Trevi & Trevi (Re-Exercise)
[2019] FamCAFC 51
•25 March 2019 [Amended 3 April 2019]
REASONS FOR JUDGMENT AS VARIED PURSUANT TO R 17.02A OF THE FAMILY LAW RULES 2004 (CTH) ON 3 APRIL 2019
FAMILY COURT OF AUSTRALIA
| TREVI & TREVI (RE-EXERCISE) | [2019] FamCAFC 51 |
| FAMILY LAW – APPEAL – RE-EXERCISE – Where this Court found error in the trial judge’s assessment of the s 75(2) factors – Where the parties were unable to reach agreement as to orders consequent upon the decision of this Court – Where both parties sought that this Court re-exercise the discretion – Where the only further evidence adduced was the proceeds of the sale of a property being higher than the agreed value relied upon by the trial judge – Where the restrictions inherent in the appeal process restrict the nature and ambit of the exercise of the s 94(2) power – CDJ v VAJ (1998) 197 CLR 172 and Allesch v Maunz (2000) 203 CLR 172 considered – Where the Court’s re-exercise of discretion is not to be fettered by adherence to the trial judge’s assessment – Where the property pool was found to be $10.2 million – Where the wife undertook the role of homemaker and parent for most of the 19 year marriage – Where there is a large income earning disparity between the parties – Where the wife is to receive a ten per cent adjustment pursuant to the s 75(2) factors – Where the wife held net assets including superannuation of $4.55 million – Where the husband is to pay the wife FAMILY LAW – APPEAL – INTEREST – Where the wife seeks interest on the cash sum payable – Where the parties agreed on an interim property settlement when staying the orders pending appeal – Where no term of the stay referred to interest – Where there was no relevant order which had taken effect within the meaning of s 117B(1)(b). |
| Family Law Act 1975 (Cth) ss 75(2), 79(4)(e), 94(2), 117B Family Law Rules 2004 (Cth) r 17.03 |
| Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40 LexisNexis Butterworths, Australian Family Law, vol 1 (at service 237) [93A.1] |
| APPELLANT: | Mr Trevi |
| RESPONDENT: | Ms Trevi |
| FILE NUMBER: | MLC | 8475 | of | 2014 |
| APPEAL NUMBER: | SOA | 38 | of | 2017 |
| DATE DELIVERED: | 25 March 2019 [Amended 3 April 2019] |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Alstergren CJ, Murphy & Kent JJ |
| HEARING DATE: | 5 March 2019 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 18 May 2017 |
| LOWER COURT MNC: | [2017] FamCA 321 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Richardson SC |
| SOLICITOR FOR THE APPELLANT: | N Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Bartfeld QC appearing via video link |
| SOLICITOR FOR THE RESPONDENT: | Kennedy Partners |
ORDERS (Amended 27 March 2019)
Pursuant to s 94(2) of Family Law Act 1975 (Cth), in substitution for Order (1) of the Orders made by Thornton J on 18 May 2017
IT IS ORDERED THAT
(1)The husband shall pay to the wife the sum of
$1,570,827$1,407,431 within 60 days of the date of this order.The parties shall, within 48 hours of the delivery of these orders file by email with the Appeals Registrar and serve immediately thereafter any written submissions, confined to not more than three typed pages, which either may wish to make in respect of the costs of these proceedings.
In the event that either party seeks an order for costs, the amount of costs so sought shall be specified by reference to the relevant scale of costs and items within it.
NOTATION
A. Order 1 is amended pursuant to r 17.02(1)(h) of the Family Law Rules 2004 (Cth) to show “$1,407,431” in lieu of “$1,570,827”.
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 Trevi & Trevi (Re-Exercise) 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 MELBOURNE |
Appeal Number: SOA 38 of 2017
File Number: MLC 8475 of 2014
| Mr Trevi |
Appellant
And
| Ms Trevi |
Respondent
REASONS FOR JUDGMENT
ALSTERGREN CJ
I agree with the orders proposed by Murphy J and with his Honour’s reasons for those orders.
MURPHY J
On 6 September 2018 this Court ordered that Order (1) of the orders for property settlement made by Thornton J on 18 May 2017 be set aside. Reasons were delivered that day.[1]
[1] Trevi & Trevi (2018) FLC 93-858 per Murphy J (Alstergren DCJ, as the Chief Justice then was, and Kent J agreeing) (“Trevi”).
The Court sought to save the parties further anxiety, delay and expense by affording them the opportunity of reaching agreement as to orders consequent upon the decision of this Court.[2] The parties’ inability to do so provoked the actions contemplated by our orders:
5.In the event that the parties do not reach agreement as contemplated by Order (3), the question of whether the sum of $437,628 paid by the wife in legal fees should be “added back”, and the question of the cash sum payable by the husband to the wife accordingly, shall be addressed by the parties each filing within forty-two (42) days of the date of these orders:
(a)the agreed facts and written submissions confined to five typed pages so as to permit this Full Court to re-exercise the discretion vested in the trial judge in respect of the said sum; or
(b) in the alternative, the proposed terms of the order for remitter.
