Zao & Lee
[2023] FedCFamC1A 232
•20 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Zao & Lee [2023] FedCFamC1A 232
Appeal from: Zao & Lee [2023] FedCFamC1F 675 Appeal number: NAA 251 of 2023 File number: SYC 8556 of 2015 Judgment of: MCCLELLAND DCJ, JARRETT & RIETHMULLER JJ Date of judgment: 20 December 2023 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Whether primary judge had “double dipped” in notionally adding back sums to the property pool – Where one add-back conceded by respondent – Evidence does not establish further add-backs were “double dipped” – Whether primary judge erred in not making any adjustment for non-disclosure by respondent – Where appellant’s case at trial did not seek an adjustment – Whether primary judge gave inadequate weight to appellant’s initial submissions – Set aside Order 2 of the orders made on 16 August, 2023 – Appeal otherwise dismissed. Legislation: Family Law Act 1975 (Cth) ss 75(2), 79(2) Cases cited: CDJ v VAJ (1998) 197 CLR 172, 230–231; [1998] HCA 67
Gronow v Gronow (1979) 144 CLR 513, 519; [1979] HCA 63
Metwally v University of Wollongong (1985) 60 ALR 68, 71; [1985] HCA 28
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Townsend and Townsend (1995) FLC 92-569; [1994] FamCA 144
Number of paragraphs: 74 Date of hearing: 4 December 2023 Place: Sydney Counsel for the Appellant: Mr Fermanis Solicitor for the Appellant: Gramelis Attorneys Counsel for the Respondent: Ms Cohen Solicitor for the Respondent: Westlink Legal Pty Ltd ORDERS
NAA 251 of 2023
SYC 8556 of 2015FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR ZAO
Appellant
AND: MS LEE
Respondent
ORDER MADE BY:
MCCLELLAND DCJ, JARRETT & RIETHMULLER JJ
DATE OF ORDER:
20 DECEMBER 2023
THE COURT ORDERS THAT:
1.Set aside Order 2 of the orders of the primary judge made on 16 August, 2023 and in lieu thereof order:
Within 28 days of settlement of the sale, the respondent wife (“the wife”) is to pay the husband a lump sum (“the lump sum”) equivalent to any shortfall between the husband receiving all of the net sale proceeds plus $193,463.05, and 50 per cent of the net sale proceeds plus $1,513,883.02, failing which interest will accrue on the said sum in accordance with the Family Law Act 1975 (Cth), its Rules and Regulations, calculated from 28 days from the date of settlement aforesaid.
2.Otherwise the appeal be dismissed.
3.The appellant pay the respondent’s costs of and incidental to the appeal fixed in the sum of $13,000.
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 the pseudonym Zao & Lee has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCCLELLAND DCJ, JARRETT & RIETHMULLER JJ:
By her Notice of Appeal filed on 12 September, 2023 the appellant wife seeks to appeal final property adjustment orders made on 16 August, 2023 by a judge of the Federal Circuit and Family Court of Australia (Division 1). The respondent husband concedes the appeal in part and agrees to a minor adjustment to the primary judge’s orders, but otherwise opposes the appeal.
For the reasons that follow, we have concluded that Grounds 2 and 3 fail. However, on the basis of the respondent’s concession with respect to one aspect of Ground 1, with which we agree, the appeal should be allowed in part. The parties agreed that in the event that the Court allowed the appeal on that basis, the resulting adjustment to the net value of the property available for distribution was not so significant as to justify the court embarking upon a wholesale re-assessment of the orders made by the primary judge. The parties agreed that it was sufficient to make orders that reflected the adjusted net value of the parties’ property without any further consideration of the general discretionary matters required when making a property adjustment order.
First, some brief context. The parties commenced cohabitation in mid 2010 and married in late 2010. There are no children from their marriage, though both have children from previous relationships. They separated in December, 2014 and were divorced in 2016. Their relationship was a little over four years in length. Proceedings were commenced in December, 2015 and the primary judge heard the case over four days in July, 2023. Judgment and reasons were delivered soon thereafter on 16 August, 2023.
The Notice of Appeal filed 12 September, 2023 advances three grounds of appeal. Ground 1 relates to amounts that the primary judge notionally “added-back” to the pool of property available for division between the parties. Ground 2 alleges that the primary judge erred by not making any adjustment to the parties’ contribution-based assessment pursuant to s 75(2) of the Family Law Act 1975 (Cth) to take account of the respondent’s failure to properly disclose his financial position. Ground 3 alleges that the primary judge failed to give proper weight to the appellant’s contributions and gave undue weight to the respondent’s contributions in coming to his conclusion that the parties’ contributions to the acquisition, conservation and improvement of their property were equal.
GROUND 1
The kernel of this ground is sub-Ground 1.2 which asserts that in making allowance as add-backs of some $636,712, the primary judge “double-dipped” in the amount of $403,930.
The primary judge addressed the “add-back” items contended for by the parties between [41]–[51] of his reasons for judgment by reference to the item numbers assigned to them in the balance sheet tendered by the parties and reproduced at [35] of those reasons. The add-back items comprised 21 items numbered 20–40. His Honour’s findings about the add-backs are summarised in the balance sheet as found by him at [60] of his reasons. Relevantly, the balance sheet as found by the primary judge included two additional “add-backs” not expressly contended for by either party – items 40A and 40B. More about these items in a moment.
