TDS & DES & Children's Representative

[2005] FamCA 746

[2005] FamCA 746

FAMILY LAW ACT 1975

IN THE FULL COURT       
OF THE FAMILY COURT OF AUSTRALIA                   Appeal No SA75 of 2004
AT HOBART  File No HBF586 of 2002
BETWEEN:

TDS
Appellant Husband
- and -
DES
Respondent & Cross-Appellant Wife

CHILDREN’S REPRESENTATIVE

REASONS FOR JUDGMENT

CORAM:  Kay, Holden & Warnick JJ 
DATE OF HEARING:                 28 June 2005
DATE OF JUDGMENT:             9 August 2005

APPEARANCES:  Mr Wilson of Counsel, instructed by, Taussig Cherrie & Associates, DX 38236 Flagstaff, appeared on behalf of the Appellant Husband

Mr McGuire of Counsel, instructed by, Temple-Smith Barclay, 100 Best Street, Devonport, Tas 7310 appeared on behalf of the Respondent & Cross Appellant Wife.

Mr Walker of Counsel, instructed by Verney Walker & Co, PO Box 1005, Devonport, Tas 7310, appeared on behalf of the Children’s Representative.

TDS & DES
SA75 of 2004
CORAM:                   Kay, Holden & Warnick JJ
DATE OF HEARING:         28 June 2005
DATE OF JUDGMENT      9 August 2005

Catchwords:           CHILDREN – CONTACT - matters in dispute on appeal narrowed to Christmas Day, the children’s birthdays and the duration of mid-week contact – orders made determining these issues

PROPERTY – pool issues - adequacy of reasons - inadequate evidence of value of the major asset - debts excluded without explanation and in face of credible evidence as to their existence - wife's home acquired post-separation in which she had an equity of over $100,000 wrongly ignored when making s75(2) adjustments-  failure to give consideration to the husband’s anxious, albeit perhaps futile,  desire to be given an opportunity to retain a farming property – trial orders would leave husband owning only his superannuation that was not presently available to him - need to consider whether a splitting order might readily achieve justice and equity between the parties - matter remitted for retrial

PROPERTY - cross-appeal by the wife sought that her share of the pool of assets excluding her property obtained subsequent to separation be increased from 60 per cent to 70 per cent - wife asserted that inadequate weight had been given both to the contributions she made during the course of the marriage and to the lack of financial support that she could look forward to in future while she had the obligation to provide for the three children of the marriage – cross-appeal dismissed.

1. This is the husband’s appeal against contact and property orders made by Bell J on 17 December 2004. 

1. The parties are the parents of three children, X born 1996 and Y and Z both born 1999.

1. As a result of matters that developed in the course of oral argument during the appeal, the contact issues that remained in dispute before us are of a fairly narrow compass. 

1. The parties reached agreement in relation to several of the issues raised by the Notice of Appeal and produced a set of minutes of consent orders.  They remained in dispute over three issues, namely:

·    Christmas Day;

·    The children’s birthdays;

·    The duration of mid-week contact.

1. The issues raised by the property appeal were significantly more complex.  The trial Judge had identified the pool of property to be divided between the parties but was not satisfied that there was appropriate evidence as to the valuation of a farm that the husband was anxious to retain.  He ordered a sale of the farm with the proceeds to be divided 60/40 in favour of the wife.  From the husband’s share he was to pay the wife the further sum of $68,060 representing 60 per cent of the value of the balance of the pool of assets as identified by the trial Judge.  The orders provided however that the order for the payment of the balance was:

“(11)…subject to any application in relation to the sale of [the farming property], the parties are given liberty to apply to bring on any question as to the adequacy of the net proceeds of the sale as aforesaid.”

1. In his appeal the husband complained that the trial Judge

·    had wrongly failed to allow the husband an opportunity to provide evidence as to the value of the farm,

·    had without explanation wrongly excluded from the pool of assets a series of liabilities that the husband owed,

·    had wrongly excluded from consideration a home that the wife had acquired after separation in which she had an equity of over $100,000 and

·    had wrongly failed to give consideration to the husband’s anxious desire to be given an opportunity to retain the farming property.

1. Whilst the amended Notice of Appeal sought orders that the farming property be transferred to the husband, the appellant’s counsel urged us to direct that the matter be the subject of a rehearing.

Background

1. The wife was born in 1964 and the husband in 1967.  They commenced cohabitation in 1995 and after some periods of separation in 1996 and again in 1997 they married in 1998.  They finally separated in 2001.

1. At the time of the hearing the wife was working five days each fortnight as a clerk at a hospital.  The husband was unemployed.  Much of the background of the parties’ relationship and the manner in which the trial was ultimately conducted needed to be viewed in light of evidence accepted by the trial Judge that the husband suffered from a personality disorder characterised by narcissistic traits, had a volatile nature and an inclination to impulsive aggression and dramatic communications.  He had been twice imprisoned for breach of protection orders made in favour of the wife and for assaulting her on one occasion.  His Honour described the husband’s closing address at the trial as “impassioned and in parts hysterical”.

Background to the contact issues

1. As a result of extensive interim and interlocutory proceedings, by the time of the trial the children were residing with their mother and the husband was having contact to X each weekend from 1.00pm Saturday until the commencement of school Monday and to all of the three children from 8.30am Wednesday until 5.00pm on Thursday of each week. 