[2]Trevi at 78,470 and Orders (3) and (4).
In the event, neither party sought a remitter. By written submissions filed in October and November 2018 each of the parties sought that this Court reach its own conclusion as to the orders to be made consequent upon the setting aside of the trial judge’s order. Those written submissions raised issues which required further oral submissions and the Court convened at the first opportunity to receive the same.
These reasons seek to explain the orders we will make in substitution for the trial judge’s order.
The Earlier Reasons and The Context For The Current Issues
The following parts of this Court’s earlier reasons provide background for the issues now raised:[3]
5.The husband is a very successful lawyer. At the time of trial he was earning about $30,000 per week. After taking account of the expenditure he asserted, he was left with a surplus of about $3,700 per week. Both during the marriage and the post-separation period, the wife assumed the role predominately of homemaker and parent. At the time of trial, she was studying and hoped to return to work upon completion of her studies.
6.The net value of the parties’ interests in property and the amount of their superannuation interests as found by her Honour was $8,133,553. In addition, an unencumbered real property was agreed to be sold, but for the purposes of the proceedings its value was agreed at $1,400,000.
7.Her Honour concluded that the contributions of the parties should be assessed as equal and that the wife should receive an additional 10 per cent of the property and superannuation interests when account was taken of s 79(4)(e) of the Family Law Act 1975 (Cth) (“the Act”) (i.e. “the s 75(2) factors”). The effect of the resulting 20 per cent disparity in the ultimate result sees the wife receiving property and superannuation of $5,720,132 and the husband $3,813,421; a disparity of nearly $2 million ($1,906,711).
8.Those findings were reflected in orders which, in substance, saw each of the husband and wife retain property in their respective names or possession (which, in each case, included an unencumbered home valued in the region of $2.5 million) and their respective member benefit entitlements in superannuation funds. The husband was ordered to pay the wife a cash sum of approximately $1.9 million.
[3]Trevi at 78,452.
It is important to again record, as is there revealed, that the parties agreed upon a distribution of their non-superannuation property.[4] Accordingly, the issue at trial was the amount of the cash sum, if any, to be paid by the husband to the wife.
[4]Trevi at 78,465–78,466.
As can be seen, the trial judge found the net property of the parties and their superannuation interests to have a total estimated value of $9,533,553. The parties are agreed that the unencumbered property referred to in the reasons quoted above has now been sold and that the net proceeds of sale are $1,633,951.
The trial judge’s finding of equality of contributions was not disturbed by our findings and orders. Error was found in her Honour’s failure to “addback” an amount of $437,628 in respect of legal fees paid by the wife. Having failed to addback that sum, her Honour erroneously failed to consider that expenditure in her s 79(4)(e) assessment (that is, the assessment of the “s 75(2) factors”) pursuant to the Family Law Act 1975 (Cth) (“the Act”).
Reference was made in the instant proceedings to what was said in this Court’s earlier reasons as follows:[5]
12.Further, and in effect alternatively, I consider respectfully that her Honour confused two well-established approaches to dealing with the wife’s paid legal fees as a claimed addback. More specifically, while purporting to treat the same as a matter relevant to s 75(2)(o), her Honour in fact applied considerations relevant to the adding back of the sum. The discretions relevant to each are illuminated by differing considerations and her Honour failed to consider matters relevant to the exercise of the discretion inherent within s 75(2) and the place of sub-paragraph (o) within that section. It follows that I also consider that her Honour erred in the assessment of the relevant s 75(2) factors and that her Honour’s reasons were inadequate to explain her refusal to addback the wife’s paid legal fees.
13. I am, then, persuaded of error in respect of Grounds 1 and 3.
…
161.It was, of course, open to her Honour to find, that for reasons set out, the addbacks claimed by the husband against the wife did not have relevance to any s 75(2) assessment or that, if they did have relevance, were balanced by either the addbacks claimed by her as against the husband or other matters such as those addressed in the submission referred to in [399] of the reasons. However, it was not, in my view, open to her Honour to ignore those sums in circumstances where both parties agitated a case that they should be considered as part of the s 75(2) assessment.
162.In my view, that is the effect of what her Honour did and in doing so, her Honour failed to take account of relevant considerations with the consequence that the discretion miscarried. If her Honour intended to take account of those matters, in my view, her reasons are not, with respect, adequate to explain how she did so.
[5]Trevi at 78,452–78,453 and 78,470.
Subsequent to the decision of the trial judge, the parties agreed that the orders would be stayed conditional upon the payment of an amount, by the husband to the wife, of $348,920 in partial satisfaction of the wife’s entitlement pursuant to the orders.
What Is The Scope Of The Re-Exercise Of Discretion By This Court?
