Court Allows Appeal in Aitken and Aitken Case Due to Failure to Consider Husband's Capacity to Pay Lump Sum Amount
Aitken & Aitken [2023] FedCFamC1A 69
The Federal Circuit and Family Court of Australia Division dealt with an appeal from a property settlement order, specifically concerning the division of assets related to the parties' jointly owned company, D Pty Ltd. The primary issue in the appeal was whether the primary judge failed to consider the husband's capacity to pay a lump sum amount to acquire the wife's interest in the company and whether adequate reasons were given for rejecting the husband's proposal for the sale of the company.
Facts:
The parties in this case, Mr. Aitken (the appellant) and Ms. Aitken (the respondent), were married and had three adult children together. They had amassed considerable wealth through their jointly owned company, D Pty Ltd. After agreeing to an equal division of their assets, they disagreed on how to deal with their respective interests in D Pty Ltd. The primary judge favored the wife's proposal that required the husband to buy out her shareholding in the business for a fixed sum, while rejecting the husband's proposal for selling D Pty Ltd.
Issue: The central issue in the case of Aitken & Aitken is whether the primary judge erred in ordering the husband to pay a lump sum amount to the wife within 60 days to acquire her shareholding in D Pty Ltd, without considering the husband's capacity to pay such an amount. Additionally, it is questioned whether the primary judge provided adequate reasons for rejecting the husband's proposal for selling D Pty Ltd and dividing the proceeds equally between the parties.
Rule: Under ss 79 and 81 of the Family Law Act 1975 (Cth), a judge has a duty to make orders that are appropriate, just and equitable in adjusting parties' property interests, with an aim to end their financial relationships. The requirement for giving reasons is a fundamental aspect of judicial function as it ensures justice has been done and allows for proper challenge of a decision (Bennett and Bennett (1991) FLC 92-191).
Application: The primary judge's order requiring the husband to pay a substantial lump sum amount to acquire the wife's shareholding in D Pty Ltd raises concerns as it appears that the husband's capacity to pay such an amount was not considered. This potentially leads to an unjust outcome, contrary to ss 79 and 81 of the Family Law Act 1975 (Cth).
The primary judge rejected the husband's proposal for selling D Pty Ltd without providing adequate reasons. This undermines transparency and impedes the ability of parties and appellate courts to comprehend his reasoning process. Furthermore, this rejection is questionable as it overlooked a potential solution that could have ensured an equal distribution of assets between parties as per their agreement.
Moreover, according to House v The King (1936) 55 CLR 499 at 504-505 and Norbis v Norbis (1986) 161 CLR 513 at 539-540, failure to take into account material considerations may necessitate appellate intervention. In this case, overlooking the husband's capacity to pay such a lump sum amount can be seen as a failure in considering a material factor.
Conclusion: In conclusion, there is merit in appealing against Order 23 made by the primary judge due to his oversight on considering husband's capacity for payment. Also, his failure to provide sufficient reasoning for rejecting husband's proposal for selling D Pty Ltd might be considered an error warranting appellate intervention. Therefore, this case should be remitted for hearing before another judge who would take into consideration all relevant factors including husband's capacity for payment while making final orders.
Details of the Parties:
- Appellant: Mr. Aitken
- Respondent: Ms. Aitken
- Company involved: D Pty Ltd
