Stone & Stone
[2015] FamCAFC 18
•19 February 2015
FAMILY COURT OF AUSTRALIA
| STONE & STONE | [2015] FamCAFC 18 |
FAMILY LAW – APPEAL – Where the trial judge adopted a global approach to the assessment of the parties’ contributions to property – Where the husband received an inheritance shortly before separation – Whether the trial judge gave proper consideration to the introduction of the husband’s inheritance – Where the parties made significant improvements to the inherited property – Where the husband failed to make proper financial disclosure – Whether the non-disclosure was to such an extent that the court was unable to determine the nature and extent of the husband’s assets and financial resources – Whether the trial judge was entitled to consider the relevance of the husband’s non-disclosure in a consideration under s 75(2) factors rather than in considering contributions under 79(4) – Where the trial judge was entitled to take the husband’s failure to disclose into account in determining s 75(2) factors – Appeal dismissed.
FAMILY LAW – APPLICATION IN AN APPEAL – Where the appellant seeks orders to reopen the case in the appeal – Where the appellant seeks to adduce further evidence – Application dismissed.
| Family Law Act 1975 (Cth): ss 75(2), 79 Family Law Rules 2004 (Cth) |
| Bellenden (formally Satterthwaite) v Satterthwaite [1948] 1 All ER 343 |
| APPELLANT: | Mr Stone |
| RESPONDENT: | Ms Stone |
| FILE NUMBER: | SYC | 6953 | of | 2009 |
| APPEAL NUMBERS: | EA EA | 58 82 | of of | 2013 2013 |
| DATE DELIVERED: | 19 February 2015 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ainslie-Wallace, Ryan & Murphy JJ |
| HEARING DATE: EA 58 OF 2013 EA 82 OF 2013 | 18 August 2014 In chambers on submissions |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 18 April 2013 19 June 2013 |
| LOWER COURT MNC: | [2013] FamCA 270 [2013] FamCA 479 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Alexander Todd |
| SOLICITOR FOR THE APPELLANT: | McDonell Milne Toltz, Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Richard Schonell SC |
| SOLICITOR FOR THE RESPONDENT: | Diana Perla & Associates |
Orders
The application in an appeal filed by the husband on 22 October 2014 be dismissed.
The husband pay the wife’s costs of and incidental to the application in an appeal as agreed between the parties or assessed, such costs to be paid twenty eight days after agreement or assessment.
The appeal against the property orders of Fowler J made on 18 April 2013 be dismissed.
The appeal against the costs orders of Fowler J made on 19 June 2013 be dismissed.
The husband pay the wife’s costs of and incidental to the appeals as agreed between the parties or assessed, such costs to be paid twenty eight days after agreement or assessment.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Stone & Stone 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 SYDNEY |
Appeal Numbers: EA 58 of 2013
EA 82 of 2013
File Number: SYC 6953 of 2009
| Mr Stone |
Appellant
and
| Ms Stone |
Respondent
REASONS FOR JUDGMENT
Ainslie-Wallace and Ryan JJ
Mr Stone (“the husband”) appeals against orders for property settlement as between him and Ms Stone (“the wife”) made by Fowler J on 18 April 2013 pursuant to s 79 of the Family Law Act1975 (Cth) (“the Act”) and against costs orders made by Fowler J on 19 June 2013. Although the subject of a second appeal, it was agreed between the parties that the outcome of the costs appeal would follow the determination of the appeal against the property orders.
His Honour found that the total net assets of the parties and each of them including superannuation to be $5,602,225 and ordered by way of property settlement that the wife receive 48 per cent of those assets, being $2,689,068. Taking into account the property to be retained by the wife, the orders required the husband to pay her an additional sum of $1,670,435. The orders resulted in the husband retaining $2,913,157 of those assessed assets.
His Honour also ordered the husband to pay a further sum of $25,110 to the wife being the balance owing to her under a financial agreement entered into by the parties and to pay a further sum of $4,400 to the wife being the husband’s share of the single expert’s fees.
Background
So as to give this appeal context, it is necessary to record a few seemingly uncontroversial facts.
The husband and wife commenced to live together in January 1998 and married in mid 1998. They separated in March 2009. There is one child of the parties’ relationship, J (“the child”), who was born in 2001. The husband was born in 1958 and the wife in 1960. The wife’s two children of a former relationship also lived with the parties. They were aged eight and ten when the parties commenced cohabitation.
The wife is a healthcare professional by occupation and in November 2006 she purchased a healthcare business in Sydney’s eastern suburbs where the parties lived. She continued to operate that business at the date of hearing before
his Honour [39]. The husband is the principal of a financial services practice, DS & Associates and is also the sole shareholder and director of a business, PC Pty Ltd (“PC”) [155].
Both parties worked throughout the marriage. Six months after the birth of their child, the wife returned to part-time work.
