Goodhew v Goodhew [2008] SBCA 7; CA-CAC 36 of 2007 (18 July 2008)

IN THE SOLOMON ISLANDS COURT OF APPEAL

NATURE OF JURISDICTION:	Appeal from Judgment of the High Court of Solomon Islands (Faukona J)
COURT FILE NUMBER:	Civil Appeal Case No.36 of 2007 (On Appeal from High Court Civil Case No. 272 of 2007)
DATE OF HEARING:	10 July 2008
DATE OF JUDGMENT:	18 July 2008
THE COURT:	Williams VP,
	Goldsbrough JA
	Adams JA
PARTIES:	Goodhew -v- Goodhew
ADVOCATES:
Appellant:	A Radclyffe
Respondent:	G Brown
KEY WORDS:
EX TEMPORE/RESERVED:	:
ALLOWED/DISMISSED:	Allowed
PAGES:	1 - 15

JUDGMENT

Introduction

1. The husband and the wife (for simplicity called respectively the husband and the wife) were married on 24 February 2000 in Honiara. They separated in January 2007 and, on 28 September 2007 a decree nisi was pronounced on the ground of the irrevocable breakdown of the marriage. The couple had no children. The wife sought financial relief by way of division of matrimonial property. On 12 November 2007 the application was heard in the High Court by Faukona J, who made orders on 23 November 2007 The substance of his Lordship’s judgment was that the husband should pay to the wife the sum of $397,000.00, representing his Lordship’s calculation of one-third of the matrimonial property. (All references to currency are to SBD unless otherwise indicated.)
   
2. The appeal from this judgment specifies three grounds –
   
   • (i) that an award of one third of the value of the husband’s assets to the wife was excessive and unreasonable in all the circumstances of the case;
   • (ii) the decision was against the weight of the evidence; and
   • (iii) the learned trial judge failed to take into account the effect of the order on the husband.
     

The evidence at trial

3. Each party relied on affidavits previously filed and gave evidence. To understand the following, it needs to be noted that the major matrimonial asset is a vessel called MV Lalai and its charters were managed by a private company called M V Lalae Charters Limited of which the husband had an 80% shareholding and the wife 20%. The vessel was owned by the husband and not by the company.
   
4. The wife relied on her affidavit of 25 July 2007 and gave evidence. In her affidavit the wife said, amongst other things, that she and the husband had considerable marital difficulties which led to their separating in January 2007 and that since then the husband had refused to provide any maintenance. She said she was not working and had no independent income, she claimed that the husband had continued to run the business which they had run together and had kept possession of their two vehicles. She said also that he had held onto the matrimonial assets, had been selling them and had kept the proceeds to himself. She said that she was very badly affected by the separation and pending divorce and the husband had not permitted her to benefit from the business. In her affidavit, the wife did not claim that she had made any contribution to the business. To the extent that this basis for a claim to the matrimonial property was articulated, it came out entirely during cross-examination.
   
5. In cross-examination the wife agreed that she had made no financial contribution towards any of the matrimonial assets. She said, "I contribute myself to the business and not financially." She added –
   

"Before I married [husband] I quit my job and he said he would finance me. I got nothing to contribute and he said he would assist for the business. I support him all along so I claimed properties.

Q...So it is from work you have done and not financial contribution? - - - A. Yes
Q [Husband] also worked towards the business? - - - A. Yes, both of us. Lalae Charter. I am at home to look after business.

Although the wife said she bought the 20% shareholding, it is clear that this was not so; it may be she misunderstood the question. She agreed she took $20,000 worth of property from the house but said this value was a guess.

6. There was no attempt made in re-examination to clarify the wife’s evidence about the extent to which she had contributed to the business.
   
7. The husband also relied on filed affidavits and gave evidence. We refer only to those parts of the affidavits that are presently relevant. In his affidavit of 30 August 2007 the deposed that they were separated in April 2007 and not in January 2007. Of particular importance was the assertion that before and during the marriage the husband had acquired personal assets with funds accumulated before the marriage and funds resulting from long term investments made prior to coming to Solomon Islands.
   
8. The husband said that, following the marriage, he and the wife jointly registered a charter business, which used the boat MV Lalae. That vessel was purchased in November 2001 with proceeds from sales of real property purchased by the husband many years before his marriage. plus a substantial loan then outstanding at approximately $600,000 for which he was personally and solely liable. He said that the lenders were seeking repayment or refinancing of the loan.
   
