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Hurst & Hurst [2018] FamCAFC 146 (8 August 2018)

Last Updated: 9 August 2018

FAMILY COURT OF AUSTRALIA

HURST & HURST

FAMILY LAW – APPEAL – PROPERTY – where the husband’s financial contributions far exceeded the wife’s – where the husband received inheritances throughout a 38 year marriage which were used for the benefit of the family – where the husband inherited a property 13 years before separation – where that inherited property was unencumbered – where that inherited property was an asset of the parties at the time of trial – where the value of that property had significantly increased by the time of separation due to market forces and town planning changes – where the trial judge assessed the husband’s contributions as being 45 per cent greater than the wife’s contributions – where the trial judge made an adjustment in favour of the wife of 12.5 per cent pursuant to s 79(4)(e) – where the trial judge failed to take into account relevant considerations – where the trial judge isolated the indirect contributions made to the inherited property – where each of the parties’ contributions reflected their roles within their respective spheres – where the trial judge’s assessment of contributions was outside the bounds within which reasonable disagreement is possible – where the trial judge failed to take into account matters relevant to a consideration of s 79(4)(e) – appeal allowed.

Aleksovski v Aleksovski (1996) FLC 92-705; [1996] FamCA 111
Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Carter and Carter (1981) FLC 91-061; [1981] FamCA 18
Clauson and Clauson (1995) FLC 92-595; [1995] FamCA 10
Cypressvale Pty Ltd v Retail Shop Lease Tribunal [1996] 2 Qd R 462; [1995] QCA 187
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
G and G (1984) FLC 91-582; [1984] FamCA 60
Kowalski and Kowalski (1993) FLC 92-342; [1992] FamCA 54
Mallet v Mallet (1984) 156 CLR 605; [1984] HCA 21
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Rodgers & Rodgers (No 2) (2016) FLC 93-712; [2016] FamCAFC 104
Shaw and Shaw (1989) FLC 92-010; [1989] FamCA 5
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
VG v OM [2005] QCA 183
Wallis & Manning (2017) FLC 93-759; [2017] FamCAFC 14
Way and Way (1996) FLC 92-702; [1995] FamCA 28
Wells and Wells (1977) FLC 90-285; [1977] FamCA 62
Zappacosta and Zappacosta (1976) FLC 90-089; [1976] FamCA 56


APPELLANT:
Ms Hurst

RESPONDENT:
Mr Hurst

FILE NUMBER:
BRC
6748
of
2016

APPEAL NUMBER:
NOA
34
of
2017

DATE DELIVERED:
8 August 2018

PLACE DELIVERED:
Brisbane

PLACE HEARD:
Brisbane

JUDGMENT OF:
Thackray, Ainslie-Wallace & Murphy JJ

HEARING DATE:
7 February 2018

LOWER COURT JURISDICTION:
Family Court of Australia

LOWER COURT JUDGMENT DATE:
7 July 2017

LOWER COURT MNC:

REPRESENTATION

COUNSEL FOR THE APPELLANT:
Mr Conrick

SOLICITOR FOR THE APPELLANT:
D. M. Wright & Associates Solicitors

COUNSEL FOR THE RESPONDENT:
Mr Matthews QC with Mr Sorensen

SOLICITOR FOR THE RESPONDENT:
Hurst Lawyers



ORDERS

(1) The Application in an Appeal filed on 24 January 2018 be dismissed.
(2) The appeal be allowed.
(3) Paragraphs (1); (9)(f) and (11) of the orders made by the Honourable Justice Carew on 7 July 2017 be set aside.
(4) The proceedings be remitted to the Family Court of Australia for rehearing by a Judge other than the Honourable Justice Carew.
(5) In the event that the parties reach agreement as to the alteration of their interests in property consequent upon this appeal being allowed and/or as to the costs of this appeal:
(6) In the event that the parties do not reach the agreement contemplated by paragraph (5) of these orders:

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 Hurst & Hurst 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 BRISBANE



