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Appellant Disputes Primary Judge's Conclusion Over Property Dispute

Delacey & Redwood [2021] FedCFamC1A 3 (8 September 2021)

The primary judge ruled upon a property dispute between the parties and the assessment of their contributions.  The appellant asserts that there was a failure to properly exercise the judicial discretion on the part of the primary judge and as a result the outcome was plainly wrong.  The Court in deciding whether or not to allow the appeal assessed the primary judge's means to identify and weigh all of the contributions of the parties. 

Facts:

The parties commenced cohabitation in late 2014, married in 2016, and separated in December 2018.  The appellant, at the time of the trial, was employed by Employer M earning in excess of $100,000 per annum.  The respondent, at the time of the trial, was employed as a Professional with Employer K on a salary of $150,000 per annum plus superannuation.  In November 2010, the respondent purchased an investment property in Suburb N for $300,000 with the assistance of a loan of $50,000 from her parents, and a mortgage of $240,000. By 2013 the respondent had repaid her parents and reduced the mortgage to $135,000.

The respondent asserted that when cohabitation commenced she had net assets of $369,000 comprising her equity in the property of $224,000, her motor vehicle, her savings, her share portfolio, her furniture, and her superannuation entitlements.  The appellant asserted that he also had a quarter interest in a property in Country L valued at $78,600, and that he had net assets with a total value of $365,000. In June 2015, the appellant purchased a house property in Suburb F for $667,000.  His Honour recorded that there was a mortgage of $500,000 and noted the appellant’s assertion that he contributed $180,000 to the purchase price and $30,000 towards stamp duty.  The parties and their child resided in the property in Suburb F.

The respondent continued to rent out her property.  She paid just less than one half of the mortgage repayments for that property, and in 2017 she made three payments each of $20,000 towards that mortgage.  With respect to the Suburb F property, the mortgage obtained by the appellant was in the nature of a credit loan of $533,600.  Further, the appellant paid $35,000 towards the stamp duty, and he contributed $188,500 to the purchase, with some of that money being used to set up a mortgage offset account at the same time. 

The appellant received $78,000 from the sale of the property in Country L, and this was applied to the mortgage over his property in Suburb F. 

Issue:

Whether the primary Judge has erred in how he has treated the property of the parties. 

Applicable law:

Family Law Act 1975 (Cth) s 75(2) - provides for the matters to be taken into consideration in relation to spousal maintenance. 
 
Federal Proceedings (Costs) Act 1981 (Cth) s 6 and 9 - where a Federal appeal succeeds on a question of law, the court that heard the appeal may, on the application of a respondent to the appeal, grant to the respondent a costs certificate in respect of the appeal.
 
Coghlan & Coghlan(2005) FLC 93-220[2005] FamCA 429 - where if the parties’ interests in specific items of property differ or they have made differing contributions, it may be desirable to proceed upon an item by item basis in the division of the property between them.
 
Gronow v Gronow (1979) 144 CLR 413; [1979] HCA 63 - where there is no doubt that an appellate court must be slow to overturn a primary Judge’s discretionary decision on grounds that only involve a challenge to the attribution of weight in making the impugned decision.
 
Holland & Holland(2017) FLC 93-798[2017] FamCAFC 166 - where even though his Honour was able to segregate pre-relationship assets into one pool, and post-cohabitation assets into another pool, his Honour was obliged to exercise his discretion “by reference to the nature, form and characteristics of the property in question and the nature, form and extent of the parties’ contributions of all types across the entirety of their relationship."
 
Norbis v Norbis(1986) 161 CLR 513[1986] HCA 17 - Wilson and Dawson JJ said that it is open to a Judge to adopt an asset by asset approach, or a separate pools approach.
 
Scott & Scott(1994) FLC 92-457[1994] FamCA 12 - where it was held that there is no rule of law that a Judge must accept evidence which is unchallenged.
 
Warren v Coombes(1979) 142 CLR 531[1979] HCA 9 - authority for the proposition that where an appellate court finds error in the orders made by a primary Judge, the court should correct it.

Analysis:

During the relationship the appellant was unemployed for a number of months, and he withdrew money from the mortgage account over his property.  Some of that money was withdrawn after separation, and in particular, $95,000 went towards his legal fees.  His Honour recorded that at the time of the hearing the property in Suburb F was valued at $880,000, and the mortgage was $354,200.  The evidence of the appellant was that the mortgage was $489,200, but the offset account had a credit balance of $135,000. 

His Honour excluded the bank accounts from the asset pool, but without referring to, or including amongst those bank accounts, the mortgage offset account.  The approach taken by his Honour was to identify the pool of assets of the parties and then exclude from consideration the “pre-relationship assets” of the parties, save and except insofar as those assets may be relevant to be taken into account.  His Honour failed to adopt a two pools approach to the assessment of contributions.  His Honour’s task was to assess contributions across the whole of the period from the commencement of cohabitation to the trial, in respect of the pre-relationship assets, and to assess contributions separately across the same period, in respect of the post-cohabitation assets.

There is no overall assessment of the respective contributions of the parties, and without that, it is not possible to discern the prospective entitlements of each of the parties based on that assessment. 

Conclusion: 

The Court ordered the appeal to be allowed. Paragraphs 16–21 of the Order made on 23 September 2020 is to be set aside.  The proceedings for property settlement between the parties are to be remitted to Division 2 of the Federal Circuit and Family Court of Australia for rehearing by a Judge other than the primary Judge.  The Court grants to the appellant 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 in respect of the costs incurred by him in relation to this appeal.  The Court grants to the respondent 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 in respect of the costs incurred by her in relation to this appeal.

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