Tallowfield & Tallowfield
[2018] FamCAFC 172
•5 September 2018
FAMILY COURT OF AUSTRALIA
| TALLOWFIELD & TALLOWFIELD | [2018] FamCAFC 172 |
| FAMILY LAW – APPEAL – INADEQUACY OF REASONS – where the reasons for judgment did not engage with the wife’s case – where the wife inherited two unencumbered income producing real properties, the net value of which equated to 85 per cent of the pool found to be available for division – where no finding was made by the trial judge to the effect that the wife had used some of her inheritance for her own purposes – where contributions of all kinds, including some incapable of being measured in monetary terms, fall into the holistic assessment of contributions in s 79 property settlement determinations – where the reasons recorded a series of conclusions expressed in general terms which were not illuminated by specific findings – where the Court was unable to discern from the reasons the path by which the result has been reached – where the reasons are inadequate – where the Court cannot be satisfied that the orders made by the trial judge were just and equitable based upon a legitimate exercise of judicial discretion – appeal allowed. |
| Family Law Act 1975 (Cth) ss 75(2), 79, 94AAA(3) |
| Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148 Dickons & Dickons [2012] FamCAFC 154 House v The King (1936) 55 CLR 499; [1936] HCA 40 Lovine & Connor (2012) FLC 93-515; [2012] FamCAFC 168 Mallet v Mallet (1984) 156 CLR 605; [1984] HCA 21 Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 Polonius & York [2010] FamCAFC 228 Woodland and Todd (2005) FLC 93-217; [2005] FamCA 161 |
| APPELLANT: | Ms Tallowfield |
| RESPONDENT: | Mr Tallowfield |
| FILE NUMBER: | LEC | 338 | of | 2013 |
| APPEAL NUMBER: | NOA | 49 | of | 2017 |
| DATE DELIVERED: | 5 September 2018 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Kent J |
| HEARING DATE: | 16 January 2018 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 13 September 2017 |
| LOWER COURT MNC: | [2017] FCCA 2206 |
REPRESENTATION
| THE APPELLANT: | In person with the assistance of a McKenzie Friend |
| COUNSEL FOR THE RESPONDENT: | Mr Theobald |
| SOLICITOR FOR THE RESPONDENT: | Egan Simpson |
Orders
The appeal from the orders made by Judge L. Turner on 13 September 2017 is allowed.
The orders made by Judge L. Turner on 13 September 2017 be set aside.
The proceedings be remitted for re-hearing in the Federal Circuit Court by a Judge other than Judge L. Turner.
The Court grants to the respondent husband a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent husband in respect of the costs incurred by the respondent husband in relation to the appeal.
The Court grants to each of the parties a costs certificate pursuant to s 8 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to each of the parties in respect of the costs incurred by them in relation to the re-hearing ordered.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Tallowfield & Tallowfield has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NOA 49 of 2017
File Number: LEC 338 of 2013
| Ms Tallowfield |
Appellant
And
| Mr Tallowfield |
Respondent
REASONS FOR JUDGMENT
On 13 September 2017 Judge L. Turner made orders in the Federal Circuit Court[1] adjusting the property interests of Mr Tallowfield (“the husband”) and Ms Tallowfield (“the wife”).
[1] Pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”).
The trial judge found that the combined property interests of the parties, including superannuation interests, were worth $927,741 net of liabilities.
The trial judge assessed that the contributions based entitlements of the parties were 56 per cent/44 per cent in favour of the wife. The trial judge determined that a further 2 per cent adjustment in favour of the wife for “future needs” was warranted.
Thus the trial judge made orders to give effect to an overall 58 per cent/42 per cent division of the parties’ property interests, as determined by the trial judge, in favour of the wife.
The wife’s appeal from those orders is opposed by the husband. The appeal is to be determined pursuant to a direction made under s 94AAA(3) of the Act.
The wife’s conduct at trial
The wife’s challenges on appeal are informed to some extent by the manner in which the wife’s conduct in the trial stage of the proceedings added complexity to the task of the trial judge in determining appropriate, and just and equitable, property adjustment orders. That conduct will be further referred to.
The parties commenced cohabitation in 1988 and finally separated in 2010. Their relationship produced two children born in 2000 and 2006 respectively.
It was uncontroversial that in 1999 the wife inherited, from her late father, two unencumbered income producing real properties, being the Q Street property, comprising three rental flats (“Q Street”); and the P Street property comprising four rental flats (“P Street”).
