Tuckson & Elsey
[2017] FamCAFC 145
•13 July 2017
FAMILY COURT OF AUSTRALIA
| TUCKSON & ELSEY | [2017] FamCAFC 145 |
| FAMILY LAW – APPEAL – DE FACTO PROPERTY – Whether the trial judge erred in adding back the entire proceeds of sale of a piece of real property – Whether the trial judge erred in the assessment of the parties’ contributions and whether the percentage adjustment was within the range of reasonable exercise of discretion – Whether the adjustment made pursuant to s 90SF(3) was within the range of a reasonable exercise of discretion – Whether the trial judge failed to deal with the appellant’s application for spousal maintenance – Where the trial judge’s final orders did not reflect the assessment and findings in the reasons for decision – Where this error was conceded by the respondent – Where the Full Court found error in the primary judge’s treatment of the piece of real property – Where the Full Court re-exercised discretion – Where the Full Court found that the primary judge failed to deal with the appellant’s application for spousal maintenance – Where the application for spousal maintenance was remitted to the Federal Circuit Court FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – Application for dismissal for want of prosecution – Where the appellant did not file their summary of argument within the time stipulated in directions – Where the Full Court found that there was no gross delay – Application dismissed – Appellant to pay respondent’s costs of the Application in an Appeal |
| Family Law Act 1975 (Cth) ss 90MT, 90SF(3), 90SM Family Law Rules 2004 (Cth) r 22.45 |
| Bennett & Bennett (1991) FLC 92-191 C v B (2006) 35 Fam LR 285 Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194 Fletcher Constructions Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No 2) (2002) 6 VR 1 Gallo v Dawson (1990) 93 ALR 479 House v The King (1936) 55 CLR 499 Jackamarra v Krakouer (1998) 195 CLR 516 K v K [1998] FamCA 41 Ledarn & Ledarn [2015] FamCAFC 220 M & M [1998] FamCA 42 Mallet v Mallet (1984) 156 CLR 605 Moylan v Nutrasweet Company [2000] NSWCA 337 Norbis v Norbis (1986) 161 CLR 513 Rafferty & Spencer (2016) FLC 93-710 Sun Alliance Insurance Ltd v Massoud [1989] VR 8 Talbot & Talbot (2015) FLC 93-660 | ||
| APPELLANT: | Ms Tuckson | |
| RESPONDENT: | Mr Elsey |
| FILE NUMBER: | CSC | 781 | of | 2013 |
| APPEAL NUMBER: | NA | 80 | of | 2015 |
| DATE DELIVERED: | 13 July 2017 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Bryant CJ, May and Aldridge JJ |
| HEARING DATE: | 4 August 2016 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 13 October 2015 |
| LOWER COURT MNC: | [2015] FCCA 2713 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Baston |
| SOLICITOR FOR THE APPELLANT: | Miller Harris Lawyers |
| COUNSEL FOR THE RESPONDENT: | Dr Brasch QC |
| SOLICITOR FOR THE RESPONDENT: | Wilson Ryan & Grose |
Orders
The appeal be allowed in part.
Order 2 of the orders made by Judge Coker on 13 October 2015 (“the orders”) be set aside.
In lieu of the sum of $95,591.20, the respondent pay to the appellant the sum of $226,742 within 45 days, less any amount already paid pursuant to order 2 of the orders.
Orders 1 and 3 to19 of the orders remain in force and effect.
The appellant’s application for spousal maintenance be remitted to the Federal Circuit Court for rehearing.
There be no order as to costs.
The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney- General to authorise a payment under that Act to the appellant in respect of the costs incurred by her in relation to the appeal.
The Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney- General to authorise a payment under that Act to the respondent in respect of the costs incurred by him in relation to the appeal.
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 Tuckson & Elsey 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 BRISBANE |
Appeal Number: NA 80 of 2015
File Number: CSC 781 of 2013
| Ms Tuckson |
Appellant
And
| Mr Elsey |
Respondent
REASONS FOR JUDGMENT
The primary judge delivered judgment and made orders in a property application on 13 October 2015 between Ms Tuckson (“the appellant”) and Mr Elsey (“the respondent”) who had been in a de facto relationship for approximately nine years. The appellant appeals the orders made and the respondent resists the appeal.
The orders required the respondent to pay to the appellant the sum of $95,591.20 within 45 days. The appellant was required to transfer her interest in a jointly owned Property D, to the respondent, subject to an indemnity by him in relation to a mortgage secured over the property. In addition there was an order under s 90MT(1)(b) of the Family Law Act 1975 (Cth) (“the Act”) providing for a splittable payment of 15 per cent (representing $9,000.27 per annum) to the appellant from the Superannuation Scheme of which the respondent was a member. Other property remained with the party who had legal title to it.
The effect of the orders as expressed by the primary judge was to provide a division of the net assets of the parties, or either of them, as to 77.5 per cent to the respondent and 22.5 per cent to the appellant.
Before hearing argument about the grounds of appeal, it was necessary to deal with two applications in the appeal. The first, filed by the respondent, sought to have the appeal dismissed for want of prosecution for failure to comply with an order in relation to the appeal pursuant to r 22.45 of the Family Law Rules 2004 (Cth) (“the Rules”). The second is an application by the appellant to extend the time for filing an Amended Notice of Appeal and for the filing of a summary of argument. It was failure to file the latter within the time ordered that was the subject of the respondent’s application for dismissal of the appeal.
The applications were listed for argument at the same time as the substantive appeal. After hearing submissions, we determined to dismiss the respondent’s application and to allow the extension of time sought by the appellant.
The following orders were made:
(1)The application in an appeal filed 26 July 2016 by the respondent seeking that the notice of appeal be dismissed for want of prosecution be dismissed.
(2)The appellant pay the respondent’s costs fixed in the sum of $2,200.
(3)In relation to the application in an appeal filed 29 July 2016 by the appellant, the appellant be granted leave to file and serve the amended notice of appeal annexed and granted leave to file and serve the summary of argument and list of authorities annexed.
We indicated that we would provide reasons for the orders made when we delivered judgment in the appeal itself. These are our reasons.
Application for dismissal pursuant to rule 22.45
On 10 November 2015, within the time allowed by the Act, the appellant filed a Notice of Appeal against the orders of the primary judge. Directions for the filing of appeal books required them to be filed by 29 April 2016. The appeal books were filed and served prior to that date.
On 15 February 2016, the court ordered that the appellant’s summary of argument and list of authorities be filed by 27 May 2016. On 23 May 2016 the solicitors for the appellant wrote to the solicitors for the respondent referring to “instructions to continue negotiations to settle all matters on a final basis” and noting that the summary of argument and list of authorities was due by 27 May 2016. The email also said:
We understand that your client is currently in the midst of a campaign, as such we propose, in the interests of progressing with meaningful negotiations, that the time for filing and serving the parties’ Summary of Argument and List of Authorities in relation to the appeal be extended. We have regard to the significant cost to both parties in relation to the preparation of these documents by their respective appeal Counsel and the benefit to both parties if this cost could be avoided.
On the same day, the appellant’s solicitors wrote to the court asking that the time for filing and serving submissions be extended to 22 July 2016. On 26 May 2016, the respondent’s solicitors wrote to the appellant’s solicitors indicating that the respondent was not prepared to agree to “any requests for extensions of time” by the appellant.
On 3 June 2016, the Appeal Registrar wrote to the parties advising that the appellant had not filed the summary of argument and list authorities in the time period specified by the orders, drawing attention to r 22.45(2)(a)(i) of the Rules.
On 7 June 2016, the appellant’s solicitors wrote to the court seeking an opportunity to negotiate and asking for a further 14 days in which to comply with the directions. On the same day the respondent’s solicitors informed the court that they did not agree to any extensions of time.
On 10 June 2016, an Amended Notice of Appeal was provided to the court and the respondent’s solicitors. The Amended Notice of Appeal sought to add two further grounds of appeal, of which the respondent had been notified in November 2015 by way of email from the appellant’s solicitors.
On 28 June 2016, the Appeal Registrar wrote to the solicitors for the appellant and the respondent advising that the appeal was listed for hearing before the Full Court at Brisbane on 4 August 2016 at 10.00 am and further reminding them that the appellant was obliged to file and serve a summary of argument and list of authorities by 27 May 2016 and that the respondent’s summary of argument and list of authorities was due by 1 July 2016.
On 8 July 2016, the solicitors for the respondent wrote to the court pointing out that the appellant had not filed their summary of argument by 27 May 2016 and that 42 days had passed since that deadline. They further reiterated that there was no consent to an extension of time. They invited the court to dismiss the appeal pursuant to r 22.45(2)(a)(i) of the Rules. Rule 22.45 relevantly provides:
22.45 Dismissal of appeal and applications for non-compliance or delay
(1) This rule applies if:
(a) the appeal is not taken to have been abandoned; and
(b) a party (the defaulting party) has not:
(i)met a requirement under these Rules or the Regulations;
(ii)complied with an order in relation to the appeal (including an application for leave to appeal or application in relation to an appeal); or
(iii)shown reasonable diligence in proceeding with an appeal or application.
