Zubcic & Zubcic
[2019] FamCAFC 168
•9 October 2019
FAMILY COURT OF AUSTRALIA
| ZUBCIC & ZUBCIC AND ANOR | [2019] FamCAFC 168 |
| FAMILY LAW – APPEAL – PROPERTY – TRUSTS – Where the wife asserts the trial Judge made an error by finding that the second respondent had a beneficial interest in a property either via a resulting trust or a constructive trust – Where it was open to find that either a resulting or constructive trust arose – No error demonstrated. FAMILY LAW – APPEAL – PROPERTY – Where the wife asserts that the trial Judge failed to take into account the wife’s ongoing care of the parties’ adult son with disability when assessing contributions pursuant to the s 75(2) factors – Where the trial Judge erred in finding that it was only the wife’s financial responsibilities to be taken into account under s 75(2) – Where the court is able to re-exercise the discretion – Where an adjustment is made in favour of the wife in relation to her ongoing care of the adult child resulting in an overall division of property as to 55 per cent to the wife and 45 per cent to the husband – Where the trial judge overlooked a joint debt of the parties and a payment by the wife for costs in relation to the sale of a property – Where the remaining grounds of appeal lacked merit – Appeal allowed in part and orders varied. FAMILY LAW – COSTS – Where only one substantial ground of appeal has been successful – Where that ground of appeal was an error made by the trial judge and the parties did not lead her Honour into that error – Where the wife’s costs are unreasonable – Where it is impossible to be certain of the amount of costs sought by the husband that relate to the appeal – Where no order for costs is made between the husband and the wife – Where the wife is to pay the costs of the second respondent – Where it is not appropriate to issue costs certificates to the parties. |
| Family Law Act 1975 (Cth) ss 75(2) and 79(4) |
| Af Petersens and Af Petersens (1981) FLC 91-095 Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 Aroney and Aroney (1979) FLC 90-709; [1979] FamCA 62 Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 Biltoft and Biltoft (1995) FLC 92-614; [1995] FamCA 45 Bloch v Bloch (1981) 180 CLR 390 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 81; [1998] HCA 67 Clauson and Clauson (1995) FLC 92-595 D & D [2004] FMCAfam 154 Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54 Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 Grefeld & Grefeld (2012) FLC 93-508; [2012] FamCAFC 71 Hutcheson & Meli [2016] FamCAFC 258 Kennon v Kennon (1997) FLC 92-757; [1997] FamCA 27 Lint & Lint [2011] FamCAFC 115 Lutzke and Lutzke (1979) FLC 90-714; [1979] FamCA 60 Maine v Maine (2016) 56 Fam LR 500; [2016] FamCAFC 270 Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78 Pittman & Pittman (2010) FLC 93-430; [2010] FamCAFC 30 Steinbrenner & Steinbrenner [2008] FamCAFC 193 Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48 Zaruba and Zaruba (2017) FLC 93-776; [2017] FamCAFC 91 |
| APPELLANT: | Ms Zubcic |
| FIRST RESPONDENT: | Mr Zubcic |
| SECOND RESPONDENT: | Mr B Zubcic |
| FILE NUMBER: | SYC | 6290 | of | 2013 |
| APPEAL NUMBER: | EAA | 35 | of | 2018 |
| DATE DELIVERED: | 9 October 2019 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Strickland, Ryan & Watts JJ |
| HEARING DATE: | 26 November 2018 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 6 March 2018 |
| LOWER COURT MNC: | [2018] FamCA 129 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Cashion SC with Mr Connor |
| SOLICITOR FOR THE APPELLANT: | Martin Street Lawyers |
| THE FIRST RESPONDENT: | In Person |
COUNSEL FOR THE SECOND RESPONDENT: | Mr Lawrence |
| SOLICITOR FOR THE SECOND RESPONDENT: | Coleman Greig Lawyers |
Orders
The oral application of the husband for leave to adduce further evidence be dismissed, save and except that by consent the evidence as to the property at B Street, Suburb C (“B Street”) being sold for $2,900,000, be admitted.
The appeal be allowed in part.
Paragraph 9 of the property settlement order made by Justice Rees on 6 March 2018 be varied by deleting paragraph 9 and inserting in its place a paragraph in the following terms:
9.That upon the sale of the property at B Street, the trustees of sale shall apply the proceeds in the following manner and priority:
9.1in payment of the costs of sale, including but not limited to the costs of the trustees for sale, agents’ commission, legal fees on the conveyance;
9.2in payment of any amount of Capital Gains Tax in relation to B Street assessed against either the husband or the wife;
9.3 payment to Centrelink of the sum of $59,150;
9.4 payment to the wife of the sum of $36,710;
9.5 payment to the wife of 66.35% of the balance;
9.6 payment to the husband of 33.65% of the balance;
9.7on the basis that the property at B Street has sold for $2,900,000, payment to the wife of 55% of the net increase in the sale proceeds over the proceeds from a sale for $2,800,000, and payment to the husband of 45% of that increase; and
9.8the husband is to pay from his share of the balance the following:
9.8.1in payment of the sum of $65,000 to the wife by way of maintenance for G in accordance with Order 6;
9.8.2in payment of the costs of Mr and Mrs Gomes incurred in these proceedings in accordance with orders made on 1 March 2018; and
9.8.3in payment of the sum of $100,000 to the husband’s solicitors, to be held by them until the determination of the dispute over the payment of costs of the proceedings in the Supreme Court of New South Wales Case Number … and distributed in accordance with that determination.
The wife pay the costs of the second respondent fixed in the sum of $35,876.36.
There be no order for costs as between the wife and the husband.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zubcic & Zubcic and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EAA 35 of 2018
File Number: SYC 6290 of 2013
| Ms Zubcic |
Appellant
And
| Mr Zubcic |
First Respondent
And
| Mr B Zubcic |
Second Respondent
REASONS FOR JUDGMENT
Introduction
By way of Further Amended Notice of Appeal filed on 11 July 2018, Ms Zubcic (“the wife”) appeals against paragraphs 1, 3, 4, 6, 7, 9.2, 9.3 and 9.5 of the final property settlement orders made by Rees J on 6 March 2018.
The orders appealed against provide for a payment of $768,877 to Mr B Zubcic (“the second respondent”) from a controlled monies account held for the wife and Mr Zubcic (“the husband”) (order 1), for the distribution of the remainder of the sum left in the controlled monies account (orders 3 and 4), for a lump sum payment by the husband to the wife of $65,000 by way of adult child maintenance (order 6), for the dismissal of the wife’s application for spousal maintenance (order 7) and for the distribution of the proceeds of sale of the property at B Street, Suburb C (“B Street”) (order 9).
The husband and the second respondent oppose the appeal.
There were a number of additional parties to the proceedings at first instance, namely:
a)the wife’s parents, Mr and Ms Gomes (“the third and fourth respondents”);
b)the Commissioner for Taxation (“the fifth respondent” or “the Commissioner”); and
c)V & Associates, Solicitors, who were previously the husband’s solicitors and to whom he owed money, but who withdrew on the basis that the amount owed to them would be paid from any entitlement of the husband (“the sixth respondent”).
As the orders sought on appeal are not intended to adversely affect the rights and entitlements of the third, fourth, fifth and sixth respondents, on 2 May 2018 the Appeal Registrar ordered that they be removed as parties to the appeal.
The husband relied on his summary of argument filed on 31 October 2018. By way of that summary of argument, the husband sought leave to rely on further summaries of argument received by the Appeal Registry on 22 November 2018 (Part 2) and 26 November 2018 (Parts 3 & 4).
Leave was granted to the husband to file and rely on his further summaries of argument at the hearing of the appeal.
In those further summaries of argument, the husband has referred to information that was not before the primary judge, and annexed various documents to those summaries which are also in that category. We have proceeded on the basis that in that regard the husband in effect makes an application for leave to adduce further evidence.
