effect an alteration of the property interests of the husband and the wife pursuant to s 79 of the Act.
As we have earlier observed, this challenge to the competence of his Honour’s orders was not included in the husband’s Notice of Appeal, however counsel for the husband adopted the cross appellant’s contention in this regard.
His Honour’s orders were:
(1)These orders are made by way of alteration of property interests pursuant to s.79 of the Family Law Act 1975 (Cth).
(2)In full and final settlement of property issues between the Husband and Wife, the assets of the [the husband and the wife] be divided between the [husband and the wife] as to 65% in favour of the First Respondent Wife and 35% in favour of the Applicant Husband.
(3)There be liberty to the [husband and the wife] to apply in relation to consequential orders.
(4)The [cross appellant’s] (intervenor’s) application is dismissed.
(5)The Applicant Husband shall indemnify and keep indemnified the First Respondent Wife in relation to any claim brought in relation to the monies referred to in these reasons as “the alleged debts”.
It is undeniable that these orders do not, despite Order 1, effect an alteration of the property interests of the husband and the wife pursuant to s 79. No order requires an adjustment to the interests in the marital home nor requires the payment to the wife, or from the wife to the husband, of funds equivalent to the percentage division referred to in the orders.
They are, in their terms, unenforceable. They provide no machinery orders.
The applications between the husband and the wife also remain on foot. His Honour merely dismissed the application of the cross appellant. Further, the orders do not require the wife to lift the caveat registered by her over the F Street properties.
It was submitted on behalf of the wife that any defects in his Honour’s orders could be cured by recourse to the liberty to apply for consequential orders provided in Order 3. We do not accept this submission as any further order that adjusts or purports to adjust the interests of the husband and the wife in the property of them or either of them would require a fresh exercise of the s 79 power.
Further, his Honour’s reference to the husband and the wife having liberty to apply was clearly intended to be in relation to matters of machinery as Order 2 makes his intention apparent that the orders were intended to be in “full and final settlement of the property issues” between the husband and the wife.
In Mullane v Mullane (1983) 158 CLR 436 the High Court identified the characteristics of orders made pursuant to section 79 of the Act. Their Honours (Mason ACJ, Wilson, Brennan, Deane and Dawson JJ) said at 445:
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.) Pty. Ltd. [(1977) 51 ALJR 672 at 679]; Reg. v. Toohey; Ex parte Meneling Station Pty. Ltd. [(1982) 158 CLR 327 at 343, 350 – 351]. It does not exclude every interest which is not assignable or transferable (cf. per Mason J. in Meneling Station [at 343]). 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.
Clearly his Honour’s orders did not give effect to s 79 and this ground is established to that extent. However, this does not advance the position of the cross appellant since it is only Order 4 which affects him.
His Honour’s order dismissing the cross appellant’s application was not affected by the same incompetence as his purported s 79 orders, and is a logical consequence of his Honour’s findings about the nature of the $40,000 advanced by the cross appellant to the husband and the wife and his rejection of there being any further indebtedness by the husband and the wife to the cross appellant in relation to improvements done to the marital home.
As his Honour said at [89], he proposed to make no order in relation to the F Street properties because the husband and cross appellant can arrange their interests in accordance with their agreement if they wish.
The cross appellant argued that his Honour’s orders do not determine the interests claimed by the wife on the basis of which she lodged a caveat over the titles to the properties.
It is correct that his Honour made no order directing the wife to remove the caveat on the titles of the F Street properties. The trial judge found, as we have indicated, that the wife had no interest in law or equity in the properties and thus it was open to his Honour to make an order for the removal of the caveat. However, his Honour's finding was a sufficient foundation to ensure the caveat can be discharged without the need for a particular order by his Honour, and we are not persuaded that appellate interference is warranted.
Ground 2
By this ground the cross appellant asserts that his Honour erred in failing to identify the jurisdiction being exercised in relation to the cross appellant’s claim.
The cross appellant based his claim for orders on the circumstances in which the husband came to be shown on the title of both properties as joint tenant and to which we have already referred, and on the debts said to be owed to him by the husband and the wife. He relied on the two written agreements to which we have already referred.