Appeal Number: NOA 34 of 2017
File Number: BRC 6748 of 2016

Ms Hurst

Appellant

And

Mr Hurst

Respondent


REASONS FOR JUDGMENT

  1. The wife appeals final orders for settlement of property made by Carew J on 7 July 2017. The orders effect an alteration of the interests in property of the parties who were married for 38 years. Her Honour ordered that the wife should receive 40 per cent of the parties’ interests in property.
  2. Those interests in property; their value; and the parties’ liabilities, are uncontroversial on this appeal. Each is tabulated at [13] of the reasons. The net value of the property available for distribution was approximately $2.66 million.[1]
  3. The husband was aged 66 years at trial. He continued to work as a professional in his own business, as he had done for about 20 years prior to trial. His income is, and always has been, very modest. For example, in the 2015/2016 financial year, his net income was approximately $37,000. He resides in the unencumbered former matrimonial home.
  4. The wife was aged 56 years at trial. She was 18 years old when she married the husband. The parties have four children. The youngest, aged 13 and a half years at trial, lives with the wife. They live in rented accommodation. The wife receives Centrelink benefits. The husband pays “little, if any, child support” (at [22]). It was conceded at trial that the wife has no reasonable prospects of earning an income now or in the future.
  5. The parties’ other three children are adults. However, the eldest suffers from very significant psychiatric issues. It appears those issues commenced with an acute episode in 2004. He was then aged 22 years. It is uncontroversial that the wife has provided, and continues to provide, for his care. He lives with her and the parties’ youngest child and is likely to do so into the foreseeable future. He has a “fraught relationship” (as her Honour described it) with the husband (at [15]). The husband provides “little assistance ... either financial or practical” to him or for him (at [21]).
  6. Her Honour’s orders saw the husband have transferred to him the unencumbered former matrimonial home, in which he has continued to live since separation. Its agreed value at trial was $1 million. The husband retained cash, shares and a number of motor vehicles with a total value of approximately $122,000. In addition, her Honour’s orders envisaged him receiving about $470,000[2] in cash from the proceeds of sale of unencumbered vacant land inherited by him some 14 years prior to trial (“the Suburb C property”). The Suburb C property had an agreed value at trial of $1.82 million. From the net proceeds of the ordered sale, an estimated amount of $300,000 was to be paid to a trust account to be held for the payment of capital gains tax (“CGT”) and a nominal amount of $4,000 was to be paid to the parties’ son.
  7. The wife retained under the orders a motor vehicle and chattels with a total value of $15,500 and about $450 in a bank account. The orders envisaged that she would receive $1,045,000 from the sale of the Suburb C property.[3]
  8. Her Honour’s determination that the husband should receive 20 per cent more of the parties’ interests in property than the wife (in dollar terms, about $530,000[4] more) reflects findings that the husband’s contributions across the period of 39 years between marriage and trial should be assessed as 45 per cent greater than the wife’s contributions (72.5 per cent / 27.5 per cent – in dollar terms about $1.196 million more). Her Honour determined that the relevant s 75(2) factors should see the wife receiving an additional 12.5 per cent, that is, about $331,000.
  9. The wife asserts centrally that her Honour’s discretionary assessment of contributions is erroneous. A similar challenge mounted to the trial judge’s assessment of “the s 75(2) factors” is founded on an asserted failure to take account of specific relevant considerations. Those assertions, arising from five of the eight grounds of appeal, raise the following issues:
    1. Did her Honour fail to take account of relevant considerations in assessing the parties’ respective contributions across the whole of the 39 year period between cohabitation and trial? Specifically, did her Honour fail to take account of:
      1. the wife’s non-financial contributions over that period particularly by, in effect, quarantining the Suburb C property; and/or
      2. the respective indirect contributions of the parties seen against the fact that the Suburb C property increased significantly in value as a result of market forces and, in particular, a rezoning in 2016; and/or
      3. the asserted fact that the Suburb C property would have needed to be sold but for the contributions of the wife.
    2. If the previous question should be answered in the affirmative, is her Honour’s assessment of contributions nevertheless within discretion particularly having regard to her Honour’s failure to specifically record the timing, value and effect of the husband’s direct financial contributions other than the Suburb C property; and
    1. Did her Honour fail to take account of the wife’s future needs and the length of time over which they were likely to arise[5] and a standard of living that is reasonable in all of the circumstances including by reference to the nature of the orders made.[6]
  10. The wife raises three additional challenges to her Honour’s orders. For reasons later to be given each can be dismissed readily.

THE ASSESSMENT OF CONTRIBUTIONS

The Trial Judge’s reasons

  1. Her Honour’s reasons are brief as, specifically, are the reasons for reaching the conclusion as to disparity of contributions just referred to.
  2. At the outset of the reasons, her Honour found:
    1. At the commencement of the marriage the husband had an interest in a residential property subject to a mortgage. The wife had some modest savings. Each party has received inheritances during the marriage but the husband’s inheritances and gifts far exceed the wife’s. In 2003 he inherited vacant land at [Suburb C] which now has an agreed value of $1,800,000 and represents about 60 per cent of the current asset pool. There has been a significant accretion in its value since 2003 when it was worth $400,000. There has been a further accretion since separation of about $300,000.
  3. It will be observed that the contributions there referred to are all direct financial contributions made by the parties. In that part of the reasons, findings are made as to the amount of the increase in value to the Suburb C property but no mention is made of any evidence as to what might have impacted that increase. Nor are any findings made as to any indirect contributions by either party.
  4. Later in the reasons, her Honour turned specifically to the topic of contributions. Given their brevity, those reasons should be quoted in full:

