Zaher & Zaher
[2022] FedCFamC1A 124
•8 August 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Zaher & Zaher [2022] FedCFamC1A 124
Appeal from: Zaher & Zaher [2022] FedCFamC2F 312 Appeal number(s): NAA 72 of 2022 File number(s): PAC 1373 of 2020 Judgment of: AUSTIN J Date of judgment: 8 August 2022 Catchwords: FAMILY LAW – APPEAL – Property – Where shortly before the hearing the respondent conceded the appeal – Mistake of fact – Where the primary judge fell into error by finding a property had been purchased using sale proceeds from a sale yet to occur – Where the mistake was material – Inadequacy of reasons – Where the reasons about the parties’ respective financial contributions and how they reflected in the ultimate division of property are unclear – Appeal allowed by consent – Costs certificates granted in respect of the appeal and the re-hearing. Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 75, 79, 117 Cases cited: DL v The Queen (2018) 266 CLR 1; [2018] HCA 26
Pettitt v Dunkley [1971] 1 NSWLR 376
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Number of paragraphs: 33 Date of hearing: 8 August 2022 Place: Sydney Counsel for the Appellant: Mr Cummings SC with Mr Allan Solicitor for the Appellant: Safe Harbour Lawyers Counsel for the Respondent: Mr Sansom SC Solicitor for the Respondent: Macquarie Law Group ORDERS
NAA 72 of 2022
PAC 1373 of 2020FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR ZAHER
Appellant
AND: MS ZAHER
Respondent
ORDER MADE BY:
AUSTIN J
DATE OF ORDER:
8 AUGUST 2022
BY CONSENT, IT IS ORDERED THAT:
1.The Application in an Appeal filed on 4 August 2022 is granted, such that the appeal is amended by the withdrawal of Ground 1 and the addition of Ground 4.6.
2.The appeal, as amended, is allowed.
3.Orders 1 to 11 inclusive made on 18 March 2022 are set aside.
4.The proceedings are remitted for re-hearing by a judge of the Federal Circuit and Family Court of Australia (Division 2) other than the primary judge.
IT IS FURTHER ORDERED THAT:
5.The appellant’s application for costs is dismissed.
6.The appellant is granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in relation to the appeal.
7.The respondent is granted a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by her in relation to the appeal.
8.The Court grants to both the appellant and the respondent costs certificates pursuant to s 8 of the Federal Proceedings (Costs) Act1981 (Cth) being certificates that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise payments under that Act to the parties in respect of the costs incurred by them in relation to the re-hearing.
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).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zaher & Zaher has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE
REASONS FOR JUDGMENTAUSTIN J:
The appellant appeals from property settlement orders made between he and the respondent on 18 March 2022 under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”) by a judge of the Federal Circuit and Family Court of Australia (Division 2).
Shortly before the appeal hearing, the appellant abandoned the central plank of the appeal and the respondent then conceded the appeal on the residual amended grounds. The parties agreed there was no option but to remit the proceedings for re-hearing by a judge other than the primary judge.
BACKGROUND
The parties hail from Country B and arrived together in Australia in 1987 using forged visas.
They were accompanied by three children. It transpired that one of the children was in fact the respondent’s brother. The respondent bore two more children after her arrival in Australia and alleged the appellant is the biological father of her four children, but the appellant denied his paternity of them all. The appellant declined to submit to paternity testing to definitively settle the dispute and so the primary judge inferentially found his paternity was established (at [75]). Notwithstanding the deception practised upon the Australian immigration authorities, the parties and the children were all granted permanent residence status in 1991.
Not only did the appellant deny his paternity of the children, he denied the parties were ever married or lived in a de facto relationship, notwithstanding they lived in the same residence from the time they arrived in Australia. During that time they occupied several homes, at least one of which they jointly owned.
The parties separated in 2014 (at [80]). In 2015, the respondent bought and registered in his own name a residential property (“the Suburb C property”), which he then occupied. He denied the respondent lived there, but she and an adult child alleged they did until they vacated the property in September 2019 when it was razed by fire.
The parties conducted the proceedings below upon the premise that the only assets available for division between them were the Suburb C property (the unimproved land value of which was about $1 million, net of the mortgage debt) and an insurance payout for the destroyed home ($702,644). Unless and until any adjustment order was made under the Act, the appellant enjoyed exclusive legal proprietary interest in those two assets.
