Smythe & Smythe

[2007] FamCA 1212

FAMILY COURT OF AUSTRALIA

SMYTHE & SMYTHE [2007] FamCA 1212

FAMILY LAW – APPEAL FROM FEDERAL MAGISTRATE’S COURT – PROPERTY – FINDING OF FACT – Established that Federal Magistrate’s finding of fact as to the quantum of savings of party to the marriage was not reasonably open to him.

FAMILY LAW - DISCRETION – Assertion that Federal Magistrate erred in determination of s 75(2) adjustment not made out. Federal Magistrate’s consideration of death of a spouse did not render his s 75(2) adjustment erroneous. F v M [2001] FamCA 1585 and Fisher & Fisher (1986) 161 CLR 438 cited. Such determination found to be within the ambit of discretion. House v The King (1936) 55 CLR 499 and Norbis v Norbis (1986) 161 CLR 513 cited.

Family Law Act 1975 (Cth) Section 75(2), Section 79(8)

House v The King (1936) 55 CLR 499
Norbis v Norbis (1986) 161 CLR 513
Australian Coal and Shale Employees’ Federation v Commonwealth (1953) 94 CLR 621
AMS v AIF (1999) 199 CLR 160
F v M [2001] FamCA 1585

Fisher & Fisher (1986) 161 CLR 438

APPELLANT: MR SMYTHE

RESPONDENT: MRS SMYTHE

FILE NUMBER: PAM 2143 of 2005

APPEAL NUMBER: EAA 55 of 2007

DATE DELIVERED: 10 October 2007

PLACE DELIVERED: Parramatta

JUDGMENT OF: Coleman J

HEARING DATE: 20 September 2007

LOWER COURT JURISDICTION: Federal Magistrate’s Court

LOWER COURT JUDGMENT DATE: 19/03/2007

LOWER COURT MNC: [2007] FMCAfam 143

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr R G Lethbridge SC

SOLICITOR FOR THE APPELLANT: C/- Leonid Titow
K W Fegebank & Associates

COUNSEL FOR THE RESPONDENT: Mr. John Shaw

SOLICITOR FOR THE RESPONDENT: Marina Voncina Solicitor

Orders

1. That the appeal be allowed.

2. That within 30 days of this date, the respondent pay to the appellant the further sum of $3200.00.

3. That the Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 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.

4. That the Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 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 respondent in relation to the appeal.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as          Smythe & Smythe.

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

Appeal Number: EAA55 OF 2007
File Number:  PAM 2143 of 2005

MR SMYTHE

Appellant

And

MRS SMYTHE

Respondent

REASONS FOR JUDGMENT

1. By Notice of Appeal filed 14 June 2007 Mr Smythe (“the appellant”) appealed against orders made by Federal Magistrate Halligan on 19 March 2007 in proceedings between the appellant and Mrs Smythe (“the respondent”) pursuant to Part VIII Family Law Act 1975 (“the Act”).

2. The appellant is the legal personal representative and son of P Smythe (“the deceased”) who died on … October 2005. The respondent was married to the deceased at that time. The respondent is not the mother of the appellant.

3. At the time of his death, there were proceedings pending in this Court between the respondent and the deceased with respect to settlement of property. The orders of the learned Federal Magistrate which give rise to this appeal were made pursuant to s 79(8) of the Act.

4. The orders of the learned Federal Magistrate provided that the property of the deceased and the respondent be divided as to 86.4 per cent to the respondent and 13.6 per cent to the appellant in his capacity as the executor of his late father’s estate.

5. The appellant seeks that, in lieu of the orders made by the learned Federal Magistrate with respect to the property of the deceased, the sum payable by the respondent to the appellant be increased from $20 000 to $160 101.

6. The respondent resisted the appeal and has sought to maintain the orders of the learned Federal Magistrate.

Background

1. Given the limited issues which arise in the appeal only brief background facts are necessary to enable an understanding of the issues which require consideration by this Court.

2. The deceased was born in 1948 and died just short of his 57^th birthday in October 2005. The respondent was born in April 1945 and is now 62 years of age.

3. The parties cohabited from 1984 until late 2004, a period of approximately 20 years. There were no children of the marriage although the respondent had children of a prior marriage, as did the deceased.

4. The learned Federal Magistrate found the property of the respondent and the deceased to be worth $543 671. That figure is controversial for present purposes only to the extent that the sum of $51 000 was included with respect to the savings of the deceased in circumstances in which the appellant contends that figure should have been $31 000.