Contributions

  1. During this very long marriage each party made contributions both financial and not financial and to the welfare of the family although the husband was the main breadwinner and the wife was the main homemaker. The husband had an interest in a property at the commencement of marriage which assisted the parties in acquiring other property during the marriage. From time to time the husband sold property he had inherited or been gifted during the marriage in order to supplement the modest income he earned from his employment. The wife provided significant homemaker contributions particularly having regard to the challenging requirements of [the parties’ eldest (adult) child] at times. Subsequent to separation the husband has had the benefit of remaining in the former matrimonial home and the wife has rented accommodation. She has also continued to care for two of the children with little assistance from the husband. It seems the husband and [the eldest (adult) child] have a fraught relationship.
  2. Each party received inheritances throughout the marriage which were in large part used for the benefit of the family (other than the [Suburb C] property). The husband also received gifts from his family which were used for the benefit of the family. The most significant inheritance was received by the husband in 2003 in the form of the [Suburb C] property. Apart from paying the rates and regular slashing the land has remained untouched. It cannot be said that the wife has made any contribution to this property other than indirectly by the rates and slashing costs being paid. The [Suburb C] property has appreciated in value over the years and even after separation. This property is now the most valuable asset of the parties.
  3. As the Full Court held in Bonnici & Bonnici [(1992) FLC 92-272] an asset does not fall into a protected category just because it was inherited. Neither party suggested otherwise. Indeed they each adopted a global approach. Inheritances and gifts are generally treated as contributions made by or on behalf of the person receiving them unless there is a clear intention that the inheritance or gift was to both parties [Kessey & Kessey (1994) FLC 92-495 at 81,850].
  4. The [Suburb C] property was received fourteen years ago. Money that would otherwise have been available for the benefit of the family has been used to maintain the property by the payment of rates and slashing but given its current value those payments could not be regarded as anything other than modest.
  5. Since separation the wife has received about $25,000 from the sale of shares. There was no suggestion that that sum should be notionally added back into the asset pool and given her modest circumstances I consider that to be a sensible concession by the husband.
  6. Overall I assess the contributions as favouring the husband 72.5/27.5 per cent.
(Emphasis added)
  1. It can be seen that those reasons, taken together with [6] earlier quoted, evidence a “global approach” to the assessment of contributions. Within the context of such an approach, a broad assessment is made of the contributions of all types made by both parties across the whole of the period of a very long marriage. Yet, the reasons also evidence one exception to that approach, namely the identified indirect (financial) contributions made to the Suburb C property.
  2. There is no error of itself in her Honour considering separately any such contributions: subparagraphs (a) and (b) of s 79(4) each refer to, relevantly, indirect contributions made to “any of the property of the parties to the marriage or either of them, or otherwise in relation to any of” that property (emphasis added).
  3. However, there is a danger in doing so. Isolating indirect contributions to but one part of the property interests of the parties in the context of a global assessment of contributions risks ignoring significant contributions made by both parties that do not have a nexus with that particular property. We consider, with respect, that her Honour did not heed that risk. The finding that the wife has not made any contributions to the Suburb C property other than the specific indirect contribution to slashing and rates is, in our respectful view, not open to her Honour on the evidence before her.

Indirect contributions and their nexus to property

  1. The Full Court said in Carter and Carter:[7]
Where property is absolutely owned by one spouse before marriage, different considerations may apply under sec. 79(4)(a) and (b), in the sense that the other spouse may not be able to show any direct or indirect contribution to the acquisition of that property ... Nevertheless, the other spouse may be able to rely on a contribution to the conservation or improvement of that property...
  1. In Shaw and Shaw[8] the Full Court held:
...a spouse’s contribution to the welfare of the family or in the capacity of homemaker or parent may be recognised by an order under sec. 79 in relation to some property even though such contribution has no connection whatsoever with that property, or any other property of the parties or either of them (whether in relation to its acquisition, conservation or improvement or otherwise)...
  1. The Full Court said in Dickons v Dickons:[9]
    1. As is plain from earlier decisions of this court, regard must be had to the use made of contributions of various types so as to compare the contributions made by each of the parties during the course of, and over the length of, their relationship (see, for example, In the Marriage of Pierce ... (1998) FLC 92-844 ...) But that is an entirely different proposition to, as it were, causally linking contributions with their asserted financial “product” or “value”. The former recognises that the nature, form and extent of contributions made by each of the parties might differ; the latter suggests that the absence of a causal link counts as no contribution at all.
    2. The search for a causal link might be seen to come instinctively to the necessary inquiry and all the more so when regard is had to s 79(4)(a) which refers to financial contributions made “directly or indirectly” “to the acquisition, conservation or improvement of any of the property” and goes on to also refer to the financial contribution made “otherwise in relation to any of that last-mentioned property”. The terms of that subparagraph might, naturally enough, be seen to suggest a causal link between those contributions and the “financial product” which those contributions of that type are said to have produced. That same requirement might also be seen to suggest that relevant contributions of that type can be seen to be quantifiable – or, at least, conceptualised – in monetary terms, in contradistinction to contributions made pursuant to s 79(4)(c).
    3. While that apparent “causal connection” might be seen in s 79(4)(a) (and (b)), no such connection is apparent from the terms of s 79(4)(c); contributions of that latter type are not linked by the words of the subparagraph to the “acquisition, conservation or improvement of any of the property” or, indeed, to “property” at all. This is not a legislative oversight; the 1983 amendments to the Act which inserted the current s 79(4)(c) were specifically intended, relevantly, to remove any suggestion that there needed to be a causal link between contributions of that type and any particular asset or property. The explanatory memorandum to the Family Law Act Amendment Bill 1983 provides, at cl 36, that a specific purpose of the re-casting of s 79(4) was, relevantly, to:
... revise sub-section 79(4) to remove the possibility of an interpretation of the sub-section requiring that there be a nexus between a spouse’s contribution and a specific item of property in section 79 proceedings ...
  1. Within that context, then, it is self-evident that financial contributions (whether direct or indirect) can be made to a relationship that have an effect on the property of the parties without those financial contributions finding their way directly into, or being directly linked to, specific property or, indeed, directly to the totality of the property available for distribution at the time of trial. Financial contributions can be made to the “acquisition, conservation or improvement” of property “directly or indirectly” (s 79(4)(a), emphasis added). A financial contribution can be made indirectly by, for example, the use by parties of income or assets for purpose A freeing up the use of other income or assets for purpose B. Moreover, a particular financial contribution might have been used wholly in discretionary expenditure which, but for that contribution, would not have been available to the parties or would have required borrowings or a diminution of capital. Such a contribution can also, in that way, be seen, for example, as an indirect contribution to the conservation of property. Indeed, the principles discussed for example in In the Marriage of Kowaliw [1981] FamCA 70; (1981) FLC 91-092 and In the Marriage of Townsend ... [1994] FamCA 144; (1995) FLC 92-569, can be seen as an exception to that general proposition.
  2. Any and all such contributions, whether or not they sound in, or are directly linked to, the property available for distribution, should be considered and assessed together with the nature, form and extent of all other contributions of all types contemplated otherwise by s 79(4).
  3. The more recent decision of the Full Court in Wallis & Manning[10] was cited before her Honour and before this Court. The Full Court there said:
    1. By those central submissions the parties approached the assessment of contributions by suggesting that “an adjustment” should be made to a result reached otherwise by reference to a miscellany of other contributions. Her Honour adopted a similar approach. Such an approach is by no means uncommon to both the presentation of cases and the structure of judgments. It is convenient in this case, as it is more broadly, so as to describe a contribution or contributions of a particular type said to have particular importance and to distinguish it or them from other contributions.
    2. Yet, that approach must also ensure that the “myriad of other contributions” [Williams & Williams [2007] FamCA 313 at [26]] and the duration over which, and circumstances in which, the miscellany of other s 79(4) contributions were made is not accorded a subsidiary role. The essential s 79(4) task is for “trial Judges [to] weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation”.[11]
  4. The corollary of seeking a nexus within a global assessment is, relevantly, the quarantining of other indirect contributions made by each of the parties across all the property during the entirety of the approximately 39 year period between cohabitation and trial. We respectfully consider that here, by isolating the Suburb C property, her Honour did in fact quarantine those contributions from having any application to it in the finding earlier highlighted. In our respectful view, that is an error.