The appealed orders were made and reasons were published in March 2022, commendably promptly after the trial was concluded.
The effect of the orders was to divide the assets equally, by requiring the sale of the Suburb C property and the equal distribution of both the net sale proceeds and the insurance payout.
The primary judge also formally declared the parties “were in a previous marital relationship” (Order 12) and, given the appellant’s abandonment of the first and principal ground of appeal, that order will stand. The appellant must now accept the existence of jurisdiction, by reason of an existent “matrimonial cause”, to entertain the parties’ underlying applications for relief under Pt VIII of the Act.
THE APPEAL
The appellant confined his complaints to legal error, discretionary error, and the insufficiency of reasons (Grounds 2, 3 and 4).
Grounds 2 and 3 are generally directed to the same underlying complaint, which is that the primary judge erred by finding the purchase of the Suburb C property, registered in the appellant’s sole name, was facilitated by use of the net proceeds realised on the sale of the parties’ former jointly owned property at Suburb D (“the Suburb D”). It is alleged and admitted that the primary judge failed to give adequate reasons for the finding (Ground 2) and mistook the facts in that regard (Ground 3).
Ground 4 contended the primary judge fell into discretionary error by dividing the parties’ property equally, essentially because the appellant was not given commensurate credit for his exclusive acquisition of the Suburb C property in 2015, following the parties’ separation in January 2014. It is alternatively contended that, even if there was no discretionary error, insufficient reasons for the result were exposed.
The reasons for judgment
The parties arrived in Australia in 1987 with no assets (at [87]). They cohabited in Australia until their marital separation in January 2014 (at [80]), though they continued to live under the same roof until September 2019 (at [81]).
During the parties’ cohabitation, the respondent was the primary carer for the parties’ four children and the primary homemaker, with little assistance from the appellant (at [82] and [104]). He instead pursued business activities to generate income (at [83] and [102]), but the respondent was also gainfully employed for about five years (at [101]–[102]). Together they toiled to acquire real property, progressively expanding their wealth. The primary judge accepted the respondent’s claim that she continued to do the cooking, cleaning and maintenance at the Suburb C property right up until September 2019 (at [76]).
By the time of trial, the appellant was the sole legal owner of the only material assets: the Suburb C property and the insurance payout in respect of the destroyed home. The value of those assets was enhanced by “a significant increase in the Sydney property market” after the parties’ separation in 2014 (at [105]). Both parties were in their late 60’s and both had suffered some ill health (at [102]), but whereas the respondent had not been employed since her serious ill health in 2011, the appellant “still engages in business activities” and had “the apparent capacity…to financially support himself” (at [102] and [105]).
Given the factual findings, together with the appellant’s concession the respondent was entitled to a cash payment of $540,000 (on the facts found) from property owned by him by way of property settlement (at [84]), the primary judge found it would be just and equitable to adjust their property interests (at [83]–[85]), satisfying the enquiry posited by s 79(2) of the Act.
His Honour decided, pursuant to the exercise of discretion under ss 79(4) and 75(2) of the Act, it would not be just and equitable to divide the property on anything other than an equal basis (at [105]–[106]), which would result in the respondent receiving some $850,000 in cash.
The errors
It was the appellant’s case at first instance that he alone bought the Suburb C property in March 2015 and, when the Suburb D property was later sold in April 2015, the parties equally divided the net sale proceeds and they each spent their own shares separately. He contended only his one-half share was attributed towards the Suburb C property.
The respondent denied getting her one-half share of the Suburb D sale proceeds, though she apparently made a contrary admission to a third party (at [56]). She alleged the appellant controlled and kept confidential his expenditure of all the money realised on the sale of all the formerly owned parcels of real estate (at [25]–[28] and [92]), which he did not refute other than in relation to the Suburb D property (at [56]).
The appellant alleged the respondent fabricated the denial of receiving her one-half share of the Suburb D proceeds in order to cover her deceptive simultaneously receipt of welfare payments. He adduced evidence of a handwritten note dated 23 July 2018, supposedly signed by the respondent, saying in part:
I [wife’s name] wish to advise sold jontley (sic) owned house at Suburb D in 2015 April.
…
I gifted my ½ the share of $183,829 to my husband.