At the date of the commencement of cohabitation the wife owned an unencumbered property in O Street, Suburb R purchased by her in 1997 for $555,000 [25]. When the parties began to live together, the husband, wife and her two children lived in this property. The wife sold this property in 2011 for $955,000 and applied the proceeds to the purchase of a property in her name in Suburb B for $1,300,000 [47]. The wife retains that property.
At the date of cohabitation the husband had assets including a property in Suburb P and a property in Suburb S ([22] and [28]). Both were purchased using borrowed funds and each was rented during the relationship. The husband received the rental income on those properties and was responsible for the payment of the mortgages. During the relationship, the husband bought other properties, each of which was subject to a mortgage and rented.
At the date of cohabitation the husband was a beneficiary of a discretionary trust, the Z Trust, established by his father in 1986 (“the trust”). X Holdings Pty Ltd is the trustee of the trust [21]. The evidence before his Honour of the trust holdings from time to time was opaque. For a time, the husband and wife were equal shareholders of X Holdings Pty Ltd and the husband is the sole director of that company. From June 1999 until June 2008, the wife was a director and secretary of X Holdings Pty Ltd. It seems that in 2001, the husband and his mother gave the benefit of their loan accounts in the trust amounting to $250,000 to the child of the husband and wife.
The husband asserted that at the date of commencement of cohabitation the trust held all of the shares in DS & Associates and PC and also held real estate, subject to a mortgage, from which the husband operated his business.
On 14 January 1998 the husband made an agreement with his sister in which he, in effect, purchased for $350,000 her future interest in a property in N Street, Suburb R (“the N Street property”). This was their mother’s property which, it was expected, would otherwise pass to the husband and his sister upon their mother’s death [27].
In 2002 the parties commenced to make significant improvements to the N Street property. The improvements cost in the order of $1,000,000. It was common ground that the wife contributed $150,000 towards the renovations. Her contribution was provided pursuant to a financial agreement between the parties in which the husband agreed to repay her contribution [35]. At the time of the hearing before the trial judge, all but $25,000 had been paid to the wife in accordance with the agreement. His Honour’s orders required the husband to repay the balance of that advance.
No borrowings were made by the husband to effect the renovations and it was eventually accepted by the husband, albeit without the production by him of relevant bank documents, that the balance of the funds was contributed by the husband from his post cohabitation earnings. The parties, the wife’s two children and the child of the parties moved into the N Street property in 2003 and lived there until separation in 2009.
The husband’s mother died in August 2006. Probate was granted in April 2007 and by way of inheritance, the husband then received the N Street property ($2,200,000), cash from the realisation of investment real estate and half of a share portfolio. The husband said, and his Honour accepted, that he received $560,000 from the proceeds of sale of the investment properties and his part of the share portfolio was worth $50,000 [135]. The husband asserted that the value of his share of his mother’s estate was $2,810,000.
The trial judge determined the net value of the assets of the parties inclusive of superannuation to be $5,602,225. He set out the property of the parties and each of them in a balance sheet at [108]:
Item
Ownership
Description
Value ($)
ASSETS
Wife [Suburb B property] 1,350,000 Wife [P Road healthcare business] 553,976 Wife Peugeot Motor Vehicle 20,000 Wife Westpac Bank Shares 3512 102,723 Wife Telstra and IAG shares 7,000 Wife Contents & Jewellery 25,000 Wife Honda Motor Vehicle 0 Husband [Suburb P property] 1,050,000 Husband [Suburb S property] 375,000 Husband [Suburb V property] 370,000 Husband [Queensland property] 375,000 Husband [T property (H Street unit trust)] Held in Unit trust by daughter Husband [N Street, Suburb R] Included in AS Trust valuation Husband Shares 48,261 Husband BMW motor vehicle 82,000 Husband [DS] & Associates 8,153 Husband Moneys due by [DS] & Associates 126,691 Husband [PC] Pty Ltd Nil Husband [Z] Trust 3,100,627 Husband Contents 10,000 Total assets $7,604,431 ADD BACKS
20 Husband Funds not accounted for including (see annexure A):
a) Loan by husband to [Z] Trust
b) [PC] term deposit
c) Loan taken by husband post separationd) Funds withdrawn 16/12/10
777,943Total add backs 777,943 Total assets (including add backs) $8,382,374 LIABILITIES
Wife Mortgage over [Suburb B property] 676,900 Wife Loan for [P Road healthcare business] –NAB 360,000 Wife Lease over Peugeot 32,703 Husband Mortgages over Real Estate 1,444,856 Husband CBA Overdraft 49,744 Husband Debt by Husband to [PC] 290,983 Total liabilities $2,855,186
SUPERANNUATION
Wife [X] Holdings SMSF 13,000 Husband [X] Holdings SMSF 31,000 Wife [Profession specific] Accumulation 29,537 Husband Commonwealth Life Accumulation 1,500 Total superannuation $75,037 Total net assets (including add backs and superannuation) $5,602,225
At the commencement of submissions, counsel for the wife handed to
his Honour an agreed joint balance sheet of the parties. Annexed to that document as annexure “A” was a list of sums which, it was argued ought to be taken into account by his Honour in determining the assets and liabilities of the parties.
