Lester & Lester [2014] FamCAFC 209; (30 October 2014)

Last Updated: 24 November 2014

FAMILY COURT OF AUSTRALIA

LESTER & LESTER

[2014] FamCAFC 209

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – CONTRIBUTIONS –Where the husband argued for a finding of equality of contributions – Where his Honour made a four per cent adjustment in the wife’s favour – Where in the context of the overall property pool the husband’s argument for equality would have resulted in him receiving an additional amount deemed de minimus and would not justify appellant intervention – Where the assessment and evaluation of the husband’s contributions was complicated by the paucity of evidence concerning the acquisition and improvements to the parties’ properties – Where money advanced by the wife’s family was properly taken into account as contributions made on her behalf – Where the advanced money was not insignificant and provide ample justification for the adjustment – No error. FAMILY LAW – APPEAL – PROPERTY SETTLEMENT – SECTION 75(2) ADJUSTMENT – Where 25 per cent adjustment made in favour of the wife – Whether the adjustment is so unreasonable and plainly unjust that there has been a failure in the exercise of discretion – Where the significant disparity in the income and income earning capacities of the parties coupled with the wife’s sole responsibility for the parties’ four children required a significant adjustment in her favour – Where the judgment did not address the actual figures involved in granting the wife an additional 25 per cent of the property pool – Where the effect of the orders would be to leave the husband with superannuation and the wife with nearly all of the tangible property – Where the differences in the nature and characteristics of the property which each party would receive was not addressed – Appeal allowed – Where re-exercise of discretion undertaken – Orders which split the husband’s superannuation interest set aside.

Family Law Act 1975 (Cth): ss 75, 79

De Winter and De Winter (1979) FLC 90-605 Parshen v Parshen (1996) FLC 92-720

APPELLANT:

Mr Lester

RESPONDENT:

Ms Lester

FILE NUMBER:

SYC

4480

of

2010

APPEAL NUMBER:

EA

83

of

2012

DATE DELIVERED:

30 October 2014

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Strickland, Ryan & Murphy JJ

HEARING DATE:

3 September 2013

LOWER COURT JURISDICTION:

Federal Magistrates Court of Australia

LOWER COURT JUDGMENT DATE:

4 June 2012

LOWER COURT MNC:

[2012] FMCAfam 388

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Ms Stenmark SC with Mr Fermanis

SOLICITOR FOR THE APPELLANT:

Scanlan’s Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Kearney SC with Ms Dulhunty

SOLICITOR FOR THE RESPONDENT:

McPhee Kelshaw

ORDERS

(1) The application in an appeal filed by the husband on 19 August 2013 be dismissed.
(2) The appeal be allowed.
(3) Orders 8 and 9 of the orders made by Federal Magistrate Monahan (as his Honour then was) on 4 June 2012 be set aside.
(4) There be no order as to costs.
(5) The Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of the costs incurred by him in relation to the appeal.
(6) The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by her in relation to the appeal.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lester & Lester has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 83 of 2012
File Number: SYC 4480 of 2010

Mr Lester

Appellant

And

Ms Lester

Respondent

REASONS FOR JUDGMENT

1. This is an appeal by Mr Lester (“the husband”) against property settlement orders made pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) by Federal Magistrate Monahan (as he then was) on 4 June 2012.
2. Following their marriage in 1991, the husband and Ms Lester (“the wife”) lived together for 18 years. They have four children who, since separation, have lived with the wife and do not see their father.
3. The focus of the hearing before his Honour was upon the financial contributions made by each of them to the relationship, the identity and value of their property, the magnitude of the adjustment to be made in the wife’s favour pursuant to s 75(2) of the Act and the form of order which would give a proper outcome. Each of these matters was contentious in the court below and all but the identity and value of the parties’ property are at issue in the appeal.
4. The wife’s contributions were assessed at 52 per cent and under s 79(4)(d)-(g), including in particular s 75(2) of the Act, she received a further adjustment of 25 per cent. The effect of the orders is that the wife received the family home in country New South Wales (subject to a mortgage), an investment property and, in addition to her own superannuation, $158,139.39 by way of a superannuation splitting order made in relation to the husband’s superannuation interest. In total, the wife received net assets valued at $745,519.39 including superannuation of $311,894. On the other hand, the husband received net assets valued at $222,687.61, of which his remaining superannuation interest represented $197,860.61. Thus from a property pool valued at $968,207 the wife received 77 per cent (including virtually all the non-superannuation property) compared to the husband’s 23 per cent which is overwhelmingly constituted by superannuation.
5. It is the husband’s contention that this outcome was manifestly unjust and outside the limits of a sound discretionary judgment. Consistent with the case he ran at first instance, it is his contention that the superannuation splitting order (order 8) should be set aside. As a consequence of this the parties’ property would be divided approximately 61 per cent to the wife with the remaining 39 per cent to him.
6. The wife opposes the appeal and seeks to maintain the orders of the trial judge.
7. By an application in an appeal filed on 19 August 2013, the husband sought leave to adduce further evidence in the appeal. Broadly stated, that evidence relates to the husband’s health and related employment issues. Senior counsel for the husband explained that the evidence is relevant to a possible re-exercise of the trial judge’s discretion. It was submitted by senior counsel for the wife that much of the evidence which might permissibly be admitted was irrelevant and should be rejected.
8. In the event error was established, we were invited to re-exercise the
   Federal Magistrate’s discretion. Other than the application to adduce further evidence already mentioned, neither party sought to adduce additional evidence on a redetermination.