1. The mother proposed that contact should occur to all three children each second weekend from after school Friday until the commencement of school Monday and for one night overnight during the off week.  Additionally there should be contact for half of the school holidays, “for periods of time on each of the children’s birthdays”, and reasonable telephone contact.  She proposed contact be from 5.00pm Christmas Eve to 2.00pm Christmas Day each second year and in the other alternate year from 2.00pm Christmas Day until 5.00pm Boxing Day.  She proposed a regime for sharing Easter contact and at the time of the trial she sought orders for telephone contact once per week and on the children’s and the husband’s birthday.  It was her proposal that the contact changeover should occur at school but where the school was not available then it was to take place outside her home.

1. The husband proposed that contact during school term should be conducted on a four week cycle.  On the first weekend he would have contact to all three children from after school Friday until the commencement of school Monday, on the second weekend he would have contact with X only from 11.00am Saturday until the commencement of school Monday.  On the third weekend he would have contact with all three children from 11.00am Saturday until the commencement of school Monday, and on the final weekend the children would be with their mother. 

1. He further proposed that he should have contact with all three children from after school Tuesday until the commencement of school Thursday in each alternate week.  He sought orders for half the school holidays.  He sought orders for the Christmas holidays to be divided so that every alternate year he would initially have the children from the completion of school until 2.00pm Christmas Day and thereafter on a week-on, week-off basis, and in the other years he would have the children from 2.00pm Christmas Day on a week-on, week-off basis.  He sought contact on his birthday, on Father’s Day, and if the children’s birthdays did not otherwise fall during a contact period he sought contact with them on an overnight basis.

1. At the trial the Child Representative proposed contact on alternate weekends from after school Friday until the commencement of school Monday, save that on every second contact weekend (that is, one out of four weekends) the twins would be returned at 10.00am on Sunday.  He also proposed that there be overnight contact on one day per fortnight from 8.45am Wednesday until 8.45am Thursday.  His Christmas Day proposals saw the children with the mother from 5.00pm Christmas Eve until 2.00pm Christmas Day in each alternate year and otherwise with the mother from 2.00pm Christmas Day to the same time on Boxing Day.  He proposed that the term holidays be equally divided between the parties and that Easter be equally divided between the parties.

1. It was the Child Representative’s proposal that the birthday contact, if a non-contact weekend should be from 10.00am to 3.00pm, and if it was during a weekday then from after school until 6.00pm.

1. Even though his Honour was extremely critical of the husband’s demeanour in court and his behaviour towards the wife out of court, he said:

“18.…It is quite clear that the relationship between the respondent and the children is good.  How this is I cannot understand for one moment having seen and heard [TDS] for the period I did during the court case.  But they do, they love him dearly and they are more than satisfied to have contact with him…”

“22.He is a man who appears to know no limits, has no control upon his anger and is a person who I would have thought would not have made a good father, either by way of residence or contact.  However, I emphasise that in fact the children do get on well and the small video I saw taken by himself of course indicates to me that he does have an ability to liaise and rapport with his children and they seem to enjoy his contact particularly.”

1. After setting out a number of concerns that his Honour had arising out of the volatile nature of the husband, his Honour indicated that he was willing to overcome any reluctance he might have had to order contact because of the support the husband was receiving both from the mother and from the Child Representative in relation to his application.  He said, however:

“55.Prior to making the Order for contact I must emphasise that I believe it is in the children’s interests that they not be put in the position where they have to face probable confrontation by the husband towards the wife and consequently I will be ordering that at all times reasonable, the contact should take place at a contact centre and that the husband be responsible for the payment of any fees due and owing to the contact centre.

56.If it is not possible then the contact should take place and will generally be able to be effected by the children being picked up by the parties at school and re-delivered to the school at the cessation of periods of contact.”

1. His Honour then determined that the contact should take place as follows:

“(4)     The husband have contact with the children in the following:

(i)each alternate weekend from 10:00am on Saturday to 8:45am on Monday or if the Monday is a public holiday then 5:00pm on the Monday;

(ii)that contact with respect to the children Y and Z terminate at 10:00am on Sunday of the second contact weekend of each month and the said two (2) children be returned to the wife at that time;

(iii)on each week that contact is not to occur on the following weekend, from 8:45am on Wednesday until 8:45am on Thursday;

(iv)that the contact arrangements referred to in (i), (ii) and (iii) be suspended during school holidays;

(v)during all school holidays for one half thereof on a week about basis, such contact to be with the husband for the first week thereof from 5:00pm on the day school breaks up and if there is an odd week or extra days at the end of such holiday period, that week shall be divided equally between the parties subject to arrangements set out hereafter for Christmas and Easter;

(vi)the wife shall have the children from 5:00pm on Christmas Eve 2004 and each alternate year thereafter;

(vii)the wife shall have the children from 2:00pm on Christmas Day 2005 to 2:00pm on 26 December 2005 and each alternate year thereafter;

(viii)on Father’s Day if it is not a contact weekend from 10:00am to 5:00pm;

(ix)that if Mother’s Day fall on a contact weekend the children be returned to the wife at 10:00am until 5:00pm on that day;

(x)that if any children’s birthday occur on a non-contact weekend the children shall spend from 10:00am to 3:00pm with the husband.

(5)At all times reasonable the above contact should take place at a contact centre and that the husband be responsible for the payment of any fees due and owing to the contact centre. If it is not possible then the contact should take place and will generally be able to be effected by the children being picked up by the parties at school and re-delivered to the school at the cessation of periods of contact.