9. The husband said that the loan liability and the turndown in the tourism industry had required him to sell some of the assets and property he had personally acquired to sustain himself. He said he had been doing this since 2005 to maintain himself and the petitioner. With work restrictions he was unable to obtain alternative employment.
   
10. So far as the motor vehicles were concerned, the husband said he owned two; a Landcruiser and an Isuzu, the former having been purchased well before marriage.. The husband sold the landcruiser shortly before the affidavit was sworn.
    
11. The husband deposed that the wife had the background and skills that would enable her easily to find find employment. He said that in May 2007 he had organized employment for her with Solomon Connect, that she happily attended an interview and was accepted for a position. However, she then refused to take up the offer of employment because, as she said to her proposed employer "she would be spending all her time on this big case against me". (We interpolate that there was no objection taken to the admissibility of any of the affidavit material, including apparent hearsay and infer that this course was taken because the facts were not disputed.). The husband said that the position paid about $5,500 per month. A letter from the Managing Director of Solomon Connect, annexed to the affidavit and tendered with it, verified these assertions. He gave the opinion that, having assessed the wife’s skills and experience, she would be able to find another well paying job with many other businesses, "as employees of her caliber are extremely hard to find".
    
12. The husband said that the wife and he were the directors of the charter business, Lalae Charters and, for that purpose, the wife had been allocated shares. However, she had not paid for the shares and had not contributed financially to the operation of the business.
    
13. The husband claimed that, since the separation, he had been giving the wife cash on a daily basis to live on, the last sum being a cheque for $1,500 on 29 May 2007. About two weeks after that the wife refused to accept further funds. Furthermore, the husband said when the wife left the marital home, she took property worth between $15,000 to $20,000 without his knowledge.
    
14. In his second affidavit of 20 October 2007 the husband deposed that he arrived in the Solomon Islands in January 1999. He had real estate in Australia and "a fairly good income". He sold the real estate, borrowed the additional funds to buy MV Lalae and set up the business Lalae Charters. He said that the purchase of the boat and setting up of the business was done without financial or other input from the wife (italics added). He said it seemed the "natural thing to do" was to appoint his wife a fellow director and allocate to her 20% of the shares. He said that all assets purchased for the home were paid for by him with no financial input from the wife. The husband said that he supported himself and his wife from his own funds including those generated by sales of assets from December 2005 to May 2007. In addition there were goods and money provided to her family to the value of $40,000. He also paid the costs for repair and extended (up to six months at a time) visits from the wife’s relatives and, he said, at no time did the wife or her relatives contribute to rent or other household expenses.
    
15. There was no suggestion that the wife’s 20% shareholding to the business was either necessary or desirable to enable the business to operate or the boat to be chartered.
    
16. Another affidavit sworn on 28 September 2007 which annexed a table of his assets and liabilities as at that date was not read by the husband but was used in cross-examination by counsel for the wife. We deal with this matter later.
    
17. In dealing with the husband’s evidence, it is obvious that the trial judge’s note is incomplete in a number of significant respects, particularly as to the matters on which sums mentioned by him were spent. The summary that follows is the best we can do with the transcript. We would respectfully point out that, although it is of course not expected that a trial judge will be able to take a verbatim transcript of the evidence, yet crucial parts of the evidence must be noted with sufficient accuracy to enable this Court to appreciate the factual issues and the evidentiary material upon which the important findings are made.
    
18. The husband is noted to have said in chief that the finance company is to repossess the boat "because no money to repurchase the boat." (We understand this to mean that he had no funds to avoid repossession of the boat, though there was actually no direct evidence that the debt was secured by a charge on the boat.). The husband is noted as having said, "I paid AUD40,000. I borrowed $10,000 to avoid liquidity". (There is no other evidence that clarifies this material). He gave evidence that the boat needed to go onto a slipway, obviously for maintenance, and requires a survey, (presumably for sea worthiness). He said that his financial position was poor, that "last week [his] next liability" is $246,540, that he had $10,000 in the ANZ Bank and around $25,000 "for expenses", with $3,000 "for credit on the boat". He gave evidence of his rent of $5,000 per month. The amount outstanding on the loan was AUD50,000. (We think that this probably meant that the AUD40,000 to which he had previously referred had reduced the AUD90,000 debt on the boat – as disclosed in the table of assets and liabilities – although it might also mean that the outstanding AUD90,000 was the balance after payment of this sum)..
    
