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Property – Contributions must be considered “holistically” and “weighed collectively” – Kennon adjustment of 5% was erroneous as it segmented the task of weighing contributions

 In Benson & Drury [2020] FamCAFC 303 (7 December 2020) the Full Court (Strickland, Watts & Austin JJ) heard a de facto husband’s appeal in a case where there was an 11 year de facto relationship from which there were two teenage children and a net pool of $2,259,053.

The parties’ jointly submitted at trial that their contributions were equal save for two disputes:

  • initial contributions, where the de facto husband owned a property with $387,000 equity as at cohabitation, but worth $900,000 at trial; while the de facto wife owned a property with equity of $108,000 as at cohabitation, but that property had been sold and applied towards a jointly owned property;
  • the de facto wife’s claim that domestic violence had made her contributions significantly more arduous than they ought to have been per Kennon v Kennon [1997] FamCA 27 (“Kennon”).

At first instance, Judge Kari cited Jabour [2019] FamCAFC 78 and declined to give greater weight to the de facto husband’s initial contributions, finding that to do so would ignore the pre- and post-separation contributions of both parties to ensure that property was retained.

Her Honour found that the de facto husband had perpetrated physical violence against the de facto wife “in all its forms” ([21]) which had a “debilitating effect” on her ([20]), concluding that the de facto wife’s “Kennon claim is made out. It is my view that the impact of the family violence … made her contributions both during the relationship and in the lengthy post-separation period all the more arduous. … As difficult as the task is of quantifying the adjustment … I have assessed the adjustment at 5%” such that the division was 55:45 overall.”

On appeal, the Full Court said (from [34]):

“While the primary judge may have been led into error, her Honour failed to consider the Kennon argument in a holistic way. Having first considered all of the parties’ respective financial and non-financial contributions, her Honour then turned to separately consider the quantification of an adjustment to the [de facto wife’s] … contribution-based entitlement on account only of the Kennon guideline. The primary judge found the parties’ overall contributions were equal … but then went on to reason that the [de facto wife’s] … contributions warranted an ‘adjustment’ of an extra five per cent as her ‘Kennon claim’ was made out.

[35] The central question raised by this appeal is how a judge takes into account the contributions of one party, found to have been made significantly more arduous by the conduct of the other, when assessing contributions under ss 79(4)(a)–(c) or ss 90SM(4)(a)–(c) of the Act. The answer is the primary judge must take a holistic approach. The contributions which have been made significantly more arduous have to be weighed along with all other contributions by each of the parties, whether financial or non-financial, direct or indirect to the acquisition, conservation and improvement of property and in the role of homemaker and parent. All contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder (Jabour & Jabour [2019] FamCAFC 78 … ).

( … )

[37] Although the use of the short-hand descriptor of a ‘Kennon claim’ is not of itself erroneous, it is liable to induce error because the issue is not a stand-alone claim, but is rather integral to the entire process … Nor is it helpful to refer to the issue as a ‘Kennon adjustment’ because that epithet invites treatment of the issue as an isolated claim for an additional share of the available property.

[38] We agree with the [de facto husband’s] … submission that the primary judge’s error in dealing with the Kennon issue is brought into stark relief by the manner in which her Honour dealt with the [de facto husband’s] … claim for greater recognition of his initial contribution of real property. The [de facto husband] … advocated for the assessment of his contribution-based entitlement at 65 per cent on account of that particular contribution … but, in express reliance upon the jurisprudence in Jabour, the primary judge rejected the submission because the [de facto husband’s] … initial contribution of real property was but one of many contributions to be synthetically taken into account … Then, contrarily, her Honour did the opposite in relation to the application of the Kennon guideline by treating it as an adjunct.

[39] The error of segmentation and the comparative analysis of one feature of the evidence against all others befell her Honour in this instance.”

As to the quantification of the effect of violence, the Full Court said (from [49]):

“ … [I]t should now be clear that the required nexus between proven family violence and the significant adverse effect upon the contributions of the victim is capable of being inferred from the lay evidence of the parties …

[50] Here, the primary judge found the [de facto husband] … perpetrated family violence upon the [de facto wife] … and drew an inference that such violence did have an effect upon the [de facto wife’s] … contributions, making them ‘all the more arduous’ … Importantly, the evaluation of the evidence from which the subject inference is sought to be drawn should be thorough and balanced. …

( … )

[52] This is a case where, given the nature of the violence described, the primary judge was entitled to draw inferences to establish the necessary evidentiary nexus.”

Although the Full Court found error in the Court’s approach to Kennon, it held no miscarriage of justice had occurred, saying (from [76]):

“There is ample unchallenged evidence to substantiate the finding that the impact of the family violence on the [de facto wife] … was such as to make her contributions, both during the relationship and in the lengthy post separation period, significantly more arduous.

[77] We are of the view that considering all of the evidence before the primary judge, including the evidence about the [de facto husband’s] … initial contribution of real property and the impact of family violence on the [de facto wife’s] … contributions, that an appropriate, just and equitable contribution-based division of the parties’ net assets is 55/45 per cent in the [de facto wife’s] … favour.”

The appeal was dismissed with costs of $15,000.

 

 

Property – Court erred by imputing de facto wife’s intention to separate rather than assessing the indicia laid down in the Act

Children – Court erred by ordering change of residence based on mistaken findings of coercive, controlling behaviour – Acceptance of family consultant’s “impression” of child’s wishes, rather than expressed views, required consideration of other matters

Spousal maintenance – Court erred in allowing husband a “financial buffer” for “vicissitudes of life” when calculating his interim spousal maintenance obligation – Failure to consider that the order could be varied should the husband’s financial position change

Children – Belligerent grandfather with months to live obtains interim parenting orders for monthly time with 5 year old – But for pre-existing relationship between child and grandfather, unified opposition of child’s parents would have been given greatest weight

Property – Arbitrator’s directions, made without input from both parties and limiting the number and size of affidavits and exhibits, lacked procedural fairness

Financial agreements – Maintenance clause void pursuant to s 90E such that it did not prevent father’s application for adult child maintenance on behalf of the parties’ disabled daughter