Regrettably, that document was not marked in any way nor did it become an exhibit in the proceedings. However his Honour referred to it in his reasons at [84].
In valuing the trust, the single expert took into account a liability in the trust for a borrowing of $150,000. In submissions, it was argued for the wife, and apparently accepted by his Honour, that this amount was in fact borrowed by the husband, the funds provided to the trust and from those funds, the husband repaid the wife $125,000 of the $150,000 advanced by her to the renovations of the N Street property. It was argued that this was not a liability of the trust, and since the valuation had taken it into account, the amount borrowed by the husband should be included in the liabilities of the husband. His Honour accepted that submission and included that amount as a liability of the husband in the balance sheet [85(a)].
PC held a term deposit of $270,000. It was agreed between the parties that $180,000 of that amount should be brought to account in the balance sheet. The dispute was as to $90,000. The husband was unable to indicate how the $90,000 had been used, other than to say it was used after the parties separated, thus it was contended it should be brought to account.
His Honour accepted that submission and brought back the whole of that amount [85(b)].
The husband asserted liabilities from mortgages held over real estate in the sum of $1,444,856 which was to be taken into account in determining the net property of the parties. Following separation, the husband borrowed $185,000 which he included in the rolled up liability of $1,444,856. He provided no explanation for its use. The wife argued that the loan ought not to form part of the husband’s liabilities and it should be “added back” into the balance sheet being considered by his Honour [85(c)].
In December 2010 the husband withdrew $114,000 from the account of PC. When asked, the husband said that the funds were used in a “failed investment”. It was submitted for the wife that the amount by which the husband’s loan account in PC was increased after separation, having been taken into account by the valuer in assessing the value of PC, the amount used by the husband for his own purposes should be included in the balance sheet. The amount by which the loan account was increased was $58,943 [85(d)].
The total of these funds amount to the $777,943 to which his Honour referred in the balance sheet.
His Honour found that the parties’ contributions up to the date of hearing ought to reflect in an adjustment of 60 per cent to the husband [152].
Turning then to a consideration of matters contained in s 75(2) of the Act,
his Honour adjusted the wife’s entitlement by a further 8 per cent. Thus the wife was to receive 48 per cent of the parties’ assets and the husband 52 per cent [169].
Important to his Honour’s findings was the husband’s failure to make proper financial disclosure.
His Honour found:
·The husband persistently made inadequate disclosure and made false and misleading disclosure [68];
·The husband failed to make full and frank disclosure and made false disclosure [70];
·The husband had declined to produce relevant documents and some documents produced by him had been significantly redacted [70]; and
·The husband had been obstructive of attempts to obtain information on the financial history of the parties in circumstances where he had historically been in control of those issues [71].
Further, his Honour found that the husband’s failure to make disclosure and
his inaccurate disclosure was such that he was not a witness on whom the court could rely in determining the issues [57].
None of these findings was challenged on appeal. Further none of
his Honour’s findings about the property of the parties as set out in a balance sheet in his Honour’s reasons was challenged in the appeal.
It is against this background that we consider the appeal.
Appeal
By leave, the husband relied on an Amended Notice of Appeal which contained eight challenges to his Honour’s orders. However, in arguing the appeal, counsel for the husband addressed the appeal by issues rather than by reference to the individual grounds. Counsel for the wife responded in the same fashion and we will consider the appeal in the same way.
The global consideration of contributions
It was contended in the Amended Notice of Appeal:
…
1.2 The Trial judge erred in adopting a global approach to the stage 1 assessment of contributions by the parties:-
a)in circumstances where two distinct asset pools existed with markedly differing contribution components by the parties, comprising in pool 1 the non-inherited assets and in pool
2 the husband’s inheritance approximating $3,210,000 at trial ([N Street, Suburb R] at $2,200,000 and cash and shares being half residue of the estate at $610,000) from his mother’s estate shortly prior to separation.…
d) in adopting the global approach the Trial Judge distorted the contribution assessment by impermissibly overcompensating the wife in respect of the inherited assets which represented more than one half of the $5,602,000 net asset pool found at trial.
The trial judge said:
109.In determining the way in which the parties’ contributions should be assessed and a result based on them arrived at, there was some argument from the husband that this should be done on an “asset-by-asset basis”.
110.In this case, where there is considerable doubt over some of the parties’ history as indicated above, it is in the Court’s view inappropriate to approach the matter on an asset-by-asset basis. The Court intends in the exercise of its discretion to approach the considerations it has to make on a “global basis”.