(2) A court having jurisdiction in the appeal or application may:
(a) if the defaulting party is the appellant or the applicant:
(i) dismiss the appeal or application; or
…
On 26 July 2016, the respondent filed an Application in an Appeal formally seeking that the appeal be dismissed for want of prosecution. This application was listed for hearing at the same time as the appeal on 4 August 2016. The respondent did not seek an adjournment of the proceedings in the event that the application for dismissal was unsuccessful.
On 29 July 2016, the appellant filed an Application in an Appeal seeking an extension of time to file and serve an Amended Notice of Appeal as well as a summary of argument and list of authorities. Also on 29 July 2016, the appellant filed a response to the respondent’s Application in an Appeal seeking that it be dismissed.
Thus, before the Court was the application for dismissal of the appeal on account of the failure to comply with the order of 15 February 2016 in relation to filing a summary of argument, and the application by the appellant for an extension of time in which to do so.
In opposition to the application for dismissal, the appellant contended that the appeal was properly on foot, the Notice of Appeal having been filed within the appropriate time. It was contended that the appellant is impecunious and that particular counsel had been engaged to appear on behalf of the appellant since the commencement of the matter, and was also carrying the appellant’s fees in relation to the appeal.
The appellant asserted that settlement negotiations in relation to other current outstanding applications that were before the Federal Circuit Court were occurring and they had sought an extension of time to file the summary of argument through correspondence with the respondent’s solicitors.
The appellant further contended that “[a]s it became clear that the parties were unlikely to reach a resolution of these matters Counsel was instructed to prepare the Summary of Argument and List of Authorities” (Affidavit of the wife’s solicitor filed 29 July 2016 at paragraph 17).
The appellant then contended that counsel was unable to draft and settle the summary of argument due to other pressures of work until 29 July 2016 and the appellant was unable to bear the cost of instructing different counsel, “having regard to the history of the matter, the complexity of the issues and the cost of new Counsel perusing the voluminous material in the [eight] volumes of the appeal books” (Affidavit of the wife’s solicitor filed 29 July 2016 at paragraph 19).
The respondent contended that there was nothing stopping settlement discussions from occurring concurrently with the preparation of documents in relation to the appeal, and that other work had been done on the appellant’s behalf by her solicitors. In particular, they were able to attend to the filing of documents in other litigation between the parties. It was denied that there were settlement negotiations in relation to the appeal. They further contended that the summary was more than two months late and was filed three clear business days before the appeal was due to be heard. Counsel for the respondent asserted the prejudice to them was “the belated time that we have had to prepare” (transcript of proceedings 4 August 2016, page 4 lines 18 – 19). However counsel did not seek an adjournment, and submitted that the “greatest prejudice” was to the administration of justice, if orders and the Rules are not complied with (transcript of proceedings 4 August 2016, page 4 lines 35 – 36).
Counsel for the respondent conceded that the appeal having been regularly instituted by the filing of the original Notice of Appeal within the appropriate time under the Act, the issue was not one of whether the appeal had merit, but whether there was an adequate explanation for the delay, any prejudice to the respondent and the general requirements of justice that orders for the filing of documents and other directions be complied with. It was conceded, however, that this was a procedural matter and did not affect any substantive rights.
Discussion
In Gallo v Dawson (1990) 93 ALR 479 at 480, McHugh J said:
… The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties … This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time …When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the application succeeding in the appeal …
(Citations omitted)
In Jackamarra v Krakouer (1998) 195 CLR 516 (“Jackamarra”), the High Court dealt with the principles in relation to the granting of an extension of time where the appeal had been lodged within time. Brennan CJ and McHugh J said at 519 – 521:
4… To grant the application for an extension of time is to put at risk a vested right of the respondent. When the application for an extension of time merely concerns the doing of an act in respect of an appeal already lodged, as the present case does, an even more liberal approach is justified. The court is dealing with a pure procedural question — should time be extended? The merits of the appeal do not furnish the criterion for granting or refusing an extension. The appeal is already filed in the court. In most, if not all cases, concerned with the doing of an act in respect of a pending appeal, the only issues would seem to be the length of time that the breach of the procedural rule has continued, the reasons for the breach, and most importantly whether the respondent or the administration of the court’s business would be prejudiced by granting the application.
…
7… If there is gross delay in prosecuting the appeal, it may be dismissed for want of prosecution. If it fails to comply with a particular rule, the rules of court may entitle the respondent to strike it out. But the merits of the appeal are not a relevant consideration where the application concerns an extension of time for taking a step in prosecuting the appeal unless, unusually, the Court can be satisfied that the appeal is so devoid of merit that it would be futile to extend time. The merits are examined at the end of the process, not during its course. It would lead to strange consequences if consideration of the merits was a prerequisite for extending the time for each and every step in the conduct of the appeal, just as it would lead to strange consequences if consideration of the merits was a factor to be determined in considering extensions of time for every step in ordinary actions.
(Footnotes omitted)
We agree with the comments of Kirby J in Jackamarra at 540:
66.… Neither a party nor its legal advisers may simply assume that a request for an extension of time will always be acceded to. Inherent in the grant of a discretionary power is the assumption that it will sometimes be refused.
(Footnote omitted)
As the appellant has filed an application to extend the time for filing the summary of argument, this matter falls to be determined pursuant to the principles outlined in Jackamarra. Counsel for the respondent conceded it was not about the merits of the appeal and did not seek to argue that the appeal was so devoid of merit that it would be futile to extend the time for filing.
In our view it cannot be said that the two month delay in filing the summary of argument constituted a gross delay in prosecuting the appeal. The summary of argument was ultimately accepted for filing by us at the hearing of the appeal and an order to that effect was made. The court and other litigants were not inconvenienced. Insofar as the respondent was required to deal with the argument that they were required to prepare in some haste, no adjournment was sought. The strongest argument put by the respondent was that court orders and directions are meant to be complied with and they are not optional at the choice of the appellant. We agree, but we note that the appellant did seek the consent of the respondent to an extension of time immediately after the time for filing the summary of argument had expired. No consent was provided.
Counsel for the respondent sought to rely upon the decision of the Full Court of this court in Ledarn & Ledarn [2015] FamCAFC 220 (“Ledarn”), where the Court dismissed the appeal for want of prosecution. The Full Court in that case observed:
27.… generally speaking, an appeal lodged within time should proceed to a hearing. However, if there is gross delay in prosecuting the appeal, as here, it may be dismissed for want of prosecution.
(Emphasis added)
In Ledarn the appellant was required to file a summary of argument and list of authorities by 26 September 2014. On 28 September 2015, the Appeal Registrar wrote to the parties informing them that the matter was listed before the Full Court on 13 October 2015 for the court to consider dismissing the appeal for want of prosecution pursuant to r 22.45.
When the matter came before the court, although the appellant sought an extension of time, she had still not filed a summary of argument. Nor was the Full Court satisfied that the appellant had “explained her failure to comply with the orders of the Registrar to file a summary of argument”. In that case there was a complete failure to comply with the Registrar’s orders and a delay of over 12 months which the Full Court found to be a “gross delay”.
In this case, the period of delay was two months and the summary of argument was sought to be filed before the listing of the appeal. In our view, the matter is not therefore on all fours with Ledarn and the application by the respondent for the dismissal of the appeal pursuant to r 22.45 will be dismissed.
Nevertheless, the respondent had done everything that could have been done to see that the matter was prosecuted in a timely way and in accordance with the procedural orders. In such circumstances, an order for costs in favour of the respondent, who was ultimately put to the expense of bringing an application for dismissal, was appropriate. Counsel for the appellant sensibly did not oppose such an order.
The appeal
The parties cohabitated in a de facto relationship for a period of about nine years between January 2004 and September 2012. At trial there was no dispute that a de facto relationship, within the definition of what constitutes such a relationship under the Act, existed.
The primary judge found the assets and liabilities of the parties and their values to be as follows (at [168]):
Assets Value Property C $385,000 Property D $580,000 Property B $800,000 Proceeds of sale – Property A $105,427 Motor vehicle 1 $9,100 Motor vehicle 2 $19,500 Motorbike $8,075 Motor vehicle 3 $15,555 Bank accounts as at 06/03/2015
CPB [1] $55
CPB [2] $1,600
ECU $1,200$2,855 Bank accounts as at 06/03/2015
CPB [1] $8,746
CPB [2] (-$23,068)$ (14,322) Chattels – Property M $15,150 Chattels – Property D $17,705 Chattels – Property L $26,855 Pets $14,000 Total $1,984,900
Liabilities Credit Union ($444,550) Motor vehicle 3 - lease ($1,744) Personal tax ($2,192) Total ($448,486)
[Net value $1,536,414]
Superannuation SS accumulation a/c $119,762 SW Pension $116,278 SW accumulation a/c $101,797 Superannuation Scheme pension $1,614,458 Total $1,952,295
With one exception, the appellant does not raise any issue about the primary judge’s assessment of the assets or their value. The one issue relates to the proceeds of sale of Property A, being $105,427, which the appellant contends should not have been included because such sum no longer existed and had been expended by the appellant to repay a debt to her father and to fund her ordinary living expenses. We will deal with that in due course.
