Singerson & Joans
[2014] FamCAFC 238
•10 December 2014 Amended pursuant to r 17.02 on 8 September 2015
FAMILY COURT OF AUSTRALIA
| SINGERSON & JOANS | [2014] FamCAFC 238 |
FAMILY LAW – APPEAL AND CROSS-APPEAL – PROPERTY – Where both the appellant and cross-appellant appeal against the same orders – Where both the appellant and cross-appellant appeal against the manner in which the trial judge determined how the husband’s inheritance should be treated – Where the trial judge identified an asset by asset and global approach and arrived at a “total asset pool on global approach” – Whether the trial judge failed to properly assess contributions and consider s 75(2) matters insofar as they relate to the husband’s inheritance – Where the trial judge erred in identifying the time upon which to assess contributions to the husband’s inheritance to be the four years between separation and trial – Where the trial judge erred in the identification of contributions – Appeal allowed.
FAMILY LAW – RE-EXERCISE OF DISCRETION – Where the parties’ respective roles remained much the same throughout the entire relationship – Where the husband introduced a substantial sum of money late in the marriage and after the parties separated – Where the Full Court considers that a global approach is appropriate – Where the Full Court assess the parties’ contributions to all of their property to the date of trial as 52.5 per cent in favour of the husband – Where each party contends s 75(2) matters are of significance – Where the Full Court does not consider any further adjustment is required pursuant to s 75(2).
Family Law Act 1975 (Cth)
Akston & Boyle (2010) FLC 93-456
Dickons & Dickons (2012) 50 Fam LR 244
Eufrosin & Eufrosin [2014] FamCAFC 191
G & G (1984) FLC 91-582
Mallet v Mallet (1984) 156 CLR 605
Norbis v Norbis (1986) 161 CLR 513
| APPELLANT/CROSS-RESPONDENT: | Mr Singerson |
| RESPONDENT/CROSS-APPELLANT: | Ms Joans |
| FILE NUMBER: | PTW | 726 | of | 2011 |
| APPEAL NUMBER: | WA | 9 | of | 2013 |
| DATE DELIVERED: | 10 December 2014 Amended pursuant to r 17.02 on 8 September 2015 |
| PLACE DELIVERED: | Perth |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Bryant CJ, Ainslie-Wallace & Crisford JJ |
| HEARING DATE: | 31 March 2014 |
| LOWER COURT JURISDICTION: | Family Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 14 March 2013 |
| LOWER COURT MNC: | [2013] FCWA 36 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT/CROSS-RESPONDENT | Mr Hooper SC with Mr Elder |
| SOLICITOR FOR THE APPELLANT/CROSS-RESPONDENT: | Dwyer Durack | |
| COUNSEL FOR THE RESPONDENT/CROSS-APPELLANT: | Mr Dowding SC with Ms Kerr | |
| SOLICITOR FOR THE RESPONDENT/CROSS-APPELLANT: | DCH Legal Group |
Orders
(Amended pursuant to Rule 17.02 of the Family Law Rules 2004 on 8 September 2015)
The appeal be allowed.
The cross-appeal be allowed.
Orders 24, 25(f) and (g) of the orders made by the Honourable Acting Judge Jordan on 14 March 2013 be set aside.
In lieu thereof:
25 (f) as to
$516,486$513,861 to the applicant wife; and(g) the remainder to the respondent husband.
The husband file written submissions as to whether there should be an adjustment to the wife’s superannuation account in the [ABC] Superannuation Fund and if so in what amount, with a commensurate adjustment to the amount the wife to receive pursuant to order 25(f), by close of business 21 days after the publication of these reasons. The wife provide written submissions in response by close of business 21 days thereafter.
There be no order as to the costs of the appeal and the cross-appeal.
The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 (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 in respect of the costs incurred by the appellant in relation to the appeal.
The Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (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 in respect of the costs incurred by the respondent in relation to the appeal.
The Court grants to the cross-appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 (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 cross-appellant in respect of the costs incurred by the cross-appellant in relation to the cross-appeal.
The Court grants to the cross-respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (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 cross-respondent in respect of the costs incurred by the cross-respondent in relation to the cross-appeal.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Singerson & Joans has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Orders
The appeal be allowed.
The cross-appeal be allowed.
Orders 24, 25(f) and (g) of the orders made by the Honourable Acting Judge Jordan on 14 March 2013 be set aside.
In lieu thereof:
25 (f) as to $516,486 to the applicant wife; and
(g) the remainder to the respondent husband.
The husband file written submissions as to whether there should be an adjustment to the wife’s superannuation account in the [ABC] Superannuation Fund and if so in what amount, with a commensurate adjustment to the amount the wife to receive pursuant to order 25(f), by close of business 21 days after the publication of these reasons. The wife provide written submissions in response by close of business 21 days thereafter.
