Van der Linden & Kordell
[2010] FamCAFC 157
•23 August 2010
FAMILY COURT OF AUSTRALIA
| VAN DER LINDEN & KORDELL | [2010] FamCAFC 157 |
| FAMILY LAW - APPEAL – PROPERTY SETTLEMENT – where previous final property settlement orders were successfully appealed by the husband and the matter was remitted for rehearing – where the wife died between the making of the first final orders and the determination of the first appeal – where the proceedings were conducted between the husband and the wife’s estate – whether the trial judge erred in the assessment of contributions given the husband’s initial contributions and the significant contributions made by the husband since the wife’s death – whether the trial judge erred in making an adjustment of only 10 per cent in favour of the husband on account of s 75(2) factors – discussion of the effect of the death of a party to a marriage on the matters to be considered in s 75(2) – whether the trial judge erred in failing to add back to the asset pool the value of the wife’s superannuation entitlements which were received by the wife’s daughter and taking this into account under s 75(2)(o) – whether the trial judge erred in adopting a global rather than an asset by asset approach – no merit in any ground of appeal – appeal dismissed. FAMILY LAW - APPEAL – COSTS – where the appeal was wholly unsuccessful – appellant to pay the respondent’s costs. |
| Family Law Act 1975 (Cth) s 75(2) & 79 |
| Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 |
| APPELLANT: | Mr Van der Linden |
| RESPONDENT: | Ms Kordell (as Executor of the Estate of the late Mrs Van der Linden) |
| FILE NUMBER: | PAF | 3975 | of | 2003 |
| APPEAL NUMBER: | EA | 121 | of | 2008 |
| DATE DELIVERED: | 23 August 2010 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Coleman, O’Ryan and Strickland JJ |
| HEARING DATE: | 3 September 2009 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 24 September 2008 |
| LOWER COURT MNC: | [2008] FamCA 1042 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Gould |
| SOLICITOR FOR THE APPELLANT: | Moira Ryan Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Lloyd with Mr Fermanis |
| SOLICITOR FOR THE RESPONDENT: | Caldwell Martin Cox Solicitors |
Orders
The appeal be dismissed.
The appellant pay the respondent’s costs of and incidental to this appeal as agreed and in default of agreement as assessed.
IT IS NOTED that publication of this judgment under the pseudonym Van der Linden & Kordell is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 121 of 2008
File Number: PAF 3975 of 2003
| Mr Van der Linden |
Appellant
And
| Ms Kordell (as Executor of the Estate of the late Mrs Van der Linden) |
Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed on 22 October 2008 Mr Van der Linden (“the husband”) appeals against property settlement orders made by Stevenson J on 24 September 2008.
Final property settlement orders had previously been made between the husband and Mrs Van der Linden (“the wife”) on 13 October 2004. The husband successfully appealed those orders to the Full Court and the matter was ultimately remitted for rehearing.
The wife died in February 2005, and thus the proceedings before Stevenson J were conducted between the husband and the executor of the wife’s Estate, the wife’s sister Ms Kordell (“Ms Kordell”).
The effect of Stevenson J’s orders made on 24 September 2008 was that the net pool of superannuation and non-superannuation assets was to be divided 70 per cent/ 30 per cent in favour of the husband. This division included a 10 per cent adjustment in favour of the husband on account of s 75(2) factors. Her Honour made orders for the sale of the former matrimonial home and for the proceeds to be divided 51 per cent to the husband and 49 per cent to the wife’s Estate (to give effect to the 70 per cent/30 per cent division).
Background
The husband was born in December 1956 and was aged 51 years at the time of trial.
The wife was born in December 1953. She died in February 2005 at the age of 52.
The wife had a daughter from a previous relationship, R Kordell (“R”), who was born in November 1982.
There was some dispute between the husband and wife as to when they commenced cohabitation. In any event they married in January 1992. The wife’s daughter R lived with the husband and wife throughout their relationship.
There are two children of the marriage, C born in March 1992 (16 years at the time of trial) and J born in July 1993 (15 years at the time of trial).
The wife did not engage in paid employment between January 1992 and May 1997, at which time she resumed employment and worked full time until 31 August 2004.
The wife was first diagnosed with cancer in July 2001 and her illness recurred in August 2004.
The parties separated under the same roof on 26 August 2002 and continued to live in the former matrimonial home until the wife moved into separate accommodation shortly before her death.
The wife commenced proceedings for parenting and property settlement orders in November 2003.
The first trial with respect to property settlement was held in October 2004 and final orders were made by Purdy J on 13 October 2004. It was common ground at trial that the wife was at that time terminally ill. The husband appealed the orders of 13 October 2004.
Before her death, the wife arranged for her daughter R to receive the whole of her superannuation entitlements.
By a will dated 17 December 2004 the wife appointed her sister, Ms Kordell, as executor of her will and trustee of her Estate. The wife bequeathed her estate in equal shares to her three children, with each child to take their share on the attainment of 25 years. There was also provision for the Trustee to apply any part of the income and capital of the estate for the maintenance, education or advancement in life of any of the wife’s children prior to their attainment of 25 years.
The wife died in February 2005.
On 8 June 2005 the Full Court substituted Ms Kordell for the wife in the proceedings.
On 6 September 2005 the Full Court allowed the husband’s appeal and sought written submissions as to whether the Court should re-exercise the discretion or remit the matter.
In late 2005 R received a payment of the wife’s superannuation entitlements in the sum of $71,433.
On 4 August 2006 the Full Court set aside the orders of Purdy J and remitted the matter for rehearing.
On 9 August 2006 the husband commenced proceedings in the Supreme Court of New South Wales pursuant to the Family Provision Act 1982 (NSW) on behalf of the two children C and J.
On 17 June 2008 Stevenson J dismissed an application by Ms Kordell seeking that the husband transfer the Supreme Court proceedings to the Family Court or, in the alternative, that the Family Court proceedings be transferred to the Supreme Court.