It must first be observed that the trial judge was not asked to adopt a two-pool approach in determining the contributions of the parties. Counsel who then appeared for the husband submitted that his Honour should consider the parties’ contributions on an asset-by-asset basis rather than adopt a global approach to the assessment of the parties’ contributions
Whether the assessment of parties’ contributions to the assets of them and each of them is done by considering them globally or on an “asset by asset” basis was considered in Norbis v Norbis (1986) 161 CLR 513 where Mason and Deane JJ said at 523:
Although it is natural to assess financial contributions under s 79(4)(a) by reference to individual assets, it is also natural to assess the contribution of a spouse as homemaker and parent either by reference to the whole of the parties' property or to some part of that property. For ease of comparison and calculation it will be convenient in assessing the overall contributions of the parties at some stage to place the two types of contribution on the same basis, ie on a global or, alternatively, on an “asset-by-asset” basis. Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient.
However, we understand the ground of appeal to be not so much concerned with the relative merits of a global as opposed to an asset-by-asset or indeed a two-pool approach to assessing contributions but rather that in failing to consider the husband’s inheritance separately from other property, the trial judge failed to attribute proper significance to the value of and time of its introduction into the parties’ relationship. Further, it was contended that in failing to consider the inheritance separately, his Honour failed to consider the husband’s contention that the wife made no contribution to it.
Counsel for the husband argued that, in truth, the arrangement between the husband, his sister and his mother concerning the N Street property and the payment to the husband’s sister of $350,000 for her interest in the N Street property gave the husband no greater interest in the property than a right to assert his interest, in the event that his sister made a claim on their mother’s estate to part of the property.
Counsel for the wife contended that although probate was granted over the husband’s mother’s estate towards the end of the parties’ relationship, in fact, the husband acquired a significant interest in the N Street property well before that time. It was contended that this was so because at the very least clause 15 of the agreement between the husband and his sister and mother stated in clear terms that their agreement operated to grant the husband an equitable interest in the N Street property which he was able to secure by the registration of a caveat over the title of the property.
We agree with counsel for the wife that although the husband’s interest in the N Street property did not crystallise in the sense that he did not acquire the right to have the title to it transferred to him until probate over his mother’s estate was granted in April 2007, he had before that time acquired an interest in it greater than that described by his counsel. Before his mother’s death, both he and the wife moved into the property and made significant renovations to it expending funds accrued during the cohabitation to do so. It was conceded by counsel for the husband during the argument on the appeal that the cost of acquisition of his sister’s interest and the $1 million spent on improving the property amounted to about one half of the value of the N Street property.
These circumstances would, it seems, give rise to an equitable interest in the husband by way of a constructive trust in the property. In our view there can be no doubt that before his mother’s death, the husband had acquired a beneficial interest in the property of at least 50 per cent of its value.
Viewed in this way, the husband’s argument that the whole of the value of the inheritance was received by him late in the relationship, could not be sustained.
The other asset which, on the appeal it was contended ought to have received separate consideration by his Honour, was the Z Trust. The trust held assets acquired before the parties commenced cohabitation and other assets acquired during cohabitation, including shares in the company through which the husband conducts his business. According to the list of assets and liabilities composed by the trial judge, after the N Street property was removed from the trust as an asset, it being conceded in the appeal that the N Street property was not an asset of the trust and had been incorrectly attributed to the trust, some $600,000 remained in the trust at the date of hearing before the trial judge.
What relationship might exist between the trust assets which the husband introduced at the commencement of cohabitation and the value of its assets as at the date of hearing was never clarified for the trial judge. Those facts having been, in effect, ignored at trial, they cannot be agitated on appeal.
Having identified the assets of the parties and each of them and composed a balance sheet, his Honour turned to a consideration of their contributions. He found that while the parties each came into the relationship with significant assets, the husband’s financial contributions both during the marriage and before outweighed those of the wife having regard to the introduction of the husband’s inheritance and the proceeds from the sale of a property owned by him before cohabitation [115]. His Honour then considered the contributions made by the parties during their relationship and noted the wife’s concession that during the relationship, the husband’s financial contributions were greater than hers. His Honour further accepted the wife’s contention that she made the greater non-financial contributions during the relationship [147].
His Honour assessed the parties’ contributions since their separation and came to a conclusion as to their respective contributions as to 40 per cent to the wife.
As is apparent, his Honour was well aware of the importance of the husband’s inheritance and his initial financial contributions to which his Honour gave weight in determining the relative contributions of the parties.
In truth, the challenge to this finding devolves to an argument that in coming to a conclusion that the wife’s contributions reflect a 40 per cent division of the assets, his Honour must have failed to give proper weight to the husband’s contribution of his inheritance and the trust assets.