To make good this ground of appeal, the appellant points to five amounts found by the primary judge to be appropriate add-backs and which total to the amount “double-dipped”. Those amounts are conveniently summarised in the following table with item numbers as used by the primary judge in [60] of his reasons. They are all to the credit of the appellant:
ADDBACKS
23.
W
Withdrawal from …45 on 14-25 Aug 2015
$203,000
30.
W
Withdrawals from …28 on 03 Feb 2017 Intl
$15,030
33.
W
Withdrawals from …28 on 24 July 2018 Intl
$100,000
34.
W
Withdrawals from …28 on 27 Aug 2018
$86,000
38.
W
Gambling
$29,782
40A
W
Deposit for Suburb T property
$57,330
40B
W
Withdrawal from NAB offset account
$145,570
Total
$636,712.00
Items 23 and 38 in the table above were and remain, uncontentious. Items 30, 33, 34, 40A and 40B are the subject of this ground of appeal.
The respondent concedes that items 40A and 40B were erroneously included and should be removed. The concession is well made. It was not in dispute that the parties had a banking account (ending in …45) from which she withdrew $202,900 (rounded by the appellant’s concession to $203,000) between 14 and 25 August, 2015. At trial the appellant conceded, erroneously we think, that this combined sum should be “added-back” to the property available for division and credited to her.
It was uncontentious that $57,330 of the $202,900 was used by the appellant as a deposit for the purchase of certain real property at Suburb T, New South Wales after separation. The parties agreed and the primary judge accepted, that this money should be seen as an “add-back”. In the circumstances of the case, that was a convenient way of dealing with the appellant’s use of this money to the respondent’s exclusion before the finalisation of the proceedings. However, that sum has been included in the balance sheet twice (as part of item 23 and as item 40A) as the appellant contends. The respondent accepts that is so. It should only be counted once.
As to the balance of $145,570, the evidence was that the appellant transferred these funds from the account ending in …45 to her own account ending in …28, again excluding the respondent from the use of these funds. The amount at item 40B is this balance of the $202,900 at item 23. The respondent also accepts that this amount has been included twice in the balance sheet. It should only be included once. However, the concession that this amount ought to be an “add-back” at all is curious. The balance of the …28 account as at the date of the trial was in the balance sheet as found by the primary judge (item 13 of the table at [60] of the reasons). The transaction simply moved the funds from one account (a joint account) to another in the appellant’s sole name. The funds were not otherwise dissipated by that transaction and without subsequent transactions dissipating them, they would have been available for distribution in these proceedings as part of the balance of that account. It is not so much the transaction moving the $145,570 from one account to another which is objectionable, but rather it is any subsequent disbursal of those funds for the appellant’s own purposes, rendering them unavailable for division between the parties that is the evil. So much is demonstrated by Townsend and Townsend (1995) FLC 92-569. In that case, the husband sold a taxi and associated taxi licence at about the time of separation, received net proceeds of sale of $148,000 and spent all the money prior to the finalisation of property proceedings. Some of the money went to defray joint liabilities and other expenditure which was seen by the primary judge as reasonable. Other funds were expended exclusively on the husband’s own purposes. On appeal, Nicholson CJ (with whom Fogarty and Jordan JJ agreed) said at 81,655:
It is, of course, necessary to make deductions for certain expenditures and, indeed, this was conceded by counsel for the wife. In particular, it seems that the sum of $12,500 repaid by the husband to his mother was in respect of a loan which was largely used for the purpose of paying out the mortgage on the matrimonial home and it seems to me accordingly that it is appropriate that that sum be brought into account. Similarly, there is the cost of the purchase of a motor vehicle of $12,895 which vehicle has been brought into account as part of the asset pool and therefore that sum should also be deducted.
Further, there are certain payments in relation to the matrimonial home in relation to telephone bills and electricity of $121.47, $420.82 and $306.71 and there is an additional expenditure relating to the purchase of the husband’s share of the home in Nelson Bay which should also be deducted from the total of $148,000. If that is done one arrives at a balance of $106,244.
It can be observed that it was not the liquidation of the taxi itself that constituted the objectionable premature distribution of assets, since the funds used to pay out debts connected with the parties’ marriage and transferred into other assets were not notionally added back. Rather, what constituted the objectionable premature distribution was the use of funds received from selling the taxi by the husband exclusively for his own purposes or in respect of which there was no reasonable explanation for their dissipation.
Thus, the concession that $145,570 ought to be “added-back” to the pool simply because it was a transfer from the parties’ joint account to the appellant’s own account without more, was probably erroneous. If the approach in Townsend is applied, the fact of the transfer from the joint account to the appellant’s account is of historical interest only. What is of critical importance is the reason for the dissipation of amounts subsequently withdrawn from the appellant’s account.
That brings us to items 30, 33 and 34 of the table set out above. The appellant’s case before us was not that the payments represented by those items were capable of categorisation by the primary judge as premature distributions of the parties’ property to her. Rather, her case is that those payments were made using the $145,570 transferred to her account from the joint account – an amount already taken up in item 23. This is a question of fact which depends upon the evidence led before the primary judge.
On this issue, the evidence before the primary judge consisted of the appellant’s trial affidavit, her answers in cross-examination and some bank statements.
Of the nearly 1500 pages of exhibits tendered by the parties at the trial, there were more than 180 pages of statements from the appellant’s …28 account covering a period of at least 10 years. The statements show many transactions over the period between August, 2015 and August, 2018. The evidence demonstrated that this account was the account into which the appellant received her wages and other lump sums from time to time. Statements for the parties’ joint account were also in evidence.
