Earning capacity affected by marriage
The following is annotated.
FAMILY LAW – APPEAL – PROPERTY – contributions assessed at 87.5/12.5 in the husband’s favour – where the wife challenges her Honour’s assessment of the contributions – where no discretionary error identified and no error found in respect of contributions – where the wife asserts that the trial judge erred in failing to make an adjustment pursuant to s 79(4)(e) – where the trial judge failed to consider relevant s 75(2) considerations resulting in an injustice to the wife – appeal allowed – re-exercise discretion – adjustment of 7.5 per cent in favour of the wife – costs ordered.
THE JUDGMENT UNDER APPEAL
- The parties’ interests in property and superannuation and, respectively, their values and amounts are not in issue in this appeal. The result is that they are agreed as totalling approximately $3.9 million. The parties cohabited for a little over eight years. After separation, the wife continued to live in the former matrimonial home in respect of which the husband paid the outgoings for about three years until the trial was heard. At the time of the trial, the husband was aged 71 and the wife 59.
- Her Honour assessed contributions in the proportion 87.5 per cent to the husband and 12.5 per cent to the wife. That is, her Honour assessed that the contributions of all types made by both parties should see a disparity between them represented by approximately $2.9 million or 75 per cent of the total value of the pool. In arriving at that conclusion, her Honour found that the wife’s direct capital contributions at the outset of the relationship were “not more than $280,000”. The husband’s capital contribution amounted to about $2.4 million.
- Those findings, too, are not challenged on this appeal. It might be noted in passing that, by reference to her Honour’s findings, the husband contributed about 89 per cent of the parties’ then interest in property and superannuation, and the wife about 11 per cent.
- In the course of arriving at the conclusions just expressed, her Honour found that she did not accept that the husband “could not remember where he had sourced some $950,000 for the payment to his first wife”. However, her Honour rejected the contention on behalf the wife “that a finding should be made that the husband has no credit in relation to the whole of his evidence”. Her Honour found in respect of the wife that “it seemed reasonable to conclude that her evidence could not be relied upon unless it was supported by a document”.
- Central to the findings made in respect to the wife’s evidence, her Honour found that the wife did not, as she alleged, receive income from China during the relationship, did not have an interest in an apartment in China, and did not otherwise have access to financial resources in China as she claimed. Again, none of those findings are challenged as such, although, as has been seen, the appellant wife contends that different weight or conclusions should have been reached by reason of that finding with respect to the husband. I see no merit in any challenges to her Honour’s orders insofar as they stand upon those challenges alone.
- Her Honour found as matters relevant to the position of the husband with respect to s 75(2) of the Act:
- the husband was 71, was retired, and a self-funded retiree; and
- the amount he will be ordered to pay the wife in cash, as both parties sought, “will deplete his retirement fund and, therefore, his income. He will, however, retain substantial assets”.
- As issues relevant to the position of the wife, her Honour found:
- she was 59;
- she has not been in paid employment since about 2004;
- her English is very poor; and
- she is unlikely to obtain paid employment.
- The central findings made by her Honour in respect of the wife’s prospective claim for damages were that “the wife will prosecute her claim and recover the appropriate amount of compensation which will cover her future medical costs”. Any pain and suffering component of any claim would not be taken into account.
THE CHALLENGES TO THE TRIAL JUDGE’S ORDERS: S 79(4)(E)
- The essence of the challenges mounted by the appellant wife is that her Honour failed to take account of relevant considerations. That is, of course, recognised as a basis for finding that her Honour’s discretion has miscarried. Allied to that challenge is an assertion that her Honour’s reasons do not illuminate sufficiently the path by which she arrived at her s 79(4)(e) assessment.
- In my opinion, her Honour has failed to consider relevant matters and her Honour’s discretion has miscarried as a result. I consider that injustice has been caused to the wife as a consequence.
- The written submissions on behalf of the wife at trial addressed a number of issues required to be considered by s 75(2), if relevant. Section 75(2)(b) of the Act required her Honour to consider “the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment”. Her Honour noted at  of the reasons that a 12.5 per cent division of the parties’ interests in property and superannuation would see the wife receive “a lump sum of $491,326”.
- Her Honour later recorded that when account was taken of the property already possessed by the wife, essentially cash, she would receive an additional $368,804. Mr Kearney SC on behalf of the husband argues forcefully that those two findings and a reading of her Honour’s reasons as a whole make it plain that her Honour has considered as a relevant consideration that which s 75(2)(b) requires. However, despite those arguments, I remain unpersuaded that her Honour did so.
