Taffner & Taffner (No. 2)
[2021] FamCAFC 130
•29 July 2021
FAMILY COURT OF AUSTRALIA
Taffner & Taffner (No. 2) [2021] FamCAFC 130
Appeal from: Taffner & Taffner [2020] FCCA 1132
Taffner & Taffner (No.2) [2020] FCCA 2328Appeal number: NOA 60 of 2020 File number: BRC 1861 of 2019 Judgment of: STRICKLAND, ALDRIDGE & KENT JJ Date of judgment: 29 July 2021 Catchwords: FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – Application to vary an order made at appeal – Order did not reflect the intention of the Court – Where the error was initially induced by the appellant’s oral submissions – Error capable of correction pursuant to r 17.02 of the Family Law Rules 2004 (Cth) – Application granted – Order varied. Legislation: Family Law Rules 2004 (Cth) r 17.02 Cases cited: Burrell v The Queen (2008) 238 CLR 218; [2008] HCA 34
Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc (2007) 70 NSWLR 411; [2007] NSWCA 195
Taffner & Taffner (2021) FLC 94-022; [2021] FamCAFC 68
Division: Appeal Division Number of paragraphs: 19 Date of last submissions: 25 June 2021 Date of hearing: Heard by way of written submissions Place: In Chambers Counsel for the Applicant: Mr Hackett Solicitor for the Applicant: Hirst & Co The Respondent: Self-represented litigant ORDERS
NOA 60 of 2020
BRC 1861 of 2019APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA
BETWEEN: MR TAFFNER
Applicant
AND: MS TAFFNER
Respondent
ORDER MADE BY:
STRICKLAND, ALDRIDGE & KENT JJ
DATE OF ORDER:
29 JULY 2021
THE COURT ORDERS THAT:
1.Pursuant to r 17.02 of the Family Law Rules 2004 (Cth), Order 4 made on 21 May 2021 is varied by replacing “$92,487.25” with “$76,289.77”.
2.Any party seeking a costs order is to file and serve written submissions within seven (7) days, with any submissions in response to be filed and served within a further seven (7) days.
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).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Taffner & Taffner has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
STRICKLAND, ALDRIDGE & KENT JJ:
On 21 May 2021, we allowed the appeal in this matter and made the following order amongst others:
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”.
As is fully explained in those reasons for judgment (Taffner & Taffner (2021) FLC 94-022), the order was made because the primary judge’s orders did not take into account the capital gains tax payable by the husband on the sale of a property he owned and which, pursuant to the orders, was sold by him prior to the appeal coming on for hearing. Thus, instead of receiving 39.37 per cent of the property of the parties to be divided, as intended by the primary judge, the husband received somewhat less.
We sought to correct that oversight by the order set out above. That order was based on the premise that to achieve the distribution intended by the primary judge the wife should bear 39.37 per cent of the capital gains tax liability. The parties now agree that the correct percentage should have been 60.63, but disagree as to how the error should be corrected.
The error came about in the following way. As the earlier reasons indicate, the gravamen of the appeal was the absence of an order dealing with the capital gains tax. Counsel for the husband was asked what order should have been made. The exchange continued:
[COUNSEL FOR THE HUSBAND]: [The primary judge] should have found that the net pool was reduced by the amount of the then evidence of capital gains tax before him of 175,000, and he should have made a further order that if the [H Street] property doesn’t sell in two years and that tax isn’t assessed, that the husband pay to the wife 60.63 per cent of that assessment or such other assessment.
ALDRIDGE J: Or alternatively just add after 3, “and the wife to reimburse the husband with 40 per cent”.
[COUNSEL FOR THE HUSBAND]: Quite. That would have achieved exactly the same result. I agree. Yes. That would have been the way. And you could have made the same order for the [K Street] property, but it hasn’t been sold and there’s no evidence of any intention to do so.
(Transcript 2 March 2021, p.17 lines 3–15)
Later the error was repeated:
KENT J: And what would the amount – I know we’re jumping ahead. What would the amount be?
[COUNSEL FOR THE HUSBAND]: The capital gains tax is as per the current estimate. I do press for the court to adopt - - -
KENT J: So it’s 40.4 per cent or something of 139,000?
[COUNSEL FOR THE HUSBAND]: Yes. 139,450.