Having perused and considered that further evidence, we are satisfied that it does not meet the criteria for the admission of further evidence as set out by the High Court of Australia in CDJ v VAJ (1998) 197 CLR 172. Neither the further information, nor the documents demonstrate error by the primary judge. Thus, save and except for one piece of information, we will not be admitting any of that so-called further evidence. That one piece relates to the sale price of the B Street property, and it is agreed between the parties that the sale price was $2.9 million. However, we observe that that evidence does not assist in determining any aspect of this appeal.
Brief Background of the Parties
The parties were married and commenced cohabitation in March 1991. They separated in August 2013 and were divorced on November 2014.
There are three, now adult, children of the marriage. The youngest child, G, born in March 1999 and currently aged 20 years, was diagnosed with autism in 2001.
In October 1987 the husband, his brother Mr II Zubcic, and the husband’s parents, namely Mr B Zubcic (father) and Ms Z Zalac (deceased mother), purchased real property at AA Street, Suburb O (“the AA Street property”) in joint names as joint tenants for $100,000.
In 1988 the wife and her parents, Mr and Mrs Gomes, purchased property at BB Street, Suburb CC (“the BB Street property”) for $95,000. From that sum, $70,000 was borrowed, secured by a mortgage. The wife contributed half of the balance of the purchase price and owned a half share of the property.
In 1990, the husband started a business, DD Pty Ltd, importing, breeding and training livestock (“the business”).
On 4 July 1990 the husband and his brother purchased a franchise (“the franchise”) for $75,000, in the name of a company EE Pty Ltd (“EE Pty Ltd”), of which the husband and his brother were equal shareholders and directors. In order to secure the loan required for the purchase of the franchise, the husband’s brother and his parents transferred their respective interests in the AA Street property into the names of the husband and the wife.
The husband and the wife borrowed $99,000, which was used to purchase the franchise and discharge the mortgage owed by the husband and his brother over the AA Street property.
The husband asserted that his parents received no consideration for that transfer, and that thereafter he held one half of the AA Street property on trust for them. The husband’s father, the second respondent, asserted that he did not know his legal interest had been transferred. The wife asserted that $60,000 was paid to the husband’s parents as consideration for the transfer.
In about 1993 or 1994 the husband’s brother ceased involvement with the franchise, but remained a director of EE Pty Ltd.
In about 1994 or 1995 the franchise was sold. The husband asserted that he received net $40,000 from the sale.
The husband asserted, but the wife denied, that from 1994 the husband and the wife operated the business in partnership.
On 4 November 1994 the husband and the wife purchased the B Street property for $265,000. They borrowed $200,000, and the balance came from savings, including from the proceeds of sale of the franchise.
In November 1994 the husband and the wife moved to the B Street property and invested $100,000 to build kennels on the property and renovate the home.
In June 1995 the wife’s parents discharged the mortgage over the BB Street property. In May 1996 the wife transferred her interest in that property to her parents for $65,000. That sum was deposited into the husband and the wife’s joint bank account.
On 1 June 1999 the wife’s parents gave the wife $175,000. Of that sum, $73,896.65 was applied to discharge the mortgage over the AA Street property, and $100,000 was to reduce the mortgage over the B Street Property.
On 11 May 2000 the husband, the wife and the wife’s parents purchased property at H Street, Suburb C (“the H Street property”) in joint names as tenants in common. The purchase price of the H Street property was $1.2 million.
The wife’s parents paid the $1.2 million to complete the purchase of the property, but the arrangement between the husband, the wife and the wife’s parents was that $600,000 of that amount would, in effect, constitute a loan to the husband and the wife, representing their half share of the purchase price, and that amount would be repaid when the sale of the AA Street property settled.
On 15 June 2000 the sale of the AA Street property for $300,000 was completed. The husband and the wife paid to the wife’s parents $277,387, and borrowed the remainder of the $600,000 from the Commonwealth Bank in order to pay out the loan from the wife’s parents.
Thereafter, the husband’s parents lived at the H Street property.
In April 2002 the husband and the wife purchased property at GG Street, Suburb Q (“the GG Street property”) for $675,000. They borrowed $540,000 from the Commonwealth Bank. The property was used as a premises to conduct the livestock business.
In April 2007 following the death of his wife in 2006, the second respondent purchased a property at HH Street, Suburb L (“the HH Street property”) for $285,000. The husband and the wife borrowed the purchase price, secured against the B Street property. The husband also asserted that they gave the second respondent an additional $10,000.
After the second respondent left the H Street property, it remained vacant until 2010, at which time the husband moved from the B Street property to live at the H Street property with the two eldest children. The wife remained at the B Street property with G. The husband and the wife did not though consider themselves to be separated.
In 2011 the GG Street property was sold for $1,150,000. Either $466,000 (as asserted by the husband) or $467,000 (as asserted by the wife) was repaid to the Commonwealth Bank, and the balance deposited into bank accounts held by the husband and wife.
In August 2012 the husband, the wife and the wife’s parents entered into an agreement to sell the H Street property for approximately $10 million.
In 2013 the husband and the wife separated. The wife and G remained living in the B Street property, and the husband moved into rental accommodation.
In November 2013, without notice to the husband, the wife froze the bank accounts of the business, and on 21 March 2014 she terminated the partnership.
On 28 October 2013 the wife commenced property proceedings in the Family Court of Australia.
In about July 2014 the HH Street property was sold and the proceeds were held by T Solicitors, pending the determination of the proceedings.
In July 2014 the Commonwealth Bank obtained judgment against the husband and the wife, and an order for possession of the B Street property.
On 17 September 2015 orders were made appointing the wife trustee for sale of the B Street property.
In January 2016, the Commissioner intervened in the proceedings, claiming unpaid income tax and penalties from the partnership.
On 18 August 2016, orders were made for the disposition of half of the proceeds of sale of H Street to the wife’s parents, with the balance held in trust by CC Solicitors (“the controlled monies account”), pending determination of the proceedings.
In 2016 the wife’s parents provided $1.5 million to purchase a property in Suburb R for $1.3 million, for the wife and G to live in.
On 28 November 2016 the mortgage over the B Street property was discharged by payment of $996,179 from the controlled monies account.
On 19 July 2017 the Commissioner was paid $961,632.29 in partnership taxation liabilities from the controlled monies account.
On 2 November 2016 Rees J made a declaration that the wife’s parents were entitled to a half share of the proceeds of sale of the H Street property.
On 20 November 2017 consent orders were made for the payment to the Commissioner, from the controlled monies account, of $667,782.61 for tax owed by the husband, and $627,121.09 for tax owed by the wife. The amount owed by the wife included $293,520.75 for capital gains tax assessed on the sale of the H Street property.
The appeal
Grounds 1 – 4
The trial Judge erred in finding (at R[174]) that the purchase money for the interest of the [wife] and the [husband] in the property known as H Street, Suburb C (H Street) was provided by the Second Respondent as to 25 per cent and the [husband] and the [wife] as to 75 per cent.
The trial Judge erred in finding (at R[187]) that a resulting trust arose so that the [wife] and the [husband] beneficially held 25 per cent of their interest in H Street for the Second Respondent and his late wife and that on her death her interest passed to the Second Respondent.
The trial Judge erred in finding (at R[197]) that by reason of the circumstances concerning the purchase money it was equally open to impose a constructive trust, the quantum of the Second Respondent’s interest being the same (at R[199]).
The trial Judge should have found that the Second Respondent has never had any beneficial interest in H Street.
The issue here is what, if any, interest does the second respondent have in the H Street property. Her Honour found that he had a 12.5 per cent beneficial interest via a resulting trust, or if not, via a constructive trust.
As can be seen, the wife submits that her Honour erred in these findings.
First, it is necessary to consider the factual background to this issue.