The primary judge determined at [192] of the reasons for judgment that, having regard to the contributions of the parties, it was appropriate to divide the assets in the percentage of 85 per cent to the respondent and 15 per cent to the appellant. Following a consideration of the matters reflected in s 90SF(3) (at [193] – [197]) and in particular the respondent’s future entitlement to a pension (at [198] – [207]) the primary judge then weighed up all of those factors and determined that there should be “an additional percentage to be awarded to the applicant” (at [208]) and determined that adjustment should be a further 7.5 per cent, “at least in relation to the immediately available assets and quantifiable superannuation” (at [212]). The primary judge also held that there should not “be any adjustment in relation to any split of the Superannuation Scheme over and above an interest of 15 percent” (at [212]).
At [213] his Honour concluded that:
… the distribution to be effected between the applicant and the respondent in relation to assets, other than the respondent’s interest in the Superannuation Scheme, is in my assessment 77.5 percent in favour of the respondent and 22.5 percent in favour of the applicant. … Insofar as any entitlement held by the applicant in the respondent’s Superannuation Scheme is concerned, I am of the view that 15 percent represents a just and equitable distribution in all the circumstances.
(Emphasis added)
The orders made by the primary judge provided for the appellant to receive as her absolute property:
· The net proceeds of sale of Property A;
· Bank accounts in her name;
· Motor vehicle 1;
· Her personal belongings and other chattels at Property B;
· The personal property, furniture, chattels and household effects in her possession;
· Her personal belongings and jewellery; and
· Her superannuation entitlements.
The respondent was to retain:
· Property C;
· Property D;
· Property B;
· His bank accounts;
· Motor vehicle 2, motorbike 1 and his interest in a leased 2012 Motor vehicle 3;
· His plant and equipment on Property B;
· The personal property, furniture, chattels and household effects in his possession, subject to the orders;
· The personal belongings in his possession, subject to the orders; and
· His superannuation entitlements, subject to the orders.
The respondent was ordered to pay to the appellant the sum of $95,591.20 within 45 days and an order was made pursuant to s 90MT(1)(b) of the Act providing for a splittable payment, when it becomes payable, of 15 per cent to the appellant in relation to the respondent’s interest in the Superannuation Scheme.
Before the appellant commenced submissions about the grounds of appeal, the Court raised with the parties what it identified as an error on the face of the orders made by the primary judge, having regard to the findings to which we have referred. In particular, the sum of $95,591.20 ordered to be paid by the respondent to the appellant did not give effect to the primary judge’s findings at [213]. After discussion between the bench and counsel, an opportunity for counsel to consider the figures was provided and, upon resumption, counsel for the respondent conceded that there was an error in the orders having regard to the assets and the findings that his Honour had made. Counsel for the appellant handed up an aide-memoir setting out the conceded error, which we now explain:
Non-superannuation pool $1,536,414 Superannuation (excluding the Superannuation Scheme) $337,837 Total (excluding the Superannuation Scheme) $1,874,251 22.5 per cent = $421,706
In addition, the appellant is to receive a splitting order equal to 15 per cent of the Superannuation Scheme.
The appellant received, pursuant to the orders:
Proceeds of sale of Property A (in dispute) $105,407 Chattels $26,855 Bank account $2,855 Motor vehicle $9,100 SS (superannuation excluding the Superannuation Scheme) $119,762 Payment from respondent – order 2 $95,591 Total $359,570 Shortfall $62,136
Having determined the appropriate percentages for division of the assets, unfortunately the primary judge did not then go on to set out what assets the appellant and respondent would be keeping and then arrive at an amount of cash to be paid by the respondent. Had he done so he must have arrived at the figures in the aide-memoire.[1] But there was no explanation as to how his Honour arrived at the sum of $95,591.20 to be paid by the respondent (order 2) and how he gave effect to the percentages that he had determined the appellant should receive.
[1] The aide-memoire incorrectly stated the proceeds of Property A which were in fact $105,427. That meant the shortfall was $62,116 , but nothing turns on this differential.
Although the error was conceded and no explanation could be advanced for the orders that the primary judge made, no ground was directly addressed to this issue because it was identified by the bench. Nevertheless, having been identified and conceded, in our view it is encompassed within an assertion in ground 6 that:
6. The learned trial judge erred in principle by failing to provide adequate reasons that enable an understanding of the relevant factual basis upon which he determined:-
…
(e) … that the orders that he intended to make would impact upon the appellant and be otherwise just and equitable.
In addition, ground 8 asserted that “[t]he decision and orders of the learned trial judge fall outside the ambit of a reasonable exercise of judicial discretion in that the result embodied in his order was plainly wrong and manifestly unreasonable”.
Counsel for the respondent did not assert that the primary judge’s error – essentially being a failure by the primary judge to give effect to his findings in the orders made, leading to an underpayment to the appellant of $62,136 – would not fall within either of the grounds set out above and, thus, to that extent the appeal must succeed.
Having conceded that the appeal must succeed on this point the issue of whether the matter should be remitted for rehearing or whether this Court could re-exercise discretion was enlivened. Whilst conceding the error, the respondent contended that depending upon whether any other, and if so what, grounds of appeal succeeded, the Court could potentially re-exercise discretion and remake the orders without the need for a remittal to the Federal Circuit Court for rehearing. The appellant contended that the error identified, and other grounds if successful, would inevitably lead to the conclusion that there must be a remittal for rehearing.
Both parties agreed that if the ground asserting error in failing to deal with or award spousal maintenance (ground 7) was successful the matter must be remitted, as it was asserted that the circumstances of the parties had changed since the hearing.
Given that the question of whether the matter should be remitted for rehearing or whether this Court can re-exercise discretion will depend upon whether any other grounds are successful, it will be necessary to consider the other grounds of appeal.
Background facts
There were significant facts in dispute but the disputed issues largely centred around the contributions made by the appellant, the application of the considerations in s 90SF(3) and whether the primary judge failed to determine the appellant’s application for spousal maintenance.
The background facts that follow are not in dispute. When the parties commenced their relationship in January 2004, the appellant was 38 years of age and the respondent was 53 years old. The respondent was at the time of the hearing, and had previously been, an elected official. He was elected in the 1990s and early 2000s prior to the relationship commencing between the appellant and the respondent. The respondent’s entitlement to a pension arose in November 2001 (at [202]).
The respondent commenced to receive benefits pursuant to the Superannuation Scheme in 2007 (at [203]).
The respondent had previously been married and his son Z came to live with the appellant and respondent in or about 2007.
The parties separated in 2012.
The respondent married his present wife in 2013 and her daughter lives with the respondent and his present wife.
The health of the appellant was an issue and the subject of medical evidence. The primary judge found at [101] that he “gained the distinct impression that, for many years, and certainly for a period prior to the commencement of any relationship with the respondent, as well as, of course, during the relationship and subsequent to separation, the [appellant] has dealt with a multitude of debilitating and painful physical and medical issues”. His Honour noted at [101] that “evidence provided in relation to the [appellant’s] circumstances were (sic) the subject of some challenge, but, I must say, only on a much more technical basis than a challenge as to the correctness of the diagnoses, that were relied upon.”
His Honour was satisfied at [102] that “the applicant does suffer from a number of medical conditions, as well as, unfortunately, in more recent times, some psychological concerns, which affect her capacity to continue in employment.” His Honour dealt in detail with the evidence from what he described as “medical and allied health professionals” at [15] to [40].
One such professional, Ms C, was an occupational therapist but had provided what the primary judge described at [15] as “a comprehensive summary of issues, in relation to the health, both physical and emotional, of the [appellant].” At [37] his Honour observed that Ms C noted at paragraph 17 of her report:
Ms Tuckson’s functional capacities will determine her capacity for work, enjoyment of preferred amenities of life, capacity for personal activities of daily living, capacity to perform her routine domestic tasks and any special dwelling requirements in the future.
At [38] the primary judge then noted:
[Ms C] went on to note that in the best case scenario, the [appellant] could be expected to have the need for various therapeutic regimes and medical treatments now and into the future, and in the worst case scenario the [appellant] could become:
...considerably disabled, with impaired mobility, being unable to work, dependent on considerable domestic assistance and requiring special aids to enable her to attend to her personal routines with dignity and safety and attend to her domestic routines independently and with safety.
