Yarrow & Yarrow (No 2)
[2023] FedCFamC2F 99
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Yarrow & Yarrow (No 2) [2023] FedCFamC2F 99
File number(s): HBC 188 of 2020 Judgment of: JUDGE TAGLIERI Date of judgment: 8 February 2023 Catchwords: FAMILY LAW – property – further reasons on remittal from appeal and re-exercise of court’s power – 13 year relationship – one pool approach – where parties hold real property and superannuation and non-superannuation interests in Australia and the United Kingdom – orders made at first instance adjusting the parties’ assets – a just and equitable adjustment required distribution of 54% in favour of husband and 46% in favour of wife if wife relocates or 57% in favour of the wife and 43% in favour of the husband if the wife does not relocate – upon giving further reasons and re-exercise of determination as to what is just and equitable – adjustment of parties’ assets consistent with first instance judgment – as appeal court set aside first instance orders – orders re-pronounced as required pursuant to these reasons Legislation: Family Law Act 1975 (Cth) ss 75(2), 75(2)(b), 75(2)(c), 75(2)(n), 75(2)(n)(a), 79(2)(d) 79(2)(g) Cases cited: Yarrow & Yarrow [2022] FedCFamC1A 135
Yarrow & Yarrow (No 2) [2022] FedCFamC1A 171
Yarrow & Yarrow [2021] FedCFamC2F 651
Division: Division 2 Family Law Number of paragraphs: 35 Date of hearing: 7-9 September 2021, 15 September 2021, 15 October 2021, 2 November 2021, in Chambers on the papers Place: City E Counsel for the Applicant: Mr Theobald Solicitor for the Applicant: Lawyers R Counsel for the Respondent: The Respondent in person ORDERS
HBC 188 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR YARROW
Applicant
AND: MS YARROW
Respondent
order made by:
JUDGE TAGLIERI
DATE OF ORDER:
8 February 2023
THE COURT DECLARES THAT:
The orders made 24 December 2021 in respect of the proceedings under s 79 of the Family Law Act 1975 (Cth) represent a just and equitable distribution of the property of the parties MR YARROW (“the husband”) and MS YARROW (“the wife”) (collectively “the Parties”).
THE COURT ORDERS THAT:
Within 28 days of the date of these Orders the parties do all things necessary to cause the sum of $10,000 to be paid from the husband’s Bank BA bank account to a joint account with the Commonwealth Bank of Australia in City E with both parties as signatories, which sum is to be held in trust for the benefit of the children.
The property known as and situate at F Street, City E in Tasmania, being all that property comprised in Certificate of Title Volume … Folio … (“the F Street City E Property”), is to be sold forthwith and for that purpose the Parties are to each do all which is necessary to effect the sale of the property including:
(a)Within 21 days from the date of this Order the Parties shall jointly appoint by agreement a real estate agent (“the Australian Agent”) as the sole agent to act on behalf of the Parties for the sale and in default of agreement between the Parties about the Australian Agent to be appointed, either party may request the President of the Real Estate Institute of Tasmania, or their nominee, to determine and appoint a real estate agent and the cost of the President’s determination must be shared equally between the Parties.
(b)The following provisions shall apply in relation to the sale of the F Street, City E Property:
(i)The Parties shall forthwith sign all documents as requested by the Australian Agent in relation to the sale of the F Street, City E Property.
(ii)The Parties will accept all reasonable recommendations of the Australian Agent with respect to the sale of the F Street, City E Property, including the marketing.
(iii)All details of the sale of the F Street, City E Property, including but not limited to marketing price, method of sale, method of advertising and sale price, shall be as agreed between the Parties in writing and in default of agreement, as determined by the Australian Agent.
(iv)The reserve price of the F Street, City E Property shall be as recommended by the Australian Agent, or as otherwise agreed between the Parties in writing, and failing agreement, the parties shall arrange a joint valuation with a valuer nominated by the President of the Real Estate Institute of Tasmania at the joint cost of the parties.
(c)The Parties shall co-operate in every way with the Australian Agent during the sale of the F Street, City E Property, including (without limiting generally the foregoing):
(i)making the key/s available to the Australian Agent;
(ii)allowing the inspection of the F Street, City E Property at all reasonable times as requested by the Australian Agent by private appointment;
(iii)ensuring the F Street, City E Property is in a neat and clean condition at the time of inspection by the Australian Agent and prospective purchasers;
(d)As the wife currently resides in the F Street, City E Property, she must permanently vacate it by no later than 7 April 2023 and the date of completion for the sale of the F Street, City E Property will not be any sooner than this date.
