Taffner & Taffner

Case [2021] FamCAFC 68

FAMILY COURT OF AUSTRALIA

Taffner & Taffner [2021] FamCAFC 68

Appeal from:

Taffner & Taffner [2020] FCCA 1132

Taffner & Taffner (No. 2) [2020] FCCA 2328
Appeal number(s): NOA 60 of 2020
File number(s): BRC 1861 of 2019
Judgment of: STRICKLAND, ALDRIDGE & KENT JJ
Date of judgment: 21 May 2021
Catchwords:

FAMILY LAW – APPEAL – PROPERTY – Final property settlement orders – Whether the primary judge erred by failing to take capital gains tax liabilities into account – Where one property has been sold and another property has the possibility of being sold – Whether the primary judge failed to give sufficient weight to the appellant’s financial contributions – Appeal allowed in part – Limited re-exercise of discretion to take account of the capital gains tax liabilities – Adjustments made – Appeal otherwise dismissed.

FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – To adduce further evidence – Where the evidence was not available at trial and assists in the re- exercise of discretion – Application allowed.

Legislation: Family Law Act 1975 (Cth) ss 75(2)(b), 79(4), 81
Cases cited:

Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55

G & G [2001] FamCA 1453

Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63

House v The King (1936) 55 CLR 499; [1936] HCA 40

Jasapas & Johns(No. 2) [2020] FamCAFC 203

Kioa v West (1985) 159 CLR 550; [1985] HCA 81

Mallett v Mallett (1984) 156 CLR 605; [1984] HCA 21

Pruchnik & Pruchnik(No. 2) (2018) 58 Fam LR 458; [2018] FamCAFC 128

Rosati v Rosati (1998) FLC 92-804; [1998] FamCA 38

Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88

Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54

Division: Appeal Division
Number of paragraphs: 78
Date of hearing: 2 March 2021
Place: Brisbane, delivered in Sydney
Counsel for the Appellant: Mr Hackett
Solicitor for the Appellant: Hirst & Co
The Respondent: Litigant in person

ORDERS

NOA 60 of 2020
BRC 1861 of 2019

APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA
BETWEEN:

MR TAFFNER

Appellant
AND:

MS TAFFNER

Respondent

ORDER MADE BY:

STRICKLAND, ALDRIDGE & KENT JJ

DATE OF ORDER:

21 MAY 2021

THE COURT ORDERS THAT:

1.The Application in an Appeal to adduce further evidence, filed by the respondent wife on 20 November 2020, is dismissed.

2.The Application in an Appeal to adduce further evidence, filed by the appellant husband on 15 February 2021, is allowed.

3.The appeal against the orders made on 21 August 2020, and amended on 28 August 2020, by a judge of the Federal Circuit Court of Australia is allowed in part.

4.Order 16 made on 21 August 2020, and amended on 28 August 2020, be varied by replacing “$122,487.25” with “$92,487.25”.

5.Any party seeking an order as to the costs of Appeal No. NOA 60 of 2020 is to file and…

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Taffner & Taffner [2021] FamCAFC 68
Case
[2021] FamCAFC 68
Decision Date

CaseChat Overview and Summary

In the matter of Taffner & Taffner, the appellant husband and the respondent wife were involved in a property settlement dispute following their divorce. The primary judge had made final property settlement orders, which the husband appealed. The wife filed an application to adduce further evidence, which was dismissed, while the husband's application was allowed. The appeal raised issues regarding the primary judge's failure to consider capital gains tax liabilities on the properties, and whether the judge had given sufficient weight to the husband's financial contributions.

The court found that the appeal must be allowed as the primary judge had failed to take into account the capital gains tax liabilities on the properties. The court re-exercised its discretion, taking into account the best estimate of the capital gains tax payable on the H Street property and the potential liability in relation to the K Street property. The court decided that the wife should pay $30,000 to the husband, and varied the superannuation splitting orders accordingly. The court dismissed the wife's application to adduce further evidence and allowed the husband's application.

The court ordered that the application in an appeal to adduce further evidence, filed by the wife on 20 November 2020, is dismissed. The application in an appeal to adduce further evidence, filed by the husband on 15 February 2021, is allowed. The appeal against the orders made on 21 August 2020, and amended on 28 August 2020, by a judge of the Federal Circuit Court of Australia is allowed in part. Order 16 made on 21 August 2020, and amended on 28 August 2020, is varied by replacing "$122,487.25" with "$92,487.25." Any party seeking an order as to the costs of Appeal No. NOA 60 of 2020 is to file and serve written submissions on the issue of costs within 14 days of these orders. Written submissions in response are to be filed and served within a further 14 days, with any written submissions in reply to be filed and served within seven days thereafter.

Orders

Orders of the court

THE COURT ORDERS THAT:

1. The Application in an Appeal to adduce further evidence, filed by the respondent wife on 20 November 2020, is dismissed.

2. The Application in an Appeal to adduce further evidence, filed by the appellant husband on 15 February 2021, is allowed.

3. The appeal against the orders made on 21 August 2020, and amended on 28 August 2020, by a judge of the Federal Circuit Court of Australia is allowed in part.

4. Order 16 made on 21 August 2020, and amended on 28 August 2020, be varied by replacing “$122,487.25” with “$92,487.25”.

