Child support – Departure order from administrative assessment for two children now aged 22 – Withdrawal of superannuation prior to terminating event artificially increased father’s assessable income

In Brenner & Chessington [2022] FedCFamC2F 1354 (6 October 2022) Judge Monahan heard a father’s application for a departure order from an administrative assessment for two children in relation to a period from 1 July 2017 to when each of the children turned 18 in 2018.

Both children were born to different mothers ([5]). The father paid child support for each of the children since 2000 until they turned 18 years.

The father ceased employment on 6 June 2017. He was advised by the child support agency to pay the minimum amount of child support until the children turned 18. After being diagnosed with cancer in September 2017, the father withdrew funds from his superannuation. In 2020 the child support registrar assessed the father’s adjusted taxable income for 2017-2018 to include his superannuation withdrawal, making his income $201,106, resulting in child support debts of about $18,800 to each of the children’s mothers.

The father’s objection to the assessment was dismissed by the child support registrar. His application to the Administrative Appeals Tribunal was also dismissed.

The father filed an application in the FCFCA, effectively seeking leave to vary the child support payments and an amendment of the calculation so that $201,000 of his superannuation was not considered taxable income ([28]).

The Court said (from [44]):

“The Applicant does not need to demonstrate exceptional circumstances to persuade a Court to grant leave under section 111 but the Court does need to carefully consider the matters in section 112 subsections (4) and (5).

( … )

[46] The first relevant matter is the responsibility for the delay. While it is clear from the evidence that the Applicant was responsible for the delay, he does provide a reasonable explanation for the delay and his predicament. …

[47] The second relevant matter is the issue of hardship to the Applicant and to Respondents should leave be granted. In addition to his serious illness, the Applicant relied on advice about the impact of his withdrawal of his superannuation entitlements which … was to his detriment. Although he was eligible to withdraw his superannuation monies because of his age, there are rules about how those monies may be treated for income tax purposes and for child support purposes. … [H]ad the Applicant simply waited to withdraw his superannuation entitlements to a date after both children had turned 18 years of age in July/August 2018, this child support problem would not have arisen. … The revised child support assessment only came about because of the Applicant’s mistaken belief that the superannuation monies would not be relevant for child support purposes. In circumstances where the child support assessments were to terminate in July/August 2018, it is difficult to see how the Respondents would suffer hardship because, had the Applicant known about the ramifications of withdrawing the superannuation funds before August 2018, he would not have done so. … [A]ny assessment of alleged hardship by the Respondents would be difficult because they did not put forward any evidence to suggest such.

[48] In relation to delay, … the Applicant did seek to address the child support problem once he became aware of it and opted to pursue, unsuccessfully, a review application through the Child Support Agency and then to the Administrative Appeals Tribunal. … ”

The Court continued (from [50]):

“Given that the Court is satisfied that the Applicant has:

-provided an explanation for his delay in making his application;

-provided evidence that he would suffer hardship if leave was not granted;

-made out a prima facie case to have the child support assessments changed;

and further noting that the Respondents did not take up the opportunity to participate and put contrary evidence before the Court, I find in favour of exercising the Court’s discretion that the Applicant be granted leave pursuant to section 111 of the Act.

[51] … The Applicant asks that the Court consider a departure order under section 118 of the Act. The Court agrees that that would be appropriate given that the child support assessments have terminated.

( … )

[54] … [T]he Applicant relies on section 117(2)(c)(ia) and submits that his application is ‘out of the ordinary’. … [He] argues that the superannuation monies he received were in the nature of savings and were not income that he earnt in the relevant child support year. … [T]he necessity to withdraw the superannuation monies was largely because of Applicant’s serious illness and his inability to earn an income …

[55] … I am satisfied that a ground for departure has been established because the Applicant had been assessed to pay child support at a rate not commensurate with his actual income in the relevant period for which he sought a departure order.”

After concluding that it would be just and equitable ([56]) and otherwise proper ([59]) to depart from the administrative assessment the Court concluded (from [65]):

“ … [G]iven leave will be granted to apply for a departure order, section 118(1)(g) of the Act gives the Court the power to adjust the Applicant’s taxable income to ‘nil’ for the relevant periods. … [G]iven the nature of this dispute, and the Applicant’s circumstances, it would be more appropriate for the Court to use its powers under section 118(1)(a) of the Act to adjust the annual rate of child support payable by the Applicant to the minimum annual assessment rate for the relevant periods, noting that the Applicant has already paid the minimum annual assessment rate for the relevant periods.

[66] This Court does not have the jurisdiction to remit the penalties that have been included in the Applicant’s child support debt. … [O]nly the Child Support Registrar has the power to remit a penalty incurred in circumstances where a parent underestimates an income amount. However, as the Applicant’s annual child support rate has been set to the minimum annual assessment … the Court would consider it inappropriate for the penalties to remain.”

Children – Graduated increase in time with young child – Discomfort of supervision insignificant compared to potential long-term detriment to child if relationship with father not rekindled

In Samad & Haider [2022] FedCFamC2F 1256 (16 September 2022) Judge Street heard a father’s application for time with a two year old child.

The parents had a short relationship commencing and concluding in 2019 and were separated before the child’s birth in 2020. At the time of the hearing, the father had not spent time with the child since her birth other than four supervised visits in 2021. He did not oppose orders that the child live with the mother provided that there was no risk to the child ([6]) and sought time on a graduated basis, with 2 hours each Saturday increasing to alternate weekends once the child commenced school plus mid-week and holiday time.

The mother adopted the position of the independent children’s lawyer, seeking sole parental responsibility, that the child live with her and spend supervised time with the father.

Judge Street said (from [18]):

“The Court is satisfied that the Father engaged in controlling conduct during that short period of the relationship. There was competing evidence about other communications relating to the physical allegations, but it is not necessary to determine those issues.

