Singerson v Joans [2015] HCATrans 195 (14 August 2015)

Last Updated: 19 August 2015

[2015] HCATrans 195

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Perth No P1 of 2015

B e t w e e n -

SINGERSON

Applicant

and

JOANS

Respondent

Application for special leave to appeal

FRENCH CJ
NETTLE J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON FRIDAY, 14 AUGUST 2015, AT 11.08 AM

Copyright in the High Court of Australia

MR R.S. HOOPER, SC: May it please your Honours, I appear for the applicant with MRS T.A. FARMER. (instructed by Lewis Blyth & Hooper)

MR P.M. DOWDING, SC: If your Honours please, I appear for the respondent with MS D.L. KERR. (instructed by DCH Legal Group)

FRENCH CJ: Yes, Mr Hooper.

MR HOOPER: Thank you. Your Honours, this application raises the issue of the intersection of family law concerning property settlement between a husband and wife with the intergenerational transfer of wealth between a parent and a child. That is the essence of the point of the case below. We contend that decisions of the Family Court and the Full Court of the Family Court of Australia conflict on the issue as to how such a case should be approached, and that this is an appropriate matter in which this Court should issue some guideline as to how cases of such nature are dealt with, as was contemplated in Norbis.

FRENCH CJ: Now, in this case, the Full Court took what would be described as an holistic approach?

MR HOOPER: I would call it a global approach. I appreciate they called it “holistic approach”, yes.

FRENCH CJ: In any event, they took into account the inheritance, but their order did not in terms affect the applicant’s interest in the inheritance?

MR HOOPER: No. The application made by the wife, if successful, would have inevitably led to that, but she was not as successful as she sought and an adjustment was made out of the proceeds of sale of the former matrimonial home.

FRENCH CJ: Yes.

MR HOOPER: But in making that assessment, the Full Court took into essentially one pile of assets a number of different assets of different character. Among them was, firstly, from our part, the bundle of rights of the husband constituted the residue of the inheritance he had received from his father’s estate after the separation. It put into the same bundle a business owned by the wife and operated by her, which generated a very significant income, in excess of $400,000 per annum, and noting that the husband’s inherited wealth generated very little income, it largely constituted by vacant or non-income earning real estate, and cash from the sale of the home.

What we say is that attempting to put all of those things into one pile, and then construct some mathematical division of it has inevitably led the Full Court into error, and that it should have actually considered these assets as being the quite different items of property that they are, when it came to a division.

The Act requires the court, of course, to identify all of the property of the parties, and that it did. What we say is that the court, when then dividing those assets, has compared not like with like, but unlike with unlike, and has then fallen into error. It is common ground, I think, that the Full Court has in a line of many prior cases taken the view, we say appropriately, that an inheritance received by one party should be treated as a contribution by that party. The distinct difference in this matter is that a very considerable inheritance, when received after separation, of in the region of $3.1 million but reduced by time of trial to about $2.6 million, was something to which the wife made no contribution.

Your Honours, in Mallet and Norbis, the discussion there about the different sorts of approaches, each of which is equally permissible, and the injunction of Justice Nygh in G &G to not lose sight of the forest for the trees and so on when making such assessments, were the background of cases where factually there had been some contribution made by each party to the relevant property under consideration. We say here there can be no suggestion that the wife has made a contribution contemplated by 79(4)(a) or (b) to the husband’s inherited property.

NETTLE J: In the end, Mr Hooper, is your complaint any more than that you say the Full Court gave too much of a percentage in relation to the inheritance of the wife?

MR HOOPER: Well, as the Chief Justice indicated, it did not in fact give any of the inheritance - - -

NETTLE J: Just so, but in effect, by taking it out of the balance, you say that they gave it too much in respect of the inheritance?

MR HOOPER: Yes, I do.

NETTLE J: It is really an exercise of discretion, is it not?