It was accepted by counsel for the cross appellant before us that in dealing with the cross appellant’s application, his Honour was obliged to determine as a matter of law and equity whether the cross appellant owned the properties and whether he was owed any money by the husband and the wife or either of them (appeal transcript 9 June 2016, page 63 line 5). However, it was argued that his Honour, in not making specific reference to the jurisdiction being exercised by him in relation to the cross appellant’s claim, fell into error by determining those issues as if under s 79 of the Act.
The gist of this ground is not so much that there is any legal requirement that a judge must recite or incant the law under which he is determining an issue, a submission that in any event must be rejected (see Browne & Keith [2015] FamCAFC 143), but rather that his Honour erred in concluding that the husband had a legal and equitable interest in the properties and further erred when he concluded that there was no debt owed to the cross appellant by the husband and the wife. It was asserted that had his Honour articulated the jurisdiction being exercised by him in relation to the cross appellant, he would not have fallen into such error.
The resolution of this ground depends on the resolution of Ground 3 raised by the cross appellant, in which it is asserted that his Honour erred in failing to give reasons to support his findings that the agreements between the husband and the cross appellant were of no effect and in finding consequentially that the husband had a legal and equitable entitlement to both properties as reflected in the respective holdings of the cross appellant and the husband.
It seems to us that if Ground 3 succeeds, it matters little if his Honour’s error came about because he mischaracterised the nature of the jurisdiction being exercised by him. As much was conceded by counsel for the cross appellant during the appeal.
Ground 3
This ground contends that his Honour erred in that he failed to give reasons for his findings in relation to the cross appellant’s claim.
It was argued that his Honour erred in concluding at [89] that it was neither “necessary or desirable” to make an order transferring the husband’s interest in the F Street properties to the cross appellant as it was asserted that his Honour provided neither legal principle nor reasons for that finding.
It was further asserted that the facts of the cross appellant’s case before his Honour gave rise to contentions that the husband held his legal interest in the properties on a resulting or constructive trust on behalf of the cross appellant, or that the cross appellant was entitled to exercise an equitable mortgage or charge over the husband’s interests.
It is to be observed that at trial the cross appellant did not advance his claim to equitable ownership of both F Street properties through the operation of a trust or as to the existence of an equitable mortgage or charge. His case before his Honour was merely to claim that because the husband had made no payment in relation to either property, the title in the property had to be transferred to him. His Honour received no assistance from counsel for the cross appellant as to how the cross appellant’s case in relation to the interest in the properties was cast.
In those circumstances we reject the argument implicit in the submissions that his Honour was obliged to identify each contention said to arise from the facts of the cross appellant’s case and give reasons as to why each or any of them were not applicable in the case.
As we have said, the cross appellant’s case was based on assertions of facts which it was said should lead to an order that the titles in the properties should be transferred to him. No argument was made to his Honour that he should consider whether a trust existed between the husband and the cross appellant in relation to these properties, or that there may exist a right to exercise an equitable mortgage or charge, but once again, that is not fatal to the argument in this instance. The point is one of law and it could not have been met by the calling of evidence below; thus the argument can be put.
In any event, acceptance of these legal conclusions said to arise from the cross appellant’s case depends on the acceptance of the facts asserted by the cross appellant – namely that the agreements were a genuine reflection of the husband’s and cross appellant’s intentions at the time and that no money had been paid to the cross appellant in relation to either property.
His Honour squarely rejected the evidence of the cross appellant and husband on the nature of their dealings and the reasons why the properties came to be in their joint names. The findings were clearly open to his Honour, and the factual underpinning to this argument therefore falls away.
Next, it was argued that the trial judge erred in finding that the husband and cross appellant would be able to agree to make changes to the certificates of title to give effect to their common intentions because he failed to give any reasons for that finding.
Both the husband and the cross appellant relied on the written agreements between them and each attested to their genuineness. There was no contention between the husband and the cross appellant that the husband held a bare legal title to the properties. Indeed the husband said and his Honour noted, that he intended to transfer to the cross appellant his interest in 5 F Street but had not at the time of the trial because of the cost involved in the transfer.
In light of that evidence, it is difficult to see what further reasoning was required of his Honour.
