Shaw v Shaw

[1989] HCATrans 240

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S63 of 1989

B e t w e e n -

DAVID LATIMER SHAW

Applicant

and

RAMONA SHAW

Respondent

Application for special leave

to appeal

DEANE J
GAUDRON J

McHUGH J

Shaw

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 OCTOBER 1989, AT 3.44 PM

Copyright in the High Court of Australia

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MR P.L.G. BRERETON:  May it please the Court, I appear for

the applicant. (instructed by Dunhill Morgan)

MR P.I. ROSE, QC: If the Court please, could I appear with

my learned friend, MISS H.A. COONAN, for the

respondent. (instructed by N.R. Lenehan & Associates)

MR BRERETON:	The principles on which appellate courts act in reviewing discretionary decisions are well known
and have long been established, in this Court, for
example, in cases such as HOUSE V R; LOVELL V LOVELL
and GRONOW V GRONOW.  What has not been clearly
established in those decisions or elsewhere is how
an appellate court should proceed to exercise its
own substituted discretion where it concludes that
an appeal from a discretionary judgment ought to be
allowed because of the trial judge's failure to have regard to a particular relevant consideration
or, equally, because of the trial judge's having
regard to some extraneous factor.

In other words, ought the appellate court

simply attempt to correct the error identified in the judgment below, or is it at liberty to reopen the whole of the judgment below and exercise its

own discretion without regard to those parts of

the first instance judgment which are neither

challenged on appeal or, if they are challenged,

are not challenged successfully. It is that

question which the applicant contends is the

question of importance which arises in the appeal,

leave to bring which is sought on this application.

The specific questions which arise, the

reasons why special leave should be granted, and
the reasons why it is said that the judgment below
are wrong are set out at pages 73 and following of

the appeal book and it is not necessary that they

be repeated or set out in writing again. In short,

the principal question arises in this way:

Mr Justice Hogan held that it was justandequitable

that by way of adjustment and settlement of

property interests, the wife should receive a
payment of $150,000 from the husband. According

to the Full Court, in so doing His Honour

implicitly held that the Latimer Family Trust

was no financial resource of the husband at all.

The Full Court thought to the contrary: that

the trust was a financial resource and allowed the

wife's appeal principally and, indeed, almost

exclusively, because the Latimer Family Trust as

such a resource had not been taken into account

by His Honour. Their Honours proceeded to think

that of the three valuations of the trust which

were in evidence, that of a Mr Mulkearns who

valued it at some $86,000 less loan account balances

was more realistic.

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In other words, the Full Court held that

His Honour had failed to take into account a resource

which, if the whole of its value was to be imputed

to the husband who was only one of the beneficiaries,

was worth $86,000. Although it was not pressed on

the appeal that the trust was the husband's alter

ego the Full Court held that the husband had de facto

control of the trust so it is a fair inference that

the Full Court imputed the whole of the value of the

trust to the husband.

The Full Court thought that His Honour should

have taken it into account and this appears at page 54 of the appeal book, at lines 30 to 37:

as a potential source of non-taxable income

of a magnitude at least comparable, in

real terms, with that received by the Trust in

the years 1983 to 1985 (for which the average

was about $3,500.00 per annum), and as a

source of unsecured borrowings of relatively

modest amounts but on very favourable terms.

One would have thought, with respect, that that was

not the description of a very great resource.

Having held that for that reason the appeal should

be allowed, the Court proceeded to consider other

grounds of appeal. The only one which it may be

taken to have upheld was an allegation or a ground

that His Honour had erred in finding that the

bench-mark of the wife's earning capacity was

$35,000, the Full Court thinking it was not higher

than $25,000, but, in any event, affirming

His Honour's view that the wife had made out no

case for maintenance. That holding, so far as the

$25,000 is concerned appears at page 60, lines 17 to 28,

of the appeal book.

McHUGH J:  But does it not come to no more than this: that

the Full Court held that there was a financial

resource that should have been taken into account

and that, in the circumstances, the proper thing

was to increase the wife's share to $150,000?