A conclusion not open on the evidence

  1. The direct financial contribution of the Suburb C property by the husband some 14 years before trial is, of course, a significant direct financial contribution weighing in his favour (s 79(4)(a)) and her Honour correctly so found. But, as the authorities earlier cited make clear, a separate question within the assessment of contributions is, relevantly, the contributions made by both parties indirectly other than financially (s 79(4)(b)) and contributions to the welfare of the family including in the capacity of homemaker and parent (s 79(4)(c)).
  2. The evidence before her Honour was plainly to the effect that both parties made indirect contributions to the conservation of the parties’ interests in property available at trial, including the Suburb C property, by proceeding upon the “stated and unstated assumptions”[12] upon which their very lengthy marriage operated and the roles within that marriage which those assumptions directed and which they each performed.[13]
  3. The contributions made to the conservation of the Suburb C property were of precisely the same nature and extent as the contributions that each made in their respective agreed roles and spheres for the 25 years prior to the contribution of the Suburb C property and for the 13 years subsequent to it. The evidence before her Honour was plainly to that effect and no evidence before her Honour suggests otherwise.
  4. The evidence of the single expert valuer posited market forces and a 2016 rezoning as the contributors to the very significant increase in value from about $400,000 when received in 2003 to $1.82 million at the date of trial. In particular, the valuer agreed that “[t]he biggest jump in the value ... is a result of the town plan changing” in 2016.[14] Her Honour makes no mention of that evidence but neither that evidence nor any other evidence before her Honour suggests any specific actions or inactions by either party contributing to the increase in value of the parties’ property, including in particular the Suburb C property (whether, in that case, attributable specifically to market forces or to rezoning).[15]
  5. The evidence before her Honour suggests that it was not open to find any basis for distinguishing between the latter categories of contributions made by each of the parties to the conservation of all of the parties’ interests in property. Each contributed to the best of their ability and in their differing ways within their respective roles or “spheres”.
  6. In our respectful view, her Honour erred by failing to take account of the important relevant considerations to which we have referred, something which, we think, is underscored by the highlighted passage at [16] and the additional findings at [18].
  7. It may well be that her Honour had in mind matters which distinguished the present circumstances from those applying, for example, in Zappacosta and Wells. If so, we are unable to see any reasons for any such conclusion and the passage highlighted at [16] of the reasons, together with [18], suggests otherwise.
  8. Equally, it may well be that her Honour had in mind that the total of the gifts and inheritances received by the husband together with the Suburb C property carried significantly greater weight than the indirect and homemaker and parent contributions made by the wife. Again, if that is so, it is not apparent from the reasons.
  9. Indeed, the miscellany of contributions referred to in summary form in the reasons earlier quoted; the absence of any particular attribution of weight to any of them; and the separate treatment of the Suburb C property at [16] and [18], evidence an entirely different conclusion, namely that all direct financial contributions but for the Suburb C property should be seen as equivalent to the wife’s contributions over a very long marriage. That approach is mirrored in exchanges between counsel and her Honour.[16]