The trial with respect to property settlement issues was heard by Stevenson J on 23 June 2008. Her Honour made final orders on 24 September 2008.
Reasons for judgment of the trial judge
Stevenson J commenced her judgment by outlining the history of the proceedings and the background of the husband and wife’s relationship, before recording the evidence that was before her. The husband and Ms Kordell were both subject to cross examination. A transcript of the wife’s oral evidence given at the first trial before Purdy J was tendered by consent.
Her Honour then outlined the approach that is to be taken pursuant to s 79(8) of the Family Law Act 1975 (Cth) (“the Act”) where a party dies before the completion of proceedings. Her Honour recorded that s 79(4)(g) was of no relevance in these proceedings as the children only had one surviving parent. Her Honour said that, similarly, a number of factors in s 75(2) were not of relevance where one of the parties to the marriage has died.
Addressing s 79(8), her Honour was satisfied in this case that an order for property settlement would have been made had the wife not died, and that it was still appropriate to make an order with respect to property.
Her Honour then recorded the assets, liabilities and financial resources of the husband and wife.
There was a dispute at trial as to whether the superannuation entitlements received by R and the legal fees paid by the husband and the Estate should be added back to the pool. Her Honour ultimately declined to add back to the pool the sum of $71,433, representing the wife’s superannuation entitlements which had been paid to her daughter R. Her Honour found that the wife was aware of her options with respect to her superannuation, and that she chose to assist R in the knowledge that her other two children would have the ongoing financial support of their father. Her Honour determined that the superannuation never vested in the wife and never formed part of her estate. Her Honour indicated she would take the payment into account under s 75(2), however.
Her Honour also determined not to add back the legal fees of either party.
The husband had conceded in the earlier trial that an amount of $14,246, which he had given his sister following separation, was to be added back, and thus her Honour did this.
Addressing the liabilities, her Honour concluded that there was insufficient evidence to find that the Estate had a debt for legal fees in the amount that had been claimed. Her Honour indicated that she would take into account pursuant to s 75(2)(o) that the Estate had unpaid legal fees in a sum yet to be quantified. Given this conclusion, her Honour found that there were no liabilities to be taken into account, and the asset pool was therefore $994,654.
Next, her Honour turned to consider the contributions of the husband and wife.
Her Honour determined to adopt a global approach to the husband and wife’s contributions rather than an asset by asset approach, as had been proposed on behalf of the husband (at paragraph 56). Her Honour explained that she decided the global approach was appropriate for three reasons. Firstly, as the husband and wife had separated under the one roof, they continued to make contributions to their property and the parenting of the children after separation. Secondly, the evidence did not permit quantification of their contributions to their superannuation funds outside of the period of their cohabitation and separation under the one roof. Thirdly, the husband had given evidence that he and the wife had reconciled for a “few months” in 2003.
Her Honour concluded that the husband and wife’s contributions were equal as at the date of separation and the date of the first trial. However, her Honour determined that the contributions of the husband since the wife’s death warranted a finding of 60 per cent in the husband’s favour. Her Honour commented, however, that the contributions of the husband since the wife’s death “although significant, must not be permitted to eclipse the substantial contributions made by [the wife] during her life.” The division of 60 per cent/40 per cent in the husband’s favour was to apply to both superannuation and non-superannuation assets. Her Honour concluded that the superannuation entitlements of both the husband and the wife had accrued to a large extent during their cohabitation.
Stevenson J then addressed the relevant s 75(2) factors, which her Honour determined to be paragraphs (a), (b), (c), (e), (f) and (o). The matters her Honour took into account in consideration of these factors included the health problems suffered by the husband, the husband’s income and earning capacity, the fact the husband now has the sole responsibility for the care of the children of the marriage and the superannuation entitlements of the husband.
In the discussion of s 75(2)(o), her Honour had regard to the superannuation benefit received by the wife’s daughter R in 2005. Her Honour found that it was the wife’s right to elect for R to solely receive the payment. Her Honour noted the husband’s concerns that there may be difficulties with the wife’s sister Ms Kordell in securing appropriate provision from the Estate for the children C and J. Her Honour, however, was confident that Ms Kordell would honour the wife’s wishes, and that the children would take their shares in the Estate at the time deemed appropriate by their mother.
Her Honour concluded that an adjustment of 10 per cent in the husband’s favour was warranted on account of the relevant s 75(2) factors.
Her Honour thus concluded that the net pool of superannuation and non-superannuation assets should be divided 70 per cent in favour of the husband. In discussing how this division was to be effected, it was common ground that a splitting order could not be made with respect to the husband’s superannuation and that he would retain that. Thus, her Honour determined that the former matrimonial home would be sold, and, taking account of assets retained by the husband and an amount to be added back to the husband’s credit, the proceeds of the sale were to be divided 51 per cent/49 per cent in favour of the husband.
After further considering the effect of her Honour’s determination as to the appropriate division of the asset pool, her Honour recorded she was satisfied that the outcome was proper, just and equitable for both parties.
Her Honour then turned to consider an application by the husband for costs arising from the dismissal of Ms Kordell’s application on 17 June 2008. The order for costs is not the subject of this appeal.
Orders of 24 September 2008
Stevenson J made the following final orders as to property settlement:
(1) That the parties shall forthwith join in the sale and do all such acts and things and shall execute all deeds, documents and instruments as may be necessary to list for sale and sell the property situate at and known as [Y property] in the State of New South Wales (being the whole of the land comprised in Certificate of Title Folio Identifier […] (‘the property’) including preparing the said home for sale, which cost shall be borne equally by the parties, for a price and with an agent to be agreed upon between the parties or, in default of such agreement as to the selling price or agent for more than 14 days, at a price and with an agent appointed by the President for the time being of the Australian Property Institute Inc. (NSW Division) whose decision shall be final and binding upon both parties.