5. For reasons which His Honour detailed, the contribution entitlements of the parties were held to be 55 per cent to the respondent and 45 per cent to the deceased. No part of this appeal involves any challenge to such conclusion.

6. For reasons which he also detailed, the learned Federal Magistrate concluded that a s 75(2) adjustment in favour of the respondent of 31.4 per cent was warranted, her overall entitlement accordingly becoming 86.4 per cent of the pool of divisible assets. Both the s 75(2) conclusion of the learned Federal Magistrate and how it was reached are controversial for purposes of the appeal.

The Reasons for Judgment of the learned Federal Magistrate

1. Having regard to the terms of the Notice of Appeal, only brief references to the learned Federal Magistrate’s Reasons for Judgment are necessary.

2. Having accurately identified the competing applications before him, provided reliable background facts, and a review the evidence of the parties, the learned Federal Magistrate considered “the applicable law”. No aspect of the appeal involves any challenge to the findings of fact made by the learned Federal Magistrate save in the one respect earlier identified, his assessment of the evidence before him, or his statement of the law which governed the proceedings which he was obliged to determine.

3. As far as the “assets and liabilities” of the parties are concerned, it is instructive only to refer to his Honour’s reasons with respect to the husband’s savings. As noted earlier, the figure of $51 000 was included with respect to such savings, a course challenged by Senior Counsel for the appellant who contended that a figure of $31 000 should have been included and further submitted that a finding in the sum of $51 000 had not been reasonably open to his Honour.

4. The learned Federal Magistrate recorded that there was “no explanation for the discrepancy between the husband’s financial statement, sworn by him a few weeks before his death, and the assets in the estate as asserted by the respondent. The difference is significant, $20,000.” [Reasons for Judgment, Appeal Book, page 19, par 44] None of those findings of fact are controversial in this appeal.

5. His Honour further observed that there was no evidence to suggest that the financial statement “must be wrong”, that the husband had not disclosed in such financial statement any bank account details as required by the rules and that a letter from the bank obtained by the appellant “giving details of moneys held by that bank for his father does not establish that there are no other moneys.” [Reasons for Judgment, Appeal Book, page 19, par 45]

6. Reference was made to the absence of “evidence as to the husband’s usual banking practice”. His Honour considered himself unable to proceed on the basis that the deceased “could not have had accounts in more than one bank, and perhaps in more than one country, he having moved to live indefinitely in the [P].” [Reasons for Judgment, Appeal Book, page 19, par 45].

7. He thus concluded:

   In the absence of any basis for disregarding the husband’s evidence as to his savings, I accept the evidence contained in the husband’s financial statement, and find that the amount of savings to be included in the pool of divisible assets is $51,000. [Reasons for Judgment, Appeal Book, page 19, par 46]

8. Given that there is no challenge to the learned Federal Magistrate’s assessment of contributions, and that the determination of the present appeal is not materially assisted by consideration of the reasons for such assessment, it is unnecessary to refer to that portion of his Honour’s Reasons for Judgment.

9. Under the heading “Assessment of other relevant considerations”, which included s 75(2), the learned Federal Magistrate recorded the concession, undoubtedly made, and sensibly made, that s 75(2) factors “strongly favour the wife because of the husband’s death.” [Reasons for Judgment, Appeal Book, page 22] His Honour recorded that the wife sought a 25 per cent adjustment on the assumption that her contribution based entitlement was 60 per cent, to produce an overall entitlement on her part of 85 per cent.

10. His Honour recorded, accurately there is no doubt, that the appellant sought a 15-20 per cent s 75(2) adjustment on the basis of the Court concluding contribution entitlements to be equal. The “range” was thus 85 per cent to 65 per cent. To the extent that the respondent was awarded more than her claim was recorded as having been, sensibly having regard to the extent to which that may have been so, that point was not taken in the appeal.

11. The learned Federal Magistrate found, uncontroversially, that the respondent was 61, was working and earning a “modest” income and lacked a significant working life left to her. [Reasons for Judgment, Appeal Book, page 22, par 57] The respondent was found to have very modest superannuation which she could not access until retirement. The learned Federal Magistrate also referred to the respondent’s inability to borrow more than $20 000.

12. To the extent that his Honour referred to the former matrimonial home of the respondent and the deceased (overwhelmingly their major asset) having been left to the respondent by her father, and to the appellant not having lived in the property since 2003, those matters, having been taken into account in the wife’s favour in the assessment of contributions, could not validly constitute a component of a s 75(2) adjustment in the wife’s favour.