Finally, it was argued that his Honour gave no reasons for finding that the written agreements between the cross appellant and the husband were of no legal effect.
As we have briefly indicated, his Honour’s conclusions in regard to these agreements are not entirely clear. He appears to accept that the documents were signed on the date shown on the face of the document at [31] but in the same paragraph says that the witness “purports to have witnessed” the second document. We can see no reason why his Honour would not accept the unchallenged evidence of Mr M that he witnessed the signature of the husband and cross appellant to those documents on the dates of the documents.
What is clear is that his Honour did not accept that the documents spoke to a genuine agreement between the husband and the cross appellant. He found at [82] that that “purported” agreements had no legal effect. Again, curiously, he refers to the lack of cross examination of Mr M and concludes that he is not bound to accept the documents as having some legal standing.
Although the findings might have been more clearly expressed, when the reasons are read as a whole, we are satisfied that by describing the agreements as “purported” his Honour was not casting any doubt on the fact that the documents were executed on the dates they bore, but rather on the genuineness of the agreement they purported to record.
It was contended on appeal that the only basis on which his Honour could have rejected the legal effect of the documents was a finding that the purported agreements were a sham and, if this was the basis he relied on he failed to give reasons as to why he made that finding.
We accept that in rejecting the agreements as having any legal effect his Honour was in effect finding that they did not reflect the genuine intentions of the husband and the cross appellant.
However, we do not accept that his Honour gave no reasons for so finding.
On this issue his Honour stated:
79.I find that the reason why the properties were not put into [the cross appellant’s] name is that the true position is that the two properties were owned jointly by the husband and [the cross appellant].
80.I do not accept the husband’s evidence that since being declared bankrupt in 1996, he has had no other source of income other than his Disability Support Pension. I find that the husband and [the cross appellant] have jointly had income from the [construction businesses].
81.The fact that the husband and [the cross appellant] are equal joint owners of 3 and 5 [F Street] makes it likely that they share equally in the other businesses, namely the [construction businesses]. It is these businesses that have provided [the cross appellant] and the husband with the cash flow that they needed to be able to live the lifestyle that they clearly do.
82.The husband’s position in relation to the [Suburb S] properties seems to be that whilst he has a 50% interest in each of the [F Street] properties, he had not made any financial contribution to the properties and therefore considered that he owed a total of $195,375 (ie 50% of the value of each of the properties) to [the cross appellant]. I do not consider that the purported agreements signed by the parties on 20 September 2005 and 6 June 2009, have any legal effect. Whilst counsel for the wife failed to cross-examine on these two documents, I do not consider that I am, as a result, bound to accept the documents as having some legal standing.
83.I find that the husband has a 50% legal interest in each of the two properties and that no monies are payable by the husband to [the cross appellant]. One reason why I have come to these conclusions is that the husband has unexplained wealth that could clearly be used to make such a purchase or to pay off [the cross appellant]. The husband was made bankrupt in 1996 and became discharged in 1999. In 1997, he won $75,000 [gambling]. He did not advise his Trustee in Bankruptcy of his win. It reflects badly on his credit that he did not do so. Had he done so, the Trustee would have claimed the monies and distributed them amongst the husband’s creditors as provided for in the Bankruptcy Act 1966. Instead, the husband says that he gave all but $15,000 to his family: $50,000 to [the cross appellant] and $20,000 to his mother. Being as poor as he suggests in his evidence, it is not credible for the husband to say that he would apply his windfall in this way. Any reasonable person in this fortunate position would have applied the windfall to establish suitable accommodation for himself. It is far more likely that the husband’s distribution of his windfall gains had something to do with him being an undischarged bankrupt and that he gave the $50,000 to [the cross appellant] and perhaps also the $20,000 to his mother, on the understanding that it remained his money.
84.It is very difficult to make findings of fact in matters such as this where parties are clearly not being frank and honest. There is much conflict in the husband’s and [the cross appellant’s] evidence. The husband initially said that he had no interest in the businesses run from the [F Street] premises, but later says that the wife, in fact, owned one of the businesses. [The cross appellant] says that the business was operated by the husband and the wife. The husband claims that a portion of the monies used for the former matrimonial home, both in purchase and fit-out, were as a result of loans made by [the cross appellant]. The wife denies that these were loans. The wife says that the husband and [the cross appellant] have falsely asserted:
· That the husband has no financial interest in the [F Street] properties;
· That [the cross appellant] has made a series of loans to the husband that are to be taken into account in the pool; and
· That the husband has not worked and does not continue to work for the business run from the [F Street] premises.