(2) In the event that the property has not sold within three (3) months of being listed for sale by private treaty in accordance with order (1) above, the parties shall do all such acts and things and sign all such deeds, documents and instruments as may be necessary to cause the said property to be sold by the same agent by way of public auction on the following terms:
(a)that such auction take place within two (2) months from the date of placing the property for sale by public auction or as soon as practicable thereafter;
(b)that the reserve price for such auction be as agreed between the parties or failing agreement for more than seven days, as determined by the selling agent;
(c)that the parties pay all auction expenses as requested by the selling agent as and when they fall due;
(d)that the parties shall do all such acts and things as may be necessary or recommended by the selling agent to properly present the property for sale and to make same available for inspection by prospective purchasers;
(e)that either party be at liberty to bid for the purchase of the property at auction;
(f)that the parties shall attend the auction and if necessary negotiate with the highest bidder at auction if the reserve price is not reached.
(3) Upon completion of the sale of the property in accordance with orders (1) and (2) above, the parties shall distribute the proceeds of sale, in the following order and priority:
(a)in payment of legal costs and real estate agent’s commission and expenses
(b)in payment of any fees due for the nomination of a valuer and fixing of a price as hereinbefore provided and in payment of valuation fees, if any
(c)in payment of 51% of the balance then remaining to the husband and in payment of the balance of 49% to the executor of the estate of the late wife.
(4) That the executor of the estate of the late wife pay to the husband an amount of $3,000, from her share of the proceeds of sale of the property on account of his costs of the Application In A Case filed on 29 April 2008.
The husband appeals paragraph 3 of the orders.
Grounds of Appeal
The grounds of appeal relied upon by the husband in his Notice of Appeal filed on 22 October 2008 are as follows:
1. That the trial judge erred in the exercise of her discretion in finding that contributions should be found as to 60% to the husband and as to 40% to the wife in circumstances where Her Honour found that the husband’s “initial contributions substantially outweighed those of [the wife]” and where the husband has made further significant contribution since the death of the wife.
2. That the trial judge erred in making an adjustment in favour of the husband pursuant to s.75(2) as to 10% in circumstances where the wife had died, and the husband has the need to support and accommodate himself and the two children of the marriage.
3. That the trial judge erred in failing to “add back” as a notional asset the wife’s superannuation paid to her daughter by a previous marriage prior to trial, the sum of $71,433.
4. That the trial judge erred in taking into account the disbursement of the wife’s superannuation as a matter pursuant to s.75(2)(o).
5. That the trial judge erred in adopting a “global” approach rather than an “asset by asset” approach given the facts of the matter.
Principles applicable to an appeal from a discretionary judgment
This is an appeal against a discretionary judgment, and the principles applicable to an appeal from such a judgment are well settled.
The limitation of an appellate court hearing an appeal from a discretionary judgment was discussed by Kitto J in Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 where his Honour said at 627:
the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong.
In House v The King (1936) 55 CLR 499, Dixon, Evatt and McTiernan JJ said at 504:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.
In Gronow v Gronow (1979) 144 CLR 513 Stephen J stated at 519:
The constant emphasis of the cases is that before reversal an appellate court must be well satisfied that the primary judge was plainly wrong, his decision being no proper exercise of his judicial discretion. While authority teaches that error in the proper weight to be given to particular matters may justify reversal on appeal, it is also well established that it is never enough that an appellate court, left to itself, would have arrived at a different conclusion. When no error of law or mistake of fact is present, to arrive at a different conclusion which does not of itself justify reversal can be due to little else but a difference of view as to weight: it follows that disagreement only on matters of weight by no means necessarily justifies a reversal of the trial judge. Because of this and because the assessment of weight is particularly liable to be affected by seeing and hearing the parties, which only the trial judge can do, an appellate court should be slow to overturn a primary judge's discretionary decision on grounds which only involve conflicting assessments of matters of weight.
Similarly, in Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343 at 345, Asquith LJ said:
It is, of course, not enough for the wife to establish that this court might, or would, have made a different order. We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable. It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.
Discussion
Ground 1 – assessment of contributions
This ground is essentially a challenge to the weight given by the trial judge to the parties’ respective contributions.
In considering this ground it is necessary to look at the trial judge’s discussion of and findings with respect to the parties’ contributions in more detail.
With respect to initial contributions, the trial judge recognised (at paragraph 46) that the husband’s initial contributions substantially outweighed those of the wife, finding that the husband had available liquid funds of between $61,000 and $76,000 at the commencement of cohabitation. The wife had approximately $5,000 in equity in a property she owned.
The trial judge found, however, that the early contributions of the wife, through an inheritance and a superannuation entitlement received within the first year and a half of cohabitation, matched the husband’s initial contributions.
The trial judge found both parties made substantial financial contributions to the reduction of the mortgage of the wife’s house and that the proceeds of sale of this property represented a significant component of the purchase price of the former matrimonial home.
The husband worked full time throughout the relationship. The wife worked from cohabitation until 1992 and then from 1997 until separation in 2002. Her Honour found both parties used their earnings for the benefit of the family.
The trial judge acknowledged that the husband contributed to the financial support and parenting of the wife’s daughter from a previous relationship and that he has had to provide the sole support for the children of the marriage since the wife’s death.
The husband gave evidence that his savings as at the date of the hearing had accrued since separation. The trial judge found that for practically all of the period between separation and the time of the wife’s death the wife was in paid employment and that the husband and wife remained living in the former matrimonial home. Her Honour thus determined that the wife had made an indirect contribution to the husband’s savings.
With respect to the parties’ respective superannuation interests, the trial judge recorded that some of the husband’s superannuation had accrued prior to the husband and wife’s cohabitation, that at the time of the first trial the husband’s superannuation was valued at approximately $165,000 and that it had increased in value by approximately $140,000 in the four years preceding the trial.