Nothing put to us persuades us that his Honour’s determination in this regard was outside “the generous ambit in which reasonable disagreement is possible” (see Bellenden (formally Satterthwaite) v Satterthwaite [1948] 1 All ER 343 at 345 per Asquith LJ). After citing this passage with approval in Norbis v Norbis (supra), Brennan J said at 540:
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.
It was also argued that his Honour failed to give reasons sufficient to illuminate the path by which he reached his conclusion as to contributions. Given the state of the evidence, we struggle to discern what more his Honour might have said.
As the passages to which we have referred reveal, his Honour’s reasons sufficiently reveal his process to the conclusion reached.
This challenge to his Honour’s orders is not made out.
Section 75(2) adjustment and the husband’s non-disclosure
The second challenge to his Honour’s orders was to his Honour’s adjustment of 8 per cent in the wife’s favour to take account of s 75(2) factors. It was argued that his Honour erred in coming to the conclusion that the matters to which he referred in his reasons at [133] to [169] required the wife to receive a further
8 per cent adjustment.
His Honour sought to compare the parties’ present and future earning capacities but said that because of the husband’s failure to disclose and where there was doubt as to the accuracy of the financial information that was disclosed, it was difficult to assess his future earning capacity [156]. Nonetheless, he found that the husband’s earning capacity was more likely to be greater than that of the wife.
It was undisputed that the wife was and had been the primary carer for the child and the primary judge found that despite the wife’s endeavours, the husband had failed to take a substantial role in the parenting of the child [158].
Although the husband had been providing financial support for the child since separation, his Honour found that the payments were made from the child’s own loan account in the trust. She was, in fact, paying her own child support.
His Honour said:
169.For all the reasons referred to above, namely:
a) the mother’s ongoing primary care of the child and
b)the clear disparity between the parties in terms of their income and earning capacity, including a consideration of the husband's capacity to generate wealth through a number of his related entities and where
c) the result of the division of assets would otherwise leave the husband in a much stronger position as to capital than the wife and where
d) the husband’s failure to disclose leaves the Court in doubt as to whether he has other undisclosed assets, financial resources or income, and taking into account the financial resources otherwise available to the parties
the Court takes the view that there should be an adjustment of some 8 per centum in favour of the wife.
Counsel for the husband submitted his Honour erred in taking into account the husband’s non-disclosure in assessing what adjustment to make in the wife’s favour arguing that in truth the husband’s non-disclosure amounted to “tardiness” and an “irritant” and was not such as to leave the court unable to determine the nature and extent of the husband’s assets and financial resources. Secondly, counsel submitted that the impact of non-disclosure, if relevant, ought be reflected in identifying assets and determining contributions pursuant to s 79(4)(a) - (b) not in a consideration of s 75(2) factors. It was argued that where the impact of non-disclosure is reflected in a s 75(2) adjustment, it is impossible to understand the weight attributed to the fact of non-disclosure and, further, what adjustment would have been made under s 75(2), if any, but for the non-disclosure.
The nature of the husband’s non-disclosure
We do not agree with counsel’s characterisation of the husband’s failure to disclose. One example of the husband’s failure in his obligation to disclose should be sufficient to illustrate why.
A single expert accountant was engaged in the trial to value the husband’s business interests, including PC. To that end, the husband provided the expert with documents and in particular, the financial statement for PC for the financial year ending 30 June 2011 showing its assets as $57,000 in a bank account. The husband agreed in his evidence that the financial statement had been prepared by him; that it was an accurate reflection of the company’s accounts and that he intended the expert to rely on that document in reaching a value of PC. Of course it will be recalled that the husband is himself a financial professional.
However, in cross examination the husband was compelled to concede that at the relevant time, PC not only held a further account of $40,000 which had not been included in the financial statement nor disclosed to the expert but that PC held an additional sum of $270,000 in a term deposit, the existence of which had not been disclosed by the husband.
The two undisclosed bank accounts came to light, not by the husband disclosing them but through a subpoena issued by the wife on PC’s bank account.
The husband had, earlier in the proceedings, declined to pay his share of the fees of the expert valuer, saying that he was unable to afford them. Ultimately the wife paid the fees on the husband’s behalf.
His Honour said of this:
68. This case involves not only persistent and continuing inadequate disclosure, but false and misleading disclosure as well. That was seen particularly in relation to submissions of the husband to the effect that he was unable to afford some independent experts’ fees, when at the hearing it was discovered that he in fact held substantial credits in accounts under his control at the time. This discovery rendered the husband’s assertions not only false but palpably false.
Thus we do not agree with counsel’s description of the husband’s failure to make financial disclosure.