- While dollar amounts are referred to as, respectively, the amount which the wife has in her possession and the amount she will receive in total as a result of her Honour’s contributions assessment, I am unable to ascertain where her Honour considered the respective positions of the parties by reference to their property and financial resources consequent upon that mooted division.
- The evidence reveals that the parties would receive as a consequence of the contributions assessment approximately the same proportions of the property with which they entered the relationship. After approximately 12 years between cohabitation and trial, embracing more than eight years of cohabitation, the husband was, by reference to the assessment of contributions, possessed of three pieces of real property, including a home in which he would reside valued at $1.25 million, a holiday property and a rental unit from which he derived income, three motor vehicles and $50,000 in furniture. From cash and superannuation, (which because of his age he can take as cash, as he might choose) totalling about $1.64 million, the husband would pay to the wife about $368,000, leaving him with cash resources of about $1.3 million.
- Additionally relevant in respect to the issue of financial resources more generally is the fact that the husband was able, at the commencement of the relationship, to source and fund nearly a million dollars in order to pay his former wife. When asked to nominate the source of those funds, he said he couldn’t recall. Her Honour did not believe him. After the same approximately 12 year period under consideration by her Honour, the wife had no home, no other real estate, and no financial resources available to her in China or otherwise. She had only a couple of hundred dollars in superannuation.
- By reference to her Honour’s assessment, the wife would have a total of about half a million dollars with which to house and support herself, the latter in consequence of her Honour’s finding that she “is unlikely to obtain paid employment”. Section 75(2)(b) of the Act also required her Honour to consider the “physical and mental capacity” of each party for “appropriate gainful employment”. The husband was a self-funded retiree with significant assets and, after payment of the amount consequent upon the mooted contributions assessment, had nearly $1.3 million in cash with which to support himself.
- The wife had, as her Honour found, little if any prospect of gainful employment. The fact that the husband was 71 at trial, and the wife 59, was very important in the consideration of that comparison. As an instance of that, the section requires, in particular, a consideration of the respective “commitments of each of the parties … necessary to enable” them to support themselves. While, in the context of a broad assessment referrable to s 79(4)(e), that may not require a dollar-for-dollar comparison assessment as might be required, for example, in a spouse maintenance case, I am unable to see where her Honour has given any consideration to this important requirement stipulated by s 75(2)(d).
- As a related matter, it was submitted before her Honour, it seems uncontroversially, that the wife was in receipt of sickness benefit at the date of trial, a consideration the specific subject of s 75(2)(f). Again, I am unable to see where her Honour has considered that factor. Separate from the requirement to consider, where relevant, the issue of capacity to earn income, s 75(2)(k) obliged her Honour to consider, if relevant, the “duration of the marriage and the extent to which it has affected the earning capacity of the other party”. So, too, s 75(2)(k) requires a consideration of “a standard of living that, in all the circumstances, is relevant”.
- As to the former, as well as finding that the wife is unlikely to obtain paid employment in the future, her Honour also found:
- The wife has lived in Australia since 1999. There is no evidence that she had an earning capacity before the marriage. She earned a small amount in a jewellery business during the marriage for a year or so. Her earning capacity has not been affected by the circumstances of the marriage.
- Those findings must be seen against earlier findings made by her Honour that the wife’s taxation returns revealed a taxable income in the 2003 taxation year of $56,900 (in, it should be noted, 2002-2003 dollars). That taxation year embraced the first seven months of the parties’ cohabitation. In the first full taxation year of the parties’ relationship, the wife’s taxable income was $14,300. Thereafter, the wife occupied the position of a full-time homemaker and the evidence reveals no taxable income was earned by the wife.
- While, of course, the wife was some 10 years older than she was at the commencement of the relationship and while the wife was, as revealed in the medical evidence before her Honour, suffering from health issues, I am respectfully unable to see how her Honour’s finding, that the wife’s earning capacity was unaffected by the relationship, was open to her on the evidence before her.
- In a similar vein, there can be no doubt that the parties enjoyed a very good standard of living during their relationship; much of that, of course, emanated from the husband’s assets with which he entered the relationship, including what was able to be purchased from his substantial cash reserves and the income derived from them and otherwise by the husband. However, the contrast between that standard of living and the comparative standards of living reasonably open to the parties post orders is nevertheless a relevant matter, and one which, in my view, was not at all considered by her Honour.
