Walker & Page (No 2)
[2019] FamCAFC 134
•9 August 2019
FAMILY COURT OF AUSTRALIA
| WALKER & PAGE (NO. 2) | [2019] FamCAFC 134 |
| FAMILY LAW – APPEAL – PROPERTY – Where the primary judge made final property orders distributing the property of the parties – Where the primary judge made indemnification orders in relation to certain outstanding debts – Where the amount of those debts had not crystallised – Where in that event the trial judge could not properly conclude that the proposed order for property settlement was just and equitable – Where the Court was satisfied of appealable error – Appeal allowed – Cost certificates granted. |
| Family Law Act 1975 (Cth) s 75(2) Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 9 and 8 |
| CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67 |
| APPELLANT: | Mr Walker |
| RESPONDENT: | Ms Page |
| FILE NUMBER: | BRC | 1066 | of | 2017 |
| APPEAL NUMBER: | NOA | 95 | of | 2018 |
| DATE DELIVERED: | 9 August 2019 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Ainslie-Wallace J |
| HEARING DATE: | 23 July 2019 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 17 July 2018 |
| LOWER COURT MNC: | [2018] FCCA 3032 |
REPRESENTATION
| THE APPELLANT: | In person |
| THE RESPONDENT: | In person |
Orders
The application in an appeal filed by the appellant on 12 June 2019 to adduce further evidence is dismissed.
The application in an appeal filed by the appellant on 15 July 2019 for leave to file subpoenas is dismissed.
Appeal NOA 95 of 2018 be allowed and the orders of Judge Vasta made on
17 July 2018 are set aside.
The matter be remitted for rehearing by a judge of the Federal Circuit Court other than the primary judge.
There be no order as to costs.
The Court grants to the appellant a costs certificate pursuant to ss 9 and 8 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 him in relation to the appeal and in relation to the new trial in the matter.
The Court grants to the respondent a costs certificate pursuant to the provisions of ss 6 and 8 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 her in relation to the appeal and in relation to the new trial in the matter.
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 Walker & Page (No. 2) 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 APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NOA 95 of 2018
File Number: BRC 1066 of 2017
| Mr Walker |
Appellant
and
| Ms Page |
Respondent
REASONS FOR JUDGMENT
On 17 July 2018 Judge Vasta made orders for property adjustment between Mr Walker (“the husband”) and Ms Page (“the wife”).
The husband appeals those orders.
Background
The parties commenced their relationship in 1999 and married in September 2002. They separated in late 2009. There are no children of the relationship although from time to time the wife’s children from a previous relationship lived with them. The husband is a tradesman and, according to the wife worked in that occupation although he occasionally took time off from working to, as she said “recharge”. At the commencement of the relationship the wife was working as a secretary and then embarked on studies to achieve professional qualifications and then entered into a business in 2005.
The husband suffers from long standing mental health issues and has been receiving treatment for anxiety and depression for many years. At the time of the hearing before the primary judge he was not working.
After the parties separated the husband moved to live in Western Australia.
The present proceedings were commenced by the husband on 24 April 2015 in the Family Court of Western Australia. The proceedings were subsequently transferred to be heard in the Federal Circuit Court in Brisbane.
The husband appeared for himself in those proceedings. It is also apparent that the husband did not file a trial affidavit setting out the evidence in support of his application for orders. Such affidavits as he did file are comprised of seemingly disparate documents which lend no ready understanding of the issues between the parties. The wife did however file a trial affidavit which was before the primary judge.
It is useful to give context to the appeal, and the husband’s arguments, to consider the parties’ property acquisitions and dealings during the course of their relationship.
At the time the parties commenced cohabitation the husband owned a property at Suburb Q which was valued at approximately $101,000 over which the wife said there was a mortgage of approximately $95,000. The wife had approximately $10,000 in a bank account.
Shortly after commencing their relationship the parties began purchasing property both as investments and to provide a residence for them to live in from time to time.