The relevance of non-disclosure to s 75(2)
Turning then to the submission that the husband’s non-disclosure was not relevant to the assessment of any adjustment in the wife’s favour pursuant to
s 75(2), we do not understand the basis of the asserted confinement of the consideration of financial non-disclosure to s 79(4) considerations as contended by the husband. In considering whether any further financial adjustment was to be made by reference to the matters contained within s 75(2), his Honour was required to consider the parties’ future by reference to earnings and earning capacity amongst other things. His Honour was clearly correct to take the husband’s failure to disclose in determining these issues, not only as to future income and earnings but as to whether the husband had other assets undisclosed and undiscovered through the wife’s endeavours (see Kowaliw and Kowaliw (1981) FLC 91-092).
It was submitted that a further adjustment of 8 per cent in this case was excessive given the wife’s profession and her future financial needs.
Perhaps had the husband complied punctiliously with his obligation to make proper financial disclosure, it might be argued that a further 8 per cent adjustment in the wife’s favour could be considered outside the reasonable range of his Honour’s discretion. However, the husband demonstrated to the trial judge that he was prepared to conceal significant sums of money.
His Honour’s approach of providing a “hedge” against the husband having successfully concealed further assets or income was one open to him in the determination of the adjustment pursuant to s 75(2) considerations.
To the extent that the submissions contend that some form of accounting is required of a trial judge determining an adjustment pursuant to s 75(2) is unsupported in the authorities. As was said by Coleman J in Steinbrenner & Steinbrenner [2008] FamCAFC 193:
234.Given that the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion, whether it be in the assessment of contributions in the matrimonial cause, assessment of damages in a personal injuries case, or determination of compensation in a land resumption case. In some cases, the “leap” is so great, and so unheralded by the discussion which precedes it as to render the reasoning process defective. In this Court’s view this is not such a case.
…
269.As with the assessment of contributions, determining an appropriate section 75(2) adjustment involved the exercise of a broad discretion. This Court may not have been as generous to the wife as was the learned Federal Magistrate, but that is not the test. The learned Federal Magistrate did not exercise his discretion pursuant to section 75(2) by reference to erroneous facts, nor did he have regard to extraneous or irrelevant facts or circumstances or fail to have regard to relevant facts or circumstances. No error of principle has been demonstrated. Nor has it been demonstrated that, despite the absence of demonstrable error, the adjustment made by the learned Federal Magistrate was manifestly excessive.
This challenge has not been made out.
The appeal will fail.
As we have indicated, it was conceded that if the principal appeal failed, so too would the appeal against his Honour’s costs order and we will also dismiss that appeal.
Costs
We sought submissions on the costs of the appeal at the conclusion of the appeal hearing to save the parties the time, trouble and expense of making those submissions once judgment had been delivered. Counsel for the husband sensibly conceded that if the appeal was unsuccessful, he could not resist an order for costs against him. We will make that order.
Application in an appeal
The appeal was heard on 18 August 2014 and the court reserved its decision. After the conclusion of the appeal hearing and before delivery of judgment on the appeal, on 22 October 2014 the husband by application sought leave to reopen the appeal and further that leave be granted to adduce further evidence on the appeal.
The further evidence is said to relate to circumstances that have arisen since the hearing of the appeal and which it is said are relevant to the Full Court’s consideration of the husband’s appeal.
The circumstances relate to the child who was born in 2001. From the date of the parties’ separation the child has lived with the wife and spent time with the husband. The husband contends that after spending time with him between 22 September and 6 October 2014, in accordance with an agreement with the wife, the child declined to return to live with the wife. He asserts that the child’s desire reflects a strong and settled preference to live with him.
On 22 October 2014, the husband filed in the Family Court of Australia an application seeking parenting orders to reflect the circumstances that the child remained in his care, that is that the child live with him and spend time with the wife. He filed an affidavit in support of that application. The application has not been heard.
It is on this material that the husband will rely if leave be given to reopen the hearing of the appeal.
The husband contends that, if leave be granted, both as to re-opening the hearing of the appeal and as to the adducing of further evidence, he will argue that in the light of the evidence, his Honour’s findings pursuant to s 75(2) of the Act which resulted in an adjustment in favour of the wife of 8 per cent represents an error in the exercise of his Honour’s discretion.
On 30 October 2014, orders were made in chambers that the parties file written submissions in relation to the husband’s application and that the matter be determined in chambers without an oral hearing unless either party requested it. No such request was received.
Both the husband and wife filed written submissions.
The application to re-open the appeal hearing
It was not controversial that the husband’s application to re-open the appeal hearing was competent, it being brought before the appeal was determined by the court. Counsel for the husband contended that whether leave is granted to re-open the appeal hearing depends on the nature and quality of the evidence sought to be adduced in a further hearing on the appeal. Clearly the proposition must be accepted because where evidence is sought to be adduced, if the evidence could not properly be received or was without persuasive effect, a grant of leave to re-open the hearing would be pointless.