The trial judge also had regard to the fact that the wife had a superannuation benefit at the commencement of cohabitation, but that there was no evidence as to its value, and that some of the wife’s superannuation entitlement would also have accrued between separation and when she stopped working prior to her death. Her Honour again noted that the husband and wife had remained living in the one home at this time. Her Honour was not able on the evidence, however, to quantify the pre-cohabitation and post separation elements of the wife’s superannuation.
To repeat, the trial judge concluded that the husband and wife’s contributions were equal as at the date of separation and as at the first trial. In reaching this conclusion, her Honour said she was mindful that the parties had occupied the same home for two and a half years following their separation, and that for most of the time they both worked, cared for their children and maintained the property. Her Honour, to repeat, found that the husband’s initial contributions were matched by the lump sum contributions of the wife in the first 18 months of their relationship.
The trial judge recognised that the husband had made contributions since the wife’s death, namely that he had accrued savings, solely cared for the children and contributed to his superannuation fund which had increased in value. He was also solely responsible for the maintenance of the former matrimonial home.
Her Honour concluded that the husband’s contributions since the wife’s death warranted a finding of 60 per cent overall in his favour. However, while her Honour considered that the contributions of the husband following the wife’s death were significant, she cautioned that they “must not be permitted to eclipse the substantial contributions made by [the wife] during her life.”
Before us, it was advanced on behalf of the husband that the trial judge had undervalued his contributions. In particular, it was submitted that the husband, during the 11 years the parties cohabitated, provided financial, emotional and other support for the wife’s child R and that the trial judge erred in failing to give sufficient weight to this contribution.
The husband also submitted that the trial judge undervalued his post separation contributions by assessing these at 10 per cent. The husband highlighted that following the wife’s death he had solely cared for the children of the marriage (a period of approximately three and a half years to the time of the trial judge’s orders). The husband also relied on the significant increase in his superannuation since the time of the first trial, to which he says the wife (or her Estate) had made no contribution.
Counsel for the respondent conceded in his written submissions that the husband helped support the wife’s daughter R during the marriage. The trial judge recognised and made reference to this support at paragraph 51 of the reasons. Her Honour also noted that she was not aware that R’s father paid any child support. This is supported by the evidence of the wife in her affidavit filed on 2 August 2004 where she outlined that she had received no child support from the child’s father.
With respect to the husband’s post separation contributions, her Honour was also mindful of the fact that the husband had the sole responsibility for the care of the two children of the marriage following the wife’s death (at paragraph 52). Her Honour also took into account the substantial increase in the value of the husband’s superannuation entitlement since separation and the first trial.
We observe that the counsel for the husband submitted that the wife did not make any contribution to the increase in the husband’s superannuation entitlement after separation and after the first trial. However, we suggest that that is not entirely correct. We understand that the increase comprised employer contributions and interest, and given that there is no issue that the wife contributed at least indirectly to the superannuation prior to separation she can be said to have indirectly contributed to the superannuation interest that accumulated after separation. (See the discussion in Morris and Morris (1982) FLC 91-271 per Full Court (Evatt CJ with whom Ellis and Gee JJ agreed) about employer contributions to superannuation.)
In any event the assessment of the parties’ contributions was a discretionary exercise. As such the principles outlined above in decisions such as House v The King and Gronow v Gronow are relevant. In order to warrant appellate intervention, it must be established that there has been an error in the exercise of this discretion. It is not enough that another judge may have come to a different conclusion.
In Norbis v Norbis (1986) 161 CLR 513 Brennan J said at 540:
The “generous ambit within which reasonable disagreement is possible” is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.
More recently in Mims & Green and Green (2008) FLC 93-359 the Full Court (Faulks DCJ, Kay and Coleman JJ) said:
119. As Brennan J explained in Norbis (supra), the ‘range’ in this case was reasonably wide. Others may have reached a conclusion more favourable to the husband than did the trial Judge. Others may have been less generously disposed. This does not mean that the trial Judge was in error. Nothing to which we have been referred persuades us that the trial Judge failed to either properly assess the husband’s initial contribution or to give him appropriate credit for it. Her Honour’s conclusion was ‘within the range’.
We are not satisfied in this case that the trial judge erred in her identification of the parties’ contributions or that her Honour’s assessment of the contributions was outside of the reasonable range of the “generous ambit” of her Honour’s discretion such as to warrant appellate intervention. We consider that her Honour took all relevant matters into consideration, including the parties’ contributions at the commencement of and early stages of cohabitation, the husband’s support of the wife’s child during their relationship and the husband’s significant post separation contributions through his care of the children and the increase in the value of his superannuation entitlements. We thus do not consider that there is any merit in this ground of appeal.
Ground 2 – s 75(2) adjustment
The husband also challenges the trial judge’s adjustment of 10 per cent in his favour on account of s 75(2) factors.
Again, it is necessary to look at the trial judge’s findings with respect to the various s 75(2) factors in more detail. In this regard, her Honour firstly took into account under paragraph (a) the health problems suffered by the husband, namely that he suffers from type 2 diabetes and has undergone surgery for the removal of a kidney and adrenal gland.
Under paragraph (b), her Honour recorded that the husband was employed full time as an engineer earning $2,778 gross per week. Her Honour had regard to evidence from the husband’s doctors as to the husband’s health and the possible impact on his earning capacity. In this respect, her Honour found that the husband’s doctor did not predict an impact on the husband’s capacity to engage in full time employment other than at some unspecified time in the future. Her Honour recorded that the husband’s income was such that he had been able to accumulate savings of approximately $56,000 since separation and had also been able to pay his legal fees of around $80,000. Her Honour thus concluded the husband was in a “comfortable” financial position. The trial judge also took into account the substantial legal fees the Estate is liable to pay.
Turning to paragraph (c) her Honour recorded the husband had the sole responsibility for the two children of the marriage, but that given the ages of the children, that responsibility was for a relatively short duration.