- Her Honour made reference to the report of a “Dr [BB]” – in fact, the report is signed by Dr CC. In the context of considering the wife’s s 75(2) adjustment, and in that context, the “chronic musculoligamentous strain of the lumbar spine and associated chronic pain syndrome”, her Honour said:
- On 15 August 2013, the wife was involved in a motor vehicle accident. A single expert, Dr [BB][sic], prepared a report for these proceedings in relation to her injuries. Dr [BB] [sic] diagnosed the wife as suffering from chronic musculoligamentous strain of the lumbar spine and associated chronic pain syndrome. He considers that her prognosis is poor and that she does not appear to have responded to treatment. She is not likely to need operative treatment, but would benefit from the services of a pain clinic, which is generally a one-off treatment option. Dr [BB] [sic] says that the likely costs [sic] of a course of multidisciplinary pain management is $5000. He does not recommend physiotherapy. The wife is likely to require paid [sic] medication in the future, but there is no evidence of the likely costs of the medication.
- The report from Dr CC (BB) was unchallenged. It reveals ongoing complaints about health problems suffered by the wife from about February 2011, primarily as a result of an earlier car accident at about that time. She received physiotherapy. Dr CC said that “It appears that the wife has anxiety and depression”. The wife had earlier referred to the wife’s treating doctor’s notes to the effect that by July 2013, that is some two and a half years after the first accident, the wife was “still suffering from PTSD” (uncontroversially, a reference to post-traumatic stress disorder).
- Dr CC noted that the treating doctor had said in June 2013 that the wife “would be requiring psychological counselling and pain management”, but went on to say that “details of any [necessary] psychological counselling is outside the area of my expertise”.
- It is insufficient for the intervention of an appellate court that my considerable disquiet, if shared by other members of the Bench, might have resulted in a conclusion that the considerations relevant by reference to s 75(2) should have resulted in adjustment to the wife. However, where an examination of the record reveals that considerations relevant to that section and, in turn, relevant as informing a just and equitable result in a s 79 application, have not been considered, appellate error is established.
- For the reasons just given, I consider that to be the case here.
THE CHALLENGE TO THE TRIAL JUDGE’S CONTRIBUTIONS ASSESSMENT
- The terms of the amended ground of appeal relied upon to challenge her Honour’s contribution finding are important to the arguments pertaining to it and to my conclusion and should be quoted. The amended ground provides:
That Her Honour erred in concluding that, having regard to the parties’ respective contributions, both financial and nonfinancial, to the acquisition, maintenance and improvement of their property, it was just and equitable to make orders conferring upon the appellant 12.5% of the total net assets (including superannuation).
- In seeking to meet the challenge mounted by that ground, Mr Kearney SC helpfully referred us to the recent decision of this Court in Elford & Elford  FamCAFC 45. I agree, with respect, that it has particular resonance to the facts and circumstances of this case.
- It is appropriate, I think, to quote the passages from Elford relied upon in particular by Mr Kearney SC. Those passages commence with reference to what was said by Kirby J in CDJ v VAJ and proceed as follows:
- The problem to which his Honour refers is exacerbated when it is difficult, if not impossible, for the court to answer the further question, “plainly wrong by reference to what?” In other areas of the law involving quintessentially discretionary decisions by reference to statutory requirements or criteria (general damages in tort and sentencing in criminal law are two examples) that subsidiary question is answered by reference to decided cases that seek to embrace the principle that in exercising any such discretions, like cases should be treated alike. In family law property cases comparisons with earlier cases have traditionally been eschewed, most commonly by reference to the axiom that each marriage is unique.
- Here, the challenged result is said to be “plainly wrong” but, as is almost always the case, the basis for the contention is only that the relevant party (here the wife) should have received more. The contention risks this Court engaging in an exercise that is not permitted, described by a former Chief Justice of Australia in this way in Sharman & Evans  HCA 8; (1977) 138 CLR 563, at 565:
… the function of a court of appeal, in my opinion, is not to offer what in connexion with another discipline would be called “a second opinion”. Such a court is strictly confined to the remedy of error in the trial or in the assessment of the trial Judge. It cannot be too strongly said that a mere difference of opinion … does not indicate error on the part of the trial Judge…
- That Court went on to quote from Babett & Falconer (2015) FLC 98-067 at  to . I will not repeat those passages here but, again, I consider they have direct relevance to the issues in this case.
- No specific discretionary error is identified in the amended ground of appeal. Stripped to its essentials the argument is, in my view, simply that this Court would have arrived at a different conclusion. That alone is not sufficient to attract the intervention of this Court. I am unable to see any other basis upon which it could be said that her Honour’s contribution assessment was “plainly wrong”.
- I reject the assertion of error in respect of contributions.
- I conclude, then, that error has been established in respect of her Honour’s s 79(4)(e) assessment with the result that her Honour’s discretion miscarried with resultant injustice to the wife.