Background facts

9. So as to give the appeal context, brief reference to the background facts is appropriate.
10. The husband was born in late 1960.
11. The wife was born in early 1964.
12. The parties married and commenced cohabitation in September 1991.
13. At the commencement of cohabitation the husband owned a 25 per cent share in a property in the north-west of Sydney (“Property H”) and had a two thirds interest in an apartment on the New South Wales Coast (“Property O”). He had superannuation and other assets of modest value.
14. The wife owned a car, savings, and funds invested in a GIO bond, in relation to which she said she owed her mother $18,000.
15. In late 1991, the parties purchased the remaining one-third share in the apartment at Property O for $40,000.
16. In mid-1992, the husband sold his share in Property H for about $43,000.
17. Property O was sold in either 1993 or 1994 from which the parties received either $120,000 or $135,000. Using those proceeds of sale they purchased land in the north-west of Sydney (“Property P”) for $150,500. Not long afterwards, and with predominately borrowed money, construction of a home on the Property P land commenced.
18. The parties moved into Property P in August 1995.
19. Their daughter was born in 1997 at which time the wife took maternity leave.
20. The parties’ elder son was born in 1999. Some months later the husband took two months paternity leave.
21. Twin boys were born to the parties in 2001. A few months after the twins were born the wife resigned her employment with an airline company.
22. In late 2006, the parties purchased a property in country New South Wales (“family home”) for $530,000 which became the family home.
23. In January 2010, the parties separated and the husband moved out of the family home where the wife and children continued to live. He moved into rented accommodation.
24. On 15 July 2010, the wife commenced proceedings in the Federal Magistrates Court (now the Federal Circuit Court) for parenting orders and property settlement.
25. Final parenting orders were made by consent on 17 January 2012. The effect of the orders is that the children reside with the wife. There is no provision in the orders for the children to spend time with the husband, it being his position that he will not see them.
26. The husband has repartnered and the wife has not.

The Federal Magistrate’s reasons

27. As no error is alleged concerning the Federal Magistrate’s analysis of the law, we will refer only to his findings of fact and the reasons he gave for his decision.
28. Having recounted the background facts to which reference has already been made, the Federal Magistrate identified the property orders sought by the parties. In summary, the wife sought that she retain the family home and following the sale of Property P she receive the net sale proceeds. In addition, that the husband be liable for the repayment of loans from the wife’s mother and brother. Importantly, the wife sought a splitting order that would see her receive some 82 per cent ($300,000) of the husband’s superannuation. Finally, the wife applied for spousal maintenance and that she and the parties’ children remain entitled in perpetuity to the benefits of the husband’s airline company staff travel and booking rights.
29. As to the orders sought by the husband, he agreed that the wife should receive the family home (subject to the mortgage secured thereon) and Property P on condition that she meets the costs of transferring the properties into her name. Of particular relevance to this appeal, in addition to retaining his personal property, the husband sought that he retains all of his superannuation.
30. After identifying the assets and liabilities in dispute, at [113], the Federal Magistrate found that the parties’ property and liabilities were as follows:

Non-superannuation Assets	Value
[Family home]	$550,000
[Property P]	$440,000
Husband’s household contents	$3,500
[Holden] vehicle (H)	$10,000
Wife’s household contents	$2,000
Husband’s [airline company] shares (289 shares)	$472
Wife’s []airline company shares (3,152 shares)	$5,043
Add-back proceeds of Wife’s [vehicle]	$5,300
Add-back proceeds of [airline company] shares (H)	$10,855
Sub-Total (Non-superannuation assets)	$1,027,170
Liabilities	Value
Mortgage on [family home]	$428,000
Mortgage on [Property P]	Nil
Loan from [wife’s brother]	$125,718
Loan from [wife’s mother]	$15,000
Sub-Total (Liabilities)	$568,718
Total net non-superannuation assets	$458,452
Superannuation Assets	Value
Husband’s Superannuation	$356,000
Wife’s AMP Flexible Lifetime Plan	$150,341
Wife’s Hesta Superannuation Plan	$3,414
Sub-Total (Superannuation assets)	$509,755
Total net assets	$968,207