It seems that the funds for these purchases were wholly borrowed and the investment properties were rented, the rent being applied to the mortgage payments, in some cases those payments were as to interest only in others both principal and interest.
In short, during the marriage the parties pooled their resources to maintain payments on the various properties, both personal and investment with some of the mortgages being cross collateralised. The wife’s evidence was that except for one property, the investment properties that were sold produced a profit.
At the date of separation the parties or either of them held the following properties and assets:
Suburb L property
This property was purchased in April 2004 for $135,000 which amount, together with the costs of purchase and stamp duty was borrowed. In January 2011 floods inundated the property causing significant damage and, while the structure of the building remained intact, the building had to be gutted and the wife spent considerable time and money bringing the property back into repair. The parties borrowed $40,000 to assist in the repairs although it was not until October of that year that the bank processed the loan, there being so many similar applications. The wife said that following the floods the property was uninhabitable and the tenant left thus leaving the parties without income from that property. The wife further said that effecting and supervising the repairs took her away from her business and as a consequence her income from the business suffered and she said that in general the floods caused a downturn in business in the affected suburbs.
Following separation, the husband made two payments towards the mortgage over this property totalling $3,000, otherwise the financial burden fell to the wife.
The parties agreed to sell this property but it received little interest. In September 2015 the wife said an offer was received, however issues with the bank refusing to provide the release of mortgage at settlement until the entire amount owed was received and with the then outstanding amounts owing for council rates led the wife to reject that offer on the basis of it being too low. A higher offer to purchase was received March 2016 which both the wife and the husband agreed to accept, however the wife said that the husband did not respond to requests that he sign the contract and the offer was withdrawn. A further offer was received in April 2016 of a greater amount than that of the March 2016, the wife signed the contract and the husband failed to sign it despite the wife’s requests. After a further contract was obtained in September 2016, signed by the wife and forwarded to the husband which he failed to sign, on 25 October 2016 an order was made empowering the Registrar of the Magistrates Court in Western Australia to sign the contract on behalf of the husband.
In or about June 2016 the tenants in the property gave notice and the husband thereafter refused to agree to the property being tenanted.
Since that time the property has been untenanted and the husband has refused to cooperate in the sale of it.
At the time of the hearing before the primary judge, the X Bank had taken proceedings to recover the mortgage debt. The husband has chosen to defend the bank’s action and the proceedings were still on foot at the time of the hearing before the primary judge. At the same time, the Body Corporate of the property commenced proceedings against the parties to recover outstanding fees. The husband defended those proceedings arguing as he did in relation to the mortgage, that he bore no liability for any debt associated with the property. The debts outstanding were Body Corporate fees in the sum of $46,000, unpaid rates and estimated agent’s commission totalling approximately $7,000.
The wife estimated that notwithstanding the sale of this property when it eventuates, there will be insufficient proceeds to discharge the debts over the property and the parties will be left owing money to the X Bank.
At the time of the hearing before the primary judge, it was anticipated that a sale of the Suburb L property at $189,000 was imminent. The wife said to the primary judge, that on the sale of that property (at that price) and after payment of the net proceeds to the debt to the X Bank there would remain debt in the order of $260,000.
Unfortunately it seems that the property was not sold. In submissions on the appeal the wife said that the X Bank has taken over the sale process and as she understands, has listed the property for sale at a price lower than earlier offers but no offer to purchase has been made.
Suburb R property
This property was purchased in April 2008 for $420,000 to provide premises from which the wife’s business could operate. There were necessary expenses incurred to convert the residential property to business premises. The business paid the loan repayments and other outgoings on the property in return for the use of the premises.
This property was sold in December 2017 and the proceeds after payment of the mortgage was used to pay debts and loans.
The wife said that following the sale of this property she drew down on a loan account to pay joint debts in order to maximise the net proceeds from the sale of Suburb L property.
Following receipt of an inheritance from the husband’s mother which included about $50,000 in cash, the X Bank unilaterally removed $10,000 from the husband’s account to partially pay down a loan on the Suburb R property that was in arrears.