(6)The husband undergo an anger management course, such anger management course to be organised by the child’s representative. The child’s representative is requested to remain in the matter for a further three months from today.”

1. Although at trial the husband had sought the creation of a contact regime that would see him having all three children on two out of four weekends and X on a third weekend, in his Notice of Appeal he sought that contact during school term should be to all three children each alternate weekend from the conclusion of school Friday to the commencement of school on Monday where if the Monday is a public holiday then the commencement of school on the Tuesday and each week that contact is not to occur, on the following weekend from the conclusion of school on Wednesday until the commencement of school on Friday.

1. As we have already indicated the parties reached agreement relating to these matters in the course of the appeal and some minutes of consent orders were handed up that provided that Order 4(i) be varied so that the alternate weekend contact commence from after school on Friday and that Order 5 be varied so that whenever a period of contact commenced from after school or 8.45am or concluded at 8.45am on a school day, changeover was to occur by the children being delivered to or collected from their school.

1. Where contact is to commence or conclude other than on a school day, changeover shall take place at the Children’s Contact Service when the contact changeover is to coincide with times when the Contact Service is available, the husband to be responsible for the payment of any fees due and owing to the Contact Centre for the provision of such service.  If the contact changeover is to take place other than during school hours or during hours when the Contact Service is not available, then such changeovers are to take place at the McDonalds Family Restaurant. 

1. Although Order 4(v) as pronounced by Bell J made reference to arrangements for Easter, the balance of the orders made no such provision.  In the course of the appeal the parties reached agreement that the orders should be further varied to provide that the husband have contact with the children for the second part of each Easter holiday period, being from 5.00pm on the Wednesday after Easter until 5.00pm on the Sunday after Easter.

1. As we have already indicated, the other contact issues that remained alive at the appeal were of a fairly short compass.

Christmas Day

1. The orders the trial Judge made provided that the wife should have the children from 5.00pm Christmas Eve 2004 and each alternate year thereafter but made no provision for the conclusion of Christmas Day contact.  They further provided that the wife should have the children from 2.00pm Christmas Day 2005 to 2.00pm on 26 December 2005 and each alternate year thereafter.  Given the confusion created by the form of the orders the parties agreed to make submissions before us as to orders that would better define the Christmas contact.  Given that the provisions for holiday contact required the children to be with the husband for the first week of the summer holidays and that Christmas was likely to fall within that week, the father submitted the mother should have the children in alternate years from 5.00pm Christmas Eve until 1.00pm Christmas Day and in the other years from 1.00pm Christmas Day until 5.00pm Boxing Day.  The mother proposed that the changeovers on Christmas Day should take place at 3.00pm rather than 1.00pm.  She argued that this would enable the parent who had had the child over Christmas Eve to include the child in the family Christmas lunch.

1. Though the resolution of this minor dispute is not to be determined by any sharply delineated application of principle, we think it likely to be more comfortable for the children and beneficial to them if they can enjoy a festive lunch or dinner with each of their parents and accordingly we intend to adopt the mother's proposals.

Children’s birthdays

1. The trial Judge had ordered:

“that if any children’s birthday occur (sic) on a non-contact weekend the children shall spend from 10.00am to 3.00pm with the husband.”

1. It should firstly be observed that the twins’ birthday is early January.  Given that the children will be on a week about roster during the school holidays, in some years it will fall during the husband’s contact period and in others it will fall during the wife’s contact period. X’s birthday is in June.

1. The mother submits that it is appropriate that the children’s birthdays be celebrated by each of the parents and that the parent with whom the child is not residing on their birthday should be entitled to make telephone contact with the child on each such occasion.  The addition of further changeovers for limited hours during the course of each birthday is contra-indicated by the level of conflict between the parties during contact changeover. 

1. We accept the strength or good sense of the mother’s argument as indicative of the mother's proposal being in the best interests of the children and propose to vary Order 4 accordingly.

Mid-week contact

1. The father had sought fortnightly mid-week contact from after school Tuesday until the commencement of school Thursday.  The mother had proposed fortnightly mid-week contact overnight from the completion of school Monday until the commencement of school Tuesday in the week after a non-contact weekend.

1. Peculiarly his Honour ordered mid-week contact from 8.45am on Wednesday until 8.45 am on Thursday in the week that contact is not to occur on the following weekend.

1. Apart from the complaint relating to the duration of the contact raised in the Notice of Appeal, the gravamen of the complaint is that his Honour gave no reasons for choosing the amount of contact that he did.  It was submitted that as the matter was very much in issue it required his Honour to not only reach a conclusion about it that was compatible with the welfare of the children but to explain adequately why one path was to be followed rather than another.

1. The matter in issue was identified by the welfare report that recommended (emphasis added):

“…as long as the children are collected and returned to school, they are likely to benefit from also having one or two school nights with their father in the ‘off’ week.  Because of the difficulties between the parents, this is recommended to occur fortnightly instead of weekly.”

1. The requirement to give adequate reasons is well established.  See Merriman (1993) FLC 92-422; (1993) 17 Fam LR 22 and the cases therein cited. The minimum requirement is to ensure that the parties and an appellate court can properly follow the line of reasoning. It is also to ensure that necessary findings are made to enable the statutory powers to be properly carried out.

