Trebiano and Trebiano - [2019] FamCAFC 16

FAMILY COURT OF AUSTRALIA

TREBIANO & TREBIANO

[2019] FamCAFC 16

FAMILY LAW – APPEAL – PROPERTY – Two pools approach – Section 75(2) adjustment – Adequacy of reasons – Where the primary judge made different adjustments to each pool of assets pursuant to s 75(2) of the Family Law Act 1975 (Cth) – Where the reasons for judgment do not adequately explain the basis on which the different adjustments were made – Where the reasons do not adequately explain how the adjustment to the non-superannuation assets was derived – Appeal allowed – Matter remitted for rehearing.

Family Law Act 1975 (Cth) s 75(2)

Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55
Cornwell v The Queen (2007) 231 CLR 260; [2007] HCA 12
Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1; [2001] HCA 8
Kuru v New South Wales (2008) 236 CLR 1; [2008] HCA 26
Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110
Sun Alliance Insurance Ltd v Massoud [1989] VR 8

APPELLANT:

Mr Trebiano

RESPONDENT:

Ms Trebiano

FILE NUMBER:

PAC

1251

2017

APPEAL NUMBER:

2018

DATE DELIVERED:

13 February 2019

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Sydney

JUDGMENT OF:

Aldridge, Austin & McClelland JJ

HEARING DATE:

27 November 2018

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

18 May 2018

LOWER COURT MNC:

[2018] FamCA 344

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Ms Clifford

SOLICITOR FOR THE APPELLANT:

Brander Smith McKnight Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Kearney SC

SOLICITOR FOR THE RESPONDENT:

Maclarens Lawyers

Orders

The appeal be allowed and the orders of the primary judge made on 18 May 2018 be set aside.
The matter is remitted to the Family Court of Australia for rehearing by a judge other than the primary judge.
Any submissions seeking an order for costs are to be filed and served within 28 days from today.
Any submissions in response are to be filed and served within a further 28 days.

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 Trebiano & Trebiano 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 FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 76 of 2018
File Number: PAC 1251 of 2017

Mr Trebiano

Appellant

And

Ms Trebiano

Respondent

REASONS FOR JUDGMENT

Introduction

Mr Trebiano (“the husband”) appeals against property orders made by a judge of the Family Court of Australia on 18 May 2018 in proceedings between him and Ms Trebiano (“the wife”).
The primary judge adopted what is often described as a two pools approach to the division of the parties’ property, so that the superannuation entitlements were dealt with in one group and the remaining property in another.
The non-superannuation assets were valued at $1,785,984. His Honour found that the parties’ contribution to those assets favoured the wife in the proportion of 60 per cent by her and 40 per cent by the husband. An adjustment taking into account the matters raised by s 75(2) of the Family Law Act 1975 (Cth), largely to take account of the husband’s ill health, resulted in the wife receiving 55 per cent of this property group and the husband 45 per cent.
The parties each had an interest valued at $1,426,500 in the Trebiano Superannuation Fund (“the Fund”) (giving the Fund a total value of $2,853,000). There were no other superannuation entitlements. The primary judge found that the wife had contributed 90 per cent to the assets held by the Fund but an adjustment of 10 per cent in favour of the husband, again taking into account his ill health, was required. The effect was that he received 20 per cent of the Fund and the wife 80 per cent. A splitting order was made to give effect to that division.

The Appeal

The husband’s Further Amended Notice of Appeal raised nine grounds of appeal. Senior counsel who prepared the Summary of Argument dealt with the grounds in four groups. Counsel who appeared at the appeal itself took a different course. She handed up a Further Summary of Argument dealing with Grounds 3 to 9 together, although her oral submissions ranged somewhat more widely. Grounds 1 and 2 were dealt with together in the husband’s original Summary of Argument.