A central issue dominating the instant proceedings is the competing contentions as to the nature, or scope, of this Court’s re-exercise of discretion.
Order 5 of our orders, quoted above, is directed to the requirement that, if re‑exercise is to occur, the relevant discretion should be exercised by reference to the facts and circumstances as at the date of the hearing of the appeal.[6] The instant issues are being determined some ten and a half years after the parties separated in September 2008.
[6]Allesch v Maunz (2000) 203 CLR 172 (“Allesch”).
Order 5 was also directed to the fact that this Court is ill-equipped on a re‑exercise to reach decisions on contested evidence.[7] For all practical purposes, if this Court is to re-exercise it must “draw inferences of fact from, and conclusions from, facts as found by the trial judge”[8] and uncontroversial evidence admitted upon the re-exercise.
[7] Partington & Cade (No 2) (2009) FLC 93-422 at 83,852 (“Partington”); Brett-Hall and Brett-Hall (2006) FLC 93-276 at 80,691 (“Brett-Hall”).
[8]Partington at 83,852.
As has been seen, it is agreed that the unencumbered property which, at trial, was intended to be sold has now been sold. It was accorded a value at trial of $1,400,000 for the purposes of relevant calculations. In the result, the property sold for $1,633,951 (net); $233,951 more than the value attributed to it at trial.
Neither party sought to put any other agreed evidence before the Court, although, as will be seen, Senior Counsel for the husband contends that this Court is unable to ignore temporal effects upon accepted factual findings of the trial judge. As an example, at trial the husband projected a period during which he would continue to work. That period is reduced by the time that has elapsed between the trial and the instant hearing and it is contended that effect should be taken into account in the exercise of this Court’s discretion.
The central argument for the wife is that the nature of the instant exercise is confined to this Court adding back the wife’s paid legal fees and recalculating the parties’ entitlements by reference to the proportions found by the trial judge to be just and equitable. Queen’s Counsel for the wife contended orally that the exercise was, “in effect, the correction of a mathematical error”. As I understand it, that argument is said to flow from the fact that this Court did not find error in her Honour’s assessment of contributions or s 79(4)(e).
By contrast, the husband argues that, because appealable error has been found and her Honour’s order is set aside, this Court must decide for itself the assessment contemplated by s 79(4)(e) of the Act (that is, the “s 75(2) factors”).
Authority to which the Court was referred suggests that, on a remitter, the Court may, by order, constrain the remitter to specified issues.[9] I am not persuaded that the authorities in respect of remitter are of assistance. The nature of the re‑exercise by this Court, determined by reference to the relevant statutory power, is in my view quite different to what may or may not be the limits of a different s 94(2) power; namely this Court seeking by its order to limit the powers, or scope of the proceedings, being conducted by a judge at first instance.
[9] Ruscoe and Walker (2002) FLC 93-093. As the learned authors of LexisNexis Butterworths, Australian Family Law, vol 1 (at service 237) [93A.1], although Coleman J dissented citing Allesch, above, as the reason, special leave was refused on the basis that there was no error in the majority decision.
Once error is established[10] “an appellate Court can substitute its own decision based on the facts and the law as they then stand”.[11] The Court’s power to do so is statutory. Section 94(2) provides, relevantly, that this Court may “make such decree or decision as in the opinion of the court, ought to have been made in the first instance” (emphasis added).
[10] Allesch at [23]; Simpson & Brockmann (2010) 43 Fam LR 32 at [40] (“Simpson”): “notwithstanding that the appeal to this court is by way of rehearing, the appeal will succeed only if error is found in the making of the orders appealed”.
[11]Allesch at [23] (emphasis added).
In CDJ v VAJ,[12] McHugh, Gummow and Callinan JJ said:
…In contrast [to an appeal in the strict sense], the Full Court of the Family Court must decide the rights of the parties upon the facts and in accordance with the law as it exists at the time of hearing the appeal. Speaking of the similar jurisdiction of the English Court of Appeal, the Master of the Rolls, Sir George Jessel, said that the appeal is a “trial over again, on the evidence used in the Court below; but there is a special power to receive further evidence”. Nevertheless, it is highly unlikely that Parliament in conferring jurisdiction on the Full Court to hear appeals intended that s 93A(2) should be construed in a way that would have the practical effect of obliterating the distinction between original and appellate jurisdiction…
(Footnotes omitted)
[12]CDJ v VAJ (1998) 197 CLR 172 at [111] (“CDJ”).
If, as in this case, the parties seek to have this Court substitute its own decision for that of the trial judge, the parties are asking the Court to exercise a power given to it by s 94(2); specifically a power to make “such decree or decision as, in the opinion of the court, ought to have been made in the first instance”.