MR HOOPER: Yes, it may be seen to be, but it is the process by which the discretion was exercised that we say has led into error. That is a process that is likely to be repeated in other cases, and will affect other members of the public who come before the Family Court - - -

NETTLE J: But why is it an error if it is recognised that no contribution was made by the wife to the inheritance, but that because of all the circumstances, she should have a larger amount, as it were, out of the remainder? Where is the error in principle in that?

MR HOOPER: The error in part, your Honour Justice Nettle, is that when one attempts to use a mathematical exercise and you put zero in an equation, you may get unusual results. We say that there are many prior cases before the Full Court and first instance judges of this type where the Full Court and the first instance judges have, we say, taken the appropriate view of assessing what is the contribution of the parties to either particular property or groups of property, and then come to a decision as to what the division should be of that property, and then moved on to the next step, which would be the adjustments that come in pursuant to 79(4)(d) and (f), 75(2) - - -

NETTLE J: Sorry, is the error in principle then that they did not individually assess the contributions to each of the assets that constituted the fund? Is that the error in principle? I am not saying I am right. What I am asking you to do is to articulate the error in principle that you say that the Full Court was guilty of.

MR HOOPER: The error of principle, your Honour, is that the Full Court has treated as a pool of property, and included within it something to which the wife made absolutely no contribution, and its calculations, therefore, fell into error. It may be that on exercise of we would say proper principle, you arrive at a different result; you arrive at a similar result. It should be noted that the Full Court, exercising a different principle and having criticised the trial judge for the manner in which he dealt with it, came to a very similar result.

NETTLE J: So the error is including in the pool an asset to which it is manifest the wife made no contribution?

MR HOOPER: Treating as a pool with other property to which the parties made contribution.

NETTLE J: That has resulted, you say, in a greater proportion of the other assets in the pool?

MR HOOPER: Yes. If I can illustrate by reference to a few cases that are cited on our list, starting with in time the Full Court case of Re Z, and I would refer to paragraph 42 where there the Full Court took the view that the assessment of contributions on an asset by asset basis was appropriate where there was substantial property coming in after separation from the contribution of one party alone; a decision of the Full Court in Polonius & York at paragraph 93, where again, significant assets - that it was useful to undertake the Norbis-type approach of “asset by asset” because of the property coming in after separation; the case of Mistle, which was a first instance judgment, but again considered a two-pool approach where inherited property was treated separately; and the case of Eufrosin, which is in fact referred to by the Full Court in its judgment at paragraph 63 on page 87 of the book, where the Full Court quotes Eufrosin as the “holistic approach” your Honour Chief Justice French used the phrase for at the beginning. In Eufrosin, it was a case that concerned a substantial lottery win post-separation, and there the Full Court approved an assessment that saw the post-separation lotto win treated quite separately.

Now, my friend Mr Dowding’s position is, in his submissions, that somehow we are seeking to quarantine the asset – the inheritance, that is – and remove it from consideration of the court. That is not the case. We are simply saying that if there is an asset to which somebody has made no contribution, that is the fact of it. If there are other assets to which some contribution has been made, that is the fact of that.

If having determined, at least on a preliminary basis, the division of property on the basis of those findings, the court will then turn its mind to any necessary adjustments under 75(2) or the other following sections of 79(4) of the Act. It is at that point that a variety of adjustments can be made which include, amongst other things, the prospective or future obligation to care for or support children, which is set out plainly in 75(2)(c) and (d) of the Act, whereas the assessment under 79(4) of the Act is obviously a contribution up to that point in time – “had been”; it is a past tense issue.

FRENCH CJ: Well, the contribution is something to be taken into account in the exercise of a larger discretion.

MR HOOPER: Yes.

FRENCH CJ: Independent of the contribution and other factors.

MR HOOPER: The other factors are not necessarily seen as contributions under 79(4)(a), (b) or (c). They are the prospective future-looking factors which the court is directed by Parliament to take into account or consider as to whether some adjustment should be made to a preliminary assessment on the contribution basis.