It is common ground that the husband and the wife held the legal title to the AA Street property on trust for the second respondent and his wife as to 50 per cent.
On 28 March 2000 the husband, the wife and the wife’s parents entered into a contract to purchase the H Street property in joint names as tenants in common for $1.2 million.
On 26 April 2000 the husband and the wife entered into a contract to sell AA Street for $300,000. Thus, the share of the second respondent and his wife in those proceeds was $150,000.
On 11 May 2000 the purchase of the H Street property was completed. The whole of the purchase price was paid by the wife’s parents, but pursuant to the arrangement between them, in effect $600,000 of that was a loan to the husband and the wife to fund their share of the purchase price, given that the sale of the AA Street property had not yet settled.
Pausing there, the wife submits orally for the purpose of the appeal, that the only relevant fact is that the whole of the funds required to complete the purchase of the H Street property was paid by the wife’s parents, and, unlike what appears in her written summary of argument filed on 11 July 2018, either there was no loan to the husband and the wife, or even if there was a loan, or a loan type arrangement, it was irrelevant to whether or not there was a resulting trust.
However, not only does that fly in the face of the case presented to the primary judge by the wife and her parents, but it flies in the face of the findings of her Honour. For example, see [11] of the reasons for judgment delivered by her Honour on 24 August 2016, [93] and [98] of the reasons for judgment delivered by her Honour on 2 November 2016, and [172] and [185] of her Honour’s reasons for judgment delivered on 6 March 2018. Her Honour said this at [172]:
172.The precise circumstances of the purchase of H Street were examined in reasons delivered on 2 November 2016 where the following findings were made:
•The purchase of H Street was completed on 11 May 2000.
•The whole of the funds required to complete the purchase were provided by Mr and Mrs Gomes.
•The husband and the wife borrowed $600,000 from Mr and Mrs Gomes to complete the purchase.
•Contracts for the sale of AA Street were exchanged on 26 April 2000 and settlement of the sale took place on 15 June 2000.
•From the proceeds of sale of AA Street, $277,387 was paid to Mr and Mrs Gomes representing repayment of $250,000 on the loan and a further payment of $27,387 towards the stamp duty and legal fees which had also been paid by Mr and Mrs Gomes.
Fatal to the wife’s now altered position in relation to the purchase of the H Street property, and as her Honour recorded at [173], no challenge was made to any of the findings set out in [172]. Thus, it is not open to the wife to mount a challenge to those findings in this appeal.
To return to the chronology.
The sale of AA Street was settled on 15 June 2000, and from the proceeds of sale, $277,387 was paid by the husband and the wife to the wife’s parents, representing a payment of $250,000 off the loan, and $27,387 towards the stamp duty and legal fees which had also been paid by the wife’s parents. The balance of the $600,000 was borrowed by the husband and the wife from the Commonwealth Bank.
Plainly, and incontrovertibly, one half of the proceeds of sale of the AA Street property was contributed by the second respondent and his wife (see [185] – [186]). As a result her Honour found as follows at [174]:
In the present instance, the purchase money for the interest of the husband and the wife in H Street was provided by the second respondent as to 25 per cent and the husband and the wife as to 75 per cent. The registered proprietors were the husband and the wife. Prima facie, a resulting trust arises in favour of the second respondent as to a 12.5 per cent interest in H Street (that being, 25 per cent of the husband and wife’s share).
Following this finding, her Honour turned to consider whether, as the wife submitted, a presumption of advancement applied in relation to the use of the money of the second respondent and his wife, by the husband and the wife. In doing so her Honour looked to the evidence of the subjective intention of the second respondent.
Importantly, it was the evidence of the second respondent that he “understood that he and his late wife would be the owners of three acres of H Street and live there rent free” (at [179]). Equally importantly, her Honour observed that the wife’s case was that she was not present during any discussion with the second respondent about the acquisition of H Street (at [181]). Her Honour then said this at [182]:
The only evidence in relation to the intention of the second respondent is his own evidence. The husband did not challenge the second respondent’s evidence that he and his late wife were to receive an interest in H Street as a result of their contribution from their interest in AA Street. The husband deposed that sometime after mid-2006 the second respondent asked the husband and wife to “pay him back some of the money for his equity that came from AA Street and then had been invested in the H Street property.” In submissions, Counsel for the husband conceded that the second respondent and his late wife received an interest of 12.5 per cent in H Street, by way of a trust.
Her Honour found at [183] that the second respondent intended that he and his wife would have an interest in H Street, and her Honour was “satisfied that the presumption of advancement [had] been rebutted” (at [184]). There is no challenge to this finding in the appeal.
To return to the issue of a resulting trust, it is relevant to record what her Honour said at [185] and [186] as follows:
185.There was no direct, contemporaneous payment of funds from the sale of AA Street towards the purchase of H Street, but rather the funds were applied in partial repayment of monies lent to the husband and the wife.
186.However, that was not a matter in the control of the second respondent. The husband and the wife simply took the whole of the proceeds of sale of AA Street, including that portion to which the second respondent was entitled, and applied those funds as they saw fit.
The complaint of the wife as to these findings is that for there to be a resulting trust, the contribution by the person not taking legal title, must be to the purchase price of the property, and cannot be by way of repayment of any mortgage taken out to purchase the property. Here it is said that the money from the second respondent and his wife did not form part of the purchase price, but at most it was part of the $600,000 subsequently paid by the husband and the wife to the wife’s parents upon the completion of the sale of the AA Street property.
Reliance for this submission is placed on the High Court of Australia decision of Calverley v Green (1984) 155 CLR 242, at 257-258, per Mason and Brennan JJ. There, their Honours held that “[t]he payment of instalments under the mortgage was not a payment of the purchase price but a payment towards the release of the charge which the parties created over the property purchased”.
However, it must be recognised that the existence of a resulting trust depends entirely on the intention of the contributing party. As Gibbs CJ said in Calverley v Green at 246, “[f]or the presumption [of a resulting trust] to apply the money must have been provided by the purchaser in his character as such…”. It has also been said by Ward CJ in Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 at [167], that “[i]n identifying the purchase price, a “broader concept” is to be applied than simply the stipulated consideration for the purchase.”
The reason for the general proposition emphasised in Calverley v Green that mortgage repayments do not constitute a direct contribution to the purchase price, is that “[t]he extent of the beneficial interests of the respective parties must be determined at the time when the property was purchased and the trust created” (Calverley v Green per Gibbs CJ at 252; see also Mason and Brennan JJ at 257). However, as identified by Ward CJ in Amit Laundry (at [188]) there are two qualifications to that proposition, the second of which is relevant here. Her Honour said this at [190]:
… [I]n Bloch v Bloch (1981) 180 CLR 390; [1981] HCA 56 there was found to be sufficient evidence from which the shared intention of each purchaser could be discerned: namely, that the parties’ respective interests in the property would be determined by their contribution, not just to the purchase price, but also by way of repayment of the loan and in discharge of the mortgage debt in respect of the land. This decision is relied upon by Amit Laundry for the proposition that, where the property the purchaser (or purchasers) intended to acquire was “not the title to land subject to mortgage but the land freed of the mortgage”, then the “price paid to free the land of mortgage as well as the price paid for the title to the land itself must be taken into account in determining the parties’ beneficial interests” (see Calverley v Green at 262-263; and see Jacobs’ Law of Trusts at [12-11]).
In Calverley v Green, the High Court cast no doubt on the decision or reasoning in Bloch v Bloch (1981) 180 CLR 390. Rather, that decision was distinguished. Mason and Brennan JJ said as follows, at 262-263:
As there was no agreement made after the purchase to alter the equitable interests acquired when the property was purchased, the payments made under the mortgage work no alteration in those interests. This case cannot be likened to Bloch v Bloch where the relevant property which the parties intended to acquire was seen to be not the title to land subject to mortgage but the land freed of the mortgage. In such a case the price paid to free the land of mortgage as well as the price paid for the title to the land itself must be taken into account in determining the parties’ beneficial interests. Mortgage payments may quantify the parties’ interests under a resulting trust of a property acquired as a mortgage-free investment, but they would rarely quantify the interests of parties under a resulting trust of a house property acquired as a home to live in…
(Footnotes omitted)
The second respondent here contends that the present case is to be characterised as a Bloch rather than a Calverley v Green type of case.