13. As against those factors, the learned Federal Magistrate counterbalanced the reality that “the untimely death of the husband means he has no future financial needs.” [Reasons for Judgment, Appeal Book, page 22, par 59]

14. His Honour then referred to the cases to which Counsel at trial had referred him and from which he recorded a number of deductions, they being:

    a) It must be presumed from the enactment of s.79(8) that the legislature intended that one party to a marriage which has broken down to the point that proceedings have been commenced for orders altering the interests of the parties in property should not profit by the fortuitous death of the other party prior to the determination of those proceedings.

    b) However, it is clear that the death of one party has a profound effect upon the balance of the s.75(2) factors.

    c) The deceased has a prima facie moral entitlement to the share gained by contribution during his or her lifetime and, if so desired, to dispose of the same by will to persons who are strangers to the marriage.

    d) The size of the pool of divisible assets, the level of future need of the surviving spouse, and the extent to which the surviving spouse’s contribution based entitlement will meet that need, are important factors in determining the extent of any adjustment to the surviving spouse. [Reasons for Judgment, Appeal Book, page 23, par 61(a) – (d)]

15. Whether or not those deductions flow logically from the authorities to which the learned Federal Magistrate referred is not a matter with which this Court needs to concern itself. That is so because, sensibly, neither Counsel submitted that his Honour’s propositions were inconsistent with any relevant statutory provision, or precluded by any authority binding on him. With respect to the learned Federal Magistrate, the propositions can be comfortably accommodated within the statutory framework which governed the proceedings before him. To the extent that the authorities to which he referred reflect that state of affairs, that is re-assuring.

16. Having digressed to further explore the authorities, the learned Federal Magistrate recorded as “significant” that the respondent’s income was modest, that she was aged 61 and that her future working life was therefore limited, as was her borrowing capacity. Neither any aspect of the respondent’s needs or the value of the former matrimonial home was considered to have established unreasonableness or extravagance. The respondent’s superannuation which she could not access until she ceased work was regarded by the learned Federal Magistrate as being “modest”. His Honour also regarded as relevant that there were “no dependent child beneficiaries of the deceased’s estate.” [Reasons for Judgment, Appeal Book, page 24, par 64]

17. His Honour then recorded:

    At her stage in life, the wife has a reasonable need to secure accommodation. To retain this home based on her contribution based entitlement, the wife would have to pay the husband’s estate $190,652, an amount she cannot raise. The wife was not challenged to suggest that this home was unreasonably extravagant for her, or to suggest she could obtain reasonable accommodation at a lesser cost. Clearly her contribution based entitlement is insufficient to meet her reasonable future needs. I am therefore satisfied that this home is appropriate to meet the wife’s reasonable need to secure accommodation. [Reasons for Judgment, Appeal Book, page 25, par 66]

18. The learned Federal Magistrate reiterated that the respondent was only able to borrow $20 000 and included this his reasoning by saying:

    She could thus retain this home and meet a $20,000 payment to the husband’s estate. Such a payment would leave the wife with 86.4% of the pool of divisible assets, and the husband’s estate with 13.6%. This requires an adjustment to the contribution-based entitlements of 31.4% in the wife’s favour. I am satisfied on the facts of this case and for the reasons given that such an adjustment is appropriate. [Reasons for Judgment, Appeal Book, page 25, par 67]

The Grounds of Appeal

1. As Senior Counsel for the appellant sensibly conceded, the appeal raises two major challenges. The first of such challenges, Ground 2, relates to the quantification of the asset pool. The second of such challenges, which incorporates Grounds 3, 4 and 5 of the Notice of Appeal, raise variously articulated challenges to the s 75(2) adjustment determined by the learned Federal Magistrate. It is convenient, and more meaningful, to consider the latter three grounds of appeal in conjunction with each other. Sensibly in this Court’s view, the remaining grounds were not pursued.

Ground 2

1. Ground 2 provided:

   The Applicant for Leave complains as to [the] following matters arising from the learned Federal Magistrates [sic] judgment:-

   …

   2. Incorrectly included the sum of $51,000.00 in the pool as the husband’s funds at hearing when the evidence was that the sum was $30,834.00 and not the sum asserted by the husband in a Financial Statement filed in September 2005. [Notice of Appeal, Appeal Book, page 3]

2. The Court has had the benefit of cogently and closely reasoned written submissions by Senior Counsel and Counsel for the parties to the appeal in relation to this, and the other grounds of appeal. The Court can do little better than refer to those submissions in the terms in which they have been presented.