31. There is no challenge to the manner in which his Honour formulated the property pool. Nonetheless and for reasons we will discuss later, it is important to note that the only finding regarding the property pool not favouring the husband was his Honour’s decision not to include as a joint liability $815 outstanding on his credit union account.
32. The wife sought to include $158,388 as a joint liability which she said the parties owed to her brother. There was no dispute that in 2007 the parties borrowed $100,000 from the wife’s brother in relation to which on
    17 December 2008 they signed a loan agreement. With interest on the $100,000 taken into account, it was agreed $125,718 was due and that this amount should be included as a joint liability. Where they disagreed was in relation to a series of payments, which amounted to $30,500 (plus interest), which his Honour accepted the wife’s brother advanced to her post separation. The wife did not persuade the Federal Magistrate that those post separation advances should be taken into account in the formulation of the property pool. However, her evidence that those advances were partially used to pay the mortgage on the family home as well as her and the children’s living expenses, was accepted. Thus, at [77], it was found that her brother’s post separation advances were a financial contribution made by the wife.
33. It was the wife’s case that $71,000 advanced by her mother should also be included as a joint liability. Of this amount, the husband conceded that $15,000 should be taken into account as a joint liability. Thus, his Honour was required to consider whether the remaining $56,000 should also be included. Of this amount, $18,000 was said to have been borrowed by the wife from her mother in 1989 and used to purchase GIO investment bonds in the wife’s name. There was no dispute that the wife owned the GIO investment bonds which she realised in 2000 for $26,893. Nor was there any evidence that the wife repaid any such loan. In addition to the purported $18,000 advance, the wife gave evidence of about 10 additional transactions which she said took to $71,000 the total amount she borrowed from and owed her mother.
34. No finding was made in relation to the $18,000, although his Honour’s findings in relation to the wife’s initial contribution tends to suggest that notwithstanding the $18,000 was not treated as a liability, the wife’s evidence that she borrowed that amount from her mother was accepted. By implication, it follows that his Honour also accepted that the $18,000 was not repayable. The wife was thus given the benefit of her having contributed the entire sum realised on the GIO bonds.
35. In relation to the other transactions which made up the $71,000, at [87], the wife’s evidence of her mother’s occasional financial contributions to the family was accepted. However, the Federal Magistrate was not persuaded that these advances were loans. Although his Honour does not make a clear finding about the quantum of money so advanced, it would appear that it was accepted that the wife’s mother advanced the money about which the wife gave evidence.
36. At [120], the monies advanced by the wife’s mother during the period of the marriage (excluding the $18,000), were taken into account as a contribution made by the wife.
37. The Federal Magistrate then assessed the parties’ financial contributions. After noting the length of the parties’ relationship (approximately 19 years),
    his Honour determined that the “global” approach to the assessment of contributions was appropriate.
38. A summary of his Honour’s findings in relation to the wife’s financial contributions made by or on her behalf is as follows:
    • an initial contribution of modest savings, a car and personal property [118];
    • $26,893 realised from GIO investment bond which matured in 2000 [79];
    • money advanced by the wife’s mother during the marriage ($56,000) [120];
    • $51,000 from the wife’s 2002 redundancy plus an additional $15,500 received at the same time which may have been paid into superannuation [122]; and
    • $30,500 advanced by the wife’s brother after separation [121] the significance of which was moderated by her having the benefit of living in the family home.
39. Although nothing turns on it, we observe that in evaluating the wife’s financial contributions his Honour would appear to have overlooked that in 1997 the wife received an inheritance of $14,714.
40. It would seem that his Honour took into account the wife’s uncontested evidence that from the commencement of cohabitation and until 2002 (subject to periods of paid and unpaid maternity leave) she worked full time, initially as a health professional and then in the travel industry, and it was presumed that she used her income for the benefit of the family (Parshen v Parshen (1996) FLC 92-720).
41. Significant weight was given to the wife’s contributions to the welfare of the family as homemaker and primary carer of the children.
42. The husband’s contributions were then considered. In relation to this issue, there was no dispute that at the commencement of cohabitation he had a 25 per cent interest in Property H and owned two-thirds of Property O. These uncontentious facts would appear to have been accepted by his Honour at [119]. We say would appear because the reasons are replete with terms such as “the husband asks”, a party “argues” and “the Court notes” which
    his Honour seems to use in lieu of making clear findings in relation to the matters asserted, argued or otherwise noted. It is not entirely clear but it would also appear to have been accepted that the husband had some superannuation.
43. In relation to the husband’s financial contributions, the Federal Magistrate said, at [123]:

The husband also submits that, in addition to his initial contribution of assets and superannuation, and his contribution of income and to the family (as discussed below), he made further significant financial contributions in the post-separation period. He details these asserted contributions in paragraph 2 of his trial affidavit.