Ground 1

Ground 1 asserts a lack of adequate reasons and is in the following terms:
1.That his Honour erred in failing to give reasons as to why a 5% was an appropriate adjustment in favour of the husband to the non-superannuation asset pool and failed to give reasons as to why 10% was an appropriate adjustment to the superannuation pool.
As we have already observed, an adjustment of five per cent was made to the non-superannuation group of assets to take into account the husband’s ill health, whereas the adjustment to the superannuation entitlements, also on account of the husband’s ill health, was 10 per cent. The ground asserts that the primary judge’s reasons did not adequately explain the different approaches to each pool.
In the Summary of Argument the husband also submitted that, having regard to the evidence as to the health of the husband, his Honour failed to give adequate reasons for the adjustment of five per cent in respect of the non-superannuation pool.
The primary submission, however, in both the Summary of Argument and the oral submissions was that when assessing the adjustment to be made to the non-superannuation assets, the primary judge took into account the husband’s superannuation entitlements, but it is not apparent from the reasons whether that was his entitlement before or after the division of the interests in the Fund. That is of some significance because before the division of the Fund the husband’s entitlement was $1,426,500, whereas it was $570,600 afterwards.
We accept that this submission goes somewhat beyond the terms of Ground 1. It was, however, raised in the Summary of Argument and addressed in the Summary of Argument in response.
Logically, this ground must be dealt with first, as it casts doubt on the validity of the overall outcome and if established is sufficient to dispose of the appeal (Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577 at 611–612, 634).
The obligation to give adequate reasons is well-known.
In Bennett and Bennett (1991) FLC 92-191 at 78,266–78,267 the Full Court adopted the principles expounded in Sun Alliance Insurance Ltd v Massoud [1989] VR 8, saying:
In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal. Gray J, who delivered the principal judgment, said, at 18:
“The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if: —
(a) the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b) justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.”
We think that the test propounded by Gray J is a particularly useful one, and one which also applies to discretionary judgments. In Maday and Maday (1985) FLC 91-636, Fogarty J, in a judgment with which the other members of the Court (Emery and Murray JJ) agreed, took the view that these principles clearly did apply to discretionary judgments and, in particular, judgments in custody matters.
In Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 (“Pollard”) McColl JA summarised the principles with respect to the obligation to give adequate reasons as follows:
57The giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes “a sense of grievance” and denies “both the fact and the appearance of justice having been done”, thus working a miscarriage of justice: Mifsud v Campbell (1991) 21 NSWLR 725 (at 728); Beale (at 442) per Meagher JA.
58The extent and content of reasons will depend upon the particular case under consideration and the matters in issue: Mifsud (at 728) per Samuels JA; Hull v Thompson [2001] NSWCA 359 (at [53]) per Rolfe AJA (Sheller JA and Davies AJA agreeing). While a judge is not obliged to spell out every detail of the process of reasoning to a finding (Yates Property Corporation Pty Limited (In Liq) v Darling Harbour Authority (1991) 24 NSWLR 156 (at 171) per Mahoney JA, (at 182) per Handley JA), it is essential to expose the reasons for resolving a point critical to the contest between the parties: North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435 (at 442) per Kirby ACJ; Soulemezis (at 259) per Kirby P, (at 270) per Mahoney JA, (at 280) per McHugh JA; applied in Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Palme [2003] HCA 56; (2003) 216 CLR 212 (at [40]) per Gleeson CJ, Gummow and Heydon JJ.
59The reasons must do justice to the issues posed by the parties’ cases: see Moylan v Nutrasweet Co [2000] NSWCA 337 (at [61]) per Sheller JA (Beazley and Giles JJA agreeing). Discharge of this obligation is necessary to enable the parties to identify the basis of the judge’s decision and the extent to which their arguments had been understood and accepted: Soulemezis (at 279) per McHugh JA. As Santow JA (with whom Meagher and Beazley JJA agreed) explained in Jones v Bradley [2003] NSWCA 81 (at [129]) it is necessary that the primary judge “ ‘enter into’ the issues canvassed and explain why one case is preferred over another”; see also Flannery v Halifax Estate Agencies Ltd t/as Colleys Professional Services [2000] 1 All ER 373 (at 377-378) per Henry, Laws LJJ and Hidden J.
The primary judge’s reasons on this issue were brief. His Honour said:
Section 75(2) factors: Non superannuation pool
73.Both parties are of retirement age and have retired. The husband’s health is slowly degenerating as discussed above and the prospect is that he will require assisted living in the foreseeable future. There is no evidence as to how that can be facilitated or what future care costs may be.
74.The property and income circumstances of the parties are considered above. Whilst the superannuation fund is at present a financial resource as to income the capital assets of the fund are available to both parties without any taxation liability.
75.Both parties have a need to accommodate themselves in appropriate housing according to age and health needs. Such is indicative of the primary non superannuation asset being sold to realise funds for that to happen. Both parties will need a capital investment sum to meet living expenses going forward.
76.Neither party is in receipt of any income tested pension although entitlement may arise as a consequence of the matrimonial assets being divided.
77.These considerations are indicative of an adjustment in favour of the husband of 5 per cent due to his greater health needs thus creating a disparity of about $175,000.00 between the parties.
Overall: Non Superannuation Pool
78.Overall, the non-superannuation pool is to be adjusted as to 55 per cent to the wife and 45 per cent to the husband. It is appropriate that there be an order for sale of the Suburb C property with consequent adjustive orders.
Superannuation Pool
79.Capital contributions to the superannuation pool have been considered above. They overwhelmingly favour the wife of about 90 per cent to the husband’s 10 per cent.
80.There is nothing to suggest that a contribution assessment reflecting capital contributions should not be adopted. The fund has in effect been static, accruing rental income and increasing real estate values with the wife attending to property management and bookkeeping.
Section 75(2) factors: Superannuation pool
81.The factors considered above are again relevant.