The adjustment that may be made – and this point, really, your Honours, is in their judgment the Full Court has essentially said that the trial judge fell into error because he only looked at the contribution made by the wife to inheritance in the four years post-separation – only after the inheritance was received – whereas the Full Court criticises and essentially says – this is at paragraph 65 of the decision – that the homemaker contribution prior to separation may be seen to be a contribution towards property acquired after it.

It is this attempt to treat or put together the contribution as a homemaker towards particular property that, in my submission, has caused confusion and led to the error that has been made. The homemaker contribution is one. The homemaker contribution under 79(4)(c) is something to be assessed up to point of trial. The prospective future homemaker contribution is something to be considered under 75(2)(c) and (d).

To say that the homemaker is towards a certain property, it really mangles the language a bit because the homemaker contribution is towards the children, family and home. It is not a contribution towards property as distinct from it, and to try and have some mathematical analysis about this and come to a particular percentage of a global pool, in my submission, is something that will only necessarily lead to error.

The Full Court has criticised the trial judge for adopting a mathematical approach, spoken of the need for a holistic approach – that is paragraphs 61 and 62 of the judgment – but, in my submission, did not then do that; did not stand back, for example, holistically and say is it appropriate that we consider as having the same monetary value, able to reduce to dollars, a bundle of rights in respect of an estate which generates little by way of income, in respect of which the wife has made no contribution – how do we compare that with a bundle of rights that the wife has that relate to businesses she runs which produce an income of $400,000 a year?

FRENCH CJ: Are you able to say that success in the appeal on the question of what you say is the error would lead to a different result?

MR HOOPER: I do, but I accept, your Honour Chief Justice French, that my friend, Mr Dowding, will say that he would contend for a better result for his client. The point I make is that, if leave is granted, at the appeal I will be taking the Court in detail through the reasons why an assessment in the way I suggest, in the way we promoted at trial, would be appropriate and would lead to a better result for my client, largely because after the primary trial our appeal was on the basis that the trial judge had conflated two tasks and had effectively double-dipped in looking at contribution to assessment, but treated to an inheritance, but had - - -

FRENCH CJ: What do you say about the deprecation in the Full Court in Norbis by Justices Mason and Deane in their adoption of the Family Court’s

criticism of the practice of giving overzealous attention to the ascertainment of the party’s contributions?

MR HOOPER: Yes, I accept the appropriateness that on a public policy point of length of trials and so forth - - -

FRENCH CJ: The risk one gets into is poking around in the entrails of discretion and starting to generate rules out of what are guidelines appropriate to particular cases.

MR HOOPER: All I am suggesting is that guidelines appropriate to particular cases are very helpful, but none is given in this type of case. Mallet and Norbis were cases of degrees of contribution by parties to a marriage to the property they had at the end. They were not cases like the ones I have referred your Honours to, where there was absolutely no contribution made. I see the light is on, your Honour. I probably should sit.

FRENCH CJ: Thank you. Yes, Mr Dowding.

MR DOWDING: Your Honours, the error we say that my learned friend has in his case is that he is assuming that section 79(4) is restricted to an analysis of contribution to property, and of course, it is not. Section 79(4)(a) and (b) specifically are there to identify contributions towards property, direct and indirect contributions, but the last provision of that section, which is section 79(c), is not directed to property at all. In fact, it is directed to the contributions to the marriage.

That, of course, is why this task does not fall to direct math in the way that Jordan J proposed it, which was to add up a bit of a percentage on the left hand and a bit of a percentage on the right hand, and then put them together and say that is the number. He started percentaging bits on one side of the separation and bits on the other side of the separation. What the Full Court said was that that actually can lead you into error. You have got to have a view about the whole matter.

You might look at particular aspects of contribution, if that is appropriate in a particular case – and it is in some of the cases that my learned friend has referred to – but that is not the case here. Here, you have a situation where, from a factual basis, the property of the parties was all in the name of the wife except for the inheritance. The question for the court and the Full Court was how much should she pay the husband?