44. His Honour’s reference to paragraph 2 of the husband’s trial affidavit is to his evidence concerning post separation mortgage payments of approximately $15,500 that he made in relation to the family home and the wife’s use of his bank accounts for three months in 2010.
45. Although none of the evidence which the husband gave concerning his income and the manner in which it was applied to the family finds expression in
    his Honour’s reasons, based on the conclusion he reached in relation to the assessment of contributions, we infer that in relation to those matters the husband’s evidence was accepted.
46. Thus, from when the parties began living together, it would appear that
    his Honour accepted:
    • within three months of the commencement of cohabitation, the parties purchased the remaining one-third share in Property O for $40,000;
    • within 12 months of the commencement of cohabitation, the husband realised his interest in Property H for $43,000; and
    • in either early 1993 or mid 1994, Property O was sold with the parties receiving either $120,000 (the wife) or $135,000 (the husband).
47. Again and although not the subject of a specific finding, it would appear that the Federal Magistrate accepted the husband’s unchallenged evidence that throughout the marriage he worked full time and contributed his entire income to the betterment of the family (Parshen).
48. Reference was made to the husband’s contributions as a homemaker and parent and to the welfare of the family which were not as significant as those made by the wife [131].
49. The parties’ contributions were evaluated at [136], which findings are reproduced below:

Assessment of contributions

136. Overall, I am satisfied that given the ebbs and flows of the parties’ respective contributions prior to, during and following the end of their lengthy cohabitation, that their respective contributions are relatively equal but very marginally favour the wife. Consequently, I assess there (sic) respective contributions as 52% in favour of the wife and 48% in favour of the husband.
50. The Federal Magistrate then addressed ss 79(4)(d)-(g) of the Act including the relevant factors in s 75(2).
51. At [138], his Honour was satisfied that the orders he would make should significantly reduce the wife’s liabilities and, over time, improve her earning capacity (s 79(4)(d)). We presume that his Honour is here making reference to his intention that she receive Property P, which she could sell to free up capital of about $440,000 to be used to repay debt.
52. In relation to s 75(2), as his Honour noted, it was common ground that the parties were in good health. In relation to the wife’s income and capacity for employment, she had a qualification as a health professional and for a number of years had undertaken casual work in her field. Having pointed to differences in the wife’s evidence concerning her income, it would appear that his Honour was satisfied she earned $300 per week from her health profession work. In her 2011 financial statement the wife said that she received $276 per week by way of family tax benefits and $241 per week in child support. It was then noted that this evidence “... differs from the figures asserted in the wife’s Case Outline document although the Court assumes that the figures asserted in the Case Outline document might be more up-to-date” [143]. Reference to the material contained in the case outline document is to the assertion that at the time of trial the wife was receiving $260 per week in child support and government benefits in the amount of $225 per week. Although it might have been inferred that his Honour was satisfied that he should proceed on the basis of the material contained in the case outline document, when he subsequently went on to specifically consider child support (s 75(2)(na) and s 79(4)(g)), he analysed that issue by reference to the wife’s 2011 financial statement and not the case outline document.
53. The wife’s argument that her ability to earn a higher income was limited by her being solely responsible for the care of the parties’ four children was considered next. His Honour was satisfied that the wife was able to work on an at least flexible part time basis and that her capacity for paid employment would only increase as the children grew.
54. Both parties were found to “...have substantial superannuation entitlements”, with the wife having superannuation valued at $149,402 and the husband’s valued at $355,873.75.
55. The husband had been employed full time by an airline company since 1986 and at the time of the hearing was earning $1,894 before tax. He had re-partnered and was expecting his first child with that partner. His partner earned $2,259.06 per week albeit there was no evidence about what would be her employment situation following the birth of their child. There was a paucity of evidence about her and the father’s expenditure and, at [177], his Honour noted that it was not possible to determine the financial implications of the pregnancy.
56. Reference was then made to the wife’s argument, which his Honour described as being “persuasive”, that she and the children were entitled to a reasonable life style. His Honour questioned how the wife’s claim to more than 90 per cent of the parties’ property together with spousal maintenance could be described as “reasonable”. The point being, it needed to be acknowledged that with the breakdown of the parties’ marriage, it was necessary to consider both parties standard of living. When regard was had to the available property and the parties’ incomes, his Honour was satisfied that it was reasonable that they both compromise their pre-separation standard of living.
57. As to child support, it is appropriate that we record his Honour’s findings as follows:
    176. The husband asserts that he currently pays $1,375.67 per month (or approximately $317.46 per week) in child support as assessed by the Child Support Agency. The husband also asserts that he registered himself for child support purposes “in late May 2010” and the wife was sent her first payment on “7^th of July 2010”. He further asserts that he has regularly paid his child support “every month” and that up to the date of the Final Hearing he had paid the wife an amount totalling “$21,171,71”.
    177. In her Financial Statement sworn 9 November 2011 and filed 15 November 2011 the wife asserts that she only receives the sum of $241.00 per week by way of child support.
    178. I note that neither party exhibited or tendered a relevant child support assessment.