There be no order as to the costs of the appeal and the cross-appeal.
The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 (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 in respect of the costs incurred by the appellant in relation to the appeal.
The Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (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 in respect of the costs incurred by the respondent in relation to the appeal.
The Court grants to the cross-appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 (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 cross-appellant in respect of the costs incurred by the cross-appellant in relation to the cross-appeal.
The Court grants to the cross-respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 (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 cross-respondent in respect of the costs incurred by the cross-respondent in relation to the cross-appeal.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Singerson & Joans has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WA 9 of 2013
File Number: PTW 726 of 2011
| Mr Singerson |
Appellant/Cross-Respondent
And
| Ms Joans |
Respondent/Cross-Appellant
AMENDED REASONS FOR JUDGMENT
Introduction
By his amended notice of appeal filed 14 March 2014, Mr Singerson (“the husband”) appeals against orders 24 and 25(f) and (g) of the property orders made by Jordan A/J on 14 March 2013, outlined below:
24The Applicant take all steps necessary and execute all documents necessary to effect a distribution of $100,000 of the [ABC] Superannuation Fund, presently in her name, to the Respondent.
25Upon the sale of the [W Street property], the proceeds of sale be distributed in the following manner:
…
(f) as to 34% to the Applicant; and
(g) as to 66% of the remainder to the Respondent.
By her amended notice of cross-appeal filed 12 August 2013, Ms Joans (“the wife”) appeals against the same orders. The consensus of counsel for both parties was, no matter in whose favour any error of the trial judge fell, the judgment was irretrievably flawed.
In proceedings between the husband and the wife for alteration of property interests under s 79 of the Family Law Act 1975 (Cth) (“the Act”) the trial judge was required, inter alia, to determine the impact of the receipt by the husband of an inheritance following the death of his father. The husband’s father passed away around the time the parties separated and the husband received the inheritance after separation.
Both parties appeal against the manner in which the trial judge determined how the inheritance should be treated.
It is contended by the parties that each has been disadvantaged as a consequence of his Honour failing to properly assess contributions and to consider the matters set out in s 75(2) of the Act insofar as they relate to the husband’s inheritance.
The parties agreed that in the event the appeal was successful this Court would re-exercise the discretion. Counsel for both parties agreed that the superannuation order as presently expressed required amendment but the quantum of the superannuation order will depend upon the outcome of the appeal and cross-appeal.
Most of the trial judge’s findings in relation to the history of the parties’ relationship are uncontentious and can be stated briefly. No findings of fact made by his Honour in the course of determining the proceedings is controversial for present purposes, save as specifically set out in the course of our judgment.
background
The parties married in 1996. They had lived together in a de facto relationship from July 1994. They separated in February 2009.
The parties have two children who, at the time of trial, were aged 13 and 10 years. The parties shared the responsibilities of caring for the children.
The husband was 47 years of age at the time of the trial. The husband worked as a property valuer. In 1999 he was retrenched from this employment. The husband suffered from the effects of depression from time to time in the years that followed. His employment since 2001 had been sporadic.
The wife was 46 years of age at the time of the trial and worked as a health services professional. In late 1994 she entered into a partnership agreement with Ms N and purchased an interest in her first health services business at C Street, Suburb J (“the C Business”). In 1999 the wife acquired an interest in and operated a second business at L Street, Suburb E (“the L Business”). Since separation the wife has continued to operate the business with her business partner. In 2011 the wife and Ms N sold a retail business attached to the C Business for $81,000.
The husband’s father died in February 2009 just before the parties’ separation. The wife remained in the former matrimonial home at W Street with the children. The husband moved into his father’s home. The husband subsequently inherited a 50 per cent share in his father’s estate together with his sister. At the time of receiving the inheritance its value to the husband was approximately $3 million.
Since separation the husband had accessed some of the available funds from his share in the estate for his own needs and purposes. When the matter came before the trial judge the husband had not been in employment or producing any income from sources other than the estate.
Since separation the wife has had the returns of the businesses, averaging $430,000 gross per year and approximately $250,000 per year after tax.
Grounds of appeal and cross-appeal
There were two issues disposed of by agreement at the commencement of the hearing before us.
Ground 6 in the amended notice of appeal was not pressed as the parties agreed to paragraph 24 of his Honour’s orders being set aside and in lieu the following orders be made:
24AAn order pursuant to Section 90MT of the Family Law Act 1975 that the member account of the husband in the [ABC] Superannuation Fund (“the Fund”) be increased by $100,000 and there be a corresponding reduction in the member account of the wife in the Fund.