The crucial point in a Bloch scenario is the intention of the party contributing to the purchase price at the relevant time.
Here there was evidence that the intention of the husband and the wife was to contribute $600,000 to the purchase price of the H Street property. Further, the intention was that the proceeds of sale of the AA Street property were to be applied to that purchase, and that was the arrangement between the husband, the second respondent, and the wife. At [169] her Honour records the husband’s evidence in this regard:
The husband deposed:
I discussed with my parents a plan to sell AA Street and apply the sale proceeds to purchase the H Street property jointly with [the wife’s] parents … My parents agreed and we then sold AA Street.
Further, at [168] her Honour recorded the evidence of the second respondent as follows:
The second respondent deposed:
I agree that my wife & I did not pay any rent at the H Street property because that was the arrangement that was made; for our half share of the AA Street property we would get the value of 3 acres when the property was sold plus we could live at the property, rent free, until it was sold.
Thus, the intention of the relevant parties was such that the proceeds of sale of the AA Street property were to be put towards the purchase of the H Street property, and there was no error by her Honour in finding that there was a resulting trust in favour of the second respondent (and his wife) as to a 12.5 per cent beneficial interest in the H Street property.
Ground 3 asserts her Honour erred in finding that it was equally open to impose a constructive trust.
The same argument is put in support of this ground, namely that the husband and the wife did not contribute to the purchase price, and thus nor did the second respondent, but as explained above that is not an argument we accept.
In any event, a constructive trust differs from a resulting trust in that it is created by operation of law without reference to the intentions of the parties. The enquiry is not as to the actual or presumed intention of the parties, but rather as to whether, according to the principles of equity, it would be unconscionable to allow a legal owner of property to enjoy sole beneficial ownership of that property (Grefeld & Grefeld (2012) FLC 93-508 at [97] citing Muschinski v Dodds (1985) 160 CLR 583, at 614-617 and 620-621 and Baumgartner v Baumgartner (1987) 164 CLR 137, at 148-150).
The trust is construed from the circumstances of the particular case, and in that regard the wife’s counsel in oral submissions attempted to suggest that her Honour did not indicate what the circumstances were on which she relied. No ground of appeal raises a lack of adequate reasons, but nor could it; her Honour plainly identified the relevant circumstances at [167]-[173].
We can see no error by her Honour in finding that it was open to impose a constructive trust in the circumstances of this case as an alternative to finding a resulting trust.
Ground 5
The trial Judge erred in:
5.1 finding that the [wife’s] ongoing contribution to the welfare of the child G could only be considered pursuant to s.75(2)(e) and s.75(2)(o) of the Act;
5.2 finding that it was only ongoing financial responsibility that could be taken into account; and
5.3 finding that no further adjustment was required because of the order for adult child maintenance.
It is unclear whether this ground is attacking her Honour’s contribution findings or her s 75(2) findings, or both.
The thrust of the ground appears to be that her Honour failed to take into account the wife’s ongoing responsibility for, and attention to, the care of the adult child G, subsequent to the date of judgment.
In her Honour’s assessment of the respective contributions of the parties her Honour did take into account the circumstance that after separation in 2013, and up to the date of the hearing, the wife was the sole carer for G. Indeed, her Honour said this:
523.After separation, the wife was the sole carer for G. As his behaviour worsened, she bore the brunt of it.
524.From mid-2013 onwards, it is the wife who has been responsible for G’s every need, emotional, physical and financial. There is no evidence of any respite for her from her responsibility, however lovingly it has been undertaken.
525.I consider that the wife’s care of G after separation needs to be recognised as a contribution but I am conscious that the period of her sole care was three and a half years and the period of their co-habitation was 22 years.
As for the period following the date of the judgment, her Honour did consider the future responsibility for the care of G, but in the context of s 75(2), and specifically paragraphs (e) and (o). However, ultimately her Honour found that it is only the financial responsibility of caring for G that could be taken into account pursuant to those paragraphs, and given that her Honour was proposing to make an order for adult child maintenance for G, no adjustment was required (at [534] – [537]).
To add to the lack of clarity in the ground of appeal, the wife appears to suggest in her summary of argument, that her Honour erred in not taking into account as a contribution by the wife, her ongoing responsibility for the care of G subsequent to the date of the judgment, but also appearing to suggest that her Honour should have taken that responsibility into account under s 75(2).
There is ample authority that the correct approach when assessing the respective contributions of the parties pursuant to s 79(4) of the Act is to only look to the contributions up to the date of the hearing, leaving consideration of the relevant factors arising thereafter and into the future, to be addressed under s 75(2) (see, eg, Pittman & Pittman (2010) FLC 93-430).
Thus, we are not persuaded that her Honour erred in adopting that approach, and we note that her Honour’s findings on contributions to the date of the hearing are not challenged in this appeal.
Thus, the question becomes has her Honour erred in how she has applied s 75(2) in this regard.
It goes without saying that the responsibility for caring for an adult child such as G, does not cease at the date of judgment, and continues into the future. Indeed, the evidence as to G’s condition, and the care that he requires, was referred to extensively by her Honour at [428] – [461].
That future responsibility can be taken into account under paragraphs (e), (l), or (o) of s 75(2). They provide as follows:
…
(e) the responsibilities of either party to support any other person;
…
(l)the need to protect a party who wishes to continue that party’s role as a parent;
…
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
…
Her Honour did not refer to paragraph (l), but her Honour recognised at [535] that in two notable decisions, namely Lutzke and Lutzke (1979) FLC 90-714, at 78,836 and Aroney and Aroney (1979) FLC 90-709, at 78,784 the court held “that the responsibility of a party to support another person, referred to in s75(2)(e) can extend to a moral obligation”.
In [536] her Honour also recognised that, “given G’s disabilities and needs, the wife’s ongoing care for him could, in the alternate, be considered under s 75(2)(o)”. However, curiously her Honour then said this:
However, it is the financial responsibility of caring for G that can be taken into account, whether pursuant to s 75(2)(e) or s 75(2)(o).
That is curious because of what her Honour has herself said about paragraph (e) in [535], but the fact is there is no basis in paragraphs (e), (l) or (o) to limit the responsibility to financial responsibility, and we do not know of any authority which supports that proposition.
The Full Court has considered the application of s 75(2)(o) in property proceedings where a parent has the ongoing care of a significantly disabled adult child; for example, see Zaruba and Zaruba (2017) FLC 93-776 and Lint & Lint [2011] FamCAFC 115. Nothing in those cases suggests that the application of the provision is limited to the financial responsibilities arising from the care of the adult child.
In D & D [2004] FMCAfam 154, it is clear that Bryant CFM (as her Honour then was) took into account the totality of the circumstances surrounding a parent’s ongoing care of a disabled adult child. The mother’s care of the adult child was described as being “a full-time and unrelenting task which [the mother] will undoubtedly carry out for the rest of her life, at least until she becomes unable by virtue of her own health to do so” (at [31]).
Section 75(2)(o) is expressed in the widest terms and forms part of a suite of provisions that recognises more than merely financial matters. Just as s 79(4)(c) requires consideration of contributions to the welfare of the family to the date of the hearing, the application of s 75(2)(c) requires prospective consideration of a person’s care or control of a child of the marriage who has not yet attained the age of 18 years. As the Full Court said in Clauson & Clauson (1995) FLC 92-595, s 75(2)(c) recognises “the restriction on an independent lifestyle which the obligation to care for children usually entails” (at 81,911). We see no reason why the same approach should not be taken when a parent has the ongoing care and control of an adult child with significant disability.