(original emphasis) [footnotes omitted]

58. The only other factor said to have influenced the application of s 75(2) was a purported loan of $50,000 made to the husband by his partner’s mother. At [180], his Honour said that he was satisfied that the loan was made and that it remained outstanding.
59. In conclusion, the Federal Magistrate found that an adjustment of 25 per cent should be made in the wife’s favour. His Honour found as follows:
    187. Overall, I am satisfied that the evidence supports that a substantial adjustment for ‘section 75(2) and related factors’ should be made in the wife’s favour.
    188. I note that both parties were in agreement that a further adjustment in the wife’s favour should be made. They disagreed, however, as to the size of that further adjustment in percentage terms. While the husband, through [counsel], sought that such an adjustment be contained to “5 per cent” and “no more than 10 per cent”, the wife sought a further adjustment in her favour of 30%. [Counsel for the wife] submitted that a ‘20%’ adjustment reflected the future parenting arrangements and the remaining ‘10%’ reflected the disparity in the parties’ earning capacity.
    189. Given the weight of the evidence, the Court is satisfied that, in percentage terms, a further adjustment of 25% is appropriate for ‘section 75(2) and related factors’.

(original emphasis) [footnotes omitted]

60. The Federal Magistrate then turned his attention to the application of those findings to the parties’ property comprising superannuation and non-superannuation assets alike. On this basis, he was satisfied that by dividing the total net property 77 per cent to the wife compared to 23 per cent in favour of the husband, would deliver a just and equitable outcome.
61. In relation to the effect of such a distribution on the parties, at [201]-[202], the Federal Magistrate said:
    201. The wife will, of course, have the option of retaining the Former Matrimonial Home subject to refinancing the current debts, or selling it and reinvesting the net proceeds. She will also have the option of selling the investment property, subject to any subdivision or other improvements that may result in an enhanced selling price. Apart from retaining certain personal property including shares, the wife will also have significant superannuation entitlements to rely upon in her retirement years.
    202. Apart from retaining his motor vehicle and certain personal property including shares, the husband will also retain significant superannuation entitlements to assist him in his retirement years.
62. On the basis that the wife had not established she was unable to support herself adequately (as required by s 72 of the Act), his Honour declined to make a spousal maintenance order in her favour and somewhat curiously, her application was adjourned.

Grounds of appeal

63. The husband relied on the grounds of appeal contained in his Notice of Appeal filed on 29 June 2012, and which are set out below:
    1. His Honour was in error in assessing the respective contributions of the parties at 52% in favour of the Wife and 48% as to the Husband in respect of the contributions pursuant to Section 79(4)(a) and (b).
2. In coming to his decision in ground 1 herein, His Honour was in error in:

2.1 Failing to give proper weight to the significant initial financial contributions of the Husband;

2.2 Giving undue weight to the Wife’s assertion of her initial financial contributions obtained from the conversion of two [insurance company] bonds; and

2.3 Failing to give proper or any weight to the post-separation financial contributions of the husband.

3. His Honour failed to give proper or adequate reasons in relation to his findings of the parties’ respective Section 79(4)(a) and (b) contributions were 52% in favour of the Wife and 48% as to the Husband.
4. His Honour was in error in exercising his discretion in making an adjustment of 25% in favour of the Wife to reflect the relevant Section 75(2) factors.

4.1 The adjustment of 25% was excessive.

5. In coming to his decision in ground 4 herein, His Honour was in error that:

5.1 His Honour failed to give proper consideration and/or weight to the Wife’s ability to work as a qualified [health professional] and her future earning capacity.

5.2 His Honour failed to take into consideration and/or give weight to the Husband’s present and future commitments and responsibilities to his partner and expected child.

5.3 His Honour failed to take into consideration and/or give weight to the Husband’s obligation to repay the sum of $50,000 to [his partner’s mother].