Now, the two tests that they had to apply to determine that issue was, first of all, the general issue of contributions to property, and that of course was under section 79(4)(a) and (b), and then they had to look at the overall contribution that she had made, both up to the date of separation and of course for the four years post-separation.

In the exercise of determining what in terms of the section 79(4) exercise, they had to determine not only contributions to the property referred to in (a) and (b) and those type of contributions; they had to look at the generalised contribution that each party made as a homemaker and parent. Then importantly, they had one more test under section 79 which was to go to section 75(2) and see what was there in that section that might be appropriate in determining this split.

Of course, you immediately get to 75(2)(b), and in determining this split, not an analysis of the future, as some family lawyers often make the mistake of asserting – and I think, with great respect, my friend suggested it – but 79 directs the court to take account of those issues in 75(2) that are irrelevant, and of course, in this case, the particular issue is what property each of the parties has at the time of the trial. That is the critical issue, and that is the point at which the estate comes in.

My friend talks about this estate not producing income. There is nothing in the judgment, as far as I can see, to justify that proposition, and the relevant comment is in paragraph 60, where the husband was not earning any money, and all he had was the estate – it does not say it was not earning any money, but that is irrelevant. The fact is he had an estate. It was a very substantial sum of money in the context of this family, and in determining the exercise under section 79 the court had to take account of this possession of that property. That is where 79 take us to 75, and 75(2)(b) requires the court to consider it.

We say, in all those circumstances, if one accepts that the Family Court is following what was said in Norbis – and, of course, what was said in Norbis both by Justices Mason and Deane and also by Justices Wilson and Dawson, at paragraphs 15 and 16 in the case of Justices Mason and Deane and paragraphs 27 and 28 in the case of Justices Wilson and Dawson – what the Judges of that Court made absolutely clear is that there are lots of mechanisms in which one can assess what is proper and just and equitable in all the circumstances, and it is helpful in some cases to apply some math to the process.

It is not mandatory, and it is not mandatory to look at individual assets or, as your Honour the Chief Justice calls it, holistically, it is not mandatory to do any of those things. All of these cases, as the Court has observed, are often so factually different from each other that it is not possible to put a template over the analysis and say this is proper, or that is proper.

The question here, in my respectful submission, for your Honours to determine is whether or not this is simply a matter of appropriate exercise of discretion, or whether there is a fundamental error that needs direction from the High Court. We say the Full Court has repeatedly understood properly and explained correctly what Justices Wilson and Deane and Mason and Dawson have said in Norbis, and the other relevant High Court cases that have touched upon it. In this case, they have done exactly what the statute requires; look at all these things, explain how their mind is working, and then come up with an overall figure.

Unfortunately, this appeal to the Full Court launched by the husband and a cross-appeal by the wife only resulted in a true change of a benefit to the wife of $25,000, so it was a very miniscule adjustment to the fact that she did not have to give him another $25,000 out of her pool. But importantly, this estate cannot simply be ignored because the statute requires its examination in two contexts.

One is the examination of to what extent that is applicable in the analysis of this homemaking and parenting, and in this case it was exceptional. There were reasons why it stood out from the ordinary, if you like, that the wife had had the carriage of the family for all of the years of the marriage almost, and introduced the original capital and skills which led to her business success; she had the principal responsibility for the children before and after the separation. All of those elements came into play, and they are relevant to when looking at the entirety of the property of the parties.

Now, Parliament obviously thought it knew how you could assess contributions as homemaker and parent – I always struggle a bit to know, I think someone observed, if she is a really good cook does that give her a tick, or if she was a particular kindergarten teacher with skills did that give her a tick? But the reality is that the courts take a broad brush analysis and say this is not a marriage where the parties pull the weight equally; this is a marriage where her contribution was really exceptional both before and after separation, and we have to apply that to the whole of the property of the parties because that is what the Act requires.

