Daly & Terrazas: Assessing Parties’ Contributions

The 2019 Family Court of Australia decision of Daly & Terrazas [2019] FamCAFC 142 was an appeal brought by the husband in respect of property orders made by a judge of the Federal Circuit and Family Court of Australia (FCFCA). The husband argued that the wife’s contributions were assessed too highly. The primary judge had made an adjustment of 70:30 in favour of the husband. The appeal was ultimately dismissed.

What did the primary judge in Daly & Terrazas say?

The matter involved a relationship of nine years which had produced two children. At the commencement of the relationship, the wife had assets worth approximately $500,000. The husband asserted he had assets of $4,974,512, which the wife disputed, but the primary judge accepted.

The primary judge considered how the parties “conducted their relationship both financially and as to the care of the children, and concluded that each contributed their efforts and their money to the “enterprise of their family.’” [para 29]. The parties had invested “both formally and informally” in each other’s properties, to the advantage of their family enterprise. [paras 10,30]

At the time of the trial, the parties’ net property pool was $12,524,921 excluding superannuation. The husband held superannuation entitlements of $342,351 and the wife $83,618.

The primary judge found that excluding the initial contributions, the parties’ contributions during and post-relationship were equal. The primary judge found that the wife’s contributions were 20% and the husband’s 80%.

The primary judge gave a further adjustment to the wife pursuant to section 75(2) of the Family Law Act 1975 of 10% on the basis that the husband had assets that had the potential to earn him a vastly greater income than the wife, and that he had greater superannuation entitlements than the wife. The children at the time of trial were living primarily with the husband and spending time with the wife on weekends and holidays.

The Daly & Terrazas appeal

There were two grounds of appeal pressed by the husband:

1. That the primary judge’s assessment that the wife’s contributions were 20% was incorrect; and
2. That the primary judge failed to provide adequate reasons for the decision she made.

The husband did not appeal the 75(2) adjustment of 10% to the wife. His primary challenge was in respect of how the initial contributions of the parties were assessed.

Ground 1 – assessment of contributions

In respect of the challenge to the assessment of the contributions – the challenge was to the exercise of the primary judge’s discretion in reaching the conclusion as to contributions. The Full Court referred to the difficulty in appealing against the discretion in the case of CDJ v VAJ (1998) CLR 172, where Kirby J said:

“[186]…Neither this Court, nor the Full 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. … To authorise appellate disturbance, where the decision under appeal is discretionary or involves quasi-discretionary evaluation, it is necessary for those mounting the challenge to demonstrate that, in reaching the orders the subject of the appeal, the court below has acted on a wrong principle or (although the precise error of principle cannot be identified) has reached a conclusion which is plainly wrong. Obviously, what is “plainly wrong” will vary in the eyes of different beholders. …

(Citations omitted)”

The court further refered to the Full Court’s decision in Babett & Falconer [2015] FamCAFC 124; (2015) FLC 98-067:

“[37] While it can be contemplated that assessments of contributions pursuant to s 79 might be judged erroneous by reason of fitting the description “unreasonable” or “plainly unjust”, it is a description that begs a foundation for this Court doing other than substituting its own discretionary conclusion for that of the trial Judge. In this, as in so many like cases, the central contention is that error is established by the result being “so outside” something that is not only unidentified but is not referenced to any foundation save for that assertion.”

The court needed to determine whether the decision reached by the primary judge was open to the primary judge on the evidence. The court was not persuaded to substitute its decision of what the contributions adjustment should be – and found that the decision reached was open to the primary judge on the evidence. The first ground of appeal failed.

Ground 2 – were there inadequate reasons given?

The second ground of appeal by the husband was that the primary judge failed to give adequate reasons for her decision. It is necessary for judges to give reasons that enable an appeal court to discern the reasoning which led to the decision reached.

The court considered that the primary judge took account of:

1. The significant disparity between the parties’ initial contributions.
2. That the parties had invested in each other’s property.
3. That the husband had significantly greater assets which he continued to deal with and increase their value.

The court referred to the decision of Steinbrenner & Steinbrenner [2008] FamCAFC 193, where Coleman J said:

“[234] Given that the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion, whether it be in the assessment of contributions in the matrimonial cause, assessment of damages in a personal injuries case, or determination of compensation in a land resumption case. In some cases, the “leap” is so great, and so unheralded by the discussion which precedes it as to render the reasoning process defective. In this Court’s view this is not such a case.”

The court was not persuaded that the primary judge’s reasoning lacked sufficient reasons which supported the decision reached.

The second ground failed. The appeal was dismissed.

Conclusion: court has discretion in assessing parties’ contributions

Daly and Terrazas highlights the importance of the court’s discretion in making findings on contributions. The threshold in re-examining a judge’s discretion is incredibly high such that it must be “unreasonable” or “plainly unjust”. It cannot simply be that another judge might have reached a different conclusion.

If you require legal advice or representation in a family law matter, please contact Armstrong Legal.