In relation to paragraph (e) the trial judge recorded that both the husband and Ms Kordell have responsibility for the children. Her Honour noted that Ms Kordell had a power of advancement under the wife’s will to make provision for the maintenance, education and advancement in life of the two children.
Under paragraph (f) her Honour took into account the husband’s substantial superannuation benefit and the circumstance that it is likely to continue to grow in the future. Her Honour thus found that the husband could look forward to financial security in his retirement.
Finally, under paragraph (o), her Honour took into account the approximately $71,000 the wife’s daughter R received in 2005 by way of the wife’s superannuation entitlements, noting that neither the husband nor the wife’s other children received any benefit from this fund. The trial judge also had regard to the provision made for the parties’ two children in the wife’s will such that they are to receive two thirds of her estate and that in the meantime the Trustee of the Estate, Ms Kordell, is empowered to provide financial support for them.
To repeat, her Honour concluded that an adjustment in favour of the husband of 10 per cent was warranted on account of the above considerations.
In support of his contention that an adjustment of 10 per cent was inadequate, it was submitted on behalf of the husband that the Estate has no needs whereas the husband has the significant and ongoing responsibility to support and accommodate himself and the two children. It was submitted that the needs of a surviving spouse have a “decisive impact” and that an adjustment of 10 per cent was inadequate, especially given that the dollar value of the adjustment is only approximately $99,000. Counsel contended that the pool of property available for distribution in this matter is not large, and that as such there should have been a greater adjustment. In support of this contention counsel referred us to the decision of Tasmanian Trustees Ltd and Gleeson (1990) FLC 92-156 per Full Court (Nygh J with whom Strauss and Baker JJ agreed).
In that case, the husband died while judgment with respect to property settlement was reserved. The Full Court recognised that the most obvious difference caused by the husband’s death was the fact that the deceased no longer had any s 75(2) needs for the future, while the survivor continued to have such needs. While the Full Court recognised (at 78,086) that the deceased had “a prima facie moral entitlement to the share gained by contribution during his or her lifetime and, if this is so desired, to dispose of that share by will to persons who are strangers to the marriage”, the surviving wife’s needs were found to be large enough to justify an adjustment in her favour of the share to which the husband might have been entitled to by way of contribution had he not died, in circumstances where the estate was very small and the wife’s needs were “overwhelming”. The trial judge had found it was no longer appropriate to make an order with respect to the former matrimonial home which the wife would retain by survivorship.
Again, in Re Parrott v Public Trustee of NSW (1994) FLC 92-473 it was recognised (at 80,906) that:
it is clear enough that the death of one party has a profound effect upon the balance of sec 75(2) factors, as the Full Court pointed out in Tasmanian Trustees Limited and Gleeson (1990) FLC 92-156.
However, although it is clear that when a spouse dies there are generally no s 75(2) factors that can be taken into account in favour of the estate, and that that should highlight the needs of the surviving spouse and the fact that they have to be met, it is equally apparent that that should not detract from the need to recognise the entitlement of the deceased spouse (which devolves onto that spouse’s estate) arising from a consideration of the respective contributions of the parties.
This issue was highlighted by Smithers J in Menzies and Evans (1988) FLC 91-969 where his Honour said this (at 77,010):
The only significant difference in the analysis of the case arising out of the death of the deceased, is the obvious one that, when comparing the position of each of the parties, the deceased no longer has sec. 75(2) needs for the future, while the husband continues to have such needs. This does, in my view, alter the situation in a way which should be reflected in the outcome of the case. Even though his needs can be met out of income, the fact that he does have to meet them, and that the deceased does not have such needs, is the significant factor here. This aspect of the case should be of moderate significance only however in view of the amount of the assets, the age of the husband, and the extent of his future needs. Save to the extent necessary to reflect this aspect of the case it would in my view be wholly inappropriate that the deceased should be deprived of the benefits of her contributions over so many years. That is to say that it is still appropriate, following the death of the deceased, that the outcome of the case should depend, largely, upon the extensive contributions of the parties over so many years.
We observe that this was referred to with approval by the Full Court in Tasmanian Trustees Ltd and Gleeson at 78,085-086.
In this case, as referred to above, her Honour found that given his income, expenses and savings the husband was in a “comfortable position” and that on the assumption that his superannuation would continue to grow he “can look forward to financial security in his retirement”. Thus, as counsel for the wife said, it is not readily apparent what the husband’s real needs are, and in any event, to use the words of Smithers J, “[t]his aspect of the case should be of moderate significance only” and “the outcome of the case should depend largely upon the extensive contributions of the parties over so many years”.
Next, in addressing the husband’s submissions that the trial judge failed to adequately take into account the fact that since separation the husband has had the sole responsibility for the care of the children, counsel for the wife referred us to the decisions of Georgeson and Georgeson (1995) FLC 92-618, V and G (1982) FLC 91-207, and Zdravkovic and Zdravkovic (1982) FLC 91-220. In those cases the Court held that caution should be exercised when considering the impact of the future maintenance needs of children in determining a property settlement for the benefit of a spouse. We agree that this is a relevant consideration and particularly here given the ages of the children.
The husband also contends that the trial judge’s reasons do not fully disclose her Honour’s reasoning as to how the $71,433 received by the wife’s daughter was taken into account.
We observe that the primary submission of the husband in relation to this issue was that it should be added back to the pool of assets. Her Honour addressed this (at paragraphs 34-37) and concluded that that amount should not be added back. On that basis her Honour said that instead she would “take into account the fact of this payment to [R] pursuant to s 75(2)”. Then, her Honour revisited this issue when considering s 75(2)(o) of the Act saying this:
74. As noted, [the wife’s] daughter [R] received some $71,000 from her superannuation in 2005. The consequence is that neither [the husband], [C] or [J] can receive any part of that benefit. On the other hand [the wife] elected to direct this money solely to [R], which was her right.