The parties identified for his Honour the relevant withdrawals from the joint account ($145,570 on 14 August, 2015 and $57,330 on 25 August, 2015). His Honour was also taken to statements for the appellant’s account showing the deposit of the $145,570 on 14 August, 2015 and another deposit of $169,093.98 on 25 September, 2015. This latter amount was the surplus funds the appellant received from the loan she used to finance the purchase of the Suburb T property. She borrowed $700,000 but only needed a little more than $530,000 to complete the purchase. She deposited surplus loan funds to this account.
The subsequent withdrawal of the amounts represented by items 30, 33 and 34 ($150,000 on 3 February, 2017; $100,000 on 24 July, 2018 and $86,000 on 27 August, 2018) were also identified for his Honour.
In her cross-examination, the appellant’s evidence varied about the source of the funds in her …28 account that were used to make the payments in items 30, 33 and 34 of the add-backs.
The appellant’s case was that the amount of $150,000, withdrawn on 3 February, 2017, was lent to her niece in Country D. His Honour found that some of this loan had been repaid and the outstanding amount is the amount represented by item 30 in the table above. About this withdrawal, the following exchange took place during cross-examination of the appellant (our emphasis):
At any rate, getting back to – you sent $150,000 to [Country D] on 3 February 2017? Yes?---Yes.
And that came out of the joint savings of – or the joint moneys of [the respondent] and yourself?---That’s a – no, that’s – that’s – I refuse to answer this question right this way.
Well, you didn’t save that money yourself without the assistance of the money that [the respondent] caused to send to Australia?---No. This money actually return back already. Returned back.
Well – but that was money that was from – included part of his money he contributed?---No. Because I withdraw – I – I got home loan for the [Suburb T] property and that was the $700,000 and the loan was 588. The surplus was more than 11 hundred – 11 hundred thousand dollars, and plus, for these two years I made income.
HIS HONOUR: Sorry, are you saying that this money, the $150,000, part of it is the profit from the sale of [Suburb T]?---No, no, no. One I purchased the property in [Suburb T], that was – the loan was 700 and the property price was 588 and the – the surplus between these numbers is about 100 – more than $110,000, and plus, for these – more than two years I made my income and I send this money to my niece, and eventually the money was returned back to Australia. And this is nothing to do with this $203,000.
(Transcript 6 July, 2023, p.303, lines 19–42)
Accepting this evidence at face value, the primary judge could not have concluded that the amount at item 30 was sourced from the $145,570 removed from the joint account. Leaving aside the question of the whether this was an appropriate add-back (something not the subject of argument before us or in the court below), no double-dipping is apparent.
When the appellant was cross-examined about the two subsequent withdrawals totalling $186,000 the following exchange took place (our emphasis):
So in the space of – from after separation in 2000 and – end of 2014 and within – having had $400,000 in the joint account in June of 2015, you then managed on top of that 200,000 that you’ve admitted you’ve taken out for the purchase of [Suburb T] – is that – you were able to send or withdraw $250,000 cash?---As I said, I took $203,000.
Leaving that aside - - -?---Okay.
There’s 100 – you’ve taken that?---Yes. 200 – or took it.
You’ve agreed to that?---Yes.
Then, you take 100 and – you send $150,000 to [Country D] on 3 February 2017?---Mmm.
From your […28] account. Then, you withdraw $100,000 and give to your daughter, you say, on 24 July 2018 – and that was taken from your […28] account. So within the space of two and a bit – two and a half years, you – we’ve taken $250,000 and given it away?---Yes. That’s what I said. This ought to be part of the $200,000 – 200,003 – $203,000.
No. It’s not part of the $203,000, as you have said, because you have said earlier that the – on 17 August 2015, you took – you withdrew from the offset account for [H Street], which is 6345, $145,570 and $57,330 for [Suburb T]?---Mmm.
This is a separate amount of money. That’s 203,000, and you’ve agreed that that needs to come back, but these are separate accounts – separate amounts. $250,000 within the space of a few years?---As I said, there was a surplus from the home loan in one – 11 hundred thousand dollars.
Madam – madam, you’re simply not telling the truth about that – these – this money?---I’m just trying my - - -
This money was money that was derived from moneys from the – [the respondent] that he brought in from [Country D]?---No. I only took $203,000 – only.
Now, we will get to court book 234?---So which page?
Two – page 234, and you can see that on that page, on 24 August 2018, [the appellant’s niece] – that is your niece – she forwarded to your […28] account $61,085?---Sorry. Which page are you talking about?
…
THE WITNESS: 20 August – yes. That’s the money he returned back or she returned back.
…
Well, again, on 27 August 2018, there was an internet withdrawal of $86,000?---That was money I lent to my daughter.
And this money came from joint funds of [the respondent] and yourself?---This money is part of 203,000.
That’s – and you haven’t shown that anywhere in these – in your evidence before the court?---Yes. I’ve given the evidence to the court. I withdrew a total amount – $203,000 – and after that, the money – I managed it here and there, and that would be including the home loan I gained from [S Bank] for the [Suburb T] property.
And you’re making that up as we go?---Pardon?
Aren’t you?---So what – what did you mean?
You’re making it up – this evidence up?---No. I’m telling the truth.
Right. Now, the – I’m sorry. I think I’m taking you backwards. Go to 229. There’s 5 another – on 14 June 2018, there’s a payment of 60,885 back?---Yes. That’s from [the appellant’s niece]. Yes. My niece.