Thus, we find merit in this ground to the extent that it asserts that her Honour should have taken into account under s 75(2)(e), (l) or (o), all aspects of the wife’s ongoing responsibility to care for G, and not just the financial responsibility.
Grounds 6, 7 and 8
The trial Judge erred in finding that the [wife] had committed waste in her capacity as trustee of sale of the [B Street] property by:
6.1 failing to identify which matters in s.75(2) of the Act her Honour was referring to;
6.2 failing to identify any relevant principles and authorities;
6.3 failing to make a finding as required by relevant authorities; and
6.4 failing to give adequate reasons why the [wife] had committed waste.
The trial Judge erred in making a finding that an adjustment be made in favour of the [husband] of five per cent of the net assets by:
7.1 failing to identify the available evidence that her Honour referred to;
7.2 failing to explain why her Honour gave very considerable weight to this matter, namely 10 per cent; and
7.3 failing to give adequate reasons explaining how her Honour arrived at this quantum.
The trial Judge erred in finding that the [wife] had committed waste in her capacity as trustee for the sale of B Street in circumstances where the property order provides that the property be sold by agreed trustees for the sale and there is no sale price or reserve price specified and thus it is not known what the ultimate sale price will be and until the ultimate sale price is known, it cannot be ascertained what alleged waste the parties have been occasioned by the [wife’s] alleged conduct.
(Emphasis as per original)
By order made on 17 September 2015 the wife was appointed as trustee for sale of the B Street property. The order specified that the wife was not permitted to sell the property for an amount less than $3 million.
The husband alleged that the wife delayed the sale because she and G lived there, and that she did not act diligently to procure the best possible sale price (at [311]).
At [316] – [380] her Honour outlined the extensive evidence which demonstrated that the wife failed to diligently list the property for sale, that she refused to reply to requests made on behalf of the husband for information as to the marketing of the property, and to provide all documents relating to the same, that she failed to convey to the husband various offers that were received for the property, and failed to take up recommendations made by the real estate agent to promote a sale of the property over the period up to and including the hearing in 2017. Further, she failed to provide to the husband a valuation obtained in relation to the property until a year after it was received.
Although there was one offer made in 2016 in excess of $3 million, namely $3.1 million, not only was the husband not made aware of it, but that offer was not accepted by the wife, and at the date of the hearing the value of the property was only $2.8 million.
Given that the agreed value of the property at the date of the hearing was $2.8 million, naturally her Honour used that figure to be able to say that “the present value of B Street is some $300,000 less than the wife could have sold it for in 2015” (at [379]). However, her Honour there was not quantifying the waste committed by the wife because not only were there other offers, but there was also significant conduct by the wife of which her Honour was rightly critical, and in any event, her Honour correctly said at [385] that it was not necessary to make a precise quantification of the waste for the purpose of taking it into account under s 75(2). Thus, to now be told by the parties that the property sold for $2.9 million is not further evidence that demonstrates any error by the trial judge, and nor does it show that the result would have been different if her Honour was aware of the actual sale price.
As for other offers, there was an offer of $3,120,000 in August 2017, and there was the prospect of selling the property in three parcels with a combined sale price of $4.2 million in 2017. That latter prospect though was not conveyed to the husband in those terms.
Her Honour, after referring to the relevant principles governing the scope of the fiduciary duty of a trustee for sale, found that the “wife committed waste in her capacity as trustee for sale” (at [384]), and her Honour proposed to take it into account “in the context of an adjustment pursuant to the provisions of s79(4)” (at [385]). Specifically, her Honour then dealt with it when considering what, if any, adjustment should be made pursuant to s 75(2) (see [482]).
Her Honour said this:
538.The most significant adjustment to be considered is the adjustment in relation to the wife’s waste as a trustee for sale.
And her Honour then concluded in relation to her assessment of the relevant s 75(2) factors as follows:
539.Doing the best I can on the available evidence, I propose to make an adjustment of 5 per cent in favour of the husband.
The first point to note is that the adjustment was five per cent, not 10 per cent as submitted by the wife (see paragraph 29 of the wife’s summary of argument filed on 11 July 2018). Plainly, the result is a 10 per cent differential between the parties, but it is not a 10 per cent adjustment to the husband.
The second point to emphasise is that the factor that is most represented in that five per cent adjustment is the wife’s waste as a trustee for sale. Indeed, given her Honour’s findings in relation to the relevant s 75(2) factors it is difficult to identify any other factor that required an adjustment.
There is of course the error by her Honour that we have addressed in Ground 5, in failing to take account of the wife’s ongoing responsibility for, and attention to, the care of the adult child G, subsequent to the date of judgment, but of course that cannot change the makeup of the five per cent adjustment as found by her Honour.
In relation to Ground 6, it is correct that her Honour did not identify the particular paragraph in s 75(2) that she was applying, but it is not necessary for a primary judge to specify the paragraph when it can be discerned from the reasons for judgment what paragraph the judge was relying upon. There can be no doubt that here it was paragraph (o).
It is also said that her Honour failed to identify any relevant principles and authorities, but again it was unnecessary for her Honour to do more than she did. Her Honour identified the conduct of the wife in failing to act as a trustee for sale should, referred to relevant authorities and applied the relevant principles.
It is unclear to what the wife is referring in Ground 6.3, but her Honour need do no more than make the finding that she did that the wife had committed waste in her capacity as trustee for sale. It was then for her Honour to take that into account when assessing what adjustment should be made in the context of applying s 75(2), and her Honour did that. As her Honour said at [385]:
Waste is to be taken into account in the context of an adjustment pursuant to the provisions of s 79(4). It is not necessary to make a precise quantification of the amount.
It is readily apparent that her Honour gave adequate reasons for her finding that the wife had committed waste, and there is no merit in this ground of appeal.
The complaint in Ground 7 is answered by reference to the oft-quoted remarks of Coleman J in Steinbrenner & Steinbrenner [2008] FamCAFC 193. At [234] his Honour said this:
Given that the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion, whether it be in the assessment of contributions in the matrimonial cause, assessment of damages in a personal injuries case, or determination of compensation in a land resumption case. In some cases, the “leap” is so great, and so unheralded by the discussion which precedes it as to render the reasoning process defective…
Clearly, his Honour was there referring to the assessment of contributions, but his Honour’s description of the approach, applies equally to the assessment of the s 75(2) factors.
Here, her Honour laid out the relevant evidence, and on the basis of that evidence found that considerable weight should be afforded to the wife’s conduct, and arrived at an adjustment in the husband’s favour of up to five per cent. In our view, her Honour did all that she was required to do, and there is no merit in Ground 7.
As to Ground 8, the premises on which it is asserted that her Honour erred in finding the wife had committed waste are misconceived. There was a reserve price as such, namely $3 million, and although there was no timeframe for the sale to occur, for the wife to not inform the husband of offers that exceeded the reserve price, and to behave in the manner summarised above, clearly justifies her Honour’s finding. Again, as her Honour said in [385], it was not “necessary to make a precise quantification of the amount” to take the waste into account in assessing what if any adjustment under s 75(2) should be made as a result of the waste. Thus, there is no merit in this ground of appeal.
Ground 9
As to the [wife’s] contention(s) as to family violence the trial Judge was in error in:
9.1 excluding material evidence in relation to the [wife’s] complaint;
9.2 failing to give adequate reasons for excluding material evidence;
9.3 failing to consider and assess admitted material evidence in relation to the complaint;
9.4 failing to make findings in relation to the evidence that was admitted, and referred to in the reasons for judgment; and
9.5 failing to find that she could infer that there was a nexus between the conduct complained of and the contributions by the [wife].