The impact of the indirect contributions of the parties

  1. We consider that her Honour’s error in the assessment of contributions wreaks an injustice upon the wife. That injustice and the importance of the assessment of the indirect contributions of both parties to the conservation of the property and the Suburb C property in particular can, we think, be usefully illustrated in dollar terms.
  2. In doing so, we are at pains to emphasise that the analysis does not at all suggest a mathematical calculation for the assessment of contributions; that remains a matter of discretion. We are also at pains to emphasise that the illustration is not designed to suggest that there is or was only one right answer to the assessment of contributions. Rather, when (as is ubiquitous) assessments of contributions are in percentage terms, the illustration serves to emphasise that it is “the real impact in money terms which is ultimately the critical issue” and to exemplify that impact.[17]
  3. The Suburb C property forms part of the parties’ interests in property at trial by reason of the husband’s direct financial contribution of it. It was valued at about $400,000 when it was contributed in 2003. The parties’ indirect contributions to its conservation see it available for distribution pursuant to s 79 orders at its 2017 value. Taking account of the estimated CGT allowed for by her Honour, the value of the Suburb C property in 2017 was approximately $1.52 million. The increase in value expressed in 2017 dollars is therefore about $1 million.
  4. As has been said, the evidence does not reveal any distinction in the contributions of all other types by both parties to the conservation of that property. It was contended by the husband below, and it is possible to infer from her Honour’s findings at [15] quoted above, that the respective contributions of all types made by the parties in respect of the other property should be seen as equal. Save for the attribution of a direct financial contribution by the husband attributable to the movement in the value of the dollar value of the $400,000 investment in the Suburb C property (about which there was no evidence or argument before her Honour) each party can be seen to have contributed equally to the increase in value by reason of their otherwise indistinguishable contributions.
  5. That analysis would see each party’s indirect contributions to the Suburb C property being assessed at about $500,000. The wife’s contribution in that amount can be seen to equate to 33 per cent of the net value of the Suburb C property at trial. It also equates to about 19 per cent of the total net property of the parties at trial.
  6. Such an approach might be compared with her Honour’s approach which assumes no contributions by the wife save for indirectly contributing to slashing and rates. As has been said, her Honour’s reasons at [15] appear to suggest that the miscellany of the parties’ contributions of all types across the whole of the relevant 39 year period should be seen as equal with the contribution of the Suburb C property (and the contributions to the Suburb C property) being seen as different and deserving of markedly greater weight.
  7. An assessment that contributions are equal in respect of the other property sees each of the parties receiving approximately $570,000.[18] Her Honour’s assessment that the wife receives 27.5 per cent overall sees the wife receiving about $730,000. The effect is that her contribution to the Suburb C property is assessed, in dollar terms, at about $160,000 as compared with $500,000, a difference of $340,000. That represents about 10.5 per cent of the net value of the Suburb C property (rather than 33 per cent) or about 6 per cent of the overall net property of the parties (rather than 19 per cent).
  8. In our view, that is illustrative of the very significant undervaluing of the wife’s indirect contributions to the Suburb C property which, the evidence reveals, are equal to the husband’s indirect contributions.

The wife’s argument that the Suburb C property would have been sold

  1. Before leaving the issue of contributions we should for completeness make mention of the specific contention by the wife that, in cross-examination, the husband conceded that without her contributions, the Suburb C property would necessarily have been sold.
  2. The contention suffers from the fact that the proposition was not put directly to the husband. The particular passage of the cross-examination relied upon is:[19]
[COUNSEL FOR THE WIFE]: Okay. We won’t split hairs. Now, your income from your practice would not have supported a mortgage as well as the family, would it?--- No. No.
Right. And, in fact, it really wasn’t supporting the family sufficiently, which was why you sold various inherited properties over the course of the marriage?---Yes.
Yes. Mr [Hurst], if my client had died in child birth when [the youngest child, M] was born or developed severe postnatal depression or whatever and simply run off and abandoned you and the family, you would not have been able to afford a nanny/housekeeper to look after [L] and [M] without selling the [Suburb C] land, could you?---No. I also inherited [another property] that was owned by my mother.
And sold and the moneys applied to - - -?---Was sold in 2004, so that I owned that one as well from 2003.
  1. Noting the answer, “no”, the husband’s evidence nevertheless remains somewhat ambiguous and all the more so because it was given in answer to hypothetical premises. We are not convinced that we should give it the meaning attributed by counsel for the wife.
  2. However, even if the wife’s proposition is accepted, we are unable to see how it adds to the analysis earlier outlined. That the property was not sold is reflective of the property being conserved by each of the parties continuing to make such contributions within their respective spheres as each made both before and after its acquisition.

Is the Trial Judge’s assessment of contributions nevertheless within discretion?