His Honour then concluded:
41. Ms C’s report addressed those issues that arise in relation to the future expectations, both with regard to her life generally and with the employability of the [appellant]. I was assisted by the report by Ms C, particularly to the extent that it drew together the significant amount of evidence that had been gathered, in relation to the [appellant] and to the difficulties that confronted her, as a result of her health circumstances.
42.Of course, I accept also, that there is an implied degree of speculation with regard to what the future might hold, and in that respect, it is noteworthy that Ms C identified the amount of stoicism that was shown by the [appellant] and her ability, therefore, to work and provide for her needs into the future, notwithstanding the difficulties that had confronted her in varying ways …
The primary judge also referred to the evidence of Mr C, a psychologist. The primary judge observed at [32] that his evidence was that the appellant was “likely to experience a period of heightened stress as she adjusts to being unable to work with symptoms of anxiety and depression; however, I do not think that she is at significant risk of developing long-term psychological problems as a result of this process”, and that “[the appellant] is likely to experience a period of psychological adjustment that should resolve in six to 12 months.”
The primary judge then observed at [33] that the brief report and limited opportunity for interaction with the appellant meant that the psychologist “was not able to comprehensively comment upon or provide assistance, in relation to the future prospects that might or might not face the [appellant].”
Issues in the appeal
The appeal brought by the appellant comprises four discrete issues:
· The treatment of the proceeds of Property A (ground 1);
· The assessment of contributions and whether the percentage adjustment was within the range of reasonable exercise of discretion, incorporating grounds 2, 6 and 8, and ground 10, which complained about the way in which the primary judge dealt with the applicant’s income from employment in the respondent’s office;
· Whether the adjustment of 7.5 per cent pursuant to s 90SF(3) was within the range of a reasonable exercise of discretion (grounds 3, 4 and 5); and
· The question of whether his Honour failed to deal with an application for spousal maintenance that was live and before him for determination (ground 7).
Given the controversy about whether his Honour had dealt with the spousal maintenance issue we propose to deal with that ground first, as finding that his Honour had failed to deal with the application for spousal maintenance would necessitate the matter being sent back for a rehearing, at least on that issue, as both counsel indicated that the financial position of their respective clients had altered.
Spousal maintenance – ground 7
The gravamen of the appellant’s argument under this ground is that the spousal maintenance application was before his Honour for determination and he had simply failed to engage with it and provided no reasons as to why he had not done so. The respondent contended that the appellant had effectively compromised her initial claim seeking $250 a week rather than $1,000 a week which was in her Amended Initiating Application and, by the time the trial concluded, her position was that if she received a splitting order in relation to the respondent’s Superannuation Scheme she was not pursuing her application for spousal maintenance. At the time of the hearing the appellant was relying on an Amended Initiating Application which sought relevantly at paragraph 20:
Spousal maintenance
That the respondent pay or cause to be paid to the [appellant], by way of spousal maintenance the sum of $1,000.00 per week or such other sum as determined by the court.
The appellant supported this application with an affidavit sworn on 5 February 2015 and at paragraph 3 set out her actual and reasonable weekly expenses. Her actual expenses totalled $1,083 per week. The appellant filed extensive written submissions. A sub-heading of “spouse maintenance” was followed immediately by another sub‑heading entitled “consideration of s 75(2)”. Paragraph 169 of these submissions said:
Consistent with authority the [appellant’s] claim for spousal maintenance falls to be considered after the court has determined the property alteration considerations.
Thereafter the appellant’s submissions dealt with a number of matters relevant to s 90SF(3), although described as a s 75(2) adjustment at paragraph 170 of the submissions. The question of spousal maintenance is dealt with at paragraphs 138 and 139 of the submissions:
138. The [appellant] is in need of an immediate source of income. The contention that she is hedging her bets is unhelpful. It is trite to say that if her claim for disability support is accepted it would otherwise validate her case that her capacity to work is limited but would have no impact upon the quantum of any spouse maintenance entitlement.
139. Accepting that where the court makes a splitting order in respect of the respondent’s Superannuation Scheme the [appellant] can immediately access a periodic non-commutable payment then the most appropriate way to deal with her spousal maintenance claim is to increase any Superannuation Scheme splitting adjustment to the benefit of the [appellant].
(Emphasis original)
It is relevant to note that the appellant sought an order in relation to the Superannuation Scheme at paragraphs 6 to 12 of her application. In particular, in relation to the Superannuation Scheme she sought an order that “the [appellant] will be entitled to be paid 30% of the splittable payment (which is equivalent to the capital sum of $17,453.00 per annum) or such sum as the Court deems appropriate but not less than 20% of the splittable payment (which is equivalent to the capital sum of $11,635.00 per annum)”.
The respondent did not make any response to the application for spousal maintenance in his Amended Response to Initiating Application.
Hence, the Initiating Application of the appellant sought a splittable payment of 30 per cent of the respondent’s Superannuation Scheme fund or alternatively such other sum provided it was not less than 20 per cent. His Honour ordered that she receive a 15 per cent splittable payment, equivalent to the annual capital sum of $9,000.27.
The respondent’s submissions appear to put in issue the capacity of the appellant to engage “in any form of paid employment” but otherwise do not address the question of the spousal maintenance claim.
On 7 March 2014, the matter proceeded before Judge Willis for hearing on the issue of interim spousal maintenance and the appellant’s application for some litigation funding pending the final hearing of the spousal maintenance and the property dispute. In reviewing the evidence by both the applicant and the respondent, Judge Willis says at [180] of her Honour’s reasons for judgment:
Doing the best I can and on the figures available to me on the evidence at present, I am not satisfied that the [respondent] has the financial capacity to pay the [appellant] the amount sought or any amount for her as spousal maintenance …
(Emphasis added)
Her Honour went on to “dismiss the application for spousal maintenance on an interim basis” (emphasis added) at [182]. Although the orders as drafted do not refer to the application as being an interim one, the point is clear from the reasons themselves that her Honour regarded it as an interim application and paragraph 4 of her orders dated 5 June 2014 provided that:
Upon the issue of costs being resolved, pursuant to rule 8.02 of the Federal Circuit Court 2001 (sic), these proceedings be transferred to the Family Court of Australia at City E to be listed in City E on a date to be advised.
(Emphasis original)
That again confirms that the matter was continuing and her Honour’s orders were, as described, interim. The respondent concedes as much in his written submissions for the appeal at paragraph 48 where it is said: “This was not prosecuted by the Appellant at trial in any meaningful way. (Contrast the trial with the vigour and zeal the matter was pursued, unsuccessfully, at the interim spouse maintenance hearing in 2014)” (emphasis added).
In opening to his Honour, before evidence was called, counsel for the appellant referred to the interim spousal maintenance determination and said “the fact that a spouse maintenance entitlement on an interim basis may or may not have been given doesn’t impact upon the capacity of your Honour to rehear it, in fact, your Honour’s obligation, and paragraphs 20 to 22 [of the respondent’s affidavit] are irrelevant, argumentative and really submission” (transcript of proceedings 10 March 2015, page 9 lines 39 – 42).
The Full Court recently considered the principles relating to adequacy of reasons for judgment in Rafferty & Spencer (2016) FLC 93-710 at [30] to [35]. Of particular relevance to this case is the following:
33. In Bennett & Bennett (1991) FLC 92-191 (“Bennett”) the Full Court of this Court adopted the test for adequacy of Reasons propounded by Gray J in Sun Alliance Insurance Ltd v Massoud [1989] VR 8. In that case 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.
In C v B (2006) 35 Fam LR 285 the Full Court referred to a number of judgments which have relevance in this context. In K v K [1998] FamCA 41 the Full Court said at [9.2] that:
The requirement to give adequate reasons is well established. The requirement minimally 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.
Their Honours also referred to the observations of the Victorian Court of Appeal in Fletcher Constructions Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No 2) (2002) 6 VR 1 at 44, where it was said that:
164.… The Court is required to do more than decide the issues arising in a proceeding: it is also obliged to give reasons for rejecting at least the principal submissions relied upon by the losing party which relate to the issues upon which the result of the proceedings depends.
In Moylan v Nutrasweet Company [2000] NSWCA 337 at [100] the Court of Appeal (Sheller, Beazley and Giles JJA) cited with approval an unreported decision of the NSW Court of Criminal Appeal to the effect that “the appellant had a right to expect that the arguments put on his behalf would be dealt with in such a way that he could be satisfied that they had been understood and, either accepted, or, if rejected, that the rejection was based on a clear and rational process of reasoning”.
We too turn to the test set out in Bennett. The test is whether the reasons upon which the decision is based are readily ascertained and whether justice can be seen to have been done.
We accept the respondent’s submission that the application for spousal maintenance does not appear to have attracted the same focus as that which it had received at the previous interim hearing before Judge Willis. Nevertheless the matters at [67] – [76], to which we have referred, make it clear that:
·The application for spousal maintenance formed part of the Amended Initiating Application;
·Counsel for the appellant drew his Honour’s attention to the application at the start of the trial (see the transcript reference at [76] of these reasons); and
·The issue of spousal maintenance was addressed in the appellant’s written submissions (see [69] of these reasons).