(e)The wife will vacate the F Street, City E Property during scheduled viewings/inspections of the F Street, City E Property and will not be present during viewings/inspections of the F Street, City E Property.
(f)The Parties must appoint Lawyers R to act in the conveyancing for sale of the F Street City E Property, and if the wife refuses to do so, this order is to be taken as authority for them to act.
Upon completion of the sale of the F Street City E Property pursuant to these Orders, the proceeds of sale are to be applied and paid by Lawyers R as follows:
(a)First, to discharge the mortgage in favour of the Commonwealth Bank of Australia presently secured over the Title to the F Street City E Property, being mortgage number …;
(b)Second, in payment of the Australian Agent’s costs of the sale, including commission and advertising expenses;
(c)Third, in payment of all reasonable legal costs and disbursements incurred in relation to the sale;
(d)Fourth, in payment of any outgoings payable, including arrears for the same, during the course of the conveyance, including but not limited to council rates, land tax, and water and sewerage rates; and
(e)Fifth, the balance sale proceeds are to be paid and distributed according to Annexure “A” and to achieve a distribution of 54% to the husband and 46% to the wife if the wife relocates to City C.
From the date of these Orders until completion of the sale and transfer of the F Street City E Property the wife shall be solely responsible for all presently outstanding and future demands for outgoings and utility expenses, including arrears, with respect to the F Street City E Property, including but not limited to mortgage loan repayments, council rates, land tax and insurance premiums.
That if by 4pm on 3 March 2023, the wife files with the Court and serves on the husband’s solicitors, a written undertaking that she will not relocate to City C earlier than 31 December 2026, a final distribution of the balance proceeds of sale of the F Street City E property according to Order 3 of these Orders is to be made but so to achieve a final adjustment of the parties total net assets as identified in the schedule marked “A” which amounts to 57% to the wife and 43% to the husband.
Note: if the wife files the undertaking referred to in this order after 4pm on 3 March 2023 or in terms inconsistent with this order, the final distribution of the balance proceeds of sale of the F Street City E property are to be made in accordance with Order 3 of these Orders.
The property known as and situate at G Road, City C in the United Kingdom (“the City C Property”) is to be sold forthwith and for that purpose the Parties are to each do all which is necessary to effect the sale of the property including that:
(a)The husband and wife do all such acts and sign all such documents as may be required to ensure that the property known as and situate at G Road, City C in the United Kingdom (“the G Road, City C Property”) is listed for sale within 21 days from the date of these Orders.
(b)Within 21 days from the date of this Order, and unless a Real Estate Agent has been agreed between the Parties’ in writing, the Parties appoint H Estate Agents (“the Agent”), as the sole agent to act on behalf of the Parties for the sale of the G Road, City C Property and the following shall apply in relation to the sale of the G Road, City C Property.
(c)The Parties shall forthwith sign all such reasonable documents as requested by the Agent in relation to the sale of the G Road, City C Property;
(d)The Parties will accept all reasonable recommendations of the Agent with respect to the sale of the G Road, City C Property, including the marketing.
(e)All details of the sale of the G Road, City C Property, including but not limited to marketing price, method of sale, method of advertising and sale price, shall be as agreed between the Parties in writing and in default of agreement, as recommended by the Agent;
(f)The Parties will agree on a sale price of the G Road, City C Property as may be nominated by the Agent or as otherwise agreed between the Parties in writing, and failing agreement, the value shall be determined by a valuer/surveyor as may be nominated by the Royal Institute of Chartered Surveyors (“RICS”) at the joint cost of the parties;
(g)The Parties shall co-operate in every way with the Agent, including (without limiting generally the foregoing):
(i)making the key/s available to the Agent;
(ii)allowing the inspection of the G Road, City C Property at all reasonable times as requested by the Agent by private appointment;
(iii)ensuring the G Road, City C Property, including the grounds, are in a neat and clean condition at the time of inspection by the Agent and prospective purchasers.
That the wife is not to occupy the G Road, City C Property in the event that she relocates to G Road, City C before it is sold.