1. Whilst we recognise that the matter was ultimately one for the exercise of his Honour’s discretion, we are unable to discern from his Honour’s reasons for judgment why it was that he chose one path rather than the other where the matter was in contest before him.  Accordingly this failure to give reasons amounts to an error in the exercise of discretion and it falls upon us to re-exercise the discretion that was otherwise available to the trial Judge.

1. In the circumstances of the case we are of the view that the mid-week contact order made by the trial Judge should be reshaped but not in the manner in which the appellant husband seeks.  In our view the order more sensibly should provide for mid-week contact to take place on each week that contact is not to occur on the following weekend from the conclusion of school on Wednesday until 8.45am on the Thursday.  There is little in the evidence that will support either a reduction of the contact to one night per fortnight or an increase in the contact to two nights per fortnight.  Ultimately we favour the more restrictive view of contact having regard to the surrounding circumstances that include the parties’ inability to communicate on matters that concern the welfare of the children and on the potential disruption to the children’s education if they spend two school nights per fortnight with their father rather than one.

1. In relation to the contact appeal it is proposed to make the following orders:

1.      That the appeal be allowed.

2.      That orders 4 and 5 of the orders made by the Honourable Justice Bell on 17 December 2004 be set aside and in lieu thereof the following orders be made:

4.        The husband have contact with the children as follows:

(i)     during school term on each alternate weekend from after school on Friday until 8.45am on Monday or if Monday is a public holiday then to 8.45am on the Tuesday;

(ii)    during school term on each week that contact is not to occur on the following weekend from after school on Wednesday until 8.45am on Thursday;

(iii)   during the school term holidays other than the summer holidays commencing at 9.00am on the first Saturday and concluding at 5.00pm on the second Saturday;

(iv)   during the summer school holidays for one half thereof on a week about basis from 9.00am Saturday until 9.00am on the following Saturday and in the event that there is an odd week or extra days at the end of such holiday period the husband shall be entitled to contact for one half of the period dates and times to be agreed between the parties in writing, save that the children shall reside with the wife each alternate year from 3.00pm Christmas Day until 5.00pm on Boxing Day commencing 2005 and in each other year from 5.00pm Christmas Eve until 3.00 pm Christmas Day;

(v)   for the second part of each Easter holiday period, being from 5.00pm on the Wednesday after Easter until 5.00pm on the Sunday after Easter;

(vi)    if Father’s Day is not on a contact weekend then from 10.00am until the commencement of school the following morning;

(vii)   if Mother’s Day falls on a contact weekend then the children are to be returned to the wife at 10.00am on Mother’s Day;

(viii)  Each parent shall be entitled to make telephone contact with any of the children on the child’s birthday.

5.     That during school term where contact is to commence after school and/or conclude before school then the contact changeover shall take place by the children being collected from and returned to their school.  Where contact is otherwise to commence or conclude during times that coincide with the operating hours of the Children’s Contact Service, changeover is to take place at the Children’s Contact Service with the husband to be responsible for the payment of any fees due and owing to the Contact Service.  Any other contact changeover is to take place at McDonalds Family Restaurant,.

The Property Judgment

1. The parties’ relationship lasted for 5½ years until separation.  The trial Judge found that the wife introduced about $70,000 cash together with a Subaru station wagon and a household full of furniture.  The husband had a home worth about $50,000 and a 10 per cent interest in a family company DH Pty Ltd.  The trial Judge placed no value on the shareholding other than to note that the company was now in liquidation.

1. In 1998 the parties purchased a 123 hectare farm (‘the farm’).  The purchase price of $100,000 was met as to $60,000 from the wife’s savings and the borrowings of $40,000.  Those borrowings were paid off by the husband some two years after its purchase.  The trial Judge noted that the husband was anxious to retain the property and that he would “endeavour to assist him in that”.  His Honour found that the husband had a superannuation entitlement of $125,000 but otherwise provided no details as to the history of its acquisition nor the manner in which that entitlement was calculated.  His Honour also identified as part of the pool of assets:

The wife’s Camry motor vehicle,          $6,000;

Excavator,   $5,000;

Honda Big Red 4-wheel bike,              $1,500;

Honda Odyessy,   $   800;

Mountain bike,   $   200;

Wife’s superannuation,   $6,400.

1. His Honour calculated that the value of the pool of assets, save for the farm was $144,100 and then made allowance for a sum of $7,000 owed by the wife to Centrelink and the further sum of $3,000 owed by the wife to the Commonwealth Bank as liabilities of the parties, leaving a reduced pool available for division of the farm plus $134,100.

1. He noted that the wife also owned some other real estate that she had acquired post-separation with the assistance of a loan of $6,000 from her father and the balance by way of mortgage.  His Honour said:

“The respondent can not [sic] say in any way that he has made any contribution to the acquisition and maintenance of such property, however I will take into consideration the that [sic] property when looking into the S75(2) [sic] factors of the parties.”

1. His Honour noted that there was no satisfactory evidence relating to the value of the farm.  He had refused admission of a valuation endeavoured to be introduced into evidence on the second or third day of the trial and had indicated he would ignore what was put to him as an unconditional offer of $200,000 to purchase it.  His Honour’s conclusion was that he was left in the invidious position of knowing that the property was purchased for $100,000 but that he had no idea what the value of the property was at the date of the trial.