19. In cross-examination the husband was asked how much the boat was worth and said –
    

"I do not know, not in good condition, engine need repair, may be less than $400,000."

20. The husband was then asked about the statement of assets and liabilities that was attached to his affidavit of 28 September 2007 He agreed that the boat was valued in that statement at approximately "half a million" (sic, the amount actually was AUD250,000), and that was equal to about $1.5 million. He agreed that statement said the Isuzu was worth $60,000, that the canoe was worth $22,000 and that "goods and chattels" (apparently placed in a container) was worth $80,000. He said that this value was "a rough guess". He agreed he had sold the Landcruiser for $27,000 and a number of small items for $2,000. He agreed that he had $10,000 in an ANZ bank account which had a balance on 11 September 2007 of $25,000. He agreed he had withdrawn $24,000 in May 2007 from the Lalae business account. So far as his bank accounts in Australia were concerned, as set out in the table, the amount of some AUD32,825 with Citibank was used to pay the financier, together with money borrowed from his parents and a friend. It seems that he still had AUD10,650 in the account, which was borrowed money and that he owed AUD50,000 to his parents and his friend. He said he had an income of about AUD360 a week (we think from a naval pension) and earned no other money.
    
21. The boat was not operational as it had not been surveyed. During addresses, counsel for the husband tendered (over objection) the whole of the table, which showed, as well as the assets upon which he had been cross-examined, substantial liabilities, including costs of slipping the vessel ($15,000) servicing the liferaft ($8000) and insurance ($27,170), due within the ensuing two months. It does not appear to have been put to the husband that the estimate given in chief was wrong except insofar as it was substantially less than the value he had attributed to it as at 11 September 2007. It is obvious that this difference does not lead to the inference that the later estimate was wrong, although it certainly raises the question that it might be. In any event, it is obvious that the table itself would lead to the inference that the estimate of value must be reduced by the requirements of slipping, liferaft service and insurance or, otherwise, these sums deducted from the credit bank balances as they then stood. Nor was it suggested that the requirement for a survey was not an impending obligation: it is clear that the value of a vessel must be reduced if it does not have a seaworthiness certification. It is not clear whether this was taken into account in the sum allowed for slipping or was another necessary outgoing. It is most regrettable that counsel for the husband did not seek to clarify these issues in re-examination. It seems to us, as we gather from the note of submissions, that this was because counsel was of the mistaken view that the applicant’s acquisition of the boat with his own funds meant that it could not (as distinct from would not) be taken into account in assessing any appropriate division of property on dissolution of the marriage.
    
22. The husband said, additionally, that the only money earned since March 2007 was $13,186 for a charter in July and, of course, it followed from what had already been stated in his affidavits, that the earnings from charters for the previous two years had been insufficient to maintain either the business of the home. Again, significance of these matters should not have been left to the judge to speculate about. We regret to say that it appears to us that his Lordship was entitled to far more assistance from both counsel than he received in this case.
    
23. The husband, in re-examination, said in effect that the wife,, did not put any effort into the business, that she was not interested in book work, that (as we understand it) she spent her time on personal emails and with her wantoks and on several occasions fought on the boat. On occasions she worked as third crew.
    
24. In summary, counsel for the wife put to the husband that his assets were worth $1.4-$1.5 million and his liabilities amounted to approximately $240,000. The husband accepted these figures but pointed out that they were estimates and not actual values. It is not possible to say from the transcript whether this question merely put to the husband the figures extracted from the table or the husband agreed that they represented his present position.
    
25. In submissions, counsel for the husband made the point, amongst others, that the value of the property was in issue and that the property, if sold might well not reach the estimated sums.
    