Upon completion of the sale of the G Road, City C Property pursuant to Order 6 of these Orders, the proceeds of sale will be paid and distributed in the following manner and priority:
(a)First, to discharge the mortgage in favour of Bank BA presently secured over the Title to the G Road, City C Property;
(b)Second, in payment of real estate agent’s costs of the sale, including commission and advertising expenses;
(c)Third, in payment of all reasonable legal costs and disbursements incurred in relation to the sale;
(d)Fourth, in payment of any outgoings payable, including arrears for the same, during the course of the conveyance, including but not limited to council tax, land tax, and water and sewerage rates;
(e)Fifth, such estimated sum which is owing, or becomes owing, for Capital Gains Tax liability in relation to the sale of the G Road, City C Property, which is to be transferred to Lawyers R, as solicitors for the husband, to be held in trust, pending determination of the Capital Gains Tax Liability Amount; and
(f)Sixth, the balance sale proceeds is to be transferred and held in the trust account of Lawyers R, to be distributed in accordance with the terms of these orders and to achieve an overall and final adjustment of the net pool of assets as identified in the schedule marked “A” and overall 54% to the husband and 46% to the wife if the wife relocates to G Road, City C;
(g)Despite subparagraph (f) of this order, if the Parties notify Lawyers R and agree in writing that a partial distribution can be made of the balance sale proceeds before the final distribution, Lawyers R are to make a partial distribution accordingly but are not required to make the partial distribution if the parties have not agreed all terms of such partial distribution, including the amount;
That if by 4pm on 3 March 2023, the wife files with the Court and serves on the husband’s solicitors, a written undertaking that she will not relocate to G Road, City C earlier than 31 December 2026, distribution of the balance proceeds of sale of the G Road, City C property according to Order 8 is to be made and to achieve a final adjustment of the parties total net assets as identified in the schedule marked “A” which amounts to 57% to the wife and 43% to the husband.
Note: if the wife files the undertaking referred to in this order after 4pm on 3 March 2023 or in terms inconsistent with this order, the final distribution of the balance proceeds of sale of the G Road, City C property are to be made in accordance with Order 8 of these Orders.
In the event that the wife does not comply with Order 9 of these Orders, the final distribution of the balance proceeds of sale of the G Road, City C property is to be made so to achieve a final adjustment of the parties total net assets as identified in the schedule marked “A” which amounts to 54% to the husband and 46% to the wife.
The Parties are to each do all that which is necessary, including signing all documents, giving authorisations or taking any other actions to give effect to these orders.
Schedule A
Ownership Agreed Value ($) To be sold pursuant to Orders 2 & 6 The G Road, City C property Joint 1,656,000 Less mortgage -545,517 Net equity (to be distributed according to orders) E1,110,483 The F Street City E property Joint 575,000 Less mortgage -294,743 Net equity (to be distributed according to orders) E280,257 To be retained by the husband Motor Vehicle 1 Husband 12,000 CBA Bank Account Joint 83 Bank BA Account (balance after deducting payment at Order 30*) Husband 24,277 CBA Bank Account Husband 4,170 Solicitors trust Husband 27,000 Super Fund LL (Australia) Husband 54,301 Super Fund MM (UK Pension) Husband 195,649 To be retained by the wife Property in City KK Wife 2,975 Motor Vehicle 2 Wife 16,990 Bank F Account Mother 3,358 NAB Bank Account Wife 111 Bank G Account Wife 192 Shares Wife 261,530 Super Fund NN (Australia) Wife 1,719 Super Fund OO (UK Pension) Wife 90,560 Tax Liability Wife -4,152 Legal Expenses (Country K)* Wife -12,477 Centrelink Debt* Wife -12,395 Note: the Net equity amounts for the two properties are estimates and cannot be determined until balance sale proceeds are known Note: the final overall percentage adjustments are according to the orders made herein Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Yarrow & Yarrow (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Judge Taglieri
By judgments of 1 September 2022[1] and 20 October 2022[2], the Full Court of the Federal Circuit and Family Court of Australia Division 1 determined an appeal from my judgment at first instance delivered on 24 December 2021[3] (“the first instance judgment”) concerning parenting and property proceedings under the Family Law Act 1975 (Cth) (“the Act”).
[1] [2022] FedCFamC1A 135.
[2] [2022] FedCFamC1A 171.
[3] [2021] FedCFamC2F 651.
The appeal advanced property and parenting grounds and was successful on one ground only concerning the property orders.
Ground 7 of the Notice of Appeal concerning property was successful and related to inadequate reasons having been given about considerations in s 75(2) of the Act, specifically ss 75(2)(b) and 75(2)(n).
The basis upon which the Full Court upheld Ground 7 is addressed in paragraphs [56] to [59] of the reasons for decision published on 1 September 2022. After delivering these reasons, the Full Court heard submissions by the parties in respect of the remittal.