3. The crux of the complaint raised by this ground is that the conduct of the proceedings, and the observations of the learned Federal Magistrate during the course of final submissions, rendered a finding that the deceased had the higher figure of $51 000 by way of savings to have not been reasonably open to him. The evidence was submitted to have established that a figure of $31 000 was the only reliable evidence upon which his Honour could proceed, as his comments during final submissions to Counsel then appearing for the appellant were asserted to have confirmed.

4. On behalf of the respondent, learned Counsel submitted that the Federal Magistrate’s conclusions with respect to the deceased’s savings had been reasonably open to him, and that the approach which he adopted with respect to those savings was that which emerged from his Honour’s Reasons for Judgment.

5. It was submitted on behalf of the respondent that whilst the appellant had not been challenged with respect to the figure of $31 000 emerging from his enquiries with respect to the deceased’s bank accounts, the onus had at all material times been upon the appellant to explain the difference between the figure sworn by the deceased twelve days prior to his death ($51 000) and the amount revealed to have been in the deceased’s bank account at trial in February 2007 ($31 000).

6. It was submitted on behalf of the respondent that her case had been opened by her Counsel on the basis that the appellant’s assertion that $31 000 of savings should be the relevant figure rather than $51 000 was resisted, and that at no time thereafter did Counsel for the respondent ever express, imply or indicate that the respondent’s case in that respect changed.

7. To the extent that the learned Federal Magistrate made the observations upon which the appellant relied, it was submitted on behalf of the respondent that those statements did not mislead the appellant’s Counsel, and occurred at a time on or after the evidence concluded, when Counsel for the appellant could not have changed anything in any event.

8. To appreciate the competing assertions with respect to this topic it is instructive to consider the examination of this topic chronologically. The deceased had in fact, in September 2005, sworn a financial statement in which he revealed funds in banks, building societies, credit unions or other financial institutions of an estimated $51 000. [Financial Statement filed 14 October 2005, Appeal Book, page 135]

9. It is common ground that the appellant’s unchallenged evidence (sworn 17 May 2006) was that a review of the deceased’s financial statement revealed that “[t]he only asset that he still has is a […] Bank Account […] containing an amount of $30 834.88.” [Affidavit of S Smythe sworn 17 May 2006 & filed 18 May 2006, Appeal Book, page 101, par 3]

10. It is not in contest that the appellant was never cross-examined to suggest that such a figure was erroneous. Nor was the appellant cross-examined in relation to bank balances at any earlier time. To the extent that the appellant was not cross-examined in relation to the diminution of the deceased’s savings, as Counsel for the respondent submitted, in the circumstances to have done so, assuming any obligation or desirability of doing so, could not have been likely to have been a productive exercise.

11. When the case was opened before the learned Federal Magistrate, Counsel then appearing for the appellant identified early in the proceedings the controversy in relation to the deceased’s savings. [Transcript of Proceedings, Appeal Book, page 28] Whilst it is not entirely clear what Counsel for the respondent conveyed to the learned Federal Magistrate during the course of that exchange, on no construction of his statements could it be suggested that Counsel for the respondent abandoned the assertion that the deceased’s savings approximated $51 000.

12. As observed earlier, there was no cross-examination or other evidence adduced by either side to advance this controversy. At the conclusion of the evidence, Counsel for the respondent made submissions to the learned Federal Magistrate after which the case was adjourned until 10 am the following morning. [Transcript of Proceedings, Appeal Book, pages 75 – 78]

1. At that time, Counsel for the respondent was said by his instructing solicitor to have been unable to attend to represent the respondent “because of another commitment”. [Transcript of Proceedings, Appeal Book, page 80, line 2]

2. Counsel for the appellant then commenced his submissions. During the course of so doing a significant exchange occurred between the learned Federal Magistrate and Counsel then appearing for the appellant. It is appropriate to set out that exchange in its entirety, for reasons which will emerge.

   MR THISTLETON: So I would ask you to draw the inference that he had $51,000 in February of ’05. We know that he made a number of trips to the [P], we know that he’d retired and the inference I would ask you to draw is that he had spent that money between the date of getting it, namely, February ’05, and his death in October of ’05.