Now, although it is quite apparent from her Honour’s reasons that she took this into account, it is true that her Honour did not for example detail how much of the 10 per cent adjustment that she made for all relevant s 75(2) factors is accounted for by this factor. However, her Honour did not do this for any of the relevant factors that she took into account, and as conceded by counsel for the husband before us, her Honour was not obliged to do so. There is ample authority in this Court to that effect. For example, in Brandt v Brandt (1997) FLC 92-758 the Full Court said this (at 84,343):
This mathematical adjustment suffers from the same defect as that mentioned above. There is a broad discretion to be exercised. The process for properly exercising that discretion has been frequently identified by the Full Court and commented on by the High Court. Whilst the task requires the exercise of a broad discretion capable of being exercised within ‘the generous ambit within which reasonable disagreement is possible’ (per Brennan J in Norbis at p 540) it is not generally an accounting exercise nor is it analogous to an award of damages or compensation which might call for a division into component parts.
As this Court has often recognised (eg see Steinbrenner & Steinbrenner [2008] FamCAFC 193, at paragraph 234), given that the assessment of the relevant factors arising under s 75(2) of the Act inevitably moves from a “qualitative evaluation” of those factors to a “quantitative reflection of such evaluation, there will inevitably be a ‘leap’ from words to figures”. That is the nature of the exercise of discretion.
The husband’s challenge in this ground is again to the weight that her Honour gave to the various considerations relevant under s 75(2), and the adjustment made as a result. In this instance, we are satisfied that her Honour took into account all relevant matters, and importantly the husband’s care of the children and his health difficulties. Her Honour also had regard to the husband’s income, his substantial superannuation benefit and the savings he has been able to accumulate. The husband did not seek to challenge the trial judge’s findings on these issues and did not raise any additional relevant matters that her Honour ought to have taken into account in a consideration of s 75(2). As we have said, his challenge was solely to the adjustment made on account of the relevant matters.
The trial judge also took into account the superannuation benefit received by the wife’s daughter R. Her Honour had regard to this factor generally in her consideration of s 75(2)(o).
In these circumstances we are not satisfied that her Honour exercised her discretion pursuant to s 75(2) by reference to erroneous facts, nor did she have regard to extraneous or irrelevant facts or circumstances, nor did she fail to have regard to relevant facts or circumstances. No error of principle has been established, and it has not been demonstrated that, despite the absence of demonstrable error, the 10 per cent adjustment was manifestly excessive. Certainly it has not been established to us that in making that adjustment her Honour fell “beyond the ambit of a reasonable exercise of discretion”. Thus there is no merit in this ground.
Grounds 3 and 4 – wife’s superannuation entitlement
Grounds 3 and 4 can conveniently be dealt with together as both grounds address the trial judge’s treatment of the wife’s superannuation entitlements which were paid to the wife’s daughter R.
Firstly, the husband challenges the trial judge’s decision not to add back the wife’s superannuation entitlements (in the sum of $71,433) to the assets of the parties. Again, although not included in the grounds of appeal, the husband also complains that her Honour failed to provide adequate reasons for declining to add back this amount.
By ground 4 the husband contends the trial judge erred in taking into account the superannuation disbursement “as a matter pursuant to s 75(2)(o).” This challenge is not advanced greatly by the husband’s submissions, either oral or written, but in his written submissions his counsel did contend that the weight that was attributed to the issue of the wife’s superannuation should have been more fully explained given that although it represented 71.8 per cent of the value of the 10 per cent adjustment made in favour of the husband it appears to have only been attributed minimal weight. We observe that we dealt with this contention in addressing ground 2 and we do not need to say anything more on this topic.
The trial judge outlined the positions of the parties with respect to whether the wife’s superannuation interest should be added back to the list of assets as follows:
32.In the first trial [the wife] said that she intended to collect her superannuation on the basis that she would have to retire from the workforce due to ill health. She said nothing about the use which she proposed to make of this money.
33.Ms [Kordell] said that she discovered that [R] was solely entitled to [the wife’s] superannuation when she advised the two funds of her sister’s death. She said that she was not surprised that [the wife] had taken this step, as she was aware that her sister wished to help [R] financially at that time.
34.On behalf of [the husband] it was contended that the sum of $71,433 should be added back to the list of assets. One suggested reason was that the late [wife] gave evidence in the first trial that she intended to bring about an equal distribution of her estate to all three of her children.
35.On behalf of Ms [Kordell] it was submitted that the late [wife’s] superannuation should not be added back, because this money never formed part of her estate. It was said that she understood her options in relation to her superannuation and elected that her daughter [R] should receive this money.
Her Honour concluded on this issue:
36.It is correct that [the wife’s] superannuation never formed part of her estate. It is also the case that the benefit did not vest in her, prior to her death. It seemed to be agreed in the first trial that she could have accessed her superannuation prior to her death, as there was no doubt that she was terminally ill. The transcript of her evidence indicates that she considered withdrawing the money in her two superannuation funds but, obviously, she later changed her mind.
37.I am not persuaded that the late [wife’s] superannuation should be added back to the list of assets. Clearly, she was aware of her options and chose to assist her daughter [R]. [C] and [J], to the knowledge of their terminally ill mother, would have the ongoing financial support of their father. The fact is that the superannuation never vested in [the wife] and never formed part of her estate. I will, however, take into account the fact of this payment to [R] pursuant to section 75(2).
It was contended by counsel for the husband that the wife made a premature distribution of property to R. The husband acknowledged that the wife was entitled to do so, but that it should not be at his cost.
The law with respect to the notional inclusion of assets for the purposes of proceedings under s 79 of the Act is well settled. (See Chorn and Hopkins (2004) FLC 93-204, Omacini and Omacini (2005) FLC 93-218 and Townsend and Townsend (1995) FLC 92-569.)
In Omacini the Full Court said:
30. To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees…
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
‘In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband's receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.’