6. His Honour failed to give adequate reasons for concluding a further adjustment in favour of the Wife of 25% for ‘section 75(2) and related factors’.
7. In all the circumstances, His Honour made orders that were not just and equitable, in that:

7.1 The Wife is left with an unencumbered property and the former matrimonial home.

7.2 The Husband is left with no real property.

7.3 The Husband’s superannuation is split so that the only asset he keeps these Orders is not a significant superannuation entitlement but a severely diminished superannuation entitlement.

8. In all the circumstances, it is unjust and inequitable that the Wife is to receive a distribution of 77%.
64. Senior counsel for the husband helpfully grouped the grounds under headings which we set out and for convenience we will consider the grounds in these groups.
65. The only order we are asked to disturb is the superannuation splitting order (order 8) which the husband contends should be set aside. However, if we do that it will also be necessary to set aside order (9) which is a consequential order.

Grounds 1 and 2 - Contributions

66. Grounds 1 and 2 assert error in the assessment of the parties’ respective contributions; in particular, that the wife’s contributions were assessed as being 4 per cent greater than those made by the husband.
67. To put this challenge in context, it needs to be understood that in the court below the husband argued for a finding of equality of contributions. As we said earlier, in relation to the formulation of the property pool and subject to a small debit balance in the husband’s credit unit account, his Honour made findings consistent with the approach for which the husband contended. This means that but for a few hundred dollars, the husband’s argument for equality of contributions would have resulted in him receiving about $19,000 more than the 48 per cent which his Honour determined. We agree with the submission made by senior counsel for the wife that considered in the context of property worth $968,207, $19,000 is de minimus and would not justify appellate intervention (De Winter and De Winter (1979) FLC 90-605).
68. Although we might have reached a different conclusion in relation to the evaluation of contributions than his Honour, that is not the test. Rather, the question is whether his Honour’s findings were open to him. In this regard, the assessment and evaluation of the husband’s contributions was complicated by the paucity of evidence concerning the acquisition of and improvements to both Property P and the family home. In addition, although there is no doubt that the husband’s interest in Property O provided the platform for the acquisition of Property P, absent evidence concerning the amount spent building a home on that property, it was difficult for his Honour to make precise findings about the extent to which the husband’s initial contribution was reflected in the current value of that property.
69. Precisely how the parties paid for their 1991 acquisition of the remaining one-third share in Property O is also shrouded in mystery. The husband gave evidence that “[w]e paid for it largely by way of our combined savings to the best of my knowledge” (Husband’s affidavit sworn 3 November 2010, [74]). Yet, his evidence is that he had $1,000 in savings and the wife said she had $5,000 in savings. On the other hand, she said the $40,000 paid to the husband’s brother for his share in the unit was paid from the redemption of her GIO bonds. Yet, it was established that the GIO bonds were realised nine years later. This is a simple vignette of the type of difficulties which bedevilled the assessment and evaluation of contributions.
70. It is also relevant that counsel for the husband’s submissions in favour of equality of contributions were based on his submission that the Federal Magistrate should reject the wife’s evidence concerning the value of the GIO bonds at the commencement of cohabitation and the extent of the financial contributions that were said to have been made on the wife’s behalf. As we have already mentioned, counsel for the husband was successful in persuading the Federal Magistrate against the inclusion in the property pool of significant sums of money advanced by members of the wife’s family as joint liabilities. Unsurprisingly these were properly taken into account in the assessment of contributions as contributions made on her behalf. These were not insignificant amounts of money and they provide ample justification for his Honour’s decision to depart from the notion of equality and make a 2 per cent adjustment in the wife’s favour.
71. Grounds 1 and 2 are not made out.

Ground 3 – Are the contributions reasons adequate?

72. Ground 3 asserts that his Honour’s reasons concerning the evaluation of the parties’ financial contributions (s 79(4)(a)) and those covered by s 79(4)(b) were inadequate. As we understood senior counsel for the father’s submission, the gravamen of the asserted error is that his Honour failed to adequately explain his decision to “... move from equality of contributions to an adjustment of 52/48% in favour of the Respondent” (written submissions, par 5.1). Understood in this manner there is an obvious and strong correlation between this ground and grounds 1 and 2. Having found no merit in grounds 1 and 2, the challenge raised by ground 3 cannot be sustained.