The definition of “property”, as your Honours observed in the last High Court case I did before your Honours, the Act requires the whole of the property to be considered - - -

FRENCH CJ: What do you say to Mr Hooper’s contention that there are conflicting approaches between different Full Courts?

MR DOWDING: The Full Court does not have any difficulty with this approach. We say none of those cases really set up a principle that is in contradistinction to the way they dealt with this. Some of the cases my friend referred to are what we have called the “lottery” cases, where after separation, there is a win, and you cannot really point to anything in particular, and you might argue that in this particular case, the wife’s contribution as homemaker parent is adequately compensated in another way, but it does not.

The Act mandates that you look at everything. The Act does not mandate you take everything into account in a particular way. It is an exercise of discretion on how to deal with the matter, and we say the Full Court does not need further guidance in relation to it, and nothing in these reasons suggests that it does.

In fact, your Honour, when they are critical of his Honour’s approach from a mathematical point of view, what they were really clearly talking about there is not applying a mathematical assessment in the end to try and put it against the appropriate division of property, but he was adding up percentages after separation and percentages before separation, and then using a mathematical approach, actually mathematically adding up all that and saying that was therefore what I am bound to give the parties.

What the Full Court is saying here is that it is an assessment in which you identify a percentage as a helpful mechanism of working out how you are going to divide what is there. The suggestion that somehow or other the Full Court was puzzled on how to deal with the estate, in our respectful submission, is wrong. The Full Court knew exactly that it had to take it into account under section 79(4)(c) and it had to take it into account under section 72. At that point in time, it had properly recognised all those elements, and it said the result of this is that the wife will retain about 47 per cent of - - -

FRENCH CJ: Well, the bottom line, as far as your contentions go, is that the Full Court was exercising a broad statutory discretion in which there are a number of permissible pathways of reasoning, and that the pathway it took was within that framework.

MR DOWDING: That is right. There is nothing unique about this idea of how do you deal with a post-separation acquisition of property. The husband in this case obviously feels a great injustice that his wife did not have anything to do with it. You might say that is right. There are lots of factual things that might emerge; he did not have any debts when he left home because she had been supporting him – had he, the value of his inheritance might have been reduced by the debts. You just cannot assume that this little treasure box was something to which no contribution had been made. In this myriad of potential factual analysis that the court has to undertake, we submit that it has exercised its discretion appropriately.

FRENCH CJ: Thank you, Mr Dowding. Yes, Mr Hooper.

MR HOOPER: Your Honours, Mr Dowding, at paragraphs 15 and 16 and in oral submissions, essentially draws on the adjustments that could be made under 75(2) of the Act to say that the Full Court has arrived at the right decision. The Full Court did not make any adjustments under 75(2) of the Act. It did not go to those issues because it did not think any adjustment needed to be made.

I accept that it could well have, had it dealt with the matter in the way that I am proposing, in the way that many other cases have indicated such matters have been dealt with, it may have said that because of the husband holding both his inheritance and a portion of the joint property that therefore there should be some adjustment for a myriad of reasons. I would contend separately or differently rather because of a myriad of other reasons, but the point is the Full Court did not do that.

It got to the point it got to simply on a contributions basis where there has been no contribution made to this asset by the wife, and for Mr Dowding to say that homemaker contributions work against the entire marriage, well, of course they do. They are to be assessed in respect of the entire marriage and the quality in the effort made of those contributions. But to say that therefore, somehow it works on property acquired after marriage does violence to the words of the statute.

FRENCH CJ: Thank you, Mr Hooper.

In our opinion, the approach adopted by the Full Court to the exercise of a discretion under section 79 does not disclose any error of principle or otherwise which would warrant the grant of special leave on any of the grounds set out in the draft notice of appeal. Special leave will be refused with costs.

The Court will now adjourn to reconstitute and establish the video-link with Adelaide, which may not be available until midday.

AT 11.42 AM THE MATTER WAS CONCLUDED