…
[COUNSEL FOR THE RESPONDENT]: Now, getting back to this – you say you’ve lent money to your daughter, have you? Or you gave it to your daughter – this 100,000?---Because this is not my money. It’s part of our money I took from the joint account, and $203,000 – this the money – part of the money I used.
No. Madam, it’s not to do with the $203,000. This is a separate amount of $100,000 you took from the joint moneys?---I took 200 – 203,000 – 200 – $203,000 in total. That’s it. I did not took – I did not take any more from a joint account.
…
Yes. So there’s 100 – so where was – $186,000?---I sent to her.
Where was she?---She’s in Australia.
Madam, I suggest you sent this money to her because you were trying to not disclose to this court that you had sums of money, significant sums of money, including the 186,000 that you didn’t want this court to know about?---I did send this document to the court. I admit this is the money I’ve sent to my daughter. I did[n’t] try to hide anything here. Everything exposed here.
But that money came from – derives from moneys that were left over as a consequence of the money – after the separation, money from [the respondent] brought in from [Country D]?
HIS HONOUR: Do you agree or disagree?---I disagree. Because I made the income, more than – almost $300,000 after tax.
(Transcript 6 July, 2023, p.304 line 15 to p.305 line 8; p.305 lines 20–21; p.305 line 35 to p.306 line 7; p.306 lines 20–27; p.311 lines 22–37)
The following observations can be made about the appellant’s testimony, namely:
(a)she asserted that she did not use any of the money taken from the …45 account to send $150,000 to her niece in Country D, but rather surplus funds borrowed by her to purchase Suburb T;
(b)her niece in Country D repaid some of that money, this seems to have been accepted by the respondent;
(c)she asserted at one point that funds totalling $186,000 were paid from the $203,000 removed by her from the …45 account, but that must be a reference to only $145,570 because the balance was paid as a deposit to purchase the Suburb T property;
(d)there is a suggestion, confirmed in the written submissions for the appellant, that the appellant suggested that some of the money sent to her daughter was not sourced from the money in the joint account at all, but came from her income; and
(e)contrary to the submission by counsel for the appellant, the appellant was indeed challenged about her evidence that the amounts in items 30, 33 and 34 were disbursed from the amount received solely from the …45 account.
Faced with the appellant’s confused and confusing evidence, the primary judge was anxious to avoid any double counting. In that respect, the following exchange is worth noting (our emphasis):
HIS HONOUR: Well, just a minute. When you say half of the sum should go on the add-back - - -
[COUNSEL FOR THE RESPONDENT]: Well, it will - - -
[SOLICITOR-ADVOCATE FOR THE APPELLANT]: The full amount can - - -
HIS HONOUR: The full amount - - -
[COUNSEL FOR THE RESPONDENT]: The full amount. Sorry, your Honour.
HIS HONOUR: - - - should go on the add-back. Yes. Yes. And that just raises this issue; I mean, at some stage you will, I hope, explain to me the relationship between this evidence at paragraph 76 of the wife’s affidavit and the purported add-backs at 35 items 20 – sorry, 21 through to 37. Okay - - -
[COUNSEL FOR THE RESPONDENT]: Yes, your Honour. There may be a number of them that aren’t pursued.
HIS HONOUR: Sorry, that are not?
[COUNSEL FOR THE RESPONDENT]: Pursued.
HIS HONOUR: Good.
[SOLICITOR-ADVOCATE FOR THE APPELLANT]: Actually, your Honour, perhaps I can assist. Item 23 is for an amount of $203,000. And I think, your Honour, you will find that 145 plus 57 is 203,000.
[COUNSEL FOR THE RESPONDENT]: So – thank you for that.
HIS HONOUR: Yes. Well, my point is I’m conscious, of course, not to double count. Add-backs.
[COUNSEL FOR THE RESPONDENT]: Yes. Yes, your Honour.
HIS HONOUR: And I’m looking for either a concession from the bar table or clarity in the evidence about how I should treat this.
[COUNSEL FOR THE RESPONDENT]: Yes, your Honour. So that’s a tick for that one.
HIS HONOUR: Sorry, is that conceded then?
[SOLICITOR-ADVOCATE FOR THE APPELLANT]: That’s my fault, your Honour. 23, in the right column, we should have put [the appellant]’s value as being 203,000. That’s my fault.
HIS HONOUR: So item 23 conceded at 203,000.
[SOLICITOR-ADVOCATE FOR THE APPELLANT]: 203,000. Correct, your Honour.
HIS HONOUR: And that represents the concessions at paragraph 76, is that right?
[SOLICITOR-ADVOCATE FOR THE APPELLANT]: It does.
(Transcript 6 July, 2023, p.278 line 22 to p.279 line 28)
Notwithstanding his Honour’s request for an explanation about the relationship between the appellant’s evidence and the purported add-backs identified in the parties’ table of assets, none was forthcoming. There was no submission, written or otherwise, to assist the primary judge with this issue. Indeed, the appellant submits before us that the evidence before the primary judge was that the source fund for the transactions giving rise to items 33 and 34 were “a myriad of transactions spanning over some three years including the deposit of the amount of $145,570” (appellant’s Summary of Argument filed 6 November, 2023, paragraph 3.20). A similar submission was made by the appellant’s solicitor-advocate to the primary judge. Yet, save for the transactions forming the relevant items, the primary judge was given no assistance to identify how those statements and the myriad of transactions demonstrated what the appellant now argues. Neither could the appellant take us to any evidence or explanation other than that which we have set out above on this issue to demonstrate the fact of double counting.
