· 2021-10-19T07:28:44+0000 · 750 posts

Wife Appeals Property Settlement Orders

Loncar & Loncar [2021] FedCFamC1A 14 (21 September 2021)

The wife appeals a property settlement order where, for the wife’s Kennon argument, the primary judge would have assessed the parties’ contributions as equal. The primary judge found that the wife should receive 57.5% of the net assets based on contributions. The Court, in determining whether the appeal should be granted, considered a novel argument as to whether the additional 7.5% the wife received based on an assessment of contributions arising from the Kennon argument should be quarantined or ignored from the third and fourth steps.

Facts:

The parties married on 3 February 2001 and separated under the one roof in September 2012. The husband vacated the Suburb A property or the matrimonial home in April 2015 while the wife and the four children of the marriage remained living in the Suburb A property. In making property settlement orders, the primary judge adopted a two pooled approach, so that the parties’ superannuation interests were considered separately. His Honour resolved a small number of controversies, including claims for add backs, and ultimately settled a table of assets and liabilities in the first pool in the net sum of $1,124,594 and superannuation in the amount of $232,623 in the second pool.

The primary judge ultimately concluded that, prior to turning to the wife’s Kennon argument, his Honour would assess the parties’ contributions in all forms equally to both pools. His Honour had a good deal of corroborative evidence including police records, the husband’s criminal record and court records of numerous Apprehended Domestic Violence Orders made against the husband prior to the separation. The primary judge made a finding that the wife’s contribution as a homemaker and parent was made “much more arduous” as a result of the systemic pattern of family violence and its effect included making the wife’s contributions in the post separation period in her role as parent much more arduous. The primary judge concluded that the wife would be entitled to receive 57.5% in terms of a contribution analysis in the net property pool of $1,124,594.00 which equates to $646,641.55.

The husband was entitled to receive the balance of 42.5% of the net property pool being $477,952.45. An adjustment of 7.5% equating to $84,344.55. His Honour dealt seriatim with the relevant prospective statutory considerations. Having created a disparity of 15 per cent in the parties’ capital positions in pool one as a result of the contribution based entitlement, the primary judge found that, there was to be a further adjustment as to 10 per cent in favour of the wife on account of prospective factors. Having regard to the disparity in the parties’ capital positions as a result of the contribution based assessment, the overall result was the parties’ entitlements were to be 67.5 percent to the wife and 32.5 percent to the husband of the non-superannuation assets, a disparity of 35 per cent.

The primary judge made an order splitting the husband’s superannuation so that the superannuation retained by each of the parties was equal. The wife appeals certain paragraphs of a final property settlement order made by the primary judge on 4 August 2020 by way of Amended Notice of Appeal filed on 29 September 2020. The wife challenges the primary judge’s consideration of the wife’s contributions, particularly those made by her as homemaker and parent between 2015 and 2020 and the adequacy of the primary judge’s adjustment. The wife also made a novel argument.

At the second stage, the primary judge assessed contributions in the wife’s favour 7.5 per cent higher as a result of her “Kennon argument”. At the third stage, his Honour took the whole of the disparity arising from the contribution findings into account under s 75(2)(b) of the Act. The wife argues that given the increased contribution assessment was founded upon those contributions being made significantly more arduous by the systemic violence of the husband towards her, the primary judge erred in not quarantining the 7.5 per cent increase from consideration at the third stage.

Issues:

I. Whether or not the primary judge err in failing to have regard or to properly consider the wife’s overall contributions and particularly the contributions that she made as homemaker and parent between 2015 and 2020.

II. Whether or not the primary judge’s finding that an adjustment pursuant to s 79(4)(d)–(g) of 10 per cent is unreasonable and plainly unjust.

III. Whether or not the Kennon argument must be ignored at the third and fourth stage.

Applicable law:

Family Law Act 1975 (Cth) s 75 - where the whole of the disparity arising from the contribution findings are taken into account.

Family Law Act 1975 (Cth) s 79 - where adjustments should be made pursuant to the terms herein.

Benson & Drury (2020) FLC 93-998; [2020] FamCAFC 303 - cautioned against the use of the short-hand descriptor of a “Kennon claim” and the reference to the issue as a “Kennon adjustment” given that those epithets might invite the treatment of the issue as an isolated claim for an additional share of the available property.

Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63 - Stephen J said that an appellate court should be slow to overturn a primary judge’s discretionary decision on grounds which only involve conflicting assessments of matters of weight.

Hickey and Hickey and Attorney-General (Cth) (Intervener) (2003) FLC 93-143; [2003] FamCA 395 - provided the four steps of the preferred approach to the determination of an application.

House v The King (1936) 55 CLR 499; [1936] HCA 40 - provided that it is not enough that the judges comprising the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion.

Kennon v Kennon(1997) FLC 92-757; [1997] FamCA 27 - provided that absent statutory instruction, there is no warrant in s 75(2)(b) Matters to be taken into consideration in relation to spousal maintenance to discount the outcome of the analysis under s 79(4)(a)–(c) Alteration of property interests under the Act.