Q Street was still retained by the wife at trial and was found by the trial judge, relying upon expert valuation evidence, to be worth $425,000.
P Street was sold in 2002 yielding capital in the order of about $350,000.
Throughout the trial stage of the proceedings the wife maintained (and the husband disputed) that by reason of an informal agreement the parties entered into in 2002, at the time of the sale of P Street (conveniently referred to as “the P Street Agreement”), the husband would have no claim upon, or entitlement to, either Q Street or the residential property at T Street. T Street had been purchased in 2001 for $185,000. The wife contended that the P Street Agreement was to the effect that, in summary, if she sold P Street to extinguish debts, including the mortgage debt that had been raised to fund the purchase of T Street; together with business debts relating to the husband’s business; the wife would thereafter be regarded as solely beneficially entitled to both Q Street and T Street, to be held by her ultimately for the benefit of the children of the marriage.
Throughout the trial stage the wife apparently operated on the misconception that her contentions about the existence and effect of the P Street Agreement justified her failure to cooperate in efforts to have the T Street and Q Street real properties valued by independent expert valuers; or to fulfil her obligation to give full and frank disclosure of all information relevant to the case including, as one example, her post-separation receipt of rental income from Q Street.
Overlaying that, the wife advanced serious allegations of fraud against the husband concerning his borrowings of funds from time to time to support the business he operated. However, her case in that respect did not include sufficient corroborative evidence, including evidence sourced to relevant lenders, to establish such serious allegations.
To compound things, the trial was heard sporadically over an 18 month period, on five days between 21 July 2015 and 8 December 2016. At times, the wife was legally represented but at other times she represented herself, including it would seem in relation to the preparation of her affidavit material for trial.
It was as late as the fifth day of trial, on 8 December 2016, that the wife made an unsuccessful application to have the husband’s solicitors restrained from further acting for him on the wife’s assertion that those solicitors had a conflict of interest. It seems the trial judge’s dismissal of that application provoked the wife’s, with all due respect to her, irrational response to withdraw from further participation in the trial. The wife did, however, subsequently avail herself of the opportunity provided by the trial judge to file written submissions subsequent to the last day of hearing on 8 December 2016.
One important practical effect of the wife’s election to withdraw from the trial, is that her withdrawal came at a time when cross-examination of the husband was yet to be completed (from 4 March 2016) and the wife was yet to open her case or be cross-examined at all. That is, in the result, the wife’s affidavit evidence and her case more generally was untested by any cross-examination of the wife.
Notwithstanding the wife’s withdrawal from the trial, and the fact that the wife thus did not present herself for cross-examination, it would seem from the reasons for judgment of the trial judge (at [14], [15] and [17]) that the trial judge nevertheless paid regard to the wife’s affidavit evidence and her written submissions filed subsequent to 8 December 2016. However, as will be further discussed, it is difficult to discern from the reasons of the trial judge what regard the trial judge actually had to the wife’s evidence on some of the central issues the wife sought to agitate in the case.
The wife’s challenges on appeal
The wife represented herself on appeal. With all due respect to her, many of the grounds of appeal stated in her Notice of Appeal filed on 5 October 2017 are largely unintelligible as proper grounds of appeal. That problem was not cured by the single page document the wife provided to the Registry on 2 January 2018 titled “Ammended [sic] Notice of Appeal”, although the latter document can be taken as an attempt by the wife to condense the grounds of appeal contained in her Notice of Appeal.
It was thus necessary, at the outset of the hearing of this appeal, to attempt to reformulate the challenges the wife sought to mount on appeal in a form that could be dealt with; and to do so in a manner that did not cause any prejudice to the husband. Whilst that process consumed significant time at the hearing of the appeal, it resulted in the following matters as being the reformulated challenges by the wife:
1.The trial judge erred by including Q Street and T Street for consideration when, by operation of the P Street Agreement entered into in 2002, the parties had agreed to these properties being retained in the sole ownership of the wife;
2.The trial judge erred in bringing to account as a joint liability of the parties a loan from the Commonwealth Bank of Australia in the amount of $140,000, and treating that loan as being secured by mortgage over T Street, because:
i.the loan was obtained by the husband solely without the wife’s knowledge or consent, by the husband either forging the wife’s signature on the loan documents or exercising duress to have the wife sign relevant documents; or
ii.the loan is not in fact secured by mortgage over T Street; or
iii.the bank has represented to the wife that she is not liable for that loan;
3.The orders made by the trial judge are not just and equitable having regard to:
i.the wife’s contributions;
ii.the wife’s future needs (s 75(2));
4.The trial judge made an error of fact in attributing the deposit paid for the purchase of T Street as being sourced to the sale proceeds of a residential property in Town S which the parties sold, when the whole of the purchase of T Street was initially funded by loan;
5.The trial judge erred in having regard to the wife’s non-compliance with an order that she pay $200 per week towards a mortgage debt on T Street when in fact no such debt existed;
6.The trial judge erred in accepting the expert valuation evidence in respect of each of the real properties and the husband’s business;
7.The trial judge erred in considering the written submissions filed by the husband on 10 March 2017 in circumstances where those submissions were not filed pursuant to an order; and
8.The trial judge erred by excluding from evidence the affidavit filed by the wife on 24 February 2016.