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644…
Before us counsel for the wife maintained the position taken at trial that the monies received by the wife’s daughter never formed part of the property of the parties and did not form part of the wife’s estate (See Casey and Braione-Howard and Defence Force Retirement and Death Benefits Authority (2005) FLC 93-219) and thus could not be added back to the asset pool.
In the course of oral submissions before us counsel for the husband conceded that the wife’s superannuation interest may have never been property, but said that it was not clear whether the wife had received the interest and given it to R, or whether she assigned the interest to her. It was submitted that in any event it does not matter, and given that the wife was able to access that superannuation and she elected not to, that cannot prejudice the husband. It is no different than any other premature disposition of property and the amount should be notionally added back. It was submitted that underpinning the relevant authorities with respect to add backs is an issue of fairness.
Counsel for the Estate conceded that the evidence was not clear as to how the superannuation interest was received by R, but that the inference was that she received it directly. Counsel for the Estate maintained that her Honour was correct in not adding the monies received by R back to the asset pool, but that in the event her Honour was incorrect with respect to this finding, that her Honour instead took the monies received into account pursuant to s 75(2)(o), which was a matter within her Honour’s discretion.
We do not consider the trial judge erred in failing to notionally include the value of the wife’s superannuation interest in the asset pool, and nor do we accept that her Honour failed to provide adequate reasons for this conclusion. Her Honour clearly explained her findings in paragraphs 34-37 of her reasons, set out above.
We observe that her Honour could have found that the disbursement by the wife of her superannuation interest to her daughter was reasonable and done nothing about it. However, ultimately, she did make allowance for it and she had a discretion as to whether she would notionally include the amount in the list of assets or take it into account when considering the matters in s 75(2). Her Honour resolved that, in the circumstances, she would take it into account when considering the matters in s 75(2). Her Honour was clearly of the view that this was the just way of dealing with it (Townsend and Townsend) and this approach was well within her discretion. Nothing has been put that persuades us that her Honour was in error in so doing. There is thus no merit in these grounds of appeal.
Ground 5 – adoption of global approach
The husband also challenged the trial judge’s adoption of a global rather than an asset by asset approach given the facts of the case. At trial, the husband proposed that an asset by asset approach be adopted, but the trial judge explained her reasons for not adopting that approach as follows:
56.It was submitted on behalf of [the husband] that I should adopt an asset-by-asset, rather than a global, approach to contribution. I have elected not to do so for a number of reasons. Firstly, the fact of separation under one roof means that [the husband] and [the wife] continued to make contributions to their property and the parenting of their children beyond August 2002. Secondly, the available evidence does not permit quantification of their contributions to their superannuation funds, outside the period of their cohabitation and separation under one roof. Thirdly, [the husband] said in his affidavit that there was a reconciliation of the relationship for “a few months” in 2003. In my view, these considerations make preferable a global approach to contribution.
In Norbis v Norbis Mason and Deane JJ said at 523:
For ease of comparison and calculation it will be convenient in assessing the overall contributions of the parties at some stage to place the two types of contribution on the same basis, i.e. on a global or, alternatively, on an ‘asset-by-asset’ basis. Which of the two approaches is the more convenient will depend on the circumstances of the particular case. However, there is much to be said for the view that in most cases the global approach is the more convenient.
…
As a matter of construction of sec. 79 Nygh J. is right in saying that the section imposes no obligation on the Family Court to pursue in relation to this issue either the global approach or the asset-by-asset approach to the exclusion of the other. We do not understand the Full Court in the present case to suggest otherwise. What the Full Court asserts is that the global approach is the only ‘realistic’, that is, convenient, means of arriving at the entitlements of the parties. Again, it seems to us that it will depend on the circumstances of the particular case, though in the majority of cases the global approach will be the more convenient and for this reason the Full Court is entitled to prescribe its adoption as a guideline in the majority of cases…
It has not been suggested that there is any fundamental difference between the two competing approaches which we have considered, in the sense that one will yield more just and equitable entitlements than the other. The general preference which has been expressed from the global approach is not by reason of any notion that it is the only approach authorised by the Act, but by reason of considerations of convenience. Accordingly, quite apart from the fact that its status as a prescribed approach is that of a guideline and not that of a principle of law, the application of the asset-by-asset approach does not of itself amount to an error of law.
Wilson and Dawson JJ also said in the case at 532-534:
If the parties' interests in specific items of property differ or they have made differing contributions, it may be desirable to proceed upon an item by item basis in the division of the property between them. In such a case, justice and equity may best be served by treating the items separately for the purpose of determining the proportions in which they are to be divided, particularly if the overall division is to be effected by the transfer or retention of interests in individual assets, as was convenient in this case. It is true, as Nygh J. pointed out, that where this is done, at the end of the exercise a calculation of the overall proportions in which the total property has been divided may serve as a useful check to ensure that the result is not disproportionate as a whole.
To say as much is to say no more than that the legislation confers a discretion upon the court which, provided the required matters are taken into account, does not dictate the employment of any particular method in the formulation of an appropriate order for the alteration of property interests. The matters which are to be taken into account will sometimes require the division of the assets, or some of them, upon the basis of their individual values, but in other cases no more than an overall division will be required. In some cases either approach may be adopted in part or in whole.
In McMahon and McMahon (1995) FLC 92-606 the Full Court (Nicholson CJ, Ellis and Buckley JJ) discussed when an asset by asset approach may be appropriate. At 82,043:
In our view, the particular circumstances of this case made an asset-by-asset approach preferable to a global approach.
The short duration of and the unhappy nature of the marriage, coupled with the parties' strict division of assets and their method of dealing with them lent itself to an asset-by-asset approach, particularly where they had separately identified another group of assets as joint.
We are conscious of the remarks of Mason CJ and Deane J in Norbis v Norbis (1986) FLC 91-712 at p 75,168; (1985-1986) 161 CLR 513 at 523, where their Honours indicated that in most cases the global approach is more convenient.