Suburb M property
This property was purchased by the parties in August 2007 for $587,500, the whole of that sum was borrowed. It was their marital home until separation and the wife continued to live there after they separated. She has been solely responsible for meeting the mortgage payments on this property after separation.
In April 2011 this property was partly destroyed by fire and that part of the property not destroyed was damaged by water, smoke and soot. Although the property was insured, the insured amount was insufficient to cover the damage and the wife incurred costs in restoring it to a habitable state. Due to the extent of the damage, the wife could not live in the property while it was being repaired and was therefore obliged to rent a property as well as continuing to pay the mortgage.
The wife estimated the value of the property to be $600,000. The property is encumbered by a home loan debt of approximately $215,300 and it also secures a business loan of approximately $177,300.
The wife’s business
In 2005, following the wife’s commencement as a professional in September 2005, the parties purchased a one half interest in a business for $175,000. The wife was also required to become jointly liable for the business overdraft which was then $75,000. The purchase price was obtained by a loan secured over a property then owned by the parties. In June 2008 the parties purchased the remaining half interest in the business for $125,000. At this point, the wife refinanced the loan to relieve the husband from any guarantees in relation to those borrowings.
In April 2015 the husband’s sister purchased a half share of the wife’s business. The wife asserts that she used the proceeds of this sale to pay her credit card debts together with her debt to the Australian Taxation Office. On 1 July 2016 the business was merged with the business of another professional to the effect that the wife holds a one third interest in the business. It is estimated the value of the wife’s one third share is between $70,000 and $80,000 and is subject to an overdraft and business loans estimated to be approximately $300,000.
Suburb P property
In 2015, following the receipt of $400,000 from his late mother’s estate, the husband in April 2018 purchased this property in his sole name for $342,000. The property is unencumbered.
The wife’s evidence was that at the time of separation, the loans were being serviced either through the rental income on the investment properties or through the parties earnings.
The wife said that at the time of separation the husband had no liability in relation to the property at Suburb M, or the business loans or overdrafts associated with the wife’s business. He and she remained jointly liable for the properties at Suburb L and Suburb R.
At the time of the hearing before the primary judge, both parties had small superannuation entitlements and the husband cash in the bank being part of the inherited amount.
The husband’s position before the primary judge was that he should retain his assets and the wife should pay him a sum of $400,000 while indemnifying him in relation to all debt. The basis for that claim was his assumption that the investment properties acquired by the parties should have produced net profit once sold, and the husband maintained that the wife had in some unspecified way diverted money for her own benefit.
The primary judge noted that the husband’s expressed desire was to see the wife bankrupt (at [88]).
His Honour found that the net assets of the parties or either of them other than superannuation, was in the order of $152,300.
He assessed their contributions up until separation as being equal but found that following that time the wife had borne the “lion’s share” of the liabilities thus coming to a view that the wife’s contribution overall should be an order for adjustment of property as to 65 per cent (at [97] – [98]). Having considered then the matters to which s 75(2) relate, his Honour finally concluded that a further adjustment was warranted and found that this would be reflected in a further adjustment in the wife’s favour of 10 per cent (at [111]). Thus his Honour concluded that the assets of the parties and each of them should be divided as to 75 per cent to the wife and 25 per cent to the husband.
Noting that the wife sought an order that the husband retain his superannuation, bank account and property, his Honour considered it just and equitable that the husband assume a proportion of the joint debt that will remain once the Suburb L property was sold.
Thus, his Honour ordered:
a)The wife retain the property at Suburb M.
b)The wife retain her interest in the business and be responsible for and indemnify the husband in relation to any liability for debts associated with the business including the debt to the W Bank in relation to the business.
c)The wife retain her superannuation entitlements.
d)The husband retain the property at Suburb P and his interest in his superannuation.
His Honour also made orders relating to the parties’ cars and the like. Although not directly referred to, his Honour’s orders contemplate the husband retaining the balance of his inheritance being a sum of cash in a bank account.