On 5 February 2015 the husband’s solicitors forwarded to the appeals registry an affidavit of the husband and on which he sought to rely in further support of the application to re-open the appeal to adduce further evidence.
The wife’s solicitor consented to the court receiving the affidavit and considering it as part of the husband’s application.
The application to adduce further evidence
As the submissions for the husband acknowledge, the application of the principles in respect of a re-opening of this appeal are interconnected with, and effectively dependent upon, the question of whether the evidence sought to be adduced on the re-opening would be received by an appeal court in any event. That, in turn, requires this court to be satisfied that the evidence would be received as additional evidence (s 93A(2) of the Act: CDJ v VAJ (1998) 197 CLR 172) or, in the event that the appeal succeeded, as evidence relevant to this court re-exercising the discretion.
As this appeal will otherwise fail, it is only the former which is relevant.
In essence, the evidence sought to be adduced by the husband by leave, if leave to re-open is granted, should be such as to satisfy us that, if admitted, it would demonstrate that his Honour’s order was erroneous or, if the evidence was not admitted, that significant injustice would occur. In CDJ v VAJ (1998), McHugh, Gummow and Callinan JJ said, at [201] that the principal purpose of s 93A(2) is:
… to give to the Full Court a discretionary power to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors which cannot otherwise be remedied by the application of the conventional appellate procedures … .
Important to the issues relevant in this case, their Honours went on to say, at [202]:
… it is highly unlikely that Parliament in conferring jurisdiction on the Full Court to hear appeals intended that s 93A(2) should be construed in a way that would have the practical effect of obliterating the distinction between original and appellate jurisdiction. Nor can the availability of further evidence relevant to issues in the appeal be treated as equivalent to a ground of appeal, proof of which prima facie entitles the appellant to a new trial. The power to admit the further evidence exists to serve the demands of justice. Ordinarily, where it is alleged that the admission of new evidence requires a new trial, justice will not be served unless the Full Court is satisfied that the further evidence would have produced a different result if it had been available at trial. Without that condition being satisfied, it could seldom, if ever, be in the interests of justice to deprive the respondent of the benefit of the orders made by the trial judge and put that person to the expense, inconvenience and worry of a new trial.
It is thus necessary to consider the nature and quality of the evidence sought to be adduced by the husband on the issue of leave to re-open the appeal.
In his affidavit filed in support of the application for parenting orders, the husband sets out conversations with the child upon which he relies to found his case that the child no longer wishes to live with her mother but wishes to live with him. In those recounted conversations, the child expresses dissatisfaction with her living arrangements with her mother.
Also attached to the affidavit is correspondence between the solicitor for the husband and that for the wife. By letter of 16 September 2014, the husband’s solicitor wrote to the wife’s and said:
We are instructed that the child of the parties, [J], has expressed a strong desire and determination to live with our client. We understand that [the child] has raised this with both her parents.
It is our client’s view that [the child] is a mature and intelligent 13 year old and that her properly formed views should be considered and respected. …
In response, by letter of 18 September 2014, the wife’s solicitors responded:
…
I note that you state that [J], the parties’ daughter, has expressed a strong desire and determination to live with your client. My instructions are that your client has been disrupting the relationship between my client and [the child] and has been suggesting to her that she could move to live with him if she is not “happy at home”.
…
My client will not agree to [the child] living with your client on a full-time basis in opposition to the Orders. …
In a further letter from the wife’s solicitors to the husband’s solicitor, of 2 October, it was indicated that the wife required the child to be returned home at 6 pm Monday 6 October 2014.
It is apparent from reading the husband’s affidavit that the child was not returned to the wife on 6 October 2014 and proceedings were commenced by him for parenting orders on 22 October 2014.
It is also clear that the wife opposes a change in the child’s living arrangements.
The affidavit of the husband sworn on 4 February 2015 attaches a copy of interim parenting orders made by consent which provides for the child to live with the husband and wife on a “week about” arrangement.
Turning then to the submissions of the husband on the application, it was said that given the child’s expression of a strong wish to live with the husband, “it is unlikely that the court would pronounce orders contrary to [the child’s] wishes…”.
From that basis, that is, assuming that final orders will eventually be made that the child live with the husband, it was argued that considered in that light, the trial judge’s assessment of the parties’ s 75(2) contributions and his Honour’s consequential adjustment of 8 per cent in the wife’s favour represented an error in the exercise of his discretion.
It was contended that although his Honour took into account a number of factors in coming to that adjustment pursuant to s 75(2), the “parenting component was clearly the most substantial and foremost element considered by the trial judge given his more detailed analysis at paragraphs [158-160] in contradistinction to other components…”.