Counsel for the husband confirmed at the hearing of the appeal that no prejudice was occasioned to the husband by reformulating the wife’s challenges on appeal in this manner.
It will be readily apparent that implicit in at least some of the wife’s challenges on appeal, is that the trial judge did not engage with arguments or issues agitated by the wife in relation to some topics. Also implicit then, if not explicit, are challenges as to the adequacy of the reasons for judgment of the trial judge for taking the approach, and reaching the conclusions the trial judge expressed, on the issues the subject of at least some of these challenges on appeal.
Challenges without any merit
Several of the wife’s challenges on appeal are conveniently dealt with first as, for the reasons which follow, they obviously lack any merit.
Business valuation
A discretionary trust controlled by the husband, the Tallowfield Family Trust (“the Trust”) operates a business (“the business”). A company controlled by the husband, Company X Pty Ltd (“the company”) acts as corporate trustee of the Trust. The company does not perform any function, or hold any assets in its own right, other than as corporate trustee of the Trust.
Mr D, chartered accountant, was the Court appointed independent expert retained to undertake an expert valuation of the Trust. His detailed report was in evidence and Mr D was cross-examined, at some length, by the wife’s then counsel at trial. Mr D’s opinion was that the Trust, as at 30 June 2014, was worth $73,000 net of liabilities on an asset backing basis.
Mr D was unmoved in his opinion to that effect throughout his
cross-examination by the wife’s then counsel. Having seen and heard Mr D give his evidence, by reference to his detailed report, it was clearly open to the trial judge to accept Mr D’s opinion of the value, as the trial judge obviously did (reasons at [42(d) and (e)]). No error in this respect on the part of the trial judge is established by the wife on appeal and this challenge is rejected.
Real estate valuations
Mr F, a certified practicing valuer at the C Firm, provided valuation reports for T Street and for Q Street.
Another valuer, Mr G, likewise provided reports about the value of these two real properties.
Both valuers gave oral evidence at trial under cross-examination. It was plainly open to the trial judge to accept, as her Honour obviously did, the expert opinions of Mr F with respect to the value for each of T Street and Q Street (reasons at [42(b) and (c)]).
Again, nothing to which the wife directed attention on appeal demonstrates that the trial judge made any error in accepting the valuation evidence provided by Mr F and this challenge is rejected.
It follows that there is no substance in any of the wife’s challenges to the effect that the trial judge made any errors concerning her Honour’s acceptance of expert evidence.
Wife’s affidavit filed on 24 February 2016
In advance of the trial listed to commence on 21 July 2015, the trial judge made directions for the trial including directions as to the filing of affidavit material by each party.
On 21 July 2015 the wife did not attend at Court. The wife had forwarded a series of emails to the trial judge’s associate in advance of the trial asserting that by reason of a medical condition, the wife was unable to attend at Court.
Notably, as at 21 July 2015 conspicuous was the absence of any affidavit of evidence in chief of the wife. That is, the wife had not complied with the directions for the filing of her affidavit of evidence in chief in advance of the trial.
In the result, on 21 July 2015 the trial judge adjourned the trial to 7 August 2015 and, by orders, provided the wife with the indulgence of extending the time for the filing of her affidavit of evidence in chief to on or before 24 July 2015.
The wife filed an affidavit of evidence in chief, not on or before 24 July 2015, but on 29 July 2015 outside the time limit prescribed. In the result it would seem that the trial judge permitted the wife to rely upon her late-filed affidavit of evidence in chief filed on 29 July 2015.
The trial proceeded on 7 August 2015 with cross-examination of the two real estate valuers and cross-examination of Mr D. The trial was then adjourned to the 3 and 4 of March 2016.