24BThe parties in their capacity as the trustees and the members of the said Fund do promptly perform such acts and sign such documents as necessary to reflect the above mentioned adjustment to member accounts in the Fund.
24CThe operative date in respect of the above mentioned adjustment of member accounts be 30 June 2013.
Counsel for both parties sought that in the event of a re-exercise of the discretion there may be a need for written submissions in relation to the making of this order. We will address this issue later in our judgment.
Ground 3 of the amended notice of cross-appeal was not pressed. The parties agreed no order was required.
CHALLENGES RELATING TO THE TRIAL JUDGE’S FINDING ON VALUES
There were two grounds directed at the values the trial judge assigned to some of the parties’ assets. For convenience we will deal with these together.
Ground 5 of the amended notice of appeal
5.The finding that the net value of the husband’s inherited property was $2,619,105 was contrary to the evidence and should have been found to be, at most, $2,469,105.
As outlined above, in 2009 the husband inherited a 50 per cent share in his father’s estate. This included a 50 per cent share of the Singerson Family Trust, the ARJM General Trust and the trustee company of both trusts, TJMA Holdings Pty Ltd.
Sometime in 2012 and 2013 the husband borrowed a total of $150,000 from TJMA Holdings Pty Ltd.
It is common ground his Honour did not include those borrowings either as a liability of the husband in the schedule of matrimonial property or as a reflection of the overall value of the husband’s interest in the estate.
At trial his Honour excluded from the property schedule various assets and liabilities accumulated by each of the parties after they separated. The $150,000 fell within this category. Approximately $75,000 of it related to the payment of legal fees. The exclusion was consistent with the agreed position of each party at trial. The husband concedes the approach to be appropriate.
His Honour remarks:
80.I appreciate the argument that the debt is real in the sense that it is part of the asset pool of the estate, and I accept the notion that exclusion of that debt would effectively reduce the value of the husband’s interest in the estate by some $75,000. I am not ruling that the debt does not exist. I am simply determining that the husband must assume responsibility for that liability in the same way that the wife must carry forward her current commercial and taxation debts.
For the purpose of the trial judge’s identification of the property of the parties and its value we discern no error in this approach. It was an approach agreed to by the parties and entailed an appropriate exercise of discretion by his Honour in the circumstances.
Accordingly, this ground must fail.
Ground 6 of the amended notice of cross-appeal
6.The learned Trial Judge’s finding that the value of the wife’s share in the [L Business] was $1,350,527 and not $1,250,527 was against the evidence and the weight of the evidence.
His Honour determined that the only item of property, of any moment, to which there was a controversy about value was the wife’s interest in the L Business. His Honour adopted the value assigned to the business by the Single Expert Witness, Mr U (referred to by the trial judge as …), as supplemented by Mr U’s written correspondence.
The single expert assigned a value to the wife’s interest in the L Business of $1,315,166 in his primary report. The wife contended the correct value should have been $1,248,333. She calculated this by reference to what she says was evidence provided to the single expert by the co-owner of the business, Ms N. She says the single expert made a mistake in what he maintains Ms N told him. This mistake led to him adopting an incorrect multiplier in forming his assessment on value.
His Honour dealt specifically with the issue:
84In Exhibit 18, in an email dated 6 March 2013 between the valuer and DCH Legal, in response 4, the valuer provided the following information:
“In the meeting with Ms [N] [in] February, the model to use for extrapolating the December 2012 results was specifically discussed, namely, whether to use a multiple of 1.8, which I often use, or 1.9. Ms [N] advised that in this business ([the L Business]) the sales trend in the second-half of the financial year is now similar to the first half. She also added that with the closure of a competitor’s [retail business] this [business’s] front of shop sales is increasing and with the advent of Valentine’s Day and Easter total sales in the second-half will be comparable. Based on these discussions with Ms [N] [in] February I chose a multiple of 2. Therefore I see no reason for an adjustment in this regard.”
85In the evidence before me, Ms [N] was to inform the Court that she did not provide such information to [the single expert]. She said that, in fact, the second-half of the financial year is traditionally slower trading than the first. When confronted with that prospect by counsel for the wife, [the single expert] confirmed that if that assertion by Ms [N] was true, it would reduce his value by the factor of the $200,000 referred to earlier.
86In re-examination, [the single expert] was again taken to the contents of response 4 and he again confirmed that Ms [N] had indeed provided the details set out in that response.
87I found Ms [N] to be a reliable witness. I also assessed [the single expert] to be an honest, astute and objective witness.