On the 20 October 2022 the Full Court delivered reasons for judgment and concluded that the matter should be remitted to me. The Court’s reasons for that conclusion are set out at [5] to [7] of judgment. Relevantly, their Honours stated:
6.…All that remains to be done is the provision of further reasons pertaining to the primary judge's consideration of the matters listed in s 75(2) of the Act, and particularly s 75(2)(b) and (n), and then the further exercise of the s 79 discretion based on the facts as found by the primary judge.
[emphasis added]
ADDITIONAL REASONS
Section 75(2)(b) of the Act requires the Court to consider the income, property and financial resources of each of the parties and the physical or mental capacity of each of them for appropriate gainful employment.
The findings and reasoning at paragraphs [2], [3], [69], [91], [92], [93], [164], [168(d)], [168(e)], [168(g)], [169(a)-(c)], [177], [179] and [202] of the first instance judgment are all relevant to the parties’ respective income and earning capacities, as they inform the issue of what work they each have historically done and are hence capable of doing.
There was no evidence before the Court of either party suffering a mental disorder or psychological traits that impair capacity for work.
There was limited evidence before the Court about the wife’s medical condition,[4] and otherwise it was not contentious that the parties were in generally good health. The effect of the evidence about the wife’s medical condition was that it would only possibly entail limited treatment and there was no meaningful evidence of it impacting on her functioning.
[4] Unchallenged affidavit evidence referred to at [202] of the first instance judgment.
The conclusion about the wife’s earning capacity and medical condition was effectively captured at [169] of the first instance judgment under the heading ss 79(2)(d) to 79(2)(g), but are equally relevant to s 75(2)(b). The findings demonstrate that I consider that the wife is likely in the short term to have some disadvantage in earning capacity and income for an undefinable temporary period as compared to the husband.
Despite this, neither party was particularly prejudiced in relation to gainful employment in the future. They are both well-educated and qualified professionals who had been employed in the finance sector before marriage and throughout a large part of the marriage. This was the common effect of both parties’ evidence and was uncontentious.
At [172] of the first instance judgment, I stated that the net adjustment for s 75(2) factors in favour of the husband should be less than 10 per cent if the wife moved to the United Kingdom. That is, I rejected the husband’s submission that a 10 per cent adjustment in favour of the husband pursuant to s 75(2)(c) of the Act for his care of the children is appropriate, as it was “on the high side”.
Concerning s 75(2)(n), there was no evidence before the Court about the parties having property or resources other than those disclosed at trial and which are subject to the findings at [197] of the first instance judgment.
Further, because I concluded that the wife did not have financial capacity to acquire the City C property, apart from each party retaining their superannuation, personal effects, chattels, furniture and vehicles in their possession, the real property was to be sold and the net proceeds distributed according to the orders made while factoring in the assets each party retained. This was self-evident from a collective reading of my reasons and the final orders.
At [172] of the first instance judgment, I also stated that the add-back issue needed attention. The reasoning about the add-back issue is found at [173] to [183] of the first instance judgment.
At [182] of the first instance judgment, I stated as follows in a draft judgment shared with the parties:
… In the exercise of my discretion, I consider that very small percentage adjustment should be made in favour of the mother for the contentions I have taken to be add-back arguments.
The husband did not make any submissions about the add-back issue when given opportunity to do so following consideration of the draft reasons for judgment.
At [198] of the first instance judgment, I stated as follows:
In my view the parties interests in the net assets identified above should be adjusted to achieve an outcome whereby the [husband] receives 54 per cent and the mother 46 per cent as I have concluded:
a)that [wife]’s overall contributions are somewhat more than the [husband]’s (at [171] above);
b)if the [wife] relocates to [City C] , as the [husband] will have the primary parenting responsibilities and the children will live with him, a net adjustment of less than 10 per cent is required (at [172]); and
c)a small adjustment in favour of the [wife] is needed for the add-back finding made.
The conclusion about the wife’s contributions being somewhat more overall is explained in the reasoning at [170] to [171] of the first instance judgment. The appeal court has said there was no error in that regard.[5]
[5] At [41] of the 1 September 2022 Full Court judgment.
However, to the extent that it was not apparent what that “somewhat more” corresponded to in money terms for each party based on the findings about the net asset pool, I observe that in this case I made findings that the net asset pool was $2,056,631.[6] The “somewhat more” I had contemplated was in the region of 2 per cent in favour of the wife. This meant that I concluded that on the basis of contributions alone adjustment of 52 per cent to the wife and 48 per cent to the husband, meaning that the wife would receive about $1,069,448 and the husband $987,182 inclusive of the assets each were to retain according to the Annexure to the judgment and their share of the net proceeds of sale of the two real estate properties.
[6] At [197] of the first instance judgment.