At the commencement of the hearing of the appeal, the wife’s senior counsel advised that Grounds 9.1 and 9.2 were abandoned.
It is said that her Honour failed to refer to “much of the admitted material evidence” in relation to family violence. Further that her Honour “has a duty to refer to material evidence and make findings about material issues in the case” (paragraphs 35 and 36 of the wife’s summary of argument filed on 11 July 2018). However, the crucial adjective here is “material”; it is for the judge to determine what is material to the issue to be resolved, and the extent to which it is necessary to refer to that information (see Hutcheson & Meli [2016] FamCAFC 258 at [33], Fox v Percy (2003) 214 CLR 118 at 132 and Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at 463-464).
In any event, we note that her Honour was at pains to set out between [386] and [427] many of the allegations made by the wife, and the evidence in relation to the same.
Here, the issue was not whether there had been family violence between the parties per se, but whether applying the well-known principle of Kennon v Kennon (1997) FLC 92-757, that family violence met the necessary criteria, namely there was “a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party’s contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been” (Kennon at 84,294, per Fogarty and Lindenmeyer JJ). Immediately, for example, that would exclude from consideration the husband’s conduct towards his father, the absence of reference to which by her Honour is complained of in this ground, and a good many of the allegations made by the wife.
After setting out what was said in Kennon, and referring to Maine v Maine (2016) 56 Fam LR 500, where the Full Court made it clear that the court can infer, from the conduct as found, that contributions were made more arduous by reason of family violence, her Honour made the following findings:
423.Having seen and heard both the husband and the wife in cross-examination over a number of days, I have no doubt that they were each assertive and argumentative.
424.I accept the evidence of both the husband and the wife that there were loud arguments. I accept the evidence of the wife that those arguments sometimes went on for hours.
425.I accept the evidence of the wife that the husband pushed her on occasions.
426.The onus is upon the wife to establish that this is an “exceptional” case within the “relatively narrow band of cases to which these considerations apply”.
427.I do not consider that the evidence upon which the wife relies is sufficient to establish that the incidents alleged bring her case within that “relatively narrow band”.
No error of principle, or of law, or of fact, in how her Honour addressed this evidence, and applied the principles of Kennon is identified by the wife in the ground of appeal, or in her written summary of argument in support of that ground, and there is no merit in this ground of appeal. The complaint amounts to nothing more than an assertion that her Honour should have either found or implied from the evidence, that the criteria set out in Kennon was satisfied. In our view the argument does not do justice to her Honour’s detailed findings about, and the significance of the evidence, concerning family violence.
Finally, it is suggested that her Honour erred in holding that the wife had the onus of establishing that this was an “exceptional case within the relatively narrow band of cases to which these considerations apply”. However, that is precisely what their Honours said in Kennon, and plainly there is no error by her Honour in reiterating that.
Ground 10
The trial Judge erred in failing to find that there is a debt of $58,484 owed to Centrelink that should have been included in the net assets and failing to make in the property order provision for repayment of the debt.
This is a complaint that has merit, and indeed, once the relevant document was produced during the hearing of the appeal, and marked Exhibit 2, the husband conceded that this was a liability that should have been included by her Honour, and thus he should be responsible for 45 per cent thereof applying what we explain later in these reasons should be her Honour’s finding as to the respective entitlements of the parties, namely 55 per cent to the wife and 45 per cent to the husband.
We propose to amend the orders made by her Honour to reflect the inclusion of this debt of $59,150.34 as at the date of Exhibit 2, namely 22 June 2018, as a joint liability of the parties.
Grounds 11 and 12
The trial Judge erred by making an order that on completion of the sale of B Street after the payment of costs of sale there then be (sic) paid any amount of capital gains tax assessed in relation to the sale in circumstances where this order was not sought by the [husband] and it is only the [husband] who may be liable to pay such capital gains tax.
The trial Judge erred in failing to find that the [wife] had paid $36,710.28 for costs in relation to the sale of B Street and failing to include in the property order provision for payment of this amount to the [wife].
There were two properties, namely the H Street property and the B Street property whereupon sale, Capital Gains Tax (CGT) would become an issue. With the H Street property, CGT has been assessed on the wife, and an amount of $293,520 was paid from the proceeds of sale of that property. The husband though had not yet been assessed as at the date of the hearing, given that he had not submitted a tax return for the relevant year. When he does so though, he will be assessed for CGT and he will pay that himself.
With the B Street property, that property had not been sold by the time of the hearing before her Honour, but plainly the parties, being the joint owners of that property on which their business had been conducted, both potentially will be assessed for CGT when it is sold. It was appropriate then for her Honour to order that that CGT, once assessed, be paid from the proceeds of sale before distribution to the parties. Any income earnt by the business was earnt prior to separation and was used to benefit the family.
The wife is correct in saying that the husband did not specifically seek an order providing for that CGT to be paid from the proceeds of sale, but that is not to the point. It was an order that necessarily had to be made.
Nor is there any inconsistency between [503], and the order her Honour made in relation to the payment of CGT assessed on the proceeds of sale of the B Street property. What her Honour said in [503] clearly relates to CGT payable in relation to the H Street property, and not the B Street property.
Thus, there is no merit in Ground 11.
As for Ground 12, plainly there is merit in this ground. The wife paid the sum of $36,710.58 towards the expenses of sale of the B Street property, and she should be reimbursed for that payment. We will amend her Honour’s orders accordingly.
Grounds 13 and 14
The trial Judge erred in dismissing the [wife’s] application for spouse maintenance by:
13.1 making a finding that the [wife] had not established that she was unable to support herself adequately in circumstances where this would depend on the [wife] not repaying to her parents amounts that the [wife] is legally obliged to pay; and
13.2 by failing to give adequate reasons as to why the [wife] had not established that she was unable to support herself adequately.
If the trial Judge was not in error in dismissing the [wife’s] application for spouse maintenance then her Honour was in error in failing to take into account as a matter of contribution, or pursuant to s.75(2) of the Act, the significant financial contribution that would have to be made by the [wife’s] parents.
The crucial issue here is her Honour’s finding that she was confident that the wife’s parents would not seek repayment of the money that they provided for the purchase of the Suburb R property.
However, for that finding to be successfully challenged, it would need to be demonstrated that it was not reasonably open on the evidence (Edwards v Noble (1971) 125 CLR 296 at 304), and the wife has not done that.
It is also not to the point that the wife has a legal liability to repay that money to her parents. It is always open to a court to find that a legal liability will not be enforced (Af Petersens and Af Petersens (1981) FLC 91-095 and Biltoft and Biltoft (1995) FLC 92-614).
Plainly, if the wife’s parents will not seek repayment, the wife will be able to support herself adequately, and she cannot establish an entitlement for spousal maintenance. Her Honour recorded at [472] the evidence of the wife’s mother “that she and her husband would not require the sale of the property if the wife were unable to pay the debt and that the property would always be available to the wife”.
Her Honour earlier in her reasons had also made a finding that the wife was entitled to a property settlement order providing net assets to her of approximately $2,477,000.
Thus, there is no lack of adequate reasons by her Honour in this regard.
There is no merit in this ground of appeal.
Ground 14 can be dealt with equally as briefly. There is no basis for the fact of the wife’s parents providing the money to purchase the Suburb R property being taken into account as a contribution on behalf of the wife; neither the property nor the liability was included in the asset pool, and that was at the request of the wife. It is also tortuous to suggest that the liability is a contribution by the wife, or on her behalf, to her own accommodation and that of the adult child G.
Similarly, there is no basis to take that liability into account under s 75(2). It is not a factor that could lead in any way to an adjustment under that subsection in the wife’s favour.
Thus, there is also no merit in this ground of appeal.