However, like the exercise of any other power under the Act, the s 94(2) power is to be exercised by reference to the issues joined between the parties and the admissible evidence which each party seeks to adduce in support of their contentions. While the s 94(2) power is no different from any other power in that respect, the restrictions inherent in the appeal process earlier referred to restrict the nature and ambit of the exercise of that power. Those restrictions derive from what an appellate court is “ill-equipped to do”[13] or from a process that would by its nature otherwise “obliterat[e] the distinction between original and appellate jurisdiction”.[14]
[13]Brett-Hall at 80,691.
[14]CDJ at [111].
In the instant case each of the husband and wife accept that error by the trial judge is established and accept thereby that the relevant s 94(2) powers of the appellate Court are exercisable.[15] In doing so, the parties embrace axiomatically the inherent restrictions earlier referred to.
[15] See, Allesch and Simpson.
They embrace those restrictions, and thereby set the parameters for the instant proceedings, by agreeing to be bound by the factual findings and the assessment of contributions made by her Honour; by agreeing upon the only evidence to be adduced in addition; and by agreeing that, in accordance with this Court’s finding, the wife’s paid legal fees should be “added back”.
The net effect of doing so is to leave for this Court the assessment of the “s 75(2) factors” based upon those findings and facts and to make orders accordingly. The Court is engaged thereby in the exercise of that relevant discretion for itself. The exercise of that discretion is not to be fettered by adherence to the trial judge’s assessment.
The wife’s argument that the exercise of this Court’s power is restricted to what is in effect a mathematical calculation is, in my view, contrary to the statutory power being exercised and contrary to what the High Court said in both CDJ v VAJ and Allesch v Maunz above. The argument seeks to impermissibly fetter the Court’s discretion which it must exercise for itself.
While no error was found in the trial judge’s percentage figure or dollar amount representing her Honour’s s 79(4)(e) assessment, this Court’s finding is a finding, relevantly, that her Honour’s assessment falls within the range within which reasonable judicial minds might differ.[16] Having found error otherwise and having set aside the relevant order, the Court now embarks upon a different task, relevantly what this Court considers to be, relevantly, the proper assessment of s 79(4)(e).
The Section 75(2) Assessment
[16] “The ‘generous ambit within which reasonable disagreement is possible’ is wide indeed… The generous ambit of reasonable disagreement marks the area of immunity from appellate interference”: Norbis v Norbis (1986) 161 CLR 513 at 540 per Brennan J.
The Interests In Property And Superannuation Of The Parties
The trial judge tabulated the property of the parties or either of them and its net value, and the parties’ superannuation interests and their respective amounts which, together, totalled $8,133,553. The table reflected the parties’ agreement as to the property each would retain – with property (and superannuation interests) valued at $5,184,573 of property in the husband’s hands and $2,948,980 in the wife’s hands.
Her Honour’s table can be adapted to reflect the interests in property of the parties or either of them, and their interests in superannuation, at the date of this hearing. The adaptations include adding the net proceeds of sale of the real property of $1,633,950 (rounded). In accordance with the accepted contributions finding, one-half of those net proceeds is attributed to each party. In addition, the addback of $437,000 (rounded) must be attributed to the wife.
The total net value of the property and superannuation assets arrived at as a consequence is $10,204,503.
The property available for distribution and the justice and equity of the orders ultimately to be made must also take account of the fact that the husband has paid to the wife $348,920 as a condition of an agreed stay pending appeal.
Taking account of the matters just referred to, the property and superannuation interests of the parties incorporating the agreed position as to what each party is to retain can be seen expressed in the following table:[17]
[17] Shading represents alterations to the trial judge’s table at [516].
The Husband
1 & 2 B Street, Suburb A $2,700,000 3 B Street, Suburb A $1,100,000 P Street, Suburb I $2,200,000 W Street, Suburb Q $300,000 T Street, U Town $365,000 Husband's Bank Accounts $449,705 Husband's Motor Vehicles $237,500 N Lawyers additional fixed capital $341,349 N Lawyers other accounts NIL Shares in "Company R" $10,510 Trevi Investment Trust $1,781 MM Fund NIL 50% sale proceeds $816,975 TOTAL NON-SUPERANNUATION ASSETS $8,522,820 Less liabilities $2,994,343 Sum paid as condition of stay pending appeal $348,920 Total net non-superannuation assets (husband)
$5,179,557
Mr Trevi Superannuation Fund $103,242 Husband’s benefit under Trevi Family Superannuation Fund $369,829 Total superannuation assets (husband)
$473,071
TOTAL NET ASSETS (HUSBAND)
$5,652,628
The Wife
Part property settlement $2,616,400 Wife's motor vehicle $40,000 Wife’s bank accounts $215,228 Paid legal fees added back $437,000 50% sale proceeds $816,975 Sum paid as condition of stay pending appeal $348,920 Total net non-superannuation assets (wife)
$4,474,523
Westpac Lifetime Superannuation $2,352 Wife’s benefit under Trevi Family Superannuation Fund $75,000 Total superannuation assets (wife)
$77,352
TOTAL NET ASSETS (WIFE)
$4,551,875
The Effect Of The Assessed Equality Of Contributions – s 75(2)(b)
Division of the property interests (including superannuation) in accordance with an equal assessment of contributions, sees each of the parties with property and superannuation interests totalling $5,102,251. The consequence of the agreed distribution of property is that the husband would need to pay to the wife $550,376.