Relevant to the appeal, his Honour ordered:
2. That the wife indemnify the husband and keep him indemnified with respect to any surplus monies owing to the X Bank with respect to the mortgage over Suburb L property up to the amount of $50,000.00.
3. That the husband indemnify the wife and keep her indemnified with respect to any surplus monies owing to the X Bank with respect to the mortgage over Suburb L property for any balance over $50,000.
The appeal
The husband raised five grounds of challenge to the primary judge’s orders.
He also filed a number of applications in an appeal. Those applications in the main reflect the husband’s contention that the wife has not given proper financial disclosure and his pursuit of further financial information. It is tolerably clear that despite documents produced to the husband in a variety of ways, through subpoenas, through the wife’s production of documents to him and by her annexing documents to her trial affidavit, the husband maintained before the primary judge and on appeal that the wife had failed to make proper financial disclosure.
The husband sought the issue of subpoenas to produce documents, which, he believed would provide him with evidence of financial non-disclosure by the wife. The husband did not identify which documents or classes of documents would be produced nor did he identify what those documents might say about the wife’s financial disclosure.
In short, the husband does not know what evidence would be produced if the subpoenas were issued. It is thus impossible to know whether the produced documents would be capable of being admitted as evidence in the appeal (see CDJ v VAJ (1998) 197 CLR 172).
In that event, the applications in an appeal filed 12 June 2019 and 15 June 2019 will be dismissed.
The husband further sought to subpoena various documents which relate to case management in the Federal Circuit Court of Australia. That application, to inspect correspondence on the Federal Circuit Court file and to have access to case management documents, was heard and determined by Kent J who dismissed the application. That application cannot be re-agitated.
Shortly before the appeal hearing, the husband sought to file an Amended Notice of Appeal. He said that it was his attempt to consolidate his arguments and submissions into one document. To that end, and accepting that it did not in fact raise new grounds, it was treated as a summary of the arguments that he wished to make on the appeal.
Although the husband raised five grounds of challenge to his Honour’s orders, it is only necessary to consider Ground 4 because it is on this basis that the appeal will succeed.
The husband particularised Ground 4 as follows:
4. The learned Trial Judge’s decision was Plainly Wrong.
The Orders as made are unjust and unequitable.
The orders as made do not separate the finances of the parties.
The orders limit the liability of the wife at the same time placing an uncalculated increasing liability on the husband.
(As per the original)
At the time the primary judge made orders 2 and 3, those requiring the parties to accept and indemnify the other in relation to the X Bank debts, the only evidence as to how much debt would remain outstanding to the X Bank after the sale of the Suburb L property was the wife’s estimate of $260,000 based on an anticipated sale price of $189,000.
While his Honour’s findings about the wife’s contributions and the husband’s failure to contribute after separation were well open to him, in the circumstances where the debt remaining to the X Bank had not crystallised, his Honour could not properly conclude that the proposed order for indemnification in context of the other orders rendered the result just and equitable. To that extent, his Honour erred and the appeal must be allowed.
The wife submitted that in the event that the appeal succeeded, the Court should re-exercise the primary judge’s discretion and she submitted that an appropriate order in that event would be that the husband and wife share the burden of the remaining debt to X Bank as to 80 per cent to the husband and 20 per cent to the wife.
Given the wife’s submissions that the Suburb L property remains unsold and the debt is still not crystallised, an order which substitutes percentages for monetary amounts will be affected by the same frailty as his Honour’s orders.
It is regrettable then that the only course is to set aside his Honour’s orders and remit the matter to be heard by another judge of the Federal Circuit Court.
Costs
Both parties sought a costs certificate in the event that the appeal succeeded on an error of law.
The husband is entitled to a certificate to the extent that he incurred the costs of obtaining the transcript for the appeal and other disbursements. The wife appeared for herself on the appeal, and to the extent that she has incurred relevant costs in relation to the appeal, I propose to grant her a cost certificate.
I will also order a certificate for each party in respect of any rehearing of the application.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie-Wallace delivered on
9 August 2019.
Associate:
Date: 9 August 2019