Grounds 15, 16 and 17
The trial Judge erred in making an order for lump sum adult child maintenance by the capitalisation of only $250 per week:
15.1 in circumstances where her Honour accepted that the child’s domestic expenses are not less than $422 per week; and
15.2 in circumstances where the [wife] has no funds other than the reduced carers allowance of only $62 per week.
The trial Judge erred by failing to give adequate reasons as to why the amount that the [husband] should pay in relation to child maintenance is only $250 per week.
If the trial Judge was not in error in limiting the [husband’s] liability to the domestic expenses of the child G to only $250 per week then her Honour was in error in failing to take into account as a matter of contribution, or pursuant to s75(2) of the Act, the significant financial contribution that would have to be made by the [wife’s] parents.
It is necessary to address Grounds 15 and 16 together, because the actual complaint here is a lack of reasons by her Honour as to why she adopted the amount of $250 as the appropriate amount of adult child maintenance to be paid on a weekly basis.
Her Honour found that G met the criteria for adult child maintenance (at [569]).
Her Honour then addressed G’s needs with the starting point being the wife’s Financial Statement where G’s expenses were said to be $2,958 per week. However, it was accepted that some of those expenses would be covered by the National Disability Insurance Scheme (“NDIS”) payment for which G was eligible, although there was no, or little evidence, as to precisely how much would be covered, and what of those expenses were necessary for his welfare.
In any event, her Honour then recorded that the wife’s estimate of G’s domestic expenses such as food, utilities, clothing and the like, were $422 per week (at [574]), and then said this:
575.The state of the evidence does not enable me to find that G’s expenses will exceed that amount, once all of the NDIS payments have been taken into account.
After referring to the evidence of the difficulties associated with the care of G, her Honour concluded as follows:
577.For those reasons, I propose to make an order that the husband pay lump sum maintenance for G which will represent a payment of maintenance for five years. I propose to set the weekly amount at $250 which will provide a small contribution to his non-domestic care.
578. The husband will pay a lump sum of $65,000.
What her Honour there says about the weekly amount of $250 providing a small contribution to G’s non-domestic care, can be read in two ways. First, the entire amount of $250 is for his non-domestic care, and none of that is to meet his domestic expenses. Alternatively, of the amount of $250, a small proportion is for his non-domestic care, and the balance is to meet his domestic expenses.
Unfortunately, her Honour does not make clear which interpretation is the correct one, but it seems to us that the latter is what her Honour is saying.
At [537] her Honour says this:
Since I propose to make an order for adult maintenance for G, in an amount that represents half of his reasonable expenses after the proportion paid by the NDIS, no further adjustment is required in relation to this aspect.
It is likely that the reference to “his reasonable expenses after the proportion paid by the NDIS” has the same meaning as the reference in [574] to his “domestic expenses” when [574] and [575] are read together.
Thus, taking [537] literally, the amount that her Honour proposed to order in relation to G’s domestic, or reasonable, expenses, would be $211 per week (ie, one half of the $422 per week referred to in [574]), and that would leave $39 per week as being the “small contribution to his non-domestic care”.
Turning to the issue of the wife’s ability to meet her half share of G’s domestic expenses, it is correct that her Honour failed to engage in any detailed analysis of that issue, but her Honour did make the following findings about the wife’s financial circumstances:
527.The wife is 48 years of age. She has not been in the paid work force since 1994. She has no real qualifications for employment. Her caring responsibilities for G will, in any event, preclude her from full time employment as she is required to be on hand if G has any difficulties.
…
533.It is necessary to take into account the fact that the husband has already received and spent his superannuation entitlement in the sum of $72,135, but the wife’s entitlement is preserved. Neither party asks for a splitting order in relation to the wife’s superannuation. It is a small sum in the overall asset pool and I do not propose to take it further into account.
…
544.It should be remembered that the funds actually held in the controlled monies account, after payment of the joint debts will be approximately $152,000. It is not possible to be more accurate because further interest will have been paid and the interest owed to J Pty Ltd will have to be paid. This calculation deals with the fund as if the personal tax of the husband and the wife had not been paid and then provides for payment out of the entitlement of each party.
Further, as to the husband’s financial circumstances her Honour said this:
528.The husband is 53 years of age. He has not worked in gainful employment since the collapse of the business in 2014. He has been in receipt of a Centrelink pension.
And as to both:
529.Neither the husband nor the wife has realistic expectations of paid employment.
It is in these circumstances that her Honour has made the order that she did, namely for the husband to pay out of his capital, lump sum maintenance of $65,000 based on $250 per week over five years.
It is uncontroversial that the wife would end up with capital in the sum of approximately $2.7 million, and like the husband out of his capital, the wife could access hers to meet her share of the domestic expenses of G.
Thus, there is no error here by the primary judge.
As to Ground 17, that is in effect a repeat of Ground 14. We have found no merit in Ground 14, and for the same reasons as we expressed there, we find no merit in Ground 17.
Conclusion
Apart from the concession by the husband in relation to Ground 10, and the obvious merit in Ground 12, we have also found merit in Ground 5, and thus the appeal must be allowed in part.
With Grounds 10 and 12 we are able to adjust the figures accordingly, but in relation to Ground 5, the question becomes whether we are able to re-exercise the discretion or whether we must remit that aspect of the matter for rehearing.
We consider that we can re-exercise the discretion.
The issue is what if any adjustment should be made pursuant to s 75(2) for the wife’s ongoing responsibility to care for the adult child G.
The evidence as to G’s condition, and the care that he requires, is referred to extensively by her Honour at [428] – [461]. There is no doubt that his ongoing needs are substantial.
Her Honour has addressed G’s financial needs into the future by providing for a payment by the husband of lump sum maintenance in the sum of $65,000.
However, there clearly needs to be an allowance to the wife because she continues to be responsible for G’s physical and emotional needs.
Her Honour determined to make an adjustment of five per cent in favour of the husband as a result of a consideration of all of the relevant s 75(2) factors, but as pointed out above, it would seem that most, if not all of that adjustment, related to the wife’s waste as a trustee for sale.
We consider that when the wife’s ongoing responsibility for the future care of G is factored in, as it must be, there should be no adjustment in favour of either party pursuant to s 75(2).
Thus, there should be no adjustment to her Honour’s contribution findings, and the ultimate entitlement of the parties to their net assets as found by her Honour should be 55 per cent to the wife and 45 per cent to the husband, rather than the 50 per cent/50 per cent division found by her Honour.
The next question is, in re-exercising the discretion in the way that we have, we need to determine how the primary judge’s property settlement order shall be varied to provide the outcome that we have arrived at.
At [509] the primary judge sets out a table comprising the assets, the notional addbacks, and the liabilities of the husband and the wife as found by her Honour. The net assets are $4,953,589, but this amount should be reduced to $4,857,729 upon payment of the Centrelink debt of $59,150 and reimbursement to the wife of the further costs associated with selling the property at B Street, in the sum of $36,710.
The details of the liabilities as found by her Honour are:
[The second respondent]
$768,877
HH Pty Ltd
$16,223
J Pty Ltd
$45,333
U School
$12,000
Payment to the wife for costs
associated with selling B Street
$3,365
Total:
$845,798
Paragraph 1 of the property settlement order made by her Honour on 6 March 2018 required the payment to the second respondent in the sum of $768,877. Paragraph 3 requires the payment of each of the other liabilities from the controlled monies account held by CC Solicitors (“CC”). In addition, paragraph 3 requires that the wife receive an amount of $76,000 and that the husband receive the same amount to be paid to him in two tranches, firstly, by way of a payment of a liability the husband owed to V & Associates in the sum of $27,996 and secondly, a payment of $48,004 to himself. Paragraph 4 divided the balance of the CC account evenly which meant (ignoring any interest that would be divided evenly) that each party shall receive $647,941.