(Annexure to appellant’s affidavit filed 25 January 2022, p. 110)
Nonetheless, the primary judge accepted the respondent’s evidence and found the appellant exercised exclusive control over the “family finances” (at [83] and [89]), but did not deal adequately with the factual conflict over what became of the Suburb D sale proceeds.
The Suburb D property was sold for approximately $943,000 in April 2015, from which the net proceeds of sale were about $368,000 (at [28], [36] and [56]). The Suburb C property was purchased the month before in March 2015 for $700,000 (Appellant’s affidavit filed 25 January 2022 at [109]). It follows that the Suburb D sale proceeds could not possibly have been used as part of the purchase price for Suburb C, yet that is what the primary judge purported to find or infer (at [98] and [100]).
The appellant deposed he purchased the Suburb C property without any financial contribution from the respondent, using the proceeds of a personal injury claim, some savings, and a loan secured by mortgage over the property. Feasibly, if the appellant had retained the totality of the Suburb D sale proceeds, as the respondent alleged, those funds might have been later used to defray the balance of the bank loan, but there was no evidence of that and no finding made to that effect. The debit balance of the bank loan was still $466,000 at the time of trial (at [86]).
In respect of the use of the sale proceeds of the Suburb D property and the purchase of the Suburb C property, the primary judge found:
98.Further, the Court has considerable questions as to the source of the funds used to fund the purchase other than by way of a mortgage. There is an inference that the respondent used the entire surplus from the sale of the previous premises at Suburb D to fund the purchase of the premise of Suburb C. In drawing this inference, the Court is mindful of the claim by the applicant that the respondent exercised coercive financial control over her. …
99.… Counsel for the applicant submitted that the respondent’s financial affairs were opaque. The Court accepts this submission.
100.…The Court is unable to be reasonably satisfied on the available evidence before it, noting the opaque nature of the finances of the respondent, and the assertion of coercive financial control by the respondent, that the applicant did not contribute some funds towards the purchase of the home that Suburb C from the sale of the property at Suburb D.
Evidently, the situation was less than clear to the primary judge.
The primary judge accepted the appellant received gross compensation of $370,000 from a personal injury claim at some point during the marriage (at [96]), but there was no evidence of the net sum actually received by the appellant or precisely how it was spent. As a consequence, the reasons are silent about the appellant’s financial contribution in that regard. It seems to have been ignored due to the lack of specificity in the evidence.
The primary judge did not accept the appellant’s evidence about his direct financial expenditure of $200,000 on renovations to the Suburb C property (at [97]) but, if the appellant received damages from his personal injury claim, the money must have been spent somehow. The respondent accepted at trial the appellant had little or no savings. The reasons inadequately deal with that aspect of the evidence concerning the appellant’s financial contributions.
The appellant’s non-financial contributions to the family were found to be minimal (at [82] and [104]), but that finding seems completely consistent with the appellant’s case at trial of never being married to the respondent and not being the father of her four children.
Both parties were found to be unreliable witnesses, so it must be said the task of making factual findings about the relevant financial contributions was made all the more difficult. Nonetheless, the apparent factual mistake about the Suburb D property sale proceeds being used towards the purchase price of the Suburb C property was material. The lack of clarity in the reasons about the parties’ respective financial contributions and how they reflected in the ultimate division of property was a material error of law (Pettitt v Dunkley [1971] 1 NSWLR 376 at 382; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247; DL v The Queen (2018) 265 CLR 1 at [131]).
CONCLUSION
The parties agree the appeal should be allowed, as indeed it should for the appealable errors described.
The appellant ambitiously sought costs against the respondent, which application is refused. The appellant eschewed the need for reasons to explain why, but something brief should be said. For four months the principal plank of the appeal was that there was no marriage and hence no jurisdiction to make the orders. That too had been the central theme of the trial. Just days before the appeal was heard, the allegation was sensibly withdrawn by the appellant. However, by comparison, it only took a matter of days for the respondent to abandon resistance to the remainder of the appeal concerning the factual mistake and the legal error of insufficient reasons. The ordinary rule in s 117(1) of the Act should prevail.
The appeal succeeds, in large measure, for the material legal error of insufficient reasons. The parties’ respective applications for costs certificates for both the appeal and the re-hearings are granted.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 9 August 2022
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