Further it was contended:
11. The 8%/$448,178.00 adjustment favouring the wife is substantial and the likelihood is that, had [the child] been residing with her father, at the time of the trial, on the above factors there would have been either a minor percentage adjustment in favour of the husband or, at the very least, no adjustment to either party. …
Thus it was argued that the changed circumstance of where the child is now living, requires “the s.75(2) 8% component in favour of the respondent to be negated at least”.
It must be observed at the outset that despite the husband’s certainty that final orders will be made that the child live with him, as was noted in the wife’s submissions, it is neither accepted nor agreed that the present arrangement for the child is settled or permanent. That interim orders providing for the child to live with each parent each alternate week do not in our view give force to the husband’s claim that final orders will be made that the child live with him on a full time basis.
It could not be thought that the position presented by the husband, namely the views expressed by the child and an apparent refusal to return to live with the wife who had been her primary carer since birth was, in effect, a fait accompli with which a court would not interfere. Courts can and do make decisions that are not in conformity with the expressed wishes of a child, even a child of 13. Even if it be accepted that final parenting orders will be made that the child remains living with the husband, the proposition that this of itself would warrant reconsideration in this appeal of his Honour’s assessment of the s 75(2) contributions cannot be maintained. That is because we do not accept the husband’s contention that the principal or significant factor taken into account by his Honour in coming to a conclusion about the parties’ respective non-financial contributions was the wife’s primary care of the child.
In considering the parties’ contributions pursuant to s 75(2) his Honour noted that there was an apparent disparity between the parties’ income at [154] and [155]. Further, he noted that he was unable to ascertain the parties’ future earning capacities because he could not be certain of the accuracy of the information provided by the husband. Indeed, his Honour found that contrary to the husband’s assertion his earning capacity is greater than that of the wife [156].
His Honour continued:
158. The parties have one child of their marriage, who is presently
11 years old. The wife is the primary parent of the child and it appears that the current parenting arrangement for this child will be ongoing. Since separation, it appears that the husband has spent time with the child once per week on Sundays. The wife asserts that, despite her efforts to foster a better relationship between the husband and the child, the husband has refused to play a substantial and significant parenting role.The trial judge referred to the submissions made on behalf of the wife in this regard that the husband had a higher earning capacity than the wife, that she had provided and would continue to provide the majority of the ongoing care for the child and that the husband had not been truthful in his financial disclosure [165].
His Honour referred to the submissions on the husband’s behalf, namely that there should be no adjustment even though the wife had the care of the child because, he contended, the wife had a higher earning capacity than the husband.
His Honour concluded:
169.For all the reasons referred to above, namely:
a) the mother’s ongoing primary care of the child and
b) the clear disparity between the parties in terms of their income and earning capacity, including a consideration of the husband's capacity to generate wealth through a number of his related entities and where
c) the result of the division of assets would otherwise leave the husband in a much stronger position as to capital than the wife and where
d) the husband’s failure to disclose leaves the Court in doubt as to whether he has other undisclosed assets, financial resources or income, and taking into account the financial resources otherwise available to the parties
the Court takes the view that there should be an adjustment of some 8 per centum in favour of the wife.
Self evidently the wife’s care of the child was but one of a number of significant factors which influenced his Honour’s determination of the appropriate s 75(2) adjustment.
Conclusion and costs
The future living arrangements for the child remain a future triable issue and are by no means an uncontested fact before this court. It is in that respect highly relevant to the exercise of the discretion to admit additional evidence on appeal that the legislature makes specific provision for the circumstances in which changed or changing arrangements in respect of a child might, in exceptional circumstances, affect an existing property order (s 79A(1)(d)).
In addition we are not at all persuaded that, if admitted, the evidence would produce a different result. As we have indicated earlier in these reasons, the trial judge’s s 75(2) assessment was multi-factorial and the wife’s future primary care of the child was but one of those factors. Importantly, as we have concluded earlier in these reasons, his Honour’s findings as to the husband’s failure to disclose was, properly, an integral component of those findings and his Honour’s ultimate conclusion on that issue. The application will be dismissed.
It was conceded on behalf of the husband that if his application to re-open was unsuccessful he should pay the wife’s costs. We agree and an order will be made to that effect.
Murphy J
I have had the advantage of reading the reasons of Ainslie-Wallace and
Ryan JJ. I agree that the appeals against the property orders made by Fowler J on 18 April 2013 and the costs orders made by his Honour on
19 June 2013 should each be dismissed and I agree broadly with their Honour's reasons for so holding. I also agree that the husband’s application in an appealshould be dismissed and that the husband should pay the wife's costs of and incidental to the appeal and the application in an appeal as their Honours propose.
I certify that the preceding one hundred and twelve (112) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Ryan and Murphy JJ) delivered on 19 February 2015.
Associate:
Date: 19 February 2015
Key Legal Topics
Areas of Law
-
Family Law
Legal Concepts
-
Appeal
-
Costs
-
Res Judicata
8
4
2