( … )

[20] … The Court finds that similar controlling behaviour has been engaged in by the Father in seeking to dictate the circumstances in which his access to the Child should recommence. …

[21] However, the Court does accept that the Father has a genuine concern as to the wellbeing of the Mother in respect of her ability to parent their Child. The Court does not, however, accept that the Father’s concerns identify any proper on-going evidentiary basis beyond the period that the Mother spent at the R Hospital from 17 June 2020 to 6 July 2020. The placing of the Child into the care of a friend for a period of approximately two weeks voluntarily by the Mother does not identify a proper basis for the ongoing concerns expressed by the Father as to the mental health and parenting ability of the Mother. …

( … )

[28] Dr G, who has been an outstanding expert for many years, prepared a detailed and helpful family report and two further letters and gave extensive helpful and perspicacious evidence to the Court on the issues raised between the parties. Again, it is not necessary to summarise the whole of Dr G’s evidence beyond identifying that Dr G, having seen the GPs records in relation to the Mother, was satisfied as to the Mother’s mental health and her ability to perform the parental responsibilities, and that the Child should live with the Mother. The Court accepts that evidence of Dr G.

[29] Dr G also characterised the conduct of the Father in the cessation of the supervised visits as being to the detriment of the best interests of the Child. Dr G also identified the potential concern as to the Father’s ability to exercise parental responsibility in circumstances where he was willing to engage in controlling behaviour in relation to supervised access, and lacked insight in relation to the best interests of the Child.  Dr G identified the importance of a parent complying with a supervised access regime in order to move forward to more meaningful and significant time. Dr G referred to the small amount of pain by the parent to the significant gain of the Child in participating in that supervised access and permitting the appropriate rekindling of bond between the Father and the Child.

( … )

[34] The Court accepts the evidence of Dr G that it is very much in the interests of the Child X for the Father to participate in the short period of discomfort of supervision so as to advance the best interests of the Child and to then facilitate the growth of that relationship through significant and meaningful time in a graduated way. The Court accepts the evidence of Dr G that, given the Father’s controlling conduct and lack of insight to which the Court has referred, that overnight time should not commence until the Child has reached the age of six. Dr G also referred to the parties undertaking alternate periods attending school events or other significant occasions.”

The Court continued from ([54]):

“The Court has taken into account that the Father has not established a relationship with the Child, and that the four visits that he had under supervised access occurred at a period of time that means there is no existing bond or relationship between the Father and the Child, notwithstanding the Father’s belief to the contrary.

[55] The Court has taken into account that the Father failed to take up the opportunity to complete the supervised access as was required under the earlier orders. It is now incredibly important for the Father, in order to advance the best interests of the Child, to spend a brief period of supervised time over six visits and then, on a graduated basis, to spend increasing time with the Child, including introducing the Child’s siblings from the Father’s other relationship, and to communicate with the Child on a regular basis.

( … )

[68] … If the Father has failed to comply with and undertake the supervised access, the progression to more meaningful time with the Child, including facilitating the parties agreeing on significant and meaningful time, is to be suspended until the Father has completed the six fortnightly supervised visits, which is the subject of the Court’s order.”

Orders were made for the father to have graduated time periods with the child increasing to unsupervised day time and then overnight time from the child’s sixth birthday.

Children – Sole parental responsibility – Mother’s application for no time with father dismissed despite intractable and unabated conflict between parents – Lump sum and non-periodic child support orders where father had not paid periodic assessment nor contributed to school fees

In Blatch (No 5) [2022] FedCFamC1F 651 (31 August 2022) Rees J heard  competing parenting, property and child support departure applications after a 15 year relationship which produced two children, X born in 2010 and Y born in 2012.

The parties separated in early 2018 and lived separately under the one roof until an incident that resulted in a domestic violence order against the father which was subsequently set aside (where the father’s conviction of charges relating to the incident was quashed on appeal).

The father sought orders for equal shared parental responsibility and that his time with the children increase over a six month period to an equal time arrangement. The mother sought sole parental responsibility and that the children spend no time with the father and have no communication with him. In the alternative, she sought that the children’s paternal time be supervised.

Rees J said (from [149]):

“I accept the evidence of Mr J [the family report writer] that the harm which has been caused to these children, and the risk of further harm, stems from the intractable and unabated conflict between their parents.

[150] … [S]ince neither appears to have heeded Mr J’s very clear warnings about the effect of the parents’ behaviour upon their children and the possibility of further psychological damage to the children if they do not take steps to remediate their respective attitudes … and their method of relating to one another, I am unable to make any orders which will effect those necessary attitudinal changes.

[151] I have every confidence that these parents will continue to behave as they have in the past, heedless or regardless of the consequences for their children.

( … )

[152] The children’s views are clearly stated. They want to spend more time with their father including overnight time and holiday time.

[153] They are 12 and 10 years old and they understand that their mother does not support their wishes.

[154] Their views need to be given considerable weight.

( … )

[165] Each of the parents fails to take responsibility for his or her contribution to risks that the children face as a result of the parents’ continuing conflict.

[166] The father at least acknowledged that the mother is a good parent with the exception of her staunch opposition to his having a relationship with the children.

( … )

[168] The mother, although asked on a number of occasions what benefits the father might bring to the children if he were able to have a relationship with him, could only say that they had fun with him. She was unable either to comprehend or acknowledge that the children might benefit from the qualities they see in their father.”

Her Honour continued (from [175]):

“I also accept the evidence of Mr J that equal shared parental responsibility is not an option for these parents.

[176] The presumption … of equal shared parental responsibility is rebutted by the incident of violence … and I am unable to find that it is otherwise in the children’s best interests to make such an order.

( … )

[178] I have no confidence at all that these parents are capable of reaching any decision in relation to their children … The father’s method of problem solving, by bullying and aggression, and his disregard for court orders … The mother is no more conciliatory as she has demonstrated in her stanch refusal to allow the father to spend time with the children and her entirely unreasonable insistence on retaining [the child’s] therapist.