5. Any party seeking an order as to the costs of Appeal No. NOA 60 of 2020 is to file and serve written submissions on the issue of costs within 14 days of these orders. Written submissions in response are to be filed and served within a further 14 days, with any written submissions in reply to be filed and served within seven days thereafter.

Note: The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

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Evidence

Evidence Before The Court

The parties were unable to agree and belatedly, on 1 June 2020 and 3 June 2020 respectively, forwarded competing draft minutes of order to his Honour along with written submissions. A further set of reasons were published by the primary judge and the final property settlement orders were made on 21 August 2020, and amended on 28 August 2020. It is necessary to read the two sets of reasons for judgment together.APPLICATIONS IN THE APPEAL TO ADDUCE FURTHER EVIDENCE On 20 November 2020, the wife filed an Application in an Appeal to adduce further evidence, which included the correspondence between the wife’s former solicitor and the husband’s solicitor regarding the drafting of the minutes of order. At the hearing, the wife contended that this evidence showed the lack of engagement by the husband’s solicitors to reach an agreed minute of order. Since the evidence is not relevant to any ground of appeal, the wife’s Application in an Appeal will therefore be dismissed. On 15 February 2021, the husband also filed an application to adduce further evidence in the appeal. In order to understand the husband’s application, it is necessary to record that Order 4(a) of the final property settlement orders provided for the husband to retain the H Street property and Order 1(d) required the release of the wife from the mortgage over it. Order 8 applied in the event that the husband could not procure the release of the wife from the mortgage. If this was the case, the property was to be sold, and after payment of the costs of sale, outstanding rates and any capital gains tax (Order 8(e)(iii)), the balance was to be paid to the husband. The further evidence that the husband proposes to adduce is to the effect that:·He was unable to refinance the mortgage;·The property was sold in January 2021 for $1,655,000, with settlement of the sale occurring in February 2021; and·The best estimate of the capital gains tax payable (as deposed by the husband’s accountant) was $139,476. The husband submits that this evidence, for obvious reasons, was not available at the hearing and highlights the error of casting the burden of the capital gains tax entirely upon him. More importantly, it is said that this material will be of assistance in any re-exercise of discretion. There is merit in these points and we will receive the affidavit of the husband filed on 23 February 2021, and the affidavit of his accountant, Mr X, also filed on 23 February 2021. We will also receive the wife’s affidavits in response to the application, filed on 22 February 2021 and 25 February 2021.THE APPEALDid the primary judge err in making the orders as to the H Street property and the associated capital gains tax? (Grounds 1 to 3) These grounds were argued together and raise the following issues:·Did the primary judge afford the parties procedural fairness as to the making of orders in relation to the H Street property?·Were adequate reasons given for making the order?·Did the orders for the H Street property achieve the intended property division?·Did the primary judge err in making the orders as to the H Street property?·Did the primary judge err in failing to take into account the capital gains tax on the H Street property?

Decision

Reasons for decision

This ground fails. CONCLUSION AND RE-EXERCISE OF DISCRETION The appeal must be allowed as identified earlier. In that event, the parties asked us to re-exercise the Court’s discretion to take account of the capital gains tax liabilities, so as to avoid the time and cost associated with remitting the matter for rehearing. The parties were content to rely on the further evidence adduced. The best estimate of the capital gains tax payable on the H Street property is $139,476. It is an estimate because the husband’s income tax return for the 2020-2021 financial year is yet to be lodged, but this is the best evidence available. In order to maintain the percentage division intended by the primary judge, the husband submits that the wife should pay to the husband 39.37 per cent of that sum, namely $54,911.70. That however, is not the end of the consideration. The H Street property was sold for $1,655,000 which was $30,000 higher than the figure taken into account by the primary judge, all of which will be retained by the husband. The primary judge took into account that there were three mortgages over this property in the sum of $1,141,811 (each mortgage totalling $940,000.00, $175, 269.99 and $26, 541.01). At the time of sale they totalled $1,207,218.14, as appears from the settlement statement (the husband’s affidavit filed on 23 February 2021, Annexure 6). Presumably, the increase is because the husband was not paying the instalments, and retained for his benefit the income that otherwise would have been applied to them. Each of these matters should be taken into account. In our opinion, they justify some adjustment in the wife’s favour. Finally, whilst there is no evidence that the K Street property is likely to be sold in the short to midterm, its sale remains a possibility. That possibility could be taken into account by an order of the kind identified by us earlier in these reasons, or by making a further adjustment in favour of the wife. In the circumstances of this matter, the latter is the preferable course as that course will end any financial dealings between the parties. That property was valued at $475,000 and the adjustment will be modest. In our view, the wife should pay $30,000 to the husband to take account of the capital gains tax liability on the H Street property and the potential liability in relation to the K Street property. The wife does not have the funds to make such a payment. The parties agreed therefore that the appropriate course was to vary the superannuation splitting orders accordingly. We shall therefore vary Order 16 made by his Honour so that the base amount allocated to the wife out of the husband’s interest in Super Fund Q is $92,487.25 (that being the amount of $122,487.25 initially allocated to the wife, less $30,000.00). COSTS Costs will be dealt with in chambers pursuant to written submissions.

Ratio Decidendi

Legal Principle Established

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