Furthermore the primary judge set out at [4] the “final position taken by the [appellant]” and went on to set out what was sought by the appellant including, relevantly, “[t]hat the respondent pay or cause to be paid to the [appellant], by way of spousal maintenance the sum of $1,000.00 per week or such other sum as determined by the court.”
His Honour said at [99]: “There are also issues raised by the [appellant], with regard to the possibility of spouse maintenance being ordered.” And again (at [176]) he said: “By the same token it is disingenuous of the respondent to suggest that there has been no financial contribution by the [appellant] to the relationship and yet, in the same breath, argue that spouse maintenance should not be considered in relation to any settlement because of the [appellant’s] long established and continuous work history …”
These passages would suggest his Honour was alive to the fact that he was required to determine the spousal maintenance application. However, the primary judge does not thereafter refer in the reasons for judgment to the application for spousal maintenance or how he proposed to determine it. Lest it be thought that he may have decided to treat it as being covered by a splitting order, that is not born out as we explain.
When considering the respondent’s interests in the Superannuation Scheme, which his Honour does at [201] to [208], his Honour appears to do so under the rubric of contribution, indicating at [202]: “It is difficult to assess or place a figure upon what might be the [appellant’s] contribution to any entitlement that the respondent has to a pension” (emphasis added). His Honour then goes on to say:
204. … The question then of what might have been the contribution made by the [appellant] to the respondent’s entitlement in 2007 and future entitlement, either when he retires or is not re‑elected, is difficult to assess. It is no doubt one of the reasons that the respondent’s submissions included specifically a suggestion that if there was to be some entitlement to an interest in the respondent’s Superannuation Scheme, it should be significantly reduced.
…
206. … It is reasonable for the [appellant] to expect some future entitlement in relation to the respondent’s pension, but it does not, in my assessment, arise from any specific contribution made by her to the acquisition of that pension.
207. The entitlement arises far more as a result of the consideration detailed in section 90SF(3)(k). The duration of the de facto relationship and the extent that it has affected the future earing (sic) capacity of the [appellant]. The [appellant’s] life changed when she commenced the relationship with the respondent and changed again, radically, when the relationship ended, 8 or 9 years later.
(Emphasis added)
Section 90SF(3)(k) requires the Court to take into account “the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration”; however, it is clearly one of the matters to be taken into account when considering what order (if any) should be made under s 90SM altering property interests (see s 90SM(4)(e), which requires consideration of “the matters referred to in subsection 90SF(3) so far as they are relevant”). It is apparent that his Honour had regard to those matters in determining what alteration would be just and equitable in relation to property interests but did not deal with the appellant’s live application for spousal maintenance. The respondent contends that his Honour adopted an alternative proposition that was put by the appellant at paragraph 139 of her written submissions: “Accepting that where the court makes a splitting order in respect of the respondent’s Superannuation Scheme the [appellant] can immediately access a periodic non-commutable payment then the most appropriate way to deal with her spousal maintenance claim is to increase any Superannuation Scheme splitting adjustment to the benefit of the applicant”.
However, there is a certain lack of clarity to this argument. It begs the question of the base from which any “increase” was to be made. The respondent suggests that any splitting adjustment in the appellant’s favour fulfilled this proposal but we do not agree. As his Honour acknowledges in setting out the orders sought by the appellant in the reasons for judgment, the appellant was seeking at paragraph 7 “30% of the splittable payment (which is equivalent to the capital sum of $17,453.00 per annum) or such sum as the Court deems appropriate but not less than 20% of the splittable payment (which is equivalent to the capital sum of $11,635.00 per annum)”, as well as seeking a spousal maintenance order of $1,000.00 per week at paragraph 20. The primary judge ultimately made orders providing for a splittable percentage less than that sought by the appellant.
It remains unclear from the reasons for judgment what his Honour found in relation to the appellant’s capacity to maintain herself and the respondent’s capacity to contribute to any order for maintenance, in light of the property settlement orders that he was proposing to make. It might be open to infer, as the respondent submitted we should, that his Honour had considered the spousal maintenance and it was in effect reflected in the orders he made for the splittable payment of the Superannuation Scheme. However, it is equally open to us to infer, as the appellant says we should, that his Honour simply neglected to deal with the spousal maintenance altogether. The failure to specifically dismiss the application might lend weight to this inference.
Regrettably we are unable to ascertain the reasoning that his Honour applied to the determination of the spousal maintenance application as he has failed to engage with it at all and thus, using the language from Sun Alliance Insurance Ltd v Massoud [1989] VR 8, “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”.
Accordingly, we find merit in ground 7.
Error of fact: proceeds of sale of Property A – ground 1
Ground 1 asserts that the primary judge erred “by including as an asset of the parties, at paragraph 168 of his reasons, the proceeds of Property A at $105,427.00 when the evidence was that these funds no longer existed but had been used by the appellant to repay a debt to her father and fund her ordinary living expenses”. The primary judge considered this matter in his reasons for judgment at [104] to [106], [159] and [162]. His Honour said:
104. For example, the [appellant] sold Property A. She was entitled to do so. She owned the property and had liabilities that attached to the property which she wished to deal with. But it does appear clear that, notwithstanding her complaints about non‑disclosure on the part of the respondent, this information did not become known until, literally, the days just prior to the commencement of the hearing.
105. Of course, there was a similar complaint made with regard to the respondent transferring at least part of his interest in Property B to his now wife, Mrs Elsey, without notice being given in relation to that.
106. What is distinguishable, however, is that the respondent did not suggest that there might be any change in values associated with Property B, or at least the interest that might properly be taken into consideration, approximately $800,000, notwithstanding that he no longer owned the entirety of the property. With regard to Property A, however, there was clearly a significant change which was not readily identified on the part of the [appellant].
At [159] of the reasons for judgment the primary judge said:
There were, as would be anticipated, some areas of significant dispute between the parties. In particular, they included what should be made of the proceeds of the sale of the applicant’s property at Property A …
And, finally, at [162] his Honour concluded his determination of this issue by saying:
Insofar as the proceeds received by the [appellant] from the sale of her Property A is concerned, it is noteworthy that the [appellant] seeks to rely upon her contribution to the matrimonial pool, as including her interest in Property A, at the commencement of the relationship, and it is also noteworthy that she includes part of that contribution as being the parties’ occupation of that property for a considerable number of months early in the relationship. The [appellant], with respect therefore, cannot suggest that there be weight given to a contribution which is then, upon sale, retained in its entirety by her, and therefore not included in the pool. I am satisfied that the proceeds of sale retained by the [appellant] should properly be included in the asset calculation and noting that there is agreement between the parties that the equity totalled $105,427.00, I intend to include that sum in the asset pool.
The references by his Honour to the contributions involved the appellant seeking to claim recognition for the property as an initial contribution on her part and as a contribution during the relationship with the appellant proposing that “Property A should be taken into consideration before this court, when dividing property” (transcript of proceedings 10 March 2015, page 32 lines 45 – 46).
As the respondent contends, it was also the case that the property had been refinanced in both parties’ names during the relationship and the appellant accepted the respondent made improvements to it. The appellant also accepted the mortgage was paid from the account in both names, and that she unilaterally sold the property and had not quarantined any of the funds, notwithstanding these factors.
The appellant argues that the primary judge erred in including the totality of the sale proceeds of Property A as part of the asset pool because “[t]he whole amount from the proceeds of sale of Property A was expended by the Appellant prior to the final hearing of this matter and therefore not available for distribution as an asset of the property pool” (appellant’s summary of argument filed 4 August 2016 at paragraph 9). It is correct, as the appellant contends, that the respondent conceded that funds were expended by the appellant in final written submissions. The respondent submitted:
5. It is not disputed by [the appellant] that she received the amount of $105,427 from the sale proceeds of Property A. Rather, [the appellant] accepts that those funds were received by her following the sale of that property, but were subsequently fully expended on various items including $50,000 for legal fees.
6. [The appellant’s] approach appears to be that those sale proceeds are to be disregarded. The respondent submits that in considering the sale proceeds expended by the applicant the Court ought to either “add back” such sum to the net non-superannuation value or, alternatively, consider it as a negative contribution by [the appellant].
At paragraph 7 the respondent further contended:
Furthermore, [the appellant] secured a line of credit over her Property A that she drew to its full limit of $100,000.00 as a result of [the appellant’s] failed share trading venture. But for that line of credit, the sale of [the appellant’s] Property A would have realised net proceeds of sale of approximately $205,000. [The appellant’s] conduct has eroded the value of the property pool; certainly it eroded the equity in a property to which the respondent had made significant direct and indirect financial contributions by way of improvements and renovations.
It cannot therefore be asserted that the acceptance by the respondent that part of the funds had been used to repay the appellant’s father was an unqualified acceptance that the property should not be regarded as part of the asset pool. Indeed, the respondent’s submissions are quite to the contrary.