[179] The children will spend the majority of their time with their mother and she will have sole parental responsibility.”

In relation to child support, the Court said (from [232]):

Lump sum child support

[232] The husband has not paid child support in accordance with the assessment since March 2021.

[233] Although it is submitted on his behalf that he will pay voluntarily … he gave no evidence to that effect and I have no reason to believe that his future behaviour will be any different from his past behaviour.

[234] The wife has been forced to enforce the assessment on two occasions. She should not be required to do so again.

( … )

[236] I am satisfied that it is just and equitable and otherwise proper to make the order sought by the wife and that the amount to be paid equals or exceeds the annual rate of child support payable for the children pursuant to the assessment.

[237] The husband will pay lump sum child support in the sum of $186,238.

Tuition fees

( … )

[239] It is not in dispute that the parents both signed the applicable documents to enrol the children in their current school and that they both intended, during the marriage, for the children to attend that school. X has attended since she was in Year 3 and Y’s enrolment was completed in November 2018, shortly before the parents separated. The documents signed by both the husband and the wife included an agreement to pay Y’s fees. Y has attended since the beginning of 2019.

[240] It was only after the parents separated that the father wrote to the school stating that he did not intend to continue to pay the school fees.

[241] I do not accept that the husband is unable to make a contribution to the school fees. …

[242] I am satisfied that it is just and equitable and otherwise proper to make the order sought by the wife.”

Property – Arbitration – Arguable that “review” of arbitral award under s 13J is not an appeal – Non-disclosure properly considered under s 75(2)(o)

In Paviello [2022] FedCFamC1F 592 (2 September 2022) Wilson J heard a wife’s application to “discharge” an arbitral award following its registration ([1]).

The wife’s grounds centred around the husband’s alleged material non-disclosure ([7]). The husband and the second respondent sought the dismissal of the wife’s review application.

Addressing the grounds of review, Wilson J said (from [7]):

“ … The review applicant argued that material non-disclosure ‘should have been as to the ultimate just and equitable adjustment pursuant to s 79(2) of the Act’. The review applicant contended that rather than doing that, the arbitrator considered that non-disclosure enlivened s 75(2)(o) of the Act. The wife argued that authorities such as Black v Kellner  [1992] FamCA 2; In the Marriage of Briese  [1985] FamCA 23; Oriolo v Oriolo [1985] FamCA 54; In the Marriage of Weir [1992] FamCA 69 and others contain stipulations about the correct approach to be adopted when one party has been derelict in his or her compliance with the duty of disclosure. …

( … )

[9] The arbitrator addressed four motor vehicles, observing in paragraph 300.14 that the husband made no attempt to adduce evidence as to the source of funds that the husband applied in his acquisition of the four motor vehicles. The arbitrator then drew the inference that the husband had the benefit of additional income or access to funds not disclosed or access to some other financial resource which was utilised to acquire the motor vehicles. The arbitrator stated that he was left guessing, as was the wife.

[10] It was open to the arbitrator to draw an inference if the material enabled such as an inference to be drawn. However, circumstances giving rise to equal degrees of probability so that the choice between them is no more than a mere matter of conjecture will not support an inference legitimately drawn. The arbitrator indicated he was left to guess at the source of funds used to purchase the four motor vehicles.

[footnotes omitted]”

Wilson J continued (from [19]):

“So far as the procedure under s 13J was concerned, despite being invited to do so, counsel for the review applicant declined to advanced submissions before me on the meaning of ‘review’ as opposed to the meaning of the word ‘appeal’ where elsewhere used in the Family Law Act. Accordingly, in the absence of detailed debate on the issue it would not be proper for me to adjudicate on the correct construct of the word ‘review’ where used in s 13J. Counsel for the first respondent relied on the decisions of a judge of what was once the Federal Circuit Court of Australia in Braddon v Braddon [2018] FCCA 1845 and in Pavic & Pavic [2018] FCCA 3386. In both of those decisions the judge pronounced that on a review application under s 13J the review applicant must establish error of law. In view of the fact that the point was not debated before me it is not appropriate to rule definitively on point on this review application. However … I express my gravest reservation that the word ‘review’ in s 13J requires the review applicant to demonstrate error of law. The point must await determination on another day. That said, it seems to me to be arguable that ‘review’ and ‘appeal’ are not the same. Debate may also abound in relation to whether the material the court examines on a review is the same as the material a court examines on the hearing of an appeal. Further, in the specific context of s 13J the ‘review’ is on ‘questions of law’. Debate may very well be enlivened on whether a question of law equates with a question of fact or even with a question of mixed fact and law. In addition, issues may very well arise about the degree of precision with which the question of law must be expressed. As I say, those points remain for another day …

( … )

[24] The ‘review’ to which s 13J is directed does not involve a hearing de novo as does a review of a registrar’s decision; it seems to me. That is in part the function of the different wording of the relevant legislative provisions and of the observations of the High Court in Harris v Caladine [1991] HCA 9. … [I]t seems to me to be unlikely that the legislature is to be taken to have intended that an arbitrator to whom a s 79 application is referred for determination in pursuance of s 13E is to apply different considerations to those a judge must apply when determining a s 79 application. So, when a dissatisfied party takes the s 79 determination further, whether to a single judge in the case of an arbitral determination or to a full court in the case of a judicial determination, the matters falling for examination by the reviewing body should be the same. Were it otherwise, a party to an arbitration would be penalised for selecting arbitration because by that selection of arbitration, the parties to arbitration would somehow have compromised their remedies consequent upon a s 79 determination. … In my view it follows that the ‘review’ in s 13J involves an examination of the evidence that was before the arbitrator against the questions of law posed in the review application so as to determine whether the arbitrator’s determination on the s 79 application was just and equitable.

( … )

[25] Under ground 1 the review applicant placed heavy reliance upon the arbitrator’s statement that non-disclosure enlivened s 75(2) considerations. The review applicant submitted that non-disclosure went to s 79 issues in the context of the verification of aspects relating to the property pool. Of that contention several things must be said.