Consequently, the CC account would be exhausted in the following way:
Payment of liabilities
$845,798
Payment to the wife
$76,000
Payment on behalf of the husband
$27,996
Payment to the husband
$48,004
Payment to the wife
$647,941
Payment to the husband
$647,941
Total:
$2,293,680
In relation to the other assets which each party retained, they are set out in [509] as follows:
| Description | Husband | Wife | ||
| 3 | Wife | Various bank accounts (CBA Wife ...96) | 1,209 | |
| 4 | Husband | Motor vehicle 1 (scrap value) | 300 | |
| 5 | Wife | Motor vehicle 2 | 10,000 | |
| 6 | Wife | Life Insurance Policy | 12,675 | |
| 7 | Wife | Household Contents | 8,000 | |
| 8 | Husband | V & Associates Trust Account | 1,910 | |
| Add back | ||||
| 9 | Husband | Monies paid by the husband for costs from interim property settlement. | 550,000 | |
| 10 | Wife | Monies received by wife | 121,613 | |
| $552,210 | $153,497 | |||
The property at B Street had a value of $2,800,000 at the time of trial, and it was to be sold. In respect of the proceeds of the sale, we propose to order that amounts be deducted in respect of the Centrelink repayment (Ground 10: $59,150) and the further costs of sale back to the wife (Ground 12: $36,710). This reduces the amount available from the sale of B Street (ignoring sale costs) to $2,704,139 (2,800,000 – 59,150 – 36,710).
Therefore, the overall assets in summary are:
Distribution to the wife from CC
($76,000 + $647,941)
$723,941
Distribution to the husband from CC
($27,996 + $48,004 + $647,941)$723,941
Assets held by the husband
$552,210
Assets held by the wife
$153,497
B Street
$2,704,139
Total
$4,857,728
In order to provide the outcome foreshadowed, these assets have to be divided 55 per cent to the wife ($2,671,750) and 45 per cent to the husband ($2,185,978).
In order to achieve this division, the wife requires the sum of $1,794,312 ($2,671,750 – $723,941 – $153,497) from the proceeds of the sale of B Street. That is 66.35 per cent of the proceeds of B Street ($1,794,312 ÷ $2,704,139). The husband requires the sum of $909,827 ($2,185,978 – $723,941 – $552,210) from the proceeds of sale, and that is 33.65 per cent of those proceeds ($909,827 ÷ $2,704,139).
We acknowledge these figures do not mathematically factor in the unknown Capital Gains Tax debt on B Street nor interest on the funds with CC but those matters are dealt with generically in the paragraphs 9.2 and 4 of the property settlement order respectively and any variation is de minimis.
Accordingly, paragraph 9 of the property settlement order made by her Honour on 6 March 2018 will be varied by deleting paragraph 9 and inserting in its place a paragraph in the following terms:
9.That upon the sale of B Street, the trustees of sale shall apply the proceeds in the following manner and priority:
9.1in payment of the costs of sale, including but not limited to the costs of the trustees for sale, agents’ commission, legal fees on the conveyance;
9.2in payment of any amount of Capital Gains Tax in relation to B Street assessed against either the husband or the wife;
9.3 payment to Centrelink of the sum of $59,150;
9.4 payment to the wife of the sum of $36,710;
9.5 payment to the wife of 66.35% of the balance;
9.6 payment to the husband of 33.65% of the balance;
9.7on the basis that the property at B Street has sold for $2,900,000, payment to the wife of 55% of the net increase in the sale proceeds over the proceeds from a sale for $2,800,000, and payment to the husband of 45% of that increase; and
9.8the husband is to pay from his share of the balance the following:
9.8.1in payment of the sum of $65,000 to the wife by way of maintenance for G in accordance with Order 6;
9.8.2in payment of the costs of Mr and Mrs Gomes incurred in these proceedings in accordance with orders made on 1 March 2018; and
9.8.3in payment of the sum of $100,000 to the husband’s solicitors, to be held by them until the determination of the dispute over the payment of costs of the proceedings in the Supreme Court of New South Wales Case Number … and distributed in accordance with that determination.
Costs
In the event that the appeal was successful the wife sought party/party costs of $159,503.15 against the husband and the second respondent. Those costs comprised $21,486.13 for solicitor’s fees, counsel fees for the senior counsel who appeared at the hearing of the appeal of $44,069.32, counsel fees for a senior counsel who did not appear at the hearing of $42,638.40, and junior counsel fees of $46,190.19. There were also disbursements of $5,119.11.
The appeal of course has only been partially successful, and indeed only in respect of one substantial ground of appeal (Ground 5) out of a total of 17 grounds of appeal. Two other grounds of appeal have succeeded, namely Grounds 10 and 12, but the former was conceded, and the latter was an obvious error by her Honour.
It is not possible to identify from the schedule of the costs sought what proportion thereof would relate to Ground 5.
However, no submission was put to us as to why any costs should be awarded against the respondents when the errors found were made by the primary judge, and there is nothing to suggest that her Honour was led into those errors by either of the respondents. There is also no obvious basis for finding that the respondents should have conceded the appeal insofar as it has turned out to be successful, prior to the appeal hearing. Indeed, it is not obvious that such a concession would have lessened the costs sought, given the nature of the one substantial ground of appeal that has succeeded.
We have referred of course to both respondents, but plainly there would be no basis to pursue costs against the second respondent because the successful grounds of appeal only relate to the husband, and do not involve the second respondent.
In the circumstances we are not prepared to order any costs in favour of the wife, but before leaving this topic we comment that in our view the costs sought are entirely unreasonable. There is no apparent basis for two senior counsel to have been instructed in this appeal, and in any event, it is plain from the schedule that there has been an unnecessary doubling up of the work undertaken by them, and in particular in the areas of reading time and conferences. There has also been a tripling up in the area of conferences, with the involvement of a junior counsel.
In the event that the appeal was dismissed, the husband sought costs totalling between $17,255.38 and $18,355.63. The range was because there is a range claimed for counsel fees.
However, it is unclear from the schedule provided by the husband whether any of the costs relating to an Application in an Appeal filed by the husband and heard and determined by Aldridge J on 20 September 2018, are included in the costs sought. The problem is that his Honour made an order for costs in favour of the husband on 20 September 2018.
Thus, it is impossible to be certain of the amount of costs sought by the husband that relate to the appeal. There is also the issue of one substantial ground of appeal being allowed and not dismissed, but it is not apparent that the husband’s costs would have been any less given the nature of that ground of appeal.
In any event, although the wife’s senior counsel indicated that the wife could not oppose an order for costs in favour of the husband if the appeal was dismissed, we are not disposed to make an order for costs in the husband’s favour. We consider that the primary position provided for in s 117(1) of the Act should apply, and each party should bear their own costs.
The second respondent also seeks costs in the event that grounds of appeal 1 – 4 are dismissed.
That is the case, and the costs he seeks total $35,878.36. That comprises $16,515.38 for solicitor’s fees, $18,972.98 for counsel fees, and $390 for the costs of translation.
The senior counsel for the wife indicated that the wife could not oppose this application, and thus we will make an order accordingly.
In the event the appeal was allowed on a question or questions of law, and no order for costs was made, the wife and the husband sought costs certificates pursuant to ss 6 and 9 respectively of the Federal Proceedings (Costs) Act 1981 (Cth) for the appeal.
Given that only one substantial ground of the 17 grounds of appeal was successful, (apart, of course, from Grounds 10 and 12), and given the circumstance that costs incurred by the wife in relation to that ground would not make much, or any difference, to her overall costs, we do not consider that it is appropriate to provide the wife with a costs certificate for the appeal.
In relation to the husband, given that he will have his costs as a result of the dismissal of 14 of the 17 grounds of appeal, it is not appropriate that he receive a costs certificate for that part of the appeal which was successful.
I certify that the preceding one hundred and ninety-four (194) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ryan and Watts JJ) delivered on 9 October 2019.
Legal Associate:
Date: 9 October 2019
3
16
1