In advance of the trial, counsel for the husband had filed a list of objections to evidence with regard to the wife’s affidavit of evidence in chief filed on 29 July 2015. However, on 24 February 2016, a matter of days before the resumed trial on 3 March 2016, the wife filed an affidavit which was apparently intended by her to replace her affidavit of evidence in chief filed on 29 July 2015. Objection to that was taken by the husband.
The trial judge, having identified that the affidavit filed on 24 February 2016 contained new evidence together with annexed documents not contained in the wife’s earlier affidavit, the trial judge upheld the husband’s objection to the later affidavit being relied upon and directed that the late-filed affidavit be uplifted from the Court file.
It was open to the trial judge, both as a matter of practice and procedure and as a matter of fairness to the husband, in the circumstances, to refuse permission for the wife to effectively replace her affidavit of evidence in chief after the trial had commenced and in circumstances where the new affidavit had been filed only a matter of days before the resumed trial. It bears repeating that directions and orders had been made by the trial judge well in advance of the commencement of trial designed to ensure that each party filed affidavit material in advance of the trial so as to put the other on notice as to the case to be met and the evidence relied upon. It may fairly be observed that counsel for the husband, given the lateness of the filing of the later affidavit, had no real opportunity to consider that material or whether objections to parts of it ought be taken given the extensive nature of the affidavit.
In my judgment no error on the part of the trial judge is demonstrated concerning the trial judge’s refusal to permit the wife to rely upon her affidavit filed on 24 February 2016.
By the same process of reasoning, no error of fact or principle is demonstrated by the wife in the trial judge having allowed the husband to rely upon written submissions filed on 10 March 2017. Again, this is a matter of practice and procedure well within the discretion of the trial judge and the content of those written submissions served only to point out that the wife ought not be permitted to make or rely upon submissions which were unsupported by any evidence.
There is thus no merit in the wife’s contention that the trial judge was in error in allowing the husband to rely upon the written submissions he filed on 10 March 2017.
Having rejected the above challenges on the basis that none of them have any merit, I turn to consider the balance of the wife’s challenges on appeal.
The P Street Agreement and assessment of the wife’s contributions
For reasons which will become apparent it is convenient that these two topics be dealt with together.
The reasons for judgment do not engage with the wife’s claim that by reason of the P Street Agreement which the wife alleged had been made, that the husband had no claim or entitlement to either of the real properties (T Street and Q Street).
Beyond noting that it was the wife’s “argument” that the husband had no entitlement to real property (at [23]), the reasons do not engage with that argument, or its bases, as contended for by the wife. However, by necessary implication from the fact that the trial judge included the two real properties as available for adjustment, and specifically observed that “[Q Street] has been included in the property pool as it is a matrimonial asset” (at [42(a)]), the trial judge rejected the wife’s argument. Whilst it is unfortunate that the trial judge used the term “matrimonial asset” being a descriptor not recognised in the Act or by authority, in context it is clear that the trial judge was not prepared to exclude the real properties in the manner sought by the wife.
Whilst it might be contended that a trial judge’s failure to deal with, by reasons, a central controversy put up for resolution[2] itself demonstrates an inadequacy in the reasons for judgment, the context in which the issue is agitated and the nature of the issue is obviously fundamental to an analysis of the reasons.
[2] See, for example, Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 per Allsop P (with whom McColl JA agreed) at [2]; and Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 per McColl JA at [58] – [59].
Here, as a result of objections being successfully taken to much of the wife’s trial affidavit very little, if anything, remained by way of admissible evidence from the wife to support her contentions as to the P Street Agreement. Further, as already noted, the wife elected to discontinue her participation in the trial prior to her being cross-examined on her evidence. The trial judge accepted the husband to be a credible witness (at [19]) and the husband refuted the making of, or entering into, the P Street Agreement. Finally, as a matter of law, there being no suggestion that any such agreement was formalised under the Act as a binding financial agreement, even if the wife proved the making of the P Street Agreement, that would not have the effect at law of ousting the jurisdiction of the Court to consider orders under s 79 of the Act including with respect to the two subject real properties.[3]
[3] See, for example, Woodland and Todd (2005) FLC 93-217 and the cases discussed in that authority.
It follows, in my judgment, that no error attended the trial judge’s approach of including Q Street and T Street for consideration in the determination of property adjustment orders pursuant to s 79 of the Act and there is no merit in the wife’s contentions concerning the P Street Agreement. Moreover, given the exclusion of the wife’s evidence it cannot be said that more by way of reasons for judgment was required to dispose of this issue.