1. His Honour found that during the course of the marriage the husband had worked in a motor vehicle wrecking business run by his parents.  He had then commenced a business of importing vehicles from Japan and working upon them to such an extent that they received an Australian compliance plate.  He was also successful as a motor car racer, although that was not seen to be a particularly profitable pastime.  His Honour concluded that during cohabitation the husband was “by far the greatest contributor by way of income” although he noted that the wife worked during the course of cohabitation save for short periods surrounding the births of the children.

1. By the time of the trial the husband’s business had failed.  He was out of employment and effectively providing no support for the children other than when they were in his care.

1. His Honour ultimately assessed the relevant contribution of the parties during cohabitation as equal.  He noted that since cohabitation the husband’s capacity to earn had not been affected but his earnings had.  He had appeared to give up seeking any form of work.  He further noted that the wife was working and had the responsibility of the children.  She had little or no chance of getting any child support.  She had her own mortgage to pay off and his Honour said that:

“…consequently I am more than satisfied there should be a weighting in her favour of 10%.”

1. His Honour calculated that from the pool of assets other than the farm that would entitle the wife to receive a cash adjustment of $68,060 as well as retaining the assets that were in her name.  He then said:

“89.…Insofar as [the farm] is concerned, as I have indicated, the only way I could ascertain a valuation of this property is to sell it but a concern has now arisen in my mind and that is, should [the farm] sell for something less then $200,000 there will [sic] insufficient funds to enable the respondent either to pay out the wife or for the parties to be able to satisfy the judgment without attacking the husband’s superannuation.

90.If that is the case, I am unable at this stage to make any order in relation to superannuation since neither of the parties have complied with the relevant acts, I know little or nothing about the superannuation and whether it is capable of splitting. I do know that the superannuation is a private fund and that is all. It would be impossible for me to make an order at this stage that the superannuation fund be split to compensate the wife for any failure of the sale of the assets to come up to her judgment.

91.Obviously, as I have said before, [the farm] will be sold and the wife will receive 60 percent of the net proceeds of such sale. I give leave to both parties to bid at any prospective sale.

92.Regrettably, it appears to me that this matter may have to come back before the Court at a later stage particularly if [the farm] does not sell for something approaching $200,000. If it does, I believe the judgment can [in] fact be satisfied.”

1. His Honour then made orders for the sale of the farm and for the division of proceeds as to 60 per cent in favour of the wife and the balance to the husband.  He further ordered:

“10.Further in regards to property settlement, the husband pay to the wife the sum of $68,060 within 3 months of today, being 60% of the net value and upon payment the wife transfer to the husband any interest she may have in relation to all items of property, save for [the farm], her motor vehicle, her furniture and her superannuation.

11.Order (10) above is subject to any application in relation to the sale of [the farm] and the parties are given liberty to apply to bring on any question as to the adequacy of the net proceeds of the sale as aforesaid.”

1. The orders that dealt with the sale of the farm envisaged a sale at a reserve price to be agreed upon or fixed by the President of the Real Estate Institute.  The sale was to be by way of public auction at the earliest reasonable date.  If the property was not sold at auction or shortly thereafter then there was to be a second auction two months after the date of the first auction at the reserve that was 10 per cent less than the earlier reserve.  If it remained unsold it was to then be on the market for private treaty with liberty to apply to the Court in relation to the terms of the sale.

1. From the matters argued before us it seems common ground that the wife’s property that was obtained post-separation had a market value of $215,000 and was subject to a mortgage of $108,000 leaving an equity of $107,000. 

1. The property judgment was the subject of both an appeal and a cross-appeal.  The husband sought to identify a number of areas in the judgment about which he had complaints.  He first sought to attack issues concerning the composition of the pool of assets.  This attack led to consideration of a number of aspects of the trial Judge's reasons and the orders made.

1. At the trial the husband was formally unrepresented although a Ms B, who had previously been the solicitor handling his file, was given leave to appear as his advocate even though she said her firm’s instructions had been withdrawn and she was appearing mainly to assist the husband in the presentation of his case rather than appearing on his behalf.  She conducted most of the case on his behalf, although the final address was conducted by the husband in person.

1. On the third day of the hearing Ms B sought to introduce evidence from Mr J, a valuer who had been retained on behalf of the husband.

1. Counsel for the wife took objection to the introduction of this evidence on the basis that Mr J was not a joint valuer as required by the Family Law Rules 2004. Further he introduced correspondence with the husband in which he had sought clarification of valuation issues but had received no response.

1. For his part Mr McGuire on behalf of the wife sought to rely upon a sale note that had been signed by a prospective purchaser of the farm making an offer of $200,000 to acquire it.  Although the affidavit of Mr J was not before us, it would appear from the transcript of the discussion concerning the valuations that Mr J’s valuation had come in at $90,000.  The trial Judge said:

“You see, this is quite crucial.  It’s very crucial.  I see that, having a quick look, I think he values it at 90,000 - 90,000, and your client is 200,000.  It is a huge difference.

MR McGUIRE:…It’s going to be important in the context that your Honour is far enough into the trial, and I think it’s proper for me to say, that my submission is that the property be sold.  In any event it may not be that crucial.

HIS HONOUR:   Yes, it might not be.

MR McGUIRE:   But it’s still crucial in the sense---

HIS HONOUR:   It would seem crucial to find out.

MR McGUIRE:   Absolutely, yes.  I don’t want to let a valuation go in without – it has not been prepared in accordance with the new rules but ---

HIS HONOUR:   No, it hasn’t.  [Mr C] is your valuer is he?