KENT J: Yes.
[COUNSEL FOR THE HUSBAND]: The figure is in the affidavit.
KENT J: Yes. But it’s 40 per cent of that figure.
[COUNSEL FOR THE HUSBAND]: I agree.
KENT J: That the wife would have to repay to [the husband].
[COUNSEL FOR THE HUSBAND]: Yes, your Honour.
(Transcript 2 March 2021, p.19 lines 8–28)
It was repeated again:
ALDRIDGE J: Just before you sit down, [addressing the wife], just assume for a moment the appeal was successful on the issue of the capital gains tax - - -
[THE WIFE]: Yes.
ALDRIDGE J: - - - [Counsel for the husband] has suggested that rather than send the case back to a Circuit Court judge for a complete retrial we just fix up order 8(d)(iii) so that you pay 40 per cent of whatever the capital gains tax is on [H Street].
[THE WIFE]: Yes.
(Transcript 2 March 2021, p.31 line 43 to p.32 line 5)
Unfortunately, the error was repeated in our reasons and affected the order that we made.
Rule 17.02 of the Family Law Rules 2004 (Cth) empowers the court to vary an order if it does not reflect the intention of the court or if there is an error in the order from an accidental slip or omission. However, r 17.02 “does not permit reconsideration, let alone alteration, of the substance of the result that was reached and recorded” (Burrell v The Queen (2008) 238 CLR 218 at [21]).
The parties agree that the order we made “had consequences” which we did not intend, namely, that the husband continued to receive less than the percentage of property distribution intended by the primary judge (Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc (2007) 70 NSWLR 411 (“Newmont”) at [89]).
In these circumstances, we are of the view that we can correct the error, even though that error was initially induced by the husband’s submissions (Newmont at [153]).
However, the matter is not one of simply correcting a calculation. Whilst we accepted that the best evidence of the capital gains tax that was payable by the husband was $139,476, we also took into account the following:
·The property sold for $30,000 more than the value taken into account by the primary judge;
·After separation the amount owing under the mortgages over the properties increased, presumably because the husband was not paying the instalments and retaining for himself the income that otherwise would have been applied to the payments; and
·The wife retained a property which would also be subject to capital gains tax, which if sold (although there was no evidence to suggest it was likely in the short to midterm) required a modest adjustment in her favour.
Thus, instead of adjusting the property settlement by $54,911.70 (being 39.37 per cent of $139,476) we discounted that figure to $30,000 to take account of these matters.
The Court should have used, as the starting point for the above exercise, the figure of
$84,564.30 (being 60.63 per cent of $139,476).
As noted earlier, the parties agree to this point but diverge as to how the error can be corrected. Each, as their primary position, submits that we should reconsider the exercise of the discretion by giving different weight to the above considerations and taking into account other matters. This we cannot do as that would be to alter the substance of our reasoning.
The secondary position of the wife was that, as the error was initially that of the husband, his application to vary the orders should simply be dismissed. The error was not solely that of the husband’s counsel however, and it should have been corrected at the time. In the circumstances of this matter it is not in the interests of justice for an order, which does not reflect the intention of the Court, to remain in force.
What then is to be done? We cannot re-exercise the discretion afresh, and can only give effect to our intention as expressed in our earlier orders. That intention was to discount the capital gains tax payable of $54,911.70 to $30,000 after taking into account a number of considerations. The effect was to reduce the sum to be taken into account to 54.63 per cent of that claimed.
As we have identified, the correct figure that should have been used for the above calculation is $84,564.30, which applying the same percentage discount, would result in the adjusting figure being $46,197.48. Therefore, on this basis, Order 16 as made by the primary judge would be varied by replacing “$122,487.25” with “$76,289.77”.
Both the husband and the wife rejected the above as an appropriate means to derive the correct order. Nonetheless, it is the only means by which we can give effect to our intention to vary the primary judge’s order and to take into account the capital gains tax payable by the husband, appropriately discounted.
Therefore, this is the course we shall adopt and Order 4 made by us on 21 May 2021 will be varied accordingly.
COSTS
Given the matters set out earlier, our preliminary view is that each party should bear their own costs of this application. However, directions will be made for submissions if either parties wish to seek another order.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Strickland, Aldridge & Kent. Associate:
Dated: 29 July 2021