The question of whether the add-back items 30, 33 and 34 were double counted is a question of fact to be determined on the evidence presented at the trial. The evidence to which we have been taken does not persuade us that the primary judge erroneously included items 30, 33 and 34 in the balance sheet in addition to item 23.
In addition to the assertion of double counting, the appellant raises additional arguments against the inclusion of items 30, 33 and 34 as “add-backs”. We will deal with these arguments in turn.
As to item 30 (the balance outstanding of a loan by the appellant to her niece) the primary judge said:
44Item 30 is added back though not in the amount sought by the husband. The evidence indicates that the wife did in fact either loan or gift to her niece the sum of $150,000, but the bank statements suggest that $134,970 was repaid, thus meaning that an add back of $15,030 is allowed.
Independently of the double counting argument, the appellant argues that the advance must have been a loan in circumstances where it was found that the niece repaid certain sums to the appellant and his Honour ought to have made that finding. However, the appellant does not explain why a finding that it was a loan was necessary. In oral submissions, counsel for the appellant effectively abandoned this argument, but we nonetheless shall deal with it.
The appellant does not cavil with the finding that $134,970 was repaid and that the balance remaining was $15,030. If the advance was indeed a loan, the balance outstanding would have come onto the appellant’s side of the balance sheet as an asset in any event. In practical terms, the outcome would be the same. The appellant held an asset, either as a notional add-back because she had prematurely distributed assets to herself, or as a debt due to her by her niece. A finding as to the nature of the advance was unnecessary because if it was a loan, the factual history demonstrated that it would probably be repaid. No argument was advanced that the loan was not likely to be repaid. If it was not a loan, it was, as the primary judge articulated at [41], a premature distribution of assets to herself.
The second argument concern items 33 and 34 together and is foreshadowed in sub-Ground 1.4. The appellant’s written submissions refine the ground of appeal so as to focus upon these items only. The appellant submits:
3.21.The extent of his Honour’s reasons at [AB:37; J:46] are as follows:
Item 33, $100,000, is a payment by the wife to her daughter which, on the evidence, has not been repaid. Item 34, $86,000, falls into the same category. These will be added back.
3.22.His Honour’s reasons at [AB:37; J:46] are simply a statement of a conclusion without elucidating how or why that conclusion was reached.
(Appellant’s Summary of Argument filed 6 November, 2023)
Read in isolation, the appellant’s argument has some merit. But the primary judge’s reasons need to be read as a whole in the context of the cases put by the parties at trial. Paragraph 41 of the primary judge’s reasons sets out:
41A number of add backs were contended for, and where the Court has allowed these it is on the basis of evidence indicating that the expenditure in question was a premature distribution of matrimonial assets. Moreover, the Court is satisfied that even if these were payments post-dating separation, the source of the monies was the co-mingled funds of the husband and the wife.
The primary judge expresses his finding that the “add-backs” he has allowed have been allowed on the basis that they were a premature distribution of the parties’ assets to one or other of them. No challenge is mounted to that finding. The finding at [41] explains the basis for his Honour’s determination at [46].
In any event, the appellant’s case in relation to these two amounts was that they were loans to her daughter that had been funded from the money taken from the joint account. For reasons we have explained above, the evidence does not demonstrate, however, that they were so funded. Instead, they represented, if not an add-back for the reasons determined by the primary judge, then an asset in the hands of the appellant as at the date of the trial and something to be brought to account.
Whilst the parties agree and we accept that the primary judge unintentionally double counted in that item 23 corresponds to items 40A and 40B, that is the only measure of success this ground enjoys. The balance of this ground of appeal has no merit.
GROUND 2
This ground of appeal has two facets. The first is the proposition that the primary judge erred in finding that the appellant did not seek any adjustment pursuant to s 75(2) of the Act by reason of what the appellant alleged was the respondent’s lack of disclosure (sub-Ground 2.2).
This sub-ground must fail, however, because the appellant did not seek any adjustment pursuant to s 75(2) of the Act by reason of the respondent’s lack of disclosure. In fact, the appellant’s advocate expressly disavowed any adjustment under s 75(2) of the Act at all.
The respondent’s incomplete disclosure was a significant focus for the appellant at the trial. It is uncontroversial that the primary judge found that the respondent had not made proper disclosure of his financial circumstances because he did not make proper disclosure about assets he owned or controlled in Country D.
Given the energy and time put by the appellant’s advocate into establishing the respondent’s lack of disclosure, it is unsurprising that the primary judge was anxious to understand the significance of the non-disclosure and so, he asked the appellant’s advocate about the significance of the respondent’s non-disclosure:
HIS HONOUR: So let – let’s just do a hypothetical. Let’s say I accept that there was failure to disclose. What are the consequences of that in this case? So I think this is partly a credibility submission. So you’re saying it affects his credibility but – but anything else?
[SOLICITOR-ADVOCATE FOR THE APPELLANT]: It affects his credibility but, your Honour, there’s an authority. It’s Trang – T-r-a-n-g – & Kingsley [2007] FamCAFC 120. It was a decision by the Court of Appeal – Strickland, Murphy and Kent in Melbourne in 2017. I will take your Honour to that case in due course. I will briefly summarise that consequence in being that the – the wife in that scenario was described as a blatant failure to disclose, and the court – the judge at first instance found that because she failed to disclose, the court wasn’t going to make orders in her favour for an adjustment of property and left everything for the husband.