MR McGUIRE:   He was.

HIS HONOUR:  Was.

MR McGUIRE:   I haven’t got an affidavit from him because of the orders that we’re seeking.

HIS HONOUR:   Yes, thank you.  What do you further say, Mr McGuire, about the admissibility of [Mr J’s] affidavit?

MR McGUIRE:   I say that in those circumstances, and after my considering my opening, that it’s inadmissible and it would not be proper for your Honour to accept that evidence. 

HIS HONOUR:   [TDS] has given evidence, Mr McGuire, of his strong desire, for sentimental reasons, to keep this property.

MR McGUIRE:   Yes.

HIS HONOUR:   Assume we have no evidence of valuation, no admissible evidence of valuation, I could still order that it would be fifty-fifty or 60:40 of the net proceeds of sale, couldn’t I.

MR McGUIRE:   That’s what I’m going to be asking your Honour to do.

HIS HONOUR:  I see.”

1. When Ms B was called upon in regard to this issue she said:

“It’s my submission to your Honour that the valuation of that property is critical.  At the time that those communications were forwarded by Mr McGuire to [TDS], [TDS] was self-represented and attempting to effectively prepare for this matter on his own…from [TDS’s] point of view, it’s his intention, if at all possible to retain onto that farming property.

HIS HONOUR:   Yes, I appreciate that.

[MS B]:   Obviously if that is to occur there needs to be an accurate value placed upon it…”

1. There was then some discussion that the valuations had been obtained in 2003 for interlocutory purposes and that the husband who was then acting for himself had no understanding of the significance of the new Rules of Court that provided for a single valuation or at the very least a conference of valuers.  Ms B concluded her submissions saying that it was a matter in which the valuer needed to be defined and a valuation obtained.

1. His Honour ultimately concluded that the issue of valuation was not as critical as was being urged upon him in that he proposed to order a sale of property in which case market forces would determine the real value.  Such an approach was entirely consistent with the approach adopted by the Full Court in Smith and Smith (1991) FLC 92-261; (1991) 15 Fam LR 206 where the Court followed the decision of the High Court in McDonald v Deputy Commissioner of Land Tax (1915) 20 CLR 231 in holding that evidence of offers to purchase or sell were not admissible on the issue of the value of an item of property. Their Honours said at 75,759:

“The determination of values of property is a difficult and uncertain matter at the best of times, but especially in Australia in recent times because there have been frequent and marked variations in the property market. It becomes a difficult and at times hazardous task in s79 proceedings but which, if performed, is likely to have a significant effect for better or worse on the fortunes of the parties.

It is largely for those reasons that a consistent line of authority in this Court has emphasized that in cases where a property is to be sold the preferable course is to fix the interests of the parties in the sale price by way of percentages rather than a fixed amount to one party and the balance to the other: See, for example, Waters and Waters (1981) FLC ¶91-019, Docters van Leeuwen and Docters van Leeuwen (1990) FLC ¶92-148 and Little and Little (1990) FLC ¶92-147.

More relevantly here, where the state of the evidence makes the process of valuation hazardous or uncertain, or where there are wide differences between legitimate valuations because of a volatile market or peculiarities relating to the specific property or otherwise, the ascertainment of value by judicial process may become too uncertain and the preferable course is to order the sale of the property so that its real value can be revealed by market forces. The proceeds of sale are then divided in appropriate proportions between the parties. This is particularly emphasized in Little's case in the following passage at p. 78,020:

‘Whilst a trial judge should determine a disputed issue of valuation where the evidence enables him to do so, we do not accept that there is an obligation cast upon him to determine such a disputed issue irrespective of the state of the evidence. It may be such that a determination is not possible. In such a case, as in a case where there is a very considerable disparity in the valuation evidence and other evidence indicates that the actual ascertainment of the true value is difficult and complex, the proper solution as between the parties may be to order a sale.’”

1. However, while the ordering of a sale in the absence of acceptable evidence of valuation was, having regard only to that circumstance, consistent with the approach of the Full Court in Smith & Smith, there were other factors in this case which affected and increased the desirability of obtaining a valuation of the farm before final orders were made.

1. First there was the very live issue, as unrealistic as it might have been, that the husband was very anxious to retain the property and the wife acknowledged how important emotionally the property was to him.  The trial Judge recognised the husband’s emotional attachment to the property when he said at paragraph 73 of his reasons for judgment that he would endeavour to assist the husband in being given an opportunity to retain the property.  Short of merely providing the husband with an opportunity to bid for the property at any auction it is difficult to see how his Honour otherwise gave weight to this consideration.

1. Perhaps more importantly the effect of the orders that his Honour made was to realistically leave the husband with nothing more than his superannuation entitlement depending on the sale price achieved for the farm property.  Whether that was a just and equitable outcome or whether justice and equity would have been achieved by making a splitting order in relation to the superannuation and otherwise allowing each of the parties to retain some of the presently available property was a matter that nobody seemed to turn their mind to.

1. Recently in Coghlan and Coghlan (2005) FLC 93-220 the majority of the Full Court indicated as follows:

“58.Thus, we consider that because of the obligation under s 79(2) to make a just and equitable order, then in order to ensure such a result the Court should wherever there is a superannuation interest apply the provisions of s 79(4)(a) to (g) (which will include the matters contained in s 75(2)) to that superannuation interest whether or not a splitting order is sought.