  1. This question arises by reason of submissions made by the husband who contends, in effect, that the husband’s direct financial contributions were overwhelming and, notwithstanding full effect being given to all of the contributions of all types made by the parties over the course of this long relationship, they well justify her Honour’s ultimate conclusion as to the disparity between the parties.
  2. The submission arises from the evidence of both inheritances and gifts received by the husband from his family. As has been seen, her Honour refers generically to both, but (apart from the Suburb C property) does not specify any amount of either, when any were received or the use to which they were put.
  3. Careful written submissions were made before her Honour by then counsel for the husband detailing the direct financial contributions made by the parties emerging from the evidence. Neither evidence nor submissions referred to how the contributions’ importance might have been illustrated by the current dollar value of (significant) amounts contributed many years ago. Again, the purpose of same is not to facilitate mathematical calculations, but rather an attempt to give both historical values and qualitative statements greater meaning and context to their present-day assessment.
  4. An aide memoire provided to this Court without objection listed the gifts and inheritances received by the husband and contributed to the marriage by him. Summarised, those direct financial contributions, their timing and their use are:
  5. The husband’s initial direct financial contribution provided a home for the wife and a springboard for the acquisition of further matrimonial homes, including a mortgage-free home for the last 21 years of the parties’ marriage. A lump sum payment of $17,000 for a personal injury case the husband had been running was received by him in 2010 and used to discharge a credit card debt.
  6. By comparison, the wife’s direct financial contributions consisted of an inheritance of $31,000 received in late 2015.
  7. The evidence also reveals the husband receiving very modest income during the marriage including, specifically, during the wife’s support of the husband retraining as a professional[23] and subsequent to his self-employment in an eponymous one-person firm. Capital amounts received by him were used to support the family (and to pay for specific benefits such as renovations to the former matrimonial homes) and, it might be argued they represent what greater levels of income might represent in otherwise similar marital circumstances. Yet, capital amounts received and used for family purposes have particular benefits, not the least of which is, of course, obviating the necessity to rely upon borrowings with their associated cost.
  8. There can be little doubt that these direct financial contributions were very significant. Totalled in dollar amounts referable to when received, they approximate $1 million.
  9. The difficulties with the argument that suggests that those matters, taken together, should be seen as leading to the conclusion that her Honour’s contributions assessment is nevertheless within discretion lie, as we see it, with what is said and not said in the reasons.
  10. First, if the amount, timing and use of the gifts and inheritances informed the disparity in contributions ultimately arrived at, that is a conclusion that is not only not immediately apparent from her Honour’s reasons but, as we have earlier sought to point out, is contrary to what the reasons suggest. Secondly, and as a consequence, the submission invites us to, in effect, arrive at a second opinion which, in turn, should inform the conclusion that her Honour’s assessment is within discretion or plainly correct.
  11. The task of arriving at an assessment of contributions would fall to this Court if the appeal is allowed and it was considered that the discretion could be reexercised by this Court based on evidence available at the hearing of the appeal and after hearing submissions based on that evidence.[24] By contrast, the husband’s submission invites us to assume the position of the trial judge and arrive at a decision that demonstrates tolerable variance (the bounds within which reasonable disagreement is possible)[25] with her Honour’s conclusion.
  12. That course may be open where it was possible for us to conclude, based on the record and the parties’ arguments, that despite identified errors, her Honour’s assessment is plainly correct or that there could be no reasonable question that her Honour’s contributions assessment was within discretion. However, we are not prepared to so conclude.

THE ASSESSMENT OF THE S 75(2) FACTORS

The Trial Judge’s reasons

  1. The trial judge’s reasons under the heading “s 75(2) factors” are again very brief and can conveniently be set out in full:
    1. The wife is 56 years of age but unable to undertake employment due to a number of medical conditions. She also has the care of [the parties’ eldest son, Mr J] and [M]. While [M] can be expected in time to be independent, it is likely that [Mr J] will require some ongoing assistance although he receives a disability support pension and has some financial independence. The wife has no superannuation and receives little assistance from the husband, either financial or practical, in the care of [Mr J] and [M]. He does of course spend time with [M] as agreed.
    2. The husband is 66 years of age and although he intends to continue practising as a [professional] his income has only ever been modest, although it is more than the wife’s Centrelink benefits. He has no superannuation. He pays little, if any, child support.
    3. In my view the s 75(2) factors warrant a significant adjustment in favour of the wife and I assess that to be 12.5 per cent.
  2. Her Honour’s reasons make no mention of, and her Honour does not otherwise appear to take into account, the impact of the mooted contributions assessment upon the financial positions of the parties (s 75(2)(n) and (b)). Those subparagraphs of s 75(2), and perhaps others, recognise a symbiosis between the s 79(4)(a), (b) and (c) assessments and the s 79(4)(e) assessment. In the vast majority of cases this is an important consideration. This case is no different in that respect.
  3. That can be seen illustrated in the competing contentions of the parties at trial. For example, the husband contended that contributions should be assessed at 60 per cent to him and 40 per cent to the wife and asserted that her 40 per cent contributions entitlement should see the s 75(2) factors as equal and therefore quantitatively at zero.
  4. The terms of a proposed property order prior to the application of the “s 75(2) factors” sees the husband retaining 72.5 per cent of the property (approximately $1.92 million) and the wife 27.5 per cent (approximately $730,000). The husband’s share includes the unencumbered former matrimonial home valued at $1 million as well as a number of motor vehicles and other chattels valued at about $122,000 and cash sum of approximately $470,000 from the Suburb C property sale. The wife was living in rented accommodation. The contributions assessment sees her retaining about $16,000 worth of chattels and cash of about $1.045 million from the Suburb C property sale.
  5. Taken together s 75(2)(b), (c), (d), (g) and (k) invite a comparison between the parties and their respective standards of living given the duration of the marriage, the impact it has had on the capacity to earn and the commitments that each party is left with.
  6. While not dealt with specifically when considering s 75(2), her Honour subsequently addressed the overall justice and equity of her mooted orders and said that the outcome would “enable the wife to house herself and the children living with her and provide a sum for investment” (at [25]). The bases upon which that conclusion is derived – what is mooted as the wife being able to “house herself and the children” and in what amount and what amount is seen as being capable of investment for a 56 year old without an earning capacity – are not specified by her Honour.
  7. There is, for example, no comparison between the nature and type of accommodation that the wife might acquire for a household of three people, including a dependent child of the marriage and a dependant adult child of the marriage, with the unencumbered $1 million home which the husband already has. Again by way of example, if the wife were to purchase a home of equivalent value to that of the husband, the mooted contributions assessment would see her with about $45,000 to invest.
  8. The care of the parties’ youngest child is referred to by her Honour (s 75(2)(c)). It is said that there is an expectation that “in time” he can be expected to be independent. He was aged 13 and a half years at the time of trial and has the vast bulk of (at least) his secondary education ahead of him. Each impacts on the commitments necessary to enable the wife to support him (s 75(2)(d)); a factor not mentioned by her Honour. That factor might be seen to be particularly relevant given that the youngest child shares a household with a disabled adult brother who is cared for by his primary carer without support from the husband.
  9. Each of the matters just referred to impacts, in turn, upon a comparison of the “standard of living that in all the circumstances is reasonable” available to each of the parties (s 75(2)(g)). That matter is not referred to by her Honour. Again, that factor might be thought to have particular relevance given the retention of the unencumbered home by the husband; chattels that apparently have been and continue to be an ongoing interest for him (particularly motor vehicles retained by him) and $470,000 in cash available to a 66 year old man who pays negligible child support for a teenage son and does not support a mentally ill son who lives with the wife.
  10. We consider that each of the matters to which we have referred are important considerations. We are unable to see that her Honour took them into account when assessing s 75(2).
  11. We respectfully consider that her Honour’s discretion miscarried.
  12. We should mention for completeness an argument advanced by counsel for the wife. It is said that her Honour failed to take into account that the wife’s future need to support herself would likely “continue for approximately 13 years after the date of the husband’s death”. There was no evidence of health difficulties that impacted upon either party’s life expectancy; the contention appears to rest on the age difference between the parties.
  13. It will be clear from what we have said that, to the extent that the submission pertains to comparative commitments of each of the parties necessary to support themselves and the children of the marriage, the submission has merit. Further, the wife contends specifically that her Honour failed to take into account “a standard of living for the wife that was reasonable in all the circumstances”.
  14. It will be clear from what we have said that we consider this submission too has merit.