88In response 4, [the single expert] provided quite an amount of specific information, and I do not for one moment suspect that he made up such information or imagined it was said. It is clear that Ms [N] has been placed under a great deal of pressure to attend to the onerous task of providing extensive information in a short period of time. I accept that she did provide the detail to [the single expert] as set out in Exhibit 18 and that that information reasonably formed the basis for the opinions expressed by [the single expert] in his original report and in his supplementary correspondence.
89In all the circumstances, I propose to adopt the value as set out in the primary report as supplemented by the written correspondence…
His Honour considered the competing evidence of each witness. Without making an adverse finding about either of them, he accepted the single expert’s evidence. He recited the circumstances of Ms N having to deal with the onerous task of gathering much financial information in a short timeframe and concluded that the pressure upon her led to an error. Although credible, his Honour found she was mistaken.
Given his Honour’s detailed consideration of this issue, we are satisfied there is no appealable challenge in respect of this ground.
CHALLENGES RELATING TO THE TRIAL JUDGE’S APPROACH
Grounds 1, 2, 3 and 4 of the amended grounds of appeal and Grounds 1, 2 4 and 5 of the amended cross-appeal
The trial judge’s assessment was that the wife receive 60 per cent of the matrimonial property (valued at $4,806,000) and a 20 per cent share of the husband’s inheritance (valued at $2,619,105). This translates to the wife receiving 46 per cent of the combined property and the husband receiving 54 per cent. In practical terms, the wife retains $3,408,000 and the husband retains $4,017,000 of the total value of $7,425,000.
In this appeal the husband seeks 40 per cent of the matrimonial property and what remains of his inheritance. As will become clear later in our reasons when we set out a schedule of the parties’ property, this equates to about 61 per cent of all the property.
Although in her cross-appeal the wife seeks 65 per cent, her position before us at the hearing of the appeal was she receive 55 per cent of all the property, including the inheritance.
It is true that these grounds of both the appeal and cross-appeal do not all refer to the fact of the husband’s inheritance. However, whether the challenge is one to the assessments his Honour made to the parties’ contributions to their property or to any subsequent adjustment considered appropriate pursuant to s 75(2) of the Act, the treatment by the trial judge of the husband’s inheritance lies at the heart of the matter. This was accepted and addressed by both counsel.
There are two matters that require brief comment prior to addressing the individual grounds of appeal. These matters relate to the overall approach adopted by the trial judge.
The first matter relates to the manner in which his Honour delivered his reasons. This was an unusual and in many ways a complex case. His Honour gave his written reasons for judgment within a working day of the conclusion of evidence and submissions. The five day trial finished on 13 March 2013 and the decision was given at 10.00 am the following day.
It is accepted that an appellate court should not over-critically scrutinise an ex-tempore judgment given shortly after a hearing. A trial judge should not be penalised for dispensing justice in a practical and timely fashion. This is common sense. A certain leeway needs to be given especially when, as here, his Honour was in the middle of a busy rolling list (Akston & Boyle (2010) FLC 93-456 per Warnick J, paragraph 28).
The second matter addresses how the trial judge dealt with the categorisation of the parties’ property. Unsurprisingly, given the timing of the husband’s father’s death and his subsequent inheritance, there was discussion about what the appropriate approach to such categorisation should be.
His Honour identified an asset by asset and a global approach. In the trial judge’s findings about the extent of the parties’ property and as contained in a schedule, his Honour distinguished between the matrimonial property and the property of the husband’s father’s estate. In adding the two figures together, he arrived at a “total asset pool on global approach”.
He also discussed a number of what could probably best be described as hybrid approaches based on the arguments of each party. He commented:
64Indeed, for my part, whichever approach I adopt, I am prone to testing the various outcomes produced by the different approaches, one against the other, to satisfy myself that the method adopted by me does not produce results which fall outside the range of outcomes emerging from a cross checking of the variety of options open.
His Honour then made assessments under s 79(4) of the Act on what he described as an asset by asset approach. He proceeded to compare his ultimate result with outcomes based on other possible approaches, including a global approach.
This course adopted by his Honour was open to him given the circumstances here. There are, however, pitfalls in the adoption of either a global or an asset by asset approach. These were identified as early as 1984 when Nygh J in G & G (1984) FLC 91-582 noted:
At the moment the Family Court is divided between those who favour the so-called global approach and those, of whom I am one, who seek to achieve some degree of precision. In my view, despite what was said in Norbis [by the Full Court of the Family Court], both approaches are legitimate unless the High Court rules otherwise provided that those who take the global approach heed the warning that the origin and nature of the different assets ought to be considered and that those who favour the more precise approach do not mistake the trees for the forest, ie add up the individual items without standing back at the end to review the overall result in the light of the needs of the parties.