The distribution of property (and any resources) in accordance with assessed contributions is an important consideration in any s 75(2) assessment.[18] In assessing s 75(2)(b) as one of a number of relevant s 75(2) factors, the mix of property and superannuation left with each of the parties is also relevant.
[18]Family Law Act 1975 (Cth) s 75(2)(b).
The husband has cash reserves (after payment of the sum paid as a condition of the stay) from which he can meet the payment to the wife and have more than $350,000 in cash remaining. He will retain five pieces of real property including his home with a total value of approximately $6.66 million and liabilities totalling just less than $3 million. The wife will retain a valuable unencumbered home and about $1.93 million in cash (following receipt of the sum paid as a condition of the stay as well as the payment required to reflect an equal distribution of property in accordance with assessed contributions).
As has been said, apart from the matters agreed upon, neither party seeks to adduce any evidence in respect of the re-exercise. As a consequence, the basis for this Court’s assessment of the relevant s 75(2) factors becomes her Honour’s findings and the agreed facts earlier referred to. However, as has also earlier sought to be pointed out, this Court’s assessment of the relevant s 75(2) factors is not an inquiry into whether her Honour’s assessment should be “adjusted”. Rather, this Court must arrive at its own s 79(4)(e) assessment.
The Temporal Changes
Before listing the findings made by her Honour, it is necessary to record that I accept the submissions of Senior Counsel for the husband that the findings used must take account of uncontroversial temporal considerations deriving from the fact that this assessment takes place approximately two and a half years after evidence in the trial before her Honour concluded and almost two years after the orders for property settlement were made.
It seems to me that failing to take account of those changes – which, without more, are not the subject of controversy – would be to introduce a level of absurdity into the exercise.
For example, her Honour made findings about an important matter, namely the care and control of a child of the marriage (s 75(2)(c)). However the relevant child was aged 17 at trial and must now be an adult. For the same reason, statutory child support obligations have ended and s 75(2)(na) has no relevance, noting that no evidence was sought to be introduced in respect of current payments that may be relevant pursuant to, for example, s 75(2)(o).
However, while the advance in a child’s age will be, all else being equal, an uncontroversial temporal change to the finding, care must be taken to ensure that, in the absence of any other consequent evidence, no other relevant factors are assumed (for example whether an adult child continues to be supported – s 75(2)(o)).
Relevant s 75(2) Considerations
The nature and distribution of property tabulated earlier in these reasons; the capital sum in excess of $550,000 to be received by the wife consequent upon the assessed equality of contributions; and the consequences of the husband paying the same, have been discussed above.
Otherwise, regard must be had to the s 75(2) matters the subject of her Honour’s findings and the temporal changes that have occurred in respect of some of them.
With respect, some at least of what her Honour appears to have taken up as findings appear to be more in the nature of a recitation of evidence. However, seen in the broader context of the reasons and other findings made by her Honour, it is tolerably clear that those matters too, were taken into account in her Honour’s assessment, and may thus be treated by us as findings for the purpose of our re-exercising the discretion.
Noting that, as has often been said, there is considerable overlap in the applicability of s 75(2)’s sub-paragraphs, her Honour’s findings referenced to the relevant sub-paragraphs of s 75(2) are as follows:
·s 75(2)(a)
“The wife is aged 52 years and the husband is aged 54 years and both are in reasonable health” (at [44]).
“The wife is aged 52 and the husband is aged 54. Both parties are in good health” (at [395]).
“Neither [party] is precluded by reason of health or education from engaging in paid employment” (at [425]).
·s 75(2)(b)
“There is a large disparity in income between the parties. The husband’s total average weekly income in accordance with his latest financial statement is $29,980 and his total weekly personal expenditure is $26,189” (at [52]).
“The wife’s average weekly income in accordance with her latest financial statement is estimated at $317 and her total weekly personal expenditure is estimated at $2,835” (at [53]).
“The wife is now living in an unencumbered property valued at approximately $2,480,000 purchased from her part property settlement and the husband is living in an unencumbered property valued at $2,700,000 which was purchased during the marriage…” (at [396]).
“There is a significant disparity of income earning capacity between the parties” (at [400]).
“The husband’s income is significant and for the year ended 30 June 2015 it was $1.54 million. In contrast the wife is studying and without paid employment. She is depleting her capital to pay living expenses. She has a nominal income earning capacity” (at [401]).
“…The wife will take some time to complete her studies and having regard to her age and lack of experience in the workforce, her employment prospects and potential for remuneration are limited” (at [402]).
“I accept the submission on behalf of the husband that it cannot be assumed that he will still be earning at his current level in seven years’ time. Having regard to his highly demanding position and competitive work environment, I accept the argument that a prospective assessment on the assumption of future earnings at this level can be no greater than four to five more years…” (at [403]).