That noted, the wife’s case about the P Street Agreement served to place particular emphasis upon a central aspect of the wife’s contributions, in particular the wife’s direct financial contribution, within the meaning of s 79(4)(a), via her inheritance. As noted, the wife complains of error on the part of the trial judge in assessing the wife’s contributions and contends that, as a result, the orders ultimately made were not just and equitable.
As earlier referred to, it seems to have been uncontentious that when T Street was purchased in 2001, that acquisition was funded by borrowings. Whilst there was a dispute between the husband and the wife as to whether the proceeds of sale of a Town S property assisted with the purchase of T Street (the husband contending that it did; the wife contending that it did not), it is not in dispute that substantial funds were borrowed in 2001 to facilitate the acquisition of T Street.
On the wife’s case it was only possible for the parties to buy the property in Town S in 1999 via the equity the wife held in her inherited properties, P Street and Q Street.
More significantly, it was the wife’s case that when P Street was sold in 2002 the net proceeds of $350,000 were paid to the Commonwealth Bank so as to extinguish the $185,000 loan to fund the acquisition of T Street with the balance being applied to other debts.
I note in passing that it is curious that when the husband was cross-examined by then counsel for the wife, the trial judge appeared to have some difficulties in accepting the accuracy of what was being put as the purchase price paid for T Street. This seems curious because a copy of the contract of purchase of T Street is one of the annexures to the wife’s affidavit and it clearly reveals that $185,000 was paid for the property.
Likewise, annexures to the wife’s affidavit in the form of copy bank documents and the like appear to corroborate the wife’s case that $320,000 sourced to the sale of P Street inherited by the wife was directly contributed by the wife.
Whilst in his affidavit the husband acknowledged something in the order of $100,000 being contributed to T Street via the sale proceeds of P Street, it is fair to say that the husband’s affidavit evidence in this respect is expressed in uncertain terms and moreover does not come to terms with the documents annexed to the wife’s affidavit as referred to.
Nevertheless, it may be that without expressly saying so, the trial judge may have accepted or preferred the husband’s version to that of the wife. At [51] of the reasons, in referring to “the extensive property brought into the pool by the wife’s inheritance” the trial judge said at sub-paragraph (b) that “[t]he sale of [P Street] assisted in the purchase of [T Street]” (emphasis added). However, as noted, on the wife’s case the sale of P Street effectively funded in its entirety the T Street acquisition as those sale proceeds extinguished the full purchase price that was borrowed in order to fund the acquisition. At no point in the reasons does the trial judge quantify what is meant by “extensive property” or quantify the relativity of that contribution to others discussed.
On the wife’s case, her inheritance including Q Street (included in the “property pool” identified by the trial judge at [41] at $425,000) also funded, in its entirety, the costs of acquisition of T Street (included at $500,000). In summary, on the wife’s case, the direct contribution by her of her inheritance was reflected in the two real properties existing as at trial with a combined value of $925,000. Even if $140,000 is deducted as “CBA home loan on [T Street]” as the trial judge found, the significance of a net value of, or equity in, the two properties at $785,000, relative to a total net pool of $927,741, as found by the trial judge, is obvious. It equates to 85 per cent of that value. That is so before account is taken of rental income received from the two properties between 1999 and the sale of P Street in 2002, and the continued receipt of rentals from Q Street throughout the balance of the period under discussion.
There was no finding made by the trial judge to the effect that the wife used some or a substantial part of her inheritance for her own purposes, that case apparently being one propounded by the husband. In any event, more than mere assertions to this effect are necessary to displace the presumption which applies that monies received by a party during the course of the parties’ cohabitation are used for the benefit of the family unit. In Polonius & York[4] the Full Court observed at [76] and [77]:
76.The Federal Magistrate did not find that either party applied their respective earnings for any purpose other than for the benefit of the family. As the Full Court observed in Parshen v Parshen (1996) FLC 92-720 (Ellis, Finn and Purdy JJ) at 83,665: “[I]n the absence of evidence to the contrary, it should be inferred in proceedings pursuant to the provisions of s 79 that moneys howsoever received by a party during the course of the parties’ cohabitation, are used by that party for the benefit of the family unit.”: see also Judkins and Santamaria [2003] FamCA 618 (15 August 2003) per Full Court (Ellis, Finn and O’Ryan JJ).