This was subsequently approved by members of the High Court in Norbis v Norbis (1986) 161 CLR 513 per Mason and Deane JJ:
The general preference which has been expressed for the global approach is not by reason of any notion that it is the only approach authorized by the Act, but by reason of considerations of convenience. Accordingly, quite apart from then fact that its status as a prescribed approach is that of a guideline and not that of a principle of law, the application of the asset-by-asset approach does not of itself amount to an error of law.
His Honour, no doubt driven by a desire to provide the parties with a speedy resolution of their property dilemma, intermingled his assessments on contributions with s 79(4)(e) matters when utilising a separate asset approach. In doing so we find he fell into the error identified by Nygh J of mistaking the trees for the forest.
We also find that his Honour, in aiming to ensure his overall result was just and equitable by referencing it to other possible approaches, turned his focus to a result based on mathematics rather than viewing the effect of his overall apportionment.
We will now deal with the specific grounds, grouped together to reflect the manner in which counsel for both parties argued the case before us. Counsel accepted that the treatment of the husband’s inheritance was central to the whole appeal and they dealt with the grounds as broad challenges rather than specific issues.
Contributions
Ground 1 of the amended notice of appeal is as follows:
1.The finding of the learned Trial Judge that the wife made an indirect contribution towards the property inherited by the husband at around the time of separation was against the evidence and the weight of the evidence and wrong in law.
Grounds 2 and 4 of the amended notice of cross-appeal are as follows:
2.Having found that the wife made a greater contribution to which a 10% allocation was appropriate, the decision of the learned Trial Judge to reduce the adjustment to the wife to only 5% in consideration of that greater contribution was against the evidence and the weight of the evidence and wrong in law, and the reasons of the learned Trial Judge either cannot be discerned or were an error.
4.Whilst the learned Trial Judge was entitled to determine the value of contributions on an asset by asset basis, the learned Trial Judge fell into error and his findings were against the evidence and the weight of the evidence in determining the husbands [sic] inheritance received post separation should be assessed as a contribution at 20% in favour of the wife.
His Honour identified the contributions made by each party to their matrimonial property up until the date of separation. His Honour concluded that the wife had made a greater contribution during the marriage in a financial sense and also in terms of her homemaking and parenting. In this respect, apart from weight, there is no challenge. His Honour then commenced to assess the actual entitlements of the parties based on his conclusions in relation to those contributions.
His Honour remarked:
123I have concluded that the overall contributions of the wife, both direct and indirect, to the acquisition of property and to the welfare of the family exceeded those of the husband to a considerable degree. She carried the lion’s share of the burden throughout the bulk of the marriage and a significant adjustment would therefore be justified on account of that factor in relation to the matrimonial assets.
His Honour then moved to allocate that “adjustment” for the imbalance in contributions that he considered warranted. His Honour found:
126Given the scope of the imbalance of contributions for the bulk of the marriage to the date of separation, my inclination would have been to make a substantial adjustment to the benefit of the wife of the order of 10 per cent in the absence of any countervailing consideration.
It is unfortunate that his Honour referred to the making of “a significant adjustment”. It is open to infer that his Honour considered the court should start with a presumption of equal entitlement and make adjustments accordingly. Such an approach is clearly wrong in law (see Mallet v Mallet (1984) 156 CLR 605).
We are persuaded that any infelicity of expression arose from his Honour’s desire to provide reasons quickly. A close reading of the reasons on the question of contributions demonstrates that he considered all of the contributions throughout the marriage before arriving at a conclusion the wife made a greater contribution overall.
His Honour continued on to identify the financial contributions made by the husband as a result of receiving property from his mother’s estate between 2004 and 2007:
129In my view, that contribution should be seen as a set off against the significant extra contributions of the wife. The parties enjoyed some $70,000 cash, rental income from a property between 2004 and 2007 and some $450,000 from the sale of a property in 2007 which funds were immediately applied to discharge joint debt.
130Taking each of those matters into account, I have concluded that the net adjustment for the special contributions of each of the parties to the date of separation should result in a 5 per cent adjustment to the advantage of the wife.
Again, with respect to his Honour the use of the term “special contributions” is unfortunate. It imports uncertainty and confusion into the exercise of assessing the contributions when it had not been present in the earlier analysis. However, we are not persuaded that his Honour proceeded upon any notion that the wife had “special skills” given a consideration of the judgment as a whole.
More relevantly, however, having assessed that the wife made a greater contribution of 10 per cent, his Honour then adopted what is sometimes referred to as a scoreboard approach, and “took away” 5 per cent of that.
