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Contributions and Add Backs in Family Law Property Settlement Proceedings - Vass & Vass [2015] FamCAFC 51

Contributions and Add Backs in Family Law Property Settlement Proceedings - Vass & Vass [2015] FamCAFC 51

Vass & Vass [2015] Fam CAFC 51

 

Introduction

The case of Vass & Vass [2015] FamCAFC 51, was heard by the Family Court of Appeal from the Federal Circuit Court matter of Vass & Vass [2013] FCCA 1354.  This was an appeal brought by Mr Vass (“the husband”) against the decision of His Honour Judge Burchardt (“the trial judge”).
 
Judges
Justices Strickland, Justice Murphy & Justice Tree
 
Key Words
Family law, Family Law Act 1975, appeal, property settlement, fair and equitable, section 79(2), section 79(4), contributions, consideration, adequacy, notional add backs, add backs.
 
Applicable Law
Family Law Act 1975 (Cth)
Federal Proceedings (Costs) Act 1981 (Cth)
Bevan & Bevan (2013) FLC 93-545
Stanford & Stanford (2012) 247 CLR 108
Kessey & Kessey (1994) FLC 92-495
 
Background
The husband and wife commenced cohabitation in 2000, married in 2001 and separated on 22 April 2012 being a 12 year relationship.  The parties have two children, aged 11 and 9 at the time of the hearing.
The husband was employed full time until made redundant in 2009.  Since 2009 the husband had been running several businesses with a business partner.  The wife worked until 2000 and then stayed at home caring for the children until she commenced part-time work home-based work in 2011.  The wife resigned from that employment with the parties separated.
 
Appeal Grounds
While there were various grounds of appeal in this matter, this case review shall only look at those grounds of appeal dealing with the parties’ contributions and notional property add backs.
 
Failure to Properly Evaluate Contributions
Grounds 6 and 7 of the appeal were brought by the husband in relation to the treatment of three contributions to the relationship.  These contributions were:
1. The husband’s initial contribution being a house which when sold returned funds in the range of $60,000 to $80,000;
2. The husband’s contribution during the relationship from a redundancy of $90,000; and
3. A contribution during the relationship from the husband’s parents of $50,000.
 
The grounds of the appeal were that the trial judge failed to properly evaluate the contributions into the property pool.
In the trial judges’ reasoning he mentioned the husband’s initial contribution of the house and the $90,000 contribution from the husband’s redundancy.  The trial judge found at paragraph 73 that the husband had made a significant initial contribution which “…formed the springboard which enabled them to buy a property which they later sold which contributed the springboard to the matrimonial property”.
The trial judge considered the 12 year length of the relationship and decided that the husband’s contribution amounted to a 5% adjustment in his favour, rejecting the wife’s counsel’s claim that the husband’s contribution after 12 years should be reduced to zero.
 
The trial judge provided in terms of contribution that the split in favour of the husband was 55/45.
 
The $50,000 contribution from the husband’s parents was mentioned by the trial judge at paragraph 50 of his decision.  The trial judge decided that the $50,000 was not a loan from the husband’s parents, but rather, a contribution from the husband’s parents going towards the husband’s contributions to the relationship per Kessey & Kessey (1994) FLC 92-495.
 
The appeal judges found that:
1. The trial judge decided that the $50,000 amount was a contribution by the husband’s parents and a contribution of the husband to the relationship; and
2. That the trial judge did not specify what weight if any should be given to the $50,000 contribution made by the husband.
 
The appeal judges decided that:
"[T]he attribution of weight in a quintessentially discretionary judgement faces considerable hurdles. Yet, the absence of reasons of sufficient adequacy (even in brief) which illuminate the relative weight that was, or was not, give to direct contributions of the nature and amount of those under consideration, gives rise to a significant concern that the exercise of the discretion has miscarried."
 
The trial judges determined that the trial judge did not consider the $50,000 contribution from the husband and found for the husband’s grounds of appeal.
 
Error in Law & Discretion to Add Back Property
This ground of appeal was brought by the husband on the grounds the trial judge added back two amounts to the property pool making an error in law.  These amounts were:
1. $50,000 the husband repaid to this parents for a purported loan, which was later found to be a contribution; and
2. $25,000 used by the husband to pay the mortgage and associated household expenses.
 
The appeal judges found that there was no error of law “per se” in the trial judge adding back property into the property pool sum where those sums were dissipated by the parties.  In particular Their Honours, stated:
"We reject any suggestion that the decision of Bevan & Bevan (2013) FLC 93-545 – or, more particularly, the decision of the High Court in Stanford & Stanford (2012) 247 CLR 108 – is authority for any necessary contrary solution.  Some statements made by the High Court may lead to the conclusion that the references to “notional property” as have been referred to in decisions of this court and at first instance may need to be reconsidered."
"The decisions referred to seek to remind the Court that, however the exercise of discretion might seek to deal with property that is said to be the subject of “add back”, proper consideration must be given to existing interests in property, and the question posed by s 79(2) as a separate inquiry from any adjustment to property interests by reference to s 79(4) of a consideration of s 79(2) reveals that it is just and equitable to alter existing interests in property."
 
The appeal judges determined that there was no error of law for the trial judge to add back property, but that in the consideration of property settlement, the court had to give proper consideration to the existing property and section 79(2) of the Family Law Act 1975 (Cth) which states “The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order."
 
The appeal judges pointed out that the above enquiry is a separate enquiry to the determination of “any adjustment to property interests” per the considerations provided under section 79(4) of the Family Law Act 1975 (Cth).
 
The appeal judges found some grounds of the husband’s appeal proven and dismissed other grounds.  As such, certificates were granted to both parties under the Federal Proceedings (Costs) Act 1981 (Cth) and the matter was remitted to the Federal Circuit Court for hearing.
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