MR BRERETON:	From $150,000 to $245,000 - an increase of some $95,000 which was expressed by the Full Court to be
intended to give the wife half of the husband's assets plus keep her own. Now, the resource on the Full Court's own finding which His Honour had
failed to take into account, was worth some $86,000
accepting Mr Mulkearns' value as the Full Court did.
If what the Full Court was seeking to do was to
give effect to what His Honour would have done had
he correctly taken into account that resource, one
would have expected an increase in the wife's award by about half of the value of that resource - by
about $43,000 - the Court having .proceeded to hold
that she should get half of the husband's assets.

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Instead of that the Full Court increases the

wife's award not merely by $43,000, not even by the

total amount of the resource that was left out of

account, but by an amount in excess of the total

amount of the resource which His Honour was found

not to have taken into account.

McHUGH J: It was their discretion to exercise, Mr Brereton.

When you opened this application, you said that it had never been defined, or it was not settled, but

the point is that for nearly 30 years, to my

knowledge, appellate courts daily exercise the
discretion for themselves and the matter is just

treated as at large. It is done in damages cases

every day of the week in New South Wales.

MR BRERETON: Well, again and with respect, Your Honour, no,

because, if I can take the analogy of a damages
case: say a trial judge's finding as to damages is
challenged, and say that a challenge is brought in

respect of all heads of damage but that error is

found only in respect of one head of damages, what

the appellate court then does is to reassess the

damages under the head in which error is found and

not to reassess those parts of the finding of

damages - - -

McHUGH J: That is a rule of practice the New South Wales

Court of Appeal imposed upon itself but the courts

always recognize that the matter is at large.

MR BRERETON:  If it is at large then that amounts to a

device fJr circumventing the sound policy and principal reasons which underly HOUSE's case.

DEANE J:	But you would have to concede, would you not, that
whatever the correct approach, there must come a time when additional assets require a reassessment
of the whole case?

MR BRERETON:	Yes.
DEANE J:	I mean, say the trial judge had dealt with it on the
basis that the husband's assets were $50,000 and an additional asset of half a million was discovered,
it would be absurd to say that the appellate court had to say, "Well, the trial judge dealt with it on
the basis of $50,000.  We are bound by that and
will now only make an adjustment to take account that he really had $550,000."

MR BRERETON: That leads into a second aspect on which the

application is put, to which I might come in a moment.

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DEANE J:	But it really leads to the same conclusion as a
matter of principle as that which Mr Justice McHugh
put to you and that is that, ultimately, these matters are within the controlled discretion of the
appellate court.

MR BRERETON: Well, with respect not, Your Honour, because if

such an additional asset were found, that would

independently be a ground for setting aside the

judgment at first instance. The fact that there

were evidence of such an asset of such obvious

significance to the case and that that evidence

were not before the court, at first instance, would

itself be a ground for attacking the original

judgmen~ if not for error in the judgment, for

non-disclosure of the material to the court.	So
that it would net require some other ground of

appeal to succeed before the additional asset could

be brought into account.

DEANE J:	But once the appeal succeeded here the judgment and
the order of the primary judge had to be set aside. Would you agree with that?
MR BRERETON:	Yes, Your Honour, and there were then two

possibilities.

DEANE J:	So the Full Court then had to decide what order
should be substituted for it.
MR BRERETON:	Yes, Your Honour.
DEANE J:	Now, it may have taken the approach, "Well, we will
work on what the trial judge said because this
additional amount doesn't, as it were, undermine
his basis and we will add something." Or it may
have taken the approach, "The appropriate course
is for us to work out what is right." Well now,
why cannot it do the latter?
MR BRERETON:	Because by adopting the latter approach, it

substitutes, in areas in which the trial judge is	either not challenged or is not found to have made
any error, its own judgment. That, in my submission,
is contrary to the principles which attached to the review of discretionary decisions.

McHUGH J:  But it cannot be, can it, because the judgment

goes. There is nothing there, except what the

appellate court elects to put in its place? It is

a matter for the appellate court to rehear the

matter then. It is a full rehearing. In a custody

case, for example, you find some error - let us

assume there is an order in favour of the wife,

some error of fact has been made in relation to the

husband; the appellate court having found the

error of fact does not say, "Well, now, we will

weigh that error against these other facts." It

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looks at the whole matter and may reverse the order

of custody.