His Honour then turned to evaluate what contributions each of the parties made after they separated and up until the date of trial. He emphasised the wife’s role as the primary carer of the children as a basis for a further adjustment for post-separation contributions. His Honour said:
133The single biggest responsibility moving forward from the date of separation to the date of trial has been the care of the children, and the wife has been required to carry the bulk of that responsibility over the last four years. I am satisfied that that task has been made somewhat more onerous by features of the husband’s conduct in the period since separation as set out in the extensive material filed on that issue. The husband’s role in relation to the ongoing care of the children over the last four years has been comparatively limited with little or no contribution in relation to [the child J] and more responsibility in relation to [the child A].
He concluded:
134Given the size of the estate, I am satisfied that some modest adjustment is justified to reflect that significantly disproportionate contribution since separation. I have settled on a further adjustment of 2.5 per cent to the wife’s advantage.
Whilst the use by his Honour of the term “estate” in this paragraph is perplexing, it later becomes apparent that his use of the word identified the matrimonial estate as opposed to the estate comprised of the husband’s inheritance.
Distilling contributions by means of a calculation or mathematical equation is generally unhelpful.
In Dickons & Dickons (2012) 50 Fam LR 244 the Full Court said:
23We wish also to refer to the approach of the federal magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).
24There can be little doubt that the classification of contributions by reference to terms such as “initial contributions”, “contributions during the relationship”, and “post-separation contributions”, can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties’ respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.
25Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “…giving over-zealous attention to the ascertainment of the parties’ contributions…” (Norbis v Norbis (1986) 161 CLR 513 at 524) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
The desirability of adopting a holistic approach to the assessment of the parties’ contributions was also dealt with recently in Eufrosin & Eufrosin [2014] FamCAFC 191.
The trial judge then moved to consider s 79(4)(e) of the Act as it related to the matrimonial property before returning to consider the wife’s entitlement to the separate category of the husband’s inheritance. In this regard he said:
151On this distinct approach it is necessary to consider the entitlement of the parties in a different light. Given the circumstances through which the husband acquired the property, the basis for any claim against it by the wife is necessarily much more limited. She made no financial or other direct contribution to the acquisition or maintenance of that property.
152The wife’s entitlement must arise by virtue of her indirect contributions over the last four years during which the husband has held that property and any ongoing contributions of that type in the future. The wife has assumed primarily responsibility for the boys’ care, both physically and financially over the last four years, and that primary obligation is likely to persist. The duration of that commitment from the date of separation when the boys were only nine and six years of age to the time of their independence will represent a very significant ongoing contribution to the welfare of the family when measured against the duration of the relationship itself.
We are of the view that his Honour misled himself, and thus fell into error, in identifying only the four years between separation and trial as being the appropriate time upon which to assess contributions to the inheritance rather than across their 15 year relationship.
Section 79(4) of the Act is clear. There is nothing to suggest that any category of contributions needs to be quarantined and applied solely to particular assets. The court is mandated to look at the totality of what the parties have contributed in a financial and non-financial sense, including contributions to the welfare of the family and to the acquisition, conservation and improvement of assets. The court is required to evaluate the significance of all the various contributions to the property, notwithstanding there may be different categories of that property.
His Honour in paragraph 152 alluded to making an assessment for future contributions, perhaps more appropriately referred to as obligations. However, the wife’s care of the children was a factor his Honour had already taken into account earlier in the judgment in his assessment of the matrimonial estate both in relation to contributions and s 75(2) matters.
We have previously referred to his conclusion, at paragraph 134, on the wife’s contributions.
In dealing with the same issues but specifically in relation to prospective factors his Honour says:
135The care of the children again looms as a significant consideration in this regard. [The child J] is 13, [the child A] is 10. As the matter currently stands, the wife is likely to need to continue to meet all or the vast bulk of the responsibilities for the ongoing care of [J] and to also assume a significant portion of the responsibility for the ongoing care of [A]. These responsibilities are likely to span a period of no less than eight years, a not insignificant period when measured against the length of the marriage itself.
His Honour then concludes his s 75(2) assessment of what he earmarks as the matrimonial property as follows:
145On the approach I have adopted to date, I have been considering the adjustments for past contributions and future needs and obligations measured against that portion of the estate acquired by the parties during the marriage which I have identified as “matrimonial property”. On that approach, when further considering the future circumstances, it is necessary to also consider the property and financial resources to be retained by each of the parties. In that context, I need to take account of the husband’s retention of any estate property.
146It will follow that, given the lack of direct contributions to the acquisition of the husband’s interest in the estate by the wife, her entitlement to share in that property will be assessed at a lower rate than the assessments I have made in the property acquired by the joint efforts of the parties.
His Honour then proceeded to deal with the next asset category under the heading “Entitlement to Share in the Husband’s Post-separation Asset Acquisition”.