“At the conclusion of the trial the parties reached an agreement on this issue and the expert witnesses were not required for cross examination. The agreement reached was that on an invested sum of $1.5 million that the wife would receive a return on that investment of between $50,250, which equates to 3.35% per annum and $141,873, which equates to 9.5% per annum” (footnote omitted) (at [406]).
“The significance that I should attach to this evidence was never explained” (at [407]).
“The husband’s income as a partner is approximately $1,196,416 per annum. As an equity partner, the husband’s remuneration depends upon his performance which is linked to the profitability of the practice. His work environment is competitive and demanding. However it was conceded in closing submissions, that it could be assumed that his income is likely to remain the same for a period of between two to four years. I accept that proposition as reasonable given that his income might decrease or increase” (at [427]).
“The husband also receives rental income from the investment properties which on his financial statement amounts to approximately $239,824 per annum. His weekly income is $29,980 and his weekly personal expenditure is $26,189. He has funds in his bank account of approximately $449,705 and he has superannuation of approximately $473,071 which includes his benefit under the [Trevi] Family Superannuation Fund” (at [428]).
“The wife’s income is approximately $317 per week but this is dependent upon her savings. According to her financial statement filed 28 April 2016 her weekly personal expenditure is $2,835 and her funds in her bank account are $215,228. The wife has superannuation of approximately $77,352 including her benefit in the [Trevi] Family Superannuation Fund” (at [429]).
“I am satisfied that in the years remaining of his working life, the husband is likely to continue to earn a significantly greater income than the wife” (at [430]).
“The wife ascribed a value of $2,250,000 to the husband’s potential [N Lawyers] Early Retirement Scheme entitlement in her balance sheet (Exhibit 11) but ultimately accepted the husband’s evidence that he was not ‘counting’ on getting money from the scheme and his evidence that ‘if I need another million dollars I will just work for another year’. Her case is that this should not be ignored. However I find that the husband is proposing to work for another five to seven years” (footnote omitted) (at [433]).
“I find that for the purposes of considering s 75(2) factors that the husband’s present income cannot be assumed for any longer than four to five years” (at [437]).
“[The husband] … intends to continue to work for the next five to seven years but obviously this cannot be guaranteed” (at [4]).
“I also find on the joint expert evidence of the chartered accountants, which was accepted by the parties, that if the wife received an amount of $1.5 million and invested that sum, that she would be likely to receive a return on that investment of between $50,250 which equates to 3.35% per annum and $141,873 which equates to 9.5% per annum” (footnote omitted) (at [438]).
·s 75(2)(c)
“…There are three children of the marriage. The youngest is aged 17 and completing Year 12…” (at [1]).
“…[The wife] is studying part time whilst caring for the youngest child and has not been in paid employment since 2006…” (at [3]).
·s 75(2)(d)
“I accept the evidence of the wife that she receives Child Support as assessed for [the youngest child] of approximately $202 per week” (at [479]).
·s 79(2)(g)
“…During the marriage the parties enjoyed a high standard of living from the husband’s income and their income from investment properties…” (at [395]).
·s 79(2)(h)
“I accept the evidence of the wife that her ability to earn an income is also compromised by her studies which she intends to extend until the end of 2017” (footnote omitted) (at [398]).
·s 75(2)(k)
“By reason of the arrangements made during what is indisputably a long marriage, the wife did not enhance her income earning capacity in any meaningful way. The wife attempted to contribute financially during the marriage in undertaking work for approximately 12 months in 2006 which was ultimately not viable because of the low remuneration, the needs of the children and the husband’s work commitments. The wife will take some time to complete her studies and having regard to her age and lack of experience in the workforce, her employment prospects and potential for remuneration are limited” (at [402]).
“…The wife at paragraph 117 of her trial affidavit deposed that the amount she spends on herself is significantly less than what she has spent in the past. The wife described both parties enjoying a high standard of living during the marriage. At paragraph 118 of her trial affidavit the wife went on to describe her standard of living during the marriage which included a trip to Queensland at least once a year, that she had ‘carte blanche’ to spend whatever she wished on clothes and shoes for herself, the parties regularly purchased new cars and the parties purchased the children ‘the latest toys and gadgets’” (at [404]).
·75(2)(j)
“…The wife has not been in the workforce for many years and has foregone opportunities for employment in favour of caring for the children and committing to her homemaker role on a full time basis over a marriage of 19 years and post separation. The wife undertook this role on the basis of the joint expectations of the parties…” (at [425]).
·75(2)(l)
“…The wife wishes to continue that parenting role during [the youngest child’s] VCE throughout 2017 but she shares the parenting role equally with the husband” (at [425]).
·75(2)(m)
“The wife … has not repartnered” (at [3]).
“The husband ... has re-partnered” (at [4]).
·75(2)(na)
“History demonstrates that the husband has paid all the expenses … and … he will continue to do so” (at [478]).
No findings were made in respect of s 75(2)(o). This Court found that, if her Honour did not addback the wife’s paid legal fees it was an error not to consider them pursuant to s 75(2). However, as has been seen, they are now included in the property to be divided.
As has been pointed out, time has affected at least some of those findings, including the finding in respect of the husband’s projected earnings at the level applicable at trial and the impact of the youngest child becoming an adult.
I am mindful that “[t]here is … at times a tendency to assess s. 75(2) factors in percentage terms without considering its real impact” and that it “is the real impact in money terms which is ultimately the critical issue”.[19] I am also mindful that, while reference is commonly made to a s 75(2) “adjustment”, that can be apt to mislead. For example, every five per cent “adjustment” to the contributions assessment represents a disparity between the parties’ entitlements of ten per cent.
[19]Clauson and Clauson (1995) FLC 92-595 at 81,911.
The submissions of the husband place significant emphasis on this factor given the overall value of the parties’ property and superannuation interests. Senior Counsel for the husband points out that a one per cent adjustment (that is, a two per cent disparity) represents slightly more than $200,000.[20]
[20] The exact figure is $204,090.
In this Court’s earlier reasons, the following was said:[21]
[21]Trevi at 78,463–78,464.
110.In particular, her Honour at [433] had made reference to evidence given by the husband that “if I need another million dollars I will just work for another year”. The husband said, in answer to a question pertaining to receipt of money by him pursuant to an early retirement scheme which he described as a “myth” that:
…If I needed a million dollars today to repay some debt, as you postulated, I wouldn’t rely on the scheme which is so contingent. What I would do is work for another year and make a million dollars. I wouldn’t retire. That would be a reason not to retire.
111.Senior Counsel also contends that had her Honour considered the effect of not making a superannuation splitting order, that would result in the payment of the additional cash sum earlier referred to and would “correspondingly increase [the husband’s] need to liquidate assets”. The necessity of the husband to liquidate assets was never part of his case at trial, the husband’s case was that any payment to the wife would be met from his cash resources plus borrowing. He alluded in evidence to using cash from the proceeds of the property ultimately agreed to be sold. Otherwise, he alluded in general terms to a possibility of asset sales without ever specifying the same or adducing evidence of sale costs and any taxation imposts.
(Footnotes omitted)
However, just as a one per cent adjustment equates to a $200,000 disparity, a ten per cent adjustment, or $2 million disparity represents less than what the husband earns in 18 months.[22]
[22] The exact figure is $2,040,900.60. Trial judge’s reasons, for example, at [401] and [428] quoted above.
Similarly, a five per cent adjustment, or $1 million disparity, is what the husband says he would earn in a year in lieu of selling assets to meet an order. Importantly, in light of arguments on behalf of the husband shortly to be addressed as to the husband’s likely future earning life, $1 million also represents what the husband says he would earn in a year in lieu of retiring.[23]
[23] Trial judge’s reasons quoting the husband’s evidence at trial at [433] quoted above.
As against those matters, the “adjustment” or disparity representing the s 75(2) assessment is made in circumstances where her Honour found that the wife has a very limited earning capacity from employment. Further, even if the wife earns from investments that which was postulated by expert evidence, which her Honour accepted at [438] of her Honour’s reasons referred to above, the disparity in the parties’ respective incomes remains vast as is the gulf in their income earning capacity. It should not be overlooked that the husband also has the capacity to derive income from invested capital.
Arguments on behalf of the husband emphasise that her Honour’s findings as to the husband’s projected earning life must now be reduced by about two and a half years to take account of the time between the evidence being given at trial and now. That should be accepted and taken into account. Equally, so too should the caveat on that expressed by the husband himself to which reference has just been made. Moreover, the husband has, since the trial, continued to have the benefit of his substantial earning capacity.
Similarly, there should be taken into account the fact that the parties are now two and a half years older; that their youngest child is now an adult and that, whatever other arrangements might pertain formally or informally, the husband’s statutory child support obligations are at an end.
Assessment
Weighing all of her Honour’s findings and all of the matters to which I have just referred, I assess the s 75(2) factors as weighing significantly in favour of the wife receiving a significant sum. I have given very significant weight to the disparity in income and income earning capacity[24] seen in light of the parties’ respective ages.
[24] See, for example, Best and Best (1993) FLC 92-418 at 80,295.
I would quantify those factors as seeing the wife’s entitlement increase by ten per cent of the value of the property and superannuation interests of the parties as earlier set out. Expressed by reference to dollar amounts, the sum of slightly more than $1 million would be added to the wife’s entitlement resulting from the assessed equality of contributions.
Notwithstanding the agreed stay of the orders on 4 July 2017, the net proceeds of sale of the unencumbered property totalling $1,633,951 were divided between the parties some three months later on a 60 per cent/40 per cent basis, with the wife receiving $980,371 and the husband receiving $653,830. By reference to the table earlier set out, sixty per cent of the property and superannuation interests of the parties sees the husband paying to the wife a cash sum of
$1,570,827$1,407,431 (rounded).[25] The result is a disparity in the parties’ respective entitlements of about $2 million.[26] Having regard to the amount already paid as a condition of the stay, that result would see the husband needing to raise and pay slightly more than $1.54 million. I am conscious that this is a significant sum.[25] $10,204,503 x 60% = $6,122,702. The wife already has or will receive
$4,551,875$4,715,271 which includes the sum of $348,920 paid to her as a condition of the agreed stay. Therefore, the wife receives $6,122,702 -$4,551,875$4,715,271 =$1,570,827$1,407,431.[26] The wife receives $6,122,702. The husband receives $4,081,801. The difference is $2,040,901.
Allowing for the receipt by the parties of
one-half ofthe sale proceeds of the real property earlier referred to and the payment of the cash sum as a condition of the stay, the property as found by her Honour sees the husband with available cash of about $900,000 which can be utilised for the payment without recourse to other assets or borrowings. In the latter respect, the husband has, among other assets, approximately $3.89 million in equity in the five pieces of real property that comprise part of his assets.[27][27] By reference to the liabilities set out in respect of the real properties at [216] of the trial judge’s reasons.
I consider that the mix of property and superannuation interests that each party receives, and the amounts of property and superannuation that each party receives, is just and equitable.
Is Interest Payable To The Wife?
Section 117B of the Act provides:
Interest on moneys ordered to be paid
(1)Subject to any order made by the court under subsection (2), where, in proceedings under this Act, a court makes an order for the payment of money (other than an order for the payment by way of maintenance of a periodic sum), interest is payable, at the rate prescribed by the applicable Rules of Court, from:
(a) the date on which the order is made; or
(b) the date on which the order takes effect;
whichever is later, on so much of the money as is from time to time unpaid.
(2)A court that makes an order for the payment of money as mentioned in subsection (1) may order that interest is not payable on the money payable under the first-mentioned order or may order:
(a)that interest is payable at a rate specified in the order, being a rate other than the rate prescribed by the applicable Rules of Court; or
(b)that interest is payable from a date specified in the order, being a date other than the date from which the interest would be payable under subsection (1).
The current rate of interest prescribed by the Family Law Rules 2004 (Cth) is 7.5 per cent.[28]
[28] Family Law Rules 2004 (Cth) r 17.03.
The wife contends that she should receive interest on the sum ordered to be paid by this Court upon the re-exercise contended for by her. It is argued that:[29]
The effect of discharging the order of the Primary Judge (Full Court order [2]) is to deprive the wife of interest on the outstanding judgment sum from 18 August 2017, being the date that Order (1) of the orders made 18 May 2017 took effect, to the date upon which the Full Court either makes an order, or, in the event of a remitter, to the day on which a single Judge makes a new order.
[29] Wife’s Summary of Argument filed 18 October 2018 at paragraph 7.
The argument then proceeds by reference to what would have occurred “[h]ad the husband paid the full amount as ordered”[30] and suggests that competing calculations of interest would be made by reference to what the husband should have paid under the original order and what the wife should have paid on any amount that, as a result of the Full Court’s order, needed to be repaid to the husband.
[30] Wife’s Summary of Argument filed 18 October 2018 at paragraph 8.
I am respectfully unable to accept the central premise of the wife’s argument.
The husband’s obligation to pay only arose on 18 August 2017. On 4 July 2017, a stay pending appeal was agreed. As has been seen, that stay was conditional on the payment by the husband to the wife of $348,920. No term of the stay referred to interest. The effect of the stay was to render her Honour’s order for payment inoperative until the Full Court made its orders. When the Full Court made its orders, the order for payment (relevantly) was discharged.
In my view, the consequence is that s 117B of the Act could not operate. After 4 July 2017 until the date of the Full Court’s orders on 6 September 2018, there was no relevant order which had taken effect within the meaning of s 117B(1)(b) of the Act. From 6 September 2018 when the relevant order was discharged, there was no “order for the payment of money” within the meaning of that section.
Conclusion And Orders
There should be substituted for Order (1) of the trial judge’s orders, an order that the husband pay to the wife the sum of $
$1,570,827$1,407,431 within 60 days of the date of this order.The parties both seek to file written submissions as to costs and an appropriate order should be made. Each has agreed to do so within 48 hours.
KENT J
I agree with the orders proposed by Murphy J and with his Honour’s reasons for those orders.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Alstergren CJ, Murphy & Kent JJ) delivered on 25 March 2019.
Associate:
Date: 3 April 2019
Key Legal Topics
Areas of Law
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Family Law
Legal Concepts
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Appeal
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Jurisdiction
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Standing
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Res Judicata
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Re-Exercise
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Costs
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Compensatory Damages
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