82.The contribution based adjustment would see the husband receive about $285,000.00, being 10 per cent, from the fund. He is in need of income to live on with his needs exacerbated by his deteriorating health circumstances.
83.The significance of his health issues is to some extent diminished by his age.
84.The contribution based assessment would see a most significant disparity in superannuation between the parties.
85.A superannuation entitlement of about $570,000.00, being 20 per cent of the value of the fund. This, leaving aside any superannuation earnings, would see the husband have an income stream of just over $1,000.00 per week for a period of more than 10 years at which time he will be 80 years of age. The wife’s future needs will be met by her retaining the remainder of the fund, being 80 per cent, that reflects her otherwise significant contribution.
86.The husband will, otherwise, have about $700,000.00 from the sale of the home and his other assets and personalty.
87.On balance, an adjustment of a further 10 per cent in the husband’s favour is appropriate to effect such an outcome.
(Emphasis altered)
The primary submissions focused on the emphasised sentence in [74]. His Honour made a small adjustment to the non-superannuation group of assets largely because of the superannuation interests the husband was to receive.
The adjustment of five per cent leads to the husband receiving approximately an additional $87,500 from the non-superannuation pool, creating a difference of about $175,000 between the parties. The husband submits that this adjustment is small, given the husband’s health, but could be justified if the husband was to retain the bulk of his existing superannuation. The submission continues that if he was only to receive 20 per cent of the superannuation assets, there is a clear argument that the five per cent adjustment to the non-superannuation assets was manifestly inadequate.
The task before us in dealing with this ground is not to consider the propriety of the adjustment, but to determine whether the asserted uncertainty in the reasons exists and, if so, whether this renders the reasons inadequate.
As the passage from Pollard quoted above makes clear, reasons must be sufficient to facilitate the exercise of a right of appeal. The appellate court should not be left to speculate as to a particular finding.
The primary judge said “the superannuation fund is at present a financial resource” (emphasis added). The use of those words tends to indicate his Honour was speaking of the fund before adjustments. If that is so, however, the husband did not retain that entitlement and the wrong entitlement has been taken into account.
On the other hand, there is force in the submission made by senior counsel for the wife that it is very much more likely than not that the primary judge had in mind the adjustment that was to be made to the superannuation entitlements and that he clearly knew what he was taking into account.
Accepting that to be so for the moment, the submission does not answer the necessity for reasons to explain to the parties and to an appellate court, if necessary, the path being taken by the primary judge.
The difficulty is highlighted, in our opinion, by the different adjustments made to the two groups of assets. Of course, the adjustments to the groups need not be the same, but the reasons should make clear the basis of each adjustment so that any difference can be readily understood.
The five per cent adjustment in favour of the husband to the non-superannuation assets, which amounted to approximately $87,500, was said to be required “due to his greater health needs”. The 10 per cent adjustment to superannuation (an adjustment of $285,000) was because:
82.… He is in need of income to live on with his needs exacerbated by his deteriorating health circumstances.
83.The significance of his health issues is to some extent diminished by his age.
The basis for the difference is not obvious unless it is that which may be taken from [85], where his Honour referred an income of $1,000 per week (that is, from a capital sum of $570,000) as being adequate for the husband’s needs, yet the wife, who does not have the difficulties with her health that beset the husband, has her needs met by a sum four times greater. So stated, that compounds the difficulty rather than explaining it.
The health of the husband was poor. His neurologist said:
Mr [Trebiano] is highly disabled and needs assistance in the activities of daily living such as dressing and at times, feeding himself. In addition, he has great difficulty mobilising and requires a walking aid when out of the house and also within the house.
In addition to the findings above, as to the state of the husband’s health his Honour also found:
51.Both the husband and wife seek to retain the Suburb C property.
52.The husband notwithstanding his illness and lack of mobility asserts that it is suitable for his ongoing accommodation with some modifications, yet he asserts the need for assistance in and about the upkeep of the property both internally and externally. He concedes mobility difficulties for him in access to and getting around in the home.
The primary judge did not refer to the evidence of the neurologist.
The husband did not call any evidence as to the nature and cost of any building modifications or the cost of increasing care. This, of course, did not assist the primary judge in determining an appropriate adjustment fashioned to take into account the husband’s health. Nonetheless, there was uncontradicted evidence that the husband was sufficiently ill as to require assistance in daily living.
It is not clear from the reasons why an income of $1,000 per week would meet the husband’s needs into the future.
In short, the primary judge’s reasons do not illuminate the basis for making the different adjustments, in light of the s 75(2) factors, to the two groups of assets. It follows that the appeal must be allowed and the matter remitted for rehearing.

Grounds 2 to 9

These grounds assert that the primary judge made mistakes of fact, erred in failing to consider whether the overall result was just and equitable, was plainly wrong and manifestly unjust and erred in the exercise of his discretion in a number of ways.
We are conscious of what the High Court has said about the desirability of intermediate courts of appeal determining all grounds of appeal where possible (Kuru v New South Wales (2008) 236 CLR 1 at 6; see also Kimberly-Clark Australia Pty Ltd v Arico Trading International Pty Ltd (2001) 207 CLR 1 at 19–20; Cornwell v The Queen (2007) 231 CLR 260 at 300–301).
However, in this instance we are of the view that Ground 1 alone is dispositive of the appeal. As the matter will have to be reheard, it is neither necessary nor desirable to express a view on the remaining grounds as the issues they raise will have to be reconsidered, possibly on the basis of different evidence.

Costs

A timetable will be set for the provision of written submissions as to costs.

I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Aldridge, Austin & McClelland JJ) delivered on 13 February 2019.

Associate:

Date: 13 February 2019