At paragraph 153 his Honour states:
That factor properly resulted in some loading in the wife’s favour in relation to the matrimonial pool. In my view, on this approach it should also give rise to some modest share in the property acquired by the husband at about the time of separation.
The context of the reference to “that factor” is unclear. A plain reading of this part of his Honour’s judgment does not explain whether it refers specifically to contributions or the matters set out in s 75(2) of the Act. Our earlier reference to para 135 of the judgment, set out above, lends itself to the latter interpretation. If this is correct then clearly contributions should have been considered before s 75(2) matters.
In contrast is his Honour’s remark that:
154I have concluded that a 20 per cent share in the estate property finds an appropriate balance between the need to recognise the significance of the wife’s ongoing contribution when measured against the fact that the contributions to the acquisition of that property must clearly be seen to come from the husband himself and to have emerged at the end of the relationship.
This suggests, however, his Honour was referring to contributions rather than s 75(2) matters.
The confusion which results from this uncertainty could lead to the conclusion that his Honour may well have taken into account the same factor of the wife’s obligation to care for the children in the future, both in terms of contributions and again in his assessment of the matters set out in s 75(2).
Having adopted an asset by asset approach his Honour has then failed to maintain any separation of the categories he designated. As a result of the unusual manner in which his Honour dealt with the husband’s inheritance it is impossible to say that he did not double count the wife’s contributions or conflate s 75(2) matters with contributions.
Section 75(2) factors
Each party has a criticism of the trial judge’s adjustment pursuant to s 79(4)(e) and it is convenient to deal with these matters together. Ground 4 of the amended notice of appeal states:
4.The determination of the learned Trial Judge that there should be an adjustment of 2.5% (a differential of approximately $240,000) in respect of future contribution, needs, obligations and Section 75(2) factors was against the evidence and the weight of the evidence and wrong in law and no such adjustment should have been made.
Ground 5 of the amended notice of cross-appeal states:
5.The learned Trial Judge erred in making only a 2.5% adjustment to the wife for section 75(2) factors and failed to give proper consideration to the fact that notwithstanding the child departure order as to the children’s education costs, the wife was to have the ongoing principal responsibility for the care and financial support of the children.
His Honour initially dealt with this matter on the basis that he needed to assess future contributions, future needs and obligations and the s 75(2) factors to the matrimonial property.
His Honour adopted what we consider to be an appropriate and orthodox approach in identifying the particular matters that would impact on his assessment in relation to these primarily prospective matters.
Unfortunately as earlier noted, a degree of confusion is imported into the judgment when the wife’s entitlement to the inheritance is considered at paragraph 146.
At this stage in the judgment his Honour was dealing with the separate category of matrimonial property. His Honour has not yet addressed the contributions to the inheritance. However, paragraph 146 is misleading in that it proceeds to determine an adjustment pursuant to s 75(2) of the Act before his Honour had considered the issue of contributions to the husband’s inheritance. In doing so his Honour must already have taken account of the husband’s inheritance and thus his superior financial position.
His Honour proceeded to do what can only be called a rather tortured mathematical cross-check of other possible approaches. Superimposed on this is the confusion about how he assessed the matters set out in s 75(2) of the Act. Given our view that there has been a muddling of the asset by asset approach with a global approach a cross-checking of any result is rendered meaningless.
We find his Honour’s approach to the exercise he was required to undertake pursuant to s 79 of the Act to be flawed in the several respects we have discussed. His Honour fell into error and the decision cannot be allowed to stand.
Weight
Ground 2 of the amended notice of appeal is:
2.If the finding of the learned Trial Judge that the wife should have an entitlement as to a 20% share in the residue of the husband’s inherited property held at the time of trial ($524,000) was based upon consideration of factors in Section 79(4)(d), (e), (f) and (g) then such a finding was against weight of the evidence and was so outside the reasonable exercise of discretion to be wrong in law and no such adjustment should have been made.
This ground complains about the weight given by his Honour to the factors he was mandated to consider in arriving at a just and equitable result. We see no need to deal with this ground further as it is encompassed by what we have said in relation to earlier grounds.
Just and equitable
The last grounds of the amended notice of cross-appeal that require consideration are:
1.The finding of the learned Trial Judge that the just and equitable distribution of the property of the parties’ was 54% to the husband was against the evidence and the weight of the evidence and wrong in law and was so far outside the reasonableness of the exercise of discretion that it represents an error, and the Court should re-exercise its discretion and allocate 65% to the wife and 35% to the husband.
3.The determination by the learned Trial Judge that the wife should have an entitlement to the husband's inherited property representing 20% of the then residue of that property, was wrong in law and the inclusion of such alleged entitlement in a determination of the overall adjustment of property interests was not just and equitable and was contrary to Section 79(2) of the Family Law Act 1975.