THE REMAINING GROUNDS OF APPEAL

Unreasonable or plainly unjust?

  1. Ground 6 asserts that the percentage distribution “is upon the facts unreasonable or plainly unjust”.
  2. Counsel for the husband at trial helpfully sought to seek out comparable cases so as to assist in the exercise of the relevant discretions. Ultimately it is conceded that with one possible exception, the differing facts of those particular cases when compared to the instant factual circumstances were of little assistance.
  3. This Court said in Rodgers & Rodgers (No 2)[26] that despite being “unanimous in our disquiet” at the trial judge’s s 75(2) assessment, “whether that disquiet sounds in discretionary error is a different question and depends upon a conclusion other than a shared view that a different result was more just and equitable” (at [69]). This Court went on to say:
    1. If we are to conclude that her Honour’s decision is “plainly wrong” or “falling beyond the bounds of a reasonable exercise of discretion” because of something other than a shared “second opinion”, we should be able to answer an additional question: “plainly wrong or unjust by reference to what?”. That additional question is difficult enough in any discretionary environment. It is made all the more difficult in respect of the s 79(4) discretion (and the satisfaction of the relevant criterion made more onerous) because here, as is almost always the case, the contention does not have a reference point. It is not contended that her Honour’s result offends any “guidelines” (as that expression in used in Norbis) and, as is ubiquitous, neither is a range of results said to be comparable to this case’s circumstances offered as a reference point.
    2. We are unable to persuade ourselves that, without more, her Honour’s assessment is “plainly unjust” or “plainly wrong”. Our disquiet is, then, without more, insufficient to justify interference with her Honour’s assessment.
  4. Those comments apply equally here. We have earlier identified specific discretionary error. In the absence of specific reference points we are not willing to conclude more generally as Ground 6 asserts.

Removal of the caveat

  1. Ground 7 asserts that her Honour made a factual error in concluding “that the wife agreed that the caveat registered over the [Suburb C] property should be removed as it may discourage a potential purchaser”. We were informed by agreement from the bar table that the [Suburb C] property had sold and that the contract had become unconditional.
  2. The ground and the issue underpinning it is otiose.

Omission of the [Suburb C] property from the schedule of assets

  1. Ground 8 asserts that the failure to include the [Suburb C] property in the “schedule ... to the order made 7 July 2017” amounts to an error. The ground is, with respect, misconceived.
  2. The schedule to her Honour’s orders pertains to distribution of property other than the Suburb C property which is the subject of earlier and detailed specific orders for sale. It should also be pointed out the tabulation of the parties’ interests in property at [13] of the reasons includes the Suburb C property.

APPLICATION IN AN APPEAL

  1. The wife filed an application seeking to adduce further evidence in the appeal. That application was dismissed and we indicated we would give short reasons for that conclusion in these reasons. These are those reasons.
  2. As has just been referred to, the Suburb C property has sold. The only relevance of the proposed further evidence is that the contract has become unconditional. However, counsel submitted that if the contract did not proceed despite having become unconditional, and if the appeal succeeded, then “the evidence would go to the terms upon which any further order in relation to the sale of that property might be undertaken”[27] by this Court on a re-exercise.
  3. Thus, it is effectively conceded that the evidence is not in fact sought to be tendered as further evidence but has potential utility only if this Court reexercises the discretion. Neither party has sought to reopen the appeal on the basis that the sale to D Pty Ltd has not proceeded.
  4. The evidence sought to be adduced has no relevance to the challenges that are the subject of the appeal.