   FEDERAL MAGISTRATE: Well, I’ve got no submissions, written or oral, from the wife that I should do other than as is the usual case, take the parties’ property as at the present time. It’s a departure from usual practice to write back something that no longer exists. It can be done in proper circumstances but absent any testing of evidence that might go to the point and absent any submission in the wife’s case that the Court should do so, I wouldn’t propose to do so. I’m not being asked to do so. The mere fact that the figures appear in a list of assets and liabilities without any submission to back it up and no evidence otherwise to back it up doesn’t amount in my mind to making it part of the wife’s case.

   MR THISTLETON: Well, in that ---

   FEDERAL MAGISTRATE: It just hasn’t been agitated in the wife’s case at all.

   MR THISTLETON: Well, I’ll ---

   FEDERAL MAGISTRATE: It was referred to at the outset and just forgotten about after that.

   MR THISTLETON: Well, I’ll leave that point alone then for obvious reasons. [Transcript of Proceedings, Appeal Book, page 92, line 26 – page 93 line 4]

3. Nothing was said with respect to that topic by the respondent’s solicitor, who was at that time appearing as the respondent’s Counsel in the absence of learned Counsel who had conducted the trial on her behalf.

4. When the learned Federal Magistrate delivered his judgment one month later he said with respect to this topic:

   44. In relation to the husband’s savings, there is no explanation for the discrepancy between the husband’s financial statement, sworn by him a few weeks before his death, and the assets in the estate as asserted by the respondent. The difference is significant, $20,000.

   45. It is suggested on behalf of the respondent that the financial statement must be wrong. But there is no evidence to suggest this is so. In relation to the savings, the husband does not disclose any bank account details as required in his financial statement. The letter from the […] Bank the respondent obtained giving details of moneys held by that bank for his father does not establish there are no other moneys. There is evidence as to the husband’s usual banking practice, and I cannot proceed on the basis he could not have had accounts in more than one bank, and perhaps in more than one country, he having moved to live indefinitely in the [P].

   46. In the absence of any basis for disregarding the husband’s evidence as to his savings, I accept the evidence contained in the husband’s financial statement, and find that the amount of savings to be included in the pool of divisible assets is $51,000. [Reasons for Judgment, Appeal Book, page 19, pars 44 – 46]

5. It would be readily apparent that reconciling the statements appearing in those paragraphs with his Honour’s observations in the exchange with Counsel then appearing for the appellant, which have been set out above, is not necessarily easy. The corollaries of a number of the propositions advanced by his Honour (paragraph 45) are also apparent.

6. Whilst the issue was not without uncertainty, this Court accepts that the reasoning process which his Honour articulated in his exchange with Counsel during final submissions accurately reflects the state of the evidence and course which the trial of the proceedings before him had taken. On the evidence to which this Court has been referred, the approach which his Honour appeared to be there indicating that he would take was clearly open to him, consistent with the law and supportable by the evidence.

7. With respect to his Honour, who almost certainly would not have had the transcript of the proceedings from a month earlier, the way in which the case was conducted, as his Honour clearly and accurately perceived at its conclusion, did not render the finding with respect to the deceased’s savings which his Honour made in his determination of the proceedings reasonably open to him. This challenge is accordingly entitled to succeed. The consequence of allowing this challenge is that the net asset pool be reduced by $20 000. If no other ground of appeal finds favour, the percentage division determined by the learned Federal Magistrate should applied to the consequentially reduced net asset pool. As a consequence, the respondent would have to pay to the appellant the further sum of approximately $3200.

Grounds 3, 4 and 5

1. The challenges to the s 75(2) adjustment were articulated by Grounds 3, 4 and 5 of the Notice of Appeal. Those grounds provided:

   The Applicant for Leave complains as to [the] following matters arising from the learned Federal Magistrate [sic] judgment:-

   …

   3. Gave inappropriate weight to the wife’s asserted borrowing capacity in determining a Section 75(2) adjustment in that the wife’s borrowing capacity was determinative of the Section 75(2) adjustment.

   4. Failed to give sufficient or any weight to the expectancy of the husband’s estate to reasonably benefit from the husband’s contributions to the matrimonial pool.

   5. Gave inappropriate weight to the wife’s perceived needs for secure accommodation. [Notice of Appeal, Appeal Book, page 3]

2. On the asset pool as determined by the learned Federal Magistrate, or as this Court concludes it ought to have been determined, the effect of the s 75(2) adjustment in the wife’s favour (31.4 per cent) was to produce a differential in the entitlements of the parties by virtue of s 75(2) of 62.8 per cent or $341 425.39 or $328 865.39.