The appellant set out as part of her documents at trial an analysis of the disbursement of funds from the sale of Property A. In addition to the payment of $50,000 to her father, payments were categorised into three categories: living expenses (totalling $39,273.99); household and electronic goods (totalling $11,447.94); and entertainment (totalling $4,902.39). The appellant was cross-examined by counsel for the respondent on the listed expenditure. Other than to identify living expenses and the payment to her father it is a fair characterisation to say that the attack, if any, on the expenditure related in the main to the expenditure claimed for entertainment.
We have set out at [100] and [101] of these reasons the submissions made by the respondent as to the sale proceeds of Property A being either “added back” or, alternatively, considered as a negative contribution by the appellant. The appellant’s father gave evidence of having provided funds to the appellant in the sum of $44,458 for living expenses, $17,953 for legal expenses not associated with these proceedings and a further sum of $123,192 for legal expenses for these proceedings. He acknowledged receiving $50,000 after the sale of Property A. That evidence was not challenged. In written submissions the appellant dealt with the proceeds of Property A at paragraphs 141 to 147, submitting that “since 26 February 2013, [the appellant] has borrowed monies from her father … for living expenses and legal expenses … in excess of $230,000.00”. It was submitted that living expenses were in excess of $44,000 and that otherwise, given the expenditure as set out, an add-back was not warranted.
In Talbot & Talbot (2015) FLC 93-660 the Full Court said at 80,377:
31. Where one party unilaterally distributes to themselves property which no longer exists and which, but for that premature distribution, would be susceptible to s 79 orders, justice and equity may require the Court to take account of the dissipated property by adding it back as against the dissipating party (Townsend & Townsend (1995) FLC 92-569). Whether that should occur, or whether the dissipation should be taken into account pursuant to s 75(2)(o), or indeed at all, are all matters requiring the exercise of the trial judge’s discretion (Townsend; Omicini & Omicini (2005) FLC 93-218; Cerini & Cerini [1998] FamCA 143).
The Full Court went on to say at 80,379:
51. However, if that discretion was to be exercised in that manner, it was necessary for the trial judge to take account of a number of relevant considerations, one of the most important of which was what the evidence revealed about expenditure from the account into which the funds were banked. That is because, among other things “… parties are entitled to reasonably conduct their affairs post‑separation in a manner that is consistent with properly getting on with their lives” (Cerini, supra) and, if money is to be “added back” some three years after it was spent, account must be taken of what the evidence reveals about what was spent on “ordinary living expenses” and of the financial circumstances of the parties more generally. (See, for example, Marker & Marker [1998] FamCA 42).
In M & M [1998] FamCA 42 the Full Court said at [2.11]:
There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.
There was further context to the appellant’s expenditure on living expenses, and that was her application for spousal maintenance before Judge Willis, which had been dismissed. It was uncontroversial that, pending property settlement orders being made, the appellant was not in receipt of spousal maintenance from the respondent and had no access either to his superannuation or any of the assets other than Property A.
The respondent contends that the primary judge did not misstate or ignore essential facts but exercised his discretion with respect to the proceeds by adding them back. The respondent’s case was that it was no more than a premature distribution by the appellant of what was otherwise the property of the parties and the primary judge finding so was within a reasonable exercise of his discretion.
We find merit in this ground. His Honour’s reasons, which we have set out, appear to be based upon the fact that because the appellant sought to have the Court take account of her contribution to Property A she could not “suggest that there be weight given to a contribution which is then, upon sale, retained in its entirety by her, and therefore not included in the pool” (at [162]).
This reasoning fails to engage with the argument being advanced by the appellant, which was that, having regard to her financial circumstances, she had to borrow money from her father for living expenses and her funds were in part to repay him and in part to meet further living expenses. It was in our view incumbent on his Honour to consider these factors and to determine whether, on the basis of that expenditure, all or any of the proceeds should be included in the asset pool given that they no longer existed at the time of trial. The primary judge failed to examine or consider how the proceeds were expended or to make any determination as to whether that expenditure was reasonable or otherwise. Accordingly we find merit in this ground.
Contributions – grounds 2, 9 and 10 (incorporating grounds 6 and 8)
These grounds contend:
2. The learned trial judge erred in assessing the contributions of the appellant by not taking into account evidence of her substantial and significant financial and non-financial contributions both during the period that the parties had resided together and subsequent to the breakdown of their relationship.
…
9. The learned trial judge erred in law in holding, at paragraph 180 of his reasons, that the appellant’s attending dinners and functions as the respondent’s partner does not, of itself, constitute a non-financial contribution, when there was uncontradicted evidence of the importance to elected officials’ careers of such attendances.
10. The learned trial judge erred in law in holding, in paragraph 182 of his reasons, that the fact that the appellant had been paid for her duties performed in the respondent’s office precluded any claim by the appellant to have those earnings taken into account as a financial contribution under section 90SM(4) of the Act, when there was uncontradicted evidence that such earnings were contributed by the appellant to the parties’ overall finances during the relationship.” (sic)
The question of the appellant’s contributions was undoubtedly the major focus of the hearing and was the subject of a considerable amount of evidence from both the parties and other witnesses. The primary judge identified at [8] the issues that he said “loomed large”:
… In particular were issues with regard to the [appellant’s] health and her capacity for future employment, as well as issues with regard to the indirect contribution made by the [appellant] to the respondent’s career, it being the case that the respondent is a[n elected official], though he had been a[n elected official] prior to the commencement of the relationship in early January 2004.
His Honour then said:
9. Interestingly, neither party required the significant number of further witnesses for the other party to be called, though it would appear that each sought to rely upon their witnesses’ evidence.
…
12. … There is, however, the inherent difficulty that arises with regard to evidence which is untested by way of cross-examination, particularly when, as is the case here, there are conflicting views, certainly with regard to the involvement of the [appellant] in the furtherance of the respondent’s career, but I shall come to those particular aspects of the matter a little later in these reasons.
13. Suffice it to say that I am satisfied that, to the extent that consideration can be given to the evidence contained within those many affidavits, they should be considered and given the weight that is appropriate, in all the circumstances. What that, of course, means is that the evidence of the deponents called for both the [appellant] and the respondent needs to be considered and, at least where appropriate, some comment made in relation to their evidence.
Having dealt with the medical evidence at [15] to [42], his Honour then turned to deal with “other witnesses” and did so at [44] to [94]. His Honour then dealt with the evidence of the parties at [97] to [137]. The issue of credit did not seem to play a significant part and his Honour said at [100]:
Each of the parties in different ways impressed me, but also, as is not uncommon, each in different ways troubled me with regard to the nature of their evidence and the degree to which their evidence could be accepted as a credible statement of the circumstances that existed, during the relationship.
Having set out the evidence, the primary judge then considered the assets and set out what he considered to be the asset pool before turning to a consideration of “the contributions of each of the parties under the various sub-headings detailed in section 90SM(4)” (at [170]). His Honour then summarised the evidence and the differences between the evidence of the parties at [171] to [188]. His Honour then indicated the task before him which he said was “to as best I can then consider the various forms of contribution made by each of the parties at the commencement of and during the relationship, and to attempt to assess and (sic) appropriate figure in relation to that contribution” (at [189]).
His Honour noted that the respondent contended that “at the commencement of the relationship the [appellant’s] contribution amounted to a little less than 4 percent of the net non-superannuation assets” (at [189]). Whilst the appellant submitted that her contribution should be assessed in the range of 30 to 40 per cent his Honour said:
191. Somewhere between those two figures, in my assessment, lies the true assessment of what constitutes the contributions by both of the parties. There cannot simply be a disregard of the enormous disparity between what each of the parties brought into the relationship at its commencement. …
192. However, to suggest that over that same 8 or 9 year period there was no contribution by the [appellant] in any way, financial or non‑financial, so as to provide some basis for further entitlement, flies in the face of the evidence in this matter. …
His Honour then concluded that “a proper assessment expressed as a percentage would be 85 percent to the respondent and 15 percent to the applicant” (at [192]).
Essentially the challenges by the appellant are to the weight the primary judge gave to the parties’ varying contributions when coming to his decision as to the relative percentage entitlements of the parties. In addition to the affidavit evidence the respondent contended that there was other evidence upon which his Honour made his assessment arising from cross-examination including
… that the Appellant lost $100,000 share trading drawing on a line of credit against Property A, did not contribute any funds to building the house at Property B, made no contribution to machinery on Property B, made no contribution to the mortgage over Property D, and that the mortgage over Property A was paid from a joint account, until it was unilaterally sold post-separation.
(Respondent’s summary of argument filed 2 August 2016 at paragraph 29).