The findings of the trial judge

26. The trial judge found that the matrimonial assets were as follows – l
    

ASSETS CLAIMED
		AUD	$
1	MV Lalae	$250,000.00	$1,500,000.00
2	1994 Isuzu		60,000.00
3	Canoe and engine		22,000.00
4	Mixed goods		80,000.00
5	ANZ Honiara		10,000.00
6	Australian Banks	$11,000.00	66,000.00
7	Land cruiser		27,000.00
8	Mixed goods		2,000.00
Total Assets			$1,767,000.00

27. His Lordship concluded that the total value of the matrimonial assets was $1,767,000, deducted the outstanding loan arrears of $515,800, leaving a balance of $1,281,200, and gave a third to the wife after deducting $20,000 in respect of property removed from the matrimonial home. We have already pointed out that the vessel was purchased early in the marriage, without any financial contribution from the wife, from the husband’s pre-marriage assets and a loan for which he was solely responsible. There was no business in respect of which the wife could have made any other kind of contribution. Up to this time, the undisputed evidence was that the wife was completely supported by the husband. In those circumstances, it is difficult indeed to see why it can be just that the value of the boat should be brought into account as a matrimonial asset of which the wife should have a share. It was an asset of the husband’s that was material to a consideration of his ability to pay any sum found to be appropriate, of course. It is evident that nothing done by way of the wife’s contribution to the business (whatever that was) could have been a contribution to the value of the boat. Indeed, its use for the purpose of the business must necessarily have reduced its value accepting, of course, that maintenance and other necessary expenditures no doubt were paid for out of the income which it generated, income of which the wife and husband had the benefit in terms of their domestic support. However, having regard to the way in which we propose to deal with the appeal, it is not necessary to finally determine this question. Similarly, the Landcruiser, on the husband’s undisputed evidence, was purchased before the marriage. Again, we find it difficult to see how it was just to regard this as an asset of which the wife was entitled to a share but, again, we do not need to finally determine this question.
    
28. Counsel for the husband submitted that the vessel and the Landcruiser (as well as other items) were entirely the property of the husband because they had been acquired with his assets alone and that it followed that the Married Woman’s Property Act 1882 did not give the wife any share in them. The trial judge rightly rejected this submission. The question is not whether the wife had acquired an equitable interest in this property – a matter to be determined under ordinary principles applying to the acquisition of property rights (see eg Pettit v Pettit [1969] UKHL 5; [1970] AC 777; Gissing v Gissing [1970] UKHL 3; [1970] 2 All ER 780) – but, rather, what financial settlement was just in all the circumstances In this respect, whether the parties come under the Islanders’ Divorce Act or the Matrimonial Causes Act 1950 as amended in 1956, the law in the Solomon Islands is that the fundamental character of the jurisdiction is the same Of course, this does not mean that the actual legal status of the ownership of the property both at law and in equity can or should be ignored. Unfortunately, however, it is not possible to discern from the judgment of the trial judge what were the considerations that led him to conclude that it was just to make an order that, in effect, gave the wife a third of the overall net value of the matrimonial property, despite the fact that, in respect at least of the Landrover and the vessel, she had no legal or equitable interest. in them
    
29. The wife gave evidence, set out above, that she had contributed to the charter business and thus to its earnings. It is implicit, of course, that much of those earnings were expended to support the couple’s domestic arrangements. It is doubtful whether the evidence – given in a general and undetailed way – could justify the inference that she made a major contribution to the undertaking but, even accepting that this conclusion was justified, that would reflect on the value of the business, not the value of the boat. No attempt was made to value the business – perhaps it had little more than goodwill and that was not, it may be, worth much. However, this problem was plainly not appreciated by either counsel and the trial judge cannot be held to have erred by not adverting to it. It was this contribution which may have justified giving the wife a substantial share of the moneys in the bank accounts and the Isuzu vehicle (and, perhaps, the canoe), providing that those moneys (as seems to be a reasonable inference) came from the charter business. His Lordship held that the wife’s acceptance of the 20% shareholding in Lalae Charter was a contribution by her to the business in that part ownership by a Solomon Islander was a prerequisite to the husband’s being able to carry on the business. There was no evidence at all to this effect and the evidence of the husband, though slight, was to the contrary. There was no basis, therefore for his Lordship’s placing of significant weight on this "contribution" in his assessment of the wife’s share.
    
30. A related issue is the manner in which the trial judge dealt with the husband’s liabilities in relation to slipping, liferaft service and insurance. His Lordship considered that it was not appropriate to deduct them from the husband’s assets, on the basis that they were recurrent outgoings and he was concerned only with capital. However, these were outgoings necessary for the maintenance of or concerning the viability of the vessel that was the principal asset brought into account by his Lordship to calculate the wife’s share. At the same time his Lordship brought into account bank accounts which, it seems, included and perhaps comprised entirely sums earned from the business and, accordingly (by parity of reasoning), represented income, rather than capital. There was no explanation for this apparent inconsistency.
    