Kowaliw and Kowaliw (1981) FLC 91-092; [1981] FamCA 70 - referenced by the Court in stating that justice and equity and public policy make it inappropriate for me (subject to one exception which I will refer to shortly) to take into account the husband's liability to pay his daughter's damages or costs in any way which would diminish the amount to be received by the wife by way of property interests.

Loude & Loude [2009] FamCAFC 52 - provides that the Court must have regard to any disparity in the parties’ capital positions as a result of the contribution based assessment.

Marsh v Marsh(1994) FLC 92-443; [1993] FamCA 57 - where his Honour said that "there are really no other provisions of Section 75 (2) which do impact in this case to affect the proper division of the assets of the parties, with the possible exception of Section 75(2)(o), which becomes relevant by virtue of the verdict for damages which I propose entering in favour of the applicant as against the respondent."

Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28 - held that ordinarily a party is bound by the conduct of their case.

Re Q (Damages for Sexual Assault) (1995) FLC 92-565; [1994] FamCA 158 - where it can be seen that by way of obiter, Kay J was of the view that quarantining may not be always appropriate.

Stanford v Stanford(2012) 247 CLR 108; [2012] HCA 52 - referred to by the Court in finding that a property settlement order should be made.

W v W; R and G (by their next friend P)(Intervener) (1994) FLC 92-475; [1994] FamCA 34 - Brown J dealt with the competing applications for property settlement orders first and then dealt with claims by the wife’s daughters against their step father arising from wrongful sexual assault.

Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12 - observed that “where all the facts have been established beyond controversy or where the point is one of construction or of law, then a court of appeal may find it expedient and in the interests of justice to entertain the point”.

Yen v Yen(2010) 42 Fam LR 691; [2010] FamCA 1 - Cronin J said, “I do not understand his Honour to say that an adjustment cannot be made under s 79(2) regardless of the award of damages.”.

Analysis:

The wife had the care of the four children of the marriage and the husband had only minimal time with one of the children. Whilst the husband paid child support as assessed from time to time, the wife asserted that those payments were totally inadequate to support the family. When reaching the overall finding of equality of contributions, apart from the Kennon argument, the primary judge specifically refers to the fact that the husband made an initial contribution of his 25 per cent interest in the Suburb A property. As to Ground 1, the weighing of contributions is not open for the Court to cherry-pick specific contributions and submit that adequate weight was not given to them without taking into account and weighing all other contributions of the parties.

Ground 2 asserts that the primary judge reached a plainly unjust outcome by otherwise allowing only a further 7.5 per cent adjustment, having taken into account the uncertainty of the wife’s employment as a recently graduated public servant, her responsibility for the financial support and parenting of three children under the age of 18 and one over 18, the inability of the husband to make any reasonable contribution by way of child support or any other financial support and the requirement of the wife to house four children. The primary judge took all of those matters into account in favour of the wife as well as the husband’s diminished future earning capacity arising from permanent physical disabilities following a motor vehicle accident.

Ground 3 asserts that the trial judge was in error in expressing that the court must have regard to any disparity in the parties’ capital position as a result of the contribution based entitlement as it indicated that he only was having regard to the financial discrepancy rather than “the cause” of the discrepancy and such overtly “diluted” the Wife’s “Kennon” adjustment which was brought about by the Husband’s conduct. Ground 4 asserts that the Trial Judge erred when considering a just and equitable result erred in ignoring, and/or failing to consider all of the Husband’s conduct.

In these two grounds, the wife argues a novel point through alternate positions which relies upon the notion that any financial advantage the wife has received from her Kennon argument should be quarantined when assessing what was an appropriate, just and equitable property settlement order. Counsel for the wife argued that the 7.5 per cent “adjustment” that the wife received because her contributions had been made significantly more arduous by the husband’s perpetration of systemic family violence, be disregarded when considering s 79(2)(b) of the Act and that the primary judge erred when his Honour took into account the whole of the disparity in the parties’ capital positions as a result of the contribution based assessment. The application of the principles articulated in Kennon does not fall within the same rubric as the approach applied in the cases relied upon by the wife, which are claims in tort. Absent statutory instruction, there is no warrant in s 75(2)(b) to discount the outcome of the analysis under s 79(4)(a)–(c) of the Act based on a Kennon argument.

Conclusion:

The Court concluded that the primary judge did not err in failing to have regard or to properly consider the wife’s overall contributions and particularly the contributions that she made as homemaker and parent between 2015 and 2020. The Court was unable to conclude that the adjustment made by the primary judge for prospective factors was unreasonable and plainly unjust. The Court found that the primary judge did not err in failing to quarantine the 7.5 per cent the wife achieved as a result of her Kennon argument and there is no merit in Grounds 3 and 4. None of the wife's grounds have merit. The Court dismissed the Amended Notice of Appeal filed on 29 September 2020. The husband has not incurred legal costs and accordingly did not seek an order for costs against the wife.

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