MR BRERETON:  It would certainly be far more difficult to

adopt the approach for which I contend in a case in

which specific factors could not be segregated and

their impact identified. But in a case such as this

and, in my submission, equivalently in a personal

injuries damages case, specific factors can be

segregated and identified. In this case a factor

worth $86,000 can be identified. Likewise in a

personal injuries case, a particular head of damages

can be identified. And if the judgment below can be corrected, as it were, by substitution of what ought to have been done in relation to that factor

for what was done, then it is not appropriate to

rework the whole of the first instance judgment.

Otherwise, what the - - -

GAUDRON J: Why is that not for the appellate court itself

to determine: whether it is or is not ap~ropriate?

MR BRERETON:  Because, Your Honour, where a separate factor

can be identified in that manner, an appellate court

which then takes it upon itself to reopen the whole

of the judgment is doing no more than saying - let

me put it this way. What the appellate court should,

in those circumstances, say is, "His Honour erred

by failing to have regard to this factor. If

His Honour had had regard to this factor, this is

what His Honour would have done." Now, the approach

which Your Honour puts to me involves the appellate
court saying, instead of that, "We don't like, or

we differ in opinion, from the ultimate result to

which His Honour came as well as the means by which

he reached it."

GAUDRON J: Well, it may do that but, ordinarily, one talks of

the discretionary decision being vitiated by error.

Admittedly they have to be errors of particular

types but you are suggesting that the decision is

like the curate's egg: it is good in parts.

McHUGH J: See, it is the decision which is discretionary, not

the findings that underlie it?

MR BRERETON:  I accept that, Your Honour, but the impact of

an error in exercising that discretion will vary

from case to case and, as I say, in some the impact

will be clearly identifiable, in othe-rsit will not.

My submission is that in those cases where it is

clearly identifiable, the appropriate course for an
appellate court is to seek to correct the error

which is identifiable rather than to exercise anew

the whole of its discretion.

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McHUGH J: I think in many cases that is right and that is the

reason why, at least in New South Wales, the Court

of Appeal rarely departs from that rule of practice

which it has imposed upon itself. But, as a matter

of principle, it is always a matter for the

appellate court to say in what way it will exercise

its discretion.

MR BRERETON: With respect, Your Honour, if that is correct,

then that provides a means for the appellate court

to defeat HOUSE V Rand the cases which follow it

by preferring its own discretion to that of the

trial judge rather than simply correcting a miscarriage

in the trial judge's discretion.

McHUGH J:  But the point is, I think, Mr Brereton, that it is

the decision which is discretionary and you do not set aside a discretionary decision unless you find

some relevant error. But, once relevant error is

found and the discretionary decision or judgment is

set aside, it no longer exists and then the ordinary

principles of appellate jurisdiction prevail. That

is to say, it is a rehearing of fact and law,

subject of course to the fact that the trial judge

has had the advantage of seeing the witnesses and

may have made findings as to credibility.

MR BRERETON: Well, without conceding that, I have probably

said as much as I can on that particular point, can

I then pass to the point that if the appellate

court does proceed in that manner to a rehearing,

its duty is no different to that of a trial judge

as put by this Court in MALLET V MALLET

to look at all the relevant factors; to have regard

to the relevant contributions and the relevant

factors under section 75(2); to weigh and balance

those factors and to come to a reasoned conclusion

on that basis. Nowhere in Their Honour's reasoning

in the Full Court is there any finding that

His Honour had erroneously had regard to the

contributions or that there was any error in what

His Honour found on the respective contributions. Yet in a passage of 15 lines, which appears

at page 62 of the appeal book, between lines 20 and 35,

the Full Court, in that passage, says:

the wife is justly entitled, on her

contributions alone, to something reasonably

close to what his Honour awarded.

There is, with respect, no reasoning, no findings,

and no consideration of factors in the judgment

capable of supporting that conclusion. Their Honours

then say:

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When proper consideration and weight are

given to the relevant s. 75(2) factors .....

a just and equitable order is for the wife

to receive approximately 50%.