3. On any view of it, the s 75(2) adjustment determined by his Honour was very substantial, particularly having regard to the asset pool. It may well be that were this Court to determine the proceedings at first instance a less generous s 75(2) adjustment would have been made. That however is not the test. Before considering the competing contentions, it is appropriate to refer briefly to the law which governs these challenges. The law in that regard is not in doubt.

4. In House v The King (1936) 55 CLR 499 it was recorded (at 504-505):

   The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.

5. In Norbis v Norbis (1986) 161 CLR 513 Brennan J said (at 539 – 540):

   The difficulties in the way of developing guidelines beset an appellate review of the exercise of discretion under s.79. Unless the primary judge reveals an error in his reasoning, the Full Court can intervene only if the order made is not just and equitable. How does the Full Court arrive at that conclusion? In Bellenden(formerly Satterthwaite) v. Satterthwaite [1948] 1 All ER 343 at p.345 Asquith LJ. stated the rationale of an appellate court’s approach:

   …It is, of course, not enough for the wife to establish that this court might, or would, have made a different order.  We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable.  It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.

   The “generous ambit within which reasonable disagreement is possible” is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.

6. Though not necessarily so expressed, the crux of the appellant’s challenge as to the s 75(2) adjustment determined by the learned Federal Magistrate is that the factors upon which his Honour was permitted to rely could not accommodate an adjustment of the magnitude which his Honour determined. Consequentially, it was submitted that his Honour must have relied upon factors which he could not properly have relied upon, and that his Honour had thus erroneously considered the issue. In effect, it was submitted on behalf of the appellant that the learned Federal Magistrate had approached the question of the s 75(2) adjustment appropriate to be made “in reverse”, and by reference to what the respondent could borrow in order to retain the former matrimonial home of the parties. What the respondent could borrow was submitted to flow from a determination of an appropriate s 75(2) adjustment, not drive the adjustment itself.

7. On behalf of the respondent it was effectively submitted that the learned Federal Magistrate’s reliance upon the respondent’s ability to borrow was a factor upon which he could rely. More importantly, it was submitted on behalf of the respondent that the learned Federal Magistrate “came to the conclusion he did by carrying out the necessary balancing exercise of all relevant factors, one of which, but only one of which, was the wife’s capacity to borrow”. [Submissions on Behalf of the Respondent, page 5, par 3.2.3]

8. It was submitted with respect to the learned Federal Magistrate’s conclusion that the former matrimonial home represented a reasonable standard of living for the wife that “this was more of a comment than a finding critical to the balancing exercise” called for by the relevant provisions of the Act. [Submissions on Behalf of the Respondent, page 5, par 3.3.1]

9. It was ultimately submitted:

   …[T]hat it was for the Court to determine what the Wife’s entitlement would be, after taking into account all of the matters required of the Court by s.79 of the Act, including s.79(2) and s.79(8) and that after giving due consideration to these matters, the learned Federal Magistrate came to the conclusion that it was appropriate to make the orders he did. The Wife submits that the learned Magistrate delivered a tightly structured Judgment containing reasons which adequately explained the orders he made. (original emphasis) [Submissions on Behalf of the Respondent, page 6, par 3.3.2]

10. Further in that regard it was submitted:

    The Appellant submits that the learned Magistrate exercised the broad discretion given to him when balancing the s.75(2) factors and that the adjustment made by him did not transcend any supposed upper percentage limit so as to result in an unjust and inequitable outcome from the point of view of the Husband’s Estate. [Submissions on Behalf of the Respondent, page 6, par 4.1]

11. As the authorities to which brief reference has been made confirm beyond doubt, the learned Federal Magistrate was exercising an undoubtedly broad discretion in determining the proceedings before him.

12. Counsel for the respondent drew to the Court’s attention the wording of s 79(8)(b)(ii) of the Act which requires the court to be of the opinion “that it is still appropriate to make an order with respect to property” in which case the “court may make such order as it considers appropriate” with respect to property the subject of proceedings.

13. Counsel for the respondent conceded, sensibly in the Court’s view, that whilst read in isolation the reference to an “appropriate” order might be thought to create a somewhat broader discretion that in proceedings between two living parties to a marriage or former marriage, the section had to be read subject to the provision of s 79(4) and s 75(2). With respect, the Court agrees that such is the case, particularly given that s 79(1) refers to the making of such order as the Court considers “appropriate” in proceedings between living parties to the marriage or former marriage.

14. The learned Federal Magistrate referred in some detail to the cases to which he was referred. Whilst such discussion is potentially illuminating, the exercise in this Court renders it unnecessary, and probably undesirable, that the Court as currently constituted seek to do more than dispose of the present challenges within the settled and uncontroversial framework which governs appeals to this Court.

