· 22 Dec 2021 · 754 posts

Wife Appeals Final Property Settlement Orders

Cornett & Hext [2021] FedCFamC1A 90 (17 December 2021)

A judge of the Family Court of Australia made final orders determining parenting and property adjustment proceedings between the parties. The primary judge assessed the parties’ contributions as 75 per cent to the husband and 25 per cent to the wife but adjusted the wife’s entitlement by 5 per cent. The wife appeals from final property settlement orders alleging that the primary judge erred in treatment of add back amounts.

Facts:

The parties commenced their relationship in 2002, began cohabiting in 2004, and married in 2008. On 5 April 2005, the parties purchased a property in Suburb BB for $535,000 (“the Suburb BB property”). The husband paid a 5 per cent deposit of $26,750 from his savings, and upon settlement, applied a further $30,000 from his savings. The balance of the purchase price was funded by a joint mortgage from the Commonwealth Bank of Australia in the amount of $500,000.

In 2012, the parties purchased the former matrimonial home at EE Street, Suburb FF for $2.5 million (“the Suburb FF property”). A 10 per cent deposit of $250,000 was paid from the husband’s inheritance into the wife’s bank account. At settlement, a further $270,000 was applied from the husband’s inheritance, followed by a further $100,000, which the husband received from NAB as a bonus. The balance was funded by a joint mortgage.

The Suburb BB property was sold for $807,000, with the net proceeds of sale being $653,796. $650,000 was applied to reduce the mortgage over the Suburb FF property to $1,036,000. The parties separated on 18 February 2018 but continued to live under one roof. The wife withdrew $8,000 from the parties’ joint bank account on 21 March 2018. The wife commenced proceedings on 24 May 2018, seeking parenting, property, and spousal maintenance orders.

At a case assessment conference in June 2018, orders were made by consent having the husband pay the wife $100,000 as partial property settlement as well as periodic spousal maintenance. On 14 January 2020, orders were made by consent varying the amount to $500,000 as partial property settlement. On the final day of hearing, the wife conceded that the husband should have sole parental responsibility for the children, that the children should live with the husband, and argued she should spend supervised time with the children once per month.

On 13 May 2021, a judge of the Family Court of Australia (as it then was) made final orders determining parenting and property adjustment proceedings between the parties. The primary judge assessed the parties’ contributions as 75 per cent to the husband and 25 per cent to the wife but adjusted the wife’s entitlement by 5 per cent. This led to an apportionment between the parties with 70 per cent to the husband and 30 per cent to the wife in respect of non-superannuation assets, and equalisation of the superannuation. There was an overall distribution of the asset pool with 32.5 percent to the wife and 67.5 percent to the husband. The wife challenges those final orders of 13 May 2021.

Issues:

I. Whether or not the primary judge erred in treatment of add back amounts.

II. Whether or not the result is just and equitable.

Applicable law:

Family Law Act 1975 (Cth) s 75(2) - provides the matters to be taken into account in relation to spousal maintenance.

Family Law Act 1975 (Cth) s 79(4) - provides for the matters to be taken into account in considering what order should be made in property settlement proceedings.

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17 - pursuant to which the Court should exercise its discretion to fix an amount of costs.

Abalos v Australian Postal Commission (1990) 171 CLR 167; [1990] HCA 47 - the High Court observed that the course of the trial and the whole substance of the judgment must be looked at, and the matter does not depend on the question whether a witness has been cross-examined to credit or has been pronounced by the judge in terms to be unworthy of it.

Aldi Foods Pty Ltd v Moroccanoil Israel Ltd (2018) 261 FCR 301; [2018] FCAFC 93 - provides that her Honour’s factual conclusions, to the extent that they depend upon the credit of the parties and witnesses, and hence the reliability of their evidence, are neither “glaringly improbable” nor “contrary to compelling inferences”, which is the test of error on appeal for factual findings of that kind.

CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67 - where it was held that neither this Court, nor the Full Court [of the Family Court] in relation to appeals to it, has authority to disturb a decision under appeal simply because the appellate judges, faced with the same material, would have reached a conclusion different from that under appeal.