In addition to the issue of weight, ground 9 asserts that “the Appellant’s non-financial contribution of attending dinners and functions to assist with the Respondent’s career should not be confused with the financial contribution made (sic) the Appellant from the income she received from her employment at the Respondent’s office. These are different and separate contributions” (appellant’s amended summary of argument at paragraph 19). This ground seems to be a reference to his Honour’s comments at [180] that:
By the same token, simply attending dinners and functions as an elected official’s partner, does not of itself constitute a non-financial contribution. Whether the partner attended or not, the elected official’s salary was to be paid and entitlements to a Superannuation Scheme pension were accrued. It does not correlate directly with the situation that is often seen of a partner taking on a significant role within the home and in respect of the care of children so as to enable the other partner to build a business or acquire assets. There is a distinction to be drawn.
We are not persuaded that his Honour’s assessment is in error but, in any event, the comments need to be seen in the context of the previous paragraph at [179], where his Honour acknowledged that “[i]t would be ludicrous to suggest that the [appellant] had done nothing in supporting her partner’s career. There were no doubt occasions where the [appellant], because of her relationship with the respondent, attended functions either with the respondent or in his absence, which carried some ‘career mileage’ for the respondent.” The comments in the subsequent paragraph need to be seen in that context.
The assertion that this was confused with the financial contribution made by the appellant from the income she received from her employment at the respondent’s office is not substantiated. At [182] the primary judge said:
Additionally, rightly or wrongly, the [appellant] was employed for at least some time in the respondent’s office and accordingly was paid for the performance certain (sic) tasks within that office. It would indeed be irregular for the [appellant] to be paid for performing duties within the office and then to additionally seek some additional entitlement in relation to a property settlement, arising from contributions for which she had already been paid.
We see nothing objectionable in his Honour’s finding. Nor do we find anything objectionable about the way in which his Honour assessed the appellant’s contributions by way of her salary and attending dinners and functions. We are not persuaded that any error has been demonstrated.
Absent any demonstrated error, the challenge to contributions falls to be considered as a matter of weight and the difficulties confronting the appellant in relation to a challenge to discretionary judgment relying upon matters of weight are well known: see House v The King (1936) 55 CLR 499. In Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194, Gleeson CJ, Gaudron and Hayne JJ said at 203 – 205:
14 Ordinarily, if there has been no further evidence admitted and if there has been no relevant change in the law, a court or tribunal entertaining an appeal by way of rehearing can exercise its appellate powers only if satisfied that there was error on the part of the primary decision-maker. That is because statutory provisions conferring appellate powers, even in the case of an appeal by way of rehearing, are construed on the basis that, unless there is something to indicate otherwise, the power is to be exercised for the correction of error.
…
19“Discretion” is a notion that “signifies a number of different legal concepts”. In general terms, it refers to a decision-making process in which “no one [consideration] and no combination of [considerations] is necessarily determinative of the result”. Rather, the decision-maker is allowed some latitude as to the choice of the decision to be made.
…
21 Because a decision-maker charged with the making of a discretionary decision has some latitude as to the decision to be made, the correctness of the decision can only be challenged by showing error in the decision-making process.
(Footnotes omitted)
We are not satisfied that, commensurate with the principles arising from House v The King, the primary judge acted upon the wrong principle, took into account extraneous or irrelevant matters or did not take into account some material consideration. Earlier statements by the High Court have emphasised the very wide discretion inherent in s 79 (Mallet v Mallet (1984) 156 CLR 605; Norbis v Norbis (1986) 161 CLR 513).
His Honour carefully assessed the evidence of both the parties, gave it appropriate weight and also took account of evidence of a number of other witnesses called for each party, none of whom were cross-examined. There was ample evidence in our view for his Honour to come to the conclusion that he did in relation to the contributions of the parties. His Honour rejected the breadth of the appellant’s evidence, indicating that she had effectively overstated her contributions to the relationship, but he also took account, holistically, of the contributions that she had made to the nine year relationship. Accordingly we find no error in the primary judge’s assessment of contribution.
Section 90SF(3) adjustment – grounds 3, 4 and 5
Ground 3 asserted that the primary judge “erred in determining that there was a concern about the appellant not being as limited in her activities including her capacity for employment as described in the evidence when there was no factual or evidential basis for that determination”.
Ground 4 asserted that the primary judge:
… erred in determining what if any adjustment to the contribution assessment, as made by him, should be made, pursuant to section 90SF(3) of the Family Law Act, by not having regard to the:
(a) financial circumstances of the appellant when there was evidence of such circumstances;
(b) the appellant’s current and future needs when there was clear evidence of such needs; and
(c) the extent to which any section 90SF(3) adjustment may enable the [appellant] to meet her current and future needs given her financial circumstances.
Ground 5 asserts that the primary judge:
… erred in not prior to making the orders that he did having regard to the:
(a) financial circumstances of the appellant when there was evidence of such circumstances;
(b) the appellant’s current and future needs when there was clear evidence of such needs; and
(c) the extent to which any section 90SF(3) adjustment may enable the [appellant] to met (sic) her current and future needs given her financial circumstances.
Ground 3 was essentially a challenge to his Honour’s finding at [102] that:
I am satisfied that the [appellant] does suffer from a number of medical conditions, as well as, unfortunately, in more recent times, some psychological concerns, which affect her capacity to continue in employment. It is clear, however, that she has, perhaps, over and above what was reasonable to expect of her, continued to seek employment and to work in various capacities, because that is an indication of her determination to be involved in all of the circumstances of her life.
His Honour ultimately determined that there was nothing to suggest the appellant would not be able to work part time or in a less arduous position. This finding is challenged. His Honour made a number of findings about the appellant’s health which, as he identified, was a significant issue in the case. At [22] his Honour set out various conditions from which she was said to suffer. At [113] to [116] the primary judge found the evidence given by the appellant with regard to the seriousness of her medical conditions was inconsistent with the degree to which her medical issues restricted her life (with regard to recreation and an ability to work). His Honour considered that the evidence of the appellant purchasing motorcycle riding gear and engaging in that activity, as well as attending a boating holiday, weakened the medical evidence suggesting that she was in fact severely debilitated. In [107] to [108] his Honour was troubled by the fact that the appellant had not taken any significant steps to address her supposedly significant medical needs even though she had access to the funds to do so. Nevertheless, at [195] his Honour accepted the appellant had serious health concerns and acknowledged her ability to engage in full time employment was limited.
At [196] his Honour found that:
There were also concerns expressed that the effects upon the [appellant], dependent upon whether her difficulties gave rise to a best case, worst case, or most likely somewhere in between, would be determinative of what work the [appellant] might be able to engage in, as well as its effects upon her quality of life. It is impossible, with any degree of certainty, to assess what the future might hold for the [appellant]. It is clear however that whilst the [appellant] has until recent times engaged in various forms of work, it is becoming more and more difficult for her to do so. I do not accept the suggestion that was made on the part of the respondent to the effect that the [appellant] was simply not working at this time, for the purposes of furthering her claim, and that there was a real expectation that she would return to full-time work once the matter was determined. The weight of evidence available in relation to the [appellant’s] health cannot be ignored in that regard.
His Honour went on then to say at [197]:
Unfortunately, like so many other aspects of this case, there are however other considerations to be looked at. They include the [appellant’s] obvious desire and determination to be involved in the workforce, as well as her obvious stoicism in respect of her difficulties and yet continued involvement in the workforce. Further, there is the concern that I touched upon earlier in the reasons with regard to her engaging in activities which would not be expected if the full impact of her difficulties was felt by her. …
All of those findings were open to his Honour. His Honour was in the position of having heard the evidence of the appellant and seeing her cross-examined. It is clear that he was aware of her medical conditions and the constraints upon her working in a full-time capacity, and in particular his Honour took into account the evidence of Ms C at [37] to [42]. We cannot agree with the contention of the appellant that the primary judge did not deal with the medical evidence in the reasons for judgment. Rather, his Honour dealt with it quite comprehensively, in particular at [15] to [42] of the reasons for judgment. In our view the findings of the primary judge on this issue were well open to his Honour on the basis of the medical evidence and the evidence given by the appellant and we find no error in his finding as to the appellant’s capacity for employment.
Grounds 4 and 5 should be read together to assert that inadequate weight was given to the s 90SF(3) factors which finds expression as a manifestation of an unjust and inequitable outcome for the appellant when the proposed orders are considered. In so far as the assessment of matters under s 90SF(3) is concerned his Honour noted sub-sections (a), (b), (f), (g), (j), (k), (m) and (n) were of particular relevance. His Honour observed at [195] the serious health concerns of the appellant and her capacity to engage in full-time employment, as well as the effects upon her quality of life at [196]. His Honour compared the difference between the financial circumstances of the appellant and the respondent at [198] and endeavoured to do justice in relation to a standard of living that in all the circumstances would be reasonable for both parties under s 90SF(3)(g) at [199]. His Honour said at [200]:
The [appellant] is of course entitled to the opportunity to maintain a reasonable standard of living. But that consideration must be looked at and balanced against the various other matters already looked at pursuant to section 90SM(4) and those other factors to be taken into account pursuant to section 90SF(3). Quite simply, when any pool is divided between the parties, each of course must receive less than what was available for the two. No matter what might be the ultimate outcome, I am satisfied that each party will be able to maintain a reasonable standard of living following the end of this relationship.