The court did not make an adjustment for her in her favour because she failed to disclose, and it’s a decision by the Court of Appeal. She failed to disclose, and the court said, “We’re not going to make an adjustment. We’re going to leave everything with the husband.” That was the finding by the trial judge, and that was upheld by the appeal court, and I can draw a parallel to this case in this way…
(Transcript 6 July, 2023, p.324 line 43 to p.325 line 14)
And again (our emphasis):
[SOLICITOR-ADVOCATE FOR THE APPELLANT]: It’s a very high threshold, and the legal argument was that you won’t get summary dismissal if it’s something that the trial judge – it’s a matter for the trial judge, and your Honour, that effectively means that it falls onto your Honour’s shoulder. This element of failure to disclose is for your Honour, and your Honour is the one, unfortunately, who was told by the – who was told by the appeal court that it’s for you to decide – the consequence. The appeal – the appeal court can’t summarily dismiss. It’s a very high threshold on very gravitas points despite that – we were invited by the registrar to do so, and we only did so because the registrar invited us. So, your Honour, this is something that falls to your shoulders to consider – the moral and social aspects that I’ve just set out to you – the parallels to criminal – finding beyond reasonable doubt. Your - - -
HIS HONOUR: But – but let’s get to the point. What do you want me to do with a finding that there has been nondisclosure?
[SOLICITOR-ADVOCATE FOR THE APPELLANT]: She keeps [Suburb E]. She keeps her superannuation. [Suburb T] is of no concern; she sold it for $20,000. He has not done his thing to comply with disclosure.
(Transcript 6 July, 2023, p.325 line 32 to p.326 line 3)
And, yet again:
HIS HONOUR: Yes. But we’re talking about the consequences of - - -
[SOLICITOR-ADVOCATE FOR THE APPELLANT]: The consequence is that, because we don’t know what he has in [Country D], we have no idea, because he hasn’t given us bank accounts that he has, we can’t test the veracity of the loans. For example, we can’t test if the money that was transferred in his relatives was, in fact, transferred from him in [Country D] to them first, like [the appellant’s niece]. Your Honour will recall [the appellant’s niece], the niece of [the appellant] where – excuse me – where she transferred money to [the appellant] but it was discovered that that money was from [the respondent] from an account that he had in [Country D], which is in the applicant court book which he has failed to disclose.
What if we got that account and it said – it showed that the money that was transferred to his relatives was actually transferred from him to their account first. What – that’s a hypothetical. But the thing is, we can’t test it. We just simply don’t know. And the consequences are just shuddering. It’s far reaching. And, as I said, it – the consequence – that’s why it’s a quasi – it is quasi-criminal because contempt of court, which is on the undertaking to disclosure, it is quasi-criminal. They are formally charged. I don’t know what the procedure is - - -
(Transcript 6 July, 2023, p.326 lines 5–22)
All of this culminated in this submission by the appellant’s solicitor-advocate:
[SOLICITOR-ADVOCATE FOR THE APPELLANT]: If your Honour were to make a ruling that, because he has failed to disclose, then a party who does not disclose their assets, then the other assets of the other party they can keep, on principle. That would make sound sense in this case.
As I said, your Honour, we can’t test any hypothesis. I could have asked these witnesses about scenarios but I simply don’t know. If I had some sort of inkling, I could have found out about scenarios that I could have presented to them but I just simply don’t know. And he admitted in the witness box he has simply chosen not to of his own volition, multiple times for the record. Your Honour, we then get to – and I’m happy to just close that – what I have to say about that because I think the words that I’ve chosen are careful, considered and I will get to that case of the appeal court shortly.
(Transcript 6 July, 2023, p.327 lines 3–13)
This is not a submission that there ought to be an adjustment to the parties’ contribution-based entitlement pursuant to s 75(2) of the Act or on any other basis. Rather, this is a speculative submission that his Honour should, as a matter of principle, leave the assets of the parties’ effectively where they were as a direct response to the respondent’s non-disclosure. At best, it was suggestive of a submission that, in the circumstances of the case and in particular the respondent’s non-disclosure, it was not just and equitable to make any property adjustment order at all. But the appellant did not put that case either.
Counsel for the appellant (who did not appear for the appellant at trial) valiantly pointed to the appellant’s case outline prepared and filed for the purposes of the trial as containing the necessary prompting for his Honour to consider the question of an adjustment under s 75(2) of the Act for the respondent’s non-disclosure. Relevantly, the following appears in that document:
41. What the Court can do, is make findings of a lack of proper disclosure. And take that as a consideration for making decisions across the board to reflect adjustments that are just and fair when the Court is effectively making decisions in the blind, because [the respondent] is hiding accounts and assets in [Country D].
(Case Outline Document dated 29 June, 2023)
We have difficulty accepting that this should have been seen by the primary judge as an invocation of s 75(2) of the Act as the basis for an adjustment to the parties’ contribution-based entitlement for two reasons. The first is the context in which the above extracted paragraph appears in the appellant’s case outline. It is preceded by two other paragraphs which bear on its purport (our emphasis):
6. Brief Summary of argument and Authorities:
1.The summary and best way of looking at the [appellant]’s position, and the case in general on both sides, is to consider the following propositions. Each will be expanded upon in detail in sections:
…
h.Non Disclosure by [the respondent]: There is an underlying issue about failure to disclose by [the respondent], that the Court must take into account in assessing how to treat the decision on contributions that has to be made across the board.