77.We observe that in Boege and Boege [2001] FamCA 1167 (15 August 2001) the Full Court (Ellis, Finn and Warnick JJ), after referring to Parshen, observed at paragraph 51: “In the instant case, it could be argued that there was evidence rebutting the presumption or inference referred to in Parshen v Parshen (supra). In our view, however, it is not sufficient to attract the consequences in the evaluation of contributions that followed in the instant case, that one party merely asserts that moneys have been retained by the other party for his/her ‘own purposes’”.
[4] [2010] FamCAFC 228.
Of course it is the case that the worth of any capital contribution cannot legitimately be “carried forward” mathematically as the sole determinant in assessing contributions under s 79(4) of the Act. Full Court authorities such as Lovine & Connor[5] and Dickons & Dickons[6] emphasise that contributions of all kinds as identified in the subsections of s 79(4), including some incapable of being measured in monetary terms, fall into the holistic assessment of contributions in s 79 property settlement determinations. It would be wrong to proceed on the notion, even accepting the wife’s case, that because she can point to a capital contribution worth 85 per cent of the net pool of property interests available for distribution, that her contributions must be assessed at 85 per cent.
[5] (2012) FLC 93-515.
[6] [2012] FamCAFC 154.
However, the significance of the wife’s direct capital contribution in proportion to the pool of assets as found is obvious and the wife’s challenges as to contribution on appeal necessitate a consideration of whether the trial judge properly assessed the wife’s contributions.
The trial judge’s discussion of contributions in the reasons is very brief and is conveniently set out in full:
Contributions
Initial contributions
43. At the commencement of the relationship:-
a)The husband was working and had approximately $15,000 in his account together with a Toyota Hilux Ute motor vehicle.
b) The wife was a student and had a Nissan Pulsar motor vehicle.
44.The parties agree that the contributions were equal at this stage and that an adjustment is not warranted.
45. I agree with the submissions of the parties in that respect.
Contributions during the relationship
46.After completing her degree the wife worked intermittently and at times received wages from the husband’s businesses.
47.The husband has been in almost constant employment either working for others or in his own businesses.
48.In 1996 the wife’s father died and by 1999 the wife had inherited properties at [Q Street] and [P Street].
49.The husband submits that the financial contributions of the parties were equal during the relationship.
50. I disagree.
51.I find that the extensive property brought into the pool by the wife’s inheritance cannot be ignored due to:-
a)The rents received which assisted with the mortgage repayments on the other properties and at times supported the business.
b)The sale of [P Street] assisted in the purchase of [T Street].
c)The existence of [Q Street] makes up a large part of the property pool.
52.However, the extent of the adjustment in favour of the wife in respect to these direct financial contributions is to be discounted due to:-
a) The timing of the inheritance in what was a lengthy marriage.
b)The contributions made by both parties to the preservation and maintenance of the real properties, including the inherited properties during the course of the relationship.
Contributions after separation
53.Since 2010 the wife has had exclusive use of the rent from [Q Street].
54.The wife has failed to disclose any documentation to the husband as to the monies generated and being generated by [Q Street].
55.Since 2010 until 2016 (when the wife was ordered to contribute to the mortgage repayments) the husband has been solely responsible for the payment of the mortgage and outgoings on [Q Street] which the wife has exclusively occupied since 2012.
56.The husband submits that an adjustment is to be made in his favour due to his financial contributions in making the mortgage repayments and outgoings on [T Street] (where the wife has been living in the property since 2012) and where the wife had exclusive use of the unknown income from [Q Street].
57.I agree with the husband and find that a small adjustment is to be made in favour of the husband for post separation contributions.
Overall conclusion on contributions
58.I find that an adjustment is to be made in favour of the wife of 6% which takes into account her contributions made during the relationship from the inheritances which has then been discounted to reflect the contributions made by the husband post separation.
One troubling aspect of the trial judge’s discussion is the inference from what is said about “adjustment”, in context, is that equality has been presumed as a starting point, contrary to authority.[7]
[7]Mallet v Mallet (1984) 156 CLR 605.