31. It will be recalled that, in respect of the AUD11,000 in Australian banks, the husband’s evidence was that it represented money borrowed from his parents. This was therefore not an asset in any real sense and, as we understand the trial judge’s calculations of the amount deducted by him from the total assets, no allowance was made for the debt which it represented.
    
32. Nor was it explained why the sums paid to the wife’s family – apparently at her instance – should not be brought into account. Certainly, they reduced the matrimonial assets.
    
33. Leaving these matters aside, the main focus of the appeal concerned the valuation of MV Lalae. As is apparent, this was the subject of dispute, though the only evidence about it came from the husband, who had given two estimates at different times. It was a matter for the trial judge to determine as best he could what this value was. The trial judge gave no reasons for fixing on the higher figure in preference to that sum estimated by the husband in his evidence or any sum between. This approach places an appellate court in considerable difficulty in exercising its bounden duty of considering appeals against the propriety of decisions made at first instance. It is essential for courts of first instance clearly to set out, not only their findings on all significant issues of fact and law material to their decisions but also sufficient of their reasons to enable the appellate court to properly exercise its supervisory obligations. To omit to do so is an error of law. In this case, we are persuaded, at all events, that the state of the evidence did not permit the conclusion that MV Lalae was worth $1.5 million. It is this conclusion that requires the appeal to be upheld and the matter remitted to the High Court for a new trial. We have only referred to the additional problems in the case to afford some guidance for the trial judge to consider in light of the evidence that is forthcoming in that proceeding.
    
34. Again by way of providing some assistance to the new trial judge, we should briefly discuss the finding by the trial judge that the wife’s share of the matrimonial assets should be one third. The ultimate question, of course is what is a just outcome and this cannot be determined by any formula. There are some cases in which a simple division will be appropriate and others in which some assets (or their money equivalent) should be divided in one proportion and other assets in another proportion. The just outcome depends on all the circumstances and must have regard to the legitimate interests of both parties. That outcome will also be significantly affected by the presence of children and which of the parties will have immediate responsibility for their care should they not be independent. Considerable allowance is usually and rightly made in favour of the party who has been unable to make a financial contribution to the welfare of the family because he or she (and most often it will be the mother) has been the principal carer of the children. The reasons for this are obvious and do not require discussion, especially in a case where children are not an issue.
    
35. At first instance, the trial judge referred to a number of authorities in which various proportions had been determined as affording an appropriate division of the matrimonial property. His Lordship gave great weight to the decision of the Court of Appeal of Vanuatu in Fisher v Fisher [1991] VUCA 2, quoting the following passage –
    

"Even if she does not earn money, a wife looking after the home and children contributes substantially to the family well being. Over the years she acquires an increasing large interest in the family property, which can include property acquired by either party before marriage. A non working wife who brings nothing into a marriage acquires very little in the first few years of marriage but for a marriage lasting several years the starting point for her share is one third..."

31. Two points should be made as to why this observation should be treated with caution in the present case. The first is that the Court was dealing with a case where there were children, a highly significant factor. The second is that the Court went on to describe the marriage of four years as "relatively short" and thought that the value of the house (the only substantial asset) should have been taken into account to the extent only that its value increased during the marriage. This approach was also taken by Ward CJ in Takaohu v Waihiou and Oihanaru [1991] SBHC 31 who brought into account capital accrued during the marriage.
    
32. Accordingly, we do not see that Fisher is any authority in this jurisdiction for a rule of thumb that, in the present case, a one third share of the matrimonial assets should be given to the wife. It is, however, authority that requires the court, if it is taking into account pre-marriage assets, to consider whether it is right that the entire value of those assets should be brought into account. In the present case, the assets brought into the marriage in the form of the boat and the Landrover were wasting assets; in the nature of things their value was diminishing. Moreover, they were being used for the purpose of deriving income that was used to support both the husband and the wife and she therefore derived a significant benefit from them. The new trial judge will need to carefully consider whether, by giving the wife a further share of those assets, she is not thereby doubling up in an unfair way so far as the husband is concerned, who brought them into the marriage and has seen their values depreciate.
    

Orders

33. Accordingly the appeal is allowed, the judgment at first instance is quashed and the matter is remitted to the High Court for rehearing.