59.It may well be that if a superannuation interest is considered having regard to the matters in s 79(4) in a case where a splitting order has not been sought by either party, it will become clear to the Court on such consideration that the only just and equitable order which can be made in the particular case is a splitting order. The Court can then afford the parties an opportunity to be heard in relation to such an order with the requisite notice being given to any trustees of the superannuation fund and a formal valuation according to the Regulations, if necessary, obtained.

60.It is relevant to say at this point that we agree with the views expressed by the Full Court in paragraph 89 of its decision in Hickey, to the effect that there is no requirement on parties to obtain a valuation in accordance with the Regulations (at least if no splitting order is sought at the outset of the trial). However, as we have indicated in the last paragraph, if in the course of hearing the matter, the Court reached the conclusion that a splitting order was required for the purpose of achieving a just and equitable order, then a valuation under the Regulations would have to be obtained.”

1. Notwithstanding the inherent difficulties involved in making a splitting order of a privately managed superannuation fund where there were predictably difficult enforcement issues likely to arise having regard to the personality of the husband, it was still incumbent upon the Court to give proper consideration to the manner in which just and equitable order could be achieved in this case.  His Honour appears to have been attuned to that difficulty when he said that if the farm should sell for something less than $200,000:

“…there will [be] insufficient funds to enable the respondent either to pay out the wife or for the parties to be able to satisfy the judgment without attacking the husband’s superannuation.”

1. His Honour went on to say:

“90.If that is the case, I am unable at this stage to make any order in relation to superannuation since neither of the parties have complied with the relevant acts, I know little or nothing about the superannuation and whether it is capable of splitting. I do know that the superannuation is a private fund and that is all. It would be impossible for me to make an order at this stage that the superannuation fund be split to compensate the wife for any failure of the sale of the assets to come up to her judgment.

91.Obviously, as I have said before, [the farm] will be sold and the wife will receive 60 percent of the net proceeds of such sale. I give leave to both parties to bid at any prospective sale.

92.Regrettably, it appears to me that this matter may have to come back before the Court at a later stage particularly if [the farm] does not sell for something approaching $200,000. If it does, I believe the judgment can [in] fact be satisfied.”

1. That led to the orders being in the form they were, particularly Order 11 which seems to provide, given the most charitable interpretation that we can offer, that if the farm failed to realise sufficient monies for the husband to pay the wife’s share of the balance of the assets then the matter might need to be re-evaluated.  The difficulty with such a course, however, was that unless his Honour was making some form of interim order, the orders that were pronounced were final orders and there was no power for the trial Judge to invite the parties to re-open the issue if the orders ultimately did not appear to be fair, just and equitable having regard to the realities of the market place.

1. All the more reason why it became imperative in the circumstances of this case to ascertain the true value of the farm or to give consideration to a splitting order.  In order to determine what further adjustments ought to have been made to the findings relating to contribution, it would have been appropriate for the Court to give recognition to the fact that the husband, depending on the sale price achieved for the farm property, was to be left basically owning his superannuation that was an asset which was not presently available to him and would be unlikely to be available for many years.  At the same time the wife had her own housing being a property that she had acquired after separation and whilst the full burden of providing for the children appeared to fall upon her shoulders (other than during contact periods) the absence of any liquid assets in the hands of the husband were matters that needed to be properly given weight to.

The husband’s debts

1. The result has further unsatisfactory aspects to it.  In the course of proceedings Ms B on behalf of the husband tendered to his Honour a statement of the husband’s “current assets and liabilities”.  It asserted that there were four liabilities being:

·    Husband’s Visa,   $15,000;

·    Husband’s CAMS debt,                  $1750;

·    Loan from CY,   $28,000;

·    Loan from husband’s parents,        $25,000.

His Honour’s judgment makes no reference to any of these debts.

1. The husband was cross-examined about the Westpac credit debt saying:

“I think you’ll find it was back up to its limit in probably about December till maybe October 2001 and it’s remained at its limit since.”

1. He was not asked any questions about the other debts although CY gave evidence that he had been involved with some business dealings with the husband and he had lodged a mortgage against the farm property in an endeavour to secure his debt.  He said that the debt was in relation to car racing and when asked how much the debt was he said he was not sure.

1. The husband’s mother had sworn an affidavit and had been cross-examined.  She said in the affidavit:

“…We also loaned $25,000.00 to [TDS] from our personal cheque account to assist him in meeting debts.  At the time, [TDS] thought these monies were sourced from his superannuation fund, but in fact that amount is a personal loan from us to [TDS].  We expect that amount to be repaid by [TDS] in due course.”

She was not challenged in cross-examination about that evidence.

1. It seems to us that the trial Judge was clearly in error in failing to either accept the evidence relating to the husband’s claimed debts or at least explain why he was rejecting it.  Unfortunately the reasons for judgment are simply silent about these matters.

The relevance of the wife’s after-acquired property

1. The third issue that was urged upon us as rendering the property outcome unsatisfactory was the manner in which the trial Judge treated the wife’s interest in the after acquired real estate.  As already indicated because the husband had made no contribution towards its acquisition or maintenance his Honour declined to include the property in the pool that he was notionally dividing on the basis of contribution issues.  Such a course was open to his Honour (see Norbis v Norbis (1986) 161 CLR 513; (1986) FLC 91-712). 