Taken together, the findings his Honour made provide adequate reasons for his Honour reaching the decision to reject the document.
It was submitted that the trial judge was obliged to indicate why the agreements did not reflect the genuine intentions of the husband and the cross appellant and it was argued that the facts did not support collusion between them. We do not accept that his Honour was required to, in effect, find motive. His Honour drew his conclusion from the objective facts he found proved in the case and on the basis of which he found that the agreements were not a genuine reflection of the intentions of the cross appellant and the husband. It was neither necessary nor, perhaps, possible to find motive. This argument must be seen against the context of his Honour’s rejection of the evidence of both the husband and the cross appellant as lacking in honesty.
Thus to make good this ground, it must be shown that the conclusion reached by his Honour was not open on the evidence. As his reasons to which we have just referred make apparent, the finding was open on the evidence.
This challenge is not made out.
Having found that Ground 3 must fail, we find that Ground 2 also finds no success.
Ground 4
By Ground 4 the cross appellant contended that his Honour erred in taking into account irrelevant considerations and in not taking into account relevant considerations.
In support of this contention counsel for the cross appellant referred to the trial judge’s findings in relation to the written agreements, relying on similar arguments to those raised in Ground 3. These arguments have been dealt with above, and must also fail in relation to Ground 4.
It was further argued under this ground that the trial judge erred in relation to the debts said to be owed to the cross appellant by the husband and the wife in three ways. First, in ordering that the husband indemnify the wife in relation to any claim made by the cross appellant in pursuit of the alleged debts. Secondly, it was argued that his Honour’s finding that if there was a debt of $40,000 it was owed to the cross appellant by the husband alone, rather than as between the husband and the wife, was not open on the evidence. Thirdly, that the trial judge erred in finding that the debts should not be included in the asset pool.
His Honour’s rejection of the cross appellant’s assertion that he advanced $40,000 to the husband and the wife as a loan and his consequential dismissal of the cross appellant’s application disposed of the issue as between the cross appellant, the husband and the wife. That being the case, there was no point in making an order for indemnity as his Honour did in Order 5. However, although it was an error and represented perhaps a misunderstanding of the effect of his findings in the application, it is not material and does not amount to appealable error.
In regards to the second assertion, the wife agreed that the cross appellant handed to her $40,000 which was used toward the deposit on the property at K Street. However her evidence, which was clearly accepted by the trial judge, was that it was part payment of the husband’s remuneration for working for the cross appellant, and she further denied the existence of a loan. Nothing in the evidence of the wife indicates to us that she accepted that the $40,000 was in fact a loan, and thus the finding that his Honour made was open on the evidence that the wife did give.
Conclusions
For the reasons we have given, the cross appeal will be dismissed.
The husband’s appeal must be allowed, and the proceedings between the husband and the wife remitted for rehearing before another judge, since it is clearly not practicable for us to re-exercise the discretion. It should go without saying that the rehearing must proceed on the basis that the issue between the husband and the wife and the cross appellant has been resolved by the findings already made by the trial judge and by the dismissal of the cross appellant’s application.
Costs
As usual we sought submissions from the parties as to costs at the end of the hearing to save them the time, trouble and expense of making submissions once the outcome of the appeal was known.
In the event that the appeal was successful, the husband sought an order for costs, but that was opposed by the wife. In the circumstances of this matter, we would not be disposed to make an order for costs as between the husband and the wife and given that the appeal has succeeded on an error of law, we will order costs certificates for both the appeal and the rehearing in relation to the husband and the wife.
As the cross appellant has been wholly unsuccessful, he should pay the wife’s costs of the cross appeal.
I certify that the preceding one hundred and thirty-one (131) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Thackray, Strickland and Ainslie-Wallace JJ) delivered on 18 August 2016.
Associate:
Date: 18 August 2016
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