Grounds 4, 5 and 6 – Section 75(2) adjustment

73. By these grounds the husband challenges the 25 per cent adjustment which, pursuant to ss 79(4)(d)–(g) of the Act, and in particular 75(2) was made in favour of the wife. The challenge is essentially two pronged. Firstly, that the adjustment is so unreasonable and plainly unjust that there has been a failure in the exercise of discretion. Secondly, that it is not possible to discern how the Federal Magistrate reached the result that he did, and thus there is a lack of adequate reasons.
74. The first thing that must be said is that the s 75(2) exercise is undertaken against the background of conclusions already made in relation to contributions. Although the Federal Magistrate did not translate his percentage findings into figures and the effect this would have on the parties’ ownership of property, before we discuss these grounds it is useful we do so. At 52 per cent the wife was entitled to receive net property valued at $503,467.64. By this stage it was common ground she would receive both properties and go on to sell Property P (possibly following a sub-division). As a consequence she would have sufficient funds to discharge the mortgage secured on the family home and possibly pay a small sum in partial discharge of the loans outstanding to members of her family. Thus she would have an unencumbered home and, on the basis that any adjustment would be made from superannuation, she would be left with about $70,000 in superannuation. On the other hand, the husband would have a car, shares and household items of little value, superannuation in his name valued at $356,000, and a further $83,913 superannuation from the wife.
75. We have already provided an overview of the reasons which his Honour gave for the 25 per cent adjustment. It can be seen that the factors which appear to have influenced his decision are:
    • The wife would be able to sell Property P and thus reduce her debt;
    • The wife is a skilled health professional who presently earned a modest income and her earning capacity would increase as the children grew;
    • The husband, on the other hand, had secure well paid employment and earned considerably more than the wife did (even when her family tax benefit and child support were taken into account);
    • Significant weight was attached to the wife being solely responsible for the parties’ four children;
    • Both parties had “substantial superannuation entitlements”, the husband’s being more than double those of the wife’s [151]; and
    • The husband owed his partner’s mother $50,000.
76. Other than to merely state that a 25 per cent adjustment in the wife’s favour would be appropriate, his Honour said nothing about why this was the case. Nor did he address the reality of an adjustment of that magnitude. Reference only to percentages can be misleading and there is much to be said in favour of the widely adopted approach of a trial judge considering the actual figures. For it is then that the magnitude of the adjustment becomes apparent. Had his Honour undertaken this exercise, he might have been surprised to find that the effect of the adjustment was to give the wife an additional $242,051.75 and reduce the husband’s entitlement by the same amount. In other words, from a pool of slightly less than $1 million, there would be an overall adjustment of slightly less than $500,000.
77. Notwithstanding the deference which we attach to the conclusions of the
    Federal Magistrate, we are unable to discern a proper basis upon which it could be determined that a 25 per cent adjustment in the wife’s favour was appropriate. Although the generous ambit within which reasonable disagreement is possible is wide indeed, the adjustment which his Honour made falls well outside those boundaries.
78. We also observe that in a case where the outcome of the assessment of the contributions of the parties was that the husband would take his entitlement in superannuation assets and the wife’s would comprise virtually all of the tangible property, it was incumbent on the Federal Magistrate to consider how the differences in the nature and characteristics of the property which each party would receive should impact on the adjustment to made pursuant to s 75(2). His Honour failed to do this, and one of the consequences of this failure is that his Honour did not take into account the ramifications of the husband’s stance that he should take his property settlement in superannuation.
79. We understand that it is no easy task to articulate how it is that a qualitative evaluation translates into a quantitative outcome. But we must agree with senior counsel for the husband that the almost complete absence of findings as to what weight his Honour gave to most of the matters referred to in this component of his reasons and the failure to explain the basis of the 25 per cent adjustment is a failure in the reasoning process.
80. We agree with his Honour that the significant disparity in the income and income earning capacities of the parties, coupled with the wife’s sole responsibility for the day to day care of their four children, requires a significant adjustment in her favour. On the other hand, the fact that the husband will pay substantial child support and, after the payment of child support have a modest income, moderates the magnitude of the adjustment which would otherwise be made in favour of the wife. Worthy of even greater weight is the fact that the husband will receive his property settlement as superannuation. It will be a number of years before the husband is able to access his superannuation, with the probability being that, whereas the wife has capital assets which are immediately available to her and at least provide her with the comfort of a home (plus superannuation), the husband is left with a modest income and no tangible assets from which he must in effect start again, without there being any clear prospect that he could ever manage to acquire a home of his own. With the nature of the parties’ property in mind, an appropriate adjustment would see the wife not having to give the husband anything further and him retaining the entirety of his superannuation.
81. Expressed in percentage terms, this means that the appropriate adjustment to be made in the wife’s favour for ss 79(4)(d)–(g) factors is in the vicinity of 8 to 10 per cent. On the basis that the parties’ contributions were found to be equal the husband said that an adjustment in the wife’s favour of somewhere between 5 and 10 per cent was warranted. Calculated on this basis such an outcome would be below the legitimate exercise of discretion. However, from a 52 per cent – 48 per cent platform, the range is in the vicinity of 8 to 10 per cent.
82. Grounds 4 and 6 are established. Given we find merit in grounds 4 and 6 there is no need to address ground 5.