1. His Honour then indicated that he would take the property into consideration when looking whether to make further adjustments because of s 75(2) factors.  Having determined that the contribution to the pool of assets otherwise described was equal his Honour then turned to the matters which he intended to take into account before making a further adjustment and in paragraph 88 he identified:

·    The wife was working;

·    She had the responsibility of the children;

·    She had little chance of getting any child support;

·    She had a mortgage to pay off of her own.

Otherwise his Honour was silent as to any other issues that ought have properly been brought into consideration, both in favour of the wife and in favour of the husband.  Most significantly we would have thought that the matters that favoured the husband included his employment prospects brought about by his personality disorder and the ownership by the wife of an asset worth in excess of $100,000.  These matters coupled with the considerations already discussed relating to the manner in which it may have been appropriate to recognise that the assets available to the husband, namely the superannuation, were not assets that he could presently receive any enjoyment from, may well have ameliorated any adjustments to a properly constituted pool of assets by reason of the considerations generally referred to as s 75(2) considerations.

The cross appeal

1. In so far as the cross appeal was concerned, it is much to the credit of the counsel for the wife that the cross appeal was not vigorously pursued.  In her Notice of Cross Appeal the wife sought orders that her share of the pool of assets excluding the property she acquired post-separation be increased from 60 per cent to 70 per cent.  She asserted that inadequate weight had been given both to the contributions she made during the course of the marriage and to the lack of financial support that she could look forward to in future while she had the obligation to provide for the three children of the marriage.  Whilst the latter was an especially powerful consideration, it needed to be viewed in light not only of the retention by her of the valuable interest in the property she acquired post-separation but also in light of the limited assets that were available to the husband and the matters already mentioned that would impinge upon his future earning capacity.

Conclusion

1. Whilst we have given earnest consideration to endeavouring to substitute our own discretion for that of the trial Judge by adjusting the pool of assets to take into account the husband’s claimed debts or those that we can be satisfied were clearly proven, namely the Visa Card debt and the debt to his mother, and then give reconsideration to the appropriate adjustments that ought be made under s 75(2) having regard to the retention by the wife of the property she acquired post-separation, ultimately we concluded that unfortunately the matter has to be remitted for retrial.  The question of obtaining an appropriate valuation for the farm and then determining whether the matter can be properly adjusted without recourse to the husband’s superannuation are matters which in our view preclude us from reaching an order that is just and equitable on the material that we have available to us. 

Costs

1. Each party has sought a costs certificate in relation to the appeal should it be granted and we are of the view that that is an appropriate order to make.

1. In addition the wife should be entitled to a certificate under s. 8 of the Federal Proceedings (Costs) Act relating to the retrial.

Orders

1.         The appeal be allowed and the cross appeal be dismissed.

2.         That orders 4 and 5 of the orders made by the Honourable Justice Bell on 17 December 2004 be set aside and in lieu thereof the following orders be made:

4.        The husband have contact with the children as follows:

(i)        during school term on each alternate weekend from after school on Friday until 8.45am on Monday or if Monday is a public holiday then to 8.45am on the Tuesday;

(ii)       during school term on each week that contact is not to occur on the following weekend from after school on Wednesday until 8.45am on Thursday;

(iii)      during the school term holidays other than the summer holidays commencing at 9.00am on the first Saturday and concluding at 5.00pm on the second Saturday;

(iv)      during the summer school holidays for one half thereof on a week about basis from 9.00am Saturday until 9.00am on the following Saturday and in the event that there is an odd week or extra days at the end of such holiday period the husband shall be entitled to contact for one half of the period between dates and times to be agreed between the parties in writing, save that the children shall reside with the wife each alternate year from 3.00pm Christmas Day until 5.00pm on Boxing Day commencing 2005 and in each other year from 5.00pm Christmas Eve until 3.00 pm Christmas Day;

(v)       for the second part of each Easter holiday period, being from 5.00pm on the Wednesday after Easter until 5.00pm on the Sunday after Easter;

(vi)      if Father’s Day is not on a contact weekend then from 10.00am until the commencement of school the following morning;

(vii)     if Mother’s Day falls on a contact weekend then the children are to be returned to the wife at 10.00am on Mother’s Day;

(viii)     Each parent shall be entitled to make telephone contact with any of the children on the child’s birthday.

5.        That during school term where contact is to commence after school  and/or conclude before school then the contact changeover shall take place by the children being collected from and returned to their school.  Where contact is otherwise to commence or conclude during times that coincide with the operating hours of the Children’s Contact Service, changeover is to take place at the Children’s Contact Service with the husband to be responsible for the payment of any fees due and owing to the Contact Service.  Any other contact changeover is to take place at McDonalds Family Restaurant.

3.        That orders 7 to 11 (both inclusive) of the orders made by Honourable Justice Bell on 17 December 2004 be set aside  and the parties’ respective claims for alteration of property interests be remitted for re-hearing at the Hobart or Launceston Registry.  An early directions hearing should be conducted to enable the presentation of appropriate valuation evidence at trial. 

4. The Court grants to the appellant a costs certificate pursuant to the provisions of s.9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.

5. The Court grants to the respondent a costs certificate pursuant to the provisions of s.6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.

6. That the Court grants to the respondent/wife a further certificate pursuant to the provisions of s.8 of the said Act being a certificate stating 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/wife in respect of such part as the Attorney General considers appropriate of any costs incurred by the respondent/wife in relation to the new trial granted by these orders.

I certify that the 76 preceding
 paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.

Elizabeth Hore
Associate