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Wife Appeals from Property Settlement Orders

Chan & Lee [2022] FedCFamC1A 85 (3 June 2022)

The wife filed an appeal from final property settlement orders which provided for 100 per cent of the pool to the wife and for the wife to indemnify the husband.  The Court, in determining whether the appeal should be allowed, assessed the notional exclusions of assets from the pool and the error of fact as to the debt of the parties.

Facts:

At the time of the original hearing, the husband was 46 and the wife was 41.  The parties migrated from China, with the wife initially granted permanent residency as an independent skilled migrant in 2007.  She later sponsored the husband’s migration.  The parties married on 15 May 2008 and separated on 16 May 2016. 

Their divorce was finalised on 25 July 2017.  There is one child of the marriage who is presently 12, and whose care is by the wife.  The property proceedings involve various items of property, including real property co-owned by the husband and wife in Australia, real property held in the wife’s name in Australia, but with the beneficial interest held by her parents, and various properties in China, as to which the husband held part of the title with his parents and then, following the death of his mother, with his father.

Significant debts were also owed by the parties, both to a bank by way of mortgage secured on the real property held in Australia, and to the wife’s parents for various purposes.  The primary judge found that the contributions of the parties favoured the wife 80 per cent, to the husband’s 20 per cent and that the various factors contained at s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) required a further adjustment to the wife of 20 per cent.  Accordingly, the primary judge allocated the whole of the assets of the relationship to the wife.  The primary judge was effecting the most favourable adjustment of property toward the wife that she was able to, with the wife to receive the whole of the property of the relationship.

The wife claims that the actual effect of the orders is that she is left in a net debt position, taking responsibility for debts of the relationship that outweigh the property that she is to receive under the orders.   The wife challenged the treatment of the parties’ various liabilities, claiming that they were misconstrued by the primary judge, and seeks that the husband continue to bear responsibility for the whole of the parties’ liabilities, including the mortgage for the property that the wife holds following the proceedings.  The wife complained that the primary judge excluded from the pool of property, the real property partly held by the husband in China, and excluded the capital gains that he has received in relation to the properties in China.  The wife further asserted that her parents were unable to speak up during the trial, aside from answering questions.

The wife complained that no parenting order was made.  The wife challenged the primary judge’s refusal to make a spousal maintenance order directed to the husband, and the failure on the part of the primary judge to identify the wife’s illness.  The wife also asserted that the primary judge misconstrued her application as being for the wife to receive 70 per cent of the property, including the B Street, Suburb C property, subject to the mortgage.  The wife alleged that the primary judge made an error of fact in failing to make a finding as to the sale price of one of the Chinese properties.

The wife made a general complaint as to the husband’s failure to make full disclosure in relation to the Chinese properties, implying that failing to give it an effect was in error.  The wife complained that the primary judge failed to notionally add back a sum removed from the parties’ savings by the husband.  The wife asserted that the primary judge made a factual error in relation to the husband’s income (and implicitly his capacity to pay spousal maintenance).  The wife also complained that the primary judge failed to take into account the special needs of the parties’ child in relation to education.  The wife complained that there was no order for child maintenance.

Issue:

Whether or not the primary judge err in making its orders.  

Applicable law:

Family Law Act 1975 (Cth) s 117 - provides that the starting position is that each party should bear their own costs, subject to the matters contained at s 117(2A) of the Act justifying a different outcome.
 
Federal Circuit and Family Court of Australia Act 2021(Cth) s 36 - provides the suite of remedies available to this Court on appeal.
 
Abalos v Australian Postal Commission (1990) 171 CLR 167[1990] HCA 47 - relied upon in holding that the primary judge was in a superior position than are we, and hence better able to make the finding her Honour did about the husband’s comprehension of the English language.
 
De Winter v De Winter (1979) 23 ALR 211 - provides that the discretion under s 79 is extraordinarily wide.
 
House v The King (1936) 55 CLR 499; [1936] HCA 40 - provides that the legal principles that guide an intermediate appellate court when considering an appeal against a primary judge’s exercise of discretion under s 79 of the Act are very well established by the High Court.
 
Hsiao v Fazarri (2020) 270 CLR 588[2020] HCA 35 - provides that the appellant's right to appeal was a right to have the Full Court review whether the primary judge’s discretion to make a property settlement order had miscarried, applying the well-established principles expressed in House v The King
 
Lee v Lee (2019) 266 CLR 129[2019] HCA 28 - requires an intermediate appellate court to conduct a “real review”. 
 
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6 - provides that reasons appealed against should not be read by an appeal court with an eye keenly attuned to the existence of error.
 
Oriolo and Oriolo (1985) 10 Fam LR 665[1985] FamCA 54 - pursuant to which in reaching the primary judge’s conclusions about the percentage contributions already mentioned, her Honour rejected the wife’s criticism of any deficiencies in the husband’s disclosure. 
 
Rimmer v Rimmer [1953] 1 QB 63 - pursuant to which the wife asserted that it was “unfair and wrong” (her words) for the husband to have no liability and responsibility.  Concepts of palm tree justice have long been eschewed.
 
Shan & Prasad [2018] FamCAFC 12 - observed that an order that required a party to receive more property than existed, and the other party to in effect “create property” to comply with the orders constitutes a flawed approach.
 
Toll (FGCT) Pty Ltd v Alphaharm Pty Ltd (2004) 219 CLR 165[2004] HCA 52 - provides that where a party executes a deed, prepared by solicitors, written in a foreign language in which the signatory is not conversant, the ordinary presumption that a person is bound by what he or she signs may be rebutted. 
 
Water Board v Moustakas (1988) 180 CLR 491[1988] HCA 12 - provides that issues not raised at trial can only be raised on appeal in extremely limited circumstances.

Analysis:

The husband’s balance sheet is silent in relation to indebtedness, while the wife’s financial statement is broadly consistent with the balance sheet that she presented to the Court, but expressed between the two documents in a manner that was apt to confuse.  

The wife’s financial statement records in the liabilities column at item 46 is $220,000, in respect of home mortgages, and at item 50 is $105,300 being loans from the wife’s parents.  However, these amounts recorded by the wife are under the heading “amount of your share” and the wife has noted that it is a 50 per cent share. 

This, as with the balance sheet, meant that the overall debts asserted at item 46 was $440,000 (rather than the $220,000 expressed as the wife’s share) and at item 50 was $210,600 (rather than merely $105,300 expressed as the wife’s share).  

Thus, if these figures were accepted and applied to the value of their B Street, Suburb C property, this left a capital value of $570,000, but an indebtedness of $650,000.

In respect of the non- B Street, Suburb C property related debt to the parents, a provision made for indemnification in respect of this debt would leave the husband also indebted, and both parties in a net debt position.  Not having the wife indemnify the husband properly reflects the reality of the position arrived at (correctly) by the primary judge that the orders should reflect a 100 per cent adjustment to the wife.  That position does not warrant an indemnification in relation to debts from the relationship that exceed the pool of property where those debts are truly those of both parties. Such an outcome is just and equitable.

Conclusion:

The appeal is allowed.  Orders 1, 2, 3 and 4 of the Family Court of Australia made on 23 March 2021 are set aside.  The respondent husband should do all acts and things required to transfer to the appellant wife all his right, title and interest in the property known as B Street, Suburb C (the “B Street, Suburb C property”).  The appellant wife indemnify the respondent husband in respect of any and all liabilities relating to the B Street, Suburb C property, including: (a) By way of mortgage; and (b) The sum of $92,092.50 loaned to the parties by the wife’s parents.

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