House v The King (1936) 55 CLR 499; [1936] HCA 40 - where the High Court said that it is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course.

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 - the majority of the High Court said that the trial judge has advantages that derive from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole.

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.

Harris & Dewell (No 2) (2018) FLC 93-863; [2018] FamCAFC 180 - provides that indemnity costs are a significant departure from the position set forth in s 117(1) of the Act and are “exceedingly rare”.

Ridehalgh v Horsefield[1994] Ch 205 - observed that legal representatives will, of course, whether barristers or solicitors, advise clients of the perceived weakness of their case and of the risk of failure.

Lemoto v Able Technical Pty Ltd (2005) 63 NSWLR 300; [2005] NSWCA 153 - held that a solicitor’s duty to the Court is co-extensive with that of counsel.

Cassidy & Murray (1995) 124 FLR 267; [1995] FamCA 91 - in the context of considering a costs order against lawyers, endorsed the decision in Ridehalgh, including the importance of the lawyer’s duty to the Court.

Giannarelli v Wraith (1988) 165 CLR 543; [1988] HCA 52 - held that the performance by counsel of his paramount duty to the court will require him to act in a variety of ways to the possible disadvantage of his client.

Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 - held that the task of this Court is to conduct a “real review”, but we also recognise we must observe the “natural limitations” that exist in the case of any appellate court proceeding wholly or substantially on the record.

S.S. Hontestroom v S.S. Sagaporack [1927] AC 37 - provides that the course of the trial and the whole substance of the judgment must be looked at, and the matter does not depend on the question whether a witness has been cross-examined to credit or has been pronounced by the judge in terms to be unworthy of it.

Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173 - held that add backs are “exceptional”, a matter of discretion for the trial judge, and reasonably incurred expenditure does not usually come within accepted categories of addback.

Wen & Thom [2010] FamCAFC 81 - where it was held that in many cases, very little will need to be said, whilst in other cases, a good deal of the reasoning process which leads to the ultimate decision will need to be revealed.

Analysis:

The wife argues that the primary judge viewed the parties’ financial circumstances as complex. This view was said to be wrong because there was no “great maze of complexity”.

Secondly, she asserts that the primary judge accepted the husband’s version of the asset pool “without qualification”, while treating the wife’s version of the asset pool as mere assertion, when the husband’s figures for the asset pool were “grossly misleading”.

Thirdly, she argues that the primary judge should not have accepted the husband’s version of the joint asset pool, because her solicitors, by email, had indicated the wife did not approve his version, but nonetheless her lawyers had embraced the husband’s statement of the asset pool as a “true reflection” .

Fourthly, she contends that the primary judge failed to take account of all the share and managed funds addbacks, “again which all had supporting documentation”.

Fifthly and finally, she argues that the primary judge failed to take account of all relevant matters concerning the asset pool, because on 12 May 2021 after judgment was reserved, the wife emailed material herself to the primary judge, in the nature of further evidence.

However, the point made by the primary judge was that it had been difficult to obtain agreement between the parties about the composition of the asset pool. It was not a statement about complexity. Secondly, as the husband submitted, neither the wife’s Case Outline for trial, nor her opening submissions, raised any issue of non-disclosure by the husband. Allegations of non-disclosure in the wife’s affidavits were the subject of objection and not pressed.

No allegations of non-disclosure were put to the husband in cross-examination. Finally, no case based on non-disclosure was put forward in closing submissions.

There was no obligation on her Honour to engage in her own forensic scrutiny of the husband beyond the manner in which the wife’s lawyers presented her case at trial. Thirdly, her Honour was informed the asset pool was agreed as between the lawyers on the record for the parties, even if the wife’s lawyers made clear that the wife herself had not given approval. Fourthly, the primary judge did not accept the husband’s version of the property pool “without qualification”. On the contrary, her Honour considered competing arguments relating to its composition.

Conclusion:

The Court concluded that her Honour’s reasons are clearly adequate, and accordingly, there is no merit in the wife's grounds. The Court dismissed the appeal. The wife is ordered to pay the husband’s costs fixed in the sum of $10,000.

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