That aside, with all due respect to the trial judge, the reasons record a series of conclusions expressed in general terms which are not illuminated by specific findings, or sufficient findings, such as to render the true meaning and effect of the stated conclusions clear. As but one example, it is not possible to discern from what is expressed at [51] and [52] as quoted above whether the trial judge accepted the wife’s case that the sale of her inherited P Street property resulted in a capital contribution by the wife of $350,000, which funded entirely the T Street property (worth $500,000 at trial); or whether the trial judge has preferred the husband’s case to the effect that only something in the order of about $100,000 was applied. As a further example, absent any kind of quantification of, on the one hand, the wife’s direct financial contributions from her inheritance as referred to in [51], and similarly some degree of quantification of the “contributions” being referred to in [52], it is not possible to discern the relativities or how these elements have been balanced out by the trial judge. For example, the trial judge does not provide explanation of what it is that is being referred to as “[t]he contributions made by both parties to the preservation and maintenance of the real properties, including the inherited properties during the course of the relationship” as referred to in [52(b)]. This is against the background that there were apparently disputed issues of fact as between the parties as to what contributions each made to the real properties, including the inherited properties. For example, the evidence of the expert real property valuer as to the state of improvements did not readily reconcile with the husband’s case that he had undertaken significant renovation work.
As a further example, the conclusions expressed by the trial judge in [57] and [58] of the reasons tend to mask, rather than illuminate, centrally important conclusions of the trial judge. It is not possible to know what constitutes the “small” adjustment being referred to in [57]. It is unclear what are the
“post separation contributions” being referred to in any quantifiable terms. Nor is it clear how the “6%” adjustment in [58] is arrived at. That is, the extent of the wife’s “contributions made” in percentage terms is unknown before that is “discounted” by an extent unknown to arrive at a final conclusion of six per cent in the wife’s favour. That is, the starting point to the assessment of contributions is an unknown, as is the extent of adjustment made in favour of the husband “for post separation contributions” or to what extent the wife’s contributions assessment favours her, prior to it being discounted to arrive at the figure of six per cent.
The feature that the reasons for judgment referred to do no more than state some broad conclusions has the consequence that the reasons for judgment, as expressed, do not eliminate the prospect that the trial judge has failed to take proper account of a material consideration, specifically, the relative worth of the wife’s inheritance as a direct financial contribution to the property interests as existing at trial.[8]
[8]House v The King (1936) 55 CLR 499.
Viewed from the perspective of adequacy of reasons, it is not possible to follow the trial judge’s line of reasoning to the conclusions reached because of the absence of central findings or particulars informing the conclusions expressed in broad terms. An appellate court must be placed in the position of being able to follow the trial judge’s line of reasoning, as must the parties, if they are to be satisfied that justice has been done.[9]
[9]Bennett and Bennett (1991) FLC 92-191 (“Bennett and Bennett”).
In the absence of adequate reasons, a Full Court is not obliged to uphold a judgment merely because the result may be said to fall within the wide ambit of the judge’s discretion. In general, the appellate court should be able to discern either expressly or by implication the path by which the result has been reached.[10] In my respectful opinion that cannot be done with respect to these reasons for judgment.
[10]Bennett and Bennett.
I am therefore satisfied of substance in the wife’s challenges comprising challenges to the adequacy of the reasons for judgment of the trial judge; and for the same reasons this Court cannot be satisfied that the orders made by the trial judge are just and equitable based upon a legitimate exercise of judicial discretion founded upon necessary findings.
Challenge to the s 75(2) adjustment in the wife’s favour
The trial judge concluded that “a small adjustment of 2% is to [sic] made in favour of the wife for future needs given the disparity in income between the parties” (reasons at [64]).
A two per cent “adjustment” of the pool of property interests as determined by the trial judge at a total of $927,741, constitutes a four per cent disparity as between the parties, worth approximately $37,000.
The reasons of the trial judge under the heading “[f]uture needs” are remarkably brief and comprise the following:
Future needs
59.Initially, the children were in the care of the husband and spending time with the wife.
60. Since 2013 the parties have had equal shared care of the children.
61.The husband pays child support to the wife and meets the majority of the children’s medical and educational expenses as well as everyday expenses.
62.The wife’s current income is unknown although the evidence supports that her income is not in the same range as that of the husband’s.
63.The husband submits that there should be no adjustment made in respect to future needs.
64.I find that a small adjustment of 2% is to [sic] made in favour of the wife for future needs given the disparity in income between the parties.
Beyond what appears in [62] there is no discussion in the reasons as to the wife’s actual level of income or her earning capacity. Whilst on appeal counsel for the husband made the valid submission that the wife’s non-participation in the appeal had the result that the wife’s evidence was not able to be tested at trial, there is no discussion at all about that evidence or reasons given for the conclusion that “[t]he wife’s current income is unknown”. More fundamentally, it is unclear what evidence the trial judge is referring to as the evidence which supports the conclusion that the wife’s income “is not in the same range as that of the husband’s”. There is no finding recorded as to the level of the husband’s income.