…
33. There is an underlying issue about failure to disclose by [the respondent], that the Court must take into account in assessing how to treat the decision on contributions that has to be made across the board.
(Case Outline Document dated 29 June, 2023)
Seen in the context of these two paragraphs, the ambiguity present in the submission at paragraph 41 is resolved. The submission is clearly that the question of the respondent’s non‑disclosure was relevant to the assessment of contributions. In the context of this ground, the appellant makes no complaint about the primary judge’s assessment of contributions, although she does so in Ground 3, albeit on a different basis
The second matter that tells against accepting that paragraph 41 should have been seen by the primary judge as an invocation of s 75(2) of the Act is the way in which the appellant chose to pursue her case at trial as revealed by the transcript extracts we have set out earlier. A party is bound by the conduct of his or her case and, except in the most exceptional circumstances, it is contrary to principle to allow a party to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so: Metwally v University of Wollongong (1985) 60 ALR 68 at 71.
It was never the appellant’s case before the primary judge that the parties’ contribution-based entitlement should be adjusted pursuant to s 75(2) of the Act for the respondent’s non‑disclosure. The primary judge made no error in failing to apprehend that she was pursuing such a case.
The primary judge did not err in recording that the appellant did not seek any adjustment pursuant to s 75(2) of the Act by reason of the respondent’s lack of disclosure.
It necessarily follows that the second facet of this ground, namely that the primary judge failed to take into consideration his findings about the respondent’s lack of disclosure and make any adjustments in favour of the appellant pursuant to s 75(2)(o) of the Act, must also fail. The appellant is bound by the way in which she ran her case at trial. Whilst the respondent’s non‑disclosure was something that might have informed an adjustment pursuant to s 75(2)(o) of the Act, the appellant did not advance that case. The solicitor-advocate for the appellant did not address s 75(2) of the Act at all. In final submissions, counsel for the respondent suggested that there should be no s 75(2) adjustment and the solicitor-advocate for the appellant made no submissions in reply.
Finally, the appellant submits that:
4.6Whilst the solicitor advocate for the Appellant did not expressly refer to section 75(2) of the Act as a basis for an adjustment by reason of the Respondent’s failure to comply with his duty of full and frank disclosure, it is clear that the solicitor advocate for the Appellant made submissions in two instances seeking an adjustment for nondisclosure. His Honour failed to engage with those submissions. The Appellant submits that His Honour did not take these material matters into consideration in assessing the contributions and the overall justice and equity of the orders as mandated in the principles laid down in House v The King.
(Appellant’s Summary of Argument filed 6 November, 2023) (Footnote omitted)
This submission seeks to engage with his Honour’s contribution-based assessment and questions of justice and equity (presumably as they arise in s 79(2) of the Act and are to be dealt with as explained in Stanford v Stanford (2012) 247 CLR 108). This submission is well beyond the bounds delineated in this ground of appeal, which by its express terms is confined to his Honour’s failure to consider and make adjustments pursuant to s 75(2) and 75(2)(o) of the Act. There was no application to amend the Notice of Appeal filed 12 September, 2023 or this ground of appeal to accommodate this broader argument.
Ground 2 of the Notice of Appeal filed 12 September, 2023 is without merit.
GROUND 3
Ground 3 of the Notice of Appeal filed 12 September, 2023 is a challenge to the weight ascribed by the primary judge to “the contributions, and in particular the initial contributions” of the appellant. It also asserts that the primary judge “gave undue weight to the contributions of the Respondent”.
Weight challenges face considerable and well-known hurdles. In Gronow v Gronow (1979) 144 CLR 513, Stephen J opined, at 519–520:
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 …
The weight or importance given to evidence is a matter quintessentially for the primary judge unless an appellant can show that the primary judge was “plainly wrong”: CDJ v VAJ (1998) 197 CLR 172 at 230–231.
This was a relationship of a little over four years. To label the relationship as a “short relationship” and thereby attempt to invoke some special principle applicable only to short relationships works only to distract from the court’s primary task, namely, to identify and weigh the contributions (of all types) made by the parties to the acquisition, conservation and improvement of parties’ property as it existed at the time of trial. His Honour’s reasons for judgment demonstrate that he did precisely that.
His Honour found that at the time of cohabitation the appellant owned a property at F Street, Suburb E which she had purchased in 2007 for $381,000. At cohabitation it had a mortgage secured upon it for $364,811. The primary judge did not consider that the appellant had significant equity in the F Street property at the commencement of the parties’ cohabitation. The parties lived in the property for about a year and his Honour took this into consideration as a contribution by the appellant.
At the commencement of cohabitation, the appellant also owned another property at Suburb W which she sold for $300,000 at the end of 2010. It was almost debt-free. His Honour found that the appellant paid about $52,000 off the mortgage over F Street and she put about $247,000 into an account that off-set the interest on the F Street mortgage. The offset account effectively reduced the mortgage to $50,000. There was no evidence of the retrospective value of F Street property.
The primary judge found that the value of real estate the appellant brought to the relationship “certainly includes the equity in the [F Street] property at the time, and the $247,000 representing the net sale proceeds of her [Suburb W] property” (at [79]).