CONCLUSIONS

  1. The Application in an Appeal is dismissed.
  2. The appeal is allowed.
  3. The wife’s Amended Notice of Appeal seeks, in effect, that this Court re-exercise the relevant discretions. In so doing, the wife seeks an order that the former matrimonial home be sold – a potential order impacted by the length of time in which the husband has resided within it and any events in the lives of both parties that may have occurred since the trial. The parties did not seek to adduce noncontroversial evidence about any such matters.
  4. Further, we have determined that, at least in some respects, her Honour’s reasons do not address matters that on a re-exercise are likely to be contentious. There has been no suggestion from the bar table of a non-contentious basis or bases upon which this Court could proceed.
  5. In all of the circumstances, this Court is unable to re-exercise the relevant discretion. The matter must be remitted for rehearing by a judge other than Carew J.
  6. Such a result for any parties to an appeal is unfortunate. It strikes as all the more so for parties whose retrial will occur over 40 years after they were married. We note, with respect, that her Honour dealt with this matter in an expeditious manner with consequent savings to the parties in costs. The resolution of the parties’ dispute is, surely, not complex. With assistance and appropriate advice from those who appeared before us agreement must surely be possible.
  7. Our orders will make provision for what seems to us to be realistic optimism in that respect by providing for minutes of consent to be forwarded within a reasonable time frame.
  8. In that respect, we note that at the conclusion of the appeal each of the parties sought the opportunity to file written submissions as to costs. Orders will be made accordingly but the time frame will accommodate the possibility of agreement just referred to.
  9. If all else fails, an order for remitter will follow.

I certify that the preceding ninety (90) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Thackray, Ainslie-Wallace and Murphy JJ) delivered on 8 August 2018.


Associate:

Date: 8 August 2018


[1] The reasons contain an estimated value because her Honour ordered ultimately that a property be sold. Thus the agreed value does not necessarily represent the sale price and an estimated amount of capital gains tax, assessed on the agreed value, is included.
[2] Pursuant to the formula at 9(f) of her Honour’s orders. The precise amount (taking no account of commission and the like) is $470,246.
[3] Pursuant to the formula referred to in footnote 2 of these reasons. The precise amount is $1,045,754.
[4] These calculations are based on the “Schedule to the order made 7 July 2017” which does not include the $3,000 of household contents at the former matrimonial home as found by her Honour at [13] and dealt with by paragraph 13 of the orders.
[5] Family Law Act 1975 (Cth) s 75(2)(d).
[6] Family Law Act 1975 (Cth) s 75(2)(g) and (b).

[7] [1981] FamCA 18; (1981) FLC 91-061 at 76,492.

[8] [1989] FamCA 5; (1989) FLC 92-010 (“Shaw”) at 77,292.

[9] [2012] FamCAFC 154; (2012) 50 Fam LR 244.

[10] [2017] FamCAFC 14; (2017) FLC 93-759.
[11] Citing Aleksovski v Aleksovski [1996] FamCA 111; (1996) FLC 92-705 at, respectively, 83,437 and 83,443 quoted in Dickons v Dickons [2012] FamCAFC 154; (2012) 50 Fam LR 244 at [20]; See also to similar effect Kowalski and Kowalski [1992] FamCA 54; (1993) FLC 92-342 at 79,630; Way and Way [1995] FamCA 28; (1996) FLC 92-702.

[12] Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108 at 122 (French CJ, Hayne, Kiefel and Bell JJ).

[13] See, Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605.
[14] Transcript, 22 May 2017, p 39 ln 27–31; See also, affidavit of single expert valuer filed 2 May 2017, Annexure A, pp 15–16.
[15] See, eg, Zappacosta and Zappacosta [1976] FamCA 56; (1976) FLC 90-089 (“Zappacosta”); Wells and Wells [1977] FamCA 62; (1977) FLC 90-285 (“Wells”). Contrast, VG v OM [2005] QCA 183.
[16] Transcript, 22 May 2017, p 47 ln 23 – 32. See also, Transcript, 22 May 2017, p 51 ln 18 to p 52 ln 24.
[17] See, eg, Clauson and Clauson [1995] FamCA 10; (1995) FLC 92-595, at 81,911 there speaking about assessments of “s 75(2) factors”.

[18] $2,961,254 – ($1,820,000 + $4,000) = $1,137,254. $1,137,254 / 2 = $568,627. (CGT is removed as a liability from the table in the reasons: it attaches to the Suburb C property and if the Suburb C property is removed from “the pool” so is the attached liability).

[19] Transcript, 22 May 2017, p 25 ln 16 – 29.

[20] The evidence is that the husband had equity of $10,000 in a $22,000 purchase.
[21] The 1,300 Suncorp shares held at trial had a value of about $14.30 per share. For indicative purposes only, the 8,000 shares inherited had a total value at that price of about $114,700.
[22] Husband’s affidavit filed 2 May 2017 at paragraphs 25 – 26.
[23] Prior to working as a professional, the husband was in another occupation earning approximately $7,000 per annum (see, husband’s affidavit filed 2 May 2017 at paragraph 15).
[24] See, eg, Allesch v Maunz (2000) 203 CLR 172.

[25] Norbis v Norbis [1986] HCA 17; (1986) 161 CLR 513 at 539 – 540 (Brennan J).
[26] [2016] FamCAFC 104; (2016) FLC 93-712.

[27] Appeal transcript, 7 February 2018, p 4 ln 1 – 4.

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