As there were relevant s 75(2) considerations, I then took those into account as required for the purpose of the orders to be made pursuant to s 79 of the Act.
The reasons at subparagraph [198(b)] of the first instance judgment stated that less than 10 per cent adjustment in favour of the husband should be made for his primary caring responsibilities for the children should the wife move back to the United Kingdom, noting that pursuant to the parenting orders, they were not permitted to relocate with the wife. I notionally contemplated an 8 per cent adjustment in favour of the husband.
Finally, the statement at [198(c)] of the first instance judgment was loosely expressed because the intention was to make a final adjustment in favour of the wife, allowing for the add-back argument pursuant to s 75(2)(o) of the Act, and for her temporary inferior income and earning capacity and including possible health impact of the medical condition, for which I collectively allowed about 2 per cent.
There is no basis for making further adjustments pursuant to s 75(2)(b), s 75(2)(c) or 75(2)(n) of the Act as relevant factors had been considered at first instance for the reasons expressed at [6] to [23] of these reasons. On the basis that the wife did move back to the United Kingdom, I concluded the parties’ net assets were to be divided 54 per cent to the husband and 46 per cent to the wife, allowing for the s 75(2) adjustments referred to above.
It was necessary to consider the possibility that the wife would not return to the United Kingdom. This is referred to at [202] and [210] of the first instance judgment. This variable scenario required refinement of adjustments that had been made pursuant to ss 75(2)(b) and 75(2)(c) of the Act.
At [202] of the first instance judgment there is a typographical error in that the reference to 56 per cent should be 57 per cent, consistent with the orders I made. The rationale for this was expressed as follows: [7]
[7] Affidavit of the mother filed 26 August 2021 at [13].
In summary these being for slightly more future parenting responsibilities, lower income for the foreseeable future and potential health complications relating to her [medical] condition.
The reference to lower income for the foreseeable future referred to present income and potential for future earnings. It acknowledged the conclusion I had reached on assets to be divided based on the same conclusions about contributions but differently for relevant s 75(2) considerations. It was uncontentious that the wife was not in employment at the time of trial but it was also uncontentious that she had good professional qualifications, significant work experience in the finance sector and actual experience working at the Employer BC.[8]
[8] As per the wife’s evidence under cross examination on 8 September 2021.
I reasoned that she would have limited earning capacity for an indefinite period of time in either Tasmania or the United Kingdom but her prospects would be less in City E than in the United Kingdom.[9] I took this into account pursuant to s 75(2)(b) of the Act allowing more generously in the scenario that she remained in Tasmania.
[9] At [169(a)] of the first instance judgment.
In addition, different adjustment was required pursuant to s 75(2)(c) of the Act, in favour of the wife due to her greater future parenting responsibility by virtue of the 8/6 parenting orders if she remained in City E.
Accordingly, I made a total adjustment of 5 per cent in favour of the wife in addition to the adjustment based on contributions alone in the alternate scenario of the wife remaining in City E. I concluded that the adjustment of the parties’ property and resources should be 57 per cent for the wife and 43 per cent to the husband providing the undertaking referred to in Order 6 was given. For this purpose, the 5 per cent adjustment was inclusive of the add-back findings referred to at [198(a)] and [198(c)] of the first instance judgment.
The disparity in dollar terms in favour of the husband on the final adjustment referred to at [24] of these reasons was about $165,000. This is, in my view, is just and equitable for the reasons given at first instance and elaborated upon herein.
The disparity in dollar terms in favour of the wife on the alternate final adjustment referred to at [30] of these reasons is an additional sum of around $287,000 to the wife. This is just and equitable overall in view of the findings and reasoning given in the first instance judgment and further reasons herein.
As the orders envisaged that the parties would retain identified assets and superannuation in their control or possession as referred to at [198] of the primary judgment, and because the net proceeds of sale from the properties would be distributed as required to achieve the overall percentage adjustment referred to in the final orders, it was unnecessary to make other adjustments pursuant to s 75(2)(n)(a) of the Act.
Section 75(2)(n)(b) of the Act was irrelevant as neither party was subject to bankruptcy.
No further or other adjustment of the parties’ assets is required than that which I ordered be made at first instance. Accordingly, I will pronounce orders afresh to reflect the conclusion that the assets be adjusted:
a.54 per cent in favour of the husband and 46 per cent to the wife if she relocates or fails to give the Undertaking required by the court; or
b.57 per cent in favour of the wife and 43 per cent to the husband if the wife does not relocate and gives the Undertaking required by the orders.
I certify that the preceding two (35) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Taglieri. Associate:
Dated: 8 February 2023
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