Absent some findings as to what is being referred to as the level or range of the wife’s income as compared with that of the husband, the conclusion as to a small adjustment of two per cent in favour of the wife appears to be entirely arbitrary.
The husband’s evidence in the case was that throughout the marriage he effectively made the sole or major contribution of income earning because the wife failed to utilise any significant earning capacity over and above her caring responsibilities for the children. The wife filed evidence concerning her income and albeit untested the combined effect of this evidence pointed to a lack of any substantial earning capacity on the part of the wife. In contrast, the expert evidence concerning the husband’s business, together with his own sworn evidence, allowed specific findings to be made as to the level of the husband’s income and thus his likely income earning capacity in the future.
In circumstances where, as the trial judge found, since 2013 the care of the children had been shared then, given the age in particular of the oldest child who was approaching his majority when the reasons for judgment were delivered, it is not clear from these reasons for judgment as to what the trial judge had in mind, specifically, as to the husband’s share of expenses for the children, as referred to in [61].
In summary, the reasons for judgment as expressed are in my respectful opinion wholly inadequate to explain how the adjustment of two per cent, as opposed to some other percentage, was arrived at.
I therefore find merit in the wife’s challenge directed to the adjustment made under s 75(2).
Balance of challenges
It follows from what has already been observed that the orders made by the trial judge must be set aside and the subject discretion to make property adjustment orders re-exercised.
As was explained to the parties in the course of the hearing, this Court always strives to re-exercise the discretion rather than impose on the parties the further costs and dislocation of another trial if that can be avoided. However, each party must have the opportunity to put further evidence before the Court for the purpose of any re-exercise of discretion and in this case it was acknowledged by both parties that each would wish to have the opportunity to place further evidence before the Court. There is the feature also in this case that the wife’s failure to cooperate in the Court processes resulted in there being no
cross-examination of the wife or testing of her evidence at trial.
In circumstances where there is to be a retrial of the proceedings, it seems to me that there is the potential for discussion of the balance of the challenges on appeal to be unhelpful to any judge undertaking the re-exercise of discretion, given that the nature of those challenges includes assertions of fraud and wrongdoing. That is, any observations that this Court makes about the husband obtaining loans fraudulently as regards the wife; or doing so by making false representations to banks (being the allegations of the wife) would be potentially unhelpful to a reconsideration of those issues in the case at trial, and it is unnecessary to so do, given the conclusions reached as to the appeal having to be allowed in any event.
Conclusion
Each party sought that if there was to be a retrial of these proceedings that such retrial take place in this Registry of the Family Court of Australia rather than in the Lismore Registry of the Federal Circuit Court of Australia.
However, as was confirmed to the parties on the hearing of the appeal, this Court does not have jurisdiction to direct that the re-hearing of the proceedings occur in the trial division of this Court, as opposed to remitting the proceedings to the Federal Circuit Court. As was also explained to the parties, if by reason of the complexity of the issues involved in the proceedings the parties seek to have the proceedings transferred to the Family Court of Australia, it is open to the parties or either of them to advance that application in the Federal Circuit Court.
For what it is worth, in relation to any such application, it would seem to me that there is sufficient complexity about the issues in this case as to justify the proceedings being transferred to the trial division of this Court. There are some peculiar features of this case which have not been discussed thus far concerning borrowings and in particular security for borrowings. For example, it is not in issue, it would seem, that a secured lender has forgiven substantial debts based essentially upon representations by the wife to the effect that she did not consent to substantial borrowings being made. The wife has secured the release to her of a certificate of title which is notionally the real property secured by a mortgage debt. On appeal, these aspects of the matter were not able to be explored in the detail necessary to reach conclusions about them, but it is clear that the events surrounding these aspects of the matter have a layer of complexity that can only be resolved at a trial.
I therefore propose to make the usual orders for the remitter of the proceedings to the Federal Circuit Court for re-hearing by a judge other than the trial judge, but obviously this does not prevent the parties from making an application for transfer of the proceedings to the Brisbane Registry of the trial division of this Court.
Costs
The husband is entitled to a costs certificate for the appeal given that the appeal is allowed by reason of errors of law. The wife acknowledged that she, having no legal representation, incurred no legal costs with respect to the appeal but the wife foreshadowed that she may incur legal costs in respect of the re-trial.
On this basis the husband should be granted a costs certificate with respect to the appeal and both parties should receive a costs certificate with respect to the
re-trial of the proceedings.
I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 5 September 2018.
Associate:
Date: 5 September 2018
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