Grounds 7 and 8 – the outcome

83. Grounds 7 and 8 dovetail with grounds 4 and 6. The focus of these challenges is on his Honour’s failure to stand back and consider the true effect of his orders, and we have, when considering grounds 4 and 6, made the same point. Whether the challenge is framed in the language of “justice and equity” or manifestly excessive, matters not. This is because in this case not only did
    his Honour err in relation to the s 75(2) exercise but he failed to consider and make findings which could lead him to be satisfied that the ultimate outcome reflected a proper exercise of his discretion.
84. We agree with senior counsel for the husband that the proper outcome would have been for the husband to retain his superannuation and the wife to otherwise have the assets she owned and which his Honour said she should receive.

Application in an appeal to adduce further evidence on the appeal

85. By an application filed on 19 August 2013, the husband sought the court’s leave to adduce further evidence on the appeal in the event of a re-exercise of the discretion. The evidence is contained in the husband’s affidavit filed 23 August 2013 and a report from his cardiologist which is dated 17 July 2013.
86. The evidence sought to be introduced concerns the husband’s health, in particular his cardiac health and how this may affect his capacity to continue to work for an airline company. It will be recalled that at trial, the husband’s position was that he was in good health as a consequence of which there was no health related issue which might impact upon his income or earning capacity.
87. In any event, it is the cardiologist’s evidence that the husband takes medication to lower his cholesterol and it is recommended he adhere to a healthy diet. In December 2012, the husband had angioplasty and two stents were placed in his right coronary artery. The risk of further intervention being needed is low in the short to medium term and probably moderate in the long term. His coronary artery disease and general health is described as stable and as not having any significant impact on his ability to continue to work. The issues which have been apparent to date are said to “...have no impact on ... his future capacity to work for [the airline company].”
88. It is the husband’s evidence that should he require the insertion of a pacemaker he is obligated to notify his employer and would, thereafter, require annual medical tests. Provided his results are normal he would be able to continue to work. There is nothing in the evidence adduced from the cardiologist which indicates there is even a reasonable probability that in the medium to long term the husband may need a pacemaker.
89. Senior counsel for the husband contends that the evidence sought to be introduced is cogent and highly relevant to the court’s consideration of s 75(2)(a) of the Act. We agree that this evidence would probably result in a qualified finding in relation to the husband’s state of health but we fail to see how it could influence the findings concerning the husband’s income and earning capacity. As a consequence, we agree with senior counsel for the wife that the evidence is barely relevant. Weighing heavily against its admission is that the evidence was available and could have been presented to the
    Federal Magistrate. It is in conflict with the manner in which the case was conducted below.
90. The application to adduce further evidence will be dismissed.

Conclusions

91. We conclude that the appeal should be allowed and that by way of re-exercise of the discretion the order which split the husband’s superannuation interest should be set aside. The effect of this is that the wife will have property worth $587,380, which relevantly provides her with the security of a home, and $153,755 in superannuation. The husband will have the few tangible assets to which reference has already been made but importantly for his long term future, $356,000 in superannuation. His total net assets will then be $380,827. Of course, it is acknowledged that both parties will carry personal unsecured liabilities due to various family members which each of them will at some stage need to address.
92. It bears repeating that putting to one side concessions the husband made about contributions in the court below, we may well have decided that his contributions were greater than those which the wife made. However, had we done so, this would have had an undoubted impact on the range of adjustment that would have been available pursuant to s 75(2) of the Act, and inevitably resulted in a greater adjustment being made in favour of the wife. The point being that however the totality of the facts as found by his Honour are viewed, we are of the view that it is just and equitable that there is an order for the settlement of property and that the outcome we propose to order is proper.

Costs of the Appeal

93. At the conclusion of the hearing we sought and received submissions from counsel as to the question of costs depending on the result of the appeal.
94. In the event that the husband was successful, his senior counsel sought an order that the wife pay his costs. However, if no order for costs is made then senior counsel sought a costs certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”).
95. Senior counsel for the wife opposed an order for costs against the wife and sought a costs certificate under the Costs Act.
96. We are not persuaded that there are circumstances here that justify an order for costs. However, the appeal has succeeded on a question of law and thus costs certificates are warranted for both parties.

I certify that the preceding ninety six (96) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ryan and Murphy JJ) delivered on 30 October 2014.

Associate:

Date: 30 October 2014