There is, again, no consideration of those factors

and no identification of what they are and no

weighing or reasoning based on them.

What the Full Court has, in my submission,

done is having decided, perhaps correctly, that

His Honour's discretion had miscarried, it has

then proceeded to substitute its own discretion

without undertaking the exercise which this Court

in MALLET's case indicated that any court

determining issues under section 79 ought to

undertake. Moreover, if the Full Court does

proceed to a rehearing, different considerations

apply to the admission of fresh evidence as

simply apply to the admission of fresh evidence

on the hearing of the appeal itself without

proceeding to reconsider the facts because a

rehearing is an alternative to a new trial.

If there were a new trial, the husband would

have been able to adduce some evidence on the

new trial: the circumstance that the daughter of
the parties who had gone to live with the wife

not long before the hearing had returned to the

husband very shortly after the hearing. The

Full Court declined to.allow that evidence to be

introduced on the appeal because, Their Honours

said, it would have made no difference to the

decision at first instance. That may be so but

it would have made a very significant difference

on the rehearing. It may not have been such

evidence as would have caused the Full Court to

allow the appeal in the first place but once the

Full Court proceeded to a rehearing it ought to

have admitted evidence of a relevant change in

circumstance when it was re-exercising the

discretion later in the day than when His Honour

had exercised his discretion.

That, in substance, are the issues which would

be raised on the appeal. It is probably not necessary

to say that the approaches of appellate courts to

discretionary judgments, more particularly in a
court where appeals from discretionary judgments

are a connnon thing, is a matter of some public

importance and the manner in which such a court

exercises its substituted discretion, as the

Full Court of the Family Court does daily, is

likewise a matter which is going to recur and a

matter of great importance to litigants in those

courts.

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DEANE J:  Your problem in that regard, when you come down to

the last bit, is that it is always possible to dress

an alleged miscarriage of discretion up as a matter

of principle. Indeed, I think we have had three or

four cases today in which that very exercise has

been attempted and it is one that, after a while,

does not become terribly persuasive, unfortunately.

MR BRERETON: Accepting that, Your Honour, there is more

to this - - -

DEANE J: That is not said critically of you in any way,

Mr Brereton.

MR BRERETON:  I accept that, Your Honour. There is more

to this than a mere miscarriage of discretion.

If the Court is against me on the first point,

none the less, so far as the reasoning of the

Full Court is concerned, the extent to which

a Full Court ought, on a rehearing to evaluate

and identify the factors and then at least disclose

in its reasoning how it reaches its conclusions

is a matter itself of some considerable importance

which goes beyond a mere matter of discretion.

May it please the Court, those are my submissions.

DEANE J:  Thank you, Mr Brereton. We need not trouble you,

Mr Rose.

We are not persuaded that the proposed appeal

would raise any question of general principle

which would warrant the grant of special leave to
appeal. Accordingly, special leave to appeal is

refused.

MR ROSE:  If the Court pleases, I would seek an order for

costs. Your Honours, under section 117 of the

FAMILY LAW ACT orders for costs lie within the

Court's discretion. There is, as Your Honours

were told earlier in another matter, the practice

orders and at first instance I would concede	of the Court generally speaking not to make
that that is certainly the case. However, on
appeals that is not necessarily the case and
that would be a factor which I would submit that
Your Honours would take into account.

McHUGH J:  The Court did not make an order in the earlier case.

MR ROSE:  No, it did not, Your Honour, but in other cases it

does from time to time depending on its view of

the merits of the appeal.

DEANE J:	Mr Brereton?
MR BRERETON:	This is a case in which the husband succeeded at

first instance. Well, I suppose it is not correct

to say anyone succeeded at first instance but at

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first instance there was no order of costs. The
wife successfully appealed and got an order for
costs of her appeal but on an application for

special leave and having regard to the background

of the FAMILY LAW ACT it is inappropriate, in my

submission, that there be an order.

DEANE J: There will be no order as to costs, Mr Rose.

MR ROSE: If the Court pleases.

AT 4.10 PM THE MATTER WAS ADJOURNED SINE DIE

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