15. As observed at the outset, this Court may well have come to a different conclusion with respect to s 75(2) were it determining the matter at first instance. The appellant can derive no comfort however from that possibility. The decision of the learned Federal Magistrate is presumed to be correct. In Australian Coal and Shale Employees’ Federation v Commonwealth (1953) 94 CLR 621 Kitto J, endorsing House v The King (supra) recorded (at 627):

    [T]here is a strong presumption in favour of the correctness of the decision appealed from, and that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance …

16. In AMS v AIF (1999) 199 CLR 160 Kirby J said (at 211):

    [A]n appellate court, invited to review the exercise of discretion at first instance will avoid an overly critical, or pernickety, analysis of the primary judge's reasons, given the large element of judgment, discretion and intuition which is involved. Only if a material error of the kind warranting disturbance of a discretionary decision is established is the appellate court authorised to set aside the primary decision, to substitute its own exercise of discretion or to require that it be re-exercised on a retrial.

17. The appellant bears the onus of establishing that the learned Federal Magistrate’s conclusion with respect to s 75(2) fell outside the ambit of a reasonable exercise of discretion. That onus may be discharged by reference to reasons which may or may not be identified.

18. As noted earlier, there is no challenge to any finding of fact made by the learned Federal Magistrate for the purpose of determining the s 75(2) adjustment appropriate to be made in the respondent’s favour. The parties themselves, albeit on the assumption of different contribution entitlements, delineated a range of s 75(2) adjustments from 15 per cent to 25 per cent. Obviously, the Court’s conclusions with respect to contributions had the potential to impact on the s 75(2) adjustment appropriate to be made.

19. To the extent that the wife obtained 5 per cent less by way of contribution entitlements than she sought, her s 75(2) adjustment could be seen as having been 30 per cent. Conversely, to the extent that the upper limit of the appellant’s s 75(2) adjustment was 20 per cent, that could be seen as reduced to 15 per cent in the light of the Court concluding a contribution entitlement of 5 per cent less than the suggested adjustment anticipated. It would be immediately apparent that the learned Federal Magistrate’s award represented the “top of the range”. The more relevant issue is whether it fell beyond the “top” of that range.

20. On behalf of the appellant it was submitted, at least inferentially, that a number of extraneous factors must have influenced the learned Federal Magistrate’s exercise of discretion pursuant to s 75(2). Those factors were the fact that the matrimonial home had been left to the respondent by her father, that the deceased had not lived in it for almost four years, that the respondent could only borrow $20 000, and that the wife’s needs and retention of the matrimonial home were not extravagant.

21. Whilst potentially of some relevance, what the respondent may have been able to borrow could, in this Court’s view, properly only have contributed minimally to her entitlement to a s 75(2) adjustment.

22. Having taken into account how the respondent came to have the property and the deceased’s absences from it prior to his death in determining the contribution based entitlements of the parties, those matters could not validly contribute anything to the wife’s entitlement to a s 75(2) adjustment.

23. Whilst not of potentially great significance, the provisions of s 75(2) permitted his Honour to take into account as a relevant factor, a standard of living which was reasonable in all the circumstances. In the context of this case, that factor assumed potentially greater significance given that no valid comparisons could be made between the respondent and the deceased.

24. Whist having regard to a reasonable standard of living does not necessarily in any case translate as an entitlement to own a home, given that the deceased would have no further needs for accommodation of the kind with which the Court was concerned, and that the property did not provide for an extravagant or excessive standard of living, not inconsiderable weight could have been attached to that factor.

25. It was fairly not submitted on behalf of the appellant that the learned Federal Magistrate was other than entitled to attach significant weight to the wife’s age, modest ability to earn, limited future earning ability and lack of qualifications for more remunerative or enduring employment. These were compelling s 75(2) factors, as the appellant no doubt recognised in conceding an adjustment of the magnitude indicated earlier.

26. The matters to which the Court has thus far referred are comparatively straightforward. The exercise becomes more difficult when the “balancing act”, as Counsel for the respondent aptly described it, is undertaken and the reality that the deceased, whose contributions give rise to the appellant’s entitlement, cannot and will not benefit in any way from any award made in favour of the appellant. Relevant in that context is the undisputed absence of dependents, either through age or disablement, on the part of the deceased.