However, it should be remembered that they stressed that they were not to be understood as denying the legitimacy of the trial Judge's ascertainment in the first instance of the financial contributions of the parties by reference to particular assets.
…
One of the reasons why their Honours expressed a preference for the global approach is because it is natural to assess the contribution by a spouse as a homemaker and parent, either by reference to the whole of the parties' property, or to some part of that property as distinct from individual assets.
However, this is not a case where the homemaker and parent contribution looms large and, having regard to the parties' agreement that it should be regarded as equal for the period of the marriage, this presented no obstacle to the adoption of the asset-by-asset approach in this case.
We consider that this is a case which falls conveniently into the class of cases referred to by Wilson and Dawson JJ in Norbis at FLC pp 75,173-75,174; CLR 532-3, when they said:—
‘If the parties' interests in specific items of property differ or they have made differing contributions, it may be desirable to proceed upon an item by item basis in the division of property between them. In such a case, justice and equity may best be served by treating the items separately for the purpose of determining the proportions in which they are to be divided, particularly if the overall division is to be effected by the transfer or retention of interests in individual assets, as was convenient in this case.’
In support of this ground, counsel for the husband outlined in his written argument that the trial judge was invited to adopt an asset by asset approach primarily due to the large amount of superannuation held by the husband at trial, especially when that is compared to the value of the superannuation at separation and at the time of the first trial. It was also submitted that the trial judge failed to make any allowance for the qualitative difference of the superannuation entitlement from other property, suggesting that it was not immediately realisable and could not “provide a roof over the heads” of the husband and the children. In the end result, it was submitted that by the adoption of a global approach, the husband was left with his superannuation interest, but his available assets were diminished.
In relation to this latter issue, although not raised in the husband’s grounds of appeal, counsel for the husband contended before us that no detailed reasons were given “for the trial judge’s preference for one pool of assets, rather than taking a ‘two pool’ approach to property and superannuation.”
It was submitted on behalf of the respondent that this is not a case where the marriage was of a short duration or where the parties divided and kept their assets separate from each other, and that adequate reasons were given by the trial judge for her adoption of a global approach. It was also contended that it would have been an impossible task for the trial judge to have undertaken an assessment of the parties’ contributions on an asset by asset basis given the state of the evidence, and in particular the husband’s evidence in relation to his contributions to his superannuation funds.
Whether an asset by asset or global approach is taken to the asset pool is a discretionary matter (Zyk and Zyk (1995) FLC 92-644 at 82,510). As was made clear by the High Court in Norbis, the approach to be adopted when considering the asset pool available for division will be dependent on the circumstances of the particular case.
We do not consider that her Honour erred in adopting a global approach in this case. It was a matter within her Honour’s discretion to be determined on the facts of the case. Her Honour clearly articulated her reasons for adopting a global approach (at paragraph 56), and we do not consider there is any merit in this ground of appeal.
In relation to the other issue raised by the counsel for the husband in his submission, namely the adoption by the trial judge of one pool of assets and the alleged failure by her to appreciate the qualitative difference between property and superannuation, we also find no merit in these complaints.
Her Honour identified the assets as comprising both superannuation and non-superannuation assets and she then applied a global approach to the assessment of the contributions of the parties to both sets of assets. Her Honour did so because as her Honour found “[t]he superannuation entitlements of both [the husband] and the late [wife] accrued, to a large extent, during their cohabitation”. We can find no error in this approach. It is consistent with what the Full Court expressed in Coghlan and Coghlan (2005) FLC 93-220, at 79,645, namely:
61. Nothing we have said in this judgment would prevent a Court in the exercise of its discretion from including a superannuation interest as an item of property in the list of property which is drawn as ‘the first step’ in the determination of proceedings under s 79, whether or not a splitting order is sought in those proceedings. This approach could be adopted where … there are features about the interest which leads the Court to conclude that this would be an appropriate approach.
62. The parties’ contributions to all items on that list (including the superannuation interest) would then be assessed on either a global or an asset by asset basis …
The issue, if any, of a qualitative difference between a superannuation interest asset and a non-superannuation asset is not an issue when considering the matters of contribution in s 79(4)(a), (b) and (c) of the Act. It may be an issue when considering the relevant matters in s 75(2) by reason of s 79(4)(e) and perhaps when determining the justice and equity of the proposed orders. However, again we can find no error in her Honour’s approach here.
Her Honour was well aware of the mix of superannuation and non-superannuation assets that the husband would be left with saying as follows (at paragraph 82):
The orders which I propose to make will give [the husband] liquid funds of around $370,000 and a superannuation benefit of approximately $305,400. He would be well placed to purchase a home for himself and the children.
In any event, her Honour was hamstrung in how she could treat the husband’s superannuation given that, as her Honour recorded in her conclusion, and as referred to above, she “was informed that it was common ground that no splitting order can be made in respect of [the husband’s] superannuation”. Thus, the only option for her Honour was for the Estate’s entitlement to the husband’s superannuation to be calculated and “an adjustment made to the distribution of the pool of non-superannuation property”. And this is what her Honour did.
Conclusion
There being no merit in any ground of appeal, the appeal will accordingly be dismissed.
Costs
At the conclusion of the hearing before us submissions were sought from the parties in relation to the costs of the appeal.
Counsel for the husband conceded that in the event the appeal was unsuccessful it would be difficult for the husband to resist an application for costs by the Estate. However, it was submitted in opposition to an order for costs that the husband now has the sole care of the two children of the marriage.
In the circumstances of the appeal being wholly unsuccessful there should be an order that the husband pay the Estate’s costs of and incidental to the appeal.
I certify that the preceding one hundred and twenty four [124] paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 23 August 2010.
Associate:
Date: 23 August 2010
Key Legal Topics
Areas of Law
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Family Law
Legal Concepts
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Appeal
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Property Settlement
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Costs
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