His Honour further recorded that:
(a)in October, 2011 the appellant purchased property at Suburb Y using the F Street property as security for a loan of $1 million, part of which ($312,756.97) was used to pay out the outstanding mortgage on the F Street property;
(b)despite her income and rent received from the F Street property, he had some doubts that the appellant had the financial capacity to obtain a loan for $1 million without some assistance from the respondent;
(c)the Suburb Y property was sold in March, 2013 and the appellant received a net sum of $132,440 from that sale;
(d)in December, 2013 the parties purchased a property described as the H Street property for $918,000. An $850,000 loan was obtained on the security of the F Street and H Street properties. Joint funds were used to pay stamp duty and in all likelihood any other funds needed to complete the purchase. Both of these properties remained in the parties’ ownership as at the date of trial.
As for the respondent’s contributions, his Honour recorded that the husband had two properties in Country D at the commencement of the parties’ relationship which the parties agreed had a value of $156,000. In addition, the respondent introduced capital sums totalling $680,000 between 2011 and 2014.
After commenting upon the difficulty created by the way in which the appellant had chosen to present her case, his Honour concluded that the respondent’s more easily quantifiable financial contribution of $680,000 and his two properties in Country D were equivalent to the “less easily quantifiable evidence of the value of the wife property, assets and other financial contributions made in the relationship” (at [85]). His Honour then continued, at [85]:
The timing at which the financial contributions were made (the wife had both the [F Street] and [Suburb W] properties at cohabitation, whereas the husband’s came in over a period of years), the fact of her earnings from employment throughout the relationship, and the fact that the [F Street] property remains in existence, are all factors pointing towards an overall assessment of equal contribution at the date of the final hearing, even if the husband’s financial contribution appears superficially to be greater than hers.
The appellant submits that in making his findings the primary judge “ignored or failed to appreciate the impact of the initial contribution and without that initial contribution, the parties would not have been able to purchase the [Suburb Y] property and [H Street] property” (appellant’s Summary of Argument filed 6 November, 2023, paragraph 5.12). We do not accept this submission. The primary judge’s reasons for judgment demonstrate that he identified the contributions made by each of the parties and weighed them one against the other. It was not explained to us how the appellant now asserts that the parties would not have been able to purchase the Suburb Y property and the H Street property without the appellant’s “initial contribution”. As the primary judge’s reasons demonstrate, the respondent contributed a significant sum of money albeit over the period of the relationship. It could equally be said that the parties would not have been able to purchase the Suburb Y property or the H Street property without the capital injections that were made by the respondent.
These submissions in support of this ground of appeal do not suggest that the primary judge failed to take into account any relevant consideration or took into account any relevant considerations. On the evidence before the primary judge, a finding that the parties’ contributions are to be assessed as equal was plainly open.
This ground of appeal has no merit.
DISPOSITION
Save for an adjustment to take account of the conceded double counting, the appeal should be dismissed.
It was suggested that no other order would be necessary given the way in which the primary judge had framed the order by which the amount to be paid by the appellant to the respondent was framed. However, so that there is some certainty, we have chosen to discharge Order 2 of the primary judge’s orders dated 16 August, 2023 and substitute a different form of order, although to the same effect.
The primary judge found the parties had net assets (including superannuation) totalling $2,406,783.02. That amount when reduced by the conceded duplicated amount is $2,203,883.02 and each party is entitled to $1,101,941.50. The respondent presently has in his possession property with a net value of $193,463.05 as follows:
Husband: P Street, City B, Country D 1% share of $600,000 $6,000.00 R Street, City B, County D 50% of $300,000 $150,000.00 Motor Vehicle 2 $1,000.00 Withdrawals from joint bank account …40 $41,877.00 Withdrawal from offset …45 $82,377.89 Superannuation Fund 2 in Country D $6,000.00 less Debt to [the respondent’s] relatives $93,791.84 Net total: $193,463.05
The net sale proceeds of the H Street property is a variable in the total value of the parties’ net assets (including superannuation). The value of the parties’ net assets aside from the H Street property and attendant liability is $1,513,883.02. An order which requires payment by the appellant to the respondent of a sum which is equivalent to the difference between, on the one hand, 50 per cent of the sum of the net sale proceeds of the H Street property and $1,513,883.02, and on the other, the sum of the net proceeds of sale of the H Street property and the net value of the property held by the respondent, will give effect to the primary judge’s orders. An order to that effect is set out at the commencement of these reasons.
COSTS
The respondent conceded that there should be no order as to the costs of the appeal until the date of the concession made by the respondent that we have referred to earlier in these reasons. The respondent argued that thereafter, he should have his costs of the appeal in the event that it was otherwise unsuccessful. We agree.
The respondent communicated the concession to the appellant at 1.49 pm on 25 November, 2023 by email. That day was a Saturday. For that reason, we have considered the respondent’s concession to have been communicated on 27 November, 2023.
It was difficult to determine the quantum of costs incurred by the respondent after his concession on 27 November, 2023 due to the state of his costs schedule. The costs schedule was filed on 28 November, 2023. Doing the best we can, the amount of costs the respondent incurred from 27 November, 2023 were the amount of $10,560 (itemised as “Total further amount estimated Professional cost for Elizabeth Cohen in relation to hearing on 4 December 2023”), the amount of $2,512.56 (itemised as “Westlink Legal estimated further cost”) and the amount of $277.16 for work undertaken by a solicitor on 27 November, 2023, for a total of $13,349.72, which we will round to $13,000.
There will be an order that the appellant pay the respondent’s costs of and incidental to the appeal fixed in the sum of $13,000.
I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland and Justices Jarrett & Riethmuller. Associate:
Dated: 20 December 2023
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