27. As the learned Federal Magistrate correctly observed, reality demanded that the death of the deceased had “a profound effect upon the balance of the s.75(2) factors.” [Reasons for Judgment, Appeal Book, page 23, par 61(b)]

1. His Honour also observed:

   a) It must be presumed from the enactment of s.79(8) that the legislature intended that one party to a marriage which has broken down to the point that proceedings have been commenced for orders altering interests of the parties in property should not profit by the fortuitous death of the other party prior to the determination of those proceedings. [Reasons for Judgment, Appeal Book, page 23, par 61(a)]

   It is to be noted that the legislature did not choose to differentiate between the criteria by reference to which the respective entitlements of living spouses were determined as opposed to those where only one spouse was living. The legislation provides no basis for considering the preservation of a deceased spouse’s estate within the context of s 75(2). Nor does any provision in the statute in any way expressly or impliedly circumscribe the ambit of the discretion which the Court exercises where one party is deceased.

2. It could thus be submitted, as Counsel for the respondent did, that the acknowledged breadth of the discretion the Court exercises when determining Part VIII proceedings between living spouses is potentially at its broadest when the proceedings fall to be determined pursuant to s 79(8) of the Act.

3. It was not submitted on behalf of the appellant that the impact on the beneficiaries of the deceased estate of any order made under s 79(8) was a relevant fact or circumstance in this case.

4. In the judgment in F v M [2001] FamCA 1585 (at page 15), Boland J referred to the judgment of Brennan J in Fisher & Fisher (1986) 161 CLR 438 during the course of which his Honour said (at 457 – 458):

   The death of a spouse will not always extinguish or satisfy the moral claims of the surviving spouse and children to which effect would have been given if the proceedings had been completed. Section 79(8) empowers the Family Court to give effect to the moral claims in respect of the property of the spouses which was made available to answer those claims by the commencement of the proceedings, provided “it is still appropriate to make an order with respect to property”: s. 79(8)(b)(ii). That qualification on the power, coupled with par. (ca)(i) of the definition of “matrimonial cause”, ensure that the jurisdiction is exercised only in cases where the moral obligations arising out of the marriage remain unsatisfied.

   Section 79(8) provides machinery for the discharge of those moral obligations in priority to any rights in the property of a party to a marriage which arise by testamentary disposition of that party’s property or by any other devolution of that property on that party’s death.

5. As noted earlier, quite apart from the fact that the discharge of the deceased’s “moral claims” to the respondent have “priority” over those of testamentary beneficiaries of the estate of the deceased, in this case there was no evidence of any facts or circumstances which might, howsoever viewed, have fallen within the ambit of s 75(2)(e)(ii) or s 75(2)(e).

6. Taken in conjunction with the other factors to which his Honour was undoubtedly entitled to have regard, the “profound effect upon the balance of the s.75(2) factors” of the deceased’s death provided the learned Federal Magistrate with an array of permissible factors upon which he could base a s 75(2) adjustment. [Reasons for Judgment, Appeal Book, page 23, par 61(b)] This his Honour did.

7. This Court is not persuaded, applying the appropriate appellate principles, that the learned Federal Magistrate erred in the exercise of his discretion in the determination of the appropriate s 75(2) adjustment. The Court does not accept that the exercise of such discretion was vitiated by his Honour’s possible reliance upon extraneous factors. The factors to which his Honour was entitled to have regard provided sufficient in this Court’s view render his Honour’s determination of the respondent’s s 75(2) adjustment reasonably open to him.

8. The Court is thus not persuaded that any of the challenges to s 75(2) adjustment made by the learned Federal Magistrate is made out. Although not strictly necessary for the purpose of determining the appeal, it is instructive to consider the position that this Court would find itself if the appeal were allowed and, as both parties appear to request, this Court were to re-exercise the discretion of the learned Federal Magistrate.

9. The reality that this Court might make a smaller, but still very substantial s 75(2) adjustment in favour of the respondent confirms the undesirability of this Court interfering with his Honour’s exercise of discretion. Howsoever expressed, in the circumstances of this case, for this Court to interfere would be in substance to suggest that because this Court reached a somewhat different conclusion than that reached by the learned Federal Magistrate, that conclusion must, in ways not demonstrated by the appellant, have been erroneous.

Conclusion

1. Save to the extent indicated as a consequence of allowing Ground 1, the appeal should be dismissed. Ground 1 having succeeded on an error which enlivens the provisions of the Federal Proceedings (Costs) Act 1981, each party should receive a costs certificate.

I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman.

Associate: 

Date:  10 October 2007