Both parties are dissatisfied with the manner in which his Honour arrived at the determination of the parties’ respective property interests. We have noted that a just and equitable result was highly unlikely to be achieved given the manner in which his Honour approached the various categories of property and for that reason the appeal will succeed.
We have dealt with all grounds of appeal and cross-appeal as they were argued before us. From the foregoing discussion it is apparent that we consider both appeals against his Honour’s decision to have merit.
RE-EXERCISE OF THE DISCRETION
Whilst the trial judge identified the need to determine the parties’ entitlements to their matrimonial property and to the husband’s post separation inheritance, we find he failed to properly evaluate and apply the legal principles relevant to that exercise.
We consider this omission constitutes an error which warrants the re-exercise of the discretion. This was a course agreed to by the parties at the hearing before us.
For the sake of clarity we set out the property of the parties for the purpose of a re-exercise. The value for the W Street property has changed due to its sale.
Matrimonial Property
Value ($)
W Street property
1,446,419
Wife’s Assets
Advance from the W Street property
150,000
Furniture
15,000
Jewellery
10,000
Interest in the C Business
1,132,7521,137,752Interest in the L Business
1,350,527
Superannuation
ABC Superannuation Fund
374,708
Subtotal - Wife
3,032,9873,037,987Husband’s Assets
Advance from the W Street property
150,000
Superannuation
ABC Superannuation Fund
209,064
XYZ SMSF Pty Ltd
15,000
Subtotal – Husband
374,064
Matrimonial Property
4,853,4704,858,470Husband’s interest in the estate
2,619,105
Total property
7,472,5757,477,575
At the appeal both parties presented their case on the basis the husband would retain the balance of his inherited assets if that was possible. It is for this reason the schedule has separately identified the two lots of property available for division.
The starting point for an assessment of the relative contributions of the parties is the unchallenged findings of the trial judge. His Honour’s findings up to his conclusions on contributions were not seriously challenged, save for the weight to be attributed to those findings.
We have no difficulty accepting that over a period of approximately 15 years cohabitation and a further four years between separation and the trial that the wife made the significantly greater contribution to the property acquired prior to separation. In particular we refer, as did the trial judge, to her greater contribution both in a financial sense and in terms of her care of the home and for the children.
The parties’ respective roles remained much the same throughout the entire relationship in every sense. The husband introduced a substantial sum of money late in the marriage and after the parties had separated. This has made a noticeable impact on the property pool.
Despite the timing of the receipt of the inheritance we consider that over this long marriage a global approach is appropriate. The contributions the parties made to various components of their assets are assessed carefully and then looked at holistically to arrive at an overall assessment.
On this basis and utilising the trial judges’ largely unchallenged findings of fact we would assess the parties’ contributions to all their property to the date of trial as 52.5 per cent in favour of the husband.
This assessment acknowledges the initial contributions of the husband and also his post separation inheritance. However, this is more than matched by, inter alia, the considerable contributions of the wife to the family including her post separation contributions.
Each party contends that matters referred to in s 75(2) are of significance, not the least being their respective earning capacity and obligations to the children.
Given the outcome on contributions and the manner in which the property is likely to be divided we do not consider any further adjustment is required.
Based on the manner in which the parties approached the appeal this result can be broken down to the wife receiving approximately 73 per cent of the property apart from the inheritance or 47.5 per cent of all the property. The net result is that she will retain
$3,549,473$3,551,848 and the husband with 52.5 per cent will retain$3,923,102$3,925,727.As the wife already has assets of
$3,032,987$3,037,987 she is entitled to a further sum of$516,486$513,861. That sum should come, subject to order 5 of our orders, from the net proceeds of W Street.Generally speaking, whilst we accept the making of an adjustment of such a minor percentage militates against appellate intervention we note that in real terms the difference between our assessment of 47.5 per cent to the wife rather than the judgment result of 46 per cent translates to an extra $111,375 on the figures before his Honour and will also have an impact on the amount the wife will receive from the increased net proceeds of the W Street property. In the circumstances of this case we consider this a significant amount. We are satisfied such division is just and equitable in relation to the value of the property to be retained by each party and the nature of the assets.
Costs
At the conclusion of the hearing the parties were asked to make submissions regarding the costs of the appeal and cross-appeal.
The parties agreed that if we found an error of law then each would seek a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”).
Both the appeal and cross-appeal have been successful and accordingly we grant each party a certificate under the Costs Act.
I certify that the preceding one hundred and six (106) paragraphs are a true copy of the amended reasons for judgment of the Honourable Full Court (Bryant CJ, Ainslie-Wallace & Crisford JJ)
Associate:
Date: 8 September 2015
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