[26] First, s 75(2)(o) is among the many s 75 factors to which the arbitrator was required to have had regard. That subsection is deliberatively broad. The arbitrator took the view that the matter of disclosure deficiencies (more properly, dereliction of duty concerning disclosure) was captured by s 75(2)(o). …

[27] … The authorities that I surveyed above concerning the consequences of disobedience with the duty of disclosure speak of the relevant rule in Chapter 13 of what was then the Family Law Rules. Those authorities addressed the impact of non-compliance with the duty of disclosure in a s 79 application. The statements of principle arising from those authorities bear upon s 79 applications. It seems to me to follow axiomatically that if non-disclosure and its consequences is a matter that can be taken into account in a s 79 application, then non-disclosure is also a matter, which, by operation of s 75(2)(o), can legitimately be taken into account. In other words, s 75(2)(o) is one of the legislative enabling provisions pursuant to which non-disclosure finds its status in a s 79 application.

[28] Here, the arbitrator specifically identified non-disclosure as a matter to be taken into account under s 75(2). Far from that not being an error of law, s 75(2) expressly permitted its consideration.”

The application for review was dismissed, the parties to file submissions as to costs.

Children – Finding of long-term pattern of “pervasive, coercive and controlling conduct” and an order for no time with father upheld

In Lim & Zong [2022] FedCFamC1A 146 (20 September 2022) McClelland DCJ heard a father’s appeal against final orders made by Judge Coates in a parenting matter in relation to one child who was born in 2012.

The parties married in 2006 in Country Q, relocated to Australia in 2007 and separated in 2012 whilst on holiday in Country Q. The parties returned to Australia in January 2013 when the mother relocated with the child.

Proceedings commenced in 2014 and after numerous court events and delays, interim orders were made on 29 October 2020 stopping the father’s time with the child on the basis of unacceptable risk. Judge Coates accepted the mother’s evidence as to numerous incidents of family violence by the father against the mother and controlling behaviour ([14]).

The self-represented father appealed.

After describing the father’s grounds of appeal as “virtually unintelligible” ([18]), McClelland DCJ said (from [26]):

“… [The primary judge found] that the father had engaged in a long-term pattern of pervasive, coercive and controlling conduct directed towards the mother. ( … )

[27] This campaign of coercive and controlling conduct carried out by the father included sending offensive emails to the mother, extending back to 2014. Those emails … extend over 30 pages, including a series of emails spanning five years in which the father seeks to coerce the mother into taking a particular course of action. …

( … )

[35] The primary judge did not accept the evidence of the father that he acknowledged the flaws in his conduct and that he had committed to change the manner in which he communicated with the mother. …

[36] … [T]he primary judge noted that the only time the father’s ‘campaign of family violence using coercion and threats over a long period of time’ halted was when orders were put in place ceasing the child’s time with the father …

( … )

[43] … [T]he primary judge found that the father had used ongoing litigation against the mother as an additional means of exerting coercive control. His Honour noted that the proceedings which are the subject of this appeal were the fifth attempt by the mother to have the matter listed for hearing that had been obstructed by the father, including by dismissing two sets of lawyers who had been appointed to act on his behalf by Legal Aid. The primary judge also referred to the conduct of the father in pursuing apprehended violence orders against the mother in the Queensland Magistrates Court. …

[44] In the context of that litigation history, the primary judge accepted the evidence of Mr O, the mother’s treating psychologist, that the ‘long years of litigation’ in addition to the father’s pattern of engaging in coercive and controlling conduct have taken a toll on the mother, the cumulative effect of which has resulted in the mother suffering from a mental illness (at [144]). …

[45] That stress and anxiety … included the mother’s concerns for the emotional well-being of the child if orders were to be made for the child to spend time with the father. …

( … )

[50] … [T]he primary judge found that the mother’s mental health would be so profoundly impacted by orders providing for the child to spend time and/or communicate with the father, that her parenting capacity would be adversely impacted. …”

Finding the father’s grounds of appeal were without merit, the Court considered the mother’s costs application and said (from [129]):

“I accept that the father is of limited financial means. On the other hand, the mother earns a relatively small salary … in the sum of $50,000 per year and has responsibility for maintaining both herself and the child. … [I]n Cross & Beaumont [2008] FamCAFC 68 …, the Full Court held that financial incapacity to pay a costs order is not a barrier to the making of a costs order where the conduct of the party may warrant such an order being made.

( … )

[131] In terms of other considerations as referred to in s 117(2A)(g), the emotional cost of litigation is well documented. As Keane J observed in Rozenblit v Vainer [2018] HCA 23 … :

Litigation is sufficiently stressful and expensive for all concerned without the unnecessary aggravations of additional cost, stress, distraction and delay occasioned by inefficiency, incompetence or sheer disregard of the rules. … Inefficient or incompetent conduct of litigation may cause injustice even if it is not intended to do so. …

(Footnote omitted)

[132] That statement of Keane J is particularly pertinent in the context of these proceedings where the primary judge acknowledged that the father has used litigation as a tool in his unrelenting campaign of coercive and controlling conduct directed towards the mother. …

[133] Accordingly, for these reasons there should be a costs order made against the father.”

The husband’s appeal was dismissed and he was ordered to pay the costs of the mother and the Independent Children’s Lawyer assessed at $4,671.90.

Procedure – Conflict of interest found where wife’s solicitor was also acting for wife’s litigation funder (which was owed $3.6 million) – Appeal from dollar for dollar costs order allowed where recoverability not adequately considered

In Charisteas [2022] FedCFamC1A 160 (7 October 2022) the Full Court (Alstergren CJ, McClelland DCJ & Aldridge J) heard a husband’s appeal from orders of a judge of the Family Court of Western Australia (“FCWA”) in relation to a property matter which commenced in 2006.

The wife’s application for a property settlement was remitted for rehearing by the High Court on 6 October 2021 (see Charisteas [2021] HCA 29, summarised at our archived case notes – property under “bias”).

On 19 April 2022, the FCWA determined a number of interim applications in preparation for the rehearing. The applications included injunctions to restrain a firm and Mr P from acting for the wife on the basis they were also acting for the wife’s litigation funder (“AF”), which was owed at least $3,600,000. A further restraint was sought against the wife’s counsel, Ms D, on the basis that contact between Ms D and the trial judge had led to the final property orders being set aside ([14]).

The husband’s applications were unsuccessful and he appealed ([4] & [10]). He also appealed an order for him to pay a “dollar-for-dollar” costs order in favour of the wife ([6]).

The Full Court said (from [34]):

“… [I]t was contended … [by the wife] that the relevant test to apply in considering whether to restrain lawyers from acting in order to protect the integrity of the judicial process is found in Kallinicos v Hunt [2005] NSWSC 1181 (“Kallinicos v Hunt”) at [76], where Brereton J said:

The test to be applied … is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice.

( … )

[36] … [T]he primary judge was led into error by the parties in these proceedings, who contended that the relevant principle to be applied … is the principle set out above.

[37] The correct test that should have been applied … is that which is adumbrated by the Full Court of the Federal Court of Australia (Besanko, Lee and Abraham JJ) in Porter v Dyer (2022) 402 ALR 659 who applied, with approval, the following statement of principle by Griffiths J in Mumbin v Northern Territory of Australia (No 1) [2020] FCA 475:

The relevant principles which guide the exercise of the Court’s separate discretion are broadly as follows:

(b)     The test to be applied is whether a fair-minded, reasonably informed member of the public might conclude that the proper administration of justice requires that a solicitor be prevented from acting in the interests of the protection of the integrity of the judicial process and the appearance of justice …

( … )

[40] … [W]e are of the opinion that the primary judge erred in failing to have regard to a relevant consideration, namely, that there is a ‘real or substantial possibility of a conflict’ between the interests of the respective clients of Firm Y and Mr P …

( … )

[42] … The wife currently owes AF … [at] least $3.6 million and AF has an interest in ensuring that the adjustment of the parties’ property sought by the wife … is reflected as a transfer of property to the wife, rather than the settlement being structured on an alternative basis. Such an alternative would be to maximise non-property or cash benefits to the wife … which may be beyond the claim of creditors including AF. …

( … )

[52] The … primary judge erred in failing to have regard to the potential and actual conflict between the interests of Firm Y, Mr P and the wife … We are satisfied that, if the extent of that actual and potential conflict were identified to a fair-minded, reasonably informed member of the public, they would conclude that the proper administration of justice requires that the restraints sought by the husband against Firm Y and Mr P be established.”

In relation to the application to restrain Ms D, the Full Court continued (from [54]):

“ … [T]he primary judge erred … in that she failed to have regard to the fact that Ms D was in a position of conflict of interest in acting for the wife, in circumstances where an application for costs had been made against Ms D.

( … )

[56] Additionally, the background facts in this matter suggest that it may be in the interests of the wife to obtain independent advice as to whether she has a claim for contribution against Ms D in respect to costs which the wife has incurred in these proceedings.

[57] For that additional reason, Ms D is in a position of actual conflict of interest as to whether she provides advice of that nature to the wife.”

Considering the dollar-for-dollar order, the Full Court concluded (from [77]):

“ … [U]ntil the High Court holds otherwise, the Court should proceed on the basis that s 117 empowers the Court to make litigation funding orders, including dollar-for-dollar orders.

[78] … As we have said, s 114 amply provides the basis for such orders and no error would be made by proceeding under that section. Whilst … the considerations to be taken into account may differ slightly due to the mandatory terms of s 117(2A) which do not apply to s 114, there is little practical difference in the approach to be taken …

( … )

[80] The appellant … submitted that her Honour erred by failing to take into account the extent to which any costs paid pursuant to the order could be later adjusted or recovered without recourse to s 79A of the Act.

( … )

[82] We accept that the primary judge did not undertake the consideration of recoverability, but that is not entirely surprising because we are unable to identify any submission put to her Honour that raised it.

( … )

[86] … [I]n the ordinary course, it would be very difficult … to make a litigation funding order, especially a dollar-for-dollar order, in favour or for the benefit of a commercial litigation funder.

[87] This was a relevant consideration to take into account. It was a point raised at the hearing and in oral submissions on the appeal, but was not referred to in the primary judge’s reasons. …

[88] It follows that the appeal must be allowed and the application remitted for rehearing. …”

The husband’s appeal was allowed; the wife was restrained from instructing the same lawyers who were acting for her litigation funder; and the wife’s counsel was restrained from acting for her.

Property – De facto thresholds – Judge’s denial of leave to proceed was “repugnant to” prior consent order granting leave under s 44(6) – De facto wife’s application could not be dismissed for want of prosecution

In Eden [2022] FedCFamC1A 178 (27 October 2022) Austin J, sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia, considered a decision of Judge Morley, where a de facto wife’s initiating application for property orders was dismissed for want of jurisdiction.

The parties were in a de facto relationship from 1989 to 22 November 2007. The de facto wife alleged that the parties reconciled in 2008 and the relationship continued for several years. There was uncertainty about the final date of separation, but consensus that the relationship ended by December 2014 ([5]). The de facto wife filed her application in August 2017.

The de facto husband initially sought dismissal of the application ([7]), but in April 2018 a different judge granted leave to proceed pursuant to s 44(6) of the Act, based on the de facto husband’s admission that jurisdiction existed ([10]-[12]).

Judge Morley found that if the relationship broke down prior to 1 March 2009, there was no jurisdiction to make any order other than dismissing the proceedings for lack of jurisdiction and an order under s 44(6) did not cure that jurisdictional issue ([17]).

Austin J said (from [18]):

“ … The minute of orders, representing the parties’ formal agreement, resolved the jurisdictional dispute. Acting on such evidence, the other judge granted leave to bring the claim for property settlement out of time, which order was entirely futile unless jurisdiction actually existed to entertain the appellant’s claim. The existence of jurisdiction could perhaps have been proven by the appellant if the issue had remained contested, but that became unnecessary when the respondent conceded.

[19] From the ancillary costs order made in the appellant’s favour, deferring the payment of such costs until after the respondent received his ‘share of entitlements’ upon resolution of the substantive property settlement claim, it is abundantly clear that the existence of jurisdiction was integral to the orders made in April 2018.

[20] The respondent’s deliberate decision to concede the existence of jurisdiction was confirmed by him before the primary judge in September 2020 and reiterated by him in the appeal, though without any apparent understanding of its significance.

( … )

[24] His Honour, despite being ‘acutely aware’ of the respondent’s admission …, wrongly rejected the appellant’s submission that his admission resolved the issue of jurisdiction in her favour …

[25] Parties are bound by the way in which they conduct their cases and these parties mutually conducted the original litigation on the premise that their de facto relationship existed at, and subsisted until sometime beyond, 1 March 2009. Jurisdiction to entertain the appellant’s substantive property settlement claim was therefore established …

[26] The primary judge observed how the order made under s 44(6) of the Act granting leave for the appellant to proceed with her substantive claim could not cure an absence of jurisdiction … but that observation requires some qualification. It is true parties cannot consensually invest courts with jurisdiction or power they do not possess (Harris v Caladine [1991] HCA 9 …), but there was no need to cure any jurisdictional lacuna here because the parties formally conceded the necessary jurisdictional facts.

[27] … The dissipation of any controversy over the existence of jurisdiction obviated any need for a finding on contested evidence. More than two years later, in the hearing conducted before the primary judge, it was not open to the respondent to adduce evidence contradicting the jurisdictional fact he formally admitted earlier in the same proceedings, at least without leave, which was neither sought nor given (s 191 of the Evidence Act 1995 (Cth)).

[28] Neither the primary judge nor the respondent was precluded by the principle of ‘issue estoppel’ from re-revisiting the issue of jurisdiction at the hearing, as the orders made in April 2018 were interlocutory in nature and did not finally resolve the issue of jurisdiction between the parties in the form of an anterior final judgment … Nevertheless, unless and until the parties were released from their binding concessions in the proceedings, the primary judge could not go behind the orders made by the other judge in April 2018.

[29] There would have been no impediment to his Honour dismissing the appellant’s substantive application for property settlement relief on merit, but her application could not be dismissed for want of jurisdiction … ”

The appeal was allowed and the proceedings remitted for re-hearing, with the court ordering costs certificates for the applicant for the appeal and the re-hearing. The respondent was self-represented.

Evidence – Subpoena – Public and children’s interest in Court having relevant evidence about parent’s mental health outweighs right to privacy

In Vitalis & Kazan (No 2) [2022] FedCFamC1F 601 (19 August 2022) Smith J heard an application for review of a decision of a Senior Judicial Registrar in a parenting case involving two children aged 4 and 8 years; the central issue being whether the children should continue to have supervised time with Ms Vitalis who was going through gender transition.

Ms Kazan had two subpoenas issued and served – on Ms Vitalis’s surgeon (“Dr O”) and on her medical insurer. Ms Vitalis objected and a Judicial Registrar set aside the subpoenas and ordered Ms Kazan to pay Ms Vitalis’s costs.

Reviewing the Judicial Registrar’s decision, Smith J said (from [16]):

“In any parenting proceeding any parties’ mental health issue is potentially relevant to the extent that it may impact on parenting capacity.

[17] The relevant mental health issue is not suggested to be gender dysmorphia.  …  [O]n her own evidence, Ms Vitalis’ overall mental health has been impacted by the totality of her circumstances, including these proceedings, and that she has sensibly been seeking assistance for her mental health.

[18] There is no dispute that Ms Vitalis’ mental health is therefore a relevant fact potentially in issue in the proceedings and a fact in respect of which subpoena may issue. Ms Vitalis has pointed out in her written submissions that she has not objected to subpoena issued by Ms Kazan on her identified treating mental health practitioners.

Dr O

[19] Ms Vitalis objected on the basis of relevance. The submission was to the effect that the details of the biological surgical procedures Dr O is involved in will not illuminate any issue relevant to parenting capacity.  On this basis this subpoena, together with that to P Company, was said to be a ‘fishing expedition’ (eg Commissioner for Railways v Small (1938) 38 SR (NSW) 564).

[20] Ms Kazan’s case was that the nature of the surgery is relevant to the possibility or likelihood that Dr O engaged in an assessment of Ms Vitalis’ mental health, and that this in turn is relevant …

[21] … [A]s part of gender reassignment, the nature of the surgery might reasonably require the surgeon to satisfy themselves that the patient meets the criteria under the World Professional Association of Transgender Health Standards of Care Guideline. That might reasonably require the surgeon to engage in their own assessment of the patient’s mental health status.

[22] In this case … it is at least possible that Dr O was required to and did undertake his own independent mental health assessment of Ms Vitalis, taking into account Ms Q’s [Ms Vitalis’ treating clinical psychologist] opinion but not merely relying upon it.

[23] Ultimately the solicitor for Ms Vitalis … conceded that given the nature of the surgery the possibility of Dr O engaging with Ms Vitalis’ mental health probably brought that subpoena within the tests stated by the High Court which bind me. I am satisfied that there is a sufficient apparent connection to the issues.

[24] Despite that concession Ms Vitalis maintained the objection on the basis firstly of privacy grounds, due to the intimate nature of the surgery, and secondly on the basis that the Court should control the use of subpoena in pursuance of the overarching purpose s 67 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) … and the associated Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Rules’).

[25] Whilst privacy grounds would be relevant if the information sought went only to the physical process, where it is conceded that there is a real possibility of a mental health assessment, and therefore a genuine forensic purpose, privacy is not a proper ground for objection.  While the Ms Vitalis’ position is understandable, given the sensitive nature of the procedures involved, the nature of the family law jurisdiction, in which the Court enquires into the welfare and best interests of children, means that the public interest and children’s interest in the Court having all available relevant evidence about a parent’s mental health outweighs the parent’s right to privacy.  …

[26] Whilst the Court should, and does, exercise close control over the issuing of subpoena as part of the application of the overarching purpose, I am not persuaded that in the context of these proceedings the subpoena to Dr O is inconsistent with the overarching purpose.”

Considering the subpoena to the medical insurer, Smith J continued (from [32]):

“Ms Kazan submitted that the subpoena to P Company is appropriate where a review of the documents which have been produced on subpoena have produced references to other medical practitioners who were not disclosed, and who Ms Kazan says should have been.

( … )

[37] In many cases the P Company subpoena would be a step too far, but each matter requires consideration on its own facts.

[38] Where a party’s mental health is an issue in the proceedings, and where it appears that she has taken an approach to disclosure which raises issues about the selectivity and reliability of that disclosure, it may be appropriate to allow a subpoena … to ensure that the Court has the best available evidence when considering the best interests of the children.

( … )

[45] For the reasons set out above I consider there is a genuine forensic purpose to each subpoena, that they should not have been set aside, that it is appropriate to grant the Application for Review, to set aside the Judicial Registrars orders, to allow access to the legal representatives only to Dr O’s records and photocopy access only to the ICL to Dr O’s records, and to reserve the questions of costs of the objections and this Application for Review to Trial.”

Procedure – Husband’s failure to adduce evidence-in-chief should not have precluded him from cross-examining wife and was a denial of natural justice

In Morgan & Valverde [2022] FedCFamC1A 133 (31 August 2022) Austin J, sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia, heard a de facto husband’s appeal from property orders after a childless de facto relationship of 9 years which ended in January 2019.

The respondent commenced proceedings in 2019 and the first trial listed for April 2021 was adjourned and rescheduled for February 2022. The appellant sought an adjournment of the rescheduled trial date which was refused and the trial proceeded. The appellant failed to file and serve any evidence before the trial and the only evidence at trial was that of the respondent.  Orders were made for a division 57.5:42.5 in favour of the appellant.

On appeal, the de facto husband argued that he was denied natural justice and procedural fairness.

Austin J said (from [16]):

“The appellant’s complaint about the decision to refuse his application to adjourn the trial is groundless because no appeal lies from the decision (s 26(2)(b)(ii) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) …

[17] In any event, the transcript reveals the discussion over the proposed adjournment and its foreshadowed refusal to have been entirely unexceptional. The oral ex tempore reasons delivered for the refusal of the adjournment do not form part of the appeal material, but it should be noted the appellant was grateful to have had the dispute heard rather than delayed. …

[18] Nor could the appellant have any reasonable complaint about the trial progressing without his evidence, given his protracted failure to file and serve the evidence-in-chief upon which he would want to rely. He was not merely late filing evidence. He did not file any evidence at all, even though he must have realised his adjournment application might fail. The appellant’s submission of not having ‘reasonable opportunity…to submit his own evidence’ is rejected. Procedural orders were made long before in April 2021, fixing the trial date and directing the parties to file and serve their evidence by January 2022 in readiness for the trial. While the appellant was apparently hospitalised for six days in January 2022, he had plenty of time to be ready for the trial commencing on 18 February 2022.

[19] … [D]uring the discussion which ensued about the need for the trial to proceed without further delay, the primary judge told the appellant he would not be able to cross-examine the respondent. Ostensibly, that was only because he failed to comply with the procedural orders requiring him to file and serve his evidence-in-chief. ( … )

[20] In Re F: Litigants in person guidelines [2001] FamCA 348 … the Full Court established this as one of several guidelines for judges dealing with self-represented litigants:

A judge should inform the litigant in person of the manner in which the trial is to proceed, the order of calling witnesses and the right which he or she has to cross examine the witnesses.

[21] The respondent commendably conceded in the appeal the primary judge did not do that.

[22] There is no doubt the appellant was in default of the procedural orders … [which] then empowered remedial action …

( … )

[24] … Her Honour did not order the appellant to take some other ‘step in the proceeding’ (r 10.27(2)(a)). Nor did her Honour ‘give judgment’ against the appellant (r 10.27(2)(b)). The Response filed by the appellant in February 2020, seeking certain property settlement orders, was not summarily dismissed. In fact, during final submissions, the primary judge elicited from him the precise nature of his proposal, as her Honour was properly intent on determining what just and equitable orders were needed to finalise the cause between the parties under Pt VIIIAB of the Act.

[25] The appellant was allowed to make final submissions, but not permitted to cross-examine the respondent, though no ‘other order’ of that sort was actually made or explained (r 10.27(2)(b)). The hearing did not proceed on an ‘undefended basis’, as the primary judge said it did …, since the appellant participated in the trial and resisted the respondent’s application, though he was deprived of an opportunity to cross-examine her.

( … )

[28] If allowed to cross-examine the respondent, the appellant would have been bound by her answers to his questions, at least to the extent her evidence was accepted by the primary judge as being credible and reliable, since he led no contrary evidence to positively establish his own version of events (Goldsmith v Sandilands [2002] HCA 31 … ; Pt 3.7 of the Evidence Act 1995 (Cth)), but he might feasibly have been able to extract favourable concessions from her. …”

Austin J concluded (from [35]):

“The appellant had no absolute right to cross-examine the respondent – only an absolute right to a fair trial. However, supposing appropriate notice is given (r 8.20 of the Rules), it would be a rare case in which the refusal of a party’s request to cross-examine a material witness at final trial would not manifest the deprivation of procedural fairness (Naparus & Frankham [2020] FamCAFC 32 …).

( … )

[37] Although the appellant did not specifically ask to cross-examine the respondent, he had already been told he would not be allowed to do so and, absent legal representation, he meekly did not contest the ruling. Denying the appellant the chance to cross-examine the respondent, at least without any adequate explanation for why and without giving him the chance to be heard about the ruling, denied him natural justice and was an error of law.

( … )

[40] Had the appellant cross-examined the respondent, it might have made no difference at all, but that is not the test. … [I]t is no easy task to be satisfied that the cross-examination of the respondent by the appellant could have had no bearing at all on the outcome. I am not so satisfied. It follows that the error was material and there is no option but to remit the proceedings for re-hearing.”

Property – De facto wife’s inconsistent representations as to status of de facto relationship in Supreme Court proceedings – Earlier proceeding and judgment give rise to claim and issue estoppel

In Colburn & Cleese [2022] FedCFamC1A 147 (23 September 2022) the Full Court (McClelland DCJ, Austin & Gill JJ) heard an appeal by a de facto husband (“the appellant”) from a declaration of Altobelli J that the parties were in a de facto relationship for five distinct periods between 1991 and May 2014 and ancillary orders in relation to the application for an adjustment of property by the respondent de facto wife (“the respondent”).

At the time of the appeal the appellant was 75 years and the respondent 76.  The parties were litigants in proceedings before the Supreme Court of NSW which culminated in orders on 28 November 2006 that divided their property interests pursuant to the provisions of the Property (Relationships) Act 1984 (NSW). The Supreme Court found that the relationship broke down in November 2002.

In the family law proceedings, the appellant asserted that their relationship subsisted from 1995 until the end of 2000; while the respondent said that the relationship endured between 1990 and May 2014.

Altobelli J found that the parties were in a de facto relationship during five periods: 1991 to 1994; 1995 to the end of 2000; September 2006 to July 2010; January 2011 to October 2012; and April 2013 to May 2014. His Honour set aside the Supreme Court judgment and did not deal with the respondent’s estoppel arguments or the applicant’s argument that estoppel prevented the respondent or His Honour from going behind the Supreme Court judgment.

The Full Court said (from [20]):

“Before turning to the grounds of appeal, it is apposite to deal with the estoppel created by the Supreme Court judgment, which issue was raised at trial but not addressed at all in the reasons for judgment. … [I]t is an issue which assumes primary importance.

( … )

[23] The Supreme Court judgment was the culmination of proceedings voluntarily commenced by the respondent in November 2004. In the Statement of Claim she filed to commence those proceedings for remedial relief under both the State Act and in equity by way of constructive trust, the appellant pleaded that the parties’ de facto relationship began in early 1990 and ended on 24 November 2002.

[24] … The litigation was eventually settled and judgment was entered on 28 November 2006, with orders made for the parties to divide their real and personal property on an agreed basis.

( … )

[26] The fact the Supreme Court judgment was entered by consent does not deprive it of any legal force. Any res judicata or estoppel which results from the pronouncement of a final judgment applies equally to judgments made by consent …

( … )

[29] … [T]he Supreme Court judgment created a ‘claim estoppel’. Any rights to property settlement relief that could be asserted in federal proceedings under Pt VIIIAB of the Act arising from any period of the de facto relationship before November 2006 are equivalent in nature to those rights that have already been asserted and determined by the Supreme Court judgment (Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 … ; Clayton v Bant [2020] HCA 44 … ). There was substantial correspondence between the parties’ rights under both the State Act and the Act arising from their de facto relationship prior to November 2006. The Supreme Court judgment finally determined the parties’ financial rights against one another as former de facto partners and estopped their entitlement to re-litigate the alteration of their property interests consequent upon the existence of their de facto relationship at any point in time prior to the Supreme Court judgment.

[30] Whilst ever the Supreme Court judgment stood undisturbed, the parties and the primary judge were estopped from enquiring behind it. Rights flowing from the parties’ de facto relationship in the period before November 2006 had already been determined and did not remain available to form part of the justiciable controversy before the primary judge. …

[31] Aside from the ‘claim estoppel’ created by the Supreme Court judgment, the circumstances under which it was entered created an ‘issue estoppel’. The termination of the parties’ de facto relationship was an ‘issue’, resolution of which established a jurisdictional fact conditioning the grant of relief (s 18(1) of the State Act; Saravinovski v Saravinovska [2017] NSWCA 85 at [109]) and upon which the parties agreed and the Supreme Court relied to exercise statutory power to quell the dispute over their financial rights. … The respondent was estopped from contending … that the de facto relationship had been revived before, and was in existence at, the time of the Supreme Court judgment, as it was contingent upon the resolution of the issue in a contradictory way: the de facto relationship had ended.

( … )

[34] In the teeth of the Supreme Court judgment, based as it was on the respondent’s verified pleadings about the de facto relationship having ended, she could not claim an alternate truth in the proceedings before the primary judge.

[35] … The respondent … wanted the Supreme Court judgment set aside … only because she regarded it as not being generous enough, she allegedly only assented to it under duress exerted by the appellant, and it was allegedly impracticable to implement. … [T]he primary judge found the appellant did not exert any duress upon her (at [134]) and the Supreme Court judgment has been fully executed, as the property and liabilities have since fallen according to the terms of the judgment, so it was not impracticable to implement. Her retrospective dissatisfaction with the generosity of the agreement could not be enough to disturb it.

[36] It follows that the appeal must succeed because the primary judge’s findings and the declaration as to the first three phases of the de facto relationship, together with the order setting aside the Supreme Court judgment, were all precluded by estoppel. …”

The orders were set aside and the case was remitted for re-hearing before another judge in relation to declaratory and substantive relief available for the period after judgment was entered between the parties in the Supreme Court of NSW on 28 November 2006. Costs certificates were issued.