His Honour dealt with s 90SF(3)(k) – the duration of the de facto relationship and the extent to which it affected the earning capacity of the party whose maintenance is under consideration – noting that the relationship had affected the appellant’s life as it previously was and changed her expectations and that there was a “consideration there in respect of the distribution to be effected between the [appellant] and the respondent” (at [207]). His Honour, however, also found at [208] that there were factors to be weighed in favour of the respondent. In particular, these factors included the fact that the respondent had since married and consequently “has responsibilities now in respect of providing for the support of his wife and step-daughter. Additionally, he continues to provide support for his son Z, as well as at least notionally, some support for his older children.”
In essence the adjustment of 7.5 per cent for the matters arising under s 90SF(3) was based upon the primary judge’s assessment on the totality of the evidence that the appellant was not as limited in her activities as set out by the evidence of her medical professionals, and that there was weight to be placed on the respondent’s future responsibilities as well. These matters again amount to a challenge to the weight given by his Honour to these factors and we refer to what we have already said about the difficulties facing the appellant in relation to such a challenge. We are not satisfied that his Honour did err about the appellant’s health concerns and ability to engage in employment and we do not find any error on his part. Accordingly the assessment of matters under s 90SF(3) in our view cannot be described as being manifestly unjust absent any demonstrated error and we find no error arising from this challenge.
To the extent that the appellant argues that the effect of the orders was not just and equitable we observe that at [213] and [215] his Honour considered the effect of his orders. However, as we indicated at the outset of the appeal, a failure by his Honour to expressly consider what each party was to be receiving led him to miscalculate what was due to the appellant and the appeal must succeed on the ground that the orders were not just and equitable, although for reasons other than those advanced by the appellant.
Accordingly we have found merit in three of the grounds of appeal advanced by the appellant, those being:
· Those relating to the justice and equity of the orders with the effect that the result was “plainly wrong” given that his Honour’s orders did not reflect the proportions in which his Honour found the assets should be distributed (grounds 6 and 8);
· That the primary judge failed to properly assess how the appellant had spent the money from the sale proceeds of Property A, and failed to consider whether they should be added back or not either in part or in whole (ground 1); and
· That the primary judge failed to deal with, or provide reasons for why he did not deal with, the application for spousal maintenance which was before the court (ground 7).
Re-exercise of discretion or remitter
As we explained at the outset both counsel indicated that if the appeal was successful in relation to the issue of spousal maintenance then it must be remitted, at least for that purpose, because the circumstances of each of the parties have changed.
We have found error and it will be necessary for the spousal maintenance issue to be remitted for rehearing. However, spousal maintenance is a separate matter and it does not necessarily follow that the property settlement aspect of the appeal must also be remitted for rehearing if this court can otherwise re-exercise discretion. In our view it is appropriate for us to do so. The two areas in which we have found error relate to miscalculation of the payment that ought to have been made to the appellant and the question of what amount of the proceeds of sale of Property A should added back to the asset pool, if any.
There was no dispute in relation to the error by his Honour in the amount that should have been provided to the appellant. Similarly, there is little controversy about how the appellant spent the money from Property A, the issue being whether or not, and if so to what extent, the court should add back those proceeds that it is accepted have been expended.
There being no factual dispute about these matters we are in a position to re‑exercise and propose to do so. We are conscious that the parties have been involved in litigation for some time and although it might be necessary for them to have further litigation over spousal maintenance that will at least be a discrete issue.
The only issue in relation to the asset pool is the treatment of the proceeds of Property A. At [95] to [111] we set out the evidence and have set out the manner in which the court’s discretion is to be exercised in a matter where one party has expended funds unilaterally from an asset which would otherwise have been brought into account in the asset pool. The appellant has identified her expenses paid from those funds. We are satisfied from the evidence of the appellant’s father that the repayment to him of $50,000 is largely represented by the sum of $44,000 provided to the appellant for living expenses between separation in 2012 and the hearing in 2015, and that he has paid substantially more than this in legal expenses for the appellant. The medical evidence is that the appellant is certainly suffering from medical conditions and ill health and her application for interim spousal maintenance was unsuccessful. There was no serious challenge to her requirement for living expenses or that her father had advanced them, and in all the circumstances in our view it is not appropriate for the sum of $50,000 paid to her father as reimbursement for that purpose, to be added back.
Similarly, the appellant claims another $39,273.99 for living expenses. The same facts pertain and again she was not seriously challenged about her need for these payments. We do not consider it appropriate to add back the $39,273.99 the appellant set out for living expenses.
However, in our view, the purchase of household and electronic goods and entertainment falls into a different category. No evidence establishes that these were necessitated by the appellant and in our view there is no reason not to add back $11,447.94 for household and electronic goods, and $4,902.39 for entertainment, totalling $16,350.33.
Thus, the net assets of the parties are as follows:
Assets
Value
Property C $385,000 Property D $580,000 Property B $800,000 Proceeds of sale – Property A - added back in part $16,350.33 Motor vehicle 1 $9,100 Motor vehicle 2 $19,500 Motorbike 1 $8,075 Motor vehicle 3 $15,555 Bank accounts as at 06/03/2015
CPB [1] $55
CPB [2] $1,600
ECU $1,200$2,855 Bank accounts as at 06/03/2015
CPB [1] $8,746
CPB [3] (-$23,068)$ (14,322) Chattels – Property M $15,150 Chattels – Property D $17,705 Chattels – Property L $26,855 Pets $14,000 SS accumulation a/c $119,762 SW Pension $116,278 SW accumulation a/c $101,797 Total $2,233,660.33
Liabilities Credit Union ($444,550) Motor vehicle 3 - lease ($1,744) Personal tax ($2,192) Total ($448,486)
Net value $1,785,174.33
Superannuation Scheme pension $1,614,458
In relation to contributions we have found no error in his Honour’s approach to contributions and adopt the findings that he made. We have discussed the evidence at some length and do not propose to do so again. Suffice it to say that exercising an independent discretion as we are required to do, we are satisfied that the findings as to the initial contributions and the contributions of the parties throughout the relationship are satisfied by an assessment compatible with his Honour’s in relation to the assets, save for the Superannuation Scheme to 85 per cent to the respondent and 15 per cent to the appellant. We also consider that because of the nature of the Superannuation Scheme and the more limited contributions that the appellant has made to it commensurate with his Honour’s findings, we also are satisfied that a 15 per cent adjustment of the splittable payment is an appropriate adjustment to be made.
In relation to the matters under s 90SF(3) we find ourselves in the same position as his Honour in relation to the evidence, which again was largely unchallenged, and we would also in the exercise of independent discretion come to the same conclusion as his Honour that a 7.5 percentage adjustment for the matters under s 90SF(3) is appropriate.
This will mean that as his Honour also found that the appellant is entitled to 22.5 per cent of the assets, excluding the Superannuation Scheme, and the respondent to 77.5 per cent. The appellant would accordingly retain the following assets:
Assets
Value
Proceeds of sale – Property A $16,350.33 Motor vehicle 1 $9,100 Bank accounts as at 06/03/2015
CPB [1] $55
CPB [2] $1,600
ECU $1,200$2,855 Chattels – Property L $26,855 SS accumulation a/c $119,762 Total $174,922.33
The total net asset pool, excluding the Superannuation Scheme is $1,785,174.33 – 22.5 per cent of that is $401,664.22. This is the sum to which the appellant is entitled; however she presently has assets of $174,922.33 which will result in the payment to her by the respondent of $226,741.89, which we would round to $226,742.
Having regard to all the evidence, this result in our view provides a just and equitable outcome.
Accordingly the appeal should be allowed and order 2 of the orders made in the Federal Circuit Court on 13 October 2015 should be set aside and in lieu thereof it should be ordered that the respondent pay to the appellant within 45 days of the date of these orders the sum of $226,742.
The orders in paragraphs 1 and 3 to 19 will remain in force and there will be a further order that the application for spousal maintenance on the part of the appellant be remitted to the Federal Circuit Court for rehearing. If the respondent has already paid to the appellant the sum of $95,591.20, or any part thereof, pursuant to his Honour’s orders then that sum should be deducted from the sum of $226,742 now required to be paid.
Costs
Given the manner in which the initial error was identified, both parties sought cost certificates for the appeal and rehearing. In our view it is an appropriate case in which to order costs certificates for the appeal. As the only matter to be remitted is the spousal maintenance application and there are many factors to now be considered, including changed circumstances which include the greater sum being paid to the appellant, we would not be prepared to order a certificate for any maintenance rehearing.
I certify that the preceding one hundred and fifty-four (154